<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JUNE 26, 1998
WINDMERE-DURABLE HOLDINGS, INC.
-------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA
------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION)
1-10177 59-1028301
----------------- -------------------
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
WINDMERE-DURABLE HOLDINGS, INC.
5980 MIAMI LAKES DRIVE
MIAMI LAKES, FLORIDA 33014
--------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (305) 362-2611
--------------
<PAGE> 2
ITEM 5. OTHER EVENTS.
On June 26, 1998, the Company entered into a Credit Agreement with
NationsBank, National Association dated June 26, 1998 which provided the Company
with $345.0 million in Senior Credit Facilities, consisting of a $160.0 million
Senior Secured Revolving Credit Facility, a $90.0 million Tranche A Term Loan, a
$75.0 million Tranche B Term Loan and a $20.0 million Tranche C Term Loan.
The Senior Secured Revolving Credit Facility includes (a) a $20 million
sublimit for the issuance of letters of credit and (b) a $10 million sublimit
for swing line loans (the "Swing Line Loans"). All amounts outstanding under the
Senior Secured Revolving Credit Facility shall be payable on June 26, 2003. The
Tranche A Term Loan will be payable in quarterly installments, ranging from $2.5
million for the quarter ended March 31, 1999 to $6.25 million for the quarter
ended March 31, 2003, and all remaining amounts owing due the following quarter.
The Tranche B Term Loan will be payable in annual installments of $750,000, with
all remaining amounts owing thereunder due June 26, 2004. The Tranche C Term
Loan will be payable in annual installments of $200,000, with all remaining
amounts owing thereunder due June 26, 2004.
Interest will accrue on the loans made under the Senior Secured
Revolving Credit Facility (other than Swing Line Loans) at either LIBOR
(adjusted for any reserves) or the base rate, which is the higher of
NationsBank, N.A.'s prime rate and the federal funds rate plus 0.05% (the "Base
Rate"), at the Company's option. Interest will accrue on the Senior Secured
Revolving Credit Facility and the Tranche A Term Loan at either LIBOR (adjusted
for any reserves) plus a specified margin which will be determined by the
leverage ratio of the Company and its subsidiaries that initially will be set at
2.50%, or the Base Rate, plus a specified margin of 1.50%, at the Company's
option. Interest will accrue on the Tranche B Term Note and the Tranche C Term
Loan at either LIBOR (adjusted for any reserves) plus a specified margin which
will be determined by the leverage ratio of the Company and its subsidiaries
that initially will be set at 3.00%, or the Base Rate plus a specified margin of
2.00%, at the Company's option. Swing Line Loans will bear interest at the Base
Rate. The post-default rate on outstanding loans is 2.00% above the otherwise
applicable rate of interest.
The aggregate amount outstanding under the Senior Credit Facilities
will be prepaid by amounts equal to the net proceeds, or a specified portion
thereof, from certain indebtedness and equity issuances and specified asset
sales by the Company and its subsidiaries, and by a specified percentage of cash
flows in excess of certain expenditures, costs and payments. The Company may at
its option reduce the amount available under the Senior Credit Facilities to the
extent such amounts are unused or prepaid in certain minimum amounts.
The Company pays certain annual administration fees to NationsBank,
N.A. for its own account as well as a commitment fee and certain fees relating
to letters of credit to NationsBank, N.A. for its own account and the account of
the other lenders under the Senior Credit Facilities.
The Senior Credit Facilities are secured by a security interest in
substantially all of the real and personal property, tangible and intangible, of
the Company and its domestic subsidiaries, as well as a pledge of all of the
stock of such domestic subsidiaries, a pledge of not less than 65% of the voting
stock of each direct foreign subsidiary of the Company and each direct foreign
subsidiary of each domestic subsidiary of the Company, and a pledge of all of
the capital stock of any subsidiary of a subsidiary of the Company that is a
borrower under the Senior Credit Facilities. The Senior Credit Facilities will
be guaranteed by all of the current and future domestic subsidiaries of the
Company.
The Senior Credit Facilities contain a number of significant covenants
that, among other things, will restrict the ability of the Company to dispose of
assets, incur additional indebtedness, prepay other indebtedness, pay dividends,
repurchase or redeem capital stock, enter into certain investments or create new
subsidiaries, enter into sale and lease-back transactions, make certain
acquisitions, engage in mergers or consolidations, create liens, or engage in
certain transactions with affiliates, and that will otherwise restrict corporate
and business activities. In
2
<PAGE> 3
addition, under the Senior Credit Facilities, the Company is required to comply
with specified financial ratios and tests, including a minimum net worth test, a
fixed charge coverage ratio, an interest coverage ratio, a leverage ratio and a
minimum EBITDA requirement.
In addition, on June 26, 1998, the Company entered into a Bridge Loan
Agreement with Nations which provided the Company with a $185.0 million in
Senior Subordinated Loans. The Senior Subordinated Loans mature in 2008 and bear
interest at an increasing rate equal to (i) the one-month London interbank
offered rate, adjusted for reserves ("LIBOR Option") plus (ii) the "Applicable
Margin," which shall initially be 550 basis points per annum, increasing by an
additional 100 basis points per annum after the first 180-day period following
the funding date, then increasing by 50 basis points per annum on each 90-day
period thereafter for as long as the Senior Subordinated Loans are outstanding.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
10.1 Credit Agreement by and among Windmere-Durable
Holdings, Inc. and NationsBank, National Association,
and the Other Lenders Party thereto From Time to Time
dated June 26, 1998
10.2 Bridge Loan Agreement dated as of June 26, 1998 among
Windmere-Durable Holdings, Inc., the Guarantors
listed therein, the Lenders named therein,
NationsBanc Montgomery Securities LLC and
NationsBridge, LLC.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WINDMERE-DURABLE HOLDINGS, INC.
Date: July 16, 1998 By:/s/ Harry D. Schulman
-----------------------------------------
Harry D. Schulman
4
<PAGE> 1
EXHIBIT 10.1
CREDIT AGREEMENT
by and among
WINDMERE-DURABLE HOLDINGS, INC.
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION
as Agent and as Lender,
and
THE OTHER LENDERS PARTY HERETO FROM TIME TO TIME
June 26, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I Definitions and Terms...........................................................1
I.1. Definitions.......................................................................1
I.2. Rules of Interpretation..........................................................35
ARTICLE II The Term Loans................................................................37
II.1. Term Loans......................................................................37
II.2. Payment of Principal............................................................37
II.3. Payment of Interest.............................................................38
II.4. Manner of Payment...............................................................39
II.5. Optional Prepayments............................................................39
II.6. Mandatory Prepayments...........................................................40
II.7. Term Notes......................................................................42
II.8. Interest Periods................................................................42
II.9. Conversions and Elections of Subsequent Interest Periods........................42
II.10. Pro Rata Payments..............................................................43
II.11. Use of Proceeds................................................................43
ARTICLE III The Revolving Credit Facility................................................44
III.1. Revolving Loans................................................................44
III.2. Payment of Interest............................................................47
III.3. Payment of Principal...........................................................47
III.4. Manner of Payment..............................................................47
III.5. Revolving Notes and Swing Line Notes...........................................48
III.6. Pro Rata Payments..............................................................48
III.7. Optional Commitment Reductions.................................................48
III.8. Conversions and Elections of Subsequent Interest Periods.......................49
III.9. Increase and Decrease in Amounts...............................................49
III.10. Unused Fee....................................................................50
III.11. Deficiency Advances; Failure to Purchase Participations.......................50
III.12. Use of Proceeds...............................................................51
III.13. Swing Line....................................................................51
ARTICLE IV Letters of Credit.............................................................53
IV.1. Letters of Credit...............................................................53
IV.2. Reimbursement...................................................................53
IV.3. Letter of Credit Facility Fees..................................................57
IV.4. Administrative Fees.............................................................57
ARTICLE V Security.......................................................................58
V.1. Security Interest................................................................58
V.2. Stock Pledge.....................................................................58
V.3. Guaranty.........................................................................58
V.4. Mortgages........................................................................59
V.5. Intellectual Property............................................................59
V.6. Information Regarding Collateral.................................................59
V.7. Further Assurances...............................................................60
ARTICLE VI Change in Circumstances.......................................................61
VI.1. Increased Cost and Reduced Return...............................................61
VI.2. Limitation on Types of Loans....................................................62
VI.3. Illegality......................................................................63
VI.4. Treatment of Affected Loans.....................................................63
VI.5. Compensation....................................................................64
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
VI.6. Taxes...........................................................................64
VI.7. Replacement Banks...............................................................66
ARTICLE VII Conditions to Making Loans and Issuing Letters of Credit.....................67
VII.1. Conditions of Initial Advance..................................................67
VII.2. Conditions of Loans and Letter of Credit.......................................71
ARTICLE VIII Representations and Warranties..............................................73
VIII.1. Organization and Authority....................................................73
VIII.2. Loan Documents................................................................73
VIII.3. Solvency......................................................................74
VIII.4. Subsidiaries and Shareholders.................................................74
VIII.5. Ownership Interests...........................................................74
VIII.6. Financial Condition...........................................................74
VIII.7. Title to Properties...........................................................75
VIII.8. Taxes.........................................................................76
VIII.9. Other Agreements..............................................................76
VIII.10. Litigation...................................................................76
VIII.11. Margin Stock.................................................................76
VIII.12. Investment Company...........................................................76
VIII.13. Intellectual Property........................................................77
VIII.14. No Untrue Statement..........................................................77
VIII.15. No Consents, Etc.............................................................77
VIII.16. Employee Benefit Plans.......................................................77
VIII.17. No Default...................................................................79
VIII.18. Hazardous Materials..........................................................79
VIII.19. Employment Matters...........................................................80
VIII.20. RICO.........................................................................80
VIII.21. Year 2000 Compliance.........................................................80
VIII.22. Transaction Agreement Representations........................................81
ARTICLE IX Affirmative Covenants.........................................................82
IX.1. Financial Reports, Etc..........................................................82
IX.2. Maintain Properties and Agreements..............................................84
IX.3. Existence, Qualification, Etc...................................................84
IX.4. Regulations and Taxes...........................................................84
IX.5. Insurance.......................................................................84
IX.6. True Books......................................................................84
IX.7. Right of Inspection.............................................................85
IX.8. Observe all Laws................................................................85
IX.9. Covenants Extending to Other Persons............................................85
IX.10. Officer's Knowledge of Default.................................................85
IX.11. Suits or Other Proceedings.....................................................85
IX.12. Notice of Discharge of Hazardous Material or Environmental Complaint...........85
IX.13. Environmental Compliance.......................................................86
IX.14. Indemnification................................................................86
IX.15. Further Assurances.............................................................86
IX.16. Employee Benefit Plans.........................................................86
IX.17. Termination Events.............................................................87
IX.18. ERISA Notices..................................................................87
IX.19. Continued Operations...........................................................87
IX.20. Use of Proceeds................................................................87
IX.21. New Subsidiaries; Minority Interests...........................................87
ARTICLE X Negative Covenants.............................................................90
X.1. Indebtedness.....................................................................90
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
X.2. Liens...........................................................................91
X.3. Investments; Acquisitions.......................................................92
X.4. Merger or Transfer of Assets....................................................92
X.5. Transactions with Affiliates....................................................93
X.6. Compliance with ERISA...........................................................94
X.7. Fiscal Year.....................................................................94
X.8. Dissolution, etc................................................................94
X.9. Hedging Obligations.............................................................95
X.10. Dividends, Redemptions and Other Payments......................................95
X.11. Subordinated Debt..............................................................95
X.12. Defaults Under Other Agreements................................................95
X.13. Compensation; Reimbursement of Expenses........................................96
X.14. Change in Accountants..........................................................96
X.15. Limitations on Sales and Leasebacks............................................96
X.16. Negative Pledge Clauses........................................................96
X.17. Intellectual Property..........................................................96
X.18. Licenses.......................................................................96
X.19. Amendment of Documents.........................................................97
X.20. Limitations on Certain Restrictive Covenants...................................97
X.21. Limitations on Business Activities.............................................97
X.22. Financial Covenants............................................................97
ARTICLE XI Events of Default and Acceleration...........................................101
XI.1. Events of Default..............................................................101
XI.2. Agent to Act...................................................................105
XI.3. Cumulative Rights..............................................................105
XI.4. No Waiver......................................................................105
XI.5. Allocation of Proceeds.........................................................105
ARTICLE XII The Agent...................................................................107
XII.1. Appointment, Powers, and Immunities...........................................107
XII.2. Reliance by Agent.............................................................107
XII.3. Defaults......................................................................108
XII.4. Rights as Lender..............................................................108
XII.5. Indemnification...............................................................108
XII.6. Non-Reliance on Agent and Other Lenders.......................................109
XII.7. Resignation of Agent..........................................................109
XII.8. Fees..........................................................................109
ARTICLE XIII Miscellaneous..............................................................110
XIII.1. Assignments and Participations...............................................110
XIII.2. Notices......................................................................112
XIII.3. Right of Set-off; Adjustments................................................113
XIII.4. Survival.....................................................................114
XIII.5. Expenses; Indemnification....................................................114
XIII.6. Amendments and Waivers.......................................................115
XIII.7. Counterparts.................................................................116
XIII.8. Termination..................................................................116
XIII.9. Confidentiality..............................................................116
XIII.10. Severability................................................................117
XIII.11. Entire Agreement............................................................117
XIII.12. Agreement Controls..........................................................117
XIII.13. Usury Savings Clause........................................................117
XIII.14. GOVERNING LAW; WAIVER OF JURY TRIAL.........................................118
</TABLE>
iii
<PAGE> 5
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 26, 1998 (the "Agreement"), is
made by and among WINDMERE-DURABLE HOLDINGS, INC., a Florida corporation having
its principal place of business in Miami Lakes, Florida (the "Borrower"),
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States, in its capacity as a Lender
("NationsBank"), and each other financial institution executing and delivering a
signature page hereto and each other financial institution which may hereafter
execute and deliver an instrument of assignment with respect to this Agreement
pursuant to Section 13.1 hereof (hereinafter such financial institutions may be
referred to individually as a "Lender" or collectively as the "Lenders"), and
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States, in its capacity as agent for the
Lenders (in such capacity, and together with any successor agent appointed in
accordance with the terms of Article XII, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
it credit facilities up to an aggregate amount of $345,000,000 consisting of (a)
a revolving credit facility in the maximum aggregate principal amount at any
time outstanding of $160,000,000, which shall include (i) a letter of credit
facility of $20,000,000 and (ii) a swing line facility of $10,000,000, and (b) a
term loan A facility in the maximum principal amount of $90,000,000, (c) a term
loan B facility in the maximum principal amount of $75,000,000 and (d) a term
loan C facility in the maximum principal amount of $20,000,000; and
WHEREAS, the Lenders are willing to make all such facilities available
to the Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
ARTICLE I
Definitions and Terms
I.1. Definitions. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the
<PAGE> 6
holder thereof), whether by purchase of such equity interest or upon
exercise of an option or warrant for, or conversion of securities into,
such equity interest, or (ii) assets of another Person which constitute
any material part of the assets of such Person or of a line or lines of
business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit
Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan or
the advance of any Term Loan on the Closing Date.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower; or (ii) which beneficially owns
or holds 10% or more of any class of the outstanding voting stock of
the Borrower or 10% or more of any class of the outstanding voting
stock (or in the case of a Person which is not a corporation, 10% or
more of the equity interest) of which is beneficially owned or held by
the Borrower. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting stock, by contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each
Lender at any time, (i) with respect to the Revolving Credit Facility
and the Participations, a fraction, the numerator of which shall be
such Lender's Revolving Credit Commitment and the denominator of which
shall be the Total Revolving Credit Commitment, and (ii) with respect
to each of the Term Loan A Facility, Term Loan B Facility or Term Loan
C Facility, as the case may be, a fraction, the numerator of which
shall be such Lender's Term Loan A Commitment, Term Loan B Commitment
or Term Loan C Commitment, as applicable, and the denominator of which
shall be the Total Term Loan A Commitment, the Total Term Loan B
Commitment or the Total Term Loan C Commitment, as applicable, which
Applicable Commitment Percentage in each case for each Lender as of the
Closing Date is as set forth in Exhibit A hereto; provided that each
Applicable Commitment Percentage of each Lender shall be increased or
decreased to reflect any assignments to or by such Lender effected in
accordance with Section 13.1 hereof.
"Applicable Lending Office" means, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or of an
affiliate of such Lender) designated for such Type of Loan on the
signature pages hereof or such other office of such Lender (or an
affiliate of such Lender) as such Lender may from time to time specify
to the Agent and the Borrower by written notice in accordance with the
terms hereof as the office by which its Loans of such Type are to be
made and maintained.
"Applicable Margin" means that percent per annum set forth
below, which shall be based upon the Consolidated Leverage Ratio for
the period of four consecutive fiscal quarters most recently ended as
specified below:
2
<PAGE> 7
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Applicable Applicable Applicable Applicable
Margin for Margin for Margin for Margin for
Eurodollar Rate Eurodollar Rate Base Rate Base Rate
Loans that are Loans that are Loans that are Loans that are
Revolving Loans Segments of Revolving Loans Segments of
Consolidated or Segments of Term Loan B or Segments of Term Loan B
Tier Leverage Ratio Term Loan A and Term Loan C Term Loan A and Term Loan C
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I Equal to or less 1.75% 2.75% .75% 1.75%
than 4.00 to 1.00
------------------------------------------------------------------------------------------------------
II Greater than 4.00 2.00% 2.75% 1.00% 1.75%
to 1.00 and less
than or equal to
4.50 to 1.00
------------------------------------------------------------------------------------------------------
III Greater than 4.50 2.25% 3.00% 1.25% 2.00%
to 1.00 and less
than or equal to
5.00 to 1.00
------------------------------------------------------------------------------------------------------
IV Greater than 5.00 2.50% 3.00% 1.50% 2.00%
to 1.00
------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in
the Applicable Margin following each Determination Date shall be
determined based upon the computations set forth in the certificate
furnished to the Agent pursuant to Section 9.1(a) and (b) hereof,
subject to review and confirmation of such computations by the Agent,
and shall be effective (the "Effective Date") commencing on the first
Business Day next following the date such certificate is received (or,
if earlier, the date such certificate was required to be delivered)
until the first Business Day following the date on which a new
certificate is delivered or is required to be delivered, whichever
shall first occur; provided however, if the Borrower shall fail to
deliver any such certificate within the time period required by Section
9.1 hereof, then the Applicable Margin shall be Tier IV until the
appropriate certificate is so delivered. From the Closing Date to the
first Effective Date next following December 31, 1998 (the "Initial
Period"), the Applicable Margin shall be as set forth in Tier IV;
provided further, however, that if the Stock Offering is consummated
prior to the end of the Initial Period, the Applicable Margin shall be
as set forth in Tier III
3
<PAGE> 8
for the remainder of the Initial Period; and provided further, however,
that for the Determination Dates occurring December 31, 1998 and March
31, 1999 the calculation of Consolidated EBITDA for determining the
Consolidated Leverage Ratio (for the purposes of calculating the
Applicable Margin only) shall be made as if the HPG Acquisition were
consummated on January 1, 1998 and shall include such pro forma
adjustments as were permitted in the Registration Statement, all in
form satisfactory to the Agent.
"Applicable Period" means (i) for the fiscal quarter of the
Borrower and its Subsidiaries ending June 30, 1999 and each fiscal
quarter of the Borrower and its Subsidiaries thereafter, a Four-Quarter
Period, and (ii) for the fiscal quarters of the Borrower and its
Subsidiaries ending September 30, 1998, December 31, 1998, and March
31, 1999 the one, two and three fiscal quarter periods ending on such
dates. For purposes of determining the Consolidated Leverage Ratio, the
Consolidated Interest Coverage Ratio and the Consolidated Fixed Charge
Ratio for the one, two or three fiscal quarter periods of the Borrower
and its Subsidiaries ending September 30, 1998, December 31, 1998 and
March 31, 1999, Consolidated EBITDA, Consolidated Interest Expense and
Consolidated Fixed Charges shall be determined by multiplying the
Adjusted Consolidated Fixed Charges (other than required principal
payments) for such periods by four, two and four-thirds, respectively.
Commencing with the fiscal quarter ending June 30, 1999 and thereafter,
such ratios shall be calculated for a Four-Quarter Period.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of
Credit.
"Approved Receivables Insurance Program" means a receivables
insurance program with NationsBanc Commercial Credit approved in
writing by the Required Lenders.
"Approved Fund" means, with respect to any Lender that is a
fund that invests in commercial loans, any other fund that invests in
commercial loans, and is managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.
"Approved Stock Option Plan" means (a) each stock option plan
(whether relating to employees or directors) or agreement pursuant to
which the options listed on Schedule 1.4 hereto are listed and (b) any
executive or employee stock option or incentive plan hereafter adopted
by the board of directors of the Borrower.
"Asheboro Facility" means the manufacturing facility of the
Seller leased by the Borrower and located at 1758 Fayetteville Street,
Asheboro, North Carolina 27203.
4
<PAGE> 9
"Asset Disposition" means any voluntary disposition, whether
by sale, lease or transfer, other than as permitted under Section 10.4
hereof, of (a) any or all of the assets, excluding cash and cash
equivalents, of the Borrower or its Subsidiaries, and (b) any of the
capital stock (including the Salton/Maxim Shares), or securities or
investments exchangeable, exercisable or convertible for or into, or
otherwise entitling the holder to receive any of the capital stock, of
any Person (other than a disposition to a Guarantor).
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B hereto (with blanks appropriately
filled in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to Section 13.1 hereof.
"Authorized Representative" means any of the President or any
Vice President of the Borrower or, with respect to financial matters,
the chief financial officer of the Borrower, or any other Person
expressly designated by the Board of Directors of the Borrower (or the
appropriate committee thereof) as an Authorized Representative of the
Borrower, as set forth from time to time in a certificate in the form
of Exhibit C hereto.
"Base Rate" means, for any day, the sum of (a) higher of (i)
the Federal Funds Rate for such day plus one-half of one percent (0.5%)
and (ii) the Prime Rate for such day, plus (b) the Applicable Margin.
Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Revolving Loan or Segment of a Term
Loan for which the rate of interest is determined by reference to the
Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan made either
(i) to satisfy Reimbursement Obligations arising from a drawing under a
Letter of Credit or (ii) to pay NationsBank in respect of Swing Line
Outstandings.
"Base Rate Segment" means a Segment bearing interest or to
bear interest at the Base Rate.
"Black & Decker License Agreement" means that certain
Trademark License Agreement dated as of the date hereof among The Black
& Decker Corporation and the Borrower.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account with the
Agent, which
5
<PAGE> 10
may be maintained at one or more offices of the Agent or an agent of
the Agent.
"Borrowing Base" means, as of the date of determination
thereof, (i) Eligible Receivables multiplied by 85% plus (ii) the
value, determined at the lower of cost or market value in accordance
with GAAP, of all Eligible Inventory multiplied by (a) for the period
from July 1 through December 31 of each year, 65% and (b) at all other
times, 50%, less (iii) 50% of the aggregate amount of all Indebtedness
of Foreign Subsidiaries permitted under Section 10.1(h) outstanding as
of such date of determination; provided, however, at no time shall the
amount of the Borrowing Base attributable to Eligible Inventory exceed
the amount of the Borrowing Base attributable to Eligible Receivables.
"Borrowing Base Certificate" means a certificate of an
Authorized Representative in the form attached hereto as Exhibit K
hereto.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility or a Swing Line Loan, in the forms of Exhibits D-1 and D-2,
respectively.
"Bridge Loan Agreement" means that certain Bridge Loan
Agreement dated as of the date hereof by and between the Borrower and
NationsBridge providing for the incurrence of the Subordinated Bridge
Debt.
"Bridge Loan Documents" means the Bridge Loan Agreement, the
executed version of each document attached thereto as an exhibit and
all other documents and agreements delivered or entered into in
connection with the transactions contemplated thereby.
"Business Day" means, (i) with respect to any Base Rate Loan,
any day which is not a Saturday, Sunday or a day on which banks in the
States of New York and North Carolina are authorized or obligated by
law, executive order or governmental decree to be closed and, (ii) with
respect to any Eurodollar Rate Loan, any day which is a Business Day,
as described above, and on which the relevant international financial
markets are open for the transaction of business contemplated by this
Agreement in London, England, New York, New York and Charlotte, North
Carolina.
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
the Borrower or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of the Borrower and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, and (ii) with respect to any Capital Lease entered into by
the Borrower or its Subsidiaries during such period, the present value
of the lease
6
<PAGE> 11
payments due under such Capital Lease over the term of such Capital
Lease applying a discount rate equal to the interest rate provided in
such lease (or in the absence of a stated interest rate, the rate used
in preparation of the financial statements described in Section 9.1(a))
all the foregoing in accordance with GAAP applied on a Consistent
Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in Section 7.1 hereof have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Collateral" means, collectively, all property of the
Borrower, any Subsidiary or any other Person in which the Agent or any
Lender is granted a Lien as security for all or any portion of the
Obligations under any Security Instrument.
"Collateral Assignment of Contracts" means that certain
Collateral Assignment of Contracts dated as of the date hereof by HP
Mexico in favor of the Agent pursuant to which HP Mexico has
collaterally assigned all of their rights and interests under certain
material contracts identified therein.
"Commitments" means the Revolving Credit Commitment, the Term
Loan A Commitment, the Term Loan B Commitment and the Term Loan C
Commitment.
"Company Securities" means common stock of the Borrower, par
value $.10 per share, issued in connection with the Permanent Junior
Financing in replacement of at least $100,000,000 in principal amount
of the Bridge Notes.
"Condemnation Award" means the cash proceeds received by the
Borrower or any Subsidiary from any condemnation or other taking (by
eminent domain or otherwise) of the whole or any part of the property
of the Borrower or any Subsidiary by any Governmental Authority.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Borrower referred to in
Section 8.6(a) hereof.
"Consolidated EBITDA" means, with respect to the Borrower and
its
7
<PAGE> 12
Subsidiaries, for the Applicable Period ending as of the date of
determination, the sum of, without duplication, (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) taxes on income, (iv)
amortization and (v) depreciation, all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis; provided,
however, that with respect to an Acquisition that is accounted for as a
"purchase", for the four fiscal quarters ending after the date of such
Acquisition, Consolidated EBITDA shall include the results of
operations of such acquired Person or assets, which amounts shall be
determined on a historical pro forma basis as if such Acquisition had
been consummated as a "pooling of interest".
"Consolidated Excess Cash Flow" means, with respect to the
Borrower and its Subsidiaries for any Fiscal Year, (i) Consolidated
EBITDA for such period (including therein any net gain or loss, as
applicable, of an extraordinary nature otherwise excluded from the
calculation thereof in the definition of "Consolidated Net Income")
minus (ii) the sum of, without duplication, for such period (A) Capital
Expenditures, plus (B) Consolidated Interest Expense, plus (C) required
principal payments on Consolidated Funded Indebtedness and optional
prepayments of the Term Loans, plus (D) accrued taxes on income, plus
(E) all cash paid as part of the cost of any Acquisition plus (F) all
amounts included in the calculation of Consolidated EBITDA for the
purposes of this definition to the extent such amounts are subject to
the mandatory prepayment provisions of Section 2.6(a), (b), (c) or (e)
hereof.
"Consolidated Fixed Charge Ratio" means, with respect to the
Borrower and its Subsidiaries for the Applicable Period, the ratio of
(i) Consolidated EBITDA for such period less Capital Expenditures for
such period to (ii) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, with respect to Borrower
and its Subsidiaries for the Applicable Period, the sum of, without
duplication, (i) Consolidated Interest Expense, during such period, and
(ii) the principal amount of Consolidated Funded Indebtedness due and
payable during such period, all determined in accordance with GAAP
applied on a Consistent Basis.
"Consolidated Funded Indebtedness" means at any time as of
which the amount thereof is to be determined, all Indebtedness of the
Borrower and its Subsidiaries, all determined on a consolidated basis
in accordance with GAAP applied on a Consistent Basis.
"Consolidated Interest Coverage Ratio" means, with respect to
the Borrower and its Subsidiaries, for the Applicable Period, the ratio
of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense.
"Consolidated Interest Expense" means, with respect to any
period of
8
<PAGE> 13
computation thereof, the gross interest expense of the Borrower and its
Subsidiaries, including without limitation (i) the amortization of debt
discounts, (ii) the amortization of all fees payable in connection with
the incurrence of Indebtedness to the extent included in interest
expense, and (iii) the portion of any liabilities incurred in
connection with Capital Leases allocable to interest expense, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Leverage Ratio" means, for any date for which
the computation thereof is being made, the ratio of (i) Consolidated
Funded Indebtedness (determined as at such date) to (ii) Consolidated
EBITDA for the Applicable Period ending on (or most recently ended
prior to) such date.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries less all operating and non-operating expenses (not related
to extraordinary events) of the Borrower and its Subsidiaries including
taxes on income, all determined on a consolidated basis in accordance
with GAAP applied on a Consistent Basis; but excluding (for all
purposes other than (x) compliance with Section 10.23(a) hereof and (y)
the computation of Consolidated EBITDA utilized to determine Excess
Cash Flow) in such calculation (1) the amount of any net gains on the
sale, conversion or other disposition of capital assets, (2) the amount
of any net gains on the acquisition, retirement, sale or other
disposition of capital stock and other securities of the Borrower or
its Subsidiaries, (3) the amount of any net gains on the collection of
proceeds of life insurance policies, (4) any write-up of any asset, (5)
any other net gain of an extraordinary nature and (6) dividends and
distributions in respect of minority investments in Persons other than
Subsidiaries, all as determined in accordance with GAAP applied on a
Consistent Basis; provided, however, that for the purposes of
determining compliance with Section 10.23(a) hereof, there shall be
disregarded any increase in Consolidated Net Income upon giving effect
to an Acquisition which results from the treatment of such Acquisition
as a "pooling of interest" although such Acquisition was a "purchase"
transaction for GAAP purposes.
"Consolidated Net Worth" means the total of Borrower's and its
Subsidiaries' shareholders' equity as determined in accordance with
GAAP on a Consistent Basis.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the financial statements
(including footnotes) of such Person in accordance with GAAP applied on
a Consistent Basis, including Statement No. 5 of the Financial
Accounting Standards Board, and any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including obligations of such
Person however incurred:
9
<PAGE> 14
(1) to purchase such Indebtedness or other
obligation or any property or assets constituting security
therefor;
(2) to advance or supply funds in any manner (i)
for the purchase or payment of such Indebtedness or other
obligation, or (ii) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(3) to grant or convey any lien, security
interest, pledge, charge or other encumbrance on any property
or assets of such Person to secure payment of such
Indebtedness or other obligation;
(4) to lease property or to purchase securities
or other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(5) otherwise to assure the owner of the
Indebtedness or such obligation of the primary obligor against
loss in respect thereof.
Contingent Obligations shall be computed at the amount which,
in light of all the facts and circumstances existing at the time,
represent the amount which can reasonably be expected to become an
actual or matured liability of such Person.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.9 hereof of a Eurodollar Rate Loan
of one Type as a Eurodollar Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Control Subsidiary" means any entity not constituting a
Subsidiary hereunder but which would otherwise be included as a
subsidiary of the Borrower for consolidated financial reporting
purposes in accordance with GAAP.
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to Section 2.9 or 3.8 or Article VI hereof of one
Type of Loan into another Type of Loan.
"Core Business" means, with respect to the Borrower and its
Subsidiaries, the business of manufacturing and distributing of small
household and outdoor appliances, pet products and related items
consistent with past practices.
"Cost of Acquisition" means, with respect to any Acquisition,
as at the date of consummation of any such Acquisition, the sum of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of the Borrower or any
Subsidiary to be transferred in connection therewith, (ii) any cash or
10
<PAGE> 15
other property and the unpaid principal amount of any debt instrument
given as consideration, (iii) any Indebtedness assumed by the Borrower
or its Subsidiaries in connection with such Acquisition, and (iv) out
of pocket transaction costs for the services and expenses of attorneys,
accountants and other consultants incurred in effecting such a
transaction, and other similar transaction costs so incurred. For
purposes of determining the Cost of Acquisition for any transaction,
(A) the capital stock of the Borrower shall be valued (I) at its market
value as reported on the New York Stock Exchange with respect to shares
that are freely tradeable, and (II) with respect to shares that are not
freely tradeable, as determined by the Board of Directors of the
Borrower and, if requested by the Agent, determined to be a reasonable
valuation by the independent public accountants referred to in Section
9.1(a) hereof, (B) the capital stock of any Subsidiary shall be valued
as determined by the Board of Directors of the Borrower or such
Subsidiary and, if requested by the Agent, determined to be a
reasonable valuation by the independent public accountants referred to
in Section 9.1(a) hereof, and (C) with respect to any Acquisition
accomplished pursuant to the exercise of options or warrants or the
conversion of securities, the Cost of Acquisition shall include both
the cost of acquiring such option, warrant or convertible security as
well as the cost of exercise or conversion.
"Credit Party" means, collectively, the Borrower, each
Guarantor and each other Person providing Collateral pursuant to any
Security Instrument.
"Debt Offering" means a public or private offering of
Indebtedness (including, without limitation, any security constituting
Indebtedness which is exchangeable, exercisable or convertible for or
into, or otherwise entitling the holder to receive, equity securities)
of the Borrower or any Subsidiary (other than Indebtedness among the
Borrower and any Subsidiary or one Subsidiary and another Subsidiary);
provided, however, the term "Debt Offering" shall not include the
issuance of the Permanent Subordinated Notes.
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate, (ii) with respect to Base Rate Loans,
Swing Line Loans and Reimbursement Obligations, at a rate of interest
per annum which shall be two percent (2%) above the Base Rate and (iii)
in any case, the maximum rate permitted by applicable law, if lower.
"Direct Foreign Control Subsidiary" means any Foreign Control
Subsidiary whose outstanding voting stock is owned by the Borrower or a
Domestic Subsidiary.
11
<PAGE> 16
"Direct Foreign Subsidiary" means any Foreign Subsidiary whose
outstanding voting stock is owned by the Borrower or a Domestic
Subsidiary.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Domestic Control Subsidiary" means any Control Subsidiary
which is organized under the laws of one of the states comprising the
United States of America, any territory thereof or the District of
Columbia.
"Domestic Subsidiary" means any Subsidiary which is organized
under the laws of one of the states comprising the United States of
America, any territory thereof or the District of Columbia.
"Eligible Assignee" means (i) a Lender; (ii) an affiliate or
Approved Fund of a Lender; and (iii) any other Person approved by the
Agent and, unless an Event of Default has occurred and is continuing at
the time any assignment is effected in accordance with Section 13.1
hereof, the Borrower, such approval not to be unreasonably withheld or
delayed by the Borrower or the Agent and such approval to be deemed
given by the Borrower if no objection is received by the assigning
Lender and the Agent from the Borrower within five Business Days after
notice of such proposed assignment has been provided by the assigning
Lender to the Borrower; provided, however, that neither the Borrower
nor an affiliate of the Borrower shall qualify as an Eligible Assignee.
"Eligible Inventory" means that domestic, Canadian and Mexican
inventory owned by the Borrower or any Guarantor which is determined by
the Agent in the reasonable exercise of its discretion to be Eligible
Inventory; provided, however, that none of the following shall be
Eligible Inventory:
(i) inventory that is kept in any location other
than the warehouses identified on Schedule 1.2 hereto as owned
or leased warehouse locations;
(ii) inventory that is unfinished, damaged,
representing returned goods or is otherwise not readily
marketable;
(iii) inventory that is subject to any Lien or
otherwise not in conformity with any representation or
warranty contained in the Security Instruments; and
(iv) inventory upon which a security interest in
favor of the Agent for the benefit of the Lenders may not be
perfected.
"Eligible Receivables" means (a) all accounts receivable of
Subsidiaries owing from Foreign Account Debtors (as defined in clause
(iii) below) which are subject to an Approved Receivables Insurance
Program less any discount, reserve or similar offset or
12
<PAGE> 17
recourse to the Borrower or any Subsidiary applicable under such
Approved Receivables Insurance Program and (b) those trade accounts
receivable of the Borrower and each Domestic Subsidiary of the Borrower
which are determined by the Agent in the reasonable exercise of its
discretion to be an Eligible Receivable; provided, however, that none
of the following shall be Eligible Receivables:
(ii) intercompany receivables;
(iii) receivables owed by the United States
government or any of its states, departments, agencies or
instrumentalities of any thereof;
(iv) unless supported by a letter of credit
issued by a financial institution, other than NationsBank,
acceptable to the Agent, or payment of which is guaranteed or
insured in a manner acceptable to the Agent and as to which
there is a no recourse against the Borrower, receivables owed
by any Person not a United States or Canadian citizen or
corporation, partnership or other entity organized under the
laws of the United States or province of Canada or the
Commonwealth of Canada whose principal office is not located
within the United States or Canada (a "Foreign Account
Debtor");
(v) receivables of any customer more than 50% of
which receivables due the Borrower or any Domestic
Subsidiaries are more than 90 days past due;
(vi) receivables that are due or unpaid for more
than ninety (90) days from the original due date thereof;
(vii) the portion of any receivable which is
subject to any offset, deduction, defense, dispute or
counterclaim, so long as no contest or dispute exist and no
payment is being withheld with respect to the remainder of
such receivable; and
(viii) receivables of any customer with respect to
which any bankruptcy or insolvency proceeding has been
commenced or filed for and no court order exists directing
payment with respect to such receivable.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(ii) Government Securities;
(iii) obligations of any corporation organized
under the laws of any state of the United States of America or
under the laws of any other nation, payable in the United
States of America, expressed to mature not later than 180
13
<PAGE> 18
days following the date of issuance thereof and rated in an
investment grade rating category by S&P and Moody's;
(iv) interest bearing demand or time deposits
issued by any Lender or certificates of deposit maturing
within one year from the date of issuance thereof and issued
by a bank or trust company organized under the laws of the
United States or of any state thereof having capital surplus
and undivided profits aggregating at least $400,000,000 and
being rated "A-" or better by S&P or "A3" or better by
Moody's;
(v) Repurchase Agreements;
(vi) Municipal Obligations;
(vii) Pre-Refunded Municipal Obligations;
(viii) shares of mutual funds which invest in
obligations described in paragraphs (a) through (f) above, the
shares of which mutual funds are at all times rated "AAA" by
S&P;
(ix) tax-exempt or taxable adjustable rate
preferred stock issued by a Person having a rating of its long
term unsecured debt of "A" or better by S&P or "A-1" or better
by Moody's; and
(x) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P-1" by Moody's.
"Employee Benefit Plan" means (i) any employee benefit plan,
including any Pension Plan, within the meaning of Section 3(3) of ERISA
which (A) is maintained for employees of the Borrower, any of its ERISA
Affiliates, or any Subsidiary or is assumed by the Borrower, any of its
ERISA Affiliates, or any Subsidiary in connection with any Acquisition
or (B) has at any time within the last six years been maintained for
the employees of the Borrower, any current or former ERISA Affiliate,
or any Subsidiary and (ii) any plan, arrangement, understanding or
scheme maintained by the Borrower or any Subsidiary that provides
retirement, deferred compensation, employee or retiree medical or life
insurance, severance benefits or any other benefit covering any
employee or former employee and which is administered under any Foreign
Benefit Law or regulated by any Governmental Authority other than the
United States of America.
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery
14
<PAGE> 19
Act, the Toxic Substances Control Act, as amended, the Clean Air Act,
as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or local
statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, any pollutant, contaminant, or hazardous, toxic or
dangerous waste, substance or material.
"Equity Offering" means a public or private offering of equity
securities (including, without limitation, any security or investment
not constituting Indebtedness exchangeable, exercisable or convertible
for or into, or otherwise entitling the holder to receive, equity
securities) of the Borrower or any Subsidiary (other than securities
issued to the Borrower or another Subsidiary); provided, however, the
term "Equity Offering" shall not include (i) any issuance of equity
securities whose aggregate market value when combined with all other
similar equity issuances, does not exceed $10,000,000 and which
issuance in connection with the exercise of stock options or warrants
granted to, or purchase of restricted stock by, eligible participants
under an Approved Stock Option Plan or (ii) the Stock Offering.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person or trade or business which
is a member of a group which is under common control with the Borrower
who together with the Borrower, is treated as a single employer within
the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Rate Loan" means a Revolving Loan or Segment of a
Term Loan for which the rate of interest is determined by reference to
the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
<TABLE>
<S> <C> <C>
Eurodollar = Interbank Offered Rate + Applicable
Rate -------------------------------- Margin
1- Eurodollar Reserve Percentage
</TABLE>
"Eurodollar Rate Segment" means a Segment bearing interest or
to bear interest at the Eurodollar Rate.
"Eurodollar Reserve Percentage" means, for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D or any successor regulation, as the maximum
reserve requirement (including any basic, supplemental, emergency,
special, or marginal reserves) applicable with respect to Eurocurrency
liabilities as that term is defined in Regulation D (or against any
other category of
15
<PAGE> 20
liabilities that includes deposits by reference to which the interest
rate of Eurodollar Rate Loans is determined), whether or not the Agent
or any Lender has any Eurocurrency liabilities subject to such
requirements, without benefits of credits or proration, exceptions or
offsets that may be available from time to time to the Agent or any
Lender. The Eurodollar Rate shall be adjusted automatically on and as
of the effective date of any change in the Eurodollar Reserve
Percentage.
"Event of Default" means any of the occurrences set forth as
such in Section 11.1 hereof.
"Existing Letters of Credit" means the letters of credit
listed on Schedule 1.3 hereto issued by NationsBank in favor of
Windmere Corporation under the Credit Agreement dated October 11, 1996.
"Facilities" means the Revolving Credit Facilities and the
Term Loan Facilities.
"Facility Guaranty" means (i) the Guaranty Agreement dated as
of the date hereof between the Guarantors and the Agent for the benefit
of the Lenders, and (ii) any other Facility Guaranty otherwise
delivered pursuant to Section 9.21 hereof, each in the form of Exhibit
J hereto and each as the same may be amended, modified or supplemented.
"Facility Termination Date" means the date on which both the
Revolving Credit Termination Date and the Term Loan Termination Date
shall have occurred, no Letters of Credit shall remain outstanding or
all the Letters of Credit shall have been cash collateralized upon
terms satisfactory to the Agent, all Swap Agreements shall have been
terminated or cash collateralized upon terms satisfactory to the Agent
and the Borrowers shall have fully paid and satisfied in full all other
Obligations.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Agent (in its individual capacity) on such day on such
transactions as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the
Borrower beginning January 1 of each calendar year and ending the
following December 31 of such calendar year.
16
<PAGE> 21
"Florida Office" means the land and buildings owned by the
Borrower located at 5980 Miami Lakes Drive, Miami Lakes, Florida.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan.
"Foreign Control Subsidiary" means any Control Subsidiary
organized under the laws of any jurisdiction other than one of the
states comprising the United States of America, any territory thereof
or the District of Columbia.
"Foreign Subsidiary" means any Subsidiary organized under the
laws of any jurisdiction other than one of the states comprising the
United States of America, any territory thereof or the District of
Columbia.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants
or which have other substantial authoritative support and are
applicable in the circumstances as of the date of a report.
"General Assignment and Acceptance Agreement" means that
certain General Assignment and Acceptance Agreement dated as of the
date hereof and effective immediately prior to the effectiveness of
this Agreement by and among the Existing Lenders, the Lenders, the
Agent and the Borrower.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government, including but not limited to Malaysia,
Mexico and Canada.
"Guarantors" means the Domestic Subsidiaries.
"Hazardous Material" means and includes any pollutant,
contaminant, hazardous, toxic or dangerous waste, substance or material
(including petroleum products, asbestos-containing materials and lead),
the management, generation, handling, storage,
17
<PAGE> 22
transportation, disposal, treatment, release, discharge or emission of
which is subject to any Environmental Law.
"Hedging Obligations" means any and all obligations of the
Borrower, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under
(i) any and all agreements, devices or arrangements designed to protect
at least one of the parties thereto from the fluctuations of interest
rates, currency exchange rates or forward rates applicable to such
party's commodities, assets, liabilities or exchange transactions,
including, but not limited to, Dollar-denominated or cross-currency
interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward
rate currency or interest rate options, puts, warrants and those
commonly known as interest rate "swap" agreements, and forward
commodity price options, puts, warrants and those commonly known as
commodity "swap" agreements; and (ii) any and all cancellations,
buybacks, reversals, terminations or assignments of any of the
foregoing;
"HP Mexico" means Hosehold Products de Mexico, S.A. de C.V.
"HPG" means the Household Products Group of the Seller,
excluding the cleaning and lighting businesses, as described in the
Transaction Agreement.
"HPG Acquisition" means the purchase by the Borrower of HPG
from the Seller pursuant to the terms of the Transaction Documents.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property other than purchases of
property, product, merchandise and services in the ordinary course of
business (so long as such amounts are payable in less than twelve (12)
months), all indebtedness secured by any Lien on the property of such
Person whether or not such indebtedness is assumed (except unperfected
Liens incurred in the ordinary course of business and not in connection
with the borrowing of money), all liability of such Person by way of
endorsements (other than for collection or deposit in the ordinary
course of business), all Contingent Obligations, the face amount of all
issued and outstanding letters of credit, and all Hedging Obligations;
provided that in no event shall the term Indebtedness include capital
stock surplus and retained earnings, minority interests in the common
stock of Subsidiaries, lease obligations (other than pursuant to
Capital Leases), reserves for deferred income taxes and investment
credits, other deferred credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all amounts owed, including principal,
interest, fees, indemnities, costs, premium, damages and expenses, in
respect of money borrowed, including without
18
<PAGE> 23
limitation the Subordinated Bridge Debt and the Permanent Subordinated
Notes and all Capital Leases and the deferred purchase price of any
property or asset, evidenced by a promissory note, bond, debenture or
similar written obligation for the payment of money (including
conditional sales or similar title retention agreements), other than
trade payables incurred in the ordinary course of business.
"Indenture" means the indenture entered into in connection
with the issuance of the Permanent Subordinated Notes.
"Insurance Award" means the net cash proceeds of any payment
made by any casualty insurer or self-insurance program of the Borrower
or any Subsidiary for any casualty or other loss with respect to the
whole or any part of the property of the Borrower or any Subsidiary
after deduction for taxes, fees and reasonable expenses incurred in the
realization thereof.
"Intellectual Property" has the meaning given to such term in
Section 8.13 hereof.
"Intellectual Property Assignments" means those certain
Assignments of Patents, Trademarks, Copyrights and Licenses in the form
attached to the Intellectual Property Security Agreement as Exhibit A,
to be filed upon acceleration of the Obligations hereunder, as from
time to time amended, supplemented or replaced.
"Intellectual Property Security Agreement" means, collectively
(or individually as the context may indicate), (i) the Intellectual
Property Security Agreement dated as of the Closing Date and executed
by the Borrower and certain of its Domestic Subsidiaries in favor of
the Agent and (ii) each other Intellectual Property Security Agreement
executed by the Borrower or a Domestic Subsidiary (whether of even date
herewith or delivered after the Closing Date pursuant to Article VI or
Section 9.21 hereof and whether executed individually or jointly and
severally with other Subsidiaries) in favor of the Agent to
collaterally secure payment and performance of its respective
obligations hereunder and under the Guaranty, as applicable,
substantially in the form of Exhibit I attached hereto and incorporated
herein by reference, as from time to time amended, supplemented or
replaced.
"Interbank Offered Rate" means, for any Loan bearing interest
at the Eurodollar Rate for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "Interbank Offered
Rate" shall mean, for any Loan bearing interest at the Eurodollar Rate
for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100th of 1%) appearing on Reuters Screen
LIBO Page as the London interbank
19
<PAGE> 24
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London Time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such
rates.
"Interest Period" means, for each Eurodollar Rate Loan, a
period commencing on the date such Eurodollar Rate Loan is made or
converted and ending, at the Borrower's option, on the date one, two,
three or six months thereafter as notified to the Agent by the
Authorized Representative three (3) Business Days prior to the
beginning of such Interest Period; provided, that,
(ii) if the Authorized Representative fails to
notify the Agent of the length of an Interest Period three (3)
Business Days prior to the first day of such Interest Period,
the Loan for which such Interest Period was to be determined
shall be deemed to be a Base Rate Loan as of the first day
thereof;
(iii) if an Interest Period for a Eurodollar Rate
Loan would end on a day which is not a Business Day, such
Interest Period shall be extended to the next Business Day
(unless such extension would cause the applicable Interest
Period to end in the succeeding calendar month, in which case
such Interest Period shall end on the next preceding Business
Day);
(iv) any Interest Period which 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;
(v) no Interest Period shall extend past the
Stated Termination Date in the case of Revolving Loans, the
Term Loan A Maturity Date in the case of Term Loan A, the Term
Loan B Maturity Date in the case of Term Loan B and the Term
Loan C Maturity Date in the case of Term Loan C; and
(vi) there shall not be more than twelve (12)
Interest Periods in effect on any day.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan
or the conversion of any Eurodollar Rate Loan into a Base Rate Loan or
the conversion of any Base Rate Loan into a Eurodollar Rate Loan in the
form of Exhibit E hereto.
"Issuing Bank" means initially NationsBank and thereafter any
Lender which is successor to NationsBank as issuer of Letters of Credit
under Article III hereof.
20
<PAGE> 25
"Kmart Agreement" means that certain Purchase, Distribution
and Marketing Agreement dated as of January 27, 1997 between Kmart
Corporation and Salton/Maxim.
"Landlord Waivers" means, collectively, each of the landlord
waiver and estoppel letters delivered by the landlord of each material
facility now leased by the Borrower and any Guarantor, all of which are
listed on Schedule 1.1 hereto, or arising after the Closing Date and
delivered by the Borrower and the Guarantors, as applicable, pursuant
to Article VI or Section 9.21 hereof, substantially in the form of
Exhibit M hereto and incorporated herein by reference.
"LC Account Agreement" means the LC Account Agreement dated as
of the date hereof, between the Borrower and the Agent, as amended,
modified or supplemented from time to time.
"Lending Office" means, as to each Lender, the Lending Office
of such Lender designated on the signature pages hereof or in an
Assignment and Acceptance or such other office of such Lender (or of an
affiliate of such Lender) as such Lender may from time to time specify
to the Authorized Representative and the Agent as the office by which
its Loans are to be made and maintained.
"Letter of Credit" means (i) a standby or documentary letter
of credit issued by the Issuing Bank for the account of the Borrower in
favor of a Person advancing credit or securing an obligation on behalf
of the Borrower and (ii) the Existing Letters of Credit.
"Letter of Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to acquire Participations in
respect of Letters of Credit and Reimbursement Obligations up to an
aggregate amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Letter of Credit
Commitment as the same may be increased or decreased from time to time
pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in
Article IV hereof providing for the issuance by the Issuing Bank for
the account of the Borrower of Letters of Credit in an aggregate stated
amount at any time outstanding not exceeding the Total Letter of Credit
Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters
of Credit plus the principal amount of all Reimbursement Obligations
then outstanding.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the
21
<PAGE> 26
common law, statute or contract, and including but not limited to the
lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. For the purposes of this
Agreement, the Borrower and any Subsidiary shall be deemed to be the
owner of any property which it has acquired or holds subject to a
conditional sale agreement, financing lease, or other arrangement
pursuant to which title to the property has been retained by or vested
in some other Person for security purposes.
"Loan" or "Loans" means any of the Revolving Loans, the Swing
Line Loans or the Term Loans.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the
Applications and Agreements for Letter of Credit, the Landlord Waivers
and all other instruments and documents heretofore or hereafter
executed or delivered to or in favor of any Lender, the Issuing Bank or
the Agent in connection with the Loans made and transactions
contemplated under this Agreement, as the same may be amended,
supplemented or replaced from the time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations or condition, financial or
otherwise, of the Borrower or any of its Subsidiaries or any other
Credit Party, (ii) the ability of any Credit Party to pay or perform
its respective obligations, liabilities and indebtedness under the Loan
Documents as such payment or performance becomes due in accordance with
the terms thereof, or (iii) the rights, powers and remedies of the
Agent or any Lender under any Loan Document or the validity, legality
or enforceability thereof (including for purposes of clauses (ii) and
(iii) the imposition of burdensome conditions thereon).
"Material Contract" means any contract or agreement (including
license agreements) the termination of which or the default by any
party thereto could reasonably be expected to have a Material Adverse
Effect; such Material Agreements as of the Closing Date being listed on
Schedule 1.2 hereto.
"Moody's" means Moody's Investors Service, Inc.
"Mortgages" means, collectively (or individually as the
context may indicate), each mortgage or similar agreement executed by
the Borrower or any Subsidiary and delivered after the Closing Date
pursuant to Article VI or Section 9.21 hereof in favor of the Agent in
the form of Exhibit O attached hereto and incorporated herein by
reference, each as from time to time amended, supplemented or replaced.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is
22
<PAGE> 27
accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) fiscal
years.
"Municipal Obligations" means general obligations issued by,
and supported by the full taxing authority of, any state of the United
States of America or of any municipal corporation or other public body
organized under the laws of any such state which are rated in the
highest investment rating category by both S&P and Moody's.
"NMS" means NationsBanc Montgomery Securities LLC and its
successors.
"NationsBank" means NationsBank, National Association.
"NationsBridge" means NationsBridge, L.L.C. and its
successors.
"Net Proceeds" (a) from any Equity Offering means cash
payments received by the Borrower therefrom as and when received, net
of all legal, accounting, banking and underwriting fees and expenses,
commissions, discounts and other issuance expenses incurred in
connection therewith and all taxes required to be paid or accrued as a
consequence of such issuance; and (b) from any Asset Disposition or
option exercised under the Option Agreement means cash payments
received by the Borrower therefrom (including any cash payments
received pursuant to any note or other debt security received in
connection with any Asset Disposition) as and when received, net of (i)
all legal fees and expenses and other fees and expenses paid to third
parties and incurred in connection therewith, (ii) all taxes required
to be paid or accrued as a consequence of such sale and (iii) with
respect to an Asset Disposition only, amounts applied to repayment of
Indebtedness (other than the Obligations) secured by a Lien on the
asset or property disposed.
"Notes" means, collectively, the Revolving Notes, the Term
Notes and the Swing Line Note.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) the Reimbursement
Obligations and otherwise in respect of the Letters of Credit, (iii)
all liabilities of Borrower to any Lender or an affiliate of a Lender
which arise under a Swap Agreement, and (iii) the payment and
performance of all other obligations, liabilities and Indebtedness of
the Borrower to the Lenders, the Agent or NMS hereunder, under any one
or more of the other Loan Documents or with respect to the Loans.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement or limited partnership agreement of such entity.
23
<PAGE> 28
"Option Agreement" means that certain Stock Agreement dated as
of May 6, 1998 between the Borrower and Salton/Maxim.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation,
certificate of incorporation, articles of organization or certificate
of limited partnership of such entity.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings, the Revolving Credit Outstandings, the Swing Line
Outstandings and the Term Loan Outstandings on such date.
"Participation" means, with respect to any Lender (other than
the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the
liability of the Issuing Bank in respect of a Letter of Credit issued
by the Issuing Bank in accordance with the terms hereof. "PBGC" means
the Pension Benefit Guaranty Corporation and any successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Borrower
or any of its ERISA Affiliates or is assumed by the Borrower or any of
its ERISA Affiliates or (ii) has at any time with the last six years
been maintained for the employees of the Borrower or any current or
former ERISA Affiliate.
"Permanent Subordinated Notes" means the permanent senior
subordinated notes in an aggregate principal amount of up to
$125,000,000 to be issued by the Borrower to replace the Subordinated
Bridge Debt.
"Permanent Junior Financing" means the permanent financing
entered into in replacement of the Subordinated Bridge Debt through the
issuance of the Permanent Subordinated Notes and the Company
Securities.
"Permanent Junior Financing Documents" means the Registration
Statement, the Indenture and all related documents entered into
connection with the transactions contemplated thereby.
"Permitted Acquisition" means (a) the HPG Acquisition and (b)
each other Acquisition effected with the consent and approval of the
board of directors or other applicable governing body of the Person
being acquired, and with the duly obtained
24
<PAGE> 29
approval of such shareholders or other holders of equity interest as
such Person may be required to obtain, so long as (i) immediately prior
to and immediately after the consummation of such Acquisition, no
Default or Event of Default has occurred and is continuing, (ii) with
respect to an Acquisition where the Cost of Acquisition exceeds
$5,000,000, substantially all of the sales and operating profits
generated by such Person (or assets) so acquired or invested are
derived from a line or lines of business that are part of the Core
Business, (iii) pro forma historical financial statements as of the end
of the most recent fiscal quarter for the trailing twelve month period
giving effect to such Acquisition are delivered to the Agent not less
than five (5) Business Days prior to the consummation of such
Acquisition, together with a certificate of an Authorized
Representative demonstrating compliance with Section 10.23 hereof after
giving effect to such Acquisition, (iv) the aggregate Cost of
Acquisition (excluding the value of any capital stock of the Borrower
given as part of the Cost of Acquisition) with respect to any
Acquisitions consummated during any Fiscal Year shall not exceed
$20,000,000; and (v) the aggregate Cost of Acquisition which consists
in whole or in part of the value of any capital stock of the Borrower
(including without limitation when combined with cash, debt or the
assumption of indebtedness for any specific Acquisition) with respect
to any Acquisition consummated after the Closing Date shall not exceed
$10,000,000.
"Permitted Indebtedness" has the meaning given to such term in
Section 10.1 hereof.
"Permitted Liens" has the meaning given to such term in
Section 10.2 hereof.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
"Pledged Stock" means (i) all of the capital stock or
partnership interests and related rights and interests owned by the
Borrower, directly or indirectly, of (A) each Domestic Subsidiary and
Domestic Control Subsidiary and (B) Newtech Electronics Industries,
Inc., PX Distributors, Inc., Break Room of Tennessee, Inc., Anasazi
Partners L.P. and after July 31, 1999, the Salton/ Maxim Shares, if
any, (ii) 65% of the outstanding voting stock and related interests and
rights of each Direct Foreign Subsidiary or Direct Foreign Control
Subsidiary (to the extent such amount is directly or indirectly owned
by the Borrower) and (iii) 100% of the capital stock and related
interests and rights directly or indirectly owned by the Borrower of
any Foreign Subsidiary or Foreign Control Subsidiary to the extent such
action would not result in any material adverse tax impact on the
Borrower, in each case now or hereafter pledged by the Borrower and
certain Subsidiaries pursuant to the Stock Pledge Agreement.
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation
or other public body organized under the laws of any such state which
are rated, based on the escrow, in the highest
25
<PAGE> 30
investment rating category by both S&P and Moody's and which have been
irrevocably called for redemption and advance refunded through the
deposit in escrow of Government Securities or other debt securities
which are (i) not callable at the option of the issuer thereof prior to
maturity, (ii) irrevocably pledged solely to the payment of all
principal and interest on such obligations as the same becomes due, and
(iii) in a principal amount and bear such rate or rates of interest as
shall be sufficient to pay in full all principal of, interest, and
premium, if any, on such obligations as the same becomes due as
verified by a nationally recognized firm of certified public
accountants.
"Prime Rate" means the rate of interest per annum established
from time to time by the Agent as its prime rate. The Prime Rate is not
necessarily the best or the lowest rate of interest offered by the
Agent.
"Principal Office" means the office of the Agent at
NationsBank, National Association, Independence Center, 15th Floor, NC1
001-15-04, Charlotte, North Carolina 28255, Attention: Agency Services,
or such other office and address as the Agent may from time to time
designate.
"Registration Statement" means the Borrower's Registration
Statement on Form S-3, registration no. 333-56069, relating to the
issuance of the Company Securities.
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse the Issuing Bank and the Lenders to the extent of their
respective Participations (including by the receipt by the Issuing Bank
of proceeds of Loans pursuant to Section 3.2 hereof) for amounts
theretofore paid by the Issuing Bank pursuant to a drawing under such
Letter of Credit.
"Related Business Party" means any supplier, vendor or
customer, or any group of individual suppliers, vendors or customers,
whose inability to perform under existing agreements or general
business failure could reasonably be expected to have a Material
Adverse Effect.
"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial paper are rated "A" by either of S&P or Moody's or "A-1" by
S&P or "P-1" by Moody's.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating in excess of 50%
of the aggregate Credit Exposures of all Lenders on such date. For
purposes of the preceding sentence, the amount of the "Credit Exposure"
of each Lender shall be equal to the aggregate principal
26
<PAGE> 31
amount of the Revolving Loans owing to such Lender plus the aggregate
unutilized amounts of such Lender's Revolving Credit Commitment
(without regard to any Swing Line Outstandings) plus the amount of such
Lender's Applicable Commitment Percentage of Letter of Credit
Outstandings plus the amount of such Lender's Applicable Commitment
Percentage of the Term Loan Outstandings; provided that, (i) if any
Lender with a Revolving Credit Commitment shall have failed to pay to
the Issuing Bank its Applicable Commitment Percentage of any drawing
under any Letter of Credit resulting in an outstanding Reimbursement
Obligation, such Lender's Credit Exposure attributable to Letters of
Credit and Reimbursement Obligations shall be deemed to be held by the
Issuing Bank for purposes of this definition and (ii) if any Lender
with a Revolving Credit Commitment shall have failed to pay to
NationsBank its Applicable Commitment Percentage of any Swing Line
Loan, such Lender's Credit Exposure equal to its Applicable Commitment
Percentage of all Swing Line Outstandings shall be deemed to be held by
NationsBank for purposes of this definition.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) by member banks of the
Federal Reserve System against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the
Eurodollar Rate is to be determined, or (ii) any category of extensions
of credit or other assets which include Eurodollar Rate Loans. The
Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Revolving Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to make Loans to the Borrower up
to an aggregate principal amount at any one time outstanding equal to
such Lender's Applicable Commitment Percentage of the Total Revolving
Credit Commitment.
"Revolving Credit Facility" means the facility described in
Article III hereof providing for Loans to the Borrower by the Lenders
in the aggregate principal amount of the Total Revolving Credit
Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Revolving Loans
then outstanding.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to Section 11.1 hereof upon the occurrence of an
Event of Default, or (iii) such date as the Borrower may voluntarily
and permanently terminate the Revolving Credit Facility by payment in
full of
27
<PAGE> 32
all Revolving Credit Outstandings, Swing Line Outstandings and Letter
of Credit Outstandings and cancellation of all Letters of Credit,
together with all accrued and unpaid interest thereon.
"Revolving Loan" means any borrowing pursuant to an Advance
under the Revolving Credit Facility in accordance with Article III.
"Revolving Notes" means the promissory notes of the Borrower
evidencing Revolving Loans executed and delivered to the Lenders
substantially in the form of Exhibit F-4 hereto.
"Salton/Maxim" means Salton/Maxim Housewares, Inc., a Delaware
corporation.
"Salton/Maxim Shares" means the shares of capital stock of
Salton/Maxim owned by the Borrower.
"Security Agreement" means, collectively (or individually as
the context may indicate), (i) the Security Agreement dated as of the
date hereof, by the Borrower and the Guarantors to the Agent and (ii)
any additional Security Agreement delivered to the Agent (whether of
even date herewith or delivered after the Closing Date pursuant to
Article VI or Section 9.21 hereof and whether executed individually or
jointly and severally with other Subsidiaries), each in the form of
Exhibit H hereto and each as hereafter amended, supplemented or
replaced from time to time.
"Security Instruments" means, collectively, the Security
Agreement, the Intellectual Property Security Agreement, the Stock
Pledge Agreement, the Mortgage (when and if required hereunder), the
Collateral Assignments of Contract Rights and all other agreements,
instruments and other documents, whether now existing or hereafter in
effect, pursuant to which the Borrower, or any Credit Party, shall
grant or convey to the Agent or the Lenders a Lien in property as
security for all or any portion of the Obligations, as any of them may
be amended, modified or supplemented from time to time.
"Segment" means a portion of a Term Loan (or all thereof) with
respect to which a particular interest rate is (or is proposed to be)
applicable.
"Seller" means The Black & Decker Corporation, a Maryland
corporation.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(ii) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations; and
28
<PAGE> 33
(iii) it is then able and expects to be able to
pay its debts as they mature; and
(iv) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
"Special Purpose Subsidiary" means a wholly-owned Subsidiary
of the Borrower organized for the sole purpose of accomplishing a Year
End Domestic Receivables Transaction and which engages in no other
business, the proper name of which shall be furnished to the Agent
promptly following its organization.
"Stated Termination Date" means June 26, 2003.
"Stock Offering" means the issuance and sale to the public of
the Company Securities resulting in net proceeds to the Borrower of at
least $100,000,000.
"Stock Pledge Agreement" means, collectively (or individually
as the context may indicate), (i) that certain Stock Pledge Agreement
dated as of the date hereof between the Borrower, certain Guarantors
and the Agent for the benefit of the Lenders and (ii) any additional
Stock Pledge Agreement delivered to the Agent (whether of even date
herewith or delivered after the Closing Date pursuant to Article VI or
Section 9.21 hereof and whether executed individually or jointly and
severally with other Subsidiaries), substantially in the form attached
hereto as Exhibit G hereto, as each such Stock Pledge Agreement may be
amended, supplemented or replaced from time to time.
"Subordinated Bridge Debt" means the subordinated bridge
indebtedness incurred pursuant to the terms of the Bridge Loan
Agreement in an aggregate original principal amount not in excess of
$185,000,000, together with all other Indebtedness into which such
Subordinated Bridge Debt is convertible or exchangeable.
"Subordinated Bridge Notes" means the subordinated notes.
"Subsidiary" means (a) any corporation in which more than 50%
of its outstanding voting stock is owned directly or indirectly by the
Borrower and/or by one or more of its Subsidiaries or (b) in the case
of a Person other than a corporation, any Person with respect to which
the Borrower or any Subsidiary, directly or indirectly, is entitled to
more than 50% of the profits of such Person.
"Swap Agreement" means one or more agreements between the
Borrower and any
29
<PAGE> 34
Person with respect to Indebtedness evidenced by any or all of the
Notes, on terms mutually acceptable to the Borrower and such Person,
which agreements create Rate hedging Obligations.
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to Section 3.13 hereof.
"Swing Line Loans" means loans made by NationsBank to the
Borrower pursuant to Section 3.13 hereof.
"Swing Line Note" means the promissory note of the Borrower
evidencing Swing Line Loans executed and delivered to the NationsBank
substantially in the form of Exhibit F-5 hereto.
"Swing Line Outstandings" means, as of any date of
determination, the aggregate principal amount of all Swing Line Loans
then outstanding.
"Term Loans" means each of the Term Loan A, Term Loan B and
Term Loan C, as the case may be.
"Term Loan A" means the loan made pursuant to the Term Loan A
Facility.
"Term Loan A Commitment" means, with respect to each Lender,
the obligation of a Term Loan A Lender to make available the Term Loan
A to the Borrower in a principal amount equal to such Term Loan A
Lender's Applicable Commitment Percentage of the Total Term Loan A
Commitment, as set forth in Exhibit A hereto.
"Term Loan A Facility" means the facility described in Section
2.1 hereof providing for a Term Loan to the Borrower by the Lenders in
the original principal amount of $90,000,000.
"Term Loan A Lender" means each Lender indicated on Exhibit A
hereto as having a Term Loan A Commitment.
"Term Loan A Maturity Date" means June 26, 2003.
"Term Loan A Termination Date" means (i) the Term Loan A
Maturity Date or (ii) such earlier date of termination of a Term Loan A
Lenders' obligations pursuant to Section 11.1 hereof upon the
occurrence of an Event of Default or (iii) such date as the Borrower
may voluntarily and permanently terminate the applicable Term Loan A
Facility by payment in full of all Obligations incurred in connection
with such Term Loan A.
30
<PAGE> 35
"Term Loan B" means the loan made pursuant to the Term Loan B
Facility.
"Term Loan B Commitment" means, with respect to each Lender,
the obligation of a Term Loan B Lender to make available the Term Loan
B to the Borrower in a principal amount equal to such Term Loan B
Lender's Applicable Commitment Percentage of the Total Term Loan B
Commitment, as set forth in Exhibit A hereto.
"Term Loan B Facility" means the facility described in Section
2.1 hereof providing for the Term Loan to the Borrower in the original
principal amount of $75,000,000.
"Term Loan B Lender" means each Lender indicated on Exhibit A
hereto as having a Term Loan B Commitment.
"Term Loan B Maturity Date" means June 26, 2004.
"Term Loan B Termination Date" means (i) the Term Loan B
Maturity Date or (ii) such earlier date of termination of a Term Loan B
Lender's obligations pursuant to Section 11.1 hereof upon the
occurrence of an Event of Default or (iii) such date as the Borrower
may voluntarily and permanently terminate the applicable Term Loan B
Facility by payment in full of all Obligations incurred in connection
with such Term Loan B.
"Term Loan C" means the loan made pursuant to the Term Loan C
Facility.
"Term Loan C Commitment" means, with respect to each Lender,
the obligation of a Term Loan C Lender to make available the Term Loan
C to the Borrower in a principal amount equal to such Term Loan C
Lender's Applicable Commitment Percentage of the Total Term Loan C
Commitment, as set forth in Exhibit A hereto.
"Term Loan C Facility" means the facility described in Section
2.1 hereof providing for the Term Loan to the Borrower in the original
principal amount of $20,000,000.
"Term Loan C Lender" means each Lender indicated on Exhibit A
hereto as having a Term Loan C Commitment.
"Term Loan C Maturity Date" means June 26, 2004.
"Term Loan C Termination Date" means (i) the Term Loan C
Maturity Date or (ii) such earlier date of termination of a Term Loan C
Lender's obligations pursuant to Section 11.1 hereof upon the
occurrence of an Event of Default or (iii) such date as the Borrower
may voluntarily and permanently terminate the applicable Term Loan C
31
<PAGE> 36
Facility by payment in full of all Obligations incurred in connection
with such Term Loan C.
"Term Loan Facilities" means the Term Loan A Facility, the
Term Loan B Facility and the Term Loan C Facility.
"Term Loan Outstandings" means, as of any date of
determination, the aggregate principal amount of the Term Loans then
outstanding and all interest accrued thereon.
"Term Loan Termination Date" means the date upon which each of
the Term Loan A Termination Date, the Term Loan B Termination Date and
the Term Loan C Termination Date shall have occurred.
"Term Notes" means, collectively, the Term A Notes, the Term B
Notes and the Term C Notes.
"Term A Notes" means, collectively, the promissory notes of
the Borrower evidencing Term Loan A executed and delivered to the Term
Loan A Lenders as provided in Section 2.8 hereof substantially in the
form of Exhibit F-1 hereto, with appropriate insertions as to amounts,
dates and names of Term Loan A Lenders.
"Term B Notes" means, collectively, the promissory notes of
the Borrower evidencing Term Loan B executed and delivered to the Term
Loan B Lenders as provided in Section 2.8 hereof substantially in the
form of Exhibit F-2 hereto, with appropriate insertions as to amounts,
dates and names of Term Loan B Lenders.
"Term C Notes" means, collectively, the promissory notes of
the Borrower evidencing Term Loan B executed and delivered to the Term
Loan C Lenders as provided in Section 2.8 hereof substantially in the
form of Exhibit F-3 hereto, with appropriate insertions as to amounts,
dates and names of Term Loan C Lenders.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4062(e) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to administer,
any Pension Plan; or (vi) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302
of ERISA; or (viii) any event or
32
<PAGE> 37
condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA; or (x) any event or condition with
respect to any Employee Benefit Plan which is regulated by any Foreign
Benefit Law that results in such Employee Benefit Plan's termination or
the revocation of the Employee Benefit Plan's authority to operate
under the applicable Foreign Benefit Law.
"Total Letter of Credit Commitment" means an amount not to
exceed $20,000,000.
"Total Revolving Credit Commitment" means $160,000,000, such
amount as reduced from time to time in accordance with Section 3.7
hereof.
"Total Term Loan A Commitment" means a principal amount equal
to $90,000,000.
"Total Term Loan B Commitment" means a principal amount equal
to $75,000,000.
"Total Term Loan C Commitment" means a principal amount equal
to $20,000,000.
"Total Term Loan Commitment" means the sum of the Total Term
Loan A Commitment, the Total Term Loan B Commitment and the Total Term
Loan C Commitment.
"Transaction Agreement" means that certain Transaction
Agreement dated as of May 10, 1998, as amended from time to time with
notice to and the consent of the Agent, by and among the Borrower and
the Seller providing for the purchase of HPG by the Borrower.
"Transaction Documents" means the Transaction Agreement and
each other agreement, together with exhibits and attachments thereto,
identified in the definition of "Transaction Documents" contained in
Exhibit A to the Transaction Agreement.
"Type" shall mean any type of Loan bearing interest at a
particular rate (i.e., a Base Rate Loan, a Eurodollar Rate Loan or a
Swing Line Loan).
"Year End Domestic Receivables Transaction" means the transfer
by the Borrower and/or its Domestic Subsidiaries to Windmere Holdings
II, Inc., a Guarantor, ("Holdings") or a Special Purpose Subsidiary on
or about December 31 of any year of
33
<PAGE> 38
Domestic Receivables (as defined in the Security Agreement entered into
by the Borrower or such Domestic Subsidiary), subject at all times to
the existing and continuing Lien on such property in favor of the Agent
for the benefit of the Lenders; provided that all of the following
conditions are satisfied:
(ii) all Domestic Receivables transferred to
Holdings or the Special Purpose Subsidiary on or about any
December 31 and retransferred to the appropriate transferor
not later than the fifth Business Day following January 1;
(iii) immediately prior to giving effect to any
such transfer, no Default or Event of Default shall have
occurred and be continuing;
(iv) Holdings and the Special Purpose Subsidiary
shall incur no Indebtedness or other liabilities for the
payment of money, other than those in favor of the Agent and
the Lenders, corporate franchise taxes and similar unsecured
obligations necessarily incurred to maintain its existence,
and the obligation to retransfer Domestic Receivables as of
the fifth Business Day following each January 1 to the
appropriate transferor;
(v) immediately before giving effect to any such
transfer on or about any December 31, Holdings or the Special
Purpose Subsidiary shall not have become liable to any Person,
and no Person shall have asserted any claim against Holdings
or the Special Purpose Subsidiary (including without
limitation the submission of any invoice) for the payment of
any amount or the delivery of any property or interest therein
other than routine invoices for the payment of operating costs
in connection with liabilities expressly permitted under the
immediately preceding clause (iii);
(vi) the Agent for the benefit of the Lenders
shall have a duly perfected first priority security interest
in the Domestic Receivables in which Holdings or the Special
Purpose Subsidiary may acquire any interest at any time,
subject to no adverse claims of creditors of, or purchasers
for value from, Holdings or the Special Purpose Subsidiary;
(vii) the Special Purpose Subsidiary shall have
been created in full compliance with the provisions of Section
9.21 hereof and there shall be then in effect an appropriate
guaranty and an appropriate security agreement executed and
delivered by and effective against the Special Purpose
Subsidiary as contemplated in such Section; and
(viii) the purpose of the Special Purpose
Subsidiary shall be strictly limited, by charter or in such
other manner as shall be acceptable to the Agent, to (A) the
acquisition and retransfer or Domestic Receivables as
contemplated in the
34
<PAGE> 39
preceding clauses of this definition and (B) the incurring of
obligations and the grant of a Lien to the Agent and the
Lenders as required by Section 9.21 hereof, and the operations
and activities of the Special Purpose Subsidiary shall at all
times be strictly limited to those actions necessary to
accomplish such purposes.
"Year 2000 Compliant" means all computer applications
(including those affected by information received from its suppliers
and vendors) that are material to the Borrower's or any of its
Subsidiaries' business and operations will on a timely basis be able to
perform properly data-sensitive functions involving all dates on and
after January 1, 2000.
"Year 2000 Problem" means the risk that computer applications
used by the Borrower and any of its Subsidiaries (including those
affected by information received from its suppliers and vendors) that
are material to the Borrower's or any of its Subsidiaries' business or
operations may be unable to recognize and perform properly
data-sensitive functions involving certain dates on and after January
1, 2000.
I.2. Rules of Interpretation
(a) All accounting terms not specifically defined herein
shall have the meanings assigned to such terms and shall be interpreted
in accordance with GAAP applied on a Consistent Basis; provided,
however, that to the extent any term defined in this Article I refers
to "Subsidiaries" and contains a calculation to be made in accordance
with GAAP, the term "Subsidiaries" shall be deemed to include Control
Subsidiaries.
(b) Each term defined in Article 1 or 9 of the Florida
Uniform Commercial Code shall have the meaning given therein unless
otherwise defined herein, except to the extent that the Uniform
Commercial Code of another jurisdiction is controlling, in which case
such terms shall have the meaning given in the Uniform Commercial Code
of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references
herein to articles, sections, paragraphs, clauses, annexes, appendices,
exhibits and schedules are references to articles, sections,
paragraphs, clauses, annexes, appendices, exhibits and schedules in or
to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the
35
<PAGE> 40
masculine gender shall include reference to the feminine or neuter
gender, and vice versa, as the context may require.
(f) When used herein or in any other Loan Document, words
such as "hereunder", "hereto", "hereof" and "herein" and other words of
like import shall, unless the context clearly indicates to the
contrary, refer to the whole of the applicable document and not to any
particular article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without
limiting the generality of any description preceding such term, and for
purposes hereof the rule of ejusdem generis shall not be applicable to
limit a general statement, followed by or referable to an enumeration
of specific matters, to matters similar to those specifically
mentioned.
(h) All dates and times of day specified herein shall
refer to such dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the opportunity
to request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of the
Loan Documents and all exhibits, schedules and appendices thereto.
(j) Any reference to a Lender in Article II when used
herein with respect to Term Loan A, Term Loan B or Term Loan C shall
mean those Lenders with a Term Loan A Commitment, a Term Loan B
Commitment or a Term Loan C Commitment, respectively, and when used in
Article III and IV with respect to a Revolving Loan shall mean those
Lenders having a Revolving Credit Commitment.
(k) Any reference to an officer of the Borrower or any
other Person by reference to the title of such officer shall be deemed
to refer to each other officer of such Person, however titled,
exercising the same or substantially similar functions.
(l) All references to any agreement or document as
amended, modified or supplemented, or words of similar effect, shall
mean such document or agreement, as the case may be, as amended,
modified or supplemented from time to time only as and to the extent
permitted therein and in the Loan Documents.
36
<PAGE> 41
ARTICLE II
The Term Loans
II.1. Term Loans. Subject to the terms and conditions of this
Agreement, each Lender with a Term Loan A Commitment, a Term Loan B Commitment
and/or a Term Loan C Commitment, as the case may be, severally agrees to make
(i) an Advance of the Term Loan A on the Closing Date in an amount equal to its
Applicable Commitment Percentage of the Total Term Loan A Commitment, (ii) an
Advance of the Term Loan B on the Closing Date in an amount equal to its
Applicable Commitment Percentage of the Total Term Loan B Commitment and (iii)
an Advance of the Term Loan C on the Closing Date in an amount equal to its
Applicable Commitment Percentage of the Total Term Loan C Commitment, in each
case, by wire transfer to the Agent. Such wire transfer shall be directed to the
Agent at the Principal Office and shall be in the form of immediately available
Dollars . The amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by delivery of
the proceeds thereof to the Borrower's Account or otherwise as shall be directed
by the Authorized Representative and reasonably acceptable to the Agent. Each
Term Loan shall be available in a single draw in Dollars at Closing. The
principal amount of each Segment of the Term Loans outstanding hereunder from
time to time shall bear interest, at the Borrower's election, at an interest
rate per annum equal to the Base Rate or the applicable Eurodollar Rate;
provided, however, that (x) no Eurodollar Rate Segment shall have an Interest
Period that extends beyond the Term Loan A Maturity Date or the Term Loan B
Maturity Date, as the case may be, (y) each Eurodollar Rate Segment of each Term
Loan shall be in the minimum amount of $5,000,000 and if greater, in an integral
multiple of $1,000,000, and (z) each Eurodollar Rate Segment may be repaid only
on the last day of the Interest Period with respect thereto unless such payment
is accompanied by the additional payment, if any, required by Section 6.5
hereof. No amount of any Term Loan repaid or prepaid by the Borrower may be
reborrowed hereunder, and no subsequent Advances of Term Loans shall be made by
any Lender after the initial Advance.
II.2. Payment of Principal. (a) The principal amount of Term Loan A
shall be repaid by the Borrower on the dates and in the amounts (subject to the
provisions of Section 2.5 and 2.6) hereof set forth below:
37
<PAGE> 42
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
March 31, 1999 $2,500,000
June 30, 1999 $2,500,000
September 30, 1999 $2,500,000
December 31, 1999 $2,500,000
March 31, 2000 $2,500,000
June 30, 2000 $2,500,000
September 30, 2000 $5,000,000
December 31, 2000 $5,000,000
March 31, 2001 $5,000,000
June 30, 2001 $5,000,000
September 30, 2001 $6,250,000
December 31, 2001 $6,250,000
March 31, 2002 $6,250,000
June 30, 2002 $6,250,000
September 30, 2002 $7,500,000
December 31, 2002 $7,500,000
March 31, 2003 $7,500,000
June 26, 2003 All remaining
principal outstanding
on Term Loan A
</TABLE>
(b) The principal amount of Term Loan B shall be repaid by the
Borrower in five consecutive annual installments of $750,000 on June 26 of each
year commencing with June 26, 1999 (subject to Sections 2.5 and 2.6 hereof) with
a final sixth payment due on June 26, 2004 in the amount of all remaining
principal outstanding on Term Loan B.
(c) The principal amount of Term Loan C shall be repaid by the
Borrower in five consecutive annual installments of $200,000 on June 26 of each
year commencing with June 26, 1999 (subject to Sections 2.5 and 2.6 hereof) with
a final sixth payment due on June 26, 2004 in the amount of all remaining
principal outstanding on Term Loan C.
(d) Notwithstanding the foregoing, the entire amount of Term Loan
Outstandings shall be due and payable by the Borrower in full on the Term Loan A
Termination Date or Term Loan B Termination Date or Term Loan C Termination
Date, as applicable.
II.3. Payment of Interest. The Borrower shall pay interest on the
outstanding and unpaid principal amount of each Segment of each Term Loan
commencing on the date of determination of the interest rate applicable to such
Segment until such Segment shall be paid at the applicable Base Rate or
Eurodollar Rate, as the case may be, as designated by the Borrower in the
applicable Interest Rate Selection Notice or as otherwise provided hereunder.
Interest relating to each Segment shall be computed on the basis of a year of
360 days and calculated for actual days elapsed. Interest on each Segment shall
be paid on the earlier of (a) in the case of any Base Rate Segment, quarterly in
arrears on the last Business Day of each March, June, September and December,
commencing on September 30, 1998, until the applicable Term Loan A Maturity Date
or Term Loan B Maturity Date, as applicable, or, if earlier, the applicable Term
Loan A Termination Date or Term Loan B Termination Date or Term Loan C
Termination Date, as applicable, on which date the entire principal amount of
and all accrued interest on the Term Loans shall be paid in full, (b) in the
case of any Eurodollar Rate Segment, on the last day of the applicable Interest
Period for such Segment and if such Interest Period extends for more than three
(3) months, at intervals of three (3) months after the first day of such
Interest Period, and (c) upon payment in full of such Term Loan; provided,
however, that if any Event of Default shall have occurred and be continuing, all
amounts outstanding hereunder shall bear interest at
38
<PAGE> 43
the Default Rate until such Event of Default is waived.
II.4. Manner of Payment.
(a) Each payment of principal (including any prepayment)
and payment of interest and fees, and any other amount required to be
paid to the Lenders with respect to the Term Loans, shall be made to
the Agent at the Principal Office for the account of each Lender in
Dollars in immediately available funds on or before 3:00 P.M. on the
date such payment is due. Without prejudice to any of the other
obligations set forth herein by the Borrower, the Agent shall, upon the
request of the Borrower, debit the amount of such payment from any one
or more ordinary deposit accounts of the Borrower with the Agent. The
Borrower shall attempt to give the Agent telefacsimile notice of any
intended payment of principal or interest prior to 12:00 Noon on the
date of such payment.
(b) The Agent shall deem any payment made by or on behalf
of the Borrower that is not made both in Dollars in immediately
available funds and prior to 3:00 P.M. on the date such payment is to
be made to be a non-conforming payment. Any such non-conforming payment
shall not be deemed to be received by the Agent until the later of (i)
the time such funds become available funds and (ii) the next Business
Day. Any non-conforming payment may, at the option of the Agent,
constitute or become a Default or Event of Default. Interest shall
continue to accrue on any principal as to which a non-conforming
payment is made until the later of (i) the date such funds become
available funds or (ii) the next Business Day at the Default Rate, from
the date such amount was due and payable.
(c) In the event that any payment hereunder or under the
Term Notes becomes due and payable on a day other than a Business Day,
then such due date shall be extended to the next succeeding Business
Day unless provided otherwise under the definition of "Interest
Period"; provided, however, that interest shall continue to accrue
during the period of any such extension; and provided further, however,
that in no event shall any such due date be extended beyond the Term
Loan A Termination Date or Term Loan B Termination Date or Term Loan C
Termination Date, as the case may be.
II.5. Optional Prepayments. The Borrower may prepay the Term Loans,
in whole or in part from time to time on any Business Day, without penalty or
premium, upon not less than five (5) Business Days' prior written notice
(effective upon receipt) to the Agent, which notice shall be irrevocable. Any
partial prepayment of the Term Loans shall be applied pro rata among Term Loan A
Outstanding, Term Loan B Outstandings and Term Loan C Outstandings to principal
installments equally across all maturities thereof for the pro rata benefit of
the Lenders. Any prepayment, whether a Base Rate Segment or a Eurodollar Rate
Segment, shall be made at a prepayment price equal to (i) the amount of
principal to be prepaid, plus (ii) all accrued and unpaid interest on the amount
so prepaid, to the date of prepayment. All prepayments under this Section 2.5
hereof shall be made in the minimum principal amount of $1,000,000 or any
integral
39
<PAGE> 44
multiple of $1,000,000 in excess thereof (or in the entire remaining principal
balance of the Term Loans). No such prepayment shall result in the payment of
any Eurodollar Rate Segment other than on the last day of the Interest Period of
such Segment unless such prepayment is accompanied by amounts due, if any, under
Section 6.5 hereof. No payment under this Section 2.5 hereof shall reduce or
excuse any payment required under Section 2.6 hereof.
II.6. Mandatory Prepayments. In addition to the required payments of
principal of the Term Loans set forth in Section 2.2 hereof and any optional
payments of principal of the Loans effected under Section 2.5 hereof, the
Borrower shall make the following required prepayments of the Term Loan
Facilities and, to the extent indicated below, the Revolving Credit Facility,
each such payment to be made to the Agent for the benefit of the Lenders within
the time period specified below:
(a) Equity Offerings. The Borrower shall make, or shall
cause each applicable Subsidiary to make, a prepayment of the Term Loan
Facilities from the Net Proceeds of any Equity Offering in an amount
equal to (i) prior to payment in full of all Term Loan Outstandings,
seventy-five percent (75%) of such Net Proceeds and (ii) after payment
in full of all Term Loan Outstandings, fifty percent (50%) of such Net
Proceeds. Each such prepayment shall be made within fifteen (15)
Business Days of receipt of such Net Proceeds and upon not less than
three (3) Business' Days written notice to the Agent, and shall include
within one (1) Business Day of repayment a certificate of an Authorized
Representative setting forth in reasonable detail the calculations
utilized in computing the amount of the Net Proceeds.
(b) Debt Offerings. The Borrower shall make, or shall
cause each applicable Subsidiary to make, a prepayment of the Term Loan
Facilities from the Net Proceeds of any Debt Offering in an amount
equal to one hundred percent (100%) of such Net Proceeds. Each such
prepayment shall be made within fifteen (15) Business Days of receipt
of such Net Proceeds and upon not less than three (3) Business' Days
written notice to the Agent, and shall include within one (1) Business
Day of repayment a certificate of an Authorized Representative setting
forth in reasonable detail the calculations utilized in computing the
amount of the Net Proceeds.
(c) Asset Dispositions. The Borrower shall make, or shall
cause each applicable Subsidiary to make, a prepayment of the Term Loan
Facilities from the Net Proceeds of any Asset Disposition in an amount
equal to (A) one hundred percent (100%) of such Net Proceeds to the
extent any portion of the Subordinated Bridge Debt remains outstanding
and (B) ninety percent (90%) of such Net Proceeds to the extent the
Subordinated Bridge Debt has been fully retired, repaid or replaced by
the Permanent Junior Financing; provided, however that with respect to
any disposition of the Salton/Maxim Shares, one hundred percent (100%)
of such Net Proceeds shall be applied (i) 50% pro rata to all Term Loan
A Outstandings, Term Loan B Outstandings and Term Loan C Outstandings
and (i) 50% to repay any Revolving Credit Outstandings or, if none,
40
<PAGE> 45
to repay any foreign or domestic Indebtedness of the Borrower other
than the Bridge Notes or the Permanent Subordinated Notes. Each such
prepayment shall be made within fifteen (15) Business Days of receipt
of such Net Proceeds and upon not less than three (3) Business' Days
written notice to the Agent, which notice shall include a certificate
of an Authorized Representative setting forth in reasonable detail the
calculations utilized in computing the amount of the Net Proceeds.
(d) Excess Cash Flow. Commencing with the Fiscal Year
ending December 31, 1999, the Borrower shall make an annual prepayment
of the Term Loan Facilities equal to fifty percent (50%) of
Consolidated Excess Cash Flow for such Fiscal Year and each Fiscal Year
thereafter. Each such prepayment shall be made within five (5) Business
Days of delivery to the Agent of the certificate described in Section
9.1(a)(i) hereof.
(e) Insurance or Condemnation Proceeds. The Borrower
shall make, or shall cause each applicable Subsidiary to make, a
prepayment of the Term Loan Facilities in an amount equal to one
hundred percent (100%) of the proceeds of any Condemnation Award or
Insurance Award; provided, however, that to the extent no Default or
Event of Default has occurred and is continuing, no such prepayment
shall be required with respect to proceeds which are reinvested by the
Borrower in repair of any damaged property or in replacement property
of approximately equivalent or greater value and utility as the
property subject to such taking or loss withing 60 days following
receipt of such proceeds. Each such prepayment shall be made (A) within
fifteen (15) Business Days of receipt of such proceeds and upon not
less than three (3) Business' Days written notice to the Agent unless
the Borrower shall have delivered to the Agent a certificate setting
forth the amount of such proceeds, confirming the intent of the
Borrower to reinvest such proceeds as provided above and containing a
detailed description of the plan of reinvestment with respect to such
proceeds or (B) upon expiration of 60 days following receipt of such
proceeds if a certificate referred to in clause (A) above has been
received by the Agent but such reinvestment has not been consummated
within the 60 day reinvestment period referred to above.
(f) Proceeds of Permanent Junior Financing. The Borrower
shall make a prepayment of Term Loan C, up to the amount of Term Loan C
Outstandings, in an amount equal to 100% of the proceeds of the
Permanent Junior Financing remaining after repayment of the Bridge
Notes.
All mandatory prepayments made pursuant to this Section 2.6 (other than
2.6(f) hereof) hereof shall be applied first to repay the Term Loans on a pro
rata basis (that is, based on the ratio each outstanding Term Loan bears to Term
Loan Outstandings) until the Term Loan Outstandings have been paid in full and
then to reduce Revolving Credit Outstandings, if any. Each mandatory prepayment
in an amount less than the Term Loan Outstandings shall be applied pro rata to
each remaining installment of Term Loan A, Term Loan B and Term Loan C (or if no
41
<PAGE> 46
Term Loan A Outstandings then exist, pro rata to each remaining installment of
Term Loan B and Term Loan C, or if no Term Loan A Outstandings or Term Loan B
Outstandings then exist, pro rata to each remaining installment of Term Loan C
only); provided, however, that any holder of Term Loan B or Term Loan C shall
have the right by the giving of at least one day's prior written notice to the
Agent to refuse prepayment of all or a portion of the Term Loan B or Term Loan C
held by it if, after giving effect to such partial prepayment, a portion of Term
Loan A will remain outstanding, and any prepayment so refused shall be applied
to prepay any remaining portion of Term Loan A. If the amount of Term Loan B or
Term Loan C as to which prepayment is refused is in excess of the remaining Term
Loan A Outstandings, then the Agent shall pro rate the amount of Term Loan B or
Term Loan C which can be paid among holders of Term Loan A based upon the
proportion that the principal amount of Term Loan A held by each Lender bears to
the Total Term Loan Outstandings. The holders of Term Loan B and Term Loan C
shall have no right to refuse prepayment of all or any portion of Term Loan B or
Term Loan C, as applicable, to the extent that any amount so refused exceeds the
amount of Term Loan A Outstandings. Any prepayment of an Eurodollar Rate Loan
pursuant to this Section 2.6 hereof other than on the last day of an Interest
Period shall be accompanied by the additional payment, if any, required by
Section 6.5 hereof.
II.7. Term Notes. The portion of each of the Term Loan A, Term Loan
B and Term Loan C made by each Lender shall be evidenced by a Term A Note, Term
B Note and the Term C Note, respectively, payable to the order of such Lender in
the respective amounts of its Term Loan A Commitment, Term Loan B Commitment and
Term Loan C Commitment, which Term Notes shall be dated the Closing Date or a
later date pursuant to an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower.
II.8. Interest Periods. Each Term Loan shall be, at the option of
the Borrower specified in an Interest Rate Selection Notice, comprised of either
Eurodollar Rate Segments or Base Rate Segments. Eurodollar Rate Segments and
Base Rate Segments may be outstanding at the same time, provided, however, there
shall not be outstanding at any one time Eurodollar Rate Loans (including
Revolving Loans) having more than twelve (12) different Interest Periods. If the
Agent does not receive an Interest Rate Selection Notice giving notice of
election of the duration of an Interest Period or of Conversion of any Segment
to or Continuation of a Segment as a Eurodollar Rate Segment by the time
prescribed by Section 2.9 hereof, the Borrower shall be deemed to have elected
to Convert such Segment to (or Continue such Segment as) a Base Rate Segment
until the Borrower notifies the Agent in accordance with Section 2.9 hereof.
II.9. Conversions and Elections of Subsequent Interest Periods.
Subject to the limitations set forth below and in Article VI, the Borrower may:
(a) upon delivery (effective upon receipt) of a properly
completed Interest Rate Selection Notice to the Agent on or before
11:00 A.M. on any Business Day, Convert any Eurodollar Rate Segment to
a Base Rate Segment on the last day of the Interest Period for such
Eurodollar Rate Segment; and
42
<PAGE> 47
(b) provided that no Default or Event of Default shall
have occurred and be continuing, upon delivery (effective upon receipt)
of a properly completed Interest Rate Selection Notice to the Agent on
or before 11:00 A.M. three (3) Business Days' prior to the date of such
Conversion:
(i) elect a subsequent Interest Period for any
Eurodollar Rate Segment to begin on the last day of the then
current Interest Period for such Eurodollar Rate Segment; and
(ii) Convert any Base Rate Segment to a
Eurodollar Rate Segment on any Business Day.
Each Conversion pursuant to this Section 2.9 hereof shall be subject to
the limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in Sections 2.1, 2.8 and Article VI hereof. The
Agent shall give written notice to each Lender of such notice of Conversion
prior to 1:00 P.M. on the day such notice of election or Conversion is received.
All such Continuations or Conversions of Term Loans shall be effected pro rata
based on the Applicable Commitment Percentages of the Lenders with respect to
such Term Loan.
II.10. Pro Rata Payments. Except as otherwise provided herein, (a)
each payment on account of the principal of and interest on each Term Loan shall
be made to the Agent for the account of the Lenders pro rata based on their
Applicable Commitment Percentages of such Term Loan, (b) all payments to be made
by the Borrower for the account of each of the Lenders on account of principal,
interest and fees, shall be made without diminution, set-off, recoupment or
counterclaim, and (c) the Agent will promptly distribute to the Lenders in
immediately available funds payments received in fully collected, immediately
available funds from the Borrower.
II.11. Use of Proceeds. The proceeds of the Term Loans made pursuant
to the Term Loan Facilities hereunder shall be used by the Borrower (a) to fund
a portion of the purchase price paid in connection with the HPG Acquisition, (b)
to refinance certain existing Indebtedness of the Borrower, (c) to pay certain
costs associated with the closing of the Asheboro Facility, which costs paid by
the Borrower shall not exceed $10,000,000, and (d) to pay certain fees and
expenses incurred in connection with the HPG Acquisition, which fees and
expenses shall not exceed $21,000,000.
43
<PAGE> 48
ARTICLE III
The Revolving Credit Facility
III.1. Revolving Loans.
(a) Commitment. Subject to the terms and conditions of
this Agreement, each Lender severally agrees to make Advances to the
Borrower under the Revolving Credit Facility from time to time from the
Closing Date until the Revolving Credit Termination Date on a pro rata
basis as to the total borrowing requested by the Borrower on any day
determined by such Lender's Applicable Commitment Percentage of the
Total Revolving Credit Commitment up to but not exceeding the Revolving
Credit Commitment of such Lender, provided, however, that the Lenders
will not be required and shall have no obligation to make any such
Advance (i) so long as a Default or an Event of Default has occurred
and is continuing or (ii) if the Agent has accelerated the maturity of
any of the Revolving Notes as a result of an Event of Default; provided
further, however, that immediately after giving effect to each such
Advance, the principal amount of Revolving Credit Outstandings plus
Swing Line Outstandings plus Letter of Credit Outstandings shall not
exceed either (x) the Total Revolving Credit Commitment or (y) the
Borrowing Base. Within such limits, the Borrower may borrow, repay and
reborrow under the Revolving Credit Facility on a Business Day from the
Closing Date until, but (as to borrowings and reborrowings) not
including, the Revolving Credit Termination Date; provided, however,
that (y) no Revolving Loan that is a Eurodollar Rate Loan shall be made
which has an Interest Period that extends beyond the Stated Termination
Date and (z) each Revolving Loan that is a Eurodollar Rate Loan may be
repaid only on the last day of the Interest Period with respect thereto
unless such payment is accompanied by the additional payment, if any,
required by Section 6.5 hereof.
(b) Amounts. Except as otherwise permitted by the Lenders
from time to time, the aggregate unpaid principal amount of the
Revolving Credit Outstandings plus Swing Line Outstandings plus Letter
of Credit Outstandings shall not exceed at any time either (i) the
Total Revolving Credit Commitment or (ii) the Borrowing Base and, in
the event there shall be outstanding any such excess, the Borrower
shall immediately make such payments and prepayments as shall be
necessary to comply with this restriction. Each Revolving Loan
hereunder, other than Base Rate Refunding Loans, and each Conversion
under Section 3.8, hereof shall be in an amount of at least $5,000,000,
and, if greater than $5,000,000, an integral multiple of $1,000,000.
(c) Advances.
(i) An Authorized Representative shall give the
Agent (1) at least three (3) Business Days' irrevocable
written notice by telefacsimile transmission of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with
44
<PAGE> 49
appropriate insertions, effective upon receipt, of each
Revolving Loan that is a Eurodollar Rate Loan (whether
representing an additional borrowing hereunder or the
conversion of a borrowing hereunder from Base Rate Loans to
Eurodollar Rate Loans) prior to 10:30 A.M. and (2) irrevocable
written notice by telefacsimile transmission of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with
appropriate insertions, effective upon receipt, of each
Revolving Loan (other than Base Rate Refunding Loans to the
extent the same are effected without notice pursuant to
Section 3.1(c)(iv)) hereof that is a Base Rate Loan (whether
representing an additional borrowing hereunder or the
Conversion of borrowing hereunder from Eurodollar Rate Loans
to Base Rate Loans) prior to 10:30 A.M. on the day of such
proposed Loan. Each such notice shall specify the amount of
the borrowing, the type of Revolving Loan (Base Rate or
Eurodollar Rate), the date of borrowing and, if a Eurodollar
Rate Loan, the Interest Period to be used in the computation
of interest. Notice of receipt of such Borrowing Notice or
Interest Rate Selection Notice, as the case may be, together
with the amount of each Lender's portion of an Advance
requested thereunder, shall be provided by the Agent to each
Lender by telefacsimile transmission with reasonable
promptness, but (provided the Agent shall have received such
notice by 10:30 A.M.) not later than 1:00 P.M. on the same day
as the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date
specified for each borrowing under this Section 3.1 hereof,
each Lender shall, pursuant to the terms and subject to the
conditions of this Agreement, make the amount of the Advance
or Advances to be made by it on such day available by wire
transfer to the Agent in the amount of its pro rata share,
determined according to such Lender's Applicable Commitment
Percentage of the Revolving Loan or Revolving Loans to be made
on such day. Such wire transfer shall be directed to the Agent
at the Principal Office and shall be in the form of Dollars
constituting immediately available funds. The amount so
received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the
Borrower by delivery of the proceeds thereof to the Borrower's
Account or otherwise as shall be directed in the applicable
Borrowing Notice by the Authorized Representative and
reasonably acceptable to the Agent.
(iii) The Borrower shall have the option to elect
the duration of the initial and any subsequent Interest
Periods and to Convert the Revolving Loans in accordance with
Section 3.8 hereof. Eurodollar Rate Loans and Base Rate Loans
may be outstanding at the same time, provided, however, there
shall not be outstanding at any one time Eurodollar Rate Loans
(including Eurodollar Rate Segments) having more than twelve
(12) different Interest Periods. If the Agent does not receive
a Borrowing Notice or an Interest Rate Selection Notice giving
notice of election of the duration of an Interest Period or of
Conversion of any
45
<PAGE> 50
Loan to or Continuation of a Loan as a Eurodollar Rate Loan by
the time prescribed by Section 3.1(c) or 3.8 hereof, the
Borrower shall be deemed to have elected to Convert such Loan
to (or Continue such Loan as) a Base Rate Loan until the
Borrower notifies the Agent in accordance with Section 3.8
hereof.
(iv) Notwithstanding the foregoing, if a drawing
is made under any Letter of Credit, such drawing is honored by
the Issuing Bank prior to the Stated Termination Date, and the
Borrower shall not immediately fully reimburse the Issuing
Bank in respect of such drawing, (A) provided that the
conditions to making a Revolving Loan as herein provided shall
then be satisfied, the Reimbursement Obligation arising from
such drawing shall be paid to the Issuing Bank by the Agent
without the requirement of notice to or from the Borrower from
immediately available funds which shall be advanced as a Base
Rate Refunding Loan by each Lender under the Revolving Credit
Facility in an amount equal to such Lender's Applicable
Commitment Percentage of such Reimbursement Obligation, and
(B) if the conditions to making a Revolving Loan as herein
provided shall not then be satisfied, each of the Lenders
shall fund by payment to the Agent (for the benefit of the
Issuing Bank) in immediately available funds the purchase from
the Issuing Bank of their respective Participations in the
related Reimbursement Obligation based on their respective
Applicable Commitment Percentages of the Total Letter of
Credit Commitment. If a drawing is presented under any Letter
of Credit in accordance with the terms thereof and the
Borrower shall not immediately reimburse the Issuing Bank in
respect thereof, then notice of such drawing or payment shall
be provided promptly by the Issuing Bank to the Agent and the
Agent shall provide notice to each Lender by telephone or
telefacsimile transmission. If notice to the Lenders of a
drawing under any Letter of Credit is given by the Agent at or
before 12:00 noon on any Business Day, each Lender shall,
pursuant to the conditions specified in this Section
3.1(c)(iv) hereof, either make a Base Rate Refunding Loan or
fund the purchase of its Participation in the amount of such
Lender's Applicable Commitment Percentage of such drawing or
payment and shall pay such amount to the Agent for the account
of the Issuing Bank at the Principal Office in Dollars and in
immediately available funds before 2:30 P.M. on the same
Business Day. If notice to the Lenders of a drawing under a
Letter of Credit is given by the Agent after 12:00 noon on any
Business Day, each Lender shall, pursuant to the conditions
specified in this Section 3.1(c)(iv) hereof, either make a
Base Rate Refunding Loan or fund the purchase of its
Participation in the amount of such Lender's Applicable
Commitment Percentage of such drawing or payment and shall pay
such amount to the Agent for the account of the Issuing Bank
at the Principal Office in Dollars and in immediately
available funds before 12:00 noon on the next following
Business Day. Any such Base Rate Refunding Loan shall be
advanced as, and shall continue as, a Base Rate Loan unless
and until the Borrower Converts such Base Rate Loan in
accordance with the terms of Section 3.8 hereof.
46
<PAGE> 51
III.2. Payment of Interest.
(a) The Borrower shall pay interest to the Agent for the
account of each Lender on the outstanding and unpaid principal amount
of each Revolving Loan made by such Lender for the period commencing on
the date of such Revolving Loan until such Revolving Loan shall be
paid, continued or converted, as the case may be, at the then
applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate
for Eurodollar Rate Loans, as designated by the Authorized
Representative pursuant to Section 3.1 hereof; provided, however, that
if any Event of Default shall have occurred and be continuing, all
amounts outstanding hereunder shall bear interest thereafter at the
Default Rate until such Event of Default is waived.
(b) Interest on each Revolving Loan shall be computed on
the basis of a year of 360 days and calculated in each case for the
actual number of days elapsed. Interest on each Revolving Loan shall be
paid (i) quarterly in arrears on the last Business Day of each
September, December, March and June, commencing September 30, 1998 for
each Base Rate Loan, (ii) on the last day of the applicable Interest
Period for each Eurodollar Rate Loan and, if such Interest Period
extends for more than three (3) months, at intervals of three (3)
months after the first day of such Interest Period, and (iii) upon
payment in full of the principal amount of such Revolving Loan.
III.3. Payment of Principal. The principal amount of each Revolving
Loan shall be due and payable to the Agent for the benefit of each Lender in
full on the Revolving Credit Termination Date, or earlier as specifically
provided herein. The principal amount of any Base Rate Loan may be prepaid in
whole or in part at any time. The principal amount of any Eurodollar Rate Loan
may be prepaid only at the end of the applicable Interest Period unless the
Borrower shall pay to the Agent for the account of the Lenders the additional
amount, if any, required under Section 6.5 hereof. All prepayments of Revolving
Loans made by the Borrower shall be in the amount of $5,000,000 or such greater
amount which is an integral multiple of $1,000,000, or the amount equal to all
Revolving Credit Outstandings, or such other amount as necessary to comply with
Section 3.1(b) or Section 3.7 hereof.
III.4. Manner of Payment.
(a) Each payment of principal (including any prepayment)
and payment of interest and fees, and any other amount required to be
paid to the Lenders with respect to the Revolving Loans, shall be made
to the Agent at the Principal Office, for the account of each Lender,
in Dollars and in immediately available funds, without setoff,
deduction, or counterclaim before 12:30 P.M. on the date such payment
is due. The Agent may, but shall not be obligated to, debit the amount
of any such payment which is not made by such time to any ordinary
deposit account, if any, of the Borrower with the Agent.
47
<PAGE> 52
(b) The Agent shall deem any payment made by or on behalf
of the Borrower hereunder that is not made both in Dollars and in
immediately available funds and prior to 12:30 P.M. to be a
non-conforming payment. Any such payment shall not be deemed to be
received by the Agent until the later of (i) the time such funds become
available funds and (ii) the next Business Day. Any non-conforming
payment may, at the election, of the Agent constitute or become a
Default or Event of Default. Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until the later
of (x) the date such funds become available funds or (y) the next
Business Day at the Default Rate from the date such amount was due and
payable.
(c) In the event that any payment hereunder or under the
Revolving Notes becomes due and payable on a day other than a Business
Day, then such due date shall be extended to the next succeeding
Business Day unless provided otherwise under clause (ii) of the
definition of "Interest Period"; provided that interest shall continue
to accrue during the period of any such extension and provided further,
that in no event shall any such due date be extended beyond the
Revolving Credit Termination Date.
III.5. Revolving Notes and Swing Line Notes.
(a) Revolving Loans made by each Lender shall be
evidenced by the Revolving Note payable to the order of such Lender in
the respective amount of its Applicable Commitment Percentage of the
Revolving Credit Commitment, which Revolving Note shall be dated the
Closing Date or a later date pursuant to an Assignment and Acceptance
and shall be duly completed, executed and delivered by the Borrower.
(b) Swing Line Loans made by NationsBank shall be
evidenced by, and be repayable with interest in accordance with the
terms of, the Swing Line Note dated the Closing Date and duly executed
and delivered by the Borrower.
III.6. Pro Rata Payments. Except as otherwise provided herein, (a)
each payment on account of the principal of and interest on the Revolving Loans
and the fees described in Section 3.10 hereof shall be made to the Agent for the
account of the Lenders pro rata based on their Applicable Commitment
Percentages, (b) all payments to be made by the Borrower for the account of each
of the Lenders on account of principal, interest and fees, shall be made without
diminution, setoff, recoupment or counterclaim, and (c) the Agent will promptly
distribute to the Lenders in immediately available funds payments received in
fully collected, immediately available funds from the Borrower.
III.7. Optional Commitment Reductions. The Borrower shall, by notice
from an Authorized Representative, have the right from time to time but not more
frequently than once each calendar month, upon not less than three (3) Business
Days' written notice to the Agent, effective upon receipt, to permanently reduce
the Total Revolving Credit Commitment. The
48
<PAGE> 53
Agent shall give each Lender, within one (1) Business Day of receipt of such
notice, telefacsimile notice, or telephonic notice (confirmed in writing), of
such reduction. Each such reduction shall be in the aggregate amount of
$1,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment of the
Revolving Loans to the extent that the principal amount of Revolving Credit
Outstandings plus Swing Line Outstandings plus Letter of Credit Outstandings
exceeds either (i) the Total Revolving Credit Commitment or (ii) the Borrowing
Base, after giving effect to such reduction, together with accrued and unpaid
interest on the amounts prepaid. No such reduction shall result in the payment
of any Eurodollar Rate Loan other than on the last day of the Interest Period of
such Eurodollar Rate Loan unless such prepayment is accompanied by amounts due,
if any, under Section 6.5 hereof.
III.8. Conversions and Elections of Subsequent Interest Periods.
Subject to the limitations set forth below and in Article VI, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before
10:30 A.M. on any Business Day, Convert all or a part of Eurodollar
Rate Loans to Base Rate Loans on the last day of the Interest Period
for such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default shall
have occurred and be continuing upon delivery, effective upon receipt,
of a properly completed Interest Rate Selection Notice to the Agent on
or before 10:30 A.M. three (3) Business Days' prior to the date of such
election or Conversion:
(i) elect a subsequent Interest Period for all
or a portion of Eurodollar Rate Loans to begin on the last day
of the then current Interest Period for such Eurodollar Rate
Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate
Loans on any Business Day.
Each election and Conversion pursuant to this Section 3.8 hereof shall
be subject to the limitations on Eurodollar Rate Loans set forth in the
definition of "Interest Period" herein and in Sections 3.1, 3.3 and Article VI
hereof. The Agent shall give written notice to each Lender of such notice of
election or Conversion prior to 3:00 P.M. on the day such notice of election or
Conversion is received. All such Continuations or Conversions of Loans shall be
effected pro rata based on the Applicable Commitment Percentages of the Lenders.
III.9. Increase and Decrease in Amounts. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower as Advances
shall be reduced by the
49
<PAGE> 54
aggregate amount of Revolving Credit Outstandings, Letters of Credit
Outstandings and Swing Line Outstandings.
III.10. Unused Fee. For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date, the Borrower agrees to pay to
the Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an unused fee equal to the product of (a) the average
daily amount by which the Total Revolving Credit Commitment exceeds the sum of
(i) Revolving Credit Outstandings (without giving effect to Swing Line
Outstandings) plus (ii) Letter of Credit Outstandings multiplied by (b) .50% per
annum. Such fees shall be due in arrears on the last Business Day of each
September, December, March and June commencing September 30, 1998 to and on the
Revolving Credit Termination Date. Notwithstanding the foregoing, so long as any
Lender fails to make available any portion of its Revolving Credit Commitment
when requested, such Lender shall not be entitled to receive payment of its pro
rata share of such fee until such Lender shall make available such portion. Such
fee shall be calculated on the basis of a year of 360 days for the actual number
of days elapsed.
III.11. Deficiency Advances; Failure to Purchase Participations. No
Lender shall be responsible for any default of any other Lender in respect to
such other Lender's obligation to make any Revolving Loan hereunder or fund its
purchase of any Participation hereunder nor shall the Revolving Credit
Commitment of any Lender hereunder be increased as a result of such default of
any other Lender. Without limiting the generality of the foregoing, in the event
any Lender shall fail to advance funds to the Borrower as herein provided, the
Agent may in its discretion, but shall not be obligated to, advance under the
applicable Revolving Note in its favor as a Lender all or any portion of such
amount or amounts (each, a "deficiency advance") and shall thereafter be
entitled to payments of principal of and interest on such deficiency advance in
the same manner and at the same interest rate or rates to which such other
Lender would have been entitled had it made such Advance under its Revolving
Note; provided that, (i) such defaulting Lender shall not be entitled to receive
payments of principal, interest or fees with respect to such deficiency advance
until such deficiency advance shall be paid by such Lender and (ii) upon payment
to the Agent from such other Lender of the entire outstanding amount of each
such deficiency advance, together with accrued and unpaid interest thereon, from
the most recent date or dates interest was paid to the Agent by the Borrower on
each Revolving Loan comprising the deficiency advance at the interest rate per
annum for overnight borrowing by the Agent from the Federal Reserve Bank, then
such payment shall be credited against the applicable Revolving Note of the
Agent in full payment of such deficiency advance and the Borrower shall be
deemed to have borrowed the amount of such deficiency advance from such other
Lender as of the most recent date or dates, as the case may be, upon which any
payments of interest were made by such Borrower thereon. In the event any Lender
shall fail to fund its purchase of a Participation after notice from the Issuing
Bank or NationsBank, as the Swing Line lender, as applicable, such Lender shall
pay to the Issuing Bank or NationsBank, as the Swing Line lender, as applicable,
interest on the amount so due from the date of such notice at the interest rate
per annum for overnight borrowing by the Agent from the Federal Reserve Bank to
the date such
50
<PAGE> 55
purchase price is received by the Issuing Bank or NationsBank, as the Swing Line
lender, as applicable.
III.12. Use of Proceeds. The proceeds of the Loans made pursuant to
the Revolving Credit Facility shall be used by the Borrower (a) to fund a
portion of the fees and expenses incurred in connection with the HPG
Acquisition, which fees and expenses shall not exceed $21,000,000, (b) for
general working capital needs and (c) for other corporate purposes, including
capital expenditures and Permitted Acquisitions.
III.13. Swing Line. Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Credit Facility
in an efficient manner and to minimize the transfer of funds between the Agent
and the Lenders, NationsBank shall make available Swing Line Loans to the
Borrower prior to the Revolving Credit Termination Date. NationsBank shall not
be obligated to make any Swing Line Loan pursuant hereto (i) if to the actual
knowledge of NationsBank the Borrower is not in compliance with all the
conditions to the making of Revolving Loans set forth in this Agreement, (ii) if
after giving effect to such Swing Line Loan, the Swing Line Outstandings exceed
$10,000,000, or (iii) if after giving effect to such Swing Line Loan, the sum of
the Swing Line Outstandings, Revolving Credit Outstandings and Letter of Credit
Outstandings exceeds either (x) the Total Revolving Credit Commitment or (y) the
Borrowing Base. Swing Line Loans shall bear interest at the Base Rate. The
Company may borrow, repay and reborrow under this Section 3.13 hereof. Unless
notified to the contrary by NationsBank, borrowings under the Swing Line shall
be made in the minimum amount of $500,000 or, if greater, in amounts which are
integral multiples of $100,000 or in the amount necessary to effect a Base Rate
Refunding Loan, upon written request by telefacsimile transmission, effective
upon receipt, by an Authorized Representative of the Borrower made to
NationsBank not later than 12:30 P.M. on the Business Day of the requested
borrowing. Each such Borrowing Notice shall specify the amount of the borrowing
and the date of borrowing, and shall be in the form of Exhibit D-2 hereto.
Unless notified to the contrary by NationsBank, each repayment of a Swing Line
Loan shall be in an amount which is an integral multiple of $100,000 or the
aggregate amount of all Swing Line Outstandings. If the Borrower instructs
NationsBank to debit any demand deposit account of the Borrower in the amount of
any payment with respect to a Swing Line Loan, or NationsBank otherwise receives
repayment, after 12:30 P.M. on a Business Day, such payment shall be deemed
received on the next Business Day.
(a) The interest payable on Swing Line Loans is solely
for the account of NationsBank, and all accrued and unpaid interest on
Swing Line Loans shall be payable on the dates and in the manner
provided in Sections 3.2(b) and 3.4 hereof with respect to interest on
Base Rate Loans. The Swing Line Outstandings shall be evidenced by the
Swing Line Note delivered to NationsBank pursuant to Section 3.5(b)
hereof.
(b) Upon the making of a Swing Line Loan, each Lender
shall be deemed to have purchased from NationsBank a Participation
therein in an amount equal to that Lender's Applicable Commitment
Percentage of such Swing Line Loan. Upon demand
51
<PAGE> 56
made by NationsBank, each Lender shall, according to its Applicable
Commitment Percentage of such Swing Line Loan, promptly provide to
NationsBank its purchase price therefor in an amount equal to its
Participation therein. Any Advance made by a Lender pursuant to demand
of NationsBank of the purchase price of its Participation shall be
deemed (i) provided that the conditions to making Revolving Loans shall
be satisfied, a Base Rate Refunding Loan under Section 3.1 hereof until
the Borrower Converts such Base Rate Loan in accordance with the terms
of Section 3.8 hereof, and (ii) in all other cases, the funding by each
Lender of the purchase price of its Participation in such Swing Line
Loan. The obligation of each Lender to so provide its purchase price to
NationsBank shall be absolute and unconditional and shall not be
affected by the occurrence of an Event of Default or any other
occurrence or event.
The Borrower, at its option and subject to the terms hereof, may
request an Advance pursuant to Section 3.1 hereof in an amount sufficient to
repay Swing Line Outstandings on any date and the Agent shall provide from the
proceeds of such Advance to NationsBank the amount necessary to repay such Swing
Line Outstandings (which NationsBank shall then apply to such repayment) and
credit any balance of the Advance in immediately available funds in the manner
directed by the Borrower pursuant to Section 3.1(c)(ii) hereof. The proceeds of
such Advances shall be paid to NationsBank for application to the Swing Line
Outstandings and the Lenders shall then be deemed to have made Loans in the
amount of such Advances. The Swing Line shall continue in effect until the
Revolving Credit Termination Date, at which time all Swing Line Outstandings and
accrued interest thereon shall be due and payable in full.
52
<PAGE> 57
ARTICLE IV
Letters of Credit
IV.1. Letters of Credit. The Issuing Bank agrees, subject to the
terms and conditions of this Agreement, upon request of the Borrower to issue
from time to time for the account of the Borrower Letters of Credit upon
delivery to the Issuing Bank of an Application and Agreement for Letter of
Credit relating thereto in form and content acceptable to the Issuing Bank;
provided, that (i) the Letter of Credit Outstandings shall not exceed the Total
Letter of Credit Commitment and (ii) no Letter of Credit shall be issued if,
after giving effect thereto, Letter of Credit Outstandings plus Revolving Credit
Outstandings plus Swing Line Outstandings shall exceed either (x) the Total
Revolving Credit Commitment or (y) the Borrowing Base. No Letter of Credit shall
have an expiry date (including all rights of the Borrower or any beneficiary
named in such Letter of Credit to require renewal) or payment date occurring
later than the earlier to occur of (x) (i) in the case of standby Letters of
Credit, one year after the date of its issuance and (ii) in the case of
documentary Letters of Credit, 120 days or (y) the Stated Termination Date.
IV.2. Reimbursement.
(a) The Borrower hereby unconditionally agrees to pay to
the Issuing Bank immediately on demand at the Principal Office all
amounts required to pay all drafts drawn or purporting to be drawn
under the Letters of Credit and all reasonable expenses incurred by the
Issuing Bank in connection with the Letters of Credit, and in any event
and without demand to place in possession of the Issuing Bank (which
shall include Advances under the Revolving Credit Facility if permitted
by Section 3.1 hereof and Swing Line Loans if permitted by Section 3.14
hereof) sufficient funds to pay all debts and liabilities arising under
any Letter of Credit. The Issuing Bank agrees to give the Borrower
prompt notice of any request for a draw under a Letter of Credit. The
Issuing Bank may charge any account the Borrower may have with it for
any and all amounts the Issuing Bank pays under a Letter of Credit,
plus charges and reasonable expenses as from time to time agreed to by
the Issuing Bank and the Borrower; provided that to the extent
permitted by Section 3.1(c)(iv) hereof and Section 3.14 hereof, amounts
shall be paid pursuant to Advances under the Revolving Credit Facility
or, if the Borrower shall elect, by Swing Line Loans. The Borrower
agrees to pay the Issuing Bank interest on any Reimbursement
Obligations not paid when due hereunder at the Base Rate plus two
percent (2.0%), or the maximum rate permitted by applicable law, if
lower, such rate to be calculated on the basis of a year of 360 days
for actual days elapsed.
(b) In accordance with the provisions of Section 3.1(c)
hereof, the Issuing Bank shall notify the Agent of any drawing under
any Letter of Credit promptly following the receipt by the Issuing Bank
of such drawing.
(c) Each Lender (other than the Issuing Bank) shall
automatically acquire on
53
<PAGE> 58
the date of issuance thereof, a Participation in the liability of the
Issuing Bank in respect of each Letter of Credit in an amount equal to
such Lender's Applicable Commitment Percentage of such liability, and
to the extent that the Borrower is obligated to pay the Issuing Bank
under Section 4.2(a) hereof, each Lender (other than the Issuing Bank)
thereby shall absolutely, unconditionally and irrevocably assume, and
shall be unconditionally obligated to pay to the Issuing Bank as
hereinafter described, its Applicable Commitment Percentage of the
liability of the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in
its capacity as a Lender) shall, subject to the terms and
conditions of Article III, pay to the Agent for the account of
the Issuing Bank at the Principal Office in Dollars and in
immediately available funds, an amount equal to its Applicable
Commitment Percentage of any drawing under a Letter of Credit,
such funds to be provided in the manner described in Section
3.1(c)(iv) hereof.
(ii) Simultaneously with the making of each
payment by a Lender to the Issuing Bank pursuant to Section
3.1(c)(iv)(B) hereof, such Lender shall, automatically and
without any further action on the part of the Issuing Bank or
such Lender, acquire a Participation in an amount equal to
such payment (excluding the portion thereof constituting
interest accrued prior to the date the Lender made its
payment) in the related Reimbursement Obligation of the
Borrower. The Reimbursement Obligations of the Borrower shall
be immediately due and payable whether by Advances made in
accordance with Section 3.1(c)(iv) hereof, Swing Line Loans
made in accordance with Section 3.14 hereof, or otherwise.
(iii) Each Lender's obligation to make payment to
the Agent for the account of the Issuing Bank pursuant to
Section 3.1(c)(iv) hereof and this Section 4.2(c) hereof, and
the right of the Issuing Bank to receive the same, shall be
absolute and unconditional, shall not be affected by any
circumstance whatsoever and shall be made without any offset,
abatement, withholding or reduction whatsoever. If any Lender
is obligated to pay but does not pay amounts to the Agent for
the account of the Issuing Bank in full upon such request as
required by Section 3.1(c)(iv) hereof or this Section 4.2(c)
hereof, such Lender shall, on demand, pay to the Agent for the
account of the Issuing Bank interest on the unpaid amount for
each day during the period commencing on the date of notice
given to such Lender pursuant to Section 3.1(c) hereof until
such Lender pays such amount to the Agent for the account of
the Issuing Bank in full at the interest rate per annum for
overnight borrowing by the Agent from the Federal Reserve
Bank.
(iv) In the event the Lenders have purchased
Participations in any
54
<PAGE> 59
Reimbursement Obligation as set forth in clause (ii) above,
then at any time payment (in fully collected, immediately
available funds) of such Reimbursement Obligation, in whole or
in part, is received by Issuing Bank from the Borrower,
Issuing Bank shall promptly pay to each Lender an amount equal
to its Applicable Commitment Percentage of such payment from
the Borrower.
(d) Promptly following the end of each calendar quarter,
the Issuing Bank shall deliver to the Agent a notice describing the
aggregate undrawn amount of all Letters of Credit at the end of such
quarter. Upon the request of any Lender from time to time, the Issuing
Bank shall deliver to the Agent, and the Agent shall deliver to such
Lender, any other information reasonably requested by such Lender with
respect to each Letter of Credit outstanding.
(e) The issuance by the Issuing Bank of each Letter of
Credit shall, in addition to the conditions precedent set forth in
Article VII, be subject to the conditions that such Letter of Credit be
in such form and contain such terms as shall be reasonably satisfactory
to the Issuing Bank consistent with the then current practices and
procedures of the Issuing Bank with respect to similar letters of
credit, and the Borrower shall have executed and delivered such other
instruments and agreements relating to such Letters of Credit as the
Issuing Bank shall have reasonably requested consistent with such
practices and procedures. All Letters of Credit shall be issued
pursuant to and subject to the Uniform Customs and Practice for
Documentary Credits, 1993 revision, International Chamber of Commerce
Publication No. 500 and all subsequent amendments and revisions
thereto.
(f) The Borrower agrees that Issuing Bank may, in its
sole discretion, accept or pay, as complying with the terms of any
Letter of Credit, any drafts or other documents otherwise in order
which may be signed or issued by an administrator, executor, trustee in
bankruptcy, debtor in possession, assignee for the benefit of
creditors, liquidator, receiver, attorney in fact or other legal
representative of a party who is authorized under such Letter of Credit
to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of
Section 13.5 hereof, the Borrower hereby agrees to indemnify and hold
harmless the Issuing Bank, each other Lender and the Agent from and
against any and all claims and damages, losses, liabilities, reasonable
costs and expenses which the Issuing Bank, such other Lender or the
Agent may incur (or which may be claimed against the Issuing Bank, such
other Lender or the Agent) by any Person by reason of or in connection
with the issuance or transfer of or payment or failure to pay under any
Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank, any other Lender or the Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, (i) caused by the willful misconduct or gross
negligence of the party to be indemnified or (ii) caused by the failure
of the Issuing Bank to pay under any Letter of Credit after the
55
<PAGE> 60
presentation to it of a request for payment strictly complying with the
terms and conditions of such Letter of Credit, unless such payment is
prohibited by any law, regulation, court order or decree. The
indemnification and hold harmless provisions of this Section 4.2(g)
hereof shall survive the Facility Termination Date.
(h) Without limiting Borrower's rights as set forth in
Section 4.2(g) hereof, the obligation of the Borrower to immediately
reimburse the Issuing Bank for drawings made under Letters of Credit
and the Issuing Bank's right to receive such payment shall be absolute,
unconditional and irrevocable, and that such obligations of the
Borrower shall be performed strictly in accordance with the terms of
this Agreement and such Letters of Credit and the related Applications
and Agreement for any Letter of Credit, under all circumstances
whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of
the Letter of Credit, the obligation supported by the Letter
of Credit or any other agreement or instrument relating
thereto (collectively, the "Related LC Documents");
(ii) any amendment or waiver of or any consent to
or departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense
(other than the defense of payment in accordance with the
terms of this Agreement) or other rights which the Borrower
may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the
Agent, the Lenders or any other Person, whether in connection
with the Loan Documents, the Related LC Documents or any
unrelated transaction;
(iv) any breach of contract or other dispute
between the Borrower and any beneficiary or any transferee of
a Letter of Credit (or any persons or entities for whom such
beneficiary or any such transferee may be acting), the Agent,
the Lenders or any other Person;
(v) any draft, statement or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever; or
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or
agreed to by the Agent, with or without notice to or approval
by the Borrower in respect of any of Borrower's Obligations
under this Agreement.
56
<PAGE> 61
IV.3. Letter of Credit Facility Fees. The Borrower shall pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an issuance fee on the aggregate amount available to be
drawn on each (i) Letter of Credit which provides credit support, other than in
connection with a commercial transaction, at a rate equal to the Applicable
Margin, and (ii) Letter of Credit which provides credit support in a commercial
transaction, of 1/4% for each 120 day term or part thereof of such Letter of
Credit. Such fees shall be due with respect to each Letter of Credit quarterly
in arrears on the last day of each December, March, June and September, the
first such payment to be made on the first such date occurring after the date of
issuance of a Letter of Credit. The fees described in this Section 4.3 before
shall be calculated on the basis of a year of 360 days for the actual number of
days elapsed.
IV.4. Administrative Fees. The Borrower shall pay to the Issuing
Bank (i) such administrative fee and other fees, if any, in connection with the
Letters of Credit in such amounts and at such times as the Issuing Bank and the
Borrower shall agree from time to time and (ii) a fronting fee for each Letter
of Credit equal to 1/8% on the aggregate amount available to be drawn on each
Letter of Credit.
IV.5. Existing Letters of Credit. The parties hereto agree that on
the Closing Date all Existing Letters of Credit shall be deemed Letters of
Credit hereunder and the outstanding undrawn face amount of such Existing
Letters of Credit shall be deemed Letter of Credit Outstandings hereunder.
57
<PAGE> 62
ARTICLE V
Security
V.1. Security Interest. As security for the full and timely payment
and performance of all Obligations, and as a continuation of the security
interests and rights granted by the Borrower and its Domestic Subsidiaries under
the Existing Credit Agreement and the Security Instruments (as defined therein),
the Borrower shall, and shall cause each Domestic Subsidiary to, on or before
the Closing Date deliver to the Agent, in form and substance reasonably
acceptable to the Agent, the Security Agreement, the Intellectual Property
Security Agreement, the Landlord Waivers and such duly executed and filed
Uniform Commercial Code financing statements sufficient to grant to the Agent a
valid, duly perfected security interest in the Collateral described therein,
subject to no prior Liens other than Permitted Liens, and do all things
reasonably necessary in the opinion of the Agent and its counsel to grant to and
continue with the Agent for the benefit of the Lenders a first priority security
interest, duly perfected with respect to Collateral governed by the UCC, in all
Collateral subject to no prior Lien or other encumbrance or restriction on
transfer (other than restrictions on transfer imposed by applicable securities
laws and Permitted Liens).
V.2. Stock Pledge. As security for the full and timely payment and
performance of all Obligations now existing or hereafter arising, the Borrower
and each Domestic Subsidiary owning any Pledged Stock shall on or before the
Closing Date deliver to the Agent, in form and substance reasonably acceptable
to the Agent, the Stock Pledge Agreement together with certificates representing
such Pledged Stock and such stock powers duly executed in blank as may be
required by the Agent in accordance with the terms hereof and thereof. In
addition to any Stock Pledge Agreement required to be delivered pursuant to
Section 9.21 hereof, the Borrower and each Subsidiary hereby agrees to pledge to
the Agent for the benefit of the Lenders (a) 100% of the capital stock and
related interests and rights directly or indirectly owned by the Borrower of any
Domestic Subsidiary or Domestic Control Subsidiary hereafter acquired or
created, (b) 65% of the voting stock and related interests and rights directly
or indirectly owned by the Borrower of any Direct Foreign Subsidiary or Direct
Foreign Control Subsidiary hereafter acquired or created and (c) 100% of the
capital stock and related interests and rights directly or indirectly owned by
the Borrower of any Foreign Subsidiary or Foreign Control Subsidiary of the
Borrower to the extent such action would not result in any material adverse tax
impact on the Borrower and, in each case, to deliver to the Agent a Stock Pledge
Agreement substantially in the form of Exhibit G hereto within thirty (30) days
of the acquisition or creation of such Subsidiary.
V.3. Guaranty. To guarantee the full and timely payment and
performance of all Obligations now existing or hereafter arising, the Borrower
shall cause the Guaranty to be delivered by each Domestic Subsidiary, in form
and substance reasonably acceptable to the Agent, on or before the Closing Date.
The Borrower hereby agrees to cause a Guaranty to be delivered by any hereafter
acquired, created or arising (a) Domestic Subsidiary and (b) Foreign Subsidiary
to the extent such action would not result in (i) any material adverse tax
impact on the
58
<PAGE> 63
Borrower or (ii) any violation of any debt agreement to which such Foreign
Subsidiary is a party.
V.4. Mortgages. As security for the full and timely payment and
performance of all Obligations now existing or hereafter arising, the Borrower
shall cause the Mortgage to be delivered to the Agent after the Closing Date
with respect to any material real property (other than the Florida Office) that
is acquired by the Borrower or any Domestic Subsidiary, in form and substance
reasonably acceptable to the Agent. The Borrower shall deliver to the Agent all
environmental reports, title insurance, appraisals, surveys, legal opinions and
other certificates and documents reasonably requested by the Agent in connection
with such Mortgage.
V.5. Intellectual Property. As security for the full and timely
payment and performance of all Obligations now existing or hereafter arising,
the Borrower and each Domestic Subsidiary owning any material patents, patent
applications, trademarks, trademark registrations and applications therefor,
copyrights, copyright registrations and applications therefor or any other
material intellectual property, shall deliver to the Agent for the benefit of
the Lenders the Intellectual Property Security Agreements and the Intellectual
Property Assignments and opinions of counsel to the Borrower and such Domestic
Subsidiary in any appropriate jurisdiction designated by the Agent as to the
validity and enforceability of such agreements and such other legal matters as
the Agent reasonably requests, in form and substance reasonably acceptable to
the Agent and the Lenders. In addition to any Intellectual Property Security
Agreement required to be delivered pursuant to Section 9.21 hereof, the Borrower
hereby agrees to pledge, or cause to be pledged, all intellectual property
interests and licenses hereafter acquired or created and owned by the Borrower
or any Domestic Subsidiary within thirty (30) days of the acquisition or
creation of such intellectual property or license.
V.6. Information Regarding Collateral. The Borrower represents,
warrants and covenants that (a) the chief executive office of the Borrower and
each Guarantor at the Closing Date is located at the address or addresses
specified on Schedule 5.6 hereto, and (b) Schedule 5.6 hereto contains a true
and complete list of (i) the legal name and address of the Borrower and each
Guarantor and of each other Person that has effected any merger or consolidation
with the Borrower or a Guarantor or contributed or transferred to the Borrower
or a Guarantor any significant portion of its assets constituting Collateral at
any time since January 1, 1993 (excluding Persons making sales in the ordinary
course of their businesses to the Borrower or a Guarantor of property
constituting inventory in the hands of such seller), (ii) each location at which
goods constituting Collateral are now located (together with the name of each
owner of the property located at such address if not the Borrower or the
applicable Guarantor, and a summary description of the relationship between the
applicable Guarantor and such Person), and (iii) each currently used trade style
and each trade name used by the Borrower or any Guarantor since January 1, 1993
and the purposes for which it was used. Borrower shall not change, and shall not
permit any other Guarantor to change, the location of its chief executive office
or any location specified in clause (ii) of the immediately preceding sentence,
or use or permit any Guarantor to use, any additional trade style, except upon
giving not less than thirty (30) days' prior written notice to the Agent and
taking or causing to be taken all such action at Borrower's
59
<PAGE> 64
or such other Guarantor's expense as may be reasonably requested by the Agent to
perfect or maintain the perfection of the Lien of the Agent in Collateral.
V.7. Further Assurances. At the request of the Agent, the Borrower
will, and will cause each Subsidiary to, execute by its duly authorized
officers, alone or with the Agent, any certificate, instrument, statement or
document and will procure any such certificate, instrument, statement or
document (and pay all connected costs) which the Agent reasonably deems
necessary to create or preserve the Liens (and the perfection and priority
thereof) of the Agent for the benefit of the Lenders contemplated hereby and by
the other Loan Documents and specifically including all Collateral acquired by
the Borrower or any Guarantor after the Closing Date.
60
<PAGE> 65
ARTICLE VI
Change in Circumstances
VI.1. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any
applicable law, rule, or regulation, or any change in any applicable
law, rule, or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office)
with any request or directive (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with respect
to any Loans, its Notes, or its obligation to make Loans, or
change the basis of taxation of any amounts payable to such
Lender (or its Applicable Lending Office) under this Agreement
or its Notes in respect of any Loans (other than taxes imposed
on the overall net income of such Lender by the jurisdiction
in which such Lender has its principal office or such
Applicable Lending Office and franchise taxes);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Commitments of such
Lender hereunder; or
(iii) shall impose on such Lender (or its
Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any
other condition affecting this Agreement or its Note or any of
such extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, Converting into,
Continuing, or maintaining any Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Notes with respect to any Loans, then the Borrower
shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction. If any
Lender requests compensation by the Borrower under this Section 6.1(a)
hereof, the Borrower may, by notice to such Lender (with a copy to the
Agent), suspend the obligation of such Lender to make or Continue Loans
of the Type with respect to which such compensation is
61
<PAGE> 66
requested, or to Convert Loans of any other Type into Loans of such
Type, until the event or condition giving rise to such request ceases
to be in effect (in which case the provisions of Section 6.4 hereof
shall be applicable); provided that such suspension shall not affect
the right of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any governmental authority,
central bank, or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of
such Lender or any corporation controlling such Lender as a consequence
of such Lender's obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its policies
with respect to capital adequacy), then from time to time upon demand
the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to
this Section 6.1 hereof and will designate a different Applicable
Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to it. Any Lender
claiming compensation under this Section 6.1 hereof shall furnish to
the Borrower and the Agent a statement setting forth the additional
amount or amounts to be paid to it hereunder which shall be conclusive
in the absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
VI.2. Limitation on Types of Loans. If on or prior to the first day
of any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination
shall be conclusive) and notify the Agent that the Eurodollar Rate will
not adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the
62
<PAGE> 67
Lenders shall be under no obligation to make additional Loans of such Type,
Continue Loans of such Type, or to Convert Loans of any other Type into Loans of
such Type and the Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Loans of the affected Type, either prepay
such Loans or Convert such Loans into another Type of Loan in accordance with
the terms of this Agreement.
VI.3. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in
which case the provisions of Section 6.4 hereof shall be applicable).
VI.4. Treatment of Affected Loans. If the obligation of any Lender
to make a particular Type of Eurodollar Rate Loan or to Continue, or to Convert
Loans of any other Type into, Loans of a particular Type shall be suspended
pursuant to Section 6.1 or 6.3 hereof (Loans of such Type being herein called
"Affected Loans" and such Type being herein called the "Affected Type"), such
Lender's Affected Loans shall be automatically Converted into Base Rate Loans on
the last day(s) of the then current Interest Period(s) for Affected Loans (or,
in the case of a Conversion required by Section 6.3 hereof, on such earlier date
as such Lender may specify to the Borrower with a copy to the Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 6.1 or 6.3 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Affected Loans have
been so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued
by such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Lender that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 6.1 or 6.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 6.4 hereof
no longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective
63
<PAGE> 68
Commitments.
VI.5. Compensation. Upon the request of any Lender, the Borrower
shall pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a
Eurodollar Rate Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 11.1 hereof) on a date
other than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any condition precedent
specified in Article VII to be satisfied) to borrow (other than by
reason of the failure of a Lender or Lenders to make funds available
without cause), Convert, Continue, or prepay a Eurodollar Rate Loan on
the date for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Agreement.
The Borrower hereby acknowledges that such losses, costs and expenses
requiring compensation from the Borrower shall include any such loss, cost or
expense incurred within 90 days after the Closing Date in connection with the
syndication of the Facilities. Any Lender claiming compensation under this
Section 6.5 hereof shall furnish the Borrower and the Agent a statement setting
forth in reasonable detail the amounts to be paid to it hereunder and the
determination thereof shall be conclusive absent manifest error.
VI.6. Taxes.
(a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which such Lender (or its Applicable Lending Office)
or the Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable under
this Agreement or any other Loan Document to any Lender or the Agent,
(i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 6.6 hereof) such Lender or
the Agent receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make
64
<PAGE> 69
such deductions, (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance
with applicable law, and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 13.2 hereof, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any
payment made under this Agreement or any other Loan Document or from
the execution or delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower agrees to indemnify each Lender and the
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 6.6 hereof) paid by
such Lender or the Agent (as the case may be) and any liability
(including penalties, interest, and expenses) arising therefrom or with
respect thereto.
(d) Each Lender organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each Lender
listed on the signature pages hereof and on or prior to the date on
which it becomes a Lender in the case of each other Lender, and from
time to time thereafter if requested in writing by the Borrower or the
Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender
is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or
business in the United States, (ii) Internal Revenue Service Form W-8
or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service, and (iii) any other form or certificate
required by any taxing authority (including any certificate required by
Sections 871(h) and 881(c) of the Internal Revenue Code), certifying
that such Lender is entitled to an exemption from or a reduced rate of
tax on payments pursuant to this Agreement or any of the other Loan
Documents.
(e) For any period with respect to which a Lender has
failed to provide the Borrower and the Agent with the appropriate form
pursuant to Section 6.6(d) hereof (unless such failure is due to a
change in treaty, law, or regulation occurring subsequent to the date
on which a form originally was required to be provided), such Lender
shall not be entitled to indemnification under Section 6.6(a), 6.6(b)
or 6.6(c) hereof with respect to Taxes imposed by the United States;
provided, however, that should a Lender, which is otherwise exempt from
or subject to a reduced rate of withholding tax, become subject to
Taxes because of its failure to deliver a form required hereunder, the
Borrower shall take
65
<PAGE> 70
such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes at such Lender's expense.
(f) If the Borrower is required to pay additional amounts
to or for the account of any Lender pursuant to this Section 6.6
hereof, then such Lender will agree to use reasonable efforts to change
the jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment
of Taxes, the Borrower shall furnish to the Agent evidence of such
payment.
(h) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of
the Borrower contained in this Section 6.6 hereof shall survive the
termination of the Commitments and the payment in full of the Notes.
VI.7. Replacement Banks. The Borrower may, in its sole discretion,
on ten (10) Business Days' prior written notice to the Agent and the applicable
Lender, cause a Lender who has (a) incurred increased costs or is unable to make
Eurodollar Rate Loans, (b) failed to fund any requested Advance, or (c) made any
claim for taxes under Section 6.6 hereof, require such Lender to (and such
Lender shall) assign, pursuant to Section 13.1 hereof, all of its rights and
obligations under this Agreement to an Eligible Assignee designated by the
Borrower which is willing to become a Lender for a purchase price equal to the
outstanding principal amount of the Loans payable to such Lender plus any
accrued but unpaid interest on such Loans, any accrued but unpaid fees with
respect to such Lender's Commitments and any other amount payable to such Lender
under this Agreement; provided, however, that any expenses or other amounts
which would be owing to such Lender pursuant to any indemnification provision
hereof (including, if applicable, Section 6.5 hereof) shall be payable by the
Borrower as if the Borrower had prepaid the Loans of such Lender rather than
such Lender having assigned its interest hereunder. The Borrower or the assignee
shall pay the applicable processing fee under Section 13.1 hereof.
66
<PAGE> 71
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
VII.1. Conditions of Initial Advance. The obligation of the Lenders
to make the Term Loans and the initial Advance under the Revolving Credit
Facility, and of the Issuing Bank to issue any additional Letter of Credit, and
of NationsBank to make any Swing Line Loan, is subject to the conditions
precedent that:
(a) the Agent shall have received on the Closing Date, in
form and substance satisfactory to the Agent and Lenders, the
following:
(i) executed originals of each of this
Agreement, the Notes, the Security Instruments and the other
Loan Documents, together with all schedules and exhibits
thereto;
(ii) certificates representing all of the shares
of Pledged Stock, together with undated stock powers executed
in blank;
(iii) the favorable written opinion or opinions
with respect to the Loan Documents and the transactions
contemplated thereby of counsel to the Credit Parties dated
the Closing Date, addressed to the Agent and the Lenders and
satisfactory to Smith Helms Mulliss & Moore, L.L.P., special
counsel to the Agent, substantially in the form of Exhibit P
hereto;
(iv) a certificate of the Chief Financial Officer
of the Borrower, certifying the solvency of the Borrower and
its Subsidiaries on the date of and immediately after giving
effect to the transactions contemplated hereby;
(v) resolutions of the boards of directors or
other appropriate governing body (or of the appropriate
committee thereof) of each Credit Party certified by its
secretary or assistant secretary as of the Closing Date,
approving and adopting the Loan Documents to be executed by
such Person, and authorizing the execution and delivery
thereof;
(vi) specimen signatures of officers of each
Credit Party executing the Loan Documents on behalf of such
Credit Party, certified by the secretary or assistant
secretary of such Credit Party;
(vii) the charter documents of each Credit Party
certified as of a recent date by the Secretary of State of its
state of organization;
(viii) the bylaws of each Credit Party certified as
of the Closing Date as
67
<PAGE> 72
true and correct by its secretary or assistant secretary;
(ix) certificates issued as of a recent date by
the Secretaries of State of the respective jurisdictions of
formation of each Credit Party as to the due existence and
good standing of each Credit Party;
(x) appropriate certificates of qualification to
do business, good standing and, where appropriate, authority
to conduct business under assumed name, issued in respect of
each Credit Party as of a recent date by the Secretary of
State or comparable official of each jurisdiction in which the
failure to be qualified to do business or authorized so to
conduct business could have a Material Adverse Effect;
(xi) notice of appointment of the initial
Authorized Representative(s);
(xii) evidence of all insurance required by the
Loan Documents;
(xiii) an initial Borrowing Notice, if any,
Borrowing Base Certificate, and, if elected by the Borrower,
Interest Rate Selection Notice;
(xiv) evidence of the filing of Uniform Commercial
Code financing statements reflecting the filing in all places
required by applicable law to perfect the Liens of the Agent
under the Security Instruments as a first priority Lien as to
items of Collateral in which a security interest may be
perfected by the filing of financing statements, and such
other documents and/or evidence of other actions as may be
necessary under applicable law to perfect the Liens of the
Agent under the Security Instruments as a first priority Lien
in and to such other Collateral as the Agent may require;
(xv) fully executed Landlord Waivers for the
warehouse facilities located in Nevada, Florida, Arkansas,
South Carolina, California, North Carolina and Washington;
(xvi) an executed copy of the Transaction
Documents certified as a full, true and correct copy of such
documents by an Authorized Officer of the Borrower;
(xvii) an executed copy of the Junior Financing
Documents certified as a full, true and correct copy of such
documents by an Authorized Representative of the Borrower;
(xviii) evidence that all fees payable by the
Borrower on the Closing Date to the Agent, NMS and the Lenders
have been paid in full;
68
<PAGE> 73
(xix) copies of all executed employment or
compensation agreements with all members of key management of
the Borrower;
(xx) The Agent and the Lenders shall have
received (a) the unaudited financial statements for the
Borrower and its Subsidiaries and HPG for the three-month
period ended March 31, 1998 and for all subsequent monthly
periods ended prior to the Closing Date, (b) audited financial
statements of HPG for each of fiscal years 1995, 1996 and
1997, (c) pro forma consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of March 31,
1998 and financial projections of the Borrower and its
Subsidiaries covering not less than five complete Fiscal Years
after the Closing, in each case giving effect to the
Acquisition, the transactions contemplated thereby and the
proposed capital structure, and (d) interim monthly financial
statements and monthly working capital detail for the most
recent trailing twelve months for which internal financial
statements are available and the first projected year, in each
case in form and substance satisfactory to the Agent, all of
which projections and financial statements shall conform to
GAAP applied on a consistent basis except as otherwise
disclosed;
(xxi) certificate of an Authorized Representative
dated the Closing Date certifying as to the matters set forth
in Section 7.1(b)(i), (ii), (iii), (iv), (vi) and (vii) below;
(xxii) copies of independent environmental reports
with respect to the Queretero Property in form and content
acceptable to the Agent and the Lenders;
(xxiii) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby;
(b) Each of the following shall be true:
(i) The Junior Financing and the HPG Acquisition
shall have been consummated on terms acceptable to the Agent
and the Lenders;
(ii) there shall not have occurred or become
known to the Agent or the Lenders any event, condition,
situation or status since the date of the information
contained in the financial and business projections, budgets,
pro forma data and forecasts concerning the Credit Parties
delivered to the Agent prior to the Closing Date that has had
or could reasonably be expected to result in a Material
Adverse Effect;
69
<PAGE> 74
(iii) There shall not be any action, suit,
investigation or proceeding pending or threatened in any court
or before any arbitrator or governmental instrumentality that
(a) purports to affect the transactions contemplated hereby
(including the HPG Acquisition), (b) could reasonably be
expected to have a material adverse effect on the financings
or any other transactions contemplated hereby (including the
HPG Acquisition), or on the Borrower or its Subsidiaries or
(c) would reasonably be expected to have a material adverse
effect on the ability of the parties hereto and thereto to
perform their obligations hereunder or under the Transaction
Documents;
(iv) the Borrower and its Subsidiaries shall have
received all approvals, consents and waivers, and shall have
made or given all necessary filings and notices as shall be
required to consummate the transactions contemplated hereby
and under the Junior Financing Documents and the Transaction
Documents without the occurrence of any default under,
conflict with or violation of (A) any applicable law, rule,
regulation, order or decree of any Governmental Authority or
arbitral authority or (B) any agreement, document or
instrument to which any of the Borrower or any Subsidiary is a
party or by which any of them or their properties are bound or
(C) the charter documents or bylaws of any Credit Party; and
(v) there shall not have occurred or exist (A)
an engagement in hostilities by the United States of America
or other national or international emergency or calamity, (B)
a general suspension of or material limitation on trading on
the New York Stock Exchange or other national securities
exchange, (C) the declaration of a general banking moratorium
by any applicable Governmental Authority or the imposition by
any applicable Governmental Authority of any material
limitation on transactions of the type contemplated by the
Loan Documents, or (D) any other material disruption of
financial or capital markets that could reasonably be expected
to adversely affect the transactions contemplated under the
Loan Documents.
(vi) There shall not have occurred a material
adverse change since December 31, 1997 in the business,
assets, operations or condition (financial or otherwise) of
the Borrower and its Subsidiaries and HPG, taken as a whole or
prospects of the Borrower and its Subsidiaries, taken as a
whole, or in the facts and information regarding such entities
as represented to date, including, without limitation, the
absence of any (a) event or circumstance, (b) change in laws
or regulations or (c) action, suit, investigation or
proceeding pending or threatened in any court or before any
governmental authority that purports to affect the Borrower or
any of its Subsidiaries, or HPG or any transaction
contemplated hereby, and that could have or could be
reasonably expected to have a Material Adverse Effect or a
material adverse effect on the ability of the Borrower or its
70
<PAGE> 75
Subsidiaries or HPG to perform their respective obligations
under the Transaction Documents or the Junior Financing
Documents.
(vii) All of the representations and warranties
and covenants contained in the Transaction Documents and the
Junior Financing Documents shall be true or performed in
accordance with their terms, respectively.
VII.2. Conditions of Loans and Letter of Credit. The obligations of
the Lenders to make any Loans, and the Issuing Bank to issue Letters of Credit,
and of NationsBank to make any Swing Line Loan, hereunder on or subsequent to
the Closing Date are subject to the satisfaction of the following conditions:
(a) the Agent or, in the case of Swing Line Loans,
NationsBank shall have received a Borrowing Notice if required by
Article III;
(b) the representations and warranties of the Borrower
set forth in Article VIII and in each of the other Loan Documents shall
be true and correct in all material respects on and as of the date of
such Advance, Swing Line Loan or Letter of Credit issuance or renewal,
with the same effect as though such representations and warranties had
been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in Section 8.6(a)(i)
hereof shall be deemed to be those financial statements most recently
delivered to the Agent and the Lenders pursuant to Section 9.1 hereof
from the date financial statements are delivered to the Agent and the
Lenders in accordance with such Section;
(c) in the case of the issuance of a Letter of Credit,
the Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
(d) at the time of (and after giving effect to) each
Advance, Swing Line Loan or the issuance of a Letter of Credit, no
Default or Event of Default specified in Article X shall have occurred
and be continuing; and
(d) the Agent and the Lenders shall be reasonably
satisfied that the Borrower and each Subsidiary will be Year 2000
Compliant on and after 90 days prior to year 2000.
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal
balance of all outstanding Loans for each Lender shall not
exceed such Lender's Revolving Credit Commitment;
71
<PAGE> 76
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Participations
in Letters of Credit and Reimbursement Obligations (or in the
case of the Issuing Bank, its remaining interest after
deduction of all Participations in Letters of Credit and
Reimbursement Obligations of other Lenders) for each Lender
and in the aggregate shall not exceed, respectively, (X) such
Lender's Letter of Credit Commitment or (Y) the Total Letter
of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line
Outstandings shall not exceed $10,000,000; and
(iv) a Revolving Loan, Swing Line Loan or a
Letter of Credit or renewal thereof, the sum of Letter of
Credit Outstandings plus Revolving Credit Outstandings plus
Swing Line Outstandings shall not exceed either (x) the Total
Revolving Credit Commitment or (y) the Borrowing Base.
72
<PAGE> 77
ARTICLE VIII
Representations and Warranties
The Borrower represents and warrants with respect to itself and its
Subsidiaries (which representations and warranties are made after giving effect
to the HPG Acquisition and which shall survive the delivery of the documents
mentioned herein and the making of Loans), that:
VIII.1. Organization and Authority.
(a) The Borrower and each Subsidiary is a corporation
duly organized and validly existing under the laws of the jurisdiction
of its formation;
(b) The Borrower and each Subsidiary (x) has the
requisite power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in the
Loan Documents, and (y) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material
Adverse Effect;
(c) The Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(d) Each Credit Party has the power and authority to
execute, deliver and perform the applicable Facility Guaranty and each
of the other Loan Documents to which it is a party; and
(e) When executed and delivered, each of the Loan
Documents to which the Borrower or any other Credit Party is a party
will be the legal, valid and binding obligation or agreement, as the
case may be, of the Borrower or such Credit Party, enforceable against
the Borrower or such Credit Party in accordance with its terms, subject
to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity (whether considered in a proceeding at law or in equity).
VIII.2. Loan Documents. The execution, delivery and performance by the
Borrower and each other Credit Party of each of the Loan Documents to which it
is a party:
(a) have been duly authorized by all requisite corporate
action (including any required shareholder approval) of the Borrower
and each other Credit Party required for the lawful execution, delivery
and performance thereof;
73
<PAGE> 78
(b) do not violate any provisions of (i) applicable law,
rule or regulation, (ii) any judgment, writ, order, determination,
decree or arbitral award of any Governmental Authority or arbitral
authority binding on the Borrower or any other Credit Party or its
properties, or (iii) the charter documents or bylaws of the Borrower or
any other Credit Party;
(c) does not and will not be in conflict with, result in
a breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which Borrower or any other Credit Party is a party, or by
which the properties or assets of Borrower or any other Credit Party
are bound; and
(d) does not and will not result in the creation or
imposition of any Lien upon any of the properties or assets of Borrower
or any other Credit Party except any Liens in favor of the Agent and
the Lenders created by the Security Instruments.
VIII.3. Solvency. The Borrower and each other Credit Party is Solvent
after giving effect to the transactions contemplated by the Loan Documents.
VIII.4. Subsidiaries and Shareholders. All shares of capital stock or
other equity interests of the Borrower are duly authorized, validly issued,
fully paid and non-assessable. The Borrower has no Subsidiaries other than those
Persons listed as Subsidiaries in Schedule 8.4 hereto and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 9.21 hereof; Schedule 8.4 hereto states as of the date hereof the
organizational form of each entity, the authorized and issued capitalization of
each Subsidiary listed thereon, the number of shares or other equity interests
of each class of capital stock or interest issued and outstanding of each such
Subsidiary and the number and/or percentage of outstanding shares or other
equity interest (including options, warrants and other rights to acquire any
interest) of each such class of capital stock or other equity interest owned by
Borrower or by any such Subsidiary; the outstanding shares or other equity
interests of each such Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable; and Borrower and each such Subsidiary owns
beneficially and of record all the shares and other interests it is listed as
owning in Schedule 8.4 hereto, free and clear of any Lien other then the Liens
created under the Loan Documents in favor of the Agent for the benefit of the
Lenders.
VIII.5. Ownership Interests. The Borrower owns no interest in any
Person other than the Persons listed in Schedule 8.4 hereto and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 9.21 hereof.
VIII.6. Financial Condition.
(a) The Borrower has heretofore furnished to the Agent
and each Lender audited consolidated and related consolidating balance
sheets of the Borrower and its
74
<PAGE> 79
Subsidiaries (including Borrower) as at December 31, 1997 and the notes
thereto and the related consolidated statements of income,
shareholders' equity and cash flows for the Fiscal Year then ended as
examined and certified by the Borrower's independent certified public
accountants. Except as set forth therein, such financial statements
(including the notes thereto) present fairly the financial condition of
the Borrower and its Subsidiaries as of the end of such Fiscal Year and
results of their operations and the changes in its shareholders' equity
for the Fiscal Year then ended, all in conformity with GAAP applied on
a Consistent Basis;
(b) since December 31, 1997, there has been no material
adverse change in the condition, financial or otherwise, of the
Borrower and its Subsidiaries or in the businesses, properties,
performance, prospects or operations of the Borrower or its
Subsidiaries, nor have such businesses or properties been materially
adversely affected as a result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo or
act of God; and
(c) the consolidated balance sheets of each of the
Borrower and its Subsidiaries and HPG that are attached hereto as
Schedule 8.6(c) hereto fairly present the consolidated financial
position of the Borrower and its Subsidiaries and HPG as of the dates
set forth therein, in each case in accordance with GAAP applied on a
Consistent Basis (except as otherwise specifically indicated therein).
The consolidated statements of income and cash flows of the Borrower
and its Subsidiaries and HPG that are attached hereto as Schedule
8.6(c) have been prepared in conformity with GAAP applied on a
Consistent Basis through all the periods involved (except as otherwise
specifically indicated therein) and fairly present the consolidated
results of operations of each of the Borrower and its Subsidiaries and
HPG for the periods indicated. The pro forma consolidated statements of
income and cash flows included in Schedule 8.6(c) hereto fairly present
the estimated consolidated income and cash flows of the Borrower and
its Subsidiaries assuming the consummation of the HPG Acquisition as if
it had occurred on the date set forth therein, and the pro forma
consolidated balance sheet of the Borrower included in Schedule 8.6(c)
hereto fairly presents the consolidated financial condition of the
Borrower and its Subsidiaries on the Closing Date (after giving effect
to all simultaneous transactions to occur on such date).
(d) except as set forth in the financial statements
referred to in Section 8.6(a) hereof or as set forth in Schedule 8.6(d)
hereto, neither the Borrower nor any Subsidiary has incurred, other
than in the ordinary course of business, any material Indebtedness,
Contingent Obligation or other commitment or liability which remains
outstanding or unsatisfied.
VIII.7. Title to Properties. The Borrower and each of its Subsidiaries
has good and marketable title to all its real and personal properties, subject
to no transfer restrictions or Liens of any kind, except for the transfer
restrictions and Liens described in Schedule 8.7 hereto.
75
<PAGE> 80
VIII.8. Taxes. The Borrower and each of its Subsidiaries have filed or
caused to be filed all federal, state and local tax returns which are required
to be filed by it and, except for taxes and assessments being contested in good
faith by appropriate proceedings diligently conducted and against which reserves
reflected in the financial statements described in Section 8.6(a) hereof and
satisfactory to the Borrower's independent certified public accountants have
been established, have paid or caused to be paid all taxes as shown on said
returns or on any assessment received by it, to the extent that such taxes have
become due.
VIII.9. Other Agreements. Neither the Borrower nor any Subsidiary is:
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(b) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which the Borrower or any
Subsidiary is a party, which default has, or if not remedied within any
applicable grace period could reasonably be likely to have, a Material
Adverse Effect.
VIII.10. Litigation. Except as set forth in Schedule 8.10
hereto, there is no action, suit, investigation or proceeding at law or in
equity or by or before any governmental instrumentality or agency or arbitral
body pending, or, to the knowledge of the Borrower, threatened by or against the
Borrower, or any of its Subsidiaries or affecting the Borrower or any of its
Subsidiaries or any properties or rights of the Borrower or any of its
Subsidiaries, which could reasonably be expected to have a Material Adverse
Effect.
VIII.11. Margin Stock. The proceeds of the borrowings made
hereunder will be used by the Borrower only for the purposes expressly
authorized herein. None of such proceeds will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin stock or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might constitute any of the
Loans under this Agreement a "purpose credit" within the meaning of said
Regulation U or Regulation X (12 C.F.R. Part 224) of the Board. Neither the
Borrower nor any agent acting in its behalf has taken or will take any action
which might cause this Agreement or any of the documents or instruments
delivered pursuant hereto to violate any regulation of the Board or to violate
the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933,
as amended, or any state securities laws, in each case as in effect on the date
hereof.
VIII.12. Investment Company. Neither the Borrower nor any of
its Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C.
Section 80a-1, et seq.). The application of the proceeds of the Loans and
76
<PAGE> 81
repayment thereof by the Borrower and the performance by the Borrower and the
other Credit Parties of the transactions contemplated by the Loan Documents will
not violate any provision of said Act, or any rule, regulation or order issued
by the Securities and Exchange Commission thereunder, in each case as in effect
on the date hereof.
VIII.13. Intellectual Property. The Borrower and its
Subsidiaries own or have the right to use under valid license agreements or
otherwise, all licenses, franchises, patents, trademarks, trademark rights,
trade names, trade name rights, trade secrets and copyrights, and all
applications for any of the foregoing, material to the conduct of their
businesses as now conducted (the "Intellectual Property"), all such Intellectual
Property being identified on the schedules to the Intellectual Property Security
Agreement and, except as set forth on Schedule 8.13 hereto, without conflict
with any patent, license, franchise, trademark, trade secrets and confidential
commercial or proprietary information, trade name, copyright, rights to trade
secrets or other proprietary rights of any other Person. Each Credit Party
owning any Collateral as defined in the Intellectual Property Security Agreement
is a party to the Intellectual Property Security Agreement.
VIII.14. No Untrue Statement. Neither (a) this Agreement nor
any other Loan Document or certificate or document executed and delivered by or
on behalf of the Borrower or any other Credit Party in accordance with or
pursuant to any Loan Document nor (b) any statement, representation, or warranty
provided to the Agent in connection with the negotiation or preparation of the
Loan Documents contains any misrepresentation or untrue statement of material
fact or omits to state a material fact necessary, in light of the circumstance
under which it was made, in order to make any such warranty, representation or
statement contained therein not misleading.
VIII.15. No Consents, Etc. Neither the respective businesses
or properties of the Borrower or any of its Subsidiaries, nor any relationship
between the Borrower or any of its Subsidiaries and any other Person, nor any
circumstance in connection with the execution, delivery and performance of the
Loan Documents and the transactions contemplated thereby, is such as to require
a consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person on the part
of the Borrower or any of its Subsidiaries as a condition to the execution,
delivery and performance of, or consummation of the transactions contemplated by
the Loan Documents, which, if not obtained or effected, would be reasonably
likely to have a Material Adverse Effect, or if so, such consent, approval,
authorization, filing, registration or qualification has been duly obtained or
effected, as the case may be.
VIII.16. Employee Benefit Plans.
(a) The Borrower and each ERISA Affiliate is in
compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder and in compliance with all
Foreign Benefit Laws with respect to all Employee
77
<PAGE> 82
Benefit Plans except for any required amendments for which the remedial
amendment period as defined in Section 401(b) of the Code has not yet
expired. Each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, each trust related to such plan has
been determined to be exempt under Section 501(a) of the Code and each
Employee Benefit Plan subject to any Foreign Benefit Law has received
the required approvals from any Governmental Authority regulating such
Employee Benefit Plan. No material liability has been incurred by the
Borrower or any ERISA Affiliate which remains unsatisfied for any taxes
or penalties with respect to any Employee Benefit Plan or any
Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i)
engaged in a nonexempt prohibited transaction described in Section 4975
of the Code or Section 406 of ERISA affecting any of the Employee
Benefit Plans or the trusts created thereunder which could subject any
such Employee Benefit Plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA, (ii) incurred any accumulated funding deficiency with
respect to any Employee Benefit Plan, whether or not waived, or any
other liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and
unpaid, (iii) failed to make a required contribution or payment to a
Multiemployer Plan, (iv) failed to make a required installment or other
required payment under Section 412 of the Code, Section 302 of ERISA or
the terms of such Employee Benefit Plan or (v) failed to make a
required contribution or payment, or otherwise failed to operate in
compliance with any Foreign Benefit Law regulating any Employee Benefit
Plan;
(c) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan, and neither the Borrower nor any ERISA Affiliate has incurred any
unpaid withdrawal liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits
under each Employee Benefit Plan which is subject to Title IV of ERISA
or whose funding is regulated by any Foreign Benefit Law, did not, as
of the most recent valuation date for each such plan, exceed the then
current value of the assets of such Employee Benefit Plan allocable to
such benefits;
(e) To the best of the Borrower's knowledge, each
Employee Benefit Plan subject to Title IV of ERISA or the funding of
which is regulated by any Foreign Benefit Law, maintained by the
Borrower or any ERISA Affiliate, has been administered in accordance
with its terms in all material respects and is in compliance in all
material respects with all applicable requirements of ERISA, all
Foreign Benefit Laws and other applicable laws, regulations and rules;
78
<PAGE> 83
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower after
due inquiry, is threatened concerning or involving any Employee Benefit
Plan.
VIII.17. No Default. As of the date hereof, there does not
exist any Default or Event of Default hereunder.
VIII.18. Hazardous Materials.
(a) The Borrower and each of its Subsidiaries is in
compliance with all applicable Environmental Laws in all material
respects, and has been issued and maintains all required federal, state
and local permits, licenses, certificates and approvals pertaining to
Hazardous Materials that are germane to the conduct of its business.
Neither the Borrower nor any of its Subsidiaries has been notified of
any pending or threatened action, suit, proceeding or investigation
which, and neither the Borrower nor any of its Subsidiaries is aware of
any facts, which (i) calls into question, or could reasonably be
expected to call into question, compliance by the Borrower or any of
its Subsidiaries with any Environmental Laws, (ii) seeks, or could
reasonably be expected to form the basis of a meritorious proceeding to
seek, to suspend, revoke or terminate any license, permit,
certification or approval pertaining to Hazardous Material that is
germane to the conduct of its business, or (iii) seeks to cause, or
could reasonably be expected to form the basis of a meritorious
proceeding to cause, any property of the Borrower or any of its
Subsidiaries to be subject to any restrictions on ownership, use,
occupancy or transferability under any Environmental Law;
(b) Neither the Borrower nor any of its Subsidiaries,
nor, to the best of Borrower's knowledge, any previous owner or
operator of any real property owned or operated by the Borrower or any
of its Subsidiaries or any other Person, has managed, generated,
stored, released, treated, or disposed of any Hazardous Material on any
portion of such property, or transferred or caused to be transferred
any Hazardous Material from such property to any other location except
in compliance with all Environmental Laws. Except for Hazardous
Materials necessary for the routine maintenance of the Properties owned
or operated by the Borrower and its Subsidiaries and as used in the
ordinary course of the Borrower's or its Subsidiaries' business, which
Hazardous Material shall be used in accordance with all applicable
Environmental Laws, the Borrower covenants it shall, and shall cause
each of its Subsidiaries to, not permit any Hazardous Materials to be
brought on to the real property owned or operated by the Borrower and
its Subsidiaries, or if so brought or found located thereon, shall be
immediately removed,
79
<PAGE> 84
with proper disposal, and all environmental cleanup requirements shall
be diligently undertaken pursuant to all Environmental Laws.
VIII.19. Employment Matters.
(a) Except with respect to employees located in Mexico,
none of the employees of the Borrower or any of its Subsidiaries is
subject to any collective bargaining agreement and there are no
strikes, work stoppages, election or decertification petitions or
proceedings, unfair labor charges, equal opportunity proceedings, or
other material labor/employee related controversies or proceedings
pending or, to the best knowledge of the Borrower, threatened against
the Borrower or any such Subsidiary or between the Borrower or any such
Subsidiary and any of their employees, other than employee grievances
arising in the ordinary course of business which could not reasonably
be expected, individually or in the aggregate, to have a Material
Adverse Effect; and
(b) Except to the extent a failure to maintain compliance
would not have a Material Adverse Effect, the Borrower and each of its
Subsidiaries is in compliance in all respects with all applicable laws,
rules and regulations pertaining to labor or employment matters,
including without limitation those pertaining to wages, hours,
occupational safety and taxation and there is neither pending or
threatened any litigation, administrative proceeding nor, to the
knowledge of the Borrower, any investigation, in respect of such
matters which, if decided adversely, could reasonably be likely,
individually or in the aggregate, to have a Material Adverse Effect.
VIII.20. RICO Neither the Borrower nor any of its Subsidiaries
is engaged in or has engaged in any course of conduct that could subject any of
their respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws.
VIII.21. Year 2000 Compliance. The Borrower has (a) undertaken
a review and assessment of the business and operations of the Borrower and its
Subsidiaries with respect to becoming Year 2000 Compliant and the Borrower is
taking or causing to be taken or undertaking to commence all actions necessary
to become and continue to be Year 2000 Compliant prior to 90 days prior to year
2000, including taking all actions and at the times specified in the Year 2000
Compliance Plan, as adopted, and (b) undertaken a review and assessment of the
business and operations of each of its Related Business Parties with respect to
becoming Year 2000 Compliant and the Borrower reasonably believes that each
Related Business Party is taking or causing to be taken or undertaking to
commence all actions necessary to become and continue to be Year 2000 Compliant
prior to 90 days prior to year 2000; the Borrower reasonably believes each of
the Borrower and each Subsidiary will be Year 2000 Compliant prior to, on and
after 90 days prior to year 2000.
80
<PAGE> 85
VIII.22. Transaction Agreement Representations. To the best of
Borrower's knowledge, each of the representations and warranties of the Seller
contained in Exhibit B of the Transaction Agreement and each of the other
Transaction Documents are true and correct as of the Closing Date.
81
<PAGE> 86
ARTICLE IX
Affirmative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will
cause each Subsidiary to:
IX.1. Financial Reports, Etc.
(a) As soon as practical and in any event within 90 days
after the end of each Fiscal Year after the Closing Date, deliver or
cause to be delivered to the Agent and each Lender (i) the audited
consolidated and unaudited consolidating balance sheets of the
Borrower and its Subsidiaries, with the notes thereto, and the related
audited consolidated and unaudited consolidating statements of
earnings, cash flow, and shareholders' equity and the notes thereto,
for such Fiscal Year, setting forth in the case of the consolidated
statements comparative financial statements for the preceding Fiscal
Year, all prepared in accordance with GAAP applied on a Consistent
Basis and containing, with respect to the audited consolidated
financial reports, opinions of Grant Thornton LLP, or other such
independent certified public accountants selected by the Borrower and
approved by the Agent, which are unqualified and without an exception
not acceptable to the Agent; and (ii) a certificate of an Authorized
Representative as to the absence of any Default or Event of Default
and demonstrating compliance with Section 10.22 hereof, which
certificate shall be in the form attached hereto as Exhibit L and
incorporated herein by reference;
(b) as soon as practical and in any event within 45 days
after the end of each fiscal quarter beginning with the fiscal quarter
ended June 30, 1998, deliver to the Agent and each Lender (i) the
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such fiscal quarter, and the related
consolidated and consolidating statements of earnings and cash flow
for such fiscal quarter and for the period from the beginning of the
Fiscal Year through the end of such fiscal quarter, accompanied by a
certificate of an Authorized Representative to the effect that such
financial statements present fairly the financial position of the
Borrower and its Subsidiaries as of the end of such fiscal quarter and
the results of their operations and the changes in shareholders'
equity for such fiscal quarter, in conformity with the standards of
GAAP with respect to interim financials, and (ii) a certificate of an
Authorized Representative as to the absence of any Default or Event of
Default and containing computations for such quarter comparable to
that required pursuant to Section 9.1(a)(ii);
(c) together with delivery of the financial statements
required under Section 9.1(a) above, deliver or cause to be delivered
to the Agent and each Lender a letter from the Borrower's accountants
specified in Section 9.1(a)(i) hereof stating that, in performing the
audit necessary to render an opinion on the financial statements
delivered under Section 9.1(a)(i), they obtained no knowledge of any
Default or Event of Default
82
<PAGE> 87
by the Borrower in the fulfillment of the terms and provisions of this
Agreement insofar as they relate to financial matters (which at the
date of such statement remains uncured); and if the accountants have
obtained knowledge of such Default or Event of Default, a statement
specifying the nature and period of existence thereof;
(d) as soon as practical and in any event within 25 days
after the end of each month, deliver or cause to be delivered to the
Agent and each Lender (i) a summary and aging of Eligible Receivables
and (ii) a Borrowing Base Certificate in the form of Exhibit K hereto;
(e) not later than the last Business Day of each Fiscal
Year, deliver to the Agent and each Lender consolidated financial
projections for the Borrower and its Subsidiaries for the period from
the beginning of the next Fiscal Year to the Stated Maturity Date,
prepared on an annual basis;
(f) promptly upon their becoming available to the
Borrower, the Borrower shall deliver to the Agent and each Lender a
copy of (i) all regular or special reports or effective registration
statements which the Borrower or any Subsidiary shall file from and
after the date hereof with the Securities and Exchange Commission (or
any successor thereto) or any securities exchange, (ii) any proxy
statement distributed by the Borrower to its shareholders, bondholders
or the financial community in general, and (iii) any management letter
or other report submitted to the Borrower or any of its Subsidiaries
by independent accountants in connection with any annual, interim or
special audit of the Borrower or any of its Subsidiaries;
(g) together with each delivery of the financial
statements required by Section 9.1(a) or (b) hereof, deliver to the
Agent and each Lender a management letter or other report setting
forth any material deviation from the Year 2000 Compliance Plan and
any other event or condition which could reasonably be expected to
prevent or materially delay the Borrower, any Subsidiary or any
Related Business Party from becoming Year 2000 Compliant before 90
days prior to year 2000; and
(h) promptly, from time to time, deliver or cause to be
delivered to the Agent and each Lender such other information
regarding the Borrower's and any of its Subsidiaries' operations,
business affairs and financial condition as the Agent or such Lender
may reasonably request;
The Agent and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agent, to any Governmental Authority
having jurisdiction over the Agent or any of the Lenders pursuant to any
written request therefor or in the ordinary course of examination of loan
files, or, subject to Section 13.9 hereof, to any other Person who shall
acquire or consider the assignment of, or acquisition of any participation
interest in, any Obligation permitted by this Agreement.
83
<PAGE> 88
IX.2. Maintain Properties and Agreements. Maintain (a) all properties
necessary to their operations in good working order and condition, make all
needed repairs, replacements and renewals to such properties, and maintain free
from Liens all trademarks, trade names, patents, copyrights, trade secrets,
know-how, and other intellectual property and proprietary information (or
adequate licenses thereto), in each case as are reasonably necessary to conduct
their business as currently conducted or as contemplated hereby, all in
accordance with customary and prudent business practices and (b) all Material
Contracts and Material Leases in full force and effect without material
defaults thereunder.
IX.3. Existence, Qualification, Etc. Do or cause to be done all things
necessary to preserve and keep in full force and effect their existence and all
material rights and franchises, and maintain their licenses or qualifications
to do business as foreign corporations and good standing in each jurisdiction
in which their ownership or lease of property or the nature of their business
makes such license or qualification necessary except where the failure to so
qualify would not have a Material Adverse Effect.
IX.4. Regulations and Taxes. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of their
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants determined on a
consolidated basis have been established unless and until any Lien resulting
therefrom attaches to any of their property and becomes enforceable against any
of their creditors.
IX.5. Insurance. (a) Keep all of their insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly
situated, (b) maintain general public liability insurance at all times with
responsible insurance carriers against liability on account of damage to
persons and property and (c) maintain insurance under all applicable workers'
compensation laws (or in the alternative, maintain required reserves if
self-insured for workers' compensation purposes) such policies of insurance to
have such limits, deductibles, exclusions, co-insurance and other provisions
providing no less coverages than are maintained by similar businesses that are
similarly situated, in any manner. such insurance policies to be in form
reasonably satisfactory to the Agent. Each of the policies of insurance
described in this Section 9.5 hereof shall provide that the Agent shall be
named as loss payee or additional insured, as applicable, and that the insurer
shall give the Agent not less than thirty (30) days' prior written notice
before any such policy shall be terminated, lapse or be altered
IX.6. True Books. Keep true books of record and account in which full,
true and correct entries will be made of all of their dealings and
transactions, and set up on their books such reserves as may be required by
GAAP with respect to doubtful accounts and all taxes,
84
<PAGE> 89
assessments, charges, levies and claims and with respect to its business in
general, and include such reserves in interim as well as year-end financial
statements.
IX.7. Right of Inspection. Permit any Person designated by any Lender
or the Agent to visit and inspect any of the properties, corporate books and
financial reports of the Borrower or any of its Subsidiaries and to discuss
their affairs, finances and accounts with their principal officers and
independent certified public accountants, all at reasonable times, at
reasonable intervals and with reasonable prior notice.
IX.8. Observe all Laws. Conform to and duly observe in all respects
all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of their business where the
failure to observe such laws, rules, regulations or other requirements could
have a Material Adverse Effect.
IX.9. Covenants Extending to Other Persons. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in Sections 9.2 through 9.8 inclusive.
IX.10. Officer's Knowledge of Default. Upon any officer of the
Borrower obtaining knowledge of any Default or Event of Default hereunder or
under any other obligation of the Borrower or any of its Subsidiaries to any
Lender, or any event, development or occurrence which could reasonably be
expected to have a Material Adverse Effect, cause such officer or an Authorized
Representative to promptly notify the Agent of the nature thereof, the period
of existence thereof, and what action the Borrower or such Subsidiary proposes
to take with respect thereto.
IX.11. Suits or Other Proceedings. Upon any officer of the Borrower
obtaining knowledge of (a) any action or proceeding against the Borrower or any
Subsidiary by any Governmental Authority the outcome of which could reasonably
be expected to have a Material Adverse Effect or (b) any litigation or other
proceedings being instituted against the Borrower or any Subsidiary, or any
attachment, levy, execution or other process being instituted against any
assets of the Borrower or any Subsidiary, in an aggregate amount in respect of
all such proceedings and processes greater than $1,000,000 not otherwise
covered by insurance, in each case promptly deliver to the Agent written notice
thereof stating the nature and status of such litigation, dispute, proceeding,
levy, execution or other process.
IX.12. Notice of Discharge of Hazardous Material or Environmental
Complaint. Promptly provide to the Agent true, accurate and complete copies of
any and all letters, notices, complaints, orders, directives, claims, or
citations received by the Borrower or any Subsidiary relating to any (a)
violation or alleged violation by the Borrower or any Subsidiary of any
applicable Environmental Laws; (b) release or threatened release into the
environment by the Borrower or any Subsidiary, or by any Person handling,
transporting or disposing of any Hazardous Material on behalf of the Borrower
or any Subsidiary, or at any facility or property
85
<PAGE> 90
owned or leased or operated by the Borrower or a Subsidiary, of any Hazardous
Material, except where occurring legally; or (c) liability or alleged liability
of the Borrower or any Subsidiary for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials.
IX.13. Environmental Compliance. If the Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or
citation alleging that the Borrower or any Subsidiary has violated any
Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower
shall, within the time period permitted and to the extent required by the
applicable Environmental Law or the Governmental Authority responsible for
enforcing such Environmental Law, remove or remedy, or cause the applicable
Subsidiary to remove or remedy, such violation or release or satisfy such
liability unless, and only during the period that, the applicability of the
Environmental Law, the fact of such violation or liability or what is required
to remove or remedy such violation is being contested by the Borrower or the
applicable Subsidiary by appropriate proceedings diligently conducted and all
reserves with respect thereto as may be required under GAAP, if any, have been
made.
IX.14. Indemnification. The Borrower hereby agrees to defend,
indemnify and hold the Agent and the Lenders, and their respective officers,
directors, employees and agents, harmless from and against any and all claims,
losses, penalties, liabilities, damages and expenses (including, without
limitation, assessment and cleanup costs and reasonable attorneys',
consultants' and other experts' fees and disbursements) arising directly or
indirectly from, out of or by reason of (a) the violation of any Environmental
Law by the Borrower or any Subsidiary or with respect to any property owned,
operated or leased by the Borrower or any Subsidiary or (b) the handling,
storage, treatment, emission or disposal of any Hazardous Material by or on
behalf of the Borrower or any Subsidiary on or with respect to property owned
or leased or operated by the Borrower or any Subsidiary. The provisions of this
Section 9.14 shall survive repayment of the Obligations, the occurrence of the
Facility Termination Date and expiration or termination of this Agreement.
IX.15. Further Assurances. At the Borrower's cost and expense upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
agreements, financing and continuation statements, and do and cause to be done
such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the provisions
and purposes of this Agreement and the other Loan Documents.
IX.16. Employee Benefit Plans. With reasonable promptness, and in any
event within thirty (30) days, the Borrower will give notice of and/or deliver
to Agent copies of (a) the establishment of any new Employee Benefit Plan, (b)
the commencement of contributions to any Pension Plan or Multiemployer Plan to
which the Borrower or any of its ERISA Affiliates was not previously
contributing, (c) any material increase in the benefits of any existing
Employee
86
<PAGE> 91
Benefit Plan, (d) each funding waiver request filed with respect to any Pension
Plan and all communications received or sent by the Borrower or any ERISA
Affiliate with respect to such request and (e) the failure of the Borrower or
any ERISA Affiliate to make a required installment or payment under Section 302
of ERISA or Section 412 of the Code or any Foreign Benefit Law (in the case of
an Employee Benefit Plan regulated by any Foreign Benefit Law) by the due date.
IX.17. Termination Events. Promptly and in any event within ten (10)
days of becoming aware of the occurrence of or forthcoming occurrence of any
(a) Termination Event or (b) "prohibited transaction," as such term is defined
in Section 406 of ERISA or Section 4975 of the Code, in connection with any
Pension Plan or any trust created thereunder, the Borrower will deliver to
Agent a notice specifying the nature thereof, what action the Borrower has
taken, is taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto.
IX.18. ERISA Notices. With reasonable promptness but in any event
within ten (10) days for purposes of clauses (a), (b) and (c), the Borrower
will deliver to the Agent copies of (a) any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401(a) of the Code, (b)
all notices received by the Borrower or any ERISA Affiliate of the PBGC's or
any Governmental Authority's intent to terminate any Pension Plan or to have a
trustee appointed to administer any Pension Plan, (c) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the
Borrower or any ERISA Affiliate with the Internal Revenue Service with respect
to each Pension Plan and (d) all notices received by the Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount
of withdrawal liability pursuant to Section 4202 of ERISA. The Borrower will
notify the Agent in writing within ten (10) Business Days of the Borrower
obtaining knowledge or reason to know that the Borrower or any ERISA Affiliate
has filed or intends to file a notice of intent to terminate any Pension Plan
under a distress termination within the meaning of Section 4041(c) of ERISA.
IX.19. Continued Operations. Continue at all times (a) to conduct its
business and engage principally in the Core Business and (b) to preserve,
protect and maintain free from Liens (other than Permitted Liens) its
Intellectual Property.
IX.20. Use of Proceeds. Use the proceeds of the Loans solely for the
purposes specified in Sections 2.11 or 3.12 hereof.
IX.21. New Subsidiaries; Minority Interests.
(a) In the event of the acquisition or creation of any
Subsidiary or Control Subsidiary (a "New Subsidiary"), cause to be
delivered to the Agent for the benefit of the Lenders a Stock Pledge
Agreement with respect to the Pledged Stock of such New Subsidiary
substantially in the form of Exhibit G hereto within thirty (30)
Business Days of the acquisition or creation of a Subsidiary;
provided, however, that if such New
87
<PAGE> 92
Subsidiary is a Foreign Subsidiary, such pledge of capital stock shall
be limited to 65% of the outstanding voting stock of such New
Subsidiary and shall only be required if it is a Direct Foreign
Subsidiary or a Direct Foreign Control Subsidiary;
(b) In the event of the acquisition or creation of any
Domestic Subsidiary, cause to be delivered to the Agent for the
benefit of the Lenders each of the following indicated to be delivered
by such Subsidiary within thirty (30) Business Days of the acquisition
or creation of such Subsidiary:
(i) a Guaranty executed by such Subsidiary,
substantially in the form of Exhibit J hereto;
(ii) a Security Agreement executed by such
Subsidiary, substantially in the form of Exhibit H hereto;
(iii) if such Subsidiary has any material leased
locations, a Landlord Waiver in the form of Exhibit M hereto;
(iv) if such Subsidiary owns any real property, a
Mortgage executed by such Subsidiary, substantially in the
form of Exhibit O hereto;
(v) if such Subsidiary owns any Intellectual
Property, an Intellectual Property Security Agreement,
executed by such Subsidiary, substantially in the form of
Exhibit I hereto;
(c) In the event of the acquisition or creation of any
Subsidiary subject to the provisions of clauses (a) or (b) above,
cause to be delivered to the Agent for the benefit of the Lenders each
of the following within the time periods indicated therein:
(i) an opinion of counsel to such Subsidiary
dated as of the date of delivery of the other documents
required to be delivered pursuant to this Section 9.21 and
addressed to the Agent and the Lenders, in form and substance
identical to the opinion of counsel delivered pursuant to
Section 7.1 hereof on the Closing Date with respect to any
Guarantor and the Pledged Stock; and
(ii) current copies of the Organizational
Documents and Operating Documents of such Subsidiary, minutes
of duly called and conducted meetings (or duly effected
consent actions) of the Board of Directors, or appropriate
committees thereof (and, if required by such Organizational
Documents or Operating Documents or by applicable laws, of
the shareholders), of such Subsidiary authorizing the actions
and the execution and delivery and performance of such
Guaranty, Security Agreement, Stock Pledge Agreement,
Intellectual Property Security Agreement or other agreement
required under this
88
<PAGE> 93
Section 9.21 and evidence satisfactory to the Agent
(confirmation of the receipt of which will be provided by the
Agent to the Lenders) that such Subsidiary is Solvent as of
such date after giving effect to such Guaranty, Security
Agreement, Stock Pledge Agreement, and, if applicable,
Intellectual Property Security Agreement.
(d) In the event (i) the Borrower or any Domestic
Subsidiary creates or acquires any material minority investment in any
Person or (ii) the Borrower owns any Salton/Maxim Shares after July
31, 1999, cause to be delivered to the Agent for the benefit of the
Lenders (A) a Stock Pledge Agreement with respect to the equity
interests (or the Salton/Maxim Shares, as applicable) of such Person
owned by the Borrower or such Domestic Subsidiary (subject to the 65%
limitation on pledging shares of Foreign Subsidiaries contained
herein) substantially in the form of Exhibit G hereto and (B) an
opinion of counsel dated as of the date of delivery of the other
documents required to be delivered pursuant to this Section 9.21 and
addressed to the Agent and the Lenders, in form and substance
identical to the opinion of counsel delivered pursuant to Section 7.1
hereof on the Closing Date with respect to the Pledged Stock, all
within thirty (30) Business Days of the acquisition or creation of
such investment.
89
<PAGE> 94
ARTICLE X
Negative Covenants
Until the occurrence of the Facility Termination Date, unless the
Required Lenders shall otherwise consent in writing, the Borrower will not, nor
will it permit any Subsidiary to:
X.1. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of the Borrower and its Subsidiaries determined on a consolidated
basis, howsoever evidenced, except the following (collectively, the "Permitted
Indebtedness"):
(a) Indebtedness set forth in Schedule 8.6 hereto and
incorporated herein by reference and any extension, renewal or
refinancing thereof that does not increase the principal amount
thereof or the interest rate payable thereon from that existing
immediately prior to such extension, renewal or refinancing; provided,
none of the instruments and agreements evidencing or governing such
Indebtedness shall be amended, modified or supplemented after the
Closing Date to change any terms of subordination, repayment or rights
of conversion, put, exchange or other rights from such terms and
rights as in effect on the Closing Date;
(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) Indebtedness evidenced by the Subordinated Notes;
(d) Indebtedness consisting of Hedging Obligations not
prohibited under Section 10.9 hereof;
(e) the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business;
(f) (i) purchase money Indebtedness and (ii) Indebtedness
incurred with respect to financing of Capital Expenditures,
collectively under both clause (i) and (ii) not to exceed an aggregate
outstanding amount at any time of $5,000,000;
(g) Indebtedness of any Guarantor owing to the Borrower or
another Guarantor and Indebtedness of the Borrower owing to any
Guarantor;
(h) Indebtedness consisting of guaranties by the Borrower
of Indebtedness permitted under Section 10.1(i) below;
(i) additional Indebtedness incurred by any Foreign
Subsidiary in an aggregate outstanding principal amount at any time
not to exceed the difference of (A)
90
<PAGE> 95
$80,000,000 less (B) the amount of any investments permitted under
Section 10.3(f) hereof.
X.2. Liens. Incur, create or permit to exist any pledge, Lien,
charge or other encumbrance of any nature whatsoever with respect to any
property or assets now owned or hereafter acquired by the Borrower or any of
its Subsidiaries, including without limitation any capital stock of the
Borrower or any of its Subsidiaries, other than any of the following
(collectively, the "Permitted Liens"):
(a) Liens existing as of the date hereof and as set forth
in Schedule 8.7 attached hereto, provided, however, that any such Lien
that is released after the date hereof may not thereafter re-attach or
otherwise become permitted by this Section 10.2(a);
(b) Liens imposed by law for taxes, assessments or charges
of any Governmental Authority for claims not yet due or which are
being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP;
(c) Liens in respect of purchase money Indebtedness
permitted to be incurred pursuant to Section 10.1(f)(i) hereof in
connection with the acquisition of certain tangible property; provided
that (a) the original principal balance of the Indebtedness secured by
such Lien constitutes not less than 80% nor more than 100% of the
purchase price of the property acquired and (B) such Lien extends only
to the property acquired with the proceeds of the Indebtedness so
secured;
(d) statutory Liens of landlords who are not subject to a
Landlord Waiver and Liens of carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law or created in the ordinary
course of business and in existence less than 90 days from the date of
creation thereof for amounts not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP;
(e) Liens incurred or deposits made in the ordinary course
of business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(f) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and zoning and other
restrictions, charges or encumbrances (whether or not
91
<PAGE> 96
recorded), which do not interfere with the ordinary conduct of the
business of the Borrower or any Subsidiary and do not impair the use
of the property to which they attach to the extent that such
interference or impairment would reasonably be expected to have a
Material Adverse Effect; and
(g) Liens on real property securing Indebtedness permitted
under Section 10.1(a), (b), (f) or (i) hereof (subject to compliance
with subsection (c) above in connection with purchase money
Indebtedness).
X.3. Investments; Acquisitions. Make any Acquisition or otherwise
purchase, own, invest in or otherwise acquire, directly or indirectly, any
stock or other securities, or make or permit to exist any interest whatsoever
in any other Person or permit to exist any loans or advances to any Person,
except that Borrower and its Subsidiaries may:
(a) invest in Eligible Securities;
(b) maintain investments, loans and advances existing as
of the date hereof and as set forth in Schedule 8.4 hereto;
(c) accept and maintain accounts receivable arising and
trade credit granted in the ordinary course of business and retain any
securities received in satisfaction or partial satisfaction thereof in
connection with accounts of financially troubled Persons to the extent
reasonably necessary in order to prevent or limit loss;
(d) make and maintain loans and advances to and
investments in Subsidiaries which are Guarantors;
(e) consummate Permitted Acquisitions and mergers
permitted under Section 10.4(a) hereof;
(f) make and maintain loans, advances and investments in
Foreign Subsidiaries in an aggregate principal amount at any time
outstanding not to exceed $40,000,000.
(g) make and maintain other loans, advances and
investments in an aggregate principal amount at any time outstanding
not to exceed $10,000,000.
X.4. Merger or Transfer of Assets.
(a) Consolidate with or merge into any other Person, or
permit any other Person to merge into it; provided, however, (i) any
Subsidiary may merge or transfer all or any part of its assets into or
consolidate with the Borrower or any Domestic Subsidiary, in each
case, provided the requirements of Article VI and Section 9.21 hereof
92
<PAGE> 97
are complied with as of the effective date of the consummation of such
merger, (ii) any Subsidiary may merge into another Person that is not
a Subsidiary prior to such merger whereby such other Person is the
surviving corporation provided the requirements of Article VI and
Section 9.21 hereof are complied with and such other Person becomes a
Subsidiary as of the effective date of the consummation of such merger
and that such merger would be a Permitted Acquisition but for the
Subsidiary not being the surviving corporation, (iii) any Direct
Foreign Subsidiary may merge with or into any other Direct Foreign
Subsidiary provided the requirements of Article VI and Section 9.21
hereof are complied with as of the effective date of the consummation
of such merger, (iv) any Foreign Subsidiary which is not a Direct
Foreign Subsidiary may merge with or into any other Foreign Subsidiary
provided the requirements of Article VI and Section 9.21 hereof are
complied with as of the effective date of the consummation of such
merger and (v) the Borrower or any Subsidiary may make a Permitted
Acquisition.
(b) Sell, lease, transfer or otherwise dispose of any
assets other than (i) dispositions of inventory in the ordinary course
of business, (ii) dispositions of equipment which, in the aggregate
during any Fiscal Year, have a fair market value or book value,
whichever is less, of not more than three percent (3%) of Property,
Plant and Equipment and Capitalized Software as shown on the
consolidated balance sheet of the Borrower and its Subsidiaries
adjusted to provide for the HPG Acquisition which is not replaced by
equipment having at least equivalent value, (iii) dispositions of
equipment which is replaced with equipment of like kind, function and
value, provided the replacement equipment shall be acquired prior to
or substantially contemporaneously with any disposition of the
Equipment that is to be replaced, and the replacement equipment shall
be free and clear of Liens other than Permitted Liens, (iv)
dispositions of other assets which, in the aggregate during any Fiscal
Year, have a fair market value or book value, whichever is less, of
not more than one percent (1%) of Consolidated Shareholders' equity of
Borrower and its Subsidiaries adjusted to provide for the HPG
Acquisition and (v) any Equity Offering of authorized but unissued
equity securities the Net Proceeds of which are subject to the terms
of Section 2.6(b) hereof except as otherwise provided therein.
X.5. Transactions with Affiliates. Other than transactions
permitted under Sections 10.3 and 10.4 hereof, enter into any transaction after
the Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Borrower, except (a) that such Persons may render services
or sell inventory to the Borrower or its Subsidiaries for compensation at the
same rates generally paid by Persons engaged in the same or similar businesses
for the same or similar services, (b) that the Borrower or any Subsidiary may
render services or sell inventory to such Persons for compensation at the same
rates generally charged by the Borrower or such Subsidiary and (c) in the
ordinary course of and pursuant to the reasonable requirements of the
Borrower's (or any Subsidiary's) business consistent with past practice of the
Borrower and its Subsidiaries and upon fair and reasonable terms no less
favorable to the Borrower (or any Subsidiary) than would
93
<PAGE> 98
be obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
X.6. Compliance with ERISA. With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability to the Borrower or any ERISA Affiliate in excess
of $500,000;
(b) permit the present value of all benefit liabilities under
all Pension Plans (except as provided below) to exceed the current
value of the assets of such Pension Plans allocable to such benefit
liabilities (the "Excess Liabilities Value") by more than $500,000;
(c) permit any accumulated funding deficiency in excess of
$500,000 (as defined in Section 302 of ERISA and Section 412 of the
Code) with respect to any Pension Plan, whether or not waived;
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto which results in or is likely to
result in a liability in excess of $500,000; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(i) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer
Plan which liability or increase, individually or together with all
similar liabilities and increases, is in excess of $500,000; or
(g) fail, or permit the Borrower or any ERISA Affiliate to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code, all applicable Foreign Benefit Law and all other applicable laws
and the regulations and interpretations thereof.
X.7. Fiscal Year. Change the Borrower's Fiscal Year.
X.8. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily
or involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution,
94
<PAGE> 99
except in connection with the merger or consolidation of Subsidiaries into each
other or into a Borrower permitted pursuant to Section 10.4 hereof.
X.9. Hedging Obligations. Incur any Hedging Obligations or enter into
any agreements, arrangements, devices or instruments relating to Hedging
Obligations, except for Hedging Obligations entered into in the ordinary course
of business which are not for speculative or investment purposes.
X.10. Dividends, Redemptions and Other Payments. (a) Declare or pay
any cash dividends or make any other payment or distribution on account of its
capital stock (other than dividends payable in the ordinary course of business
solely in Common Stock) on any shares of stock of any class of the Borrower, now
or hereafter outstanding, or (b) purchase, redeem (whether mandatory or optional
redemption) or otherwise retire any such shares or interests in consideration of
cash or any debt instrument (whether or not subordinated) or shares of capital
stock issued by any Subsidiary of the Borrower, or apply or set apart any of
their assets therefor or make any other distribution (by redemption of capital
or otherwise) in respect of any such shares, or agree to do any of the
foregoing, other than (i) dividends payable by any Subsidiary to another
Subsidiary or to the Borrower and (ii) the purchase or redemption of capital
stock of employees pursuant to an Approved Stock Option Plan so long as (A) the
aggregate amount paid in connection with such purchase or redemption during any
twelve month period does not exceed $500,000 and (B) no Default or an Event of
Default exist after giving effect to such purchase or redemption.
X.11. Subordinated Debt.
(a) Pay or prepay, or set aside any cash or other assets to
pay or prepay, (i) all or any part of the principal amount owing with
respect of the Subordinated Bridge Debt or the Permanent Subordinated
Notes or (ii) any interest, premium or other amounts in respect to the
Subordinated Bridge Debt or the Permanent Subordinated Notes other than
in accordance with the terms of the Bridge Loan Agreement and the
Indenture; provided, however, that the Subordinated Bridge Debt may be
refinanced and replaced by the Permanent Subordinated Notes in
connection with the consummation of the Permanent Junior Financing.
(b) Materially amend the provisions of or terminate (other
than in connection with the full and final payment of the Subordinated
Bridge Debt or the Permanent Subordinated Notes) the Bridge Loan
Documents or the Permanent Junior Financing Documents without the prior
written consent of the Required Lenders.
X.12. Defaults Under Other Agreements. Permit any landlord,
mortgagee, trustee under deed of trust or lienholder to lawfully declare a
default under any lease, mortgage, deed of trust or lien instrument on real
estate owned or leased by the Borrower or any Guarantor or permit any landlord
to lawfully terminate, prior to the expiration of its term, any leasehold
interest of the
95
<PAGE> 100
Borrower or any Guarantor, if such default or termination, individually or
collectively, would reasonably be expected to result in a Material Adverse
Effect.
X.13. Compensation; Reimbursement of Expenses.
(a) Pay any salary, fees, and other direct and indirect
remuneration and compensation to any of its directors and executive
officers in an amount in excess of those amounts paid to directors and
executive officers of comparable companies engaged in the same general
type of business and in similar financial condition.
(b) Reimburse any stockholder, officer, director, employee or
agent of the Borrower or any Guarantor for any expenses incurred by
such Person other than reasonable expenses incurred for or on behalf of
the Borrower or any Guarantor in the ordinary course of business.
X.14. Change in Accountants. Change its independent public
accountants to any Person other than Grant Thornton LLP, Price Waterhouse,
L.L.P., Deloitte & Touche, L.L.P., KPMG Peat Marwick, L.L.P., Arthur Andersen &
Co., L.L.P., Coopers & Lybrand, L.L.P. or Ernst & Young, L.L.P., or any
successor to any thereof as a result of their combination.
X.15. Limitations on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Guarantor of
real or personal property which has been or is to be sold or transferred by the
Borrower or any Guarantor to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or any Guarantor.
X.16. Negative Pledge Clauses. Enter into any agreement other than
this Agreement and the other Loan Documents and the Junior Financing Documents
which prohibits or limits the ability of any of the Borrower or any Guarantor to
create, incur, assume or suffer to exist any Lien, security interest or
encumbrance upon any of its property, assets or revenues, whether now owned or
hereafter acquired.
X.17. Intellectual Property. Cause or permit any of the licenses,
trademarks, patents, copyrights, or other Intellectual Property of the Borrower
or its Subsidiaries to be sub-licensed, assigned or transferred or subject to
any encumbrance or interest, other than in favor of the Agent for the benefit of
the Lenders hereunder or, with respect to sub-licenses only, to manufacturers
and distributors of Inventory in the ordinary course of business as currently
conducted.
X.18. Licenses. Grant, establish, create or permit to exist any
license of any of the Intellectual Property to any Person except for (i) such
licenses granted for the limited purpose of conducting sales or marketing
promotions in the ordinary course of business of existing or new products for a
reasonable, limited time period, (ii) such licenses approved by the Required
Lenders in writing prior to the granting thereof within 30 days after request
therefor, such
96
<PAGE> 101
approval not to be unreasonably withheld, and (iii) such licenses granted to any
Material Subsidiary party to the Intellectual Property Security Agreement which
has delivered an appropriate Intellectual Property Assignment executed in blank
with respect to such license.
X.19. Amendment of Documents. Materially amend, supplement or
replace, or waive any of the material terms or provisions of, (a) any Material
Contract, (b) the Transaction Documents, (c) the Bridge Loan Agreement or (d)
the Organizational Documents or Operating Documents of the Borrower without the
prior written consent of the Agent and the Required Lenders.
X.20. Limitations on Certain Restrictive Covenants. Neither the
Borrower nor any Subsidiary shall enter into, or permit to exist, with any
Person any agreement (other than this Agreement) which prohibits or limits the
ability of any Subsidiary to declare or pay any dividend or make any loan to or
investment in the Borrower or any other owner of such Subsidiary.
X.21. Limitations on Business Activities. The Borrower will not
conduct any business or engage in any activity or hold any assets other than
holding the shares of capital stock of its Subsidiaries and administrative
activities directly related thereto.
X.22. Financial Covenants.
(a) Consolidated Net Worth. Permit at any time Consolidated
Net Worth to be less than 90% of Consolidated Net Worth at June 30,
1998, such amount to be increased as at the first day of each fiscal
quarter, beginning with the fiscal quarter beginning October 1, 1998,
by an amount equal to (a) seventy-five percent (75%) of Consolidated
Net Income during the immediately preceding fiscal quarter, plus (b)
one hundred percent (100%) of the Net Proceeds of any Equity Offering
consummated during the immediately preceding fiscal quarter; provided,
however, in no event shall the Consolidated Net Worth requirement be
decreased as a result of a net loss of the Borrower and its
Subsidiaries (i.e., negative Consolidated Net Income) for any fiscal
quarter, except that Consolidated Net Worth may be reduced by the
actual amount of non-cash charges incurred in connection with the HPG
Acquisition up to but not exceeding $25,000,000. Any increase
calculated pursuant hereto shall be determined based upon financial
statements delivered in accordance with Section 9.1(a) and (b) hereof;
provided, however such increase shall be deemed effective as of the
first day of the fiscal quarter in which such financial statements are
delivered or required to be delivered, if earlier.
(b) During the period prior to the refinancing of the
Subordinated Bridge Notes with the Permanent Junior Financing:
(i) Consolidated Fixed Charge Coverage Ratio. Permit
Consolidated Fixed Charge Coverage Ratio to be less than the
ratio indicated below at any time during the period indicated:
97
<PAGE> 102
<TABLE>
<S> <C>
Closing Date through
third fiscal quarter 1999 1.00 to 1.00
Fourth fiscal quarter 1999
and thereafter 1.25 to 1.00
</TABLE>
(ii) Consolidated Interest Coverage Ratio. Permit
Consolidated Interest Coverage Ratio to be less than the ratio
indicated below at any time during the period indicated:
<TABLE>
<S> <C>
Closing Date through
first fiscal quarter 1999 1.75 to 1.00
Second fiscal quarter 1999
through third fiscal quarter 1999 1.50 to 1.00
Fourth fiscal quarter 1999
through third fiscal quarter 2000 1.75 to 1.00
Fourth fiscal quarter 2000
and thereafter 2.00 to 1.00
</TABLE>
(iii) Consolidated Leverage Ratio. Permit Consolidated
Leverage Ratio to be greater than the ratio indicated below at
any time during the period indicated:
<TABLE>
<S> <C>
Second fiscal quarter 1999 6.50 to 1.00
Third fiscal quarter 1999 6.80 to 1.00
Fourth fiscal quarter 1999
through first fiscal quarter 2000 5.00 to 1.00
Second fiscal quarter 2000 5.50 to 1.00
Third fiscal quarter 2000 5.75 to 1.00
Fourth fiscal quarter 2000
through second fiscal quarter 2001 4.00 to 1.00
Third fiscal quarter 2001 4.50 to 1.00
</TABLE>
98
<PAGE> 103
<TABLE>
<S> <C>
Fourth fiscal quarter 2001
and thereafter 3.50 to 1.00
</TABLE>
(iv) Consolidated EBITDA. Permit Consolidated EBITDA
to be less than the amount indicated below at the date
indicated:
<TABLE>
<S> <C>
Third fiscal quarter end 1998 $23,000,000
Fourth fiscal quarter end 1998 $54,000,000
First fiscal quarter end 1999 $60,000,000
</TABLE>
(v) Total Indebtedness. Permit the aggregate amount
of Indebtedness owing by the Borrower and its Subsidiaries on
a consolidated basis, less the outstanding amount of the
Subordinated Bridge Notes, to exceed $355,000,000 at any time.
(c) During the period on or after the consummation of the
refinancing of the Subordinated Bridge Notes with the Permanent Junior
Financing:
(i) Consolidated Fixed Charge Coverage Ratio. Permit
Consolidated Fixed Charge Coverage Ratio to be less than the
ratio indicated below at any time during the period indicated:
<TABLE>
<S> <C>
Closing Date through
third fiscal quarter 1999 1.00 to 1.00
Fourth fiscal quarter 1999
through third fiscal quarter 2000 1.25 to 1.00
Fourth fiscal quarter 2000
and thereafter 1.50 to 1.00
</TABLE>
(ii) Consolidated Interest Coverage Ratio. Permit
Consolidated Interest Coverage Ratio to be less than the ratio
indicated below at any time during the period indicated:
<TABLE>
<S> <C>
Closing Date through
third fiscal quarter 1999 2.00 to 1.00
Fourth fiscal quarter 1999
through third fiscal quarter 2000 2.50 to 1.00
Fourth fiscal quarter 2000
and thereafter 3.00 to 1.00
</TABLE>
99
<PAGE> 104
(iii) Consolidated Leverage Ratio. Permit Consolidated
Leverage Ratio to be greater than the ratio indicated below at
any time during the period indicated:
<TABLE>
<S> <C>
Second fiscal quarter 1999 5.50 to 1.00
Third fiscal quarter 1999 6.00 to 1.00
Fourth fiscal quarter 1999
through first fiscal quarter 2000 4.00 to 1.00
Second fiscal quarter 2000
Through third fiscal quarter 2000 4.50 to 1.00
Fourth fiscal quarter 2000
through second fiscal quarter 2001 3.00 to 1.00
Third fiscal quarter 2001 3.50 to 1.00
Fourth fiscal quarter 2001
and thereafter 3.00 to 1.00
</TABLE>
(iv) Consolidated EBITDA. Permit Consolidated EBITDA
to be less than the amount indicated below at the date
indicated:
<TABLE>
<S> <C>
Third fiscal quarter end 1998 $23,000,000
Fourth fiscal quarter end 1998 $54,000,000
First fiscal quarter end 1999 $60,000,000
</TABLE>
(v) Total Indebtedness. Permit the aggregate amount
of Indebtedness owing by the Borrower and its Subsidiaries on
a consolidated basis, less the outstanding amount of the
Permanent Subordinated Notes, to exceed $335,000,000 at any
time.
100
<PAGE> 105
ARTICLE XI
Events of Default and Acceleration
XI.1. Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether
pursuant to any provision of Article II, Article III or Article IV, at
maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan, Reimbursement Obligation or
other Obligation or of any fees or other amounts payable to any of the
Lenders, the Issuing Bank or the Agent on the date on which the same
shall be due and payable; or
(c) if default shall be made in the performance or observance
of any covenant set forth in Sections 9.7, 9.10, 9.20, 9.21 and Article
X; or
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a) or (b) above) and such default shall continue
for 30 or more days after the earlier of receipt of notice of such
default by the Authorized Representative from the Agent or an officer
of the Borrower becomes aware of such default, or if a default shall be
made in the performance or observance of, or shall occur under, any
covenant, agreement or provision contained in any of the other Loan
Documents (beyond any applicable grace period, if any, contained
therein) or in any instrument or document evidencing or creating any
obligation, guaranty, or Lien in favor of the Agent or any of the
Lenders or delivered to the Agent or any of the Lenders in connection
with or pursuant to this Agreement or any of the Obligations, or if any
Loan Document ceases to be in full force and effect (other than in
accordance with its terms in the absence of default or with the consent
of the Agent and the Lenders), or if without the written consent of the
Lenders, this Agreement or any other Loan Document shall be disaffirmed
or shall terminate, be terminable or be terminated or become void or
unenforceable for any reason whatsoever (other than in accordance with
its terms in the absence of default or with the consent of the Agent
and the Lenders); or
(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount with
respect to any Indebtedness (other
101
<PAGE> 106
than the Loans and other Obligations) of the Borrower or any of its
Subsidiaries in an amount not less than $500,000 in the aggregate
outstanding, or (ii) a default, which is not waived, in the
performance, observance or fulfillment of any term or covenant
contained in any agreement or instrument under or pursuant to which any
such Indebtedness may have been issued, created, assumed, guaranteed or
secured by the Borrower or any of their Subsidiaries, or (iii) any
other event of default as specified in any agreement or instrument
under or pursuant to which any such Indebtedness may have been issued,
created, assumed, guaranteed or secured by the Borrower or any of its
Subsidiaries, and such default or event of default shall continue for
more than the period of grace, if any, therein specified, or such
default or event of default shall permit the holder of any such
Indebtedness (or any agent or trustee acting on behalf of one or more
holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report
or statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower or any of its Subsidiaries pursuant to or in
connection with any Loan Document, or otherwise, shall be false or
misleading in any material respect when given; or
(g) if the Borrower or any of its Subsidiaries shall be unable
to pay its debts generally as they become due; file a petition to take
advantage of any insolvency statute; make an assignment for the benefit
of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole
or any substantial part of its property; file a petition or answer
seeking liquidation, reorganization or arrangement or similar relief
under the federal bankruptcy laws or any other applicable law or
statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any of its Subsidiaries or
of the whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against the Borrower or
any of its Subsidiaries seeking liquidation, reorganization or
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state, which petition is not dismissed within sixty (60) days; or if,
under the provisions of any other law for the relief or aid of debtors,
a court of competent jurisdiction shall assume custody or control of
the Borrower or any of its Subsidiaries or of the whole or any
substantial part of any of its properties, which control is not
relinquished within sixty (60) days; or if there is commenced against
the Borrower or any of its Subsidiaries any proceeding or petition
seeking reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state which proceeding or petition remains
undismissed for a period of sixty (60) days; or if the Borrower or any
of its Subsidiaries takes any action to indicate its consent to or
approval of any such proceeding or petition; or
102
<PAGE> 107
(i) if (i) one or more judgments or orders where the amount
not covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $1,000,000 is rendered against the Borrower
or any of its Subsidiaries, or (ii) there is any attachment, injunction
or execution against any of the Borrower's or its Subsidiaries' or
properties for any amount in excess of $1,000,000 in the aggregate; and
such judgment, attachment, injunction or execution remains unpaid,
unstayed, undischarged, unbonded or undismissed for a period of thirty
(30) days; or
(j) if the Borrower or any of its Subsidiaries shall suspend
all or any part of its operations material to the conduct of the
business of the Borrower and its Subsidiaries taken as a whole; or
(k) if the Borrower merges into another Person or dissolves;
(l) if there shall occur and not be waived an Event of
Default as defined in any of the other Loan Documents; or
(m) if any Event of Default as defined in any of the Bridge
Loan Documents or the Permanent Junior Financing Documents shall occur;
or
(n) if any Person or group of Persons acting in concert, other
than the owners of more than 10% of outstanding securities of the
Borrower as of Closing Date having voting rights in the election of
directors, shall own or control, directly or indirectly, more than 30%
of the outstanding securities of the Borrower having voting rights in
the election of directors, in each case to be determined on a fully
diluted basis and taking into account any outstanding securities or
contract rights exercisable, exchangeable or convertible into equity
interests; or
(o) if (i) the Borrower or any Subsidiary shall fail (A) to
implement or complete any material action or process constituting a
portion of the Year 2000 Compliance Plan on the date set forth for
implementation or completion of such action or process and such failure
shall continue for a period of 30 or more days or (B) to be Year 2000
Compliant on or after 90 days prior to year 2000; or (ii) any Related
Business Party (A) shall notify the Borrower that it will not or
reasonably does not expect to be Year 2000 Compliant prior to January
1, 2000 or (B) shall fail to be Year 2000 Compliant on or after 90 days
prior to January 1, 2000; or
(p) if the Kmart Agreement shall be terminated or any
amendment thereof is entered into by the parties thereto without the
consent of the Agent and such termination or amendment has or could
reasonably be expected to have a Material Adverse Effect; or
103
<PAGE> 108
(q) if the report of the field examination of the assets of
the Borrower is not completed with results satisfactory to the Agent
within 90 days after the Closing Date; or
(r) if the the acquistion of the Queretero, Mexico property is
not consummated in accordance with the terms of the Transaction
Agreement on or before August 31, 1998; or
(s) if the Black & Decker License Agreement shall (i) be
modified in any material respect having an adverse effect on the
Borrower without the written consent of the Agent or (ii) terminate, or
the license granted thereunder shall terminate, for any reason prior to
the expiration of the Initial Term (as defined in the Black & Decker
License Agreement);
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be
taken: (i) the Agent, with the consent of the
Required Lenders, may, and at the direction of the
Required Lenders shall, declare any obligation of the
Lenders and the Issuing Bank to make further
Revolving Loans and Swing Line Loans or to issue
additional Letters of Credit terminated, whereupon
the obligation of each Lender to make further
Revolving Loans, of NationsBank to make further Swing
Line Loans, and of the Issuing Bank to issue
additional Letters of Credit, hereunder shall
terminate immediately, and (ii) the Agent shall at
the direction of the Required Lenders, at their
option, declare by notice to the Borrower any or all
of the Obligations to be immediately due and payable,
and the same, including all interest accrued thereon
and all other obligations of the Borrower to the
Agent and the Lenders, shall forthwith become
immediately due and payable without presentment,
demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived,
anything contained herein or in any instrument
evidencing the Obligations to the contrary
notwithstanding; provided, however, that
notwithstanding the above, if there shall occur an
Event of Default under clause (g) or (h) above, then
the obligation of the Lenders to make Revolving
Loans, of NationsBank to make Swing Line Loans, and
of the Issuing Bank to issue Letters of Credit
hereunder shall automatically terminate and any and
all of the Obligations shall be immediately due and
payable without the necessity of any action by the
Agent or the Required Lenders or notice to the Agent
or the Lenders;
(B) the Borrower shall, upon demand of the Agent
or the Required Lenders, deposit cash with the Agent
in an amount equal to the amount of any Letter of
Credit Outstandings, as collateral security for the
repayment
104
<PAGE> 109
of any future drawings or payments under such Letters
of Credit, and such amounts shall be held by the
Agent pursuant to the terms of the LC Account
Agreement; and
(C) the Agent and each of the Lenders shall have
all of the rights and remedies available under the
Loan Documents or under any applicable law.
XI.2. Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
XI.3. Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
XI.4. No Waiver. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
XI.5. Allocation of Proceeds. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
this Article XI, all payments received by the Agent hereunder, in respect of any
principal of or interest on the Obligations or any other amounts payable by the
Borrower hereunder, shall be applied by the Agent in the following order:
(a) amounts due to the Lenders pursuant to Sections 3.10, 4.3,
4.4 and 13.5 hereof;
(b) amounts due to the Agent pursuant to Section 12.8 hereof;
(c) payments of interest on Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders;
(d) payments of principal of Loans and Reimbursement
Obligations, to be applied for the ratable benefit of the Lenders;
105
<PAGE> 110
(e) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to Section 11.1 hereof;
(f) amounts due to the Agent, the Issuing Bank and/or Lenders
pursuant to Sections 4.2(g) and 12.9 hereof;
(g) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the
Lenders;
(h) payments of amount due to Lenders under any Swap
Agreement;
(i) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
106
<PAGE> 111
ARTICLE XII
The Agent
XII.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 12.5
hereof and the first sentence of Section 12.6 hereof shall include its
affiliates and its own and its affiliates' officers, directors, employees, and
agents): (a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or fiduciary
for any Lender; (b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made in or in
connection with any Loan Document or any certificate or other document referred
to or provided for in, or received by any of them under, any Loan Document, or
for the value, validity, effectiveness, genuineness, enforceability, or
sufficiency of any Loan Document, or any other document referred to or provided
for therein or for any failure by any Loan Party or any other Person to perform
any of its obligations thereunder; (c) shall not be responsible for or have any
duty to ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Loan Party or the satisfaction of any condition
or to inspect the property (including the books and records) of any Loan Party
or any of its Subsidiaries or affiliates; (d) shall not be required to initiate
or conduct any litigation or collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted to be taken by it
under or in connection with any Loan Document, except for its own gross
negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care.
Each Lender hereby irrevocably designates and appoints NationsBank as the Agent
for the Lenders under this Agreement, and each of the Lenders hereby irrevocably
authorizes NationsBank as the Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers as are expressly delegated to the Agent by the terms of
this Agreement and such other Loan Documents, together with such other powers as
are reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any of the Lenders, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
XII.2. Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telefacsimile)
believed by it to be genuine and correct and to have been signed, sent or made
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel for any Loan Party), independent
accountants, and other experts
107
<PAGE> 112
selected by the Agent. The Agent may deem and treat the payee of any Note as the
holder thereof for all purposes hereof unless and until the Agent receives and
accepts an Assignment and Acceptance executed in accordance with Section 13.1
hereof. As to any matters not expressly provided for by this Agreement, the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding on all of the Lenders; provided,
however, that the Agent shall not be required to take any action that exposes
the Agent to personal liability or that is contrary to any Loan Document or
applicable law or unless it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking any such action.
XII.3. Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 12.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
XII.4. Rights as Lender. With respect to its Revolving Credit
Commitment and the Loans made by it, NationsBank (and any successor acting as
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Agent in its individual capacity.
NationsBank (and any successor acting as Agent) and its affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to,
make investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with any Credit Party or any of its
Subsidiaries or affiliates as if it were not acting as Agent, and NationsBank
(and any successor acting as Agent) and its affiliates may accept fees and other
consideration from any Credit Party or any of its Subsidiaries or affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
XII.5. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Section 13.5 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Agent
(including by any Lender) in any way relating to or arising out of any Loan
Document or the transactions contemplated thereby or
108
<PAGE> 113
any action taken or omitted by the Agent under any Loan Document; provided that
no Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Person to be indemnified.
Without limitation of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs or expenses payable by
the Borrower under Section 13.5 hereof, to the extent that the Agent is not
promptly reimbursed for such costs and expenses by the Borrower. The agreements
contained in this Section shall survive the Facility Termination Date and the
expiration or termination of this Agreement.
XII.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Credit Parties and its
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under the Loan Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition, or business of any Credit Party or any of its Subsidiaries or
affiliates that may come into the possession of the Agent or any of its
affiliates.
XII.7. Resignation of Agent. The Agent may resign at any time by
giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent meeting the requirements set forth herein. The Borrower shall have the
right to approve such Agent so long as no Default or Event of Default exist. If
no successor Agent shall have been so appointed by the Required Lenders 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 Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, 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 hereunder as
Agent, the provisions of this Article XI 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.
XII.8. Fees. The Borrower agrees to pay to the Agent, for its
individual account, an annual Agent's fee as from time to time agreed to by the
Borrower and Agent in writing.
109
<PAGE> 114
ARTICLE XIII
Miscellaneous
XIII.1. Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Loans, its
Note, and its Commitment); provided, however, that
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another
Lender, an Affiliate of a Lender, or Approved Fund or an
assignment of all of a Lender's rights and obligations under
this Agreement, any such partial assignment shall be in an
amount at least equal to $5,000,000 or an integral multiple of
$1,000,000 (or if less, the entire remaining amount of such
Lender's Revolving Credit Commitment, Term Loan A Commitment,
Term Loan B Commitment or Term Loan C Commitment) in excess
thereof;
(iii) each such assignment by a Lender with respect to
the Revolving Credit Facility shall be of a constant, and not
varying, percentage of all of its rights and obligations under
the Revolving Credit Facility and Letter of Credit Facility
and the Revolving Note;
(iv) each such assignment by a Lender with respect to
the Term Loan A Facility shall be of a constant, and not
varying, percentage of all of its rights and obligations under
the Term Loan A Facility and the Term Note A;
(v) each assignment by a Lender with respect to the
Term Loan B Facility shall be a constant, and not varying,
percentage of all of its rights and obligations under the Term
Loan B Facility and the Term Note B;
(vi) each assignment by a Lender with respect to the
Term Loan C Facility shall be a constant, and not varying,
percentage of all of its rights and obligations under the Term
Loan C Facility and the Term Note C; and
(vii) the parties to such assignment shall execute and
deliver to the Agent for its acceptance an Assignment and
Acceptance in the form of Exhibit B hereto, together with any
Note subject to such assignment and a processing fee of
$3,500.
110
<PAGE> 115
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights, and benefits
of a Lender hereunder and the assigning Lender shall, to the extent of
such assignment, relinquish its rights and be released from its
obligations under this Agreement. Upon the consummation of any
assignment pursuant to this Section, the assignor, the Agent and the
Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is
not incorporated under the laws of the United States of America or a
state thereof, it shall deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding of Taxes in
accordance with Section 6.6 hereof.
(b) The Agent shall maintain at its address referred to in
Section 13.2 hereof a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Agent and the Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable
prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed
by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially
the form of Exhibit B hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons
in all or a portion of its rights, obligations or rights and
obligations under this Agreement (including all or a portion of its
Commitment or its Loans); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the right of set-off
contained in Section 13.3 hereof, and (iv) the Borrower shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender
shall retain the sole right to enforce the obligations of the Borrower
relating to its Loans and its Notes and to approve any amendment,
modification, or waiver of any provision of this Agreement; provided,
however, that consent of the participant may be required for
amendments, modifications, or waivers decreasing the amount of
principal of or the rate at which interest is payable on such Loans or
Notes, extending any scheduled principal payment date or date fixed for
the payment of interest on such Loans or Notes, or extending or
increasing its Commitment).
111
<PAGE> 116
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender
from time to time to assignees and participants (including prospective
assignees and participants), subject, however, to the provisions of
Section 13.9 hereof.
XIII.2. Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address, telex number or telefacsimile number, as appropriate,
set forth below or such other address or number as such party shall specify by
notice hereunder:
(a) if to the Borrower:
Windmere-Durable Holdings, Inc.
5980 Miami Lakes Drive
Miami Lakes, Florida 33014
Attn: Chief Financial Officer
Telephone: (305) 362-2611
Telefacsimile: (305) 364-0635
(b) if to the Agent:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Cindy Harmon, Agency Services
Telephone: (704) 386-8451
Telefacsimile: (704) 386-9923
with a copy to:
112
<PAGE> 117
NationsBank, National Association
NationsBank Tower
100 Southeast 2nd Street, 14th Floor
Miami, Florida 33131
Attention: Corporate Finance
Telephone: (305) 533-2418
Telefacsimile: (305) 523-2437
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
(d) if to any other Credit Party, at the address set forth on
the signature page of the Facility Guaranty or Security Instrument
executed by such Credit Party, as the case may be.
XIII.3. Right of Set-off; Adjustments
(a) Upon the occurrence and during the continuance of any
Event of Default, each Lender (and each of its affiliates) is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its
affiliates) to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note held by such Lender,
irrespective of whether such Lender shall have made any demand under
this Agreement or such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any
such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Lender may have.
(b) If any Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of the Loans owing to it, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, or otherwise), in a greater
proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans owing to it, or
interest thereon, such benefitted Lender shall purchase for cash from
the other Lenders a participating interest in such portion of each such
other Lender's Loans owing to it, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds
113
<PAGE> 118
thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but
without interest. The Borrower agrees that any Lender so purchasing a
participation from a Lender pursuant to this Section 13.3 may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Person were the direct creditor of the Borrower in the
amount of such participation.
XIII.4. Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
commitment hereunder or the Borrower has continuing obligations hereunder unless
otherwise provided herein. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.
XIII.5. Expenses; Indemnification.
(a) The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the syndication of the
facilities and the preparation, execution, delivery, administration,
modification or amendment of this Agreement, the other Loan Documents
and the other documents to be delivered hereunder, including, without
limitation, the reasonable fees and expenses of counsel for the Agent
with respect thereto and with respect to advising the Agent as to its
rights and responsibilities under the Loan Documents. The Borrower
acknowledges that NationsBank and NMS on behalf of the Borrower will
cause a substantial portion of the Commitments to be acquired by other
financial institutions subsequent to the Closing Date. NationsBank, at
the request of the Borrower and in order to expedite the HPG
Acquisition, has agreed to provide all the Commitments at the Closing
Date. The Borrower agrees that during a period of up to 90 days
following the Closing Date one or more assignments of portions of the
Commitments will occur and that to the extent the Borrower has
outstanding Eurodollar Rate Loans the Borrower will likely incur
additional costs, fees and charges under Section 6.5 hereof. The
Borrower agrees to immediately reimburse the Agent and NationsBank for
any such costs, fees and charges. In addition, the Borrower agrees that
the incurrence of such costs, fees and charges shall not be the basis
for the Borrower withholding its consent or approval of any Person as
an Eligible Assignee. The Borrower further agrees to pay on demand all
costs and expenses of the Agent and the Lenders, if
114
<PAGE> 119
any (including, without limitation, reasonable attorneys' fees and
expenses), in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of the Loan Documents
and the other documents to be delivered hereunder.
(b) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender and each of their affiliates and their respective
officers, directors, employees, agents, and advisors (each, an
"Indemnified Party") from and against any and all claims, damages,
losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation, or
proceeding or preparation of defense in connection therewith) the Loan
Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans, except to the extent such
claim, damage, loss, liability, cost, or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful
misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 13.5 applies, such
indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by the Borrower, its directors,
shareholders or creditors or an Indemnified Party or any other Person
or any Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated. The Borrower
agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to it, any of its
Subsidiaries, any Guarantor, or any security holders or creditors
thereof arising out of, related to or in connection with the
transactions contemplated herein, except to the extent that such
liability is found in a final non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified party's
gross negligence or willful misconduct; provided, however, in no event
shall any Indemnified Party be liable for punitive, consequential,
indirect or special damages, as opposed to direct damages.
(c) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 13.5 shall survive the Facility
Termination Date and the expiration or termination of this Agreement.
XIII.6. Amendments and Waivers. Any provision of this Agreement or
any other Loan Document may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Lenders
(and, if Article XII or the rights or duties of the Agent are affected thereby,
by the Agent); provided that no such amendment or waiver shall, unless signed by
all the Lenders, (i) increase the Commitments of the Lenders, (ii) reduce the
principal of or rate of interest on any Loan or any fees or other amounts
payable hereunder, (iii) postpone any date fixed for the payment of any
scheduled installment of principal of or interest on any Loan or any fees or
other amounts payable hereunder or for termination of any
115
<PAGE> 120
Commitment, or (iv) change the percentage of the Commitments or of the unpaid
principal amount of the Notes, or the number of Lenders, which shall be required
for the Lenders or any of them to take any action under this Section 13.5 or any
other provision of this Agreement or (v) release Guarantors or all or
substantially all of the Collateral other than as otherwise permitted herein;
and provided further that no such amendment or waiver shall, unless signed by
Lenders holding more than 50% of the Term Loan A Commitments, Term Loan B
Commitments or Term Loan C Commitments, as applicable, change the application of
any payment of Term Loan A, Term Loan B or Term Loan C.
XIII.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
XIII.8. Termination. The termination of this Agreement shall not
affect any rights of the Borrower, the Lenders or the Agent or any obligation of
the Borrower, the Lenders or the Agent, arising prior to the effective date of
such termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of the
Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until payment
in full of the Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, any Lender is for any reason compelled to surrender such payment to
any Person because such payment is determined to be void or voidable as a
preference, impermissible setoff, a diversion of trust funds or for any other
reason, this Agreement shall continue in full force and the Borrower shall be
liable to, and shall indemnify and hold the Agent or such Lender harmless for,
the amount of such payment surrendered until the Agent or such Lender shall have
been finally and irrevocably paid in full. The provisions of the foregoing
sentence shall be and remain effective notwithstanding any contrary action which
may have been taken by the Agent or the Lenders in reliance upon such payment,
and any such contrary action so taken shall be without prejudice to the Agent or
the Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
XIII.9. Confidentiality. The Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by the Borrower pursuant to this Agreement that is marked confidential;
provided that nothing herein shall prevent any
116
<PAGE> 121
Lending Party from disclosing such information (a) to any other Lending Party or
any affiliate of any Lending Party, or any officer, director, employee, agent,
or advisor of any Lending Party or affiliate of any Lending Party, (b) to any
other Person if reasonably incidental to the administration of the credit
facility provided herein, (c) as required by any law, rule, or regulation, (d)
upon the order of any court or administrative agency, (e) upon the request or
demand of any regulatory agency or authority, (f) that is or becomes available
to the public or that is or becomes available to any Lending Party other than as
a result of a disclosure by any Lending Party prohibited by this Agreement, (g)
in connection with any litigation to which such Lending Party or any of its
affiliates may be a party, (h) to the extent necessary in connection with the
exercise of any remedy under this Agreement or any other Loan Document, and (i)
subject to provisions substantially similar to those contained in this Section
13.9, to any actual or proposed participant or assignee.
XIII.10. Severability. If any provision of this Agreement or the
other Loan Documents shall be determined to be illegal or invalid as to one or
more of the parties hereto, then such provision shall remain in effect with
respect to all parties, if any, as to whom such provision is neither illegal nor
invalid, and in any event all other provisions hereof shall remain effective and
binding on the parties hereto.
XIII.11. Entire Agreement. This Agreement, together with the other
Loan Documents, constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all previous proposals,
negotiations, representations, commitments and other communications between or
among the parties, both oral and written, with respect thereto.
XIII.12. Agreement Controls. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
XIII.13. Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Agent an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if
the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of
117
<PAGE> 122
the Lenders and the Borrower to conform strictly to any applicable usury laws.
Accordingly, if any Lender contracts for, charges, or receives any consideration
which constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be canceled automatically and, if previously paid, shall at such
Lender's option be applied to the outstanding amount of the Loans made hereunder
or be refunded to the Borrower. As used in this paragraph, the term "Highest
Lawful Rate" means the maximum lawful interest rate, if any, that at any time or
from time to time may be contracted for, charged, or received under the laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws now
allow.
XIII.14. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE.
(b) THE BORROWER AND EACH LENDER HEREBY EXPRESSLY AND
IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT
SITTING IN NEW YORK AND, BY THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER AND EACH LENDER EXPRESSLY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE
EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN
ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER AND EACH LENDER
HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) THE BORROWER AND EACH LENDER AGREES THAT SERVICE OF
PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE
ADDRESS OF THE BORROWER PROVIDED IN SECTION 13.2 HEREOF, BY ANY OTHER
METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN
THE STATE OF FLORIDA.
118
<PAGE> 123
(d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY
THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO
THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER
APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
[Signatures on following pages]
119
<PAGE> 124
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
WINDMERE-DURABLE HOLDINGS, INC.
WITNESS:
By:
---------------------------------------
Name: Harry D. Schulman
Title: Senior Vice President-Finance and
Administration
NATIONSBANK, NATIONAL ASSOCIATION,
AS AGENT
By:
---------------------------------------
Name: Andrew M. Airheart
Title: Senior Vice President
Credit Agreement Signature Page 1
<PAGE> 125
NATIONSBANK, NATIONAL ASSOCIATION
By:
---------------------------------------
Name: Andrew M. Airheart
Title: Senior Vice President
Domestic Lending Office:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-2374
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association
ABA # 053000196
Account No.:1366212250600
Reference: Corporate Credit Services
Attention: Windmere
Credit Agreement Signature Page 2
<PAGE> 1
EXHIBIT 10.2
EXECUTION COPY
================================================================================
BRIDGE LOAN AGREEMENT
dated as of
June 26, 1998
among
WINDMERE-DURABLE HOLDINGS, INC.
as Borrower
the Guarantors listed on the signature pages hereto,
as Guarantors
THE LENDERS named herein,
NationsBanc Montgomery Securities LLC, as Arranger
and
NationsBridge, L.L.C., as Administrative Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS.....................................................1
SECTION 1.1. DEFINED TERMS...................................................1
SECTION 1.2. INTERPRETATION.................................................22
ARTICLE II THE CREDIT AGREEMENT...........................................23
SECTION 2.1. COMMITMENTS TO MAKE BRIDGE LOANS...............................23
SECTION 2.2. CONVERSION TO TERM LOANS.......................................23
SECTION 2.3. OPTION TO EXCHANGE TERM LOANS FOR EXCHANGE NOTES...............23
SECTION 2.4. INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT INTEREST.........24
SECTION 2.5. MANDATORY PREPAYMENT...........................................25
SECTION 2.6. OPTIONAL PREPAYMENT............................................25
SECTION 2.7. BREAKAGE COSTS; INDEMNITY......................................26
SECTION 2.8. EFFECT OF NOTICE OF PREPAYMENT.................................26
SECTION 2.9. PAYMENTS.......................................................26
SECTION 2.10. TAXES..........................................................28
SECTION 2.11. RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC.....................30
SECTION 2.12. CERTAIN FEES...................................................31
ARTICLE III. REPRESENTATIONS AND WARRANTIES.................................32
SECTION 3.1. REPRESENTATIONS AND WARRANTIES IN THE CREDIT AGREEMENT AND
THE ACQUISITION AGREEMENT...................................32
SECTION 3.2. ORGANIZATION; POWERS...........................................32
SECTION 3.3. DUE AUTHORIZATION AND ENFORCEABILITY...........................32
SECTION 3.4. NO CONFLICTS...................................................33
SECTION 3.5. NO VIOLATIONS; MATERIAL CONTRACTS..............................34
SECTION 3.6. CAPITAL STOCK; SUBSIDIARIES....................................34
SECTION 3.7. LIENS..........................................................35
SECTION 3.8. NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS
OF FEDERAL RESERVE SYSTEM...................................35
SECTION 3.9. GOVERNMENTAL REGULATIONS.......................................35
SECTION 3.10. FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES...............35
SECTION 3.11. FULL DISCLOSURE................................................36
SECTION 3.12. PRIVATE OFFERING; RULE 144A MATTERS............................36
SECTION 3.13. ABSENCE OF PROCEEDINGS.........................................37
SECTION 3.14. TAXES..........................................................37
SECTION 3.15. FINANCIAL CONDITION; SOLVENCY..................................37
SECTION 3.16. NO MATERIAL ADVERSE CHANGE.....................................38
SECTION 3.17. YEAR 2000 COMPLIANCE...........................................38
ARTICLE IV. COVENANTS......................................................38
SECTION 4.1. USE OF PROCEEDS................................................38
SECTION 4.2. NOTICE OF DEFAULT AND RELATED MATTERS..........................38
SECTION 4.3. MERGER; SALE OF ALL OR SUBSTANTIALLY ALL ASSETS................39
SECTION 4.4. INFORMATION; SEC REPORTS; COMPLIANCE CERTIFICATES..............40
SECTION 4.5. EXISTENCE; BUSINESS AND PROPERTIES; INSURANCE..................41
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 4.6. COMPLIANCE WITH LAWS...........................................42
SECTION 4.7. RESTRICTED PAYMENTS............................................42
SECTION 4.8. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM SUBSIDIARIES..42
SECTION 4.9. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND
ISSUANCE OF ADDITIONAL PREFERRED STOCK......................42
SECTION 4.10. ANTI-LAYERING..................................................44
SECTION 4.11. SALE AND LEASEBACK TRANSACTIONS................................44
SECTION 4.12. INVESTMENTS; ACQUISITIONS......................................44
SECTION 4.13. LIMITATION ON TRANSACTIONS WITH AFFILIATES.....................45
SECTION 4.14. LINE OF BUSINESS...............................................45
SECTION 4.15. LIENS..........................................................45
SECTION 4.16. STAY, EXTENSION AND USURY LAWS.................................45
SECTION 4.17. CHANGE OF CONTROL..............................................45
SECTION 4.18. OBLIGATIONS AND TAXES..........................................46
SECTION 4.19. CONSOLIDATED NET WORTH.........................................46
SECTION 4.20. CONSOLIDATED FIXED CHARGE COVERAGE RATIO.......................47
SECTION 4.21. CONSOLIDATED LEVERAGE RATIO....................................47
SECTION 4.22. CONSOLIDATED INTEREST COVERAGE RATIO...........................48
SECTION 4.23. CONSOLIDATED EBITDA............................................49
SECTION 4.24. ADDITIONAL SUBSIDIARY GUARANTEES...............................49
SECTION 4.25. YEAR 2000 COMPLIANCE...........................................49
SECTION 4.26. ENVIRONMENTAL COMPLIANCE.......................................50
SECTION 4.27. ERISA..........................................................50
SECTION 4.28. HEDGING OBLIGATIONS............................................51
SECTION 4.29. DEFAULTS UNDER OTHER AGREEMENTS................................51
SECTION 4.30. LICENSES.......................................................51
SECTION 4.31. DISSOLUTION, ETC...............................................52
ARTICLE V. CONDITIONS........................................................52
SECTION 5.1. CLOSING........................................................52
SECTION 5.2. CORPORATE AND OTHER PROCEEDINGS................................52
SECTION 5.3. CONCURRENT TRANSACTIONS........................................54
SECTION 5.4. NO MATERIAL LOSS...............................................54
SECTION 5.5. NO EVENT OF DEFAULT............................................55
SECTION 5.6. LITIGATION; RESTRAINING ORDERS.................................55
SECTION 5.7. NO CHANGES IN FINANCIAL MARKETS................................55
SECTION 5.8. ENVIRONMENTAL REPORTS..........................................55
SECTION 5.9. DUE DILIGENCE..................................................56
SECTION 5.10. ESCROW AGREEMENT...............................................56
SECTION 5.11. EXCHANGE NOTES.................................................56
SECTION 5.12. ESCROWED WARRANTS..............................................56
SECTION 5.13. DEBT REGISTRATION RIGHTS AGREEMENT.............................56
SECTION 5.14. EQUITY REGISTRATION RIGHTS AGREEMENT...........................56
SECTION 5.15. DELIVERY OF OPINIONS...........................................56
SECTION 5.16. SOLVENCY.......................................................57
SECTION 5.17. PAYMENT OF FEES................................................57
SECTION 5.18. NO BREACH UNDER ENGAGEMENT LETTER, COMMITMENT
LETTER OR FEE LETTER.......................................57
SECTION 5.19. CONSENTS AND APPROVALS.........................................57
SECTION 5.20. MARGIN REGULATIONS.............................................57
SECTION 5.21. SATISFACTORY FINANCIAL STATEMENTS..............................58
SECTION 5.22. REPAYMENT OF INDEBTEDNESS......................................58
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VI. TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH
LOANS AND THE SECURITIES; REPRESENTATIONS OF LENDERS;
PARTICIPATIONS...............................................58
SECTION 6.1. TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING THE
LOANS AND THE SECURITIES...................................58
SECTION 6.2. PERMITTED ASSIGNMENTS..........................................59
SECTION 6.3. PERMITTED PARTICIPANTS; EFFECT.................................59
SECTION 6.4. DISSEMINATION OF INFORMATION...................................60
SECTION 6.5. TAX TREATMENT..................................................60
SECTION 6.6. REPLACEMENT SECURITIES UPON TRANSFER OR EXCHANGE...............60
SECTION 6.7. REGISTER.......................................................60
ARTICLE VII. EVENTS OF DEFAULT...............................................61
SECTION 7.1. EVENTS OF DEFAULT..............................................61
SECTION 7.2. ACCELERATION...................................................63
SECTION 7.3. RIGHTS AND REMEDIES CUMULATIVE.................................63
SECTION 7.4. DELAY OR OMISSION NOT WAIVER...................................63
SECTION 7.5. WAIVER OF PAST DEFAULTS........................................64
SECTION 7.6. RIGHTS OF LENDERS TO RECEIVE PAYMENT...........................64
ARTICLE VIII. PERMANENT SECURITIES...........................................64
SECTION 8.1. PERMANENT SECURITIES...........................................64
ARTICLE IX. TERMINATION.....................................................65
SECTION 9.1. TERMINATION....................................................5
SECTION 9.2. SURVIVAL OF CERTAIN PROVISIONS.................................65
ARTICLE X. SUBORDINATION...................................................65
SECTION 10.1. CERTAIN DEFINITIONS...........................................65
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY..........................66
SECTION 10.3. DEFAULT ON DESIGNATED SENIOR DEBT.............................66
SECTION 10.4. ACCELERATION OF SECURITIES....................................67
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER...........................67
SECTION 10.6. NOTICE BY THE BORROWER........................................68
SECTION 10.7. SUBROGATION...................................................68
SECTION 10.8. RELATIVE RIGHTS...............................................68
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY THE BORROWER
AND THE GUARANTORS........................................69
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE......................69
SECTION 10.11. RIGHTS OF ADMINISTRATIVE AGENT................................69
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.........................69
SECTION 10.13. AMENDMENTS....................................................70
ARTICLE XI. GUARANTEE.......................................................70
SECTION 11.1. THE GUARANTEE.................................................70
SECTION 11.2. LIMITATION ON LIABILITY.......................................71
SECTION 11.3. STAY OF ACCELERATION..........................................72
SECTION 11.4. RELEASE OF GUARANTORS.........................................72
ARTICLE XII. INDEMNITY......................................................72
SECTION 12.1. INDEMNIFICATION...............................................72
SECTION 12.2. INDEMNITY NOT AVAILABLE.......................................73
SECTION 12.3. SETTLEMENT OF CLAIMS..........................................74
SECTION 12.4. APPEARANCE EXPENSES...........................................74
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 12.5. INDEMNITY FOR TAXES, RESERVES AND EXPENSES....................74
SECTION 12.6. SURVIVAL OF INDEMNIFICATION...................................75
SECTION 12.7. LIABILITY NOT EXCLUSIVE; PAYMENTS.............................75
ARTICLE XIII. THE ADMINISTRATIVE AGENT; THE ARRANGERS.......................76
SECTION 13.1. APPOINTMENT...................................................76
SECTION 13.2. DELEGATION OF DUTIES..........................................76
SECTION 13.3. EXCULPATORY PROVISIONS........................................76
SECTION 13.4. RELIANCE BY ADMINISTRATIVE AGENT..............................77
SECTION 13.5. NOTICE OF DEFAULT.............................................77
SECTION 13.6. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS........77
SECTION 13.7. INDEMNIFICATION...............................................78
SECTION 13.8. ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL CAPACITIES............78
SECTION 13.9. SUCCESSOR ADMINISTRATIVE AGENT................................79
SECTION 13.10. SUCCESSOR ADMINISTRATIVE AGENT................................79
ARTICLE XIV. MISCELLANEOUS.................................................79
SECTION 14.1. EXPENSES; DOCUMENTARY TAXES...................................79
SECTION 14.2. NOTICES.......................................................79
SECTION 14.3. CONSENT TO AMENDMENTS AND WAIVERS.............................80
SECTION 14.4. PARTIES.......................................................81
SECTION 14.5. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL................................................81
SECTION 14.6. REPLACEMENT NOTES.............................................82
SECTION 14.7. APPOINTMENT OF AGENT FOR SERVICE..............................82
SECTION 14.8. MARSHALLING; RECAPTURE........................................82
SECTION 14.9. LIMITATION OF LIABILITY.......................................82
SECTION 14.10. INDEPENDENCE OF COVENANTS.....................................83
SECTION 14.11. CURRENCY INDEMNITY............................................83
SECTION 14.12. WAIVER OF IMMUNITY............................................83
SECTION 14.13. FREEDOM OF CHOICE.............................................83
SECTION 14.14. SUCCESSORS AND ASSIGNS........................................84
SECTION 14.15. MERGER........................................................84
SECTION 14.16. SEVERABILITY CLAUSE...........................................84
SECTION 14.17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY..................................................84
</TABLE>
EXHIBIT A: ASSIGNMENT AND ACCEPTANCE
EXHIBIT B: FORM OF BRIDGE NOTE
EXHIBIT C: DEBT REGISTRATION RIGHTS AGREEMENT
EXHIBIT D: EQUITY REGISTRATION RIGHTS AGREEMENT
EXHIBIT E: ESCROW AGREEMENT
EXHIBIT F: EXCHANGE NOTE INDENTURE
EXHIBIT G: WARRANT AGREEMENT
EXHIBIT H: OPINION OF GREENBERG TRAURIG HOFFMAN LIPOFF ROSEN & QUENTEL
iv
<PAGE> 6
THIS BRIDGE LOAN AGREEMENT, dated as of June 26, 1998 (as amended,
restated and/or otherwise modified from time to time, this "AGREEMENT"), is by
and among:
(a) Windmere-Durable Holdings, Inc., a Florida corporation (the
"BORROWER"),
(b) the Guarantors listed on the signature pages hereto as
Guarantors,
(c) NationsBridge, L.L.C., as Administrative Agent, and
(d) NationsBanc Montgomery Securities LLC, as Arranger.
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"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's 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.
"ACQUISITION" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest at
the time it becomes exercisable by the holder thereof), whether by purchase of
such equity interest or upon exercise of an option or warrant for, or conversion
of securities into, such equity interest, or (ii) assets of another Person which
constitute any material part of the assets of such Person or of a line or lines
of business conducted by such Person.
"ACQUISITION AGREEMENT" means the Transaction Agreement, together
with the exhibits, schedules and attachments thereto, dated as of May 10, 1998,
by and among B&D and the Borrower on behalf of itself and its Wholly Owned
Subsidiaries.
"ADMINISTRATIVE AGENT" means NationsBridge, L.L.C., acting as
administrative agent pursuant to Article XIII or any successor or replacement
Administrative Agent, acting in such capacity.
"AFFECTED PARTY" means any Lender, any Lender's Eurodollar Lending
Office, any beneficial owner of any Lender, and their respective successors and
assigns.
"AFFILIATE" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with the Borrower; or (ii) which beneficially owns or holds 10%
or more of any class of the outstanding voting stock of the Borrower or 10% or
more of any class of the outstanding voting stock (or in the case of a Person
which is not a corporation, 10% or more of the equity interest) of which is
beneficially owned or held by the Borrower. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction
<PAGE> 7
of the management and policies of a Person, whether through ownership of voting
stock, by contract or otherwise.
"AFFILIATE TRANSACTION" has the meaning specified in Section 4.13.
"AGREEMENT" has the meaning specified in the preamble to this
Agreement.
"APPLICABLE MARGIN" means:
(i) with respect to Bridge Loans that are Base Rate Loans, 450
basis points per annum at all times through and including the date that
is 180 days subsequent to the Closing Date, 550 basis points per annum at
all times after the date that is 180 days subsequent to the Closing Date
and prior to the date that is 270 days subsequent to the Closing Date and
increasing by 50 basis points per annum on the date that is 270 days
subsequent to the Closing Date and by an additional 50 basis points per
annum on the last day of each 90-day period thereafter for so long as any
Bridge Loans are outstanding; and
(ii) with respect to Bridge Loans that are Eurodollar Rate
Loans, 550 basis points per annum at all times through and including the
date that is 180 days subsequent to the Closing Date, 650 basis points
per annum at all times after the date that is 180 days subsequent to the
Closing Date and prior to the date that is 270 days subsequent to the
Closing Date and increasing by 50 basis points per annum on the date that
is 270 days subsequent to the Closing Date and by an additional 50 basis
points per annum on the last day of each 90-day period thereafter for so
long as any Bridge Loans are outstanding.
"APPLICABLE PERIOD" means (i) for the fiscal quarter of the
Borrower and its Subsidiaries ending June 30, 1999 and each fiscal quarter of
the Borrower and its Subsidiaries thereafter, a Four-Quarter Period, and (ii)
for the fiscal quarters of the Borrower and its Subsidiaries ending September
30, 1998, December 31, 1998, and March 31, 1999 the one, two and three fiscal
quarter periods ending on such dates. For purposes of determining the
Consolidated Leverage Ratio, the Consolidated Interest Coverage Ratio and the
Consolidated Fixed Charge Ratio for the one, two or three fiscal quarter periods
of the Borrower and its Subsidiaries ending September 30, 1998, December 31,
1998 and March 31, 1999, Consolidated EBITDA, Consolidated Interest Expense and
Consolidated Fixed Charges shall be determined by multiplying the Adjusted
Consolidated Fixed Charges (other than required principal payments) for such
periods by four, two and four-thirds, respectively. Commencing with the fiscal
quarter ending June 30, 1999 and thereafter, such ratios shall be calculated for
a Four-Quarter Period.
"APPROVED STOCK OPTION PLAN" means (a) each stock option plan
(whether relating to employees or directors) or agreement pursuant to which the
options listed on Schedule 1.4 of the Credit Agreement are listed and (b) any
executive or employee stock option or incentive plan hereafter adopted by the
board of directors of the Borrower.
"ARRANGER" has the meaning specified in the preamble to this
Agreement.
"ASSET SALE" means any voluntary disposition, whether by sale,
lease or transfer, other than as permitted under Section 4.3 hereof, of (a) any
or all of the assets, excluding cash and cash equivalents, of the Borrower or
its Subsidiaries, and (b) any of the capital stock (including the Salton/Maxim
Shares), or securities or investments exchangeable, exercisable or convertible
for or into, or
2
<PAGE> 8
otherwise entitling the holder to receive any of the capital stock, of any
Person (other than a disposition to a Guarantor).
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of EXHIBIT A or such other form as shall be
approved by the Administrative Agent.
"B&D" means The Black & Decker Corporation, a Maryland
corporation.
"BANKRUPTCY LAW" means (i) Title 11 of the U.S. Code or (ii) any
other law of the United States, any political subdivision thereof or any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors.
"BASE RATE" means, for any day, the sum of (a) higher of (i) the
Federal Funds Rate for such day plus 50 basis points and (ii) the Prime Rate for
such day, plus (b) the Applicable Margin. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Prime Rate or Federal Funds Rate.
"BASE RATE LOAN" means a Bridge Loan or a Term Loan at any time
that the interest rate thereon is computed with reference to the Base Rate.
"BENEFICIAL OWNER" has the meaning as defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act.
"BLACK & DECKER LICENSE AGREEMENT" means that certain Trademark
License Agreement dated as of the date hereof among B&D and the Borrower.
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States or any successor.
"BORROWER" has the meaning specified in the preamble to this
Agreement.
"BRIDGE LOAN" means a loan made by any Lender to the Borrower
pursuant to Section 2.1.
"BRIDGE NOTE" means a promissory note of the Borrower in the form
attached as EXHIBIT B hereto evidencing the Bridge Loan and Term Loan of any
Lender.
"BUSINESS DAY" means each day other than a Saturday, a Sunday or
any other day on which banking institutions in the City of New York, the City of
Charlotte or at a place of payment are authorized by law, regulation or
executive order to remain closed and, if such day relates to a payment or
prepayment of principal of, or interest on, or an Interest Period for,
Eurodollar Rate Loans, any day which is also a day on which dealings in dollar
deposits are carried out in the London interbank markets.
"CAPITAL EXPENDITURES" means, with respect to the Borrower and
its Subsidiaries, for any period the sum of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by the Borrower or
any Subsidiary during such period for items that would be classified as
"property, plant or equipment" or comparable items on the consolidated balance
sheet of the Borrower and its Subsidiaries, including without limitation all
transactional costs incurred in connection with
3
<PAGE> 9
such expenditures provided the same have been capitalized, and (ii) with respect
to any Capital Lease entered into by the Borrower or its Subsidiaries during
such period, the present value of the lease payments due under such Capital
Lease over the term of such Capital Lease applying a discount rate equal to the
interest rate provided in such lease (or in the absence of a stated interest
rate, the rate used in preparation of the financial statements described in
Section 4.4(a)), all the foregoing in accordance with GAAP applied on a
Consistent Basis.
"CAPITAL LEASES" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time including
Statement No. 13 of the Financial Accounting Standards Board and any successor
thereof.
"CAPITAL MARKETS TRANSACTION" has the meaning specified in Section
2.5(a).
"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 Borrower and its Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act); (ii) the adoption of a plan relating to the liquidation or
dissolution of the Borrower; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 30% of the Voting Stock of the
Borrower (measured by voting power rather than number of shares); or (iv) the
first day on which a majority of the members of the Board of Directors of the
Borrower are not Continuing Directors.
"CHANGE OF CONTROL FEE" means a fee equal to 1% of the principal
amount of the Loans prepaid pursuant to the Change of Control Offer.
"CHANGE OF CONTROL OFFER" has the meaning specified in Section
4.17(a).
"CHANGE OF CONTROL PAYMENT" has the meaning specified in Section
4.17(a).
"CHANGE OF CONTROL PAYMENT DATE" has the meaning specified in
Section 4.17(a).
"CLOSING" has the meaning specified in Section 5.1.
"CLOSING DATE" has the meaning specified in Section 5.1.
"CODE" means the Internal Revenue Code of 1986, as amended, and
any regulation promulgated thereunder.
"COMMITMENT" means, with respect to any Lender, the amount set
forth opposite such Lender's signature on the signature pages of this Agreement.
"COMMITMENT LETTER" means the Bridge Commitment Letter (including
the Summaries of Indicative Terms and Conditions incorporated by reference
therein), dated May 5, 1998, as amended, between the Borrower and the
Administrative Agent.
4
<PAGE> 10
"CONSOLIDATED EBITDA" means , with respect to the Borrower and its
Subsidiaries, for the Applicable Period ending as of the date of determination,
the sum of, without duplication, (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) taxes on income, (iv) amortization and (v) depreciation,
all determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis provided, however, that with respect to an Acquisition that is
accounted for as a "purchase," for the four fiscal quarters ending after the
date of such Acquisition, Consolidated EBITDA shall include the results of
operations of such acquired Person or assets, which amounts shall be determined
on a historical pro forma basis as if such Acquisition had been consummated as a
"pooling of interest."
"CONSOLIDATED FIXED CHARGE RATIO" means, with respect to the
Borrower and its Subsidiaries for the Applicable Period, the ratio of (i)
Consolidated EBITDA for such period less Capital Expenditures for such period to
(ii) Consolidated Fixed Charges for such period.
"CONSOLIDATED FIXED CHARGES" means, with respect to Borrower and
its Subsidiaries for the Applicable Period, the sum of, without duplication, (i)
Consolidated Interest Expense, during such period, and (ii) the principal amount
of Consolidated Funded Indebtedness due and payable during such period, all
determined in accordance with GAAP applied on a Consistent Basis.
"CONSOLIDATED FUNDED INDEBTEDNESS" means at any time as of which
the amount thereof is to be determined, all Indebtedness of the Borrower and its
Subsidiaries, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis.
"CONSOLIDATED INTEREST COVERAGE RATIO" means, with respect to the
Borrower and its Subsidiaries, for the period of four consecutive fiscal
quarters ending as of the date of determination, the ratio of (i) Consolidated
EBITDA to (ii) Consolidated Interest Expense.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to the
Applicable Period, the gross interest expense of the Borrower and its
Subsidiaries, including without limitation (i) the amortization of debt
discounts, (ii) the amortization of all fees payable in connection with the
incurrence of Indebtedness to the extent included in interest expense and (iii)
the portion of any liabilities incurred in connection with Capital Leases
allocable to interest expense, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"CONSOLIDATED LEVERAGE RATIO" means, for any date for which the
computation thereof is being made, the ratio of (i) Consolidated Funded
Indebtedness (determined as at such date) to (ii) Consolidated EBITDA for the
Applicable Period.
"CONSOLIDATED NET INCOME" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its Subsidiaries
less all operating and non-operating expenses (not related to extraordinary
events) of the Borrower and its Subsidiaries including taxes on income, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis; but excluding (for all purposes other than compliance with
Section 4.19) in such calculation (1) the amount of any net gains on the sale,
conversion or other disposition of capital assets, (2) the amount of any net
gains on the acquisition, retirement, sale or other disposition of capital stock
and other securities of the Borrower or its Subsidiaries, (3) the amount of any
net gains on the collection of proceeds of life insurance policies, (4) any
write-up of any asset, (5) any other net gain of an extraordinary nature, and
(6) dividends and distributions in respect of minority investments in Persons
other than Subsidiaries, all as determined in accordance with GAAP applied on a
Consistent Basis; provided that for the purposes of determining
5
<PAGE> 11
compliance with Section 4.19, there shall be disregarded any increase in
Consolidated Net Income upon giving effect to an Acquisition which results from
the treatment of such Acquisition as a "pooling of interest" although such
Acquisition was a "purchase" transaction for GAAP purposes.
"CONSOLIDATED NET WORTH" means the total of the Borrower's and its
Subsidiaries' shareholders' equity as determined in accordance with GAAP on a
Consistent Basis, minus the sum of the following, (i) the book value of all
assets that would be treated as intangible assets under GAAP and (ii) any
prepaid advertising credits.
"CONSISTENT BASIS" in reference to the application of GAAP means
the accounting principles observed in the period referred to are comparable in
all material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in Section 3.10(a) hereof.
"CONTINGENT OBLIGATION" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof, would be
required) to be included in the financial statements (including footnotes) of
such Person in accordance with GAAP applied on a Consistent Basis, including
Statement No. 5 of the Financial Accounting Standards Board, and any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person (the "PRIMARY OBLIGOR") in any manner,
whether directly or indirectly, including obligations of such Person however
incurred:
(1) to purchase such Indebtedness or other obligation or
any property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or (ii) to
maintain a minimum working capital, net worth or other balance sheet
condition or any income statement condition of the primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets of such
Person to secure payment of such Indebtedness or other obligation;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the owner or
holder of such Indebtedness or obligation of the ability of the primary
obligor to make payment of such Indebtedness or other obligation; or
(5) otherwise to assure the owner of the Indebtedness or
such obligation of the primary obligor against loss in respect thereof.
Contingent Obligations shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represent the amount which can reasonably be expected to become an actual or
matured liability of such Person.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Borrower who (i) was a member of such
Board of Directors on the date of this Agreement 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 at the time of such
nomination or election.
6
<PAGE> 12
"CONVERSION DATE" means the Maturity Date.
"CONVERSION DEFAULT" means the occurrence of any one or more of
the following: (i) any Payment Default, (ii) any acceleration of any of the
obligations owing under the Credit Agreement, or (iii) any Default or Event of
Default under Section 7.1(i) or (j).
"CONVERSION RATE" means, as of any date, the sum of (i) the then
applicable Conversion Spread, plus (ii) the greatest of the following (expressed
as a percentage per annum), calculated as of the Conversion Date:
(a) the rate of interest applicable to the Bridge Loans on the
Conversion Date,
(b) the sum of (1) the yield (expressed as a percentage per
annum) in effect on the Conversion Date for United States Treasury Notes
with a remaining maturity closest to nine years from the Conversion Date
(provided, however, that if the remaining term of the Term Loans is not
equal to the constant maturity of a United States Treasury Note for which
a weekly average yield is given, such yield on United States Treasury
Notes shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United
States Treasury Notes for which such yields are given), plus (2) 675
basis points, and
(c) 12.5%.
"CONVERSION SPREAD" means zero basis points during the 90-day
period commencing on the Conversion Date, increasing by 50 basis points at the
beginning of each subsequent 90-day period.
"CORE BUSINESS" means, with respect to the Borrower and its
Subsidiaries, the business of manufacturing and distributing small household and
outdoor appliances, pet products and related items consistent with past
practices.
"COST OF ACQUISITION" means, with respect to any Acquisition, as
at the date of consummation of any such Acquisition, the sum of the following
(without duplication): (i) the value of the capital stock, warrants or options
to acquire capital stock of the Borrower or any Subsidiary to be transferred in
connection therewith, (ii) any cash or other property and the unpaid principal
amount of any debt instrument given as consideration, (iii) any Indebtedness
assumed by the Borrower or its Subsidiaries in connection with such Acquisition,
and (iv) out of pocket transaction costs for the services and expenses of
attorneys, accountants and other consultants incurred in effecting such a
transaction, and other similar transaction costs so incurred. For purposes of
determining the Cost of Acquisition for any transaction, (A) the capital stock
of the Borrower shall be valued (I) at its market value as reported on the New
York Stock Exchange with respect to shares that are freely tradeable, and (II)
with respect to shares that are not freely tradeable, as determined by the Board
of Directors of the Borrower and, if requested by the Administrative Agent,
determined to be a reasonable valuation by the independent public accountants
referred to in Section 4.4(b) hereof, (B) the capital stock of any Subsidiary
shall be valued as determined by the Board of Directors of the Borrower or such
Subsidiary and, if requested by the Administrative Agent, determined to be a
reasonable valuation by the independent public accountants referred to in
Section 4.4(b) hereof, and (C) with respect to any Acquisition accomplished
pursuant to the exercise of options or warrants or the conversion of securities,
the Cost of Acquisition shall include both the cost of acquiring such option,
warrant or convertible security as well as the cost of exercise or conversion.
7
<PAGE> 13
"CREDIT AGREEMENT" means the Credit Agreement, dated as of the
date hereof, by and among the Borrower, the Lenders referred to therein and
NationsBank, N.A., as agent and lender, as the same may be amended, extended,
renewed, restated, refinanced, refunded, replaced, substituted, supplemented or
otherwise modified (in each case, in whole or in part, and without limitation as
to amount, terms, conditions, covenants and other provisions) from time to time.
"CREDIT FACILITIES" means, with respect to the Company, one or
more debt facilities (including, without limitation, the Senior Credit Facility)
or commercial paper facilities, in each case with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"CUSTODIAN" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
"DEBT REGISTRATION RIGHTS AGREEMENT" means the registration rights
agreement among the Borrower, the Guarantors and the Administrative Agent
pursuant to which the Exchange Notes are required to be registered for public
sale, in the form attached as EXHIBIT C.
"DEFAULT" means any event that, with the passage of time, the
giving of notice or both, would constitute an Event of Default.
"DIRECT FOREIGN SUBSIDIARY" means any Foreign Subsidiary whose
outstanding voting stock is owned by the Borrower or a Domestic Subsidiary.
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"DOMESTIC SUBSIDIARY" means, with respect to the Borrower, any
Subsidiary of the Borrower that was formed under the laws of the United States
of America or that guarantees or otherwise provides credit support for any
Indebtedness of the Borrower.
"ELIGIBLE SECURITIES" means the following obligations and any
other obligations previously approved in writing by the Administrative Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the laws of
any state of the United States of America or under the laws of any other nation,
payable in the United States of America, expressed to mature not later than 180
days following the date of issuance thereof and rated in an investment grade
rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued by any
Lender or certificates of deposit maturing within one year from the date of
issuance thereof and issued by a bank or trust company organized under the laws
of the United States or of any state thereof having capital surplus and
undivided profits aggregating at least $400,000,000 and being rated "A-" or
better by S&P or "A3" or better by Moody's;
8
<PAGE> 14
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in obligations
described in paragraphs (a) through (f) above, the shares of which mutual funds
are at all times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred stock
issued by a Person having a rating of its long term unsecured debt of "A" or
better by S&P or "A-1" or better by Moody's; and
(i) asset-backed remarked certificates of participation
representing a fractional undivided interest in the assets of a trust, which
certificates are rated at least "A-1" by S&P and "P-1" by Moody's.
"EMPLOYEE BENEFIT PLAN" means (i) any employee benefit plan,
including any Pension Plan, within the meaning of Section 3(3) of ERISA which
(A) is maintained for employees of the Borrower, any of its ERISA Affiliates, or
any Subsidiary or is assumed by the Borrower, any of its ERISA Affiliates, or
any Subsidiary in connection with any Acquisition or (B) has at any time within
the last six years been maintained for the employees of the Borrower, any
current or former ERISA Affiliate, or any Subsidiary and (ii) any plan,
arrangement, understanding or scheme maintained by the Borrower or any
Subsidiary that provides retirement, deferred compensation, employee or retiree
medical or life insurance, severance benefits or any other benefit covering any
employee or former employee and which is administered under any Foreign Benefit
Law or regulated by any Governmental Entity other than the United States of
America.
"ENGAGEMENT LETTER" means the engagement letter, dated May 5,
1998, between the Borrower and NationsBanc.
"ENVIRONMENTAL LAWS" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air
Act, as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning, any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or material.
"EQUITY OFFERING" means a public or private offering of equity
securities (including, without limitation, any security or investment not
constituting Indebtedness exchangeable, exercisable or convertible for or into,
or otherwise entitling the holder to receive, equity securities) of the Borrower
or any Subsidiary (other than securities issued to the Borrower or another
Subsidiary); provided, however, the term "EQUITY OFFERING" shall not include (i)
any issuance of equity securities whose aggregate market value when combined
with all other similar equity issuances, does not exceed $10,000,000 and which
issuance in connection with the exercise of stock options or warrants granted
to, or purchase of restricted stock by, eligible participants under an Approved
Stock Option Plan or (ii) the Permanent Securities.
"EQUITY REGISTRATION RIGHTS AGREEMENT" means the registration
rights agreement among the Borrower, the Guarantors and the Administrative Agent
pursuant to which the Escrowed Warrants and the Warrant Shares are required to
be registered for public sale, in the form attached as EXHIBIT D.
9
<PAGE> 15
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person or trade or business which is a
member of a group which is under common control with the Borrower who together
with the Borrower, is treated as a single employer within the meaning of Section
414(b) and (c) of the Code.
"ESCROW ACCOUNT" has the meaning specified in the Escrow
Agreement.
"ESCROW AGENT" means U.S. Bank Trust National Association, in its
capacity as escrow agent pursuant to the Escrow Agreement.
"ESCROW AGREEMENT" means the escrow agreement among the
Administrative Agent, on behalf of the Lenders, and the Escrow Agent, in the
form attached as EXHIBIT E.
"ESCROWED WARRANTS" means the warrants to purchase shares of
common stock of the Borrower, par value $.10 per share, deposited with the
Escrow Agent pursuant to the Escrow Agreement on the date hereof.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the
office, if any, of such Lender specified from time to time as its "Eurodollar
Lending Office" in a written notice to the Borrower.
"EURODOLLAR RATE" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
Rate 1- Eurodollar Reserve Percentage Margin
"EURODOLLAR RATE LOAN" means a Bridge Loan at any time the
interest rate thereon is computed with reference to the Eurodollar Rate.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day, that
percentage (expressed as a decimal) which is in effect from time to time under
Regulation D or any successor regulation, as the maximum reserve requirement
(including any basic, supplemental, emergency, special, or marginal reserves)
applicable with respect to Eurocurrency liabilities as that term is defined in
Regulation D (or against any other category of liabilities that includes
deposits by reference to which the interest rate of Eurodollar Rate Loans is
determined), whether or not the Administrative Agent or any Lender has any
Eurocurrency liabilities subject to such requirements, without benefits of
credits or proration, exceptions or offsets that may be available from time to
time to the Administrative Agent or any Lender. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"EVENT OF DEFAULT" means any event specified in Section 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
10
<PAGE> 16
"EXCHANGE NOTE INDENTURE" means, the indenture relating to the
Exchange Notes, among the Borrower, as issuer, the Guarantors, as guarantors and
the Exchange Note Trustee, as trustee, in the form attached as EXHIBIT F.
"EXCHANGE NOTE TRUSTEE" means, on any date of determination, the
trustee under the Exchange Note Indenture.
"EXCHANGE NOTES" means the Senior Subordinated Exchange Notes of
the Borrower, guaranteed by the Guarantors, placed into escrow on the Closing
Date, to be issued in exchange for certain Term Loans pursuant to Section 2.3,
in the form attached as an exhibit to the Exchange Note Indenture.
"EXCHANGE NOTICE" has the meaning specified in Section 2.3(a) of
this Agreement.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate charged to
the Administrative Agent (in its individual capacity) on such day on such
transactions as determined by the Administrative Agent.
"FEE LETTER" means that certain Fee Letter, dated May 5, 1998, as
amended, among the Borrower, the Administrative Agent and NationsBanc.
"FISCAL YEAR" means the twelve month fiscal period of the Borrower
beginning January 1 of each calendar year and ending the following December 31
of such calendar year.
"FOREIGN BENEFIT LAW" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign nation or any
province, state, territory, protectorate or other political subdivision thereof
regulating, relating to, or imposing liability or standards of conduct
concerning, any Employee Benefit Plan.
"FOREIGN SUBSIDIARY" means any Subsidiary organized under the laws
of any jurisdiction other than one of the states comprising the United States of
America, any territory thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles, being those
principles of accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants or which
have other substantial authoritative support and are applicable in the
circumstances as of the date of a report.
"GOVERNMENT SECURITIES" means direct obligations of, or
obligations the timely payment of principal and interest on which are fully and
unconditionally guaranteed by, the United States of America.
"GOVERNMENTAL ENTITY" means any Federal, state, municipal,
national or other governmental department, commission, board, bureau, court,
agency or instrumentality or political
11
<PAGE> 17
subdivision thereof or any entity or officer exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to any
government or any court, in each case whether associated with a state of the
United States, the United States, or a foreign entity or government, including
but not limited to Malaysia, Mexico and Canada.
"GUARANTORS" means (i) each current and future Domestic Subsidiary
of the Borrower and (ii) any other Subsidiary of the Borrower that executes a
notation of Guarantee in accordance with the provisions of this Agreement, and
their respective successors and assigns.
"GUARANTEE" means the guarantee by each of the Guarantors pursuant
to Article XI hereof.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section
11.1.
"GUARANTORS" has the meaning specified in the preamble to this
Agreement.
"HAZARDOUS MATERIAL" means and includes any pollutant,
contaminant, hazardous, toxic or dangerous waste, substance or material
(including petroleum products, asbestos-containing materials and lead), the
management, generation, handling, storage, transportation, disposal, treatment,
release, discharge or emission of which is subject to any Environmental Law.
"HEDGING OBLIGATIONS" means any and all obligations of the
Borrower, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, currency exchange rates
or forward rates applicable to such party's commodities, assets, liabilities or
exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements, and forward commodity price options, puts,
warrants and those commonly known as commodity "swap" agreements; and (ii) any
and all cancellations, buybacks, reversals, terminations or assignments of any
of the foregoing.
"HPG ACQUISITION" means the acquisition by the Borrower of
substantially all of the assets of the Target pursuant to the Acquisition
Agreement.
"INDEBTEDNESS" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of such
Person for the acquisition of property other than purchases of property,
product, merchandise and services in the ordinary course of business (so long as
such amounts are payable in less than twelve (12) months), all indebtedness
secured by any Lien on the property of such Person whether or not such
indebtedness is assumed (except unperfected Liens incurred in the ordinary
course of business and not in connection with the borrowing of money), all
liability of such Person by way of endorsements (other than for collection or
deposit in the ordinary course of business), all Contingent Obligations, the
face amount of all issued and outstanding letters of credit, and all Hedging
Obligations; provided that in no event shall the term Indebtedness include
capital stock surplus and retained earnings, minority interests in the common
stock of Subsidiaries, lease obligations (other than pursuant to Capital
Leases), reserves for deferred income taxes and investment credits, other
deferred credits or reserves.
12
<PAGE> 18
"INDEBTEDNESS FOR MONEY BORROWED" means with respect to any
Person, without duplication, all amounts owed, including principal, interest,
fees, indemnities, costs, premium, damages and expenses, in respect of money
borrowed, including without limitation the indebtedness evidenced by the Bridge
Notes, the Loans and the Permanent Securities which are debt securities and all
Capital Leases and the deferred purchase price of any property or asset,
evidenced by a promissory note, bond, debenture or similar written obligation
for the payment of money (including conditional sales or similar title retention
agreements), other than trade payables incurred in the ordinary course of
business.
"INDEMNIFIED PARTY" has the meaning specified in Section 12.1.
"INDEMNIFYING PARTY" has the meaning specified in Section 12.1.
"INTELLECTUAL PROPERTY" means all licenses, franchises, patents,
trademarks, trademark rights, trade names, trade name rights, trade secrets and
copyrights the Borrower and its Subsidiaries own or have the right to use under
valid license agreements or otherwise, and all applications for any of the
foregoing, material to the conduct of their business as now conducted.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means, collectively (or
individually as the context may indicate), (i) the Intellectual Property
Security Agreement dated as of the Closing Date and executed by the Borrower and
certain of its Domestic Subsidiaries in favor of the agent under the Credit
Agreement and (ii) each other Intellectual Property Security Agreement executed
by the Borrower or a Domestic Subsidiary as permitted by the Credit Agreement.
"INTERBANK OFFERED RATE" means, for any Eurodollar Rate Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100th of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "INTERBANK OFFERED RATE" shall
mean, for any Eurodollar Rate Loan for any Interest Period therefor, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in dollars at approximately 11:00 a.m. (London Time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
"INTEREST PAYMENT DATE" means (i) the last day of each September,
December, March and June after the Closing Date , (ii) the Maturity Date and
(iii) the date of any prepayment of all or any portion of the principal of the
Loans.
"INTEREST PERIOD" means, in respect of any Eurodollar Rate Loan,
(i) in the case of the first Interest Period (if any) applicable to the Bridge
Loans, the period commencing on and including the Closing Date and ending on the
numerically corresponding date in the month thereafter, and (ii) in the case of
each subsequent Interest Period, the period beginning on the last day of the
prior Interest Period and ending on the numerically corresponding date in the
month thereafter; provided, however, that if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended until the
next succeeding Business Day unless the next Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Notwithstanding the foregoing, no Interest Period in
respect of the Bridge Loans may extend beyond the Maturity Date and each
13
<PAGE> 19
Interest Period that would otherwise commence before and end after the Maturity
Date shall end on the Maturity Date.
"INVESTMENT BANKS" means, in the event of any Permanent Securities
that are (a) equity securities, collectively, NationsBanc and Merrill Lynch,
Pierce, Fenner & Smith Incorporated and (b) debt securities, NationsBanc.
"KMART AGREEMENT" means that certain Purchase, Distribution and
Marketing Agreement dated as of January 27, 1997 between Kmart Corporation and
Salton/Maxim.
"LENDERS" shall mean (a) each financial institution that has
executed a counterpart to this Agreement (other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance.
"LIEN" means any interest in property securing any obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. For the purposes of this
Agreement, the Borrower and any Subsidiary shall be deemed to be the owner of
any property which it has acquired or holds subject to a conditional sale
agreement, financing lease, or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes.
"LIQUIDATED DAMAGES" means any and all liquidated damages then
owing pursuant to any of the Loan Documents.
"LOAN" means a Bridge Loan or a Term Loan.
"LOAN DOCUMENTS" means this Agreement, the Bridge Notes and the
Related Documents.
"LOAN REGISTER" means the register maintained by the
Administrative Agent on behalf of the Borrower pursuant to Section 6.3.
"MAJORITY LENDERS" means, at any time, Lenders holding at least a
majority of the then aggregate unpaid principal balance of the Loans, or, if no
such principal amount is then outstanding, Lenders having at least a majority of
the total Commitments; provided that, for purposes hereof, neither the Borrower
nor any of its Affiliates shall be included in (i) the Lenders holding such
amount of the Loans or having such amount of the Commitments or (ii) determining
the aggregate unpaid principal amount of the Loans or the total Commitments.
"MATERIAL CONTRACTS" has the meaning specified in Section 3.4(a).
"MATERIAL ADVERSE EFFECT" means any circumstance or event that (i)
has, or may be reasonably expected to have, any materially adverse effect upon
the validity or enforceability of this Agreement or any of the Transaction
Documents, (ii) is, or may be reasonably expected to be, materially adverse to
the consolidated financial condition, business, operations, assets, liabilities
or management of the Borrower and its Subsidiaries (without giving pro forma
effect to the
14
<PAGE> 20
HPG Acquisition), taken as a whole or the Target, or prospects of the Borrower
and its Subsidiaries (without giving pro forma effect to the HPG Acquisition)
(iii) materially impairs the ability of the Borrower or any Guarantor to
consummate the Loan or to perform its Obligations under the Transaction
Documents.
"MATURITY DATE" means June 26, 1999.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) fiscal years.
"MUNICIPAL OBLIGATIONS" means general obligations issued by, and
supported by the full taxing authority of, any state of the United States of
America or of any municipal corporation or other public body organized under the
laws of any such state which are rated in the highest investment category by
both S&P and Moody's.
"NATIONSBANC" means NationsBanc Montgomery Securities LLC.
"NET CASH PROCEEDS" means the aggregate cash proceeds received
(including any cash and cash equivalents and cash payments received by way of
deferred payment of principal pursuant to a note, an installment receivable or
otherwise, but only as and when received) from any Capital Markets Transaction,
net, in the case of an Asset Sale, of (i) costs of sale (including payment of
the outstanding principal amount of, premium or penalty, if any, interest and
other amounts on any Indebtedness (other than Loans) secured by a Lien permitted
pursuant to Section 4.15 on such assets and required to be repaid under the
terms thereof as a result of such Asset Sale), (ii) taxes paid or payable in the
year such Asset Sale occurs or in the following year as a result thereof and
(iii) amounts provided as a reserve, in accordance with GAAP, against any
liabilities under any indemnification obligations associated with such Asset
Sale (except that, to the extent and at the time any such amounts are released
from such reserve, such amounts shall constitute Net Cash Proceeds).
"OBLIGATIONS" means all now existing and hereafter arising
obligations and liabilities of any of the Borrower and the Guarantors to any and
all of the Lenders arising under or in connection with the Loan Documents,
whether absolute or contingent, and whether for principal, interest, penalties,
premium, fees, indemnifications, reimbursements, damages (including, if
applicable, Liquidated Damages), or otherwise and specifically including
post-petition interest (whether or not an allowable claim).
"OFFERING DOCUMENTS" means an offering memorandum or prospectus
together with such other documents, instruments and agreements as the Investment
Banks may request in their sole discretion in connection with the issuance of
the Permanent Securities.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operation 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
either the Borrower or any Guarantor by an Officer of the Borrower or any
Guarantor, as the case may be, who must be the principal executive officer, a
vice chairman, the principal financial officer, the treasurer or the principal
accounting officer of the Borrower or any Guarantor, as the case may be.
15
<PAGE> 21
"OPINION OF COUNSEL" means an opinion from legal counsel of the
Borrower or any Guarantor, which legal counsel is reasonably acceptable to the
Administrative Agent.
"OPTION AGREEMENT" means that certain Stock Agreement dated as of
May 6, 1998 between the Borrower and Salton/Maxim.
"OTHER TAXES" has the meaning specified in Section 2.10(b).
"PAYMENT BLOCKAGE NOTICE" has the meaning specified in Section
10.4.
"PAYMENT DEFAULT" means any Default or Event of Default under
Section 7.1(b), (c) or (d) or any matured or unmatured default under the
analogous provisions of the documents governing the Credit Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"PENSION PLAN" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code and
which (i) is maintained for employees of the Borrower or any of its ERISA
Affiliates or is assumed by the Borrower or any of its ERISA Affiliates or (ii)
has at any time within the last six years been maintained for the employees of
the Borrower or any current or former ERISA Affiliate.
"PERMANENT SECURITIES" means any combination of (i) debt
securities issued by the Borrower, which are guaranteed by the Guarantors and
(ii) equity securities of the Borrower which have either been registered with
the SEC and sold pursuant to a registration statement in a public offering or
privately placed or otherwise sold in an offering exempt from registration with
the SEC, to refinance the Loans.
"PERMITTED ACQUISITION" means (a) the HPG Acquisition and (b) each
of the other Acquisitions effected with the consent and approval of the board of
directors or other applicable governing body of the Person being acquired, and
with the duly obtained approval of such shareholders or other holders of equity
interest as such Person may be required to obtain, so long as (i) immediately
prior to and immediately after the consummation of such Acquisition, no Default
or Event of Default has occurred and is continuing, (ii) with respect to an
Acquisition where the Cost of Acquisition exceeds $5,000,000, substantially all
of the sales and operating profits generated by such Person (or assets) so
acquired or invested are derived from a line or lines of business that are part
of the Core Business, (iii) pro forma historical financial statements as of the
end of the most recent fiscal quarter for the trailing twelve month period
giving effect to such Acquisition are delivered to the Administrative Agent not
less than five (5) Business Days prior to the consummation of such Acquisition,
together with a certificate of an Authorized Representative demonstrating
compliance with Sections 4.19, 4.20 4.21 and 4.22 hereof after giving effect to
such Acquisition, (iv) the aggregate Cost of Acquisition (excluding the value of
any capital stock of the Borrower given as part of the Cost of Acquisition) with
respect to any Acquisition consummated (A) during any fiscal year shall not
exceed $20,000,000, and (B) during the term of this Agreement shall not exceed
$100,000,000; and (v) the aggregate Cost of Acquisition which consists in whole
or in part of the value of any capital stock of the Borrower (including without
limitation when combined with cash, debt or the assumption of Indebtedness for
any specific Acquisition) with respect to any Acquisition consummated after the
Closing Date shall not exceed $10,000,000.
"PERMITTED LIENS" means:
16
<PAGE> 22
(a) Liens securing Obligations under the Credit Agreement that
were permitted by the terms hereof to be incurred;
(b) Liens existing as of the date hereof, provided, however,
that any such Lien that is released after the date hereof may not thereafter
re-attach or otherwise become permitted by this clause (b);
(c) Liens imposed by law for taxes, assessments or charges of
any Governmental Entity for claims not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(d) Liens in respect of purchase money Indebtedness permitted
to be incurred pursuant to Section 4.9(vii)(a) hereof in connection with the
acquisition of certain tangible property; provided that (a) the original
principal balance of the Indebtedness secured by such Lien constitutes not less
than 80% nor more than 100% of the purchase price of the property acquired and
(B) such Lien extends only to the property acquired with the proceeds of the
Indebtedness so secured;
(e) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or created
in the ordinary course of business and in existence less than 90 days from the
date of creation thereof for amounts not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(f) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts;
(g) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other restrictions,
charges or encumbrances (whether or not recorded), which do not interfere with
the ordinary conduct of the business of the Borrower or any Subsidiary and do
not impair the use of the property to which they attach to the extent that such
interference or impairment would reasonably be expected to have a Material
Adverse Effect; and
(h) Liens on real property securing Indebtedness permitted
under clauses (ii), (vii) or (ix) of Section 4.9 hereof (subject to compliance
with subsection (c) above in connection with purchase money Indebtedness).
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or government or any agency or political subdivision thereof or any
other entity.
"PREPAYMENT DATE" has the meaning specified in Section 2.8.
"PRE-REFUNDED MUNICIPAL OBLIGATIONS" means obligations of any
state of the United States of America or of any municipal corporation or other
public body organized under the laws of any such state which are rated, based on
the escrow, in the highest investment rating category by both S&P and
17
<PAGE> 23
Moody's and which have been irrevocably called for redemption and advance
refunded through the deposit in escrow of Government Securities or other debt
securities which are (i) not callable at the option of the issuer thereof prior
to maturity, (ii) irrevocably pledged solely to the payment of all principal and
interest on such obligations as the same becomes due, and (iii) in a principal
amount and bear such rate or rates of interest as shall be sufficient to pay in
full all principal of, interest, and premium, if any, on such obligations as the
same becomes due as verified by a nationally recognized firm of certified public
accountants.
"PRIME RATE" means the rate of interest per annum established from
time to time by the Administrative Agent as its prime rate. The Prime Rate is
not necessarily the best or the lowest rate of interest offered by the
Administrative Agent.
"QUERETERO PROPERTY" means the property located at Accesco III
SIN, Fracc., Industrial Benito Juarez, Queretero, QRO. 76130, Mexico.
"REGISTRATION RIGHTS AGREEMENTS" means the Debt Registration
Rights Agreement and the Equity Registration Rights Agreement.
"REGULATION D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"RELATED DOCUMENTS" means the Exchange Notes, the Exchange Note
Indenture, the Registration Rights Agreements, the Warrant Agreement, the Escrow
Agreement, the Engagement Letter and the Fee Letter.
"REPURCHASE AGREEMENT" means a repurchase agreement entered into
with any financial institution whose debt obligations or commercial paper are
rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by Moody's.
"RESPONSIBLE OFFICER" of any corporation shall mean any executive
officer or financial officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"RESTRICTED INVESTMENT" means an investment other than an
investment permitted by Section 4.12 hereof.
"RESTRICTED PAYMENTS" has the meaning specified in Section 4.7.
"SALE AND LEASEBACK TRANSACTION" has the meaning specified in
Section 4.11.
"SALTON/MAXIM" means Salton/Maxim Housewares, Inc., a Delaware
corporation.
"SALTON/MAXIM SHARES" means the shares of capital stock of
Salton/Maxim owned by the Borrower.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means, collectively, the Exchange Notes and the
Escrowed Warrants.
18
<PAGE> 24
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SINGLE EMPLOYER PLAN" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any Subsidiary
is an "employer" as described in Section 4001(b) of ERISA and which is not a
Multiemployer Plan.
"SOLVENT" means, when used with respect to any Person, that at the
time of determination:
(a) the fair value of its assets (both at fair valuation and at
present fair saleable value on an orderly basis) is in excess of the total
amount of its liabilities, including Contingent Obligations; and
(b) it is then able and expects to be able to pay its debts as
they mature; and
(c) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
"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 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 (herein referred to
as the "PARENT"), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any determination is being
made, owned, controlled or held by the parent.
"TARGET" means the Household Products Group, excluding the
Cleaning and Lighting divisions, of B&D.
"TAXES" has the meaning specified in Section 2.10(a).
"TERM LOAN" means a loan made on the Conversion Date, if any, by a
Lender to the Borrower pursuant to Section 2.2 to refinance a Bridge Loan.
"TERMINATION EVENT" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the notice
requirement has been waived by applicable regulation); or (ii) the withdrawal of
the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA
or was deemed such under Section 4068(f) of ERISA; or (iii) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; or (iv) the institution of proceedings to terminate a Pension Plan by the
PBGC; or (v) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; or (vi) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii)
19
<PAGE> 25
the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (viii) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the termination of
a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA; or
(x) any event or condition with respect to any Employee Benefit Plan which is
regulated by any Foreign Benefit Law that results in such Employee Benefit
Plan's termination or the revocation of the Employee Benefit Plan's authority to
operate under the applicable Foreign Benefit Law.
"TRANSACTIONS" means, collectively, the HPG Acquisition, the
related financing transactions and each of the other transactions contemplated
by the Transaction Documents.
"TRANSACTION DOCUMENTS" the Loan Documents, the Credit Agreement
and the Acquisition Agreement.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
"VOTING STOCK" means, with respect to any Person at any time, the
capital stock of such Person that is at such time entitled to vote in the
election of the board of directors of such Person.
"WARRANT AGENT" means First Trust New York, in its capacity as
warrant agent pursuant to the Warrant Agreement.
"WARRANT AGREEMENT" means the warrant agreement between the
Borrower and the Warrant Agent, in the form attached as EXHIBIT G.
"WARRANT SHARES" means the shares of common stock of the Borrower
issued pursuant to the Warrant Agreement upon exercise of the Escrowed Warrants.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person, 100% of the capital stock and other Equity Interests of which is owned
directly or indirectly by such Person.
"YEAR 2000 COMPLIANT" has the meaning specified in Section 3.17.
"YEAR 2000 PROBLEM" has the meaning specified in Section 3.17.
SECTION 1.2. Interpretation. In this Agreement, the singular
includes the plural and the plural includes the singular; words implying any
gender include the other genders; references to any section, exhibit or schedule
are to sections, exhibits or schedules hereto unless otherwise indicated;
references to statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form; "including" following a word or phrase shall not be
construed to limit the generality of such word or phrase; and an accounting term
not otherwise defined has the meaning assigned to it in accordance with GAAP.
20
<PAGE> 26
ARTICLE II.
THE CREDIT AGREEMENT
SECTION 2.1. COMMITMENTS TO MAKE BRIDGE LOANS. In reliance upon
the representations and warranties of the Borrower set forth herein and subject
to the terms and conditions herein set forth, each of the Lenders severally
agrees to make a Bridge Loan to the Borrower on the Closing Date in the amount
of such Lender's Commitment. The proceeds of each Bridge Loan shall be disbursed
by wire transfer on the Closing Date as provided in written instructions
delivered by the Borrower to each of the Lenders on the Business Day prior to
the Closing Date. Each Bridge Loan will mature on the Maturity Date.
SECTION 2.2. CONVERSION TO TERM LOANS. If, on the Maturity Date:
(i) all principal and interest in respect of the Bridge Loans has not been paid
in full, (ii) no Conversion Default exists and is continuing, (iii) no order,
decree, injunction or judgment enjoining the conversion of Bridge Loans to Term
Loans shall be in effect and (iv) the Administrative Agent receives an Officers'
Certificate from the Borrower certifying to the foregoing and requesting a
conversion of the Bridge Loans to Term Loans, each of the Lenders hereby commits
that, on the Maturity Date, such Lender will convert its Bridge Loan (including,
without limitation, any Bridge Loans resulting from the capitalization of
interest pursuant to Section 2.4(e) below), to a Term Loan maturing on the ninth
anniversary of the original Maturity Date (and the Maturity Date shall be deemed
to have been automatically extended to such ninth anniversary date).
SECTION 2.3. OPTION TO EXCHANGE TERM LOANS FOR EXCHANGE NOTES.
(a) On any Business Day on or after the Conversion Date (if
any), any Lender may elect to exchange all or any portion of its Term Loan for
one or more Exchange Notes by giving not less than three Business Days' prior
irrevocable written notice of such election to the Borrower, the Escrow Agent,
the Administrative Agent and the Exchange Note Trustee specifying the principal
amount of its Term Loan to be exchanged (which shall be at least $1,000,000 and
integral multiples of $1,000 in excess thereof) and subject to Section 6.1, the
name of the proposed registered holder and, subject to the terms of the Exchange
Note Indenture, the amount of each Exchange Note requested (each such notice, an
"EXCHANGE NOTICE"); provided, that in no event shall the aggregate principal
amount of the Term Loans initially exchanged pursuant to this Section 2.3(a) be
less than $25,000,000. Any such exchanging Lender shall deliver its Bridge Notes
to the Administrative Agent within three Business Days following delivery of an
Exchange Notice. Term Loans exchanged for Exchange Notes pursuant to this
Section 2.3 shall be deemed repaid and canceled and the Exchange Notes so issued
shall be governed by and construed in accordance with the provisions of the
Exchange Note Indenture.
(b) Not later than the third Business Day after delivery of an
Exchange Notice:
(i) the Administrative Agent shall deliver to the Escrow Agent
the original Bridge Notes delivered to it by the exchanging Lender
pursuant to Section 2.3(a);
(ii) the Escrow Agent shall cancel each Bridge Note so delivered
to it and, if applicable, the Borrower shall issue a replacement Bridge
Note to such Lender in an amount equal to the principal amount of such
Lender's Term Loan that is not being exchanged, or the Escrow Agent shall
make a notation on the surrendered Bridge Note to the effect that a
portion of the Term Loan represented thereby has been repaid; and
(iii) the Escrow Agent shall deliver the applicable Exchange
Note(s) to the Exchange Note Trustee for authentication and delivery to
the holder or holders thereof specified in the Exchange Notice.
21
<PAGE> 27
(c) Each Exchange Note issued pursuant to this Section 2.3
shall bear interest at a fixed rate equal to the rate per annum borne by the
Term Loan on the date of the Exchange Notice. Accrued interest on Term Loans so
exchanged shall be canceled and the Exchange Notes received in such exchange
shall bear interest from and including the most recent date to which interest
has been paid on the Term Loans so exchanged.
SECTION 2.4. INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT
INTEREST.
(a) INTEREST RATE APPLICABLE TO BRIDGE LOANS. The Bridge Loans
shall be Base Rate Loans until the Borrower shall irrevocably specify in a
written notice (a "RATE SELECTION NOTICE") delivered to the Administrative
Agent, or otherwise agree with the Lenders, that the Bridge Loans shall be
Eurodollar Rate Loans. Subject to Sections 2.4(d), (e) and (f) below (i) if the
Bridge Loans are Base Rate Loans (prior to a Rate Selection Notice or pursuant
to Section 2.9 (b) or (c)), the unpaid principal balance thereof shall bear
interest until paid at a rate per annum equal to the sum of the Base Rate plus
the Applicable Margin, changing when and as the Base Rate and/or the Applicable
Margin changes, and (ii) if the Bridge Loans are Eurodollar Rate Loans, the
unpaid principal balance thereof shall bear interest until paid at a rate per
annum equal to the sum of the Eurodollar Rate plus the Applicable Margin,
changing when and as the Eurodollar Rate and/or the Applicable Margin changes.
(b) INTEREST ON TERM LOANS. Subject to Sections 2.4(d), (e) and
(f) below, interest on the unpaid principal balance of the Term Loans of each
Lender will accrue at a rate per annum equal to the Conversion Rate, changing
when and as the Conversion Spread changes.
(c) BASIS OF COMPUTATION OF INTEREST; PAYMENT OF INTEREST. All
interest shall be calculated for actual days elapsed on the basis of a 360-day
year (or a 365-day year in the case of Base Rate Loans) and shall be payable in
arrears not later than 12:00 noon (New York City time) on each Interest Payment
Date by wire transfer of immediately available funds in accordance with Section
2.9.
(d) MAXIMUM INTEREST RATE. Notwithstanding anything contained
in Section 2.4(a) or 2.4(b), but subject to Section 2.4(f), in no event shall
the interest rate on the Loans for any Interest Period exceed an annual rate
equal to the lesser of (i) (A) in the case of Bridge Loans, 16% or (B) in the
case of Term Loans, 17% and (ii) the maximum interest rate permitted by law.
(e) OPTION TO PAY INTEREST IN KIND. Subject to Section 2.4(f),
to the extent that the interest rate on the Loans for any Interest Period
exceeds a rate equal to 14% per annum, in the case of the Bridge Loans, or 15%
per annum, in the case of the Term Loans, the Borrower shall have the option to
pay to each Lender, pro rata, all or a portion of the interest payable for such
Interest Period in excess of the amount of interest that would have been payable
on such date at an interest rate of 14% per annum, in the case of the Bridge
Loans, or 15% per annum, in the case of the Term Loans, by capitalizing such
excess interest and adding it to the aggregate principal amount of outstanding
Bridge Loans or Term Loans, as the case may be, held by such Lender, effective
as of the applicable Interest Payment Date. The Borrower shall give the
Administrative Agent an irrevocable notice that it will exercise such right at
least three Business Days prior to any Interest Payment Date as to which such
right is to be exercised.
(f) DEFAULT INTEREST. (i) If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other Obligation
becoming due hereunder, by acceleration or otherwise, or under any other Loan
Document, the Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount to but excluding the date of
actual payment (after as
22
<PAGE> 28
well as before judgment) to the extent lawful, at a rate per annum equal to 200
basis points in excess of the otherwise applicable interest rate on the Loans.
The Borrower shall pay such default interest and all interest accruing on any
overdue Obligation in cash on demand from time to time.
SECTION 2.5. MANDATORY PREPAYMENT.
(a) The Borrower shall prepay the Loans ratably in accordance
with the aggregate outstanding principal balances thereof, with the Net Cash
Proceeds of: (i) any direct or indirect public offering or private placement of
the Permanent Securities, or any other debt or equity securities of the Borrower
or any Guarantor issued after the Closing Date other than (A) any issuance of
directors' qualifying shares and (B) any issuance or sale of common stock (or
common stock equivalents) of the Borrower to officers and employees under
employee benefit or compensation plans, (ii) the incurrence of any other
Indebtedness by the Borrower or any of its Subsidiaries after the Closing Date
(other than Indebtedness permitted to be incurred under the Credit Agreement
pursuant to Section 4.9) and (iii) any Asset Sale by the Borrower or any of its
Subsidiaries after the Closing Date (other than an Asset Sale permitted under
Section 4.12) (each of the transactions in the foregoing clauses (i), (ii) and
(iii), a "CAPITAL MARKETS TRANSACTION"). The Borrower shall, not later than the
fourth Business Day following any Capital Markets Transaction, apply such Net
Cash Proceeds to prepay the Loans pursuant to this Section 2.5, without premium
or penalty, by paying to each Lender an amount equal to 100% of such Lender's
pro rata share of the aggregate principal amount of the Loans to be prepaid,
plus accrued and unpaid interest thereon to the Prepayment Date.
(b) Subject to and in accordance with Section 4.17, in the
event of any Change of Control, the Borrower shall offer to prepay the Loans
pursuant to Section 4.17.
SECTION 2.6. OPTIONAL PREPAYMENT.
The Borrower may, upon three Business Days' prior written notice
to each of the Lenders, prepay the Loans at any time, in whole or in part, on a
pro rata basis, by paying to each applicable Lender an amount equal to 100% of
such Lender's pro rata share of the aggregate principal amount of Loans to be
prepaid, plus accrued and unpaid interest thereon to the Prepayment Date.
SECTION 2.7. BREAKAGE COSTS; INDEMNITY. The Borrower agrees to
indemnify and hold each Affected Party harmless from and against any loss or
expense which such Affected Party sustains or incurs as a consequence of:
(a) the failure by the Borrower to borrow Eurodollar Rate Loans
on the Closing Date after the Borrower has given a notice with respect thereof
in accordance with Section 5.1, unless such failure by the Borrower is due
exclusively to a Lender's gross negligence or willful action,
(b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of Section
2.5 or 2.6, as applicable, or
(c) the mandatory or optional prepayment of Eurodollar Rate
Loans on a day that is not the last day of an Interest Period.
Such indemnification may include an amount equal to the excess, if any of (i)
such Affected Party's actual loss and expenses incurred (excluding lost profits)
in connection with, or by reason of, any of the foregoing events and (ii) the
excess, if any of (A) the amount of interest that would have accrued on the
principal amount of Bridge Loans not so made or the principal amount of Loans so
prepaid from the date of such
23
<PAGE> 29
proposed issuance or prepayment in the case of a failure to make Bridge Loans,
to the last day of the Interest Period that would have commenced on the proposed
date of funding, or in the case of any such prepayment, to the last day of the
Interest Period in which such prepayment occurred, in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (B) the amount of
interest (as reasonably determined by such Affected Party) which would have
accrued to such Affected Party on such amount by placing such amount on deposit
for a period comparable to such Interest Period with leading banks in the
interbank Eurodollar market. A certificate as to any amounts payable pursuant to
this Section 2.7 submitted to the Borrower by any Affected Party shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Obligations.
SECTION 2.8. EFFECT OF NOTICE OF PREPAYMENT. The Borrower shall
notify the Lenders in writing at their addresses shown in the Loan Register of
any date set for prepayment (each such day, a "PREPAYMENT DATE") of Loans. Once
such notice is sent or mailed, the Loans to be prepaid shall become due and
payable on the Prepayment Date set forth in such notice. Such notice may not be
conditional.
SECTION 2.9. PAYMENTS.
(a) WIRE TRANSFER. Except as provided in Section 2.4(e) with
respect to the payment of certain interest by capitalizing it and adding it to
the principal of outstanding Loans, the principal of, fees, premium, if any, and
interest on each Bridge Note and all other Obligations arising under the Loan
Documents shall be payable by wire transfer in immediately available funds (in
United States dollars) to the respective accounts of the Lenders set forth below
their signatures on the signature pages of this Agreement or otherwise
designated in the Loan Register from time to time to the Borrower by any Lender
at least three Business Days prior to the due date therefor.
(b) CHANGE IN COSTS. If prior to the first day of any Interest
Period with respect to a Eurodollar Rate Loan, any Lender shall have determined
(which determination shall be conclusive and binding upon the Borrower and the
Guarantors) that: (i) by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, or (ii) the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to such Lender or its Eurodollar Lending Office of maintaining its
Eurodollar Rate Loan during such Interest Period, then such Lender shall give
facsimile or telephone notice thereof to the Borrower as soon as practicable
thereafter. If such notice is given, the interest rate on each Bridge Loan for
such Interest Period and for each subsequent Interest Period until such Lender
gives notice to the Borrower otherwise shall equal the sum of the Base Rate plus
the Applicable Margin.
(c) CHANGE IN LAW. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Borrower that subsequent to the date
hereof the introduction of, or any change in the interpretation of, any law or
regulation makes it unlawful, or any Governmental Entity asserts that it is
unlawful, for such Lender or its Eurodollar Lending Office to make or maintain
Eurodollar Rate Loans hereunder, (i) the obligation of such Lender to make or
maintain Eurodollar Rate Loans shall be suspended until such Lender shall notify
the Borrower that the circumstances causing such suspension no longer exist and
(ii) any Eurodollar Rate Loan then outstanding from such Lender shall
immediately be converted into a Base Rate Loan.
(d) PAYMENTS ON BUSINESS DAYS. If any payment to be made
hereunder or under any Bridge Note shall be due on a day other than a Business
Day, such payment shall be made on the next
24
<PAGE> 30
succeeding Business Day (and such extension of time shall be included in
computing interest in connection with such payment); provided, however, that if
such succeeding Business Day falls in the next calendar month, such payment
shall be made on the next preceding Business Day.
(e) PARTIAL PREPAYMENTS AND REDEMPTIONS. All partial
prepayments and redemptions of the outstanding principal balance of the Loans
shall be made ratably amongst the applicable Lenders in accordance with their
respective shares of the aggregate outstanding principal balance of the Loans
eligible for prepayment or redemption.
(f) ALLOCATION. Any money paid to, received by, or collected by
the Administrative Agent or any Lender pursuant to this Agreement or any other
Loan Document, shall be applied in the following order, at the date or dates
fixed by the Administrative Agent:
FIRST: to any unpaid fees and reimbursement or unpaid expenses of
the Administrative Agent hereunder and under the Fee letter;
SECOND: to the payment of all costs, expenses, other fees,
commissions and taxes owing to any Lender hereunder;
THIRD: to the indefeasible payment of all accrued interest to the
date of such payment or collection;
FOURTH: to the indefeasible payment of the amounts then due and
unpaid under this Agreement, the Bridge Notes or any other Loan Document
for principal, in respect of which or for the benefit of which such money
has been paid or collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Bridge Notes
for principal; and
FIFTH: the balance, if any, to the Person lawfully entitled
thereto.
SECTION 2.10. TAXES.
(a) TAXES. Any and all payments by the Borrower and each
Guarantor hereunder or under the Bridge Notes, the Exchange Notes or any other
Loan Document shall be made, in accordance with Section 2.9 or the other
applicable provision of the applicable Loan Document, free and clear of and
without deduction or withholding for or on account of any and all present or
future taxes, levies, imports, deductions, charges or withholdings additions to
tax, interest, penalties and all other liabilities with respect thereto,
excluding income, franchise or similar taxes imposed or levied on the
Administrative Agent or the Lenders as a result of a present or former
connection between the Administrative Agent or the Lenders and the jurisdiction
of the governmental authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Administrative Agent or such Lenders having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement) (all such non-excluded taxes, levies, imports, deductions, charges,
withholdings and liabilities being hereinafter referred to as "TAXES"). If the
Borrower or any Guarantor shall be required by law to deduct or withhold any
Taxes from, or in respect of, any sum payable hereunder or under the Bridge
Notes, the Exchange Notes or any other Loan Document to the Administrative Agent
or the Lenders or any of their respective Affiliates who may become a Lender:
(i) the sum payable thereunder shall be increased as may be necessary so that
after making all required deductions or withholdings (including deductions or
withholdings applicable to additional sums payable under this Section 2.10) the
Administrative Agent or the Lenders or any of their respective Affiliates
receives an amount equal to the
25
<PAGE> 31
sum it would have received had no such deductions or withholdings been made;
(ii) the Borrower or such Guarantor, as the case may be, shall make such
deductions or withholdings; and (iii) the Borrower or such Guarantor, as the
case may be, shall pay the full amount deducted to the relevant tax authority or
other authority in accordance with applicable laws.
(b) OTHER TAXES. In addition, the Borrower and the Guarantors
agree to pay any present or future stamp, mortgage recording or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or under a Bridge Note, Exchange Note or
other Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or the other Loan Documents
(hereinafter referred to as "OTHER TAXES") and hold the Administrative Agent and
each Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Lender) to pay such Other Taxes. Each Lender represents that, to the best
of its knowledge, except for any such Other Taxes that may be imposed under the
federal, state or local laws of the United States (or any political subdivision
thereof), it is not aware of any such stamp, mortgage recording or documentary
taxes or any other excise or property taxes, charges or similar levies.
(c) INDEMNITY. The Borrower and the Guarantors will indemnify
the Administrative Agent and any Lender for the full amount of Taxes or Other
Taxes arising in connection with payments made under this Agreement or any other
Loan Document (including, without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.10) paid by the
Administrative Agent or any Lender or any of their respective Affiliates and any
liability (including penalties, additions to tax interest and expenses) arising
therefrom or with respect thereto. Payment under this indemnification shall be
made within fifteen days from the date the Administrative Agent or any Lender or
any of their respective Affiliates makes written demand therefor; provided,
however, that the Borrower and the Guarantors shall not be obligated to make
payment to the Lender or the Administrative Agent (as the case may be) pursuant
to this Section 2.10(c) in respect of penalties, interest and other liabilities
attributable to any Taxes or Other Taxes, if (i) written demand therefor has not
been made by such Lender or the Administrative Agent within 60 days from the
date on which such Lender or the Administrative Agent received written notice of
the imposition of Taxes or Other Taxes by the relevant taxing or governmental
authority, but only to the extent such penalties, interest and other similar
liabilities are attributable to such failure or delay by the Administrative
Agent or the Lender in making such written demand, (ii) such penalties, interest
and other liabilities have accrued after the Borrower had indemnified or paid an
additional amount due as of the date of such payment pursuant to this Section
2.10(c) or (iii) such penalties, interest and other liabilities are attributable
to the gross negligence or willful misconduct of the Lender or the
Administrative Agent or such Affiliates. After the Lender or the Administrative
Agent (as the case may be) receives written notice of the imposition of the
Taxes or Other Taxes which are subject to this Section 2.10(c), such Lender and
Administrative Agent will act in good faith to promptly notify the Borrower and
the Guarantors of their obligations hereunder; provided, however, that the
failure to so act shall not, standing alone, affect the rights of the
Administrative Agent or the Lenders under this Section 2.10(c).
(d) FURNISH EVIDENCE TO ADMINISTRATIVE AGENT. The Borrower will
make reasonable efforts to obtain certified copies of tax receipts evidencing
the payment of any Taxes deducted or withheld from each taxing authority
imposing such Taxes. The Borrower will furnish to the Lenders, within 60 days
after the date the payment of any Taxes so deducted or withheld is due pursuant
to applicable law, original or certified copies of tax receipts evidencing such
payment by the Borrower or, if such receipts are not obtainable, other evidence
of such payments by the Borrower reasonably satisfactory to the Lenders.
26
<PAGE> 32
(e) SURVIVAL. Without prejudice to the survival of any other
agreement of the Borrower or any Guarantor hereunder, the agreements and
obligations of the Borrower and the Guarantors contained in this Section 2.10
shall survive the payment in full of all amounts due hereunder and under the
Bridge Notes.
(f) MITIGATION. If the Borrower or any Guarantor (as the case
may be) is required to pay additional amounts to or for the account of any
Lender pursuant to this Section 2.10 as a result of a change in law or treaty
occurring after such Lender first became a party to this Agreement, then such
Lender will, at the request of the Borrower or such Guarantor, change the
jurisdiction of its Applicable Lending Office if such change (i) will eliminate
or reduce any such additional payment which may thereafter accrue and (ii) is,
in such Lender's sole, reasonable discretion, determined not to be materially
disadvantageous or cause unreasonable hardship to such Lender, provided that
fees, charges, costs or expenses that are related to such change shall be borne
by the Borrower or such Guarantor on behalf of a Lender, and the mere existence
of such expenses, fees or costs shall not be deemed to be materially
disadvantageous or cause undue hardship to the Lender.
Each Lender and the Administrative Agent agrees that it will (i)
take all reasonable actions reasonably requested by the Borrower or any
Guarantor in writing that are without risk and material cost to such Lender or
the Administrative Agent and consistent with the internal policies of such
Lender and applicable legal and regulatory restrictions (as the case may be) to
maintain all exemptions, if any, available to it from withholding taxes (whether
available by treaty or existing administrative waiver) and (ii) to the extent
reasonable and without risk and material cost to it, otherwise cooperate with
the Borrower or any Guarantor to minimize any amounts payable by the Borrower or
such Guarantor under this Section 2.10; provided, however, that in each case,
any cost relating to such action or cooperation requested by the Borrower or
such Guarantor shall be borne by the Borrower or such Guarantor, respectively.
(g) TAX BENEFIT. If and to the extent that any Lender is able,
in its sole opinion, to apply or otherwise take advantage of any offsetting tax
credit or other similar tax benefit arising out of or in conjunction with any
deduction or withholding which gives rise to an obligation on the Borrower or
any Guarantor to pay any additional amount pursuant to this Section 2.10 then
such Lender shall, to the extent that in its sole opinion it can do so without
prejudice to the retention of the amount of such credit or benefit and without
any other adverse tax consequences for such Lender, reimburse to the Borrower at
such time as such tax credit or benefit shall have actually been received by
such Lender such amount as such Lender shall, in its sole opinion, have
determined to be attributable to the relevant deduction or withholding and as
will leave such Lender in no better or worse position than it would have been in
if the payment of such additional amount had not been required.
Nothing in this Section 2.10 shall oblige any Lender to disclose
to the Borrower or any other person any information regarding its tax affairs or
tax computations or interfere with the right of any Lender to arrange its tax
affairs in whatever manner it thinks fit and, in particular, no Lender shall be
under any obligation to claim relief from its corporate profits or similar tax
liability in credits or deductions available to it and, if it does claim, the
extent, order and manner in which it does so shall be at its absolute
discretion.
27
<PAGE> 33
SECTION 2.11. RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC.
(a) RIGHT OF SET-OFF. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, or if the Borrower becomes insolvent, however evidenced,
the Borrower authorizes each Lender at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special, time or
demand, provisional or final, whether or not collected or available) in any
currency and any other indebtedness at any time held or owing by such Lender or
any of its Affiliates (including, without limitation, by branches and agencies
of such Lender wherever located) to or for the credit or the account of the
Borrower against and on account of the Obligations of the Borrower to such
Lender under this Agreement or under any of the other Loan Documents, including,
without limitation, all interests in or participation in the Obligations
purchased by such Lender, and all other claims of any nature or description
arising out of or in connection with this Agreement or any other Loan Document,
irrespective of whether or not such Lender shall have made any demand hereunder
and although the Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured. A Lender may exercise such rights notwithstanding that
the amounts concerned may be expressed in different currencies and each Lender
is authorized to effect any necessary conversions at a market rate of exchange
selected by it. A Lender exercising its rights under this Section 2.11(a) shall
provide prompt notice to the Borrower following such exercise.
(b) SHARING. If any Lender shall obtain from the Borrower
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement, a Loan Document or any Bridge Note held
by it though the exercise of any right of set-off, banker's lien or counterclaim
or similar right or otherwise (other than from the Administrative Agent as
provided herein) and, as a result of such payment, such Lender shall have
received a greater percentage of the principal of or interest on the Loans or
such other amounts then due to such Lender by the Borrower than the percentage
received by any other Lenders, it shall promptly purchase from such other
Lenders participation in (or, if and to the extent specified by such Lender,
direct interests in) the Loans or such other amounts, respectively, owing to
such other Lenders (or any interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal of and/or interest on the Loans or such other amounts,
respectively, owing to each of the Lenders. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participation
sold or otherwise) if such payment is rescinded or must otherwise be restored.
(c) NO REQUIREMENT. Nothing in this Agreement shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness or obligation of the Borrower. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a set-off to which this Section 2.11 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such secured claim in
manner consistent with the rights of the Lenders entitled under this Section
2.11 to share in the benefits of any recovery on such secured claim.
Section 2.12. Certain FEES. The Borrower agrees to pay to the
Administrative Agent, for its own account, the fees specified in the Fee Letter
with respect to the Bridge Loans, Terms Loans and Exchange Notes, amounts for
its expenses incurred hereunder and all other amounts owing under this Agreement
and the other Loan Documents.
28
<PAGE> 34
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
As of the date hereof and as of the Closing Date, each of the
Borrower and the Guarantors hereby jointly and severally agrees with, and
represents and warrants to, the Lenders that each of the following
representations and warranties is true and will be true after giving pro forma
effect to the Transactions:
SECTION 3.1. REPRESENTATIONS AND WARRANTIES IN THE CREDIT
AGREEMENT AND THE ACQUISITION AGREEMENT. The representations and warranties of
the Borrower contained in the Credit Agreement are hereby incorporated herein by
reference for the benefit of the Lenders (without giving effect to any waivers
thereof or amendment, thereto subsequent to the date hereof) and are true and
correct in all material respects.
SECTION 3.2. ORGANIZATION; POWERS. The Borrower and each of its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has all requisite power
and authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required, except where the failure so to qualify could not reasonably be
expected to result in a Material Adverse Effect and (d) has the power and
authority to execute, deliver and perform its obligations under each of the
Transaction Documents and each other agreement or instrument contemplated hereby
to which it is or will be a party and, in the case of the Borrower, to borrow
hereunder.
SECTION 3.3. DUE AUTHORIZATION AND ENFORCEABILITY.
(a) Each of the Transaction Documents: (i) has been duly
authorized, executed and delivered by Borrower and each of its Subsidiaries (to
the extent each is a party thereto) and (ii) constitutes a valid and binding
obligation of Borrower and each of its Subsidiaries (to the extent each is a
party thereto) enforceable against each such Person in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally and by general principles of
equity (whether arising under a proceeding at law or in equity).
(b) The Loans, the Bridge Notes and the Exchange Notes have
been duly authorized by the Borrower and each of the Guarantees and the
guarantees by the Guarantors of the Borrower's obligations under the Exchange
Notes have been duly authorized by the Borrower and each Guarantor, as
applicable. When the Bridge Notes and the Exchange Notes have been executed and
delivered pursuant to the terms of this Agreement or the Exchange Note
Indenture, as applicable, each of the Loans, the Bridge Notes, the Exchange
Notes, and the Guarantees and the guarantees by the Guarantors of the Borrower's
obligations under the Exchange Notes will be valid and binding obligations of
the Borrower and each Guarantor, as applicable, enforceable against it in
accordance with their terms, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforceability of creditors' rights generally and by general
principles of equity (whether arising under a proceeding at law or in equity).
29
<PAGE> 35
(c) The Escrowed Warrants have been duly authorized by the
Borrower and, when executed and authenticated pursuant to the terms of the
Warrant Agreement and delivered to the Escrow Agent, will be valid and binding
obligations of the Borrower, enforceable against it in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally and by general principles of
equity (whether arising under a proceeding at law or in equity).
(d) The Warrant Shares have been duly authorized and validly
issued, and upon exercise of the Escrowed Warrants in accordance with the terms
of the Warrant Agreement will be fully paid and nonassessable.
SECTION 3.4. NO CONFLICTS.
(a) Except as disclosed on SCHEDULE 3.4, neither the execution
and delivery of any of the Transaction Documents nor the consummation of any of
the transactions contemplated hereby or thereby nor compliance with the terms
and provisions hereof or thereof (i) violates or will violate any material law
or regulation or any order or decree of any court or Governmental Entity
applicable to the Borrower or any of its Subsidiaries or by which any of their
respective properties or assets may be bound, (ii) constitutes or will
constitute a breach or a violation of, any of the terms or provisions of, or a
default under, the organizational documents (including any certificate of
incorporation or bylaws) or any other corporate restriction of any of the
Borrower or any of its Subsidiaries or (iii) conflicts with or will result in
the breach of, or constitutes a default under, any material contract, lease,
indenture, loan agreement (including, without limitation, the Credit Agreement),
mortgage, deed of trust or other agreement or instrument (each, a "MATERIAL
CONTRACT") to which the Borrower or any of its Subsidiaries is a party or to
which any of them may be subject or by which any of them or any of their
respective assets is or may be bound.
(b) No consent, approval, authorization or order of, or any
registration or filing with, any Governmental Entity is or will be required in
connection with (i) the execution and delivery of any of the Transaction
Documents by the Borrower or any of its Subsidiaries (to the extent each is a
party thereto) or the consummation of the transactions contemplated hereby or
thereby, or (ii) the issuance and delivery of the Escrowed Warrants or the
Warrant Shares by the Borrower, other than (A) such authorizations, approvals,
consents, exemptions, registrations or filings as shall have been made or
secured by the date hereof, or (B) such actions as may be required under the
Registration Rights Agreements after the date hereof in connection with any
transfer of the Exchange Notes and the Escrowed Warrants or the Warrant Shares
issuable upon exercise thereof.
SECTION 3.5. NO VIOLATIONS; MATERIAL CONTRACTS.
(a) There does not exist (i) any violation of any law or
regulation or any order or decree of any court or Governmental Entity applicable
to the Borrower or any of its Subsidiaries, which violation could reasonably be
expected to have a Material Adverse Effect or (ii) any conflict or violation of
any terms or provisions of the organizational documents (including any articles
or certificate of incorporation or bylaws) of the Borrower or any of its
Subsidiaries.
(b) Neither the Borrower nor any of its Subsidiaries is a party
to any agreement or instrument or subject to any corporate or other restriction
that, individually or in the aggregate, has had or could have a Material Adverse
Effect. Each Material Contract to which the Borrower or any of its
30
<PAGE> 36
Subsidiaries is a party or by which the Borrower or any of its Subsidiaries or
any of their respective properties or assets are or may be bound as of the
Closing Date is listed on SCHEDULE 3.5 and true and correct copies of all such
Material Contracts have been delivered to the Administrative Agent.
(c) As of the Closing Date: (i) each Material Contract is in
all material respects valid, binding and in full force and effect and is
enforceable by the Borrower and each of its Subsidiaries (to the extent that
each is a party thereto) in accordance with its terms, (ii) the Borrower and
each of its Subsidiaries (to the extent each is a party thereto) has performed
in all material respects all obligations required to be performed by it to date
under all of its Material Contracts and is not (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect thereunder and, to the knowledge of the Borrower and each of its
Subsidiaries, no other party to any of the Material Contracts is (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any material respect thereunder, (iii) neither the Borrower or any of its
Subsidiaries, nor, to the knowledge of the Borrower and each of its
Subsidiaries, any other party to any Material Contract, has given notice of
termination of, or taken any action inconsistent with the continuation of, any
Material Contract, and (iv) none of such other parties has any presently
exercisable or future right to terminate any Material Contract, including any
right to terminate any Material Contract on account of the execution, delivery
or performance of any of the Transaction Documents.
SECTION 3.6. CAPITAL STOCK; SUBSIDIARIES.
(a) All shares of capital stock and other equity interests of
the Borrower are duly authorized, validly issued, fully paid and non-assessable.
All shares of capital stock and other equity interests of each Subsidiary of the
Borrower are duly authorized, validly issued, fully paid and non-assessable and
owned directly or indirectly by the Borrower beneficially and of record, free
and clear of any Lien other than the Liens to be created under the Credit
Agreement. SCHEDULE 3.6 sets forth, (i) as of the date hereof (and without
giving effect to the Transactions) a list of all direct and indirect
Subsidiaries of the Borrower and the percentage ownership (direct and indirect)
of the Borrower therein and (ii) as of the Closing Date (after giving effect to
the Transactions), a list of all direct Subsidiaries of the Borrower and each
Guarantor and the percentage ownership interest of the Borrower and such
Guarantor, as applicable, therein. All such shares of capital stock or other
ownership interest are duly authorized, validly issued, fully paid and
non-assessable and owned by the Borrower or each Guarantor, as the case may be,
free and clear of all Liens.
(b) There are (i) no outstanding subscriptions, warrants,
options, calls or commitments of any character related to or entitling any
Person to purchase or otherwise acquire any shares of the capital stock or other
equity interests of any of the Borrower's, (ii) no obligations or securities
convertible into or exchangeable for shares of any capital stock or other equity
interests of the Borrower or any of its Subsidiaries or any commitments of any
character relating to or entitling any Person to purchase or otherwise acquire
any such obligations or securities, other than the Escrowed Warrants and (iii)
no preemptive or similar rights to subscribe for or to purchase any capital
stock or other equity interests of the Borrower or any of its Subsidiaries.
SECTION 3.7. LIENS. There are no Liens on any assets of the
Borrower or any of its Subsidiaries except Permitted Liens.
SECTION 3.8. NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF
FEDERAL RESERVE SYSTEM. None of the transactions contemplated by this Agreement
(including without limitation
31
<PAGE> 37
the use of the proceeds from the Loans and Permanent Securities) will violate or
result in a violation of Section 7 of the Exchange Act, or any rule or
regulation issued pursuant thereto, including, without limitation, Regulations
T, U and X of the Board.
SECTION 3.9. GOVERNMENTAL REGULATIONS. None of the Borrower or any
of its Subsidiaries is or will be subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Federal Power Act, the Interstate Commerce Act or to any other
statute, rule or regulation limiting its ability to incur Indebtedness for
borrowed money.
SECTION 3.10. FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
(a) The consolidated balance sheets of each of the Borrower and
its Subsidiaries and the Target that are attached hereto as SCHEDULE 3.10 fairly
present the consolidated financial position of the Borrower and its Subsidiaries
and the Target as of the dates set forth therein, in each case in accordance
with GAAP consistently applied (except as otherwise specifically indicated
therein). The consolidated statements of income and cash flows of the Borrower
and its Subsidiaries and the Target that are attached hereto as SCHEDULE 3.10
have been prepared in conformity with GAAP applied on a Consistent Basis through
all the periods involved (except as otherwise specifically indicated therein)
and fairly present the consolidated results of operations of each of the
Borrower and its Subsidiaries and the Target for the periods indicated. The pro
forma consolidated statements of income and cash flows included in SCHEDULE 3.10
fairly present the estimated consolidated income and cash flows of the Borrower
and its Subsidiaries assuming the consummation of the HPG Acquisition as if it
had occurred on the date set forth therein, and the pro forma consolidated
balance sheet of the Borrower included in SCHEDULE 3.10 fairly presents the
consolidated financial condition of the Borrower and its Subsidiaries on March
31, 1998 (after giving effect to all simultaneous transactions to occur on such
date). The historical and pro forma financial statements attached hereto as
SCHEDULE 3.10 comply as to form with the requirements applicable to such
financial statements in, and constitute all of the financial statements required
by, Regulation S-X of the Act for a Form S-1 registration statement. The
presentation of pro forma EBITDA set forth in such pro forma financial
statements is consistent with the requirements of Regulation S-X.
(b) Neither the Borrower nor its Subsidiaries nor the Target
(prior to giving effect to the consummation of the Transaction) has any
liability (absolute or contingent) except (i) those shown on the most recent
audited balance sheets described in Section 3.10(a), (ii) those incurred under
the Transaction Documents, (iii) those incurred in the ordinary course of
business since the date of such audited balance sheets and (iv) those that would
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
32
<PAGE> 38
SECTION 3.11. FULL DISCLOSURE. No information, report, financial
statement or certificate delivered or to be delivered to the Lenders in
connection with the Transactions contains or will contain any untrue statement
of material fact or omitted or omits or will omit to state a material fact
necessary to make such statements not misleading in light of the circumstances
in which such statements were made; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, the Borrower represents only that it acted
in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
SECTION 3.12. PRIVATE OFFERING; Rule 144A Matters.
(a) Based in part on the accuracy of the representations and
warranties of, and compliance with the covenants and agreements by, the Lenders
in Section 6.1, the making of the Loans hereunder and the issuance of the
instruments evidencing such Loans and the Securities are and will be exempt from
the registration and prospectus delivery requirements of the Securities Act.
Neither the Borrower nor any Guarantor has issued or sold Loans, the instruments
evidencing such Loans or the Securities or equity securities to anyone other
than the Lenders. No securities of the same class as the Loans, the instruments
evidencing such Loans or the Securities have been issued or sold by the Borrower
or any Guarantor within the six-month period immediately prior to the date
hereof. Each of the Borrower and the Guarantors agrees that neither it, nor
anyone acting on its behalf (other than the Lenders, as to whom the Borrower and
the Guarantors make no representation), will (i) offer the Loans, the
instruments evidencing such Loans or the Securities so as to subject the making,
issuance and/or sale of the Loans, the instruments evidencing such Loans or the
Securities, to the registration or prospectus delivery requirements of the
Securities Act or (ii) offer any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, or otherwise approach or
negotiate with respect to the same with, anyone if the issuance or sale of the
Loans, the instruments evidencing such Loans, the Securities and any such
securities would be integrated as a single offering for the purposes of the
Securities Act, including without limitation, Regulation D thereunder, in such a
manner as would require registration under the Securities Act thereof. Each
Bridge Note, and (subject to the terms of the Exchange Note Indenture and the
Escrow Agreement) each of the Exchange Notes and the Escrowed Warrants shall
have a legend setting forth the restrictions on the transferability thereof
imposed by the Securities Act for so long as such restrictions apply.
(b) In the case of each offer, sale or issuance of the Loans,
the instruments evidencing such Loans or the Securities no form of general
solicitation or general advertising was or will be used by the Borrower or any
Guarantor or their representatives (other than the Lenders, as to whom the
Borrower and the Guarantor make no representation), including, but not limited
to, advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(c) The Securities will be eligible for resale pursuant to Rule
144A under the Securities Act. When the Securities are issued and delivered
pursuant to the Transaction Documents, they will not be of the same class
(within the meaning of Rule 144A(d) (3) under the Securities Act) as any other
security of the Borrower or any Guarantor that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated interdealer quotation system. Neither the
issuance of the Exchange Notes nor the execution, delivery and performance of
the Transaction Documents (other than the Debt Registration Rights Agreement)
will require the qualification of an indenture under the Trust Indenture Act.
33
<PAGE> 39
SECTION 3.13. ABSENCE OF PROCEEDINGS. Except with respect to the
matters disclosed in SCHEDULE 3.13, there is not pending or threatened any
action, suit or proceeding to which the Borrower or any of its Subsidiaries is a
party, before or by any court or other Governmental Entity or body (domestic or
foreign), that could reasonably be expected to cause a Material Adverse Effect.
SECTION 3.14. TAXES. The Borrower and its Subsidiaries have duly
and timely filed all required tax returns and reports and paid prior to
delinquency all taxes, assessments, and governmental levies except (i) those not
in the process of enforcement and being contested in good faith and by
appropriate proceedings and (ii) where the failure to file or make payment could
not reasonably be expected to have a Material Adverse Effect.
SECTION 3.15. FINANCIAL CONDITION; SOLVENCY.
(a) Each of the Borrower and the Guarantors is, and immediately
after giving effect to the consummation of the Transaction will be, Solvent.
(b) Neither the Borrower nor any Guarantor intends to incur
debts beyond its ability to pay such debts as they mature, taking into account
the timing and amounts of cash to be received by it and the timing and amounts
of cash to be payable on or in respect of its Indebtedness.
SECTION 3.16. NO MATERIAL ADVERSE CHANGE. There has been no
material adverse change in the business, assets, operation, condition (financial
or otherwise), or management of the Borrower and its Subsidiaries, taken as a
whole, or the Target, or prospects of the Borrower and its Subsidiaries, taken
as a whole (in each case, including any event which, in the opinion of the
Majority Lenders, is reasonably likely to result in such a material adverse
change) since December 31, 1997.
SECTION 3.17. YEAR 2000 COMPLIANCE. The Borrower has (i) initiated
a review and assessment of all areas within its and each of its Subsidiaries'
business and operations (including those affected by suppliers, vendors and
customers) that could be adversely affected by the "YEAR 2000 PROBLEM" (that is,
the risk that computer applications used by the Borrower or any of its
Subsidiaries (or suppliers, vendors and customers) that are material to the
Borrower's or any of its Subsidiaries' business or operations may be unable to
recognize and perform properly date-sensitive functions involving certain dates
on and after January 1, 2000), (ii) developed a plan and timeline for addressing
the Year 2000 Problem on a timely basis, and (iii) to date, implemented that
plan in accordance with that timetable. Based on the foregoing, the Borrower
believes that all computer applications (including those of its suppliers,
vendors and customers) that are material to its or any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "YEAR 2000 COMPLIANT"), except to the extent that a failure
to do so could not reasonably be expected to have Material Adverse Effect.
34
<PAGE> 40
ARTICLE IV.
COVENANTS
So long as any Commitment shall remain outstanding or any
Obligation shall remain unpaid, each of the Borrower covenants and agrees with
the Lenders as follows:
SECTION 4.1. USE OF PROCEEDS. The Borrower shall use the proceeds
of the Loans solely to finance, in part, the HPG Acquisition and the
transactions contemplated thereby.
SECTION 4.2. NOTICE OF DEFAULT AND RELATED MATTERS. The Borrower
shall furnish to the Administrative Agent (with copies for each Lender) written
notice, promptly upon becoming aware of the existence of:
(a) any condition or event that constitutes a Default or an
Event of Default, specifying the nature and period of existence thereof and the
action taken or proposed to be taken with respect thereto;
(b) (i) any action or proceeding against the Borrower or any
Subsidiary by any Governmental Entity the outcome of which could reasonably be
expected to have a Material Adverse Effect or (ii) any litigation or other
proceedings being instituted against the Borrower or any Subsidiary, or any
attachment, levy, execution or other process being instituted against any assets
of the Borrower or any Subsidiary, in an aggregate amount in respect of all such
proceedings and processes greater than $1,000,000 not otherwise covered by
insurance;
(c) any (i) violation or alleged violation by the Borrower or
any Subsidiary of any applicable Environmental Laws, (ii) release or threatened
release into the environment by the Borrower or any Subsidiary, or by any Person
handling, transporting or disposing of any Hazardous Material on behalf of the
Borrower or any Subsidiary, or at any facility or property owned or leased or
operated by the Borrower or a Subsidiary, of any Hazardous Material, except
where occurring legally, or (iii) liability or alleged liability of the Borrower
or any Subsidiary for the costs of cleaning up, removing, remediating or
responding to a release of Hazardous Materials; and
(d) any development that, individually or in the aggregate, has
resulted in, or could reasonably be expected to have, a Material Adverse Effect.
SECTION 4.3. MERGER; SALE OF ALL OR SUBSTANTIALLY ALL ASSETS.
The Borrower shall not and shall not permit any of its
Subsidiaries to
(a) consolidate with or merge into any other Person, or permit
any other Person to merge into it; provided, however, (i) any Subsidiary may
merge or transfer all or any part of its assets into or consolidate with the
Borrower or any Domestic Subsidiary, in each case, provided the requirements of
Section 4.24 hereof are complied with as of the effective date of the
consummation of such merger, (ii) any Subsidiary may merge into another Person
that is not a Subsidiary prior to such merger whereby such other Person is the
surviving corporation provided the requirements of Section 4.24 hereof are
complied with and such other Person becomes a Subsidiary as of the effective
date of the consummation of such merger and that such merger would be a
Permitted Acquisition but for the Subsidiary not being the surviving
corporation, (iii) any Direct Foreign Subsidiary may merge with or into any
other Direct Foreign Subsidiary, (iv) any Foreign Subsidiary which is not a
Direct Foreign Subsidiary may merge with or into any other Foreign Subsidiary
and (v) the Borrower or any Subsidiary may make a Permitted Acquisition; or
(b) sell, lease, transfer or otherwise dispose of any assets
other than (i) dispositions of inventory in the ordinary course of business,
(ii) dispositions of equipment which, in the aggregate during any fiscal year,
have a fair market value or book value, whichever is less, of not more than
three percent (3%) of Property, Plant and Equipment and Capitalized Software as
shown on the consolidated balance sheet of the Borrower and its Subsidiaries
adjusted to provide for the HPG Acquisition which is not
35
<PAGE> 41
replaced by equipment having at least equivalent value, (iii) dispositions of
equipment which is replaced with equipment of like kind, function and value,
provided the replacement equipment shall be acquired prior to or substantially
contemporaneously with any disposition of the equipment that is to be replaced,
and the replacement equipment shall be free and clear of Liens other than
Permitted Liens, (iv) dispositions of other assets which, in the aggregate
during any fiscal year, have a fair market value or book value, whichever is
less, of not more than one percent (1%) of Consolidated Shareholders' equity of
Borrower and its Subsidiaries adjusted to provide for the HPG Acquisition and
(v) any Capital Markets Transaction of authorized but unissued equity securities
the Net Cash Proceeds of which are subject to the terms of Section 2.5(a)
hereof.
SECTION 4.4. INFORMATION; SEC REPORTS; COMPLIANCE CERTIFICATES.
(a) The Borrower shall, and shall cause each of its
Subsidiaries to, promptly provide such information concerning the businesses,
properties, liabilities and financial condition of the Borrower and such
Subsidiaries as any Lender may from time to time reasonably request, including,
if so requested, any reports or other documents provided to lenders in
connection with the Credit Agreement. The Borrower shall, and shall cause each
of its respective Subsidiaries to:
(i) keep proper books of record and account in which full, true
and correct entries shall be made of all dealings and transactions in
relation to its business and activities,
(ii) permit the Lenders or their representatives to visit and
inspect any of their respective properties, to examine and make abstracts
from any of their respective books and records and to discuss their
respective businesses, finances and accounts with their respective
executive officers and, subject to the right of the Borrower's
representatives to participate in any such discussion, with their
independent public accountants, all upon reasonable notice and at such
reasonable times and as often as may reasonably be desired, and
(iii) permit the Lenders or their representatives to consult with
the Borrower and such Subsidiaries with respect to their businesses and
make proposals with respect to such businesses (such proposals not to
impede and may facilitate faster or more secure repayment of the
Obligations), and meet with the respective executive officers of the
Borrower and such Subsidiaries with respect to such proposals.
(b) The Borrower shall furnish to the Lenders (i) as soon as
available and in any event within 30 days after the end of each month a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such month and the related consolidated statements of income and cash flows of
the Borrower and its Subsidiaries for such month and unless provided pursuant to
clause (b)(ii), for the period from the beginning of the then current fiscal
year to the end of such month, (ii) all quarterly and annual financial
information required to be contained in a filing with the SEC on Forms 10-Q and
10-K, 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 Borrower and its Subsidiaries and, with respect to the annual
information only, a report thereon by the Borrower's certified independent
public accountants (who shall be a firm of established national reputation) and
(ii) all current reports required to be filed with the SEC on Form 8-K, in each
case within the time periods set forth in the SEC's rules and regulations.
36
<PAGE> 42
(c) The Borrower shall deliver to the Lenders, within 60 days
after the end of each fiscal quarter, an Officers' Certificate stating that a
review of the activities of the Borrower and its Subsidiaries during the
preceding fiscal quarter have been performed with a view to determining whether
the Borrower and its Subsidiaries have kept, observed, performed and fulfilled
their respective Obligations under this Agreement, and further stating that (i)
the Borrower and its Subsidiaries have kept, observed, performed and fulfilled
each and every covenant contained in this Agreement and are not in default in
the performance or observance of any of the terms, provisions or conditions
hereof or under any other mortgage, indenture or debt instrument (or, if a
Default, Event of Default or default under any such mortgage, indenture or
instrument shall have occurred, describing all such Defaults, Events of Default
or defaults and what action the Borrower is taking or proposes to take with
respect thereto).
(d) So long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to paragraph (b) above shall be accompanied by a
written statement of the Borrower's certified independent public accountants
(who shall be from a firm of established national reputation) that, solely in
making the examination necessary for certification of such financial statements
and without independent investigation or inquiry, nothing has come to their
attention that would lead them to believe that the Borrower or any of its
respective Subsidiaries has violated any provisions of Article IV of this
Agreement 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.
SECTION 4.5. EXISTENCE; BUSINESS AND PROPERTIES; INSURANCE. (a)
The Borrower shall, and shall cause each of its Subsidiaries to maintain (i) all
properties necessary to their operations in good working order and condition,
make all needed repairs, replacements and renewals to such properties, and
maintain free from Liens (other than Permitted Liens) all Intellectual Property
and proprietary information (or adequate licenses thereto), in each case as are
reasonably necessary to conduct their business as currently conducted or as
contemplated hereby, all in accordance with customary and prudent business
practices and (ii) all Material Contracts and material leases in full force and
effect without material defaults thereunder.
(b) The Borrower shall, and shall cause each of its
Subsidiaries to do or cause to be done all things necessary to preserve and keep
in full force and effect their existence and all material rights and franchises,
and maintain their licenses or qualifications to do business as foreign
corporations and good standing in each jurisdiction in which their ownership or
lease of property or the nature of their business makes such license or
qualification necessary except where the failure to so qualify would not have a
Material Adverse Effect.
(c) The Borrower shall, and shall cause each of its
Subsidiaries to (i) keep all of their insurable properties adequately insured at
all times with responsible insurance carriers against loss or damage by fire and
other hazards to the extent and in the manner as are customarily insured against
by similar businesses owning such properties similarly situated, (ii) maintain
general public liability insurance at all times with responsible insurance
carriers against liability on account of damage to persons and property and
(iii) maintain insurance under all applicable workers' compensation laws (or in
the alternative, maintain required reserves if self-insured for workers'
compensation purposes) such policies of insurance to have such limits,
deductibles, exclusions, co-insurance and other provisions providing no less
coverages than are maintained by similar businesses that are similarly situated,
in any manner. such insurance policies to be in form reasonably satisfactory to
the Administrative Agent. Each of the policies of insurance
37
<PAGE> 43
described in this Section 4.5(c) shall provide that the Administrative Agent
shall be named as loss payee or additional insured, as applicable, and that the
insurer shall give the Administrative Agent not less than thirty (30) days'
prior written notice before any such policy shall be terminated, lapse or be
altered.
SECTION 4.6. COMPLIANCE WITH LAWS. The Borrower shall, and shall
cause each of its Subsidiaries to, comply in all respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities (including Environmental Laws and ERISA and the rules and
regulations thereunder), except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings or where non-compliance
therewith could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.7. RESTRICTED PAYMENTS. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly: (i) declare
or pay any cash dividends or make any other payment or distribution on account
of its capital stock (other than dividends payable in the ordinary course of
business solely in common stock) on any shares of stock of any class of the
Borrower, now or hereafter outstanding, (ii) purchase, redeem (whether mandatory
or optional redemption) or otherwise retire any such shares or interests in
consideration of cash or any debt instrument (whether or not subordinated) or
shares of capital stock issued by any Subsidiary of the Borrower, or apply or
set apart any of their assets therefor or make any other distribution (by
redemption of capital or otherwise) in respect of any such shares, (iii) make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is pari passu with or
subordinated to the Loans (other than the Loans), except a payment of interest
or principal at Stated Maturity; or (iv) make any Restricted Investment, or
agree to do any of the foregoing, other than (i) dividends payable by any
Subsidiary to another Subsidiary or to the Borrower and (ii) the purchase or
redemption of capital stock of employees pursuant to an Approved Stock Option
Plan so long as (A) the aggregate amount paid in connection with such purchase
or redemption during any twelve month period does not exceed $500,000 and (B) no
Default or an Event of Default exists after giving effect to such purchase or
redemption.
SECTION 4.8. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
SUBSIDIARIES. The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into, or permit to exist, with any Person any agreement
(other than this Agreement and the Credit Agreement) which prohibits or limits
the ability of any Subsidiary to declare or pay any dividend or make any loan to
or investment in the Borrower or any other owner of such Subsidiary.
SECTION 4.9. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS
AND ISSUANCE OF ADDITIONAL PREFERRED STOCK.
(a) The Borrower shall not, and shall not permit any of its
respective Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become liable, contingently or otherwise, with
respect to (collectively, "incur"), or permit to exist, any Indebtedness
(including Acquired Debt) or any shares of preferred stock except for:
(i) (A) Indebtedness under the Credit Agreement in an aggregate
principal amount at any one time outstanding not to exceed $325.0
million, minus the aggregate amount of all principal repayments with
respect to term loans made under the Credit Agreement since the Closing
Date, plus $20.0 million and (B) Indebtedness incurred by Foreign
Subsidiaries under Credit Facilities in an aggregate principal amount not
to exceed $80.0 million; provided that the aggregate principal
38
<PAGE> 44
amount of all Indebtedness outstanding pursuant to clauses (A) and (B)
shall not exceed $355.0 million at any time;
(ii) the Loans and the Guarantees;
(iii) the issuance of the Exchange Notes in accordance with
Section 2.3 and guarantees thereof by the Guarantors;
(iv) the incurrence by any Guarantor or any of its Subsidiaries
of intercompany Indebtedness between or among such Guarantor and any of
its Subsidiaries; provided, however, that (i) if any Guarantor or the
Borrower is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
Obligations and (ii)(A) any subsequent issuance or transfer of equity
interests that results in any such Indebtedness being held by a Person
other than any Guarantor or any of its Subsidiaries and (B) any sale or
other transfer of any such Indebtedness to a Person that is neither a
Guarantor nor one of its Subsidiaries shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by such Guarantor or such
Subsidiary, as the case may be;
(v) Indebtedness consisting of Hedging Obligations not
prohibited under this Agreement;
(vi) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(vii) (a) purchase money Indebtedness and (b) Indebtedness
incurred with respect to financing of Capital Expenditures, collectively
under both clause (a) and (b) not to exceed an aggregate outstanding
amount at any time of $5,000,000;
(viii) Indebtedness of any Guarantor owing to the Borrower or
another Guarantor and Indebtedness of the Borrower owing to any
Guarantor; and
(ix) Indebtedness outstanding on the date hereof and set forth
on SCHEDULE 4.9.
(b) For purposes of determining compliance with this Section
4.9, accrual of interest, the accretion of accreted value and the payment of
interest by capitalizing the same or issuing additional Indebtedness will not be
deemed to be an incurrence of Indebtedness.
39
<PAGE> 45
SECTION 4.10. ANTI-LAYERING. Notwithstanding any other provision
hereof, neither the Borrower nor any Guarantor will incur, create, issue,
assume, guarantee or otherwise become directly or indirectly liable for any
Indebtedness that is subordinate or junior in right of payment to the Credit
Agreement and senior in any respect in right of payment to the Loans.
SECTION 4.11. SALE AND LEASEBACK TRANSACTIONS. The Borrower shall
not, and shall not permit any of its Subsidiaries to, enter into any arrangement
with any Person providing for the leasing by the Borrower or any Guarantor of
real or personal property which has been or is sold or transferred by the
Borrower or any Guarantor to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or any Guarantor (a "SALE AND LEASEBACK
TRANSACTION").
SECTION 4.12. INVESTMENTS; ACQUISITIONS. The Borrower shall not,
and shall not permit any of its Subsidiaries to make any Acquisition or
otherwise purchase, own, invest in or otherwise acquire, directly or indirectly,
any stock or other securities, or make or permit to exist any interest
whatsoever in any other Person or permit to exist any loans or advances to any
Person, except that Borrower and its Subsidiaries may:
(a) invest in Eligible Securities;
(b) maintain investments, loans and advances existing as of the
date hereof and as set forth in Schedule 3.6 attached hereto;
(c) accept and maintain accounts receivable arising and trade
credit granted in the ordinary course of business and retain any securities
received in satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably necessary in
order to prevent or limit loss;
(d) make and maintain loans and advances to and investments in
Subsidiaries which are Guarantors; and
(e) consummate Permitted Acquisitions and mergers permitted
under Section 4.3 hereof.
(f) make and maintain loans, advances and investments in
Foreign Subsidiaries in an aggregate principal amount at any time outstanding
not to exceed $40,000,000.
(g) make and maintain other loans, advances and investments in
an aggregate principal amount at any time outstanding not to exceed $10,000,000
SECTION 4.13. LIMITATION ON TRANSACTIONS WITH AFFILIATES. Other
than transactions permitted under Sections 4.3 and 4.12 hereof, the Borrower
shall not, and shall not permit any of its Subsidiaries to, enter into any
transaction after the Closing Date, including, without limitation, the purchase,
sale, lease or exchange of property, real or personal, or the rendering of any
services, with any Affiliate of the Borrower, (each of the foregoing, an
"AFFILIATE TRANSACTION"), except (a) that such Persons may render services or
sell inventory to the Borrower or its Subsidiaries for compensation at the same
rates generally paid by Persons engaged in the same or similar businesses for
the same or similar services, (b) that the Borrower or any Subsidiary may render
services or sell inventory to such Persons for compensation at the same rates
generally charged by the Borrower or such Subsidiary and (c) in the
40
<PAGE> 46
ordinary course of and pursuant to the reasonable requirements of the Borrower's
(or any Subsidiary's) business consistent with past practice of the Borrower and
its Subsidiaries and upon fair and reasonable terms no less favorable to the
Borrower (or any Subsidiary) than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate.
SECTION 4.14. LINE OF BUSINESS. The Borrower shall not conduct any
business or engage in any activity or hold any assets other than holding the
shares of capital stock of its Subsidiaries and administrative activities
directly related thereto.
SECTION 4.15. LIENS. The Borrower shall not enter into any
agreement other than this Agreement and the other Loan Documents and the Credit
Agreement which prohibits or limits the ability of any of the Borrower or any
Guarantor to create, incur, assume or suffer to exist any Lien, security
interest or encumbrance upon any of its property, assets or revenues, whether
now owned or hereafter acquired.
SECTION 4.16. STAY, EXTENSION AND USURY LAWS. The Borrower and
each of the Guarantors covenants (to the extent that they may lawfully do so)
that they shall not, and 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 in or the performance of this Agreement; and the Borrower
waives, and agrees to cause its Subsidiaries to waive (to the extent that they
may lawfully do so), all benefit or advantage of any such law, and covenant that
they shall not, and shall not permit its Subsidiaries to, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Lenders, but shall suffer and permit, and shall cause its Subsidiaries to suffer
and permit, the execution of every such power as though no such law has been
enacted.
SECTION 4.17. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Lender
will have the right to require the Borrower to prepay all or any part of the
principal amount of such Lender's Loans pursuant to the offer described below
(the "CHANGE OF CONTROL OFFER") at a prepayment price in cash equal to the
aggregate principal amount thereof plus (i) accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of prepayment and (ii) the
Change of Control Fee thereon (the "CHANGE OF CONTROL PAYMENT"). Within 10 days
following any Change of Control, the Borrower will mail a notice to each Lender
describing the transaction or transactions that constituted the Change of
Control and offer to repay the Loans on the date specified in such notice, which
date shall be no later than 30 days after the date of such Change of Control
(the "CHANGE OF CONTROL PAYMENT DATE"), pursuant to the procedures set forth
below.
(b) Notice of a Change of Control Offer shall be mailed by the
Borrower to the Lenders at their addresses set forth in the Loan Register. The
Change of Control Offer shall remain open from the time of mailing until the
Change of Control Payment Date. The notice shall be accompanied by a copy of the
most recent reports furnished pursuant to Section 4.4(b)(i) and (ii). The notice
shall contain all instructions and materials necessary to enable such Lenders to
elect to be prepaid pursuant to the Change of Control Offer.
(c) On the Change of Control Payment Date, the Borrower shall
repay all Loans or portions thereof of all Lenders that properly elected
repayment thereof pursuant to the Change of Control Offer, pay the Change of
Control Payment for each such Loan (or portion thereof) elected to be prepaid
41
<PAGE> 47
and deliver to each Lender a new Bridge Note equal in principal amount
(excluding premiums, if any) to any unpurchased portion of the corresponding
Bridge Note surrendered. The Borrower will notify the remaining Lenders of the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
SECTION 4.18. OBLIGATIONS AND TAXES. The Borrower shall, and shall
cause its Subsidiaries to, pay its Indebtedness and other Obligations promptly
and in accordance with their terms and comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of their
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants determined on a
consolidated basis have been established unless and until any Lien resulting
therefrom attaches to any of their property and becomes enforceable against any
of their creditors.
SECTION 4.19. CONSOLIDATED NET WORTH. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain at all times Consolidated Net
Worth to be at least 90% of Consolidated Net Worth at June 30, 1998, such amount
to be increased as at the first day of each fiscal quarter, beginning with the
fiscal quarter beginning October 1, 1998, by an amount equal to (a) seventy-five
percent (75%) of Consolidated Net Income during the immediately preceding fiscal
year, plus (b) one hundred percent (100%) of the Net Cash Proceeds of an Equity
Offering consummated during the immediately preceding fiscal quarter; provided,
however, in no event shall the Consolidated Net Worth requirement be decreased
as a result of a net loss of the Borrower and its Subsidiaries (i.e., negative
Consolidated Net Income) for any fiscal quarter except that Consolidated Net
Worth may be reduced by the actual amount of non-cash charges incurred in
connection with the HPG Acquisition up to but not exceeding $25,000,000. Any
increase calculated pursuant hereto shall be determined based upon financial
statements delivered in accordance with Section 4.4(b) hereof; provided, however
such increase shall be deemed effective as of the first day of the fiscal
quarter in which such financial statements are delivered or required to be
delivered, if earlier.
SECTION 4.20. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The
Borrower shall, and shall cause each of its Subsidiaries to maintain at all
times a Consolidated Fixed Charge Coverage Ratio of not less than the ratio
indicated below at any time during the period indicated:
Closing Date through third 1.00 to 1.00
fiscal quarter 1999
Fourth fiscal quarter 1999 1.10 to 1.00
through third
fiscal quarter 2000
Fourth fiscal quarter 2000 and 1.20 to 1.00
thereafter
42
<PAGE> 48
SECTION 4.21. CONSOLIDATED LEVERAGE RATIO. The Borrower shall, and
shall cause each of its Subsidiaries to maintain at all times a Consolidated
Leverage Ratio of not less than the ratio indicated below at any time during the
period indicated:
Second fiscal quarter 1999 6.75 to 1.00
Third fiscal quarter 1999 7.00 to 1.00
Fourth fiscal quarter 1999 5.50 to 1.00
through first
fiscal quarter 2000
Second fiscal quarter 2000 6.00 to 1.00
through third
fiscal quarter 2000
Fourth fiscal quarter 2000 4.50 to 1.00
through second
fiscal quarter 2001
Third fiscal quarter 2001 5.00 to 1.00
Fourth fiscal quarter 2001 and 4.00 to 1.00
thereafter
SECTION 4.22. CONSOLIDATED INTEREST COVERAGE RATIO. The Borrower
shall, and shall cause each of its Subsidiaries to, maintain at all times a
Consolidated Interest Coverage Ratio of not less than the ratio indicated below
at any time during the period indicated:
Closing Date through first 1.60 to 1.00
fiscal quarter 1999
Second fiscal quarter 1999 1.50 to 1.00
through third
fiscal quarter 1999
Fourth fiscal quarter 1999 1.60 to 1.00
through third
fiscal quarter 2000
Fourth fiscal quarter 2000 and 1.80 to 1.00
thereafter
43
<PAGE> 49
SECTION 4.23. CONSOLIDATED EBITDA. The Borrower shall, and shall
cause each of its Subsidiaries to, maintain at all times a Consolidated EBITDA
of not less than the amount indicated below at any time during the period
indicated:
Closing Date through third $22,000,000
fiscal quarter 1998
Fourth fiscal quarter 1998 $52,000,000
First fiscal quarter 1999 $58,000,000
SECTION 4.24. ADDITIONAL SUBSIDIARY GUARANTEES. If the Borrower or
any of the Guarantors shall acquire or create another Domestic Subsidiary after
the date hereof, or if any Subsidiary of the Borrower becomes a Domestic
Subsidiary, then such newly acquired or created Domestic Subsidiary shall become
a Guarantor and execute a notation of Guarantee and deliver an Opinion of
Counsel, in accordance with the terms hereof.
SECTION 4.25. YEAR 2000 COMPLIANCE. The Borrower will promptly
notify the Administrative Agent in the event the Borrower discovers or
determines that any computer application (including those of its suppliers,
vendors and customers) that is material to its or any of its Subsidiaries'
business and operations will not be Year 2000 complaint, except to the extent
that such failure could not reasonably be expected to have a Material Adverse
Effect.
SECTION 4.26. ENVIRONMENTAL COMPLIANCE. If the Borrower or any
Subsidiary shall receive any letter, notice, complaint, order, directive, claim
or citation alleging that the Borrower or any Subsidiary has violated any
Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower
shall, within the time period permitted and to the extent required by the
applicable Environmental Law or the Governmental Authority responsible for
enforcing such Environmental Law, remove or remedy, or cause the applicable
Subsidiary to remove or remedy, such violation or release or satisfy such
liability unless, and only during the period that, the applicability of the
Environmental Law, the fact of such violation or liability or what is required
to remove or remedy such violation is being contested by the Borrower or the
applicable Subsidiary by appropriate proceedings diligently conducted and all
reserves with respect thereto as may be required under GAAP, if any, have been
made.
SECTION 4.27. ERISA.
(a) With reasonable promptness, and in any event within thirty
(30) days, the Borrower will give notice of and/or deliver to Agent copies of
(i) the establishment of any new Employee Benefit Plan, (ii) the commencement of
contributions to any Pension Plan or Multiemployer Plan to which the Borrower or
any of its ERISA Affiliates was not previously contributing, (iii) any material
increase in the benefits of any existing Employee Benefit Plan, (iv) each
funding waiver request filed with respect to any Pension Plan and all
communications received or sent by the Borrower or any ERISA Affiliate with
respect to such request and (v) the failure of the Borrower or any ERISA
Affiliate to make a required installment or payment under Section 302 of ERISA
or Section 412 of the Code or any Foreign Benefit Law (in the case of an
Employee Benefit Plan regulated by any Foreign Benefit Law) by the due date.
(b) Promptly and in any event within ten (10) days of becoming
aware of the occurrence of or forthcoming occurrence of any (i) Termination
Event or (ii) "prohibited transaction," as
44
<PAGE> 50
such term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Pension Plan or any trust created thereunder, the Borrower
will deliver to the Administrative Agent a notice specifying the nature thereof,
what action the Borrower has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto.
(c) With reasonable promptness but in any event within ten (10)
days for purposes of clauses (a), (b) and (c), the Borrower will deliver to the
Administrative Agent copies of (a) any favorable or unfavorable determination
letter from the Internal Revenue Service regarding the qualification of an
Employee Benefit Plan under Section 401(a) of the Code, (b) all notices received
by the Borrower or any ERISA Affiliate of the PBGC's or any Governmental
Entity's intent to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan, (c) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by the Borrower or any ERISA Affiliate
with the Internal Revenue Service with respect to each Pension Plan and (d) all
notices received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA. The Borrower will notify the Administrative
Agent in writing within ten (10) Business Days of the Borrower obtaining
knowledge or reason to know that the Borrower or any ERISA Affiliate has filed
or intends to file a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of ERISA.
(d) With respect to any Pension Plan, Employee Benefit Plan or
Multiemployer Plan, the Borrower shall not and shall not permit any of its
Subsidiaries to: (i) permit the occurrence of any Termination Event which would
result in a liability to the Borrower or any ERISA Affiliate in excess of
$500,000; (ii) permit the present value of all benefit liabilities under all
Pension Plans (except as provided below) to exceed the current value of the
assets of such Pension Plans allocable to such benefit liabilities (the "Excess
Liabilities Value") by more than $500,000; (iii) permit any accumulated funding
deficiency in excess of $500,000 (as defined in Section 302 of ERISA and Section
412 of the Code) with respect to any Pension Plan, whether or not waived; (iv)
fail to make any contribution or payment to any Multiemployer Plan which the
Borrower or any ERISA Affiliate may be required to make under any agreement
relating to such Multiemployer Plan, or any law pertaining thereto which results
in or is likely to result in a liability in excess of $500,000; (v) engage, or
permit any Borrower or any ERISA Affiliate to engage, in any prohibited
transaction under Section 406 of ERISA or Sections 4975 of the Code for which a
civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section
4975 of the Code may be imposed; (vi) permit the establishment of any Employee
Benefit Plan providing post-retirement welfare benefits or establish or amend
any Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the obligation of
the Borrower or any ERISA Affiliate to a Multiemployer Plan which liability or
increase, individually or together with all similar liabilities and increases,
is in excess of $500,000; (vi) fail, or permit the Borrower or any ERISA
Affiliate to fail, to establish, maintain and operate each Employee Benefit Plan
in compliance in all material respects with the provisions of ERISA, the Code,
all applicable Foreign Benefit Law and all other applicable laws and the
regulations and interpretations thereof.
SECTION 4.28. HEDGING OBLIGATIONS. The Borrower shall not, and
shall not permit any Subsidiary to, incur any Hedging Obligations or enter into
any agreements, devices or instruments related to Hedging Obligations, except
for Hedging Obligations permitted pursuant to the Credit Agreement.
SECTION 4.29. DEFAULTS UNDER OTHER AGREEMENTS. The Borrower shall
not, and shall not permit any Subsidiary to permit any landlord, mortgagee,
trustee under deed of trust or lienholder to
45
<PAGE> 51
lawfully declare a default under any lease, mortgage, deed of trust or lien
instrument on real estate owned or leased by the Borrower or any Guarantor or
permit any landlord to lawfully terminate, prior to the expiration of its term,
any leasehold interest of the Borrower or any Guarantor, if such default or
termination, individually or collectively, would reasonably be expected to
result in a Material Adverse Effect.
SECTION 4.30. LICENSES. The Borrower shall not, and shall not
permit any Subsidiary to grant, establish, create or permit to exist any license
of any of the Intellectual Property to any Person except for (i) such licenses
granted for the limited purpose of conducting sales or marketing promotions in
the ordinary course of business of existing or new products for a reasonable,
limited time period, (ii) such licenses approved by the Majority Lenders in
writing prior to the granting thereof within 30 days after request therefor,
such approval not to be unreasonably withheld, and (iii) such licenses granted
to any material Subsidiary party to the Intellectual Property Security Agreement
which has delivered an appropriate Intellectual Property Assignment executed in
blank with respect to such license.
Section 4.31. Dissolution, etc. The Borrower shall not, and shall
not permit any Subsidiary to wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with the merger or
consolidation of Subsidiaries into each other or into a Borrower permitted
pursuant to Section 4.3 hereof.
SECTION 4.32. TOTAL INDEBTEDNESS.
The Borrower shall not, and shall not permit any Subsidiary to
permit the aggregate amount of Indebtedness owing by the Borrower and its
Subsidiaries on a consolidated basis to exceed $355,000,000 at any time.
ARTICLE V.
CONDITIONS
The obligation of each of the Lenders to make Bridge Loans is
subject to (i) the representations and warranties in Article III and the
representations and warranties of the Borrower and such Guarantor, as the case
may be, in the Credit Agreement being true, correct and complete in all respects
on and as of the Closing Date to the same extent as though made on and as of
that date, (ii) on or prior to the Closing Date, the Borrower and such
Guarantor, as the case may be, having performed and complied with all covenants
and conditions to be performed and observed by it on or prior to the Closing
Date and (iii) the prior or concurrent satisfaction of each of the following
conditions:
SECTION 5.1. CLOSING. Upon satisfaction of the conditions set
forth herein, each of the Lenders shall disburse the proceeds of its Bridge Loan
by wire transfer of immediately available funds to the account designated by the
Borrower in New York, New York, against delivery to the Lenders in Bridge Notes
in the names and denominations specified by the Lenders (the "CLOSING"). The
Borrower shall give the Lenders at least three (3) Business Days' notice of the
expected date of such Closing (the "CLOSING DATE"). The Closing shall take place
at such place as shall be agreed upon by the Lenders and the Borrower.
SECTION 5.2. CORPORATE AND OTHER PROCEEDINGS. On or before the
Closing Date, all corporate and other proceedings taken or to be taken in
connection with the Transactions and all documents incidental thereto not
previously found acceptable by the Administrative Agent shall be satisfactory in
form
46
<PAGE> 52
and substance to the Administrative Agent, and the Administrative Agent shall
have received on behalf of the Lenders the following items, each of which shall
be in form and substance satisfactory to the Administrative Agent and, unless
otherwise noted, dated the Closing Date:
(a) a certified copy of the Borrower's and each of the
Guarantor's charters, in each case together with a certificate of status,
compliance, good standing or like certificate with respect to the Borrower and
each Guarantor issued by the appropriate government officials of the
jurisdiction of its respective formation and of each jurisdiction in which the
Borrower or such Guarantor owns any material assets or carries on any material
business, each to be dated a recent date prior to the Closing Date;
(b) a copy of the Borrower's and each of the Guarantor's
bylaws, in each case certified as of the Closing Date by its Secretary or one of
its Assistant Secretaries;
(c) resolutions of the Borrower's and each of the Guarantor's
Board of Directors, in each case approving and authorizing the execution,
delivery and performance of this Agreement, each of the other Transaction
Documents and any other documents, instruments and certificates required to be
executed by the Borrower or such Guarantor in connection herewith or therewith
and approving and authorizing the execution, delivery and payment of the Bridge
Notes, the Exchange Notes and the Escrowed Warrants and the consummation of the
Transactions, each certified as of the Closing Date by its respective Secretary
or one of its Assistant Secretaries as being in full force and effect without
modification or amendment;
(d) signature and incumbency certificates of the Borrower's and
each of the Guarantor's Officers executing this Agreement and the Bridge Notes;
(e) executed copies of this Agreement and the Bridge Notes,
drawn to the order of the Lenders;
(f) a notation of Guarantee, executed and delivered by each
Guarantor, dated the date of this Agreement, substantially in the form of
EXHIBIT B hereto, as applicable;
(g) an Officers' Certificate from the Borrower and each of the
Guarantors in form and substance satisfactory to the Administrative Agent to the
effect that (i) the representations and warranties in Article III and the
representations and warranties of the Borrower and such Guarantor, as the case
may be, in the Credit Agreement are true, correct and complete in all respects
on and as of the Closing Date to the same extent as though made on and as of
that date, (ii) on or prior to the Closing Date, the Borrower and such
Guarantor, as the case may be, has performed and complied with all covenants and
conditions to be performed and observed by it on or prior to the Closing Date
and (iii) all conditions to the consummation of the Transactions have been
satisfied on the terms set forth in the documentation relating thereto and have
not been waived or amended without the Administrative Agent's prior written
consent;
(h) true and correct copies of the final form of each of: (i)
the Acquisition Agreement, which shall provide that the aggregate cost of the
Transactions (including without limitation the purchase price to be paid by the
Borrower to acquire the assets of the Target, the refinancing of certain
existing debt of the Borrower and the Target, the payment of costs related to
the closing of the Target's Asheboro, North Carolina manufacturing facility
(which costs to the Borrower and its affiliates shall not exceed $10.0 million)
and the payment of all fees and expenses) shall not exceed $402.5 million; and
(ii) the Credit Agreement;
47
<PAGE> 53
(i) true and correct copies of each of the other Transaction
Documents, each of which shall be satisfactory in form and substance to each of
the Lenders, in their sole reasonable discretion;
(j) a copy of all closing documents relating to the HPG
Acquisition and all such counterpart originals or certified copies of such
documents, instruments, certificates, opinions and reliance letters as the
Administrative Agent may reasonably request;
(k) a copy of all closing documents relating to the Credit
Agreement and all such counterpart originals or certified copies of such
documents, instruments, certificates, reliance letters and opinions as the
Administrative Agent may reasonably request (including, without limitation, a
reliance letter, addressed to the Lenders, from counsel to the Borrower,
entitling the Lenders to rely on the opinions issued by such counsel in
connection with the Credit Agreement);
(l) a copy of all closing documents relating to the other
Transactions and all such counterpart originals or certified copies of such
documents, instruments, certificates, reliance letters and opinions as the
Administrative Agent may reasonably request; and
(m) all authorizations, consents and approvals required by
Section 5.19.
SECTION 5.3. CONCURRENT TRANSACTIONS. Either prior to or
concurrently with the making of the Bridge Loans by the Lenders: (i) the banks
and other lending institutions shall have funded no more than $197.9 million
pursuant to the Credit Agreement and at least an additional $147.1 million shall
be available to the Borrower for future borrowings thereunder and (ii) the HPG
Acquisition shall have been consummated pursuant to the terms of the Acquisition
Agreement delivered pursuant to Section 5.1(h) above in compliance with
applicable law and regulatory approvals and shall not have been materially
altered, amended or otherwise changed or supplemented or any material condition
therein waived, without the prior written consent of the Lenders.
SECTION 5.4. NO MATERIAL LOSS. Neither the Borrower nor any of its
Subsidiaries shall have sustained any loss or interference with respect to its
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, which loss or interference, in the sole
judgment of the Administrative Agent, has had or is reasonably likely to have a
Material Adverse Effect; there shall not have been, in the reasonable discretion
of the Administrative Agent, any material adverse change since December 31, 1997
in the business, assets, operations, condition (financial or otherwise) or
management of the Borrower and its Affiliates, taken as a whole or the Target,
or in the prospects of the Borrower and its Affiliates, taken as a whole. No
event or circumstance shall have occurred, and the Administrative Agent shall
not have become aware of any event or circumstance, which has had, or could
reasonably be expected to have, a material adverse effect on the business,
operations, property, financial condition, results of operations, assets,
liabilities or management of the Borrower or any of its Affiliates or the
Target, or prospects of the Borrower or any of its Affiliates. Neither the
Borrower nor any of its Affiliates nor the Target shall have any material
liabilities (contingent or otherwise) except those set forth on the most recent
audited balance sheets of such entities provided to the Administrative Agent and
those incurred in the ordinary course of business since the date of such audited
balance sheets.
SECTION 5.5. NO EVENT OF DEFAULT. No event shall have occurred and
be continuing or would result from the consummation of the Transactions that
would constitute an Event of Default.
48
<PAGE> 54
SECTION 5.6. LITIGATION; RESTRAINING ORDERS. There shall not be
threatened or pending any action, suit, investigation or proceeding in any court
or before any other Governmental Entity, or any other Person, domestic or
foreign that purports to affect the Transactions or any of the financings
contemplated hereby and that could reasonably be expected to have a Material
Adverse Effect on (i) the Borrower and its Affiliates, taken as a whole, or the
Target; (ii) the Transactions or any of the financings contemplated hereby; and
(iii) the ability of the Borrower and the Guarantors to perform their respective
Obligations with respect to the Bridge Notes and the Guarantees.
SECTION 5.7. NO CHANGES IN FINANCIAL MARKETS. There shall not have
occurred (i) any general suspension of, or limitation on times or prices for,
trading in securities on the New York Stock Exchange or American Stock Exchange
or in the over-the-counter market in the United States; (ii) a declaration of a
banking moratorium on any suspension of payments in respect of the banks in the
United States or New York; or (iii) either (a) an outbreak or escalation of
hostilities between the United States and any foreign power, or (b) an outbreak
or escalation of any other insurrection or armed conflict involving the United
States or any other national or international calamity or emergency, or (c) any
material change in the financial markets of the United States, which, in the
sole judgment of the Administrative Agent, makes it impracticable or inadvisable
to proceed with the consummation of the Bridge Loans or any of the other
transactions contemplated hereby including, without limitation, the issuance and
sale of the Permanent Securities or that would materially affect the ability to
sell or syndicate the Bridge Loans.
SECTION 5.8. ENVIRONMENTAL REPORTS. The Administrative Agent shall
have received reports and other information in form, scope and substance
satisfactory to the Administrative Agent concerning environmental liabilities of
the Borrower and its Subsidiaries (after giving effect to the Transactions),
including, without limitation, copies of independent environmental reports with
respect to the Queretero Property.
SECTION 5.9. DUE DILIGENCE. The corporate, capital and ownership
structure (which shall be as set forth in SCHEDULE 3.6) and the articles of
incorporation and by-laws, equityholder agreements, management, and litigation
and environmental matters of the Borrower and its Subsidiaries (after giving
effect to the Transactions) shall be satisfactory to the Administrative Agent,
and the Administrative Agent shall have received any information reasonably
necessary to conduct such due diligence.
SECTION 5.10. ESCROW AGREEMENT. The Borrower and the Escrow Agent
shall have entered into the Escrow Agreement and a fully executed copy of the
Escrow Agreement shall have been delivered to each of the Lenders.
SECTION 5.11. EXCHANGE NOTES. The Borrower, each of the Guarantors
and the Exchange Note Trustee shall have entered into the Exchange Note
Indenture and a fully executed copy of the Exchange Note Indenture shall have
been delivered to each of the Lenders. $200.0 million in aggregate principal
amount of Exchange Notes shall have been issued by the Borrower and the
Guarantors into escrow and delivered to the Escrow Agent as contemplated by the
Escrow Agreement.
SECTION 5.12. ESCROWED WARRANTS. The Borrower shall have issued
the Escrowed Warrants into escrow and delivered the Escrowed Warrants to the
Escrow Agent as contemplated by the Escrow Agreement.
SECTION 5.13. DEBT REGISTRATION RIGHTS AGREEMENT. The Borrower,
each of the Guarantors and the Administrative Agent shall have entered into the
Debt Registration Rights Agreement
49
<PAGE> 55
and a fully executed copy of the Debt Registration Rights Agreement shall have
been delivered to each of the Lenders.
SECTION 5.14. EQUITY REGISTRATION RIGHTS AGREEMENT. The Borrower,
each of the Guarantors and the Administrative Agent shall have entered into the
Equity Registration Rights Agreement and a fully executed copy of the Equity
Registration Rights Agreement shall have been delivered to each of the Lenders.
SECTION 5.15. DELIVERY OF OPINIONS. The Administrative Agent shall
have received originally executed copies of one or more favorable written
opinions of (i) Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, counsel
for the Borrower and the Guarantors, in the form of EXHIBIT H hereto and
addressed to the Lenders and (ii) such other opinions of counsel and such
certificates or opinions of accountants, appraisers or other professionals as
the Administrative Agent shall have reasonably requested.
SECTION 5.16. SOLVENCY. The Administrative Agent shall have
received a certificate of the chief financial officer of the Company, in form
and substance satisfactory to the Administrative Agent, certifying that, on the
date of and immediately after giving effect to the consummation of the
Transactions, each of the Borrower and its Subsidiaries will be Solvent.
SECTION 5.17. PAYMENT OF FEES. On or before the Closing Date, the
Borrower shall have paid to the Lenders and their Affiliates the fees payable on
the Closing Date pursuant to Section 2.12.
SECTION 5.18. NO BREACH UNDER ENGAGEMENT LETTER, COMMITMENT LETTER
OR FEE LETTER. Neither the Borrower nor any Guarantor shall be in breach or
violation of any of its obligations under the Engagement Letter, the Commitment
Letter or the Fee Letter and each of the Engagement Letter and the Fee Letter
shall be in full force and effect.
SECTION 5.19. CONSENTS AND APPROVALS. On or before the Closing
Date, all governmental, equityholder and third party consents (including
Hart-Scott-Rodino clearance and the consent, if necessary, of any existing
lenders and lessors of the Borrower and its Affiliates or the Target) and
approvals necessary, in connection with the Transactions and the related
financings and other transactions contemplated hereby shall have been obtained
and shall remain in full force and effect and all applicable waiting periods
under any law applicable to the Transactions shall have expired without any
action being taken by any competent authority (including without limitation, any
Governmental Entity) which restrains, prevents or imposes materially adverse
conditions upon the completion of the Transactions or the financing thereof or
that could seek or threaten any of the foregoing, and no law or regulation shall
be applicable which, in the reasonable judgment of the Administrative Agent
could have such effect and evidence of the receipt of such authorizations,
consents and approvals satisfactory to the Administrative Agent shall have been
delivered to the Administrative Agent. Copies of all such authorizations,
consents and approvals shall have been delivered to the Administrative Agent on
the Closing Date.
SECTION 5.20. MARGIN REGULATIONS. The making of the Bridge Loans
in the manner contemplated in this Agreement shall not violate the applicable
provisions of Regulation T, U or X of the Board or any other regulation of the
Board.
SECTION 5.21. SATISFACTORY FINANCIAL STATEMENTS. The
Administrative Agent shall have received (a) the most recent interim financial
statements and working capital detail for (i) the most recent month and the most
recent trailing twelve months for which internal financial statements are
available and (ii) the first projected twelve-month period following
consummation of the HPG Acquisition,
50
<PAGE> 56
and a pro forma consolidated balance sheet of the Borrower as of March 31, 1998
giving effect to the Transactions and the financings and other transactions
contemplated hereby and prepared by Ernst & Young and Grant Thornton and (b) all
audited and unaudited historical financial statements of the Borrower, its
Affiliates, the Target and all other completed or probable acquisitions
(including pro forma financial statements) meeting the requirements of
Regulation S-X for a Form S-1 registration statement, and all such financial
statements shall be satisfactory in form and substance to the Administrative
Agent. Such financial statements referred to in clause (b) shall show actual pro
forma (after giving effect to the Transactions) consolidated EBITDA (in
conformance with the requirements of Regulation S-X) of the Borrower for the
year ended December 31, 1997 and the most recent twelve-month period for which
financial statements are available, in each case of not less than $51.7 million
and the Administrative Agent shall have received a letter from Grant Thornton
stating that such pro forma consolidated financial statements comply as to form
with the requirements of Regulation S-X.
SECTION 5.22. REPAYMENT OF INDEBTEDNESS. On or before the Closing
Date, certain existing Indebtedness set forth in SCHEDULE 5.23 attached hereto
of the Borrower and the Target shall be repaid in full and all commitments
thereunder shall be terminated.
ARTICLE VI.
TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH LOANS AND THE
SECURITIES; REPRESENTATIONS OF LENDERS; PARTICIPATIONS
SECTION 6.1. TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING THE
LOANS AND THE SECURITIES. Each Lender acknowledges that none of the Loans, the
instruments evidencing such Loans and the Securities have been registered under
the Securities Act and represents and agrees that it is acquiring the Loans, the
instruments evidencing such Loans and the Securities for its own account and
that it will not, directly or indirectly, transfer, sell, assign, pledge or
otherwise dispose of its Loans, the instruments evidencing such Loans or
Securities (or any interest therein) unless such transfer, sale, assignment,
pledge or other disposition is made (i) pursuant to an effective registration
statement under the Securities Act or (ii) pursuant to an available exemption
from registration under, and otherwise in compliance with, the Securities Act.
Each Lender represents, warrants, covenants and agrees to and with the Borrower
and each Guarantor that it is either (i) a qualified institutional buyer within
the meaning of Rule 144A under the Securities Act acting for its own account or
the account of one or more other qualified institutional buyers, and is aware
that the Borrower and each Guarantor may rely upon the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A thereunder
or (ii) an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act. Each of the Lenders
acknowledges that the instruments evidencing the Loans and the Securities will
bear a legend restricting the transfer thereof in accordance with the Securities
Act.
Subject to the provisions of the previous paragraph, each of the
Borrower and the Guarantors agrees that, with the consent of the Administrative
Agent, each Lender will be free to sell or transfer all or any part of the
Loans, the instruments evidencing the Loans or the Securities (including,
without limitation, participation interest in the Loans) to any third party and
to pledge any or all of the Securities to any commercial bank or other
institutional lender.
SECTION 6.2. PERMITTED ASSIGNMENTS. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time assign to one or more banks or other entities ("Purchasers") all or any
part of its rights and obligations hereunder and under the Loan Documents. Such
assignment shall be substantially in the form of Exhibit A or in such other form
as may be agreed to by the
51
<PAGE> 57
parties thereto. The consent of the Borrower and the Administrative Agent shall
be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof; provided, however, that
if a Default has occurred and is continuing, the consent of the Borrower shall
not be required. Such consent shall not be unreasonably withheld or delayed.
SECTION 6.3. PERMITTED PARTICIPANTS; EFFECT.
(a) Any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time sell to one or more banks or
other entities ("PARTICIPANTS"") participating interests in any Loan owing to
such Lender, any Bridge Note held by such Lender, any Commitment of such Lender
or any other interest of such Lender under the Loan Documents; provided that the
aggregate amount of such participating interest shall not be less than $5.0
million. In the event of any such sale by a Lender of participating interests to
a Participant, such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
owner of its Loans and the holder of any Note issued to it in evidence thereof
for all purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
(b) Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or waiver
with respect to any Loan or Commitment in which such Participant has an interest
which forgives principal, interest or fees or reduces the interest rate or fees
payable with respect to any such Loan or Commitment, extends the Maturity Date,
postpones any date fixed for any regularly scheduled payment of principal of, or
interest or fees on, any such Loan or Commitment or releases any guarantor of
any such Loan or releases all or substantially all of the collateral, if any,
securing any such Loan.
52
<PAGE> 58
(c) The Borrower agrees that each Participant shall be deemed
to have the right of setoff provided in Section 2.11 in respect of its
participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that each Lender shall retain the
right of setoff provided in Section 2.11 with respect to the amount of
participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 2.11, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 2.11 as if each Participant were a Lender.
SECTION 6.4. DISSEMINATION OF INFORMATION. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"TRANSFEREE") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries, including without limitation any information contained in any
Reports.
SECTION 6.5. TAX TREATMENT. If any interest in any Loan Document
is transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.10.
SECTION 6.6. REPLACEMENT SECURITIES UPON Transfer or Exchange.
Upon surrender of any Securities by any Lender in connection with any permitted
transfer or exchange, the Borrower will execute and deliver in exchange therefor
a new Security or Securities of the same aggregate tenor and principal amount,
payable to the order of such Persons and in such denominations as such Lender
may request. The Borrower may require payment by such Lender of a sum sufficient
to cover any stamp tax or governmental charge imposed in respect of any such
transfer.
SECTION 6.7. REGISTER. The Administrative Agent on behalf of the
Borrower shall maintain a register of the principal amount of the Loans held by
each Lender and any interest due and payable with respect thereto. The
Administrative Agent will allow any Lender to inspect and copy such register at
the Administrative Agent's principal place of business during normal business
hours.
ARTICLE VII.
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The occurrence of any one or more
of the following events shall constitute an "EVENT OF DEFAULT: "
(a) any representation or warranty made or deemed made by the
Borrower or any of its Subsidiaries herein or that is contained in any
certificate, document or financial or other statement furnished by any of them
at any time under or in connection with any Transaction Document shall prove to
have been incorrect in any material respect on or as of the date made or deemed
made;
(b) the Borrower defaults in the payment of the principal of or
premium on any of the Loans, whether or not prohibited by the subordination
provisions of Article X hereof, when the same shall become due and payable,
whether at stated maturity, upon acceleration, upon redemption, or otherwise;
53
<PAGE> 59
(c) the Borrower defaults in the payment of any interest upon
any of the Loans, whether or not prohibited by the subordination provisions of
Article X hereof, when the same becomes due and payable and such default
continues for five calendar days;
(d) the Borrower defaults in the payment of any other
Obligations payable under this Agreement or any of the other Loan Documents,
whether or not prohibited by the subordination provisions of Article X hereof,
and such default continues for five calendar days;
(e) the Borrower or any of its Subsidiaries fails to observe or
perform any of its covenants or agreements contained in Article IV (other than
Sections 4.5, 4.6, 4.16, 4.18 and 4.26(a), (b) and (c);
(f) the Borrower or any of its Subsidiaries fails to observe or
perform any of its covenants or agreements (other than those Sections of Article
IV not listed in the parenthetical in clause (e) above) contained in any of the
Loan Documents, other than a default under items listed on Schedule 3.4 hereof,
and such default continues for more than the period of grace, if any, therein
specified, or such default or event of default shall permit the holder of any
such Indebtedness (or any agent or trustee acting on behalf of one or more
holders) to accelerate the maturity thereof;
(g) 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 Borrower or any of its
Subsidiaries (or the payment of which is guaranteed by the Borrower or any of
its Subsidiaries), whether such Indebtedness or guarantee now exists, or is
created after the date of this Agreement, which default (i) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such 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 such
Indebtedness under which there has been a default described in clause (a) above
or the maturity of which has been so accelerated aggregates $5.0 million;
(h) (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies liability) is
in excess of $1.0 million is rendered against the Borrower or any of its
Subsidiaries, or (ii) there is any attachment, injunction or execution against
any of the Borrower's or its Subsidiaries' or properties for any amount in
excess of $1.0 million in the aggregate; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged, unbonded or
undismissed for a period of thirty (30) days; or
(i) the Borrower or any of its Subsidiaries shall (i) be unable
to pay its debts generally as they become due; (ii) file a petition to take
advantage of any insolvency statute; (iii) make an assignment for the benefit of
its creditors; (iv) commence a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any substantial
part of its property; or (v) file a petition or answer seeking liquidation,
reorganization or arrangement or similar relief under the federal bankruptcy
laws or any other applicable law or statute; or
(j) a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrower or any of its Subsidiaries or of the whole or any
substantial part of its properties and such order, judgment or decree continues
unstayed and in effect for a period of sixty (60) days, or approve a petition
filed against the
54
<PAGE> 60
Borrower or any of its Subsidiaries seeking liquidation, reorganization or
arrangement or similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state, which
petition is not dismissed within sixty (60) days; or if, under the provisions of
any other law for the relief or aid of debtors, a court of competent
jurisdiction shall assume custody or control of the Borrower or any of its
Subsidiaries or of the whole or any substantial part of any of its properties,
which control is not relinquished within sixty (60) days; or if there is
commenced against the Borrower or any of its Subsidiaries any proceeding or
petition seeking reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state which proceeding or petition remains undismissed for a
period of ninety (90) days; or if the Borrower or any of its Subsidiaries takes
any action to indicate its consent to or approval of any such proceeding or
petition; or
(k) the obligations of any Guarantor under its Guarantee 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 Guarantee; or
(l) the Borrower or any of its Subsidiaries shall suspend all
or any part of its operations material to the conduct of the business of the
Borrower and its Subsidiaries taken as a whole; or
(m) the Borrower merges into another Person or dissolves; or
(n) (i) the Borrower or any Subsidiary shall fail (A) to
implement or complete any material action or process constituting a portion of
its plan to be Year 2000 Compliant on the date set forth for implementation or
completion of such action or process and such failure shall continue for a
period of 30 or more days or (B) to be Year 2000 Compliant on or after 90 days
prior to year 2000; or
(o) the Kmart Agreement shall be terminated or any amendment
thereof is entered into by the parties thereto without the consent of the
Administrative Agent, and such termination or amendment has or could reasonably
be expected to have a Material Adverse Effect; or
(p) the report of the field examination of the assets of the
Borrower is not completed with results satisfactory to the Administrative Agent
within 90 days after the Closing Date; or
(q) the acquisition of the Queretero, Mexico property is not
consummated in accordance with the terms of the Acquisition Agreement on or
before August 31, 1998; or
(r) the Black & Decker License Agreement shall (i) be modified
in any material respect having an adverse effect on the Borrower without the
written consent of the Administrative Agent or (ii) terminate, or the license
granted thereunder shall terminate, for any reason prior to the expiration of
the Initial Term (as defined in the Black & Decker Licenses Agreement).
SECTION 7.2. ACCELERATION. If any Event of Default (other than an
Event of Default specified in Section 7.1(i) and (j) is continuing, the Lenders
holding at least 25% in aggregate principal amount of the then outstanding Loans
may, by written notice to the Borrower, declare the unpaid principal of and any
accrued and unpaid interest and fees on all of the Loans to be immediately due
and payable. Upon such declaration, all Obligations in respect of the Loans
shall become immediately due and payable immediately. If an Event of Default
specified in Section 7.1(i) and (j) occurs, all Obligations in respect of the
Loans shall ipso facto become and be immediately due and payable without any
declaration, notice or other act on the part of any Lender.
55
<PAGE> 61
SECTION 7.3. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Lenders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent or subsequent assertion or employment of any
other appropriate right or remedy.
SECTION 7.4. DELAY OR OMISSION NOT WAIVER. No delay or omission by
any Lender to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article VII or by law to the Lenders may be exercised from time to time, and as
often as may be deemed expedient, by the Lenders.
SECTION 7.5. WAIVER OF PAST DEFAULTS. Subject to Section 11.3, the
Majority Lenders by written notice to the Borrower may 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 or
interest that has become due solely because of the acceleration) have been cured
or waived.
SECTION 7.6. RIGHTS OF LENDERS To Receive Payment. Notwithstanding
anything to the contrary contained in this Agreement, the right of any Lender to
receive payment of principal of, premium and interest on the Loans and Bridge
Notes held by such Lender, on or after the respective due dates expressed in
this Agreement or the Bridge Notes, 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 Lender.
ARTICLE VIII.
PERMANENT SECURITIES
SECTION 8.1. PERMANENT SECURITIES. The Borrower and the Guarantors
shall use their best efforts to do all things required in the reasonable opinion
of the Investment Banks in connection with the sale of the Permanent Securities,
including, but not limited to (i) prior to and 30 Business Days immediately
following the Closing Date, commencing the preparation of a Rule 144A offering
memorandum or registration statement under the Securities Act with respect to
the Permanent Securities, and other documentation (including an indenture), all
as deemed necessary by the Investment Banks to effect the offering of Permanent
Securities, (ii) no later than 15 Business Days prior to the Closing Date,
delivering to the Investment Banks such unaudited consolidated and pro forma
financial information, projections as to future operations and such other
financial information relating to the Borrower and its Subsidiaries and their
respective businesses and any probable or recently completed acquisition as may
be reasonably requested by the Investment Banks, (iii) prior to and 30 Business
Days immediately following the Closing Date, finalizing the Offering Documents
in form and substance reasonably satisfactory to the Investment Banks, the
Borrower and the Guarantors, including, if applicable, filings of a registration
statement under the Securities Act, (iv) no later than 30 Business Days
following the Closing Date, making appropriate Officers of the Borrower and its
Subsidiaries available to the Investment Banks for meetings with prospective
purchasers of the Permanent Securities and preparing and presenting to potential
investors road show material in a manner consistent with other new issuances of
high yield debt securities and (v) executing an underwriting or purchase
agreement substantially in the form of NationsBanc's standard
56
<PAGE> 62
underwriting or purchase agreement, as the case may be, modified as appropriate
to reflect the terms of the transactions contemplated thereby and containing
such terms, covenants, conditions, representations, warranties and indemnities
as are customary in similar transactions and providing for the delivery of legal
opinions, comfort letters, and Officers' Certificates, all in form and substance
reasonably satisfactory to the Investment Banks and their counsel, as well as
such other terms and conditions as the Investment Banks and their counsel may in
their reasonable discretion consider appropriate in light of then prevailing
market conditions applicable to similar financings or in light of any aspect of
the transactions contemplated hereby that requires such other terms or
conditions. The proceeds from the issuance of the Permanent Securities shall be
used to prepay the Loans pursuant to Section 2.5.
ARTICLE IX.
TERMINATION
SECTION 9.1. TERMINATION. The Lenders, by notice to the Borrower,
may terminate this Agreement at any time after the earlier of (i) the
consummation of the HPG Acquisition without the making of any Bridge Loans and
(ii) August 31, 1998.
SECTION 9.2. SURVIVAL OF CERTAIN PROVISIONS. If this Agreement is
terminated pursuant to this Article IX, such termination shall be without
liability of any party to any other party, except that, whether or not the
transactions contemplated by this Agreement are consummated, (i) the Obligations
of the Borrower and the Guarantors to reimburse the Lenders for all of their
out-of-pocket expenses pursuant to Section 13.1 and the Fee Letter and (ii) the
indemnity provisions contained in Article XII shall, in each case, remain
operative and in full force and effect.
ARTICLE X.
SUBORDINATION
SECTION 10.1. AGREEMENT TO SUBORDINATE. The Borrower and the
Guarantors agree, and each Lender agrees, that the Indebtedness evidenced by the
Loans is subordinated in right of payment, to the extent and in the manner
provided in this Article X, to the prior payment in full of all Senior Debt
(whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed), and that the subordination is for the benefit of the holders of
Senior Debt.
SECTION 10.1. CERTAIN DEFINITIONS.
"DESIGNATED SENIOR DEBT" means any Indebtedness outstanding under
the Credit Agreement.
"PERMITTED JUNIOR SECURITIES" means equity interests in the
Borrower or any Guarantor or debt securities that 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 Loans are
subordinated to Senior Debt pursuant to this Agreement.
"REPRESENTATIVE" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
"SENIOR DEBT" means (i) all Indebtedness outstanding under the
Credit Agreement and all Hedging Obligations with respect thereto, (ii) any
other Indebtedness that is permitted to be incurred by the Borrower or any
Guarantor pursuant to this Agreement unless the instrument under which such
57
<PAGE> 63
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Loans, and (iii) all Obligations with
respect to any of the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt shall not include (x) any Indebtedness of the Borrower or
the Guarantors to any of its Subsidiaries or other Affiliates, (y) other than
letter of credit obligations of the Borrower's Hong Kong Subsidiaries, any
Indebtedness incurred for the purchase of goods or materials or for services
obtained in the ordinary course of business (other than with the proceeds of
revolving credit borrowings permitted hereby) and (z) any Indebtedness that is
incurred in violation of this Agreement.
A distribution may consist of cash, securities or other property,
by set-off or otherwise.
SECTION 11.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any
distribution to creditors of the Borrower or the Guarantors in a liquidation or
dissolution of the Borrower or such Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Borrower or such Guarantor or its property, in an assignment for the benefit of
creditors or any marshalling of the Borrower's or such Guarantor's assets and
liabilities:
(1) holders of Senior Debt shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the
rate specified in the applicable Senior Debt) before any Lender shall be
entitled to receive any payment with respect to its Loan (except that
Lenders may receive Permitted Junior Securities); and
(2) until all Obligations with respect to Senior Debt
(as provided in subsection (1) above) are paid in full, any distribution
to which Lenders would be entitled but for this Article X shall be made
to holders of Senior Debt (except that Lenders may receive Permitted
Junior Securities), as their interests may appear.
SECTION 10.3. DEFAULT ON DESIGNATED SENIOR DEBT. The Borrowers and
the Guarantors may not make any payment or distribution to the Administrative
Agent or any Lender in respect of Obligations with respect to the Loans and may
not acquire from the Administrative Agent or any Lender any Loans for cash or
property (other than Permitted Junior Securities) until all principal and other
Obligations with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal or
other Obligations with respect to Designated Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement,
indenture or other document governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on
Designated Senior Debt occurs and is continuing that permits holders of
the Designated Senior Debt to accelerate its maturity and the
Administrative Agent receives a notice of the default (a "PAYMENT
BLOCKAGE NOTICE") from a Person who may give it pursuant to Section
10.12 hereof. If the Administrative Agent receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section 10.4 unless and until (i) at
least 360 days shall have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled
payments of principal, premium, if any, and interest on the Loans that
have come due have been paid in full in cash. No nonpayment default
that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Administrative Agent shall be, or be made, the
basis for a subsequent Payment Blockage Notice.
58
<PAGE> 64
The Borrowers and the Guarantors may and shall resume payments on
and distributions in respect of the Loans and may acquire them upon the earlier
of:
(1) the date upon which the default is cured or waived,
or
(2) in the case of a default referred to in Section
10.4(ii) hereof, the earlier of the date on which such default is cured or
waived or 179 days after the date on which the Payment Blockage Notice is
received, unless the maturity of such Designated Senior Debt has been
accelerated, if this Article X otherwise permits the payment, distribution or
acquisition at the time of such payment or acquisition.
SECTION 10.4. ACCELERATION OF SECURITIES. If payment of the Loans
is accelerated because of an Event of Default, the Borrower shall promptly
notify holders of Senior Debt of the acceleration.
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER. In the event
that the Administrative Agent or any Lender receives any payment of any
Obligations with respect to the Loans at a time when the Administrative Agent or
such Lender, as applicable, has actual knowledge that such payment is prohibited
by Section 10.4 hereof, such payment shall be held by the Administrative Agent
or such Lender, in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to 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 Senior
Debt.
With respect to the holders of Senior Debt, the Administrative
Agent undertakes to perform only such obligations on the part of the
Administrative Agent as are specifically set forth in this Article X, and no
implied covenants or obligations with respect to the holders of Senior Debt
shall be read into this Agreement against the Administrative Agent. The
Administrative Agent shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Administrative Agent shall pay over or distribute to or on behalf of Lenders,
the Borrower, the Guarantors or any other Person money or assets to which any
holders of Senior Debt shall be entitled by virtue of this Article X, except if
such payment is made as a result of the willful misconduct or gross negligence
of the Administrative Agent.
59
<PAGE> 65
SECTION 10.6. NOTICE BY THE BORROWER. The Borrower and the
Guarantor shall promptly notify the Administrative Agent of any facts known to
the Borrower or any Guarantor that would cause a payment of any Obligations with
respect to the Loans to violate this Article X, but failure to give such notice
shall not affect the subordination of the Loans to the Senior Debt as provided
in this Article X.
SECTION 10.7. SUBROGATION. After all Senior Debt is paid in full
and until the Loans are paid in full, the Lenders shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Loans) to the rights
of holders of Senior Debt to receive distributions applicable to Senior Debt to
the extent that distributions otherwise payable to the Lenders have been applied
to the payment of Senior Debt. A distribution made under this Article X to
holders of Senior Debt that otherwise would have been made to the Lenders is
not, as between the Borrower and the Guarantors, on one hand, and the Lenders,
on the other hand, a payment by the Borrower and the Guarantors on the Loan.
SECTION 10.8. RELATIVE RIGHTS. This Article X defines the relative
rights of the Lenders and holders of Senior Debt. Nothing in this Agreement
shall:
(a) impair, as between the Borrower and the Guarantors, on one
hand, and the Lenders, on the other hand, the obligation of the Borrower and the
Guarantors, which is absolute and unconditional, to pay principal of and
interest on the Loans in accordance with their terms;
(b) affect the relative rights of the Lenders and creditors of
the Borrower and the Guarantors other than their rights in relation to holders
of Senior Debt; or
(c) prevent the Administrative Agent or any Lender from
exercising its available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Debt to receive distributions and payments
otherwise payable to the Lenders.
If the Borrower and the Guarantors fail because of this Article X
to pay principal of or interest on a Loan on the due date, the failure is still
a Default or Event of Default.
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY THE BORROWER
AND THE GUARANTORS. No right of any holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Loans shall be impaired by
any act or failure to act by the Borrower and the Guarantors or any Lender or by
the failure of the Borrower and the Guarantors or any Lender to comply with this
Agreement.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever
a distribution is to be made or a notice given to holders of Senior Debt, the
distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets of the Borrower or any
Guarantor referred to in this Article X, the Administrative Agent and the
Lenders 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
Administrative Agent or to the Lenders for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other Indebtedness of the Borrower and the Guarantors, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X.
60
<PAGE> 66
SECTION 10.11. RIGHTS OF ADMINISTRATIVE AGENT. Notwithstanding the
provisions of this Article X or any other provision of this Agreement, the
Administrative Agent shall not be charged with knowledge of the existence of any
facts that would prohibit the making of any payment or distribution by the
Administrative Agent, and the Administrative Agent may continue to make payments
on the Loans, unless the Administrative Agent shall have received at the address
set forth in Section 14.2 hereof at least five Business Days prior to the date
of such payment written notice of facts that would cause the payment of any
Obligations with respect to the Loans to violate this Article X. Only the
Company or a Representative may give the notice. Nothing in this Article X shall
impair the claims of, or payments to, the Administrative Agents under or
pursuant to Article XIII hereof.
The Administrative Agent in its individual or any other capacity
may hold Senior Debt with the same rights it would have if it were not
Administrative Agent. Any agent may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION. Each Lender,
authorizes and directs the Administrative Agent on such Lender's behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in this Article X, and appoints the Administrative Agent to act as
such Lender's attorney-in-fact for any and all such purposes.
SECTION 10.13. AMENDMENTS. The provisions of this Article X shall
not be amended or modified without the written consent of the holders of all
Senior Debt.
ARTICLE XII.
GUARANTEE
SECTION 11.1. THE GUARANTEE.
(a) Each Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest, fees
and premium (if any) on the Loans and the Bridge Notes, and the full and
punctual payment of all other Obligations of the Borrower under this Agreement,
the Bridge Notes and the other Loan Documents, including all reasonable costs of
collection and enforcement thereof and interest thereon which would be owing by
the Borrower but for the effect of any Bankruptcy Law (collectively, the
"GUARANTEED OBLIGATIONS"). Each Guarantor understands, agrees and confirms that
each of the Lenders may enforce this Guarantee up to the full amount guaranteed
by each Guarantor hereunder against each Guarantor without proceeding against
any other obligor or against any security for the Guaranteed Obligations. All
payments made by each Guarantor under this Guarantee shall be paid at the place
and in the manner specified in Section 2.9. Each Guarantor agrees that this is a
continuing Guarantee of payment and not merely a Guarantee of collection.
(b) The obligations of each Guarantor hereunder shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any Obligation of the Borrower under this
Agreement, the Bridge Notes or any other Loan Document, by operation of
law or otherwise;
61
<PAGE> 67
(ii) any modification or amendment of or supplement to this
Agreement, the Bridge Notes or any of the other Loan Documents;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for, or any other Person's guarantee of, any of the
Guaranteed Obligations;
(iv) any change in the corporate existence, structure or
ownership of the Borrower or any other guarantor of the Borrower's
Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower or any obligor or any of their
respective assets or any resulting release or discharge of any Obligation
of the Borrower contained in the Loan Documents;
(v) the existence of any claim, set-off or other rights which
any obligor may have at any time against the Borrower or any other
Person, whether in connection herewith or with any unrelated
transactions, provided that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrower for any reason of this Agreement, the Bridge Notes or any
other Loan Document, or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower of the principal of,
interest, premium or fees on the Loans or any other amount payable by the
Borrower under this Agreement, the Bridge Notes or any of the other Loan
Documents; or
(vii) any other act or omission to act or delay of any kind by
the Borrower or any other Person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal
or equitable discharge of Guaranteed Obligations hereunder.
(c) Each Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Borrower, any right to require a proceeding first against the
Borrower or another obligor, protest, notice and all demands whatsoever and
covenants that, subject to this Article XI, this Guarantee shall not be
discharged except by complete payment and performance of all Guaranteed
Obligations.
(d) If any Lender is required by any court or otherwise to
return to the Borrower or any Guarantor, or any Custodian for the Borrower or
any of the other obligors or their respective assets, any amount paid to any
Lender, this Guarantee, to the extent of the amount so returned, shall be
reinstated in full force and effect.
(e) Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Lenders in respect of any Guaranteed
Obligations until payment in full of all Guaranteed Obligations. Each Guarantor
further agrees that (i) the maturity of the Guaranteed Obligations may be
accelerated as provided in Section 7.2 notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Guaranteed
Obligations and (ii) in the event of any declaration of acceleration of such
Guaranteed Obligations as provided in Section 7.2, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by each
Guarantor for the purpose of this Guarantee.
SECTION 11.2. LIMITATION ON LIABILITY. Each Guarantor and, by its
acceptance of any Bridge Note, each Lender, hereby confirms that it is the
intention of all such parties that this Guarantee not
62
<PAGE> 68
constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar law to the extent applicable to this Guarantee. To effectuate the
foregoing intention, the Lenders and the Guarantors hereby irrevocably agree
that the Obligations of each Guarantor under this Guarantee shall be limited to
the maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of each Guarantor that are relevant under
such laws, result in the Obligations of each Guarantor under the Guarantee not
constituting a fraudulent transfer or conveyance.
SECTION 11.3. STAY OF ACCELERATION. In the event that acceleration
of the time for payment of any Guaranteed Obligation is stayed upon insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of this Agreement and the Bridge Notes shall
nonetheless by payable by the Guarantors forthwith on demand by any Lender.
SECTION 11.4. RELEASE OF GUARANTORS. 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, 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) will be released and relieved of any obligations under its Guarantee;
provided that the Net Cash Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Agreement,
including without limitation Section 4.3(b). Upon delivery by the Borrower to
the Administrative Agent of an Officers' Certificate and an Opinion of Counsel
to the effect that such sale or other disposition was made by the Borrower in
accordance with the applicable provisions of this Agreement, including without
limitation Section 4.3(b) hereof, the Administrative Agent shall execute any
documents reasonably required in order to evidence the release of any Guarantor
from its Obligations under its Guarantee.
Any Guarantor not released from its Obligations under its
Guarantee shall remain liable for the full amount of principal of and interest
on the Loans and for the other obligations of any Guarantor under this Agreement
as provided in this Article XI.
63
<PAGE> 69
ARTICLE XIII.
INDEMNITY
SECTION 12.1. INDEMNIFICATION. The Borrower and each Guarantor
(each, an "INDEMNIFYING PARTY" and, collectively, the "INDEMNIFYING PARTIES")
jointly and severally agree to indemnify and hold harmless each Lender and their
respective Affiliates and Affected Parties and each director, officer, employee
and agent thereof (each, an "INDEMNIFIED PARTY") from and against any and all
losses, claims, damages and liabilities, joint or several, to which any
Indemnified Party may become subject relating to or arising out of or in
connection with the transactions contemplated by this Agreement (including the
use of the proceeds of the Loans) or any related transaction, and to reimburse
each Indemnified Party, promptly upon demand, for expenses (including reasonable
counsel fees and expenses) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or threatened loss,
claim, damage or liability, or any litigation, proceeding or other action in
respect thereof, including any amount paid in settlement of any litigation,
proceeding or other action (commenced or threatened) to which the Indemnifying
Parties shall have consented in writing (such consent not to be unreasonably
withheld) whether or not any Indemnified Party is a party and whether or not
liability resulted; provided, however, that the indemnity contained in this
Section 12.1 will not apply to any Indemnified Party to the extent that it shall
be judicially determined that such losses, claims, damages, liabilities or
expenses resulted primarily from the gross negligence or willful misconduct of
such Indemnified Party. The Indemnified Parties will promptly notify the
Borrower upon receipt of written notice of any claim or threat to institute a
claim; provided that any failure by the Indemnified Parties to give such notice
shall not relieve the Borrower from the obligation to indemnify the Indemnified
Parties except to the extent the Borrower is actually prejudiced thereby.
If any action, claim, investigation or other proceeding is
instituted or threatened against any Indemnified Parties in respect of which
indemnity may be sought hereunder, the Borrower shall be entitled to assume the
defense thereof with counsel selected by the Borrower (which counsel shall be
reasonably satisfactory to such Indemnified Parties) and after notice from the
Borrower to such Indemnified Parties of its election so to assume the defense
thereof, the Borrower will not be liable to such Indemnified Parties hereunder
for any legal or other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof other than reasonable costs of
investigation and such other expenses as have been approved in advance; provided
that (i) if counsel for such Indemnified Parties determines in good faith that
there is a conflict which requires separate representation for the Borrower and
such Indemnified Parties, or (ii) the Borrower fails to assume or proceed in a
timely and reasonable manner with the defense of such action or fails to employ
counsel reasonably satisfactory to such Indemnified Parties in any such action,
then in either such event such Indemnified Parties shall be entitled to select
one primary counsel and, if necessary, one local counsel, of their own choice to
represent such Indemnified Parties, and the Borrower shall not, or no longer, be
entitled to assume the defense thereof on behalf of such Indemnified Parties and
such Indemnified Parties shall be entitled to indemnification for the reasonable
expenses (including reasonable fees and expenses of such counsel) to the extent
provided in the preceding paragraph. Such counsel shall, to the fullest extent
consistent with its professional responsibilities, cooperate with the Borrower
and any counsel designated by the Borrower. Nothing contained herein shall
preclude any Indemnified Parties, at their own expense, from retaining
additional counsel to represent such Indemnified Parties in any action with
respect to which indemnity may be sought from the Borrower hereunder.
SECTION 12.2. INDEMNITY NOT AVAILABLE. If the indemnification
provided for herein is unavailable to any Indemnified Party in respect of any
losses, claims, damages, liabilities or judgments referred to herein (or any
investigation, claim, litigation, proceeding or other action in respect
thereof), then
64
<PAGE> 70
the Indemnifying Parties agree to contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages, liabilities
or expenses in (i) in such proportion as is appropriate to reflect the relative
benefits to the Indemnifying Parties, on the one hand, and the Lenders, on the
other hand, in connection with the matter giving rise to such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Indemnifying
Parties on the one hand, and the Lenders, on the other in connection with the
actions which resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The Borrower and each
Guarantor agree that for the purposes of this Section 12.2 the relative benefits
to the Borrower and its Subsidiaries on the one hand, and the Indemnified
Parties on the other hand, of the transactions contemplated by this Agreement,
including, without limitation, the Loans and the other transactions contemplated
by any of the Loan Documents in any way relating to any Loan, including the use
of the proceeds of the Loans shall be deemed to be in the same proportion that
the proceeds of all Loans made or to be made to the Borrower bears to the
interest and fees paid or to be paid to the Lenders in connection with the
Loans; provided, however, that, to the extent permitted by applicable law, in no
event shall the Indemnified Parties be required to contribute an aggregate
amount in excess of the aggregate interest and fees actually paid to the Lenders
in connection with the Loans. The foregoing contribution agreement shall be in
addition to any rights that any Indemnified Party may have at common law or
otherwise. No investigation or failure to investigate by any Indemnified Party
shall impair the foregoing indemnification and contribution agreement or any
right an Indemnified Party may have.
SECTION 12.3. SETTLEMENT OF CLAIMS. The Borrower and each
Guarantor agree that, neither it nor any of its Subsidiaries will settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding in respect of which indemnification or contribution
could be sought under Section 12.1 or 12.2 (whether or not any Indemnified Party
is an actual or potential party to such claim, action or proceeding) without the
prior written consent of the Indemnified Parties, unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action or proceeding, which
consent shall not be unreasonably withheld.
SECTION 12.4. APPEARANCE EXPENSES. If an Indemnified Party is
requested or required to appear as a witness in any action brought by or on
behalf of or against the Borrower, any Guarantor or any Affiliate thereof in
which such Indemnified Party is not named as a defendant, the Borrower agrees to
reimburse such Indemnified Party for all reasonable expenses incurred by it in
connection with such Indemnified Party's appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.
SECTION 12.5. INDEMNITY FOR TAXES, RESERVES AND EXPENSES. If,
after the date hereof, the adoption of any law or guideline or any amendment or
change in the administration, interpretation or application of any existing or
future law or guideline by any Governmental Entity charged with the
administration, interpretation or application thereof, or the compliance with
any request or directive of any Governmental Entity (whether or not having the
force of law):
(a) subjects any Affected Party to any tax of any kind with
respect to this Agreement or the Bridge Notes or changes the basis of
taxation of payments of amounts due hereunder or thereunder or with
respect to this Agreement or any of the other Loan Documents, (including,
without limitation, any sales, gross receipts, general corporate,
personal property, privilege or
65
<PAGE> 71
license taxes, and including claims, losses and liabilities arising from
any failure to pay or delay in paying any such tax (unless such failure
or delay results solely from such Affected Party's gross negligence or
willful misconduct), but excluding (i) federal, state or local taxes
based on net income incurred by such Affected Party) and (ii) Taxes,
Other Taxes and any taxes, levies, imposts, deductions, charges or
withholding specifically excluded under Section 2.10(a);
(b) imposes, modifies or deems applicable any reserve
(including, without limitation, any reserve imposed by the Board),
special deposit or similar requirement against assets of the Borrower and
the Guarantors held by, credit to the Borrower and the Guarantors
extended by, deposits of the Borrower and the Guarantors with or for the
account of, or other acquisition of funds of the Borrower and the
Guarantors by, any Affected Party;
(c) shall change the amount of capital maintained or requested
or directed to be maintained by an Affected Party; or
(d) imposes upon an Affected Party any other condition or
expense (including, without limitation, (i) loss of margin and (ii)
attorneys' fees and expenses incurred by officers or employees of an
Affected Party (or any successor thereto) and expenses of litigation or
preparation therefor in contesting any of the foregoing) with respect to
this Agreement or any of the other Loan Documents or the purchase,
maintenance or funding of the Loans by an Affected Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital of, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, any of the other Loan Documents, the obligations hereunder or
thereunder or the funding of the Loans hereunder, the Affected Party may notify
the Indemnifying Party of the amount of such increase, reduction, or imposition,
and the Indemnifying Parties hereby jointly and severally agree to pay to the
Affected Party the amount necessary to compensate the Affected Party for such
increase, reduction or imposition. Such amounts shall be due and payable by the
Indemnifying Parties 15 days after such notice is given.
SECTION 12.6. SURVIVAL OF INDEMNIFICATION. The provisions
contained in this Article XII shall remain in full force and effect whether or
not any of the transactions contemplated hereby are consummated and
notwithstanding the termination of this Agreement or the payment in full of all
Obligations hereunder.
SECTION 12.7. LIABILITY NOT EXCLUSIVE; PAYMENTS. The agreements of
each Indemnifying Party in this Article XII shall be in addition to any
liability that each may otherwise have. All amounts due under this Article XII
shall be payable as incurred upon written demand therefor.
ARTICLE XIV.
THE ADMINISTRATIVE AGENT; THE ARRANGERS
SECTION 13.1. APPOINTMENT. Each Lender hereby irrevocably
designates and appoints the Administrative Agent as the agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the
66
<PAGE> 72
Administrative Agent shall have no duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
SECTION 13.2. DELEGATION OF DUTIES. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to the advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible to the Lenders for the negligence or misconduct
of any agents or attorneys in-fact selected by it with reasonable care.
SECTION 13.3. EXCULPATORY PROVISIONS. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any of its
Subsidiaries or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement, opinion or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document or for any failure of the Borrower
or any of its Subsidiaries to perform its obligations hereunder or thereunder.
The Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries.
SECTION 13.4. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Bridge Note, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower or any of its Subsidiaries), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of the Bridge Note as the owner thereof for all purposes unless
a written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Majority Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
SECTION 13.5. NOTICE OF DEFAULT. The Administrative Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Administrative Agent has received notice
from a Lender, the Borrower or any of its Subsidiaries referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall
67
<PAGE> 73
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Majority Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
SECTION 13.6. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER
LENDERS. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the affairs
of the Borrower or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any material or other information provided by the
Administrative Agent (which, if so furnished are acknowledge by the Lenders to
be for informational purposes only and without representation or warranty) or
any other Lenders, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender confirms
that it is a qualified institutional buyer within the meaning of Rule 144A under
the Securities Act. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have no any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial or other condition,
prospects or credit worthiness of the Borrower or any of its Subsidiaries which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION 13.7. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower or any of its Subsidiaries and without limiting the obligation of
the Borrower and any of its Subsidiaries to do so), ratably according to their
respective Commitments in effect on the date on which indemnification is sought,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (include, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any other Loan Document or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing, provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Loans and all other Obligations
payable hereunder.
68
<PAGE> 74
SECTION 13.8. ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL CAPACITIES.
The Administrative Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower as though
the Administrative Agent were not acting in such capacities hereunder and under
the other Loan Documents. With respect to the Loans made or renewed by it and
the Bridge Note issued to it the Administrative Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not the Administrative Agent, and the
terms "LENDER" and "LENDERS" shall include the Administrative Agent in its
individual capacity.
SECTION 13.9. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative
Agent may resign as Administrative Agent upon 30 days' notice to the Lenders and
the Borrowers. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents then the Majority Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Administrative Agent,
hereunder. Effective upon such appointment and approval, the term
"ADMINISTRATIVE AGENT" shall mean and include such successor agent, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent, any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent the provisions of this Article XIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 13.10. SUCCESSOR ADMINISTRATIVE AGENT. Except as expressly
set forth herein, the Arrangers, in their capacity as such, shall have no duties
or responsibilities, and shall incur no liabilities, under this Agreement or the
other Loan Documents.
ARTICLE XV.
MISCELLANEOUS
SECTION 14.1. EXPENSES; DOCUMENTARY TAXES. The Borrower and the
Guarantors hereby jointly and severally agree to pay (a) all reasonable
out-of-pocket expenses (including, without limitation, expenses incurred in
connection with due diligence of the Lenders) associated with the preparation,
execution and delivery, administration, waiver, enforcement or modification and
enforcement of the documentation contemplated hereby and (b) the reasonable fees
and disbursements of legal counsel to the Lenders in connection with the
transactions contemplated herein, including in each case those incurred prior to
the date hereof.
SECTION 14.2. NOTICES. All notices and other communications
pertaining to this Agreement or any Bridge Note shall be in writing and shall be
delivered (a) in Person (with receipt acknowledged), (b) by facsimile (confirmed
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth) or (c) by
overnight courier, addressed as follows:
(i) If to the Administrative Agent, to it at:
NationsBridge, L.L.C.
NationsBank Corporate Center
100 North Tryon Street
Charlotte, N.C. 28255
Attention: Lynne Wertz
Facsimile No.: (704) 388-9941
69
<PAGE> 75
with a copy to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attention: Kirk A. Davenport, Esq.
Facsimile No.: (212) 751-4864
(ii) If to any Lender, to it at its address set
forth on the signature pages hereto:
(iii) If to the Borrower or any Guarantor, to it
at:
Windmere-Durable Holdings, Inc.
5980 Miami Lakes Drive
Miami Lakes, Florida 33014-2467
Attention: Chief Financial Officer
Facsimile No.: (305) 364-0502
with a copy to:
Greenberg Traurig Hoffman Lipoff
Rosen & Quentel
1221 Brickell Avenue
Miami, Florida 33131
Attention: Paul Berkowitz, Esq.
Facsimile No.: (305) 579-0717
or to such other Person or address as shall be furnished in writing delivered to
the other parties in compliance with this Section.
SECTION 14.3. CONSENT TO AMENDMENTS AND WAIVERS.
(a) Except as provided in Section 14.3(b), this Agreement and
the Bridge Notes may be amended or supplemented with the consent of the
Borrower, each Guarantor and the Majority Lenders and any existing default or
compliance with any provision of this Agreement or the Bridge Notes may be
waived with the consent of the Majority Lenders. Bridge Notes held by the
Borrower or any of its Affiliates will not be deemed to be outstanding for
purposes of this Section 14.3.
(b) Notwithstanding the provisions of Section 14.3(a), without
the consent of each Lender affected thereby, an amendment or waiver may not: (i)
reduce the principal amount of any Loan, (ii) change the fixed maturity of any
Loan, (iii) reduce the rate of or change the time for payment of interest on any
Loan, (iv) waive a Default or Event of Default in the payment of principal of or
premium, or interest, if any, on the Loans or an other amounts payable under any
of the Loan Documents, (v) make any Loan payable in money other than that stated
in the applicable Loan, (vi) make any change in the provisions of this Agreement
relating to the rights of Lenders to receive (A) prepayments on, or (B) payments
of principal of, or premium, fees or interest, if any, on, the Loans, (vii) make
any change to the provisions of
70
<PAGE> 76
Article VIII that would adversely affect the rights of any Lender, (viii)
release any Guarantor from its Guarantee or (ix) make any change in the
foregoing amendment and waiver provisions.
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Lender for
or as an inducement to any consent, waiver or amendment permitted by Section
14.3(a) unless such consideration is offered to be paid and is paid to all
Lenders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or amendment.
SECTION 14.4. PARTIES. This Agreement shall inure to the benefit
of and be binding upon the Borrower, each Guarantor, the Affected Parties and
each of their respective successors and assigns. Except as expressly in this
Agreement, nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other Person any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
Except as expressly provided in this Agreement, this Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the Affected Parties and their respective successors and assigns, and
for the benefit of no other Person.
SECTION 14.5. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL. THIS AGREEMENT AND THE BRIDGE NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH OF THE BORROWER,
EACH GUARANTOR AND EACH OF THE LENDERS HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY (EACH, A "NEW
YORK COURT") FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THE BRIDGE NOTES, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE BORROWER, EACH GUARANTOR AND THE
LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
BORROWER, EACH GUARANTOR AND THE LENDERS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE BRIDGE
NOTES, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 14.6. REPLACEMENT NOTES. If any Bridge Note becomes
mutilated and is surrendered by the applicable Lender to the Borrower, or if any
Lender claims that any of its Bridge Notes has been lost, destroyed or
wrongfully taken, the Borrower shall execute and deliver to such Lender a
replacement Bridge Note, upon the delivery by such Lender of an indemnity to the
Borrower to save it and any agent of it harmless in respect of such loss,
destruction or wrongful taking with respect to such Bridge Note.
SECTION 14.7. APPOINTMENT OF AGENT FOR SERVICE. The Borrower
designates and appoints CT Corporation and such other Persons as may irrevocably
agree in writing to serve as their respective agent to receive on their behalf
service of all process in any proceedings in any New York Court, such service
being hereby acknowledged by the Borrower to be effective and binding in every
respect. If
71
<PAGE> 77
any agent appointed by a the Borrower refuses to receive and forward such
service, that the Borrower hereby agrees that service upon it by mail shall
constitute sufficient service.
SECTION 14.8. MARSHALLING; RECAPTURE. Neither the Administrative
Agent nor any Lender shall be under any obligation to marshall any assets in
favor of the Borrower or any other party or against or in payment of any or all
of the Obligations. To the extent any Lender receives any payment by or on
behalf of the Borrower, which payment or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to the Borrower or its estate, trustee, receiver, custodian or any
other party under any Bankruptcy Law, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, the
obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of Borrower to such Lender as of the date such
initial payment, reduction or satisfaction occurred.
SECTION 14.9. LIMITATION OF LIABILITY. No claim may be made by the
Borrower, any Guarantor or any other Person against the Administrative Agent or
any Lender or the Affiliates, directors, officers, employees, attorneys or
agents of any of them for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any theory of
liability arising out of or related to the transactions contemplated by this
Agreement or the other Loan Documents, or any act, omission or event occurring
in connection therewith; and the Borrower and each Guarantor hereby waive,
release and agree not to sue and shall cause each of its respective Subsidiaries
to waive, release or agree not to sue (if required), upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
SECTION 14.10. INDEPENDENCE OF COVENANTS. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or Event of Default if such action
is taken or condition exists.
SECTION 14.11. CURRENCY INDEMNITY. The Borrower acknowledges and
agrees that this is a credit transaction where specification of dollars is of
the essence and dollars shall be the currency of account and payment in all
events. If, pursuant to a judgment or for any other reason, payment shall be
made in another currency and such payment, after prompt conversion to dollars
and transfer to New York City in accordance with normal banking procedures,
falls short of the sum due the Lenders in dollars, the Borrower shall pay the
Lender such shortfall and the Lenders shall have a separate cause of action for
such amount.
SECTION 14.12. WAIVER OF IMMUNITY. To the extent that the Borrower
or any Guarantor has or hereafter may acquire any immunity from:
(a) the jurisdiction of any court of (i) any jurisdiction in
which the Borrower or any Guarantor owns or leases property or assets or
(ii) the United States, the State of New York or any political
subdivision thereof; or
72
<PAGE> 78
(b) from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property and assets, this
Agreement, any Loan Document or actions to enforce judgments in respect
of any thereof,
it hereby irrevocably waives such immunity in respect of its obligations under
the above-referenced document.
SECTION 14.13. FREEDOM OF CHOICE. The submission to the
jurisdiction of the courts referred to in this Article IV shall not (and shall
not be construed so as to) limit the right of any Lender to take proceedings
against the Borrower or any Guarantor in the courts of any country in which the
Borrower or such Guarantor has assets or in any other court of competent
jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
SECTION 14.14. SUCCESSORS AND ASSIGNS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants and
agreements of the Borrower and each Guarantor in this Agreement shall bind their
respective successors and assigns. Neither the Borrower nor any Guarantor may
assign or transfer any of its rights or obligations hereunder (by operation of
law or otherwise) without the prior written consent of the Majority Lenders.
SECTION 14.15. MERGER. This Agreement constitutes the entire
contract among the parties relating to the subject matter hereof and supersedes
any and all previous agreements among the parties relating to the subject matter
hereof, except for those provisions in the Fee Letter and the Engagement Letter
that are in addition to the provisions contained herein.
SECTION 14.16. SEVERABILITY CLAUSE. In case any provision in this
Agreement or any Bridge Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and such
provision shall be ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
SECTION 14.17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY. All representations, warranties and agreements contained in or
incorporated into this Agreement, or contained in Officers' Certificates
submitted pursuant hereto, shall remain operative and in full force and effect
until all Obligations under all of the Loan Documents have been repaid in full,
regardless of any investigation made by or on behalf of the Lenders or any
controlling Person of the Lenders, or by or on behalf of the Borrower or any
controlling Person of the Borrower, and shall survive delivery of the Bridge
Notes.
[signature pages follow]
73
<PAGE> 79
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WINDMERE-DURABLE HOLDINGS, INC.
By:
-------------------------------------
Name: Harry D. Schulman
Title: Chief Financial Officer
<PAGE> 80
GUARANTORS:
HOUSEHOLD PRODUCT, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
HP DELAWARE, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
HP AMERICAS, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
HPG LLC
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
HP INTELLECTUAL CORP.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
WINDMERE HOLDINGS CORPORATION
By:
-------------------------------------
Name: Burton A. Honig
Title: President
<PAGE> 81
WINDMERE HOLDINGS CORPORATION II
By:
-------------------------------------
Name: Burton A. Honig
Title: President
WINDMERE INNOVATIVE PET PRODUCTS, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
EDI MASTERS, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
WINDMERE CORPORATION
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President Finance
BAY BOOKS AND TAPES, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President Finance
JERDON PRODUCTS, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
FORTUNE PRODUCTS, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: President
CONSUMER PRODUCT AMERICAS, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Treasurer
WINDMERE FAN PRODUCTS, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: Vice President
WD DELAWARE, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: President
WD DELAWARE II, INC.
By:
-------------------------------------
Name: Burton A. Honig
Title: President
<PAGE> 82
NATIONSBRIDGE, L.L.C. ,
AS ADMINISTRATIVE AGENT
By:
------------------------
Name:
Title:
LENDERS:
Commitment Amount:
$ [Insert name of Lender]
------------------------
By: ,
------------------------
the Managing Director
By: ,
-----------------------
the General Partner
By:
Name:
Title:
Wire Transfer Instructions
Name of Bank: [Insert name of bank]
Address:
----------------------
ABA#:
----------------------
For the account of
----------------------
Account No.:
----------------------
FOR FURTHER CREDIT TO [INSERT NAME OF LENDER].
Reference:
Attention:
----------------------
Telephone:
----------------------
<PAGE> 83
Exhibit A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bridge Loan Agreement, dated as of
_______, 1998 (as amended, supplemented or otherwise modified from time to time,
the "BRIDGE LOAN AGREEMENT"), by and among Windmere-Durable Holdings, Inc., a
Florida corporation, (the "BORROWER"), the Guarantors named on the signature
pages thereto as guarantors (each a "GUARANTOR" and, collectively, the
"GUARANTORS"), NationsBanc Montgomery Securities LLC, as Arranger (the
"ARRANGER"), NationsBridge, L.L.C., as Administrative Agent (in such capacity,
the "ADMINISTRATIVE AGENT") and the lenders named on the signature pages thereto
(the "LENDERS"). Unless otherwise defined herein, terms defined in the Bridge
Loan Agreement and used herein shall have the meanings given to them in the
Bridge Loan Agreement.
The Assignor identified on Schedule I hereto (the "ASSIGNOR") and
the Assignee identified on Schedule I hereto (the "ASSIGNEE") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the percentage interest described in
Schedule 1 hereto (the "ASSIGNED INTEREST") in and to the Assignor's rights and
obligations under the Bridge Loan Agreement (the "ASSIGNED FACILITIES"), in a
principal amount for the Assigned Facilities as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Bridge Loan Agreement or with
respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Bridge Loan Agreement, any other Loan Document or
any other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim:
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, any of its Subsidiaries or
any other obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Bridge Loan Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Bridge Notes
held by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Bridge
Notes for a new Bridge Note or Bridge Notes payable to the Assignee and (ii) if
the Assignor has retained any interest in the Assigned Facility, requests that
the Administrative Agent exchange the attached Bridge Notes for a new Bridge
Note or Bridge Notes payable to the Assignor, in each case in amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which are effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Bridge Loan Agreement, and all schedules and exhibits
thereto together with copies of the financial information delivered pursuant to
subsection 4.4 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Administrative Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own
<PAGE> 84
credit decisions in taking or not taking action under the Bridge Loan Agreement,
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; (d) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Bridge Loan Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto as are delegated to
the Administrative Agent by' the terms thereof, together with such powers as are
incidental thereto; (e) agrees that it will be bound by the provisions of the
Bridge Loan Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Bridge Loan Agreement are required to be
performed by it as a Lender; and (f) agrees that it shall have no recourse
against the Assignor with respect to any matters relating to the Bridge Loan
Agreement, the other Loan Documents or any others instrument or documents
furnished pursuant hereto or thereto.
4. The Assignor hereby assigns to Assignee all of its rights
and obligations under the Fee Letter with respect to the Assigned Interest.
5. The effective date of this Assignment and Acceptance shall
be the Effective Date of Assignment described in Schedule I hereto (the
"EFFECTIVE DATE"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for acceptance by it and recording
by the Administrative Agent pursuant to Section 6.3 of the Bridge Loan
Agreement, effective as of the Effective Date (which shall not, unless otherwise
agreed to by the Administrative Agent, be earlier than five Business Days after
the date of such acceptance and recording by the Administrative Agent).
6. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. From and after the Effective Date, (a) the Assignee shall
be a party to the Bridge Loan Agreement and the Fee Letter and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Bridge Loan Agreement and the Fee Letter.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule I hereto.
<PAGE> 86
Schedule 1
to Assignment and Acceptance
Name of Assignor:
----------------------------
Name of Assignee:
----------------------------
Effective Date of Assignment:
----------------
<TABLE>
<CAPTION>
Principal Commitment
Credit Facility Assigned Amount Assigned Commitment Percentage Assigned1
- ------------------------ ------------------- ------------------------------
<S> <C> <C>
$ %
---------------- -------- --------
</TABLE>
- ---------------------------
(1) Calculate the Commitment Percentage that is assigned to at least 9
decimal places and show as a percentage of the aggregate commitments of
all Lenders.
<PAGE> 87
[Name of Assignee] [Name of Assignor]
By: By:
------------------------------------ ----------------------------------
Title: Title:
Accepted:
NATIONSBRIDGE, L.L.C.,
as Administrative Agent
By:
------------------------------------
Title:
<PAGE> 88
Exhibit B
THE SECURITY EVIDENCED OR CONSTITUTED HEREBY HAS BEEN ACQUIRED FOR INVESTMENT
AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
SECURITY MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT (OR AN EXEMPTION THEREFROM) HAVE BEEN
COMPLIED WITH.
No. __ New York, New York
$ , 1998
--------------- -----------------
BRIDGE NOTE
FOR VALUE RECEIVED, the undersigned, Windmere-Durable Holdings,
Inc., a Florida corporation (the "COMPANY"), promises to pay to the order of
_______________________________, or its registered assigns (the "HOLDER"), the
principal sum of the aggregate of (i) __________________ Dollars ($_______) and
(ii) the aggregate amount by which the principal amount of this Bridge Note is
increased pursuant to Section 2.4(e) of the Bridge Loan Agreement referred to
below, and to pay interest from the date hereof on the unpaid principal amount
hereof from time to time outstanding, at the rates per annum and on the dates
specified in that certain Bridge Loan Agreement, dated as of _______, 1998,
among the Company, the guarantors names on the signature pages thereto as
guarantors (each a "GUARANTOR" and, collectively, the "GUARANTORS"), NationsBanc
Montgomery Securities LLC, as Arranger (the "ARRANGER"), NationsBridge, L.L.C.,
as Administrative Agent (in such capacity, the "ADMINISTRATIVE AGENT") and the
lenders named on the signature pages thereto (the "LENDERS"). (as amended,
restated and/or otherwise modified from time to time, the "BRIDGE LOAN
AGREEMENT"). Terms used herein and not otherwise defined have the meanings
assigned to them in the Bridge Loan Agreement. In the event the principal amount
of this Bridge Note is increased in accordance with Section 2.4(e) of the Bridge
Loan Agreement, the Holder may exchange this Bridge Note for a Bridge Note
definitively stating the aggregate principal amount hereof pursuant to Section
6.2 of the Bridge Loan Agreement.
The unpaid principal balance of this Bridge Note, together with
all accrued and unpaid interest thereon, shall become due and payable on the
Maturity Date unless the Conversion Date occurs, in which case the unpaid
principal balance hereof, together with all accrued and unpaid interest thereon,
shall become due and payable on the date that is nine years after the Maturity
Date.
The Company promises to pay interest on demand, to the extent
permitted by law, on any overdue principal and interest from their due dates at
the rate per annum as specified in Section 2.4 of the Bridge Loan Agreement.
All payments of the principal of and premium and interest on this
Bridge Note shall be made in money of the United States of America that at the
time of payment is legal tender for the payment of public and private debts, by
transfer of immediately available funds into a bank account designated by the
Holder in writing to the Company; provided, however, that (i) to the extent
interest exceeds a rate equal to 14% per annum, in the case of the Bridge Loans,
or 15% per annum, in the case of the Term Loans, the Company shall have the
option to pay all or a portion of the interest due and payable in excess of the
amount of interest that would have been payable on such date at an interest rate
of 14% per annum, in the case of the Bridge Loans, or 15% per annum, in the case
of the Term Loans, by capitalizing such excess interest and adding it to the
aggregate principal amount of outstanding Bridge Loans or Term Loans, as the
<PAGE> 89
case may be, and (ii) notwithstanding anything contained in the Bridge Loan
Agreement or any of the Bridge Notes to the contrary, in no event shall the
interest rate hereon for any period of computation exceed a rate per annum equal
to the lesser of (A)(1) in the case of the Bridge Loans, 16%, or (2) in the case
of Term Loans, 17%, and (B) the maximum interest rate permitted by applicable
law. The principal amount of this Bridge Note is subject to increase in
accordance with Section 2.4(a) of the Bridge Loan Agreement.
The Company agrees to pay, upon demand, all reasonable
out-of-pocket expenses (including, without limitation, the reasonable fees and
disbursements of legal counsel to the Holder) associated with the waiver,
enforcement or modification of the Bridge Loan Agreement or this Bridge Note.
This Bridge Note is entitled to the benefits of a joint and
several unconditional and irrevocable guarantee (the "NOTE GUARANTEE") of, inter
alia, the due and punctual payment of the principal of, premium (if any) and
interest on this Bridge Note as set forth the Bridge Loan Agreement. Each of the
Guarantors has acknowledged its liability under the Note Guarantee by signing
this Bridge Note.
The Company hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever. The nonexercise by the Holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Bridge Note is one of the Bridge Notes referred to in the
Bridge Loan Agreement, which Agreement, among other things, contains provisions
for the acceleration of the maturity hereof upon the happening of certain
events, for optional and mandatory prepayment in full of the principal hereof
prior to maturity and for the amendment or waiver of certain provisions of the
Bridge Loan Agreement, all upon the terms and conditions therein specified. In
the event of any conflict between the provisions of this Bridge Note and the
Bridge Loan Agreement, the provisions of the Bridge Loan Agreement shall govern.
THIS BRIDGE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
2
<PAGE> 90
IN WITNESS WHEREOF, the Company has caused this Bridge Note to be
signed in its corporate name by its duly authorized officer and to be dated as
of the day and year first above written.
WINDMERE-DURABLE HOLDINGS, INC.
By:
-------------------------------
Name:
Title:
ACKNOWLEDGMENT OF NOTE GUARANTEE:
[INSERT NAME AND SIGNATURE BLOCK FOR
EACH GUARANTOR]
By:
----------------------------------------
Name:
Title:
3
<PAGE> 91
[Back of Bridge Note]
OPTION OF HOLDER TO ELECT PURCHASE UPON CHANGE OF CONTROL
If you want to elect to have this Bridge Note purchased by the
Company pursuant to Section 4.20 of the Bridge Loan Agreement check the box
below.
[ ] Please purchase the entire amount of this Bridge Note
If you want to elect to have only part of this Bridge Note
purchased by the Company pursuant to Section 4.17 of the Bridge Loan Agreement,
state the amount you elect to have purchased:
$ .
-------------
Date:
-------------------
Your Signature:
------------------------------------------
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No.
-------------------
Signature Guarantee:
- ----------------------------
