$45,000,000
CREDIT AGREEMENT
Dated as of
November 13, 1996
Among
GENERAL HOUSEWARES CORP.,
THE BANKS SIGNATORY HERETO,
AND
HARRIS TRUST AND SAVINGS BANK
as Agent
TABLE OF CONTENTS
SECTION PAGE
SECTION 1. THE CREDIT FACILITY
Section 1.1. The Revolving Credit
SECTION 2. GENERAL PROVISIONS APPLICABLE TO ALL LOANS
Section 2.1. Applicable Interest Rates
Section 2.2. Minimum Borrowing Amounts
Section 2.3. Borrowing Procedures
Section 2.4. Interest Periods
Section 2.5. Maturity of Loans
Section 2.6. Prepayments
Section 2.7. Default Rate
Section 2.8. The Notes
Section 2.9. Commitment Terminations
Section 2.10. Funding Indemnity
Section 2.11. Margin Adjustments
SECTION 3. FEES
Section 3.1. Commitment Fee
Section 3.2. Closing Fees
Section 3.3. Agent's Fees
Section 3.4. Letter of Credit Fees
Section 3.5. Transaction Charges
SECTION 4. PLACE AND APPLICATION OF PAYMENTS; EXTENSION OF
TERMINATION DATE
Section 4.1. Place and Application of Payments
SECTION 5. DEFINITIONS; INTERPRETATION
Section 5.1. Definitions
Section 5.2. Interpretation
SECTION 6. REPRESENTATIONS AND WARRANTIES
Section 6.1. Organization and Qualification
Section 6.2. Subsidiaries
Section 6.3. Corporate Authority and Validity of Obligations
Section 6.4. Not an Investment Company
Section 6.5. Margin Stock
Section 6.6. Financial Reports
Section 6.7. No Material Adverse Change
Section 6.8. Litigation
Section 6.9. Tax Returns
Section 6.10. Approvals
Section 6.11. Liens
Section 6.12. ERISA
Section 6.13. Material Agreements
Section 6.14. Compliance with Environmental Laws
SECTION 7. CONDITIONS PRECEDENT
Section 7.1. Initial Borrowing
Section 7.2. All Loans and Letters of Credit
Section 7.3. Additional Conditions to Loans (other than Refunding
Borrowings), Letters of Credit
Section 7.4. Letters of Credit
Section 7.5. Termination of The 1994 Credit Agreement
SECTION 8. COVENANTS
Section 8.1. Corporate Existence
Section 8.2. Maintenance
Section 8.3. Taxes
Section 8.4. Insurance
Section 8.5. Financial Reports and Other Information
Section 8.6. Consolidated Net Worth
Section 8.7. Leverage Ratio
Section 8.8. Fixed Charge Coverage Ratio
Section 8.9. Minimum Current Ratio
Section 8.10. Distributions
Section 8.11. Indebtedness for Borrowed Money
Section 8.12. Sale and Leaseback
Section 8.13. Investments
Section 8.14. Capital Expenditures
Section 8.15. Mergers, Consolidations, Leases, and Sales
Section 8.16. ERISA
Section 8.17. Conduct of Business
Section 8.18. Liens
Section 8.19. Use of Proceeds; Margin Stock
Section 8.20. Compliance with Laws
SECTION 9. EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default
Section 9.2. Non-Bankruptcy Defaults
Section 9.3. Bankruptcy Defaults
Section 9.4. Letters of Credit
Section 9.5. Expenses
SECTION 10. CHANGE IN CIRCUMSTANCES
Section 10.1. Change of Law
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of
LIBOR
Section 10.3. Increased Cost and Reduced Return
Section 10.4. Lending Offices
Section 10.5. Discretion of Bank as to Manner of Funding
SECTION 11. THE AGENT
Section 11.1. Appointment and Authorization
Section 11.2. Agent and Affiliates
Section 11.3. Action by Agent
Section 11.4. Consultation with Experts
Section 11.5. Liability of Agent
Section 11.6. Indemnification
Section 11.7. Credit Decision
Section 11.8. Resignation of the Agent
Section 11.9. Payments
SECTION 12. MISCELLANEOUS
Section 12.1. Withholding Taxes
Section 12.2. No Waiver of Rights
Section 12.3. Non-Business Day
Section 12.4. Documentary Taxes
Section 12.5. Survival of Representations
Section 12.6. Survival of Indemnities
Section 12.7. Sharing of Set-Off
Section 12.8. Notices
Section 12.9. Counterparts
Section 12.10. Successors and Assigns
Section 12.11. Participants and Note Assignees
Section 12.12. Assignment of Commitments by Banks
Section 12.13. Amendments
Section 12.14. Non-Reliance on Margin Stock
Section 12.15. Legal Fees and Indemnification
Section 12.18. Governing Law
Section 12.19. Headings
Section 12.20. Entire Agreement
Exhibit A Revolving Credit Note
Exhibit B Subsidiaries of General Housewares Corp.
Exhibit C Opinion of Counsel
Exhibit D Compliance Certificate
Exhibit E Funded Debt of Subsidiaries and Existing Short Term
Indebtedness of
Borrower
Exhibit F Liens
Exhibit G Guaranties
Exhibit H Description of First Colony and American Mayflower Debt
CREDIT AGREEMENT
To each of the Banks signatory hereto
Ladies and Gentlemen:
The undersigned, General Housewares Corp., a Delaware corporation (the
"Borrower"), applies to you for your several commitments, subject to all the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to make a revolving credit facility (the
"Revolving Credit") available in the form of loans or letters of credit, all
as more fully hereinafter set forth. Each of you is hereinafter referred to
as a "Bank", all of you are hereinafter referred to collectively as the
"Banks" and Harris Trust and Savings Bank in its capacity as agent hereunder
is hereinafter referred to as the "Agent".
SECTION 1. THE CREDIT FACILITY;.
Section 1.1. The Revolving Credit;. (a) General. Subject to the terms and
conditions hereof, the Banks agree to extend the Revolving Credit to the
Borrower which may be availed of by the Borrower in its discretion from time
to time to and including the Termination Date. The Revolving Credit, subject
to all of the terms and conditions hereof, may be utilized by the Borrower in
the form of loans ("Loans"), letters of credit (such letters of credit,
together with all letters of credit issued and outstanding under The 1994
Credit Agreement which shall be deemed issued and outstanding hereunder, the
"Letters of Credit"), all as more fully hereinafter set forth. The maximum
amount of the Revolving Credit which each Bank agrees to extend to the
Borrower (which in the case of Eurocurrency Loans denominated in an
Alternative Currency means the Original Dollar Amount thereof) shall be as set
forth opposite its name under the heading "Revolving Credit Commitment" on the
applicable signature page hereof (its "Revolving Credit Commitment" and
cumulatively for all the Banks the "Revolving Credit Commitments") (subject to
any reductions thereof pursuant to the terms hereof). The obligations of the
Banks hereunder are several and not joint and no Bank shall under any
circumstances be obligated to extend credit hereunder in excess of its
Revolving Credit Loan Commitment.
(b) Loans. Each Borrowing of Loans shall be made ratably from the
Banks in proportion to their respective Commitments. The Borrower may elect
that each Borrowing of Loans be made available by means of Domestic Rate Loans
denominated in U.S. Dollars or Eurocurrency Loans denominated either in U.S.
Dollars or an Alternative Currency.
(c) Letters of Credit. (i) General Terms. Subject to all of the
terms and conditions hereof, the Revolving Credit may be availed of in the
form of Letters of Credit, provided that the maximum Letter of Credit
Utilization under the Revolving Credit (which in the case of Letters of Credit
payable in an Alternative Currency means the U.S. Dollar Equivalent thereof as
determined pursuant to Section 1.1(c)(vi) hereof) shall at no time exceed
$10,000,000 (the "Letter of Credit Subfacility Amount"). The Letters of
Credit shall be issued by the Agent for the pro rata account of the Banks,
and, accordingly, each Letter of Credit shall be deemed to utilize the
Commitments of all Banks pro rata in accord with the respective amounts
thereof.
(ii) Term. Each Letter of Credit issued hereunder shall expire not
later than the earlier of (i) one year from the date issued (or be cancelable
not later than one year from the date issued) or (ii) the Termination Date.
(iii) General Characteristics. Each Letter of Credit issued
hereunder shall be payable in U.S. dollars or an Alternative Currency, shall
conform to the general requirements of the Agent for the issuance of
commercial or standby letters of credit (as appropriate) as to form and
substance and shall be a letter of credit which the Agent may lawfully issue.
(iv) Applications. At the time the Borrower requests each Letter
of Credit to be issued (or prior to the first issuance of a Letter of Credit,
in the case of a continuing application), it shall execute and deliver to the
Agent an application for such Letter of Credit in the form customarily
prescribed by the Agent for a Letter of Credit of the type requested (the
"Applications"). In the event that the Agent is not promptly reimbursed for
the amount of any draft drawn under a Letter of Credit issued hereunder, the
obligation of the Borrower to reimburse it for the amount of such draft so
paid by the Agent shall bear interest (which the Borrower hereby promises to
pay) from and after the date such draft is paid until payment in full thereof
(a) in the case of a draft payable in U.S. Dollars, at the rate per annum
determined by adding 2% per annum to the Domestic Rate as from time to time in
effect and (b) in the case of a draft payable in an Alternative Currency, at
the rate per annum determined by adding 2% to the sum of the Overnight
Eurocurrency Rate as from time to time in effect and the Applicable Margin for
Eurocurrency Loans under the Revolving Credit. Subject to the provisions
hereof, the Borrower may request a Loan in payment of any such reimbursement
obligation, such Loans to be evidenced by the Notes and, further, in the event
the conditions precedent to making any such Loan are not satisfied, the
Borrower hereby irrevocably authorizes the Banks to make a Domestic Rate Loan
for payment of any such reimbursement obligations, any such Loan may be made
without regard to the provisions of Section 5 hereof and the Borrower
acknowledges and agrees, however, that the Banks shall be under no obligation
to make any such Loan and the Banks shall incur no liability to the Borrower
or any other Person for failing or refusing to make a Loan under this Section
1.1(c). This Agreement supersedes any terms of the Applications which are
irreconcilably inconsistent with the terms hereof. Anything containe in the
Applications to the contrary notwithstanding the Borrower shall pay fees in
connection with Letters of Credit as set forth in Sections 3.4 and 3.5 hereof.
(v) Change in Law. If the Agent or any Bank shall determine in
good faith that any change in any applicable law, regulation or guideline
(including, without limitation, Regulation D of the Board of Governors of the
Federal Reserve System) or any new law, regulation or guideline, or any
interpretation of any of the foregoing by any governmental authority charged
with the administration thereof or any central bank or other fiscal, monetary
or other authority having jurisdiction over such Bank (whether or not having
the force of law) shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirements against the Letters of Credit, or the Agent's
or such Bank's or the Borrower's liability with respect thereto; or
(ii) impose on the Agent or such Bank any penalty with respect to
the foregoing or any other condition regarding this Agreement, the
Applications or the Letters of Credit;
and the Agent or such Bank shall determine in good faith that the result of
any of the foregoing is to increase the cost (whether by incurring a cost or
adding to a cost) to the Agent or such Bank of issuing, maintaining or
participating in the Letters of Credit hereunder (without benefit of, or
credit for, any prorations, exemptions, credits or other offsets available
under any such laws, regulations, guidelines or interpretations thereof), then
the Agent or such Bank shall use its best efforts to give the Borrower prompt
notice thereof and the Borrower shall pay on demand to the Agent or such Bank
from time to time as specified by the Agent or such Bank such additional
amounts as the Agent or such Bank shall reasonably determine are sufficient to
compensate and indemnify it (computed commencing on the effective date of any
event mentioned herein) for such increased cost. If the Agent or a Bank makes
such a claim for compensation, it shall provide to the Borrower a certificate
setting forth such increased costs as a result of any event mentioned herein
and such certificate shall be prima facie evidence as to the amount thereof.
(vi) Foreign Currency Equivalency. For all purposes of
determining the amount of Letters of Credit hereunder, Letters of Credit
payable in an Alternative Currency shall be converted into their U.S. Dollar
Equivalent as of the time issued and shall be reconverted into their U.S.
Dollar Equivalent as of the first day of each calendar quarter (and as of any
other time the Required Banks deem appropriate), with each such
redetermination to apply until the next determination.
(d) Participation in Letters of Credit. Each Bank shall
participate on a pro rata basis in the Letters of Credit issued by the Agent,
which participation shall automatically arise upon the issuance of each Letter
of Credit. Each Bank unconditionally agrees that in the event the Agent is
not immediately reimbursed by the Borrower for the amount paid by it on any
draft presented under a Letter of Credit, then in that event such Bank shall
pay to the Agent that portion of the amount of each draft so paid by the Agent
which is equal to the same percentage of the amount so paid as the percentage
which its Commitment bears to the aggregate of the Commitments and in return
such Bank shall automatically receive an equivalent percentage participation
in the rights of the Agent to obtain reimbursement from the Borrower for the
amount of such draft, together with interest thereon as provided for herein.
In the event that any Bank fails to honor its obligation to reimburse the
Agent for its pro rata share of the amount of any such draft then in that
event (i) each other Bank shall pay to the Agent its pro rata share of the
payment due the Agent from the defaulting Bank, (ii) the defaulting Bank shall
have no right to participate in any recoveries from the Borrower in respect of
such draft and (iii) all amounts to which the defaulting Bank would otherwise
be entitled under the terms of this Agreement shall first be applied to
reimbursing the Banks for their respective pro rata shares of the defaulting
Bank's portion of the draft together with interest thereon at the rate
provided for in Section 1.1(c)(iv) hereof. Upon reimbursement to other Banks
pursuant to clause (iii) above of the amounts advanced by them to the Agent in
respect of the defaulting Bank's share of the draft, together with interest
thereon, the defaulting Bank shall thereupon be entitled to its participation
in the Agent's rights of recovery against the Borrower in respect of the draft
paid by the Agent.
SECTION 2. GENERAL PROVISIONS APPLICABLE TO ALL LOANS;.
Section 2.1. Applicable Interest Rates;. (a) Domestic Rate Loans. Each
Domestic Rate Loan made by a Bank (including Loans made pursuant to Section
1.1(c) hereof) shall bear interest (computed on the basis of a year of 360
days and actual days elapsed) on the unpaid principal amount thereof from the
date such Loan is made until maturity (whether by acceleration or otherwise)
at a rate per annum equal to the Domestic Rate from time to time in effect,
payable on the last day of the applicable Interest Period and at maturity
(whether by acceleration or otherwise).
"Domestic Rate" means for any day the greater of:
(i) the rate of interest announced by the Agent from time to time
as its prime commercial rate, or equivalent, with any change in the Domestic
Rate resulting from a change in said prime commercial rate to be effective as
of the date of the relevant change in said prime commercial rate; and
(ii) the sum of (x) the rate for that day set forth opposite the
caption "Federal Fund (Effective)" in the daily statistical release designated
as "Composite 3:30 P.M. Quotations for U.S. Government Securities", or any
successor publication, published by the Federal Reserve Bank of New York or,
if such publication shall be suspended or terminated, the arithmetic average
of the rates quoted to the Agent as the prevailing rates per annum (rounded
upward, if necessary, to the next higher 1/100 of 1%) bid at approximately
10:00 A.M. (Chicago time) (or as soon thereafter as is practicable) on such
day by two or more New York or Chicago Federal funds dealers of recognized
standing selected by the Agent for the purchase at face value of Federal funds
in the secondary market in an amount comparable to the principal amount owed
to the Banks for which such rate is being determined, plus (y) 1/2 of 1%
(0.50%).
(b) Eurocurrency Loans. (i) General. Each Eurocurrency Loan
made by a Bank (including Loans made pursuant to Section 1.1(c) hereof) shall
bear interest (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Loan is
made until maturity (whether by acceleration or otherwise) at a rate per annum
equal to the sum of the applicable Eurocurrency Margin plus the Adjusted
LIBOR, payable on the last day of the applicable Interest Period and at
maturity (whether by acceleration or otherwise), and, if the applicable
Interest Period is longer than three months, on each day occurring every three
months after the date such Loan is made.
"Adjusted LIBOR" means, for any Borrowing of Eurocurrency Loans, a rate per
annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR
100% - Eurocurrency Reserve Percentage
"LIBOR" means, with respect to an Interest Period for a Borrowing of
Eurocurrency Loans, (a) the LIBOR Index Rate for such Interest Period, if such
rate is available, and (b) if the LIBOR Index Rate cannot be determined, the
arithmetic average of the rate of interest per annum, as determined by the
Agent (rounded upwards, if necessary, to the nearest whole multiple of 1/16 of
1%), at which deposits of U.S. Dollars or the relevant Alternative Currency in
immediately available and freely transferable funds are offered to the Agent
at 11:00 a.m. (London, England time) two Business Days prior to the
commencement of such Interest Period by major banks in the interbank market
for a period equal to such Interest Period and in an amount approximately
equal to the principal amount of the Eurocurrency Loan scheduled to be made by
the Agent as part of such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars or the relevant Alternative
Currency for a period equal to such Interest Period, which appears on the
Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day two
Business Days before the commencement of such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that service
or such other service as may be nominated by the British Bankers' Association
as the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for deposits in U.S. Dollars or the
relevant Alternative Currency).
"Eurocurrency Reserve Percentage" means, for any Borrowing of Eurocurrency
Loans, the daily average for the applicable Interest Period of the maximum
rate at which reserves (including, without limitation, any supplemental,
marginal and emergency reserves) are imposed during such Interest Period by
the Board of Governors of the Federal Reserve System (or any successor) under
Regulation D on "eurocurrency liabilities", as defined in such Board's
Regulation D, (or in respect of any other category of liabilities that
includes deposits by reference to which the interest rate on
Eurocurrency Loans is determined or any category of extension of credit or
other assets that include loans by non-United States offices of any Bank to
United States residents) subject to any amendments of such reserve requirement
by such Board or its successor, taking into account any transitional
adjustments thereto. For purposes of this definition, the Eurocurrency Loans
shall be deemed to be "eurocurrency liabilities" as defined in Regulation D
without benefit or credit for any prorations, exemptions or offsets under
Regulation D.
"Eurocurrency Margin" means 1.00% subject to adjustment as provided in Section
2.11 hereof.
(ii) Borrowings of Alternative Currencies. On the date the
Borrower requests a Borrowing of Eurocurrency Loans from the Banks in an
Alternative Currency, as provided in Section 2.3(a) below, the Agent shall
promptly notify each Bank of the currency in which such Borrowing is
requested. If a Bank determines that such Alternative Currency is not
available to it in sufficient amount and for a sufficient term to enable it to
make the Loan requested of it as part of such Eurocurrency Borrowing and so
notifies the Agent no later than 2:00 p.m. (Chicago time) on the same day it
receives notice from the Agent of such requested Loan, the Agent shall
promptly so notify the Borrower. If the Borrower nevertheless desires such
Borrowing, it must notify the Agent by no later than 3:00 p.m. (Chicago time)
on such day. If the Agent does not receive such notice from the Borrower by
3:00 p.m. (Chicago time), the Borrower shall automatically be deemed to have
revoked its request of the Eurocurrency Borrowing and the Agent will promptly
notify the Banks of such revocation. If the Borrower does give such notice by
3:00 p.m. (Chicago time), each Bank that did not notify the Agent by 2:00 p.m.
(Chicago time) that the requested Alternative Currency is unavailable to it to
fund the requested Loan shall, subject to Section 7 hereof, make its Loan in
the Alternative Currency requested in accordance with Section 2.3(d) hereof.
Each Bank that did so notify the Agent by 2:00 p.m. (Chicago time) that it
would not be able to make the Loan requested from it shall, subject to Section
7 hereof, make a Eurocurrency Loan denominated in U.S. Dollars in the amount
of the Original Dollar Amount of, and with the same Interest Period as, the
Eurocurrency Loan such Bank was originally requested to make. Such
Eurocurrency Loan denominated in U.S. Dollars shall be made by the affected
Bank on the same day as the other Banks make their Eurocurrency Loans
denominated in the applicable Alternative Currency as part of the relevant
Borrowing f Eurocurrency Loans, but shall bear interest with reference to the
Adjusted LIBOR applicable to U.S. Dollars rather than the relevant Alternative
Currency for the applicable Interest Period and shall be made available in
accordance with the procedures for disbursing U.S. Dollar Loans under Section
2.3(d) hereof. Any Loan made in an Alternative Currency shall be advanced in
such currency, and all payments of principal and interest thereon shall be
made in such Alternative Currency.
(c) Rate Determinations. The Agent shall determine each interest
rate applicable to the Loans and reimbursement obligations hereunder, and its
determination thereof shall be conclusive and binding except in the case of
manifest error.
Section 2.2. Minimum Borrowing Amounts;. Each Borrowing of
Domestic Rate Loans shall be in an amount not less than $1,000,000, or any
larger amount that is an integral multiple of $500,000. Each Borrowing of
Eurocurrency Loans denominated in U.S. Dollars shall be in an amount not less
than $3,000,000, or any larger amount that is an integral multiple of
$1,000,000. Each Borrowing of Eurocurrency Loans denominated in an
Alternative Currency shall be in an amount for which the U.S. Dollar
Equivalent is not less than $3,000,000 or any larger amount that is an
integral multiple of the U.S. Dollar equivalent of $1,000,000 or, solely in
the case of Refunding Borrowing for a Borrowing in an Alternative Currency, if
less, the same amount of the Alternative Currency as the maturing Borrowing.
Section 2.3. Borrowing Procedures;. (a) Notice to the Agent.
The Borrower shall give telephonic or telecopy notice to the Agent (which
notice shall be irrevocable once given and, if by telephone, shall be promptly
confirmed in writing) by no later than 10:00 A.M. (Chicago time) (i) on the
date at least three (3) Business Days prior to the date of each requested
Borrowing of Eurocurrency Loans and (ii) on the date of any requested
Borrowing of Domestic Rate Loans. Each such notice shall specify the date of
the requested Borrowing (which shall be a Business Day), the amount of the
requested Borrowing, the type of Loans to comprise such Borrowing and, if such
Borrowing is to be comprised of Eurocurrency Loans, the Interest Period
applicable thereto and if such Borrowing is of a Eurocurrency Loan denominated
in an Alternative Currency, the Alternative Currency in which such Loan is to
be denominated. The Borrower agrees that the Agent may rely on any such
telephonic or telecopy notice given by any person it in good faith believes is
an Authorized Representative without the necessity of independent
investigation and in the event any notice by such means conflicts with the
written confirmation, such notice shall govern if the Agent has acted in
reliance thereon.
(b) Notice to the Banks. The Agent shall give prompt telephonic,
telex or telecopy notice to each of the Banks of any borrowing request
received pursuant to Section 2.3(a) above and, if such notice requests the
Banks to make Eurocurrency Loans, the Agent shall give notice to the Borrower
and each of the Banks by like means of the interest rate applicable thereto
(but, if such notice is given by telephone, the Agent shall confirm such rate
in writing) promptly after the Agent has made such determination.
(c) Borrower's Failure to Notify. In the event Borrower fails to
give notice pursuant to Section 2.3(a) above of the reborrowing of the
principal amount of any maturing Borrowing of Loans denominated in U.S.
Dollars and has not notified the Agent by 10:00 A.M. (Chicago time) on the day
such Borrowing matures that it intends to repay such Borrowing, the Borrower
shall be deemed to have requested a Borrowing of Domestic Rate Loans on such
day in the amount of the maturing Borrowing of Loans, subject to Section 7.2
hereof. In the event the Borrower fails to give notice pursuant to Section
2.3(a) above of the reborrowing of the principal amount of any maturing
Borrowing of Loans denominated in an Alternative Currency and has not notified
the Agent by 10:00 A.M. (Chicago time) on the day such Borrowing matures that
it intends to repay such Borrowing, the Borrower shall be deemed to have
required a Borrowing of Eurocurrency Loans denominated in the same currency as
the maturing Borrowing on such day in the amount of the maturing Borrowing of
Loans with an Interest Period of one (1) month, subject to Section 7.2 hereof.
(d) Disbursement of Loans. Not later than 11:00 A.M. (Chicago
time) on the date of any Borrowing of Loans denominated in U.S. Dollars other
than Domestic Rate Loans, and not later than 12 Noon (Chicago time) on the
date of any Borrowing of Domestic Rate Loans, each Bank shall make available
its Loan in funds immediately available in Chicago, Illinois at the principal
office of the Agent, except to the extent such Borrowing is either a
reborrowing, in whole or in part, of the principal amount of a maturing
Borrowing of Loans (a "Refunding Borrowing") or a refinancing of a
reimbursement obligation with respect to a letter of credit issued (a
"Refinancing Borrowing"), in which case each Bank shall record the Loan made
by it as a part of such Refunding Borrowing or Refinancing Borrowing, as the
case may be, on its books or records or on a schedule to the appropriate Note,
as provided in Section 2.8 hereof, and shall effect the repayment, in whole or
in part, as appropriate, of its maturing Loan or reimbursement obligation
through the proceeds of such new Loan. Subject to Section 7 hereof, the Agent
shall make the proceeds of each Borrowing available to the Borrower at the
Agent's principal office in Chicago, Illinois. If a Borrowing is to be
denominated in an Alternative Currency, subject to Sections 2.1(b)(ii) and 7
hereof, each Bank shall make available its Loan in the Alternative Currency at
such office as the Agent has previously notified to each Bank, for delivery to
the Borrower at the Agent's direction, in funds then customary for the
settlement of international transactions in such currency and no later than
such local time as is necessary for such funds to be received and transferred
to the Borrower for same day value, except to the extent such Borrowing is a
Refunding Borrowing or a Refinancing Borrowing, in which case each Bank shall
record the Loan made by it as part of such Refunding Borrowing or Refinancing
on its books and records or on a schedule to the appropriate Note as provided
in ection 2.8 hereof, and shall effect the repayment, in whole or in part, as
appropriate, of its maturing Loan or reimbursement obligation through the
proceeds of such new Loan.
Section 2.4. Interest Periods;. As provided in Section 2.3 hereof,
at the time of each request for the Borrowing of Loans hereunder the Borrower
shall select an Interest Period applicable to such Loans from among the
available options. The term "Interest Period" means the period commencing on
the date a Borrowing of Loans is made and ending, (a) in the case of Domestic
Rate Loans, on the last day of the calendar quarter in which such Loan is made
(i.e. the first to occur of March 31, June 30, September 30, and December 31
following the date such Borrowing is made) and (b) in the case of Eurocurrency
Loans, the date, as the Borrower may select, 1, 2, 3 or 6 months thereafter;
provided, however, that:
(a) any Interest Period for a Borrowing of Domestic Rate Loans
commencing less than 90 days before the Termination Date shall end on the
Termination Date;
(b) with respect to any Borrowing of Eurocurrency Loans, the
Borrower may not select an Interest Period that extends beyond the Termination
Date;
(c) whenever the last day of any Interest Period would otherwise
be a day that is not a Business Day, the last day of such Interest Period
shall be extended to the next succeeding Business Day, provided that, in the
case of an Interest Period for a Borrowing of Eurocurrency Loans, if such
extension would cause the last day of such Interest Period to occur in the
following calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day; and
(d) for purposes of determining the Interest Period for a
Borrowing of Eurocurrency Loans, a month means a period starting on one day in
a calendar month and ending on the numerically corresponding day in the next
calendar month; provided, however, that if there is no numerically
corresponding day in the month in which such an Interest Period is to end or
if such an Interest Period begins on the last Business Day of a calendar
month, then such Interest Period shall end on the last Business Day of the
calendar month in which such Interest Period is to end.
Section 2.5. Maturity of Loans;. Each Loan shall mature and become
due and payable by the Borrower on the last day of the Interest Period
applicable thereto.
Section 2.6. Prepayments;. (a) Voluntary. (i) Domestic Loans. The
Borrower shall have the privilege of prepaying without premium or penalty and
in whole or in part (but, if in part, then: (i) in an amount not less than
$1,000,000 and in integral multiples of $500,000 in the case of Domestic Rate
Loans and (ii) in an amount such that the minimum amount required for a
Borrowing pursuant to Section 2.2 hereof remains outstanding) on any Business
Day upon prior notice to the Agent which must be received by the Agent (which
shall advise each Bank thereof promptly thereafter) by no later than 11:00
a.m. on the prepayment date, such prepayment to be made by the payment of the
principal amount to be prepaid.
(ii) Eurocurrency Loans. The Borrower may not prepay any
Eurocurrency Loan before its maturity.
(iii) Reborrowings. Any amount paid or prepaid on the Loans
before the Termination Date may, subject to the terms and conditions of this
Agreement, be borrowed, repaid and borrowed again.
(b) Mandatory. Concurrently with each reduction of the
Commitments (whether voluntarily or required) the Borrower shall prepay the
Notes by the amount, if any, necessary so that the aggregate outstanding
principal balance of the Notes, when taken together with the aggregate
outstanding amounts of Letter of Credit Utilization shall not exceed the
Commitments as so reduced, each such prepayment to be made by the payment of
the principal amount to be prepaid and accrued interest thereon to the date
fixed for prepayment, and in the case of Eurocurrency Loans, any compensation
required by Section 2.10 hereof. Additionally, in the event that outstanding
Letter of Credit Utilization (which in the case of Letters of Credit payable
in an Alternative Currency shall mean the U.S. Dollar Equivalent thereof as
determined pursuant to Section 1.1(c)(vi) hereof) shall at any time exceed the
Letter of Credit Subfacility Amount, the Borrower shall pay the amount of such
excess to the Agent, which each such payment first to be applied to
outstanding reimbursement obligations with respect to Letters of Credit until
payment in full thereof with any remaining balance to be held by the Agent as
collateral security for the obligations owing with respect to the Letters of
Credit.
Section 2.7. Default Rate;. If any payment of principal on any
Loan is not made when due (whether by acceleration or otherwise) or not repaid
pursuant to a Refinancing Borrowing or Refunding Borrowing hereunder, such
Loan shall bear interest (computed on the basis of a year of 360 days and
actual days elapsed) from the date such payment was due until paid in full,
payable on demand, at a rate per annum equal to:
(a) with respect to any Domestic Rate Loan, the sum of two
percent (2%) plus the Domestic Rate from time to time in effect;
(b) with respect to any Eurocurrency Loan denominated in U.S.
Dollars the sum of two percent (2%) plus the rate of interest in effect
thereon at the time of such default until the end of the Interest Period
applicable thereto and, thereafter, at a rate per annum equal to the sum of
two percent (2%) plus the Domestic Rate from time to time in effect; and
(c) with respect to any Eurocurrency Loan denominated in an
Alternative Currency, the sum of two percent (2%) plus the rate of interest in
effect thereon at the time of such default until the end of the Interest
Period applicable thereto and, thereafter, at a rate per annum equal to the
sum of the Applicable Eurocurrency Margin, plus two percent (2%) plus the
Overnight Eurocurrency Rate.
Section 2.8. The Notes;. (a) Each Loan made to the Borrower by a
Bank (including Loans made pursuant to Section 1.1(c)(iv) hereof) shall be
evidenced by a promissory note of the Borrower in the form of Exhibit A hereto
(individually, a "Note" and collectively, the "Notes"). Such Notes shall be
dated the date hereof, payable to the order of each Bank and shall otherwise
be in the form of the relevant Exhibits hereto.
(b) Each Bank shall record on its books or records or on a
schedule to the appropriate Note the amount of each Loan made by it to the
Borrower, the Interest Period thereof, all payments of principal and interest
and the principal balance from time to time outstanding thereon, in respect of
any Eurocurrency Loan, the interest rate applicable thereto and the currency
in which such Loan is made, and, in respect of any Loan, the type of such
Loan; provided that prior to the transfer of any Note all such amounts shall
be recorded on a schedule to such Note. The record thereof, whether shown on
such books or records of a Bank or on a schedule to any Note, shall be prima
facie evidence as to all such amounts; provided, however, that the failure of
any Bank to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of the Borrower to repay all
Loans made to it hereunder together with accrued interest thereon. At the
request of any Bank and upon such Bank tendering to the Borrower the Note to
be replaced, the Borrower shall furnish a new Note to such Bank to replace any
outstanding Note and at such time the first notation appearing on a schedule
on the reverse side of, or attached to, such Note shall set forth the
aggregate unpaid principal amount of all Loans, if any, then outstanding
thereon.
Section 2.9. Commitment Terminations;. The Borrower shall have
the right at any time and from time to time, upon five (5) Business Days'
prior written notice to the Agent, to terminate without premium or penalty, in
whole or in part, the Commitments, any partial termination to be in an amount
not less than $5,000,000 or any larger amount that is an integral multiple of
$1,000,000, and to reduce ratably the respective Commitments of each Bank;
provided that Commitments may not be reduced to an amount less than the sum of
(a) the aggregate principal amount of Loans (which, in the case of
Eurocurrency Loans denominated in an Alternative Currency, shall mean the
Original Dollar Amount thereof) and (b) the Letter of Credit Utilization then
outstanding (which in the case of Letters of Credit payable in an Alternative
Currency shall mean the U.S. Dollar Equivalent thereof as determined pursuant
to Section 1.1(c)(vi) hereof). Any termination of Commitments pursuant to
this Section 2.9 may not be reinstated.
Section 2.10. Funding Indemnity;. In the event any Bank shall
incur any loss, cost or expense (including, without limitation, any loss of
profit, and any loss, cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such Bank to fund or
maintain any Eurocurrency Loan or the relending or reinvesting of such
deposits or amounts paid or prepaid to such Bank) as a result of:
(a) any payment or prepayment of a Eurocurrency Loan on a date
other than the last day of its Interest Period,
(b) any failure (because of a failure to meet the conditions of
Section 7 or otherwise) by the Borrower to borrow a Eurocurrency Loan on the
date specified in a notice given pursuant to Section 2.3 hereof (unless such
notice was revoked in accordance with Section 2.1(b)(ii) in the event a Bank
determined that the requested Alternative Currency in which such Eurocurrency
Loan was to be made was unavailable to it),
(c) any failure by the Borrower to make any payment of principal
on any Eurocurrency Loan when due (whether by acceleration or otherwise), or
(d) any acceleration of the maturity of a Eurocurrency Loan as a
result of the occurrence of any Event of Default hereunder,
then, upon the demand of such Bank, the Borrower shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense. If any
Bank makes such a claim for compensation, it shall provide to the Borrower,
with a copy to the Agent, a certificate executed by an officer of such Bank
setting forth the amount of such loss, cost or expense in reasonable detail
(including an explanation of the basis for and the computation of such loss,
cost or expense) and the amounts shown on such certificate shall be
conclusive.
Section 2.11. Margin Adjustments.; The applicable Eurocurrency
Margin specified in Section 2.1(b) hereof shall be subject to quarterly
adjustment (commencing with the fiscal quarter ending June 30, 1997) based
upon the ratio of (a) average monthly Consolidated Funded Debt for the
immediately preceding four fiscal quarters ended on each such fiscal quarter
end to (b) Consolidated Income Before Interest, Taxes and Depreciation for the
immediately preceding four fiscal quarters ended on each such fiscal quarter
end (the "Cash Flow Ratio") as follows (the margins from time to time
applicable to the Eurocurrency Loans being hereinafter referred to as the
"Applicable Eurocurrency Margin"):
If as of the last day of any fiscal quarter. Applicable Eurocurrency
Margin Shall Each Be:
Level I: .625%
Cash Flow Ratio is less than 1.75 to 1.00Level ii:
.75%
Cash Flow Ratio is greater than or equal to 1.75 to 1.00 but less than or
equal to 2.50 to 1Level iii:
1.00%
Cash Flow Ratio is greater than 2.50 to 1.00 but less than or equal to 2.75 to
1.00Level iv: 1.25%
Cash Flow Ratio is greater than 2.75 to 1.00Not later than five Business Days
after receipt by the Agent of the financial statements and the compliance
certificate called for by Section 8.5 hereof for the applicable quarter, the
Agent shall determine the Cash Flow Ratio for the applicable period based on
the information contained in such financial statements and compliance
certificate and shall promptly notify the Borrower and the Banks of such
determination and of any change in the Applicable Eurocurrency Margin
resulting therefrom, any such change in the Applicable Eurocurrency Margin to
be effective as of the date the Agent so notifies the Borrower, with such new
Applicable Eurocurrency Margin to continue in effect until the effective date
of the next quarterly redetermination in accordance with the foregoing. Each
determination of the Cash Flow Ratio and Applicable Eurocurrency Margin by the
Agent in accordance with this Section shall be conclusive and binding on the
Borrower and the Banks absent manifest error. The foregoing to the contrary
notwithstanding, in the event the Borrower shall have failed to deliver the
financial statements for the applicable quarter within the times provided by
Section 8.5 hereof, the highest applicable margins shall apply until delivery
of such financial statements.
SECTION 3. FEES;.
Section 3.1. Commitment Fee;. The Borrower shall pay to the Agent
for the ratable account of the Banks a commitment fee at the rate of
one-fourth of one percent (0.25%) per annum (computed on the basis of a year
of 360 days and the actual number of days elapsed) on the average daily Unused
Amount of the Revolving Credit Commitments hereunder, provided however, that
at all times during which Level IV pricing is in effect pursuant to Section
2.11 hereof, including the times provided for by the last sentence of such
Section the rate of the commitment fee payable pursuant hereto shall be
increased to three-eighths of one percent (.375%) per annum computed as
aforesaid. Such commitment fee is payable in arrears on the last day of each
March, June, September and December occurring after the date hereof
(commencing December 31, 1996) and on the Termination Date, unless the
Revolving Credit Commitments are terminated in whole on an earlier date, in
which event the fees for the period to the date of such termination in whole
shall be paid on the date of such termination.
Section 3.2. Closing Fees;. The Borrower shall pay to the Agent for
the account of each of the Banks, the closing fees specified in the letters
dated November 4, 1996 from the Agent to the Banks.
Section 3.3. Agent's Fees;. The Borrower shall from time to time pay
the Agent for its own use and benefit such fees as the Borrower and the Agent
have mutually agreed upon.
Section 3.4. Letter of Credit Fees;. (a) Standby Letters of Credit.
The Borrower shall pay to the Agent for the ratable account of the Banks a
nonrefundable fee for each special purpose standby Letter of Credit issued
hereunder equal to one percent (1%) per annum (computed on the basis of a year
of 360 days and actual days elapsed) (or such other rate as may be agreed upon
by the Borrower and the Banks) of the initial face amount of each standby
Letter of Credit, such fee to be payable in U. S. Dollars in advance on the
date of issuance of the relevant Letter of Credit and, in the event the term
of any Letter of Credit expires or is extendible for more than one year from
the issuance date thereof, on the date(s) occurring each year thereafter and
such fee to be nonrefundable in the event any Letter of Credit is terminated
or canceled prior to its expressed maturity date.
(b) Commercial Letters of Credit. The Borrower shall pay to the
Agent in U. S. Dollars, for the ratable account of the Banks, a nonrefundable
negotiation fee for each documentary commercial letter of credit issued
hereunder in an amount equal to 1/4 of 1% of the initial face amount of such
Letter of Credit, such fee to be payable upon issuance of such letter of
credit.
Section 3.5. Transaction Charges;. The Borrower shall pay to the
Agent for its own account such issuing and processing fees and charges as the
Agent from time to time customarily imposes in connection with the issuance,
negotiation and payment of letters of credit and drafts drawn thereunder, such
fees to be paid in accord with the standard and customary practices of the
Agent.
SECTION 4. PLACE AND APPLICATION OF PAYMENTS; EXTENSION OF
TERMINATION
DATE
Section 4.1. Place and Application of Payments;. All payments of
principal of and interest on the Loans, reimbursement obligations with respect
to Letters of Credit and all payments of fees and all other amounts payable
under this Agreement shall be made to the Agent by no later than 12:00 noon
(Chicago time) (a) at the principal office of the Agent in Chicago, Illinois
(or such other location in the State of Illinois as the Agent may designate to
the Borrower) or (b) if such payment is to be made in an Alternative Currency,
no later than 12:00 noon local time at the place of payment to such office as
the Agent has previously notified the Borrower, in each case for the benefit
of the Banks. Any payments received after such time shall be deemed to have
been received by the Agent on the next Business Day. All such payments shall
be made (i) in the case of obligations payable in U.S. Dollars, in immediately
available funds at the place of payment or (ii) in the case of obligations
payable in an Alternative Currency, in such Alternative Currency in funds then
customary for the settlement of international transactions in such currency,
in all cases, without setoff or counterclaim and without reduction for, and
free from, any and all present or future taxes, levies, imposts, duties, fees,
charges, deductions, withholdings, restrictions or conditions of any nature
imposed by any government or any political subdivision or taxing authority
thereof. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal or interest on Loans, reimbursement
obligations with respect to Letters of Credit or fees ratably to the Banks and
like funds relating to the payment of any other amount payable to any Bank to
such Bank, in each case to be applied in accordance with the terms of this
Agreement.
Anything contained herein to the contrary notwithstanding, all payments and
collections received in respect of the indebtedness evidenced by the Notes,
this Credit Agreement and the other Loan Documents received, in each instance,
by the Agent or any of the Banks after the occurrence of an Event of Default
shall be remitted to the Agent and distributed as follows:
(a) first, to the payment of any outstanding costs and expenses
incurred by the Agent in monitoring, verifying, protecting, preserving or
enforcing rights under the Credit Agreement or the Notes or the other Loan
Documents and in any event including all costs and expenses of a character
which the Borrower has agreed to pay under Sections 9.5 and 12.15 hereof (such
funds to be retained by the Agent for its own account unless it has previously
been reimbursed for such costs and expenses by the Banks, in which event such
amounts shall be remitted to the Banks to reimburse them for payments
theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or other
fees or amounts due under the Notes, the Credit Agreement and the other Loan
Documents other than for principal, ratably as among the Banks in accord with
the amount of such interest and other fees or amounts owing each Bank;
(c) third, to the payment of the principal of the Notes and
principal amounts owing in respect of other Obligations hereunder, ratably as
among the Banks in accord with the amount of such principal owing each Bank;
(d) fourth, to the Agent to be held as collateral security for
all undrawn outstanding Letters of Credit hereunder unless and until all such
indebtedness, obligations and liabilities have been fully paid and satisfied
or such Letters of Credit have been terminated or expired; and
(e) fifth, to the Borrower or whoever may be lawfully entitled
thereto.
Section 4.2. Extension of the Revolving Credit Termination Date.
No sooner than 60 days prior to the second anniversary date of the Closing
Date and no later than the second anniversary of the Closing Date (and, if the
same shall have been extended pursuant to this Section 4.2, the third
anniversary of the Closing Date) the Borrower may request in a written notice
to the Agent that the scheduled Termination Date then in effect be extended
for one (1) year. The Agent will promptly inform the Banks of such request
and each Bank shall notify the Agent in writing within 30 days of receipt of
such notice whether it agrees to such extension. In the event that any Bank
shall fail to so notify the Agent whether it agrees to such extension, such
Bank shall be deemed to have refused to grant the requested extension. Upon
receipt by the Agent of the consent of all the Banks, the Borrower and the
Banks shall enter into such documents as the Agent may deem necessary or
appropriate to reflect such extension. In no event shall the Termination Date
be extended beyond December 31, 2001.
SECTION 5. DEFINITIONS; INTERPRETATION';.
Section 5.1. Definitions;. The following terms when used herein
have the following meanings:
"Adjusted LIBOR" is defined in Section 2.1(b) hereof.
"Agent" means Harris Trust and Savings Bank and any successor pursuant to
Section 11.8 hereof.
"Agreement Accounting Principles" shall mean generally accepted principles of
accounting in effect at the time of the preparation of the financial
statements referred to in Section 6.6 hereof, applied in a manner consistent
with that used in preparing such statements.
"Alternative Currency" means each of Canadian Dollars, British Pounds
Sterling, Japanese Yen or German Deutschmarks, so long as such currency is
freely transferable and freely convertible into U.S. Dollars.
"Applicable Eurocurrency Margin" is defined in Section 2.11 hereof.
"Authorized Representative" means any of the persons shown on the list of
officers provided by the Borrower pursuant to Section 7.1(c) hereof, or any
other person shown on any updated such list provided by the Borrower to the
Agent, or any further or different officer(s) or employee(s) of the Borrower
so named by any Authorized Representative of the Borrower in a written notice
to the Agent.
"Bank" means each bank signatory hereto.
"Borrower" means General Housewares Corp., a Delaware corporation.
"Borrowing" means the total of Loans of a single type made by one or more
Banks to the Borrower on a single date and for a single Interest Period and if
such Loans are Eurocurrency Loans, denominated in the same currency.
Borrowings of Loans are made ratably from each of the Banks according to their
Commitments.
"Business Day" means any day other than a Saturday or Sunday on which Banks
are not authorized or required to close in Chicago, Illinois or New York, New
York and, if the applicable Business Day relates to the borrowing or payment
of a Eurocurrency Loan, on which banks are dealing in United States Dollar
deposits or the relevant Alternative Currency in the interbank market in
London, England and Nassau, Bahamas and, if the applicable Business Day
relates to a borrowing or payment of a Eurocurrency Loan denominated in an
Alternative Currency, on which banks and foreign exchange markets are open for
business in the city where disbursements of or payments on such Loans are to
be made.
"Capital Lease" of a Person means at any date any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person, prepared in accordance with
Agreement Accounting Principles.
"Cash Flow Ratio" is defined in Section 2.11 hereof.
"Closing Date" shall mean November 13, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitments" shall mean the Revolving Credit Commitments.
"Consolidated Current Assets" means the consolidated current assets of the
Borrower and its Consolidated Subsidiaries determined in accordance with
Agreement Accounting Principles.
"Consolidated Current Liabilities" means the consolidated current liabilities
of the Borrower and its Consolidated Subsidiaries determined in accordance
with Agreement Accounting Principles.
"Consolidated Funded Debt" means Funded Debt of the Borrower and its
Subsidiaries on a consolidated basis without duplication.
"Consolidated Income Before Interest, Taxes and Depreciation" means, for any
fiscal quarter, Consolidated Income Before Interest, Taxes, Depreciation and
Rentals less all payments during such fiscal quarter pursuant to all operating
leases, determined on a consolidated basis for the Borrower and the
Consolidated Subsidiaries in accordance with Agreement Accounting Principles.
"Consolidated Income Before Interest, Taxes, Depreciation and Rentals" means,
for any fiscal quarter, the sum of (i) earnings before income taxes for such
fiscal quarter, plus (ii) Interest Expense for such fiscal quarter plus (iii)
all charges for depreciation of fixed assets and amortization of Intangible
Assets for such fiscal quarter plus (iv) payments during such fiscal quarter
pursuant to all operating leases determined on a consolidated basis for the
Borrower and the Consolidated Subsidiaries in accordance with Agreement
Accounting Principles.
"Consolidated Net Earnings" for any period means the consolidated net income
of the Borrower and its Consolidated Subsidiaries accrued during such period
as computed on a consolidated basis in accordance with Agreement Accounting
Principles, and, without limiting the foregoing, after deduction from gross
income of all charges and reserves, including charges and reserves for all
taxes on or measured by income, but excluding any profits or losses on the
sale or other disposition not in the ordinary course of business of fixed or
capital assets or on the acquisition, retirement, sale or other disposition of
stock or securities of the Borrower and its Consolidated Subsidiaries, and
also excluding taxes on such profits and any tax deductions or credits on
account of any such losses.
"Consolidated Subsidiary" means any Subsidiary or other entity whose accounts
are required to be consolidated with those of the Borrower in accordance with
Agreement Accounting Principles.
"Consolidated Net Worth" means, as of the date of any determination thereof,
the total stockholders equity of the Borrower and its Consolidated
Subsidiaries, determined in accordance with Agreement Accounting Principles.
"Controlled Group" has the same meaning as in Section 414(b) of the Code.
"Current Assets" shall mean current assets as defined in accordance with
Agreement Accounting Principles.
"Current Debt" means any obligation for borrowed money payable one year or
less from the date of the creation of such obligation.
"Current Liabilities" shall mean current liabilities as defined in accordance
with Agreement Accounting Principles.
"Default" means any event or condition the occurrence of which would, with the
passage of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Rate" is defined in Section 2.1(a) hereof.
"Domestic Rate Loan" means a Loan bearing interest at the rate specified in
Section 2.1(a) hereof.
"Earnings Available For Fixed Charges" for any period shall mean the sum of
(a) Consolidated Net Earnings for such period plus (to the extent deducted in
determining such Consolidated Net Earnings), (b) all provisions for any
Federal, state or other income taxes made by the Company and its Consolidated
Subsidiaries during such period and (c) Fixed Charges during such period.
"ERISA" is defined in Section 6.12 hereof.
"Eurocurrency Loan" means a Loan bearing interest at the rate specified in
Section 2.1(b) hereof and shall also include eurodollar loans outstanding as
of the date hereof and made pursuant to The 1994 Credit Agreement.
"Eurocurrency Margin" is defined in Section 2.1(b) hereof.
"Eurocurrency Reserve Percentage" is defined in Section 2.1(b) hereof.
"Event of Default" means any of the events or circumstances specified in
Section 9.1 hereof.
"Federal Funds Rate" is defined in Section 11.9 hereof.
"Fixed Charge Coverage Ratio" is defined in Section 8.8 hereof.
"Fixed Charges" for any period shall mean on a consolidated basis the sum of
(a) All Rentals (excluding Capitalized Lease Obligations) payable by the
Borrower and its Consolidated Subsidiaries plus (b) all Consolidated Interest
Expense (including the interest component of all Capitalized Lease
Obligations) of the Borrower and its Consolidated Subsidiaries.
"Fixed Rate Loans" means the Eurocurrency Loans.
"Funded Debt" of any Person shall mean (a) all Indebtedness of such Person for
borrowed money (including, without limitation, the Obligations hereunder) or
which has been incurred in connection with the acquisition of assets in each
case having a final maturity of one or more than one year from the date of
origin thereof (or which is renewable or extendible at the option of the
obligor for a period or periods more than one year from the date of origin),
including all payments in respect thereof that are required to be made within
one year from the date of any determination of Funded Debt, whether or not the
obligation to make such payments shall constitute a current liability of the
obligor under Agreement Accounting Principles, (b) all Capitalized Lease
Obligations of such Person, and (c) all Guaranties by such Person of Funded
Debt of others.
"Gangelhoff Note" means the 12% Subordinated Note, due 2000 dated December 29,
1988 of General Housewares Corp. payable to Ronald J. Gangelhoff in the face
principal amount of $5,000,000.
"Guaranties" of a Person means any agreement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes liable upon, the obligation of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, operating agreement, take-or-pay contract or letter of credit but
excluding customary indemnities by any Persons with respect to products sold
by it in the ordinary course of business.
"Indebtedness" of any Person shall mean and include all obligations of such
Person which in accordance with Agreement Accounting Principles shall be
classified upon a balance sheet of such Person as liabilities of such Person,
and in any event shall include all (a) obligations of such Person for borrowed
money or which have been incurred in connection with the acquisition of
property or assets, (b) obligations secured by any Lien upon property or
assets owned by such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (c) obligations created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person, notwithstanding the fact that the rights and
remedies of the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property, (d) obligations to
purchase any property or to obtain the services of another Person if the
contract requires that payment for such property or services be made
regardless of whether such property is delivered or such services are
performed, except that no obligation shall constitute Indebtedness solely
because the contract provides for commercially reasonable liquidated charges
or reimbursement of expenses following cancellation, (e) Capitalized Lease
Obligations, (f) obligations with respect to letters of credit and bankers
acceptances and (g) Guaranties of obligations of others of the character
referred to in this definition.
"Interest Period" is defined in Section 2.4 hereof.
"Investments" shall mean all investments, in cash or by delivery of property,
made directly or indirectly in any Person, whether by acquisition of shares of
capital stock, Indebtedness or other obligations or Securities or by loan,
advance, capital contribution or otherwise; provided that "Investments" shall
not mean or include routine investments in property to be used or consumed in
the ordinary course of business.
"Lending Office" is defined in Section 10.4 hereof.
"Letter of Credit" is defined in Section 1.1(a) hereof.
"Letter of Credit Subfacility Amount" is defined in Section 1.1(c) hereof.
"Letter of Credit Utilization" means, as of any date of determination, the sum
of (i) the maximum aggregate amount which is or at any time thereafter may be
available for drawing under all Letters of Credit then outstanding (which in
the case of Letters of Credit payable in an Alternative Currency shall mean
the U.S. Dollar Equivalent thereof as determined pursuant to Section
1.1(c)(vi) hereof) plus (ii) the aggregate amount of all drawings under
Letters of Credit honored by the Agent and not theretofore reimbursed by the
Borrower.
"Leverage Ratio" is defined in Section 8.7 hereof.
"LIBOR" is defined in Section 2.1(b) hereof.
"Lien" means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, including, but not limited
to, the security interest lien arising from a mortgage, encumbrance, pledge,
conditional sale, security agreement or trust receipt, or a lease, consignment
or bailment for security purposes. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purposes of this definition, a Person shall be
deemed to be the owner of any Property which it has acquired or holds subject
to a conditional sale agreement, Capital Lease or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
Person for security purposes, and such retention of title shall constitute a
"Lien."
"Loan" is defined in Section 1.1(a) hereof, and the term "type" of Loan refers
to its status as a Domestic Rate Loan or Eurocurrency Loan.
"Loan Documents" means this Agreement, the Notes and the Applications.
"Margin Stock" means "margin stock" as defined in Regulation U of the Board of
Governors of the Federal Reserve System.
"Material Plan" is defined in Section 9.1(f) hereof.
"Northern" means The Northern Trust Company.
"Note" is defined in Section 2.8 hereof.
"Obligations" means all unpaid principal of and accrued and unpaid interest on
the Notes and the reimbursement obligation of the Borrower with respect to the
Letters of Credit, all accrued and unpaid fees and all other obligations of
the Borrower to the Banks or any Bank or the Agent arising under the Loan
Documents.
"Original Dollar Amount" means in relation to any Loan denominated in an
Alternative Currency, the U.S. Dollar Equivalent of such Loan on the day it is
made.
"Overnight Eurocurrency Rate" shall mean for a Eurocurrency Loan denominated
in an Alternative Currency, or any Letter of Credit payable in an Alternative
Currency, the rate of interest per annum as determined by the Agent (rounded
upwards, if necessary, to the nearest whole multiple of one-sixteenth of one
percent (1/16 of 1%)) at which overnight or weekend deposits of the
appropriate currency for delivery in immediately available and freely
transferable funds would be offered by the Agent to major banks in the
interbank market upon request of such major banks for the applicable period as
determined above and in an amount comparable to the unpaid principal amount of
such Eurocurrency Loan or reimbursement obligation with respect to such Letter
of Credit (or, if the Agent is not placing deposits in such currency in the
interbank market, then the Agent's cost of funds in such currency for such
period).
"PBGC" is defined in Section 6.12 hereof.
"Permitted Investments" means the following:
(1) Existing Investments in foreign Consolidated Subsidiaries,
other Investments existing as of December 31, 1993 and disclosed on the
audited financial statements herefore delivered to the Banks, Investments in
domestic Consolidated Subsidiaries and Investments in any corporation which
concurrently with such investment becomes a Consolidated Subsidiary;
(2) Property to be used by the Borrower or a Subsidiary in the
ordinary course of its business;
(3) Current assets arising from the sale of goods and services in
the ordinary course of business of the Borrower and its Subsidiaries;
(4) Investments in direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the United States
of America, maturing not more than one year from the date of acquisition
thereof;
(5) Investments in certificates of deposits maturing not more
than one year from the date of acquisition thereof, issued by any of the Banks
or any commercial banks or trust companies organized under the laws of the
United States or any state thereof, each having capital, surplus and undivided
profits aggregating at least $500,000,000;
(6) Investments in commercial paper given the highest rating by
both Moody's Investors Service, Inc. and Standard and Poors Corporation and
maturing not more than 270 days from the date of creation thereof;
(7) Investments in direct obligations of a state of the United
States, or a municipality thereof, given the highest rating by both Moody's
Investors Services, Inc. and Standard and Poors Corporation and maturing not
more than one year from the date of acquisition thereof; and
(8) the Borrower's own stock option plans and savings or stock
purchase plans.
Investments shall be valued at cost less any net return of capital through the
sale, liquidation or repayment (by credit or otherwise) thereof or other
return of capital thereon.
"Person" means an individual, partnership, corporation, associate, trust,
unincorporated organization or any other entity or organization, including a
government or agency or political subdivision thereof.
"Plan" means with respect to the Borrower and each Subsidiary at any time an
employee pension benefit plan which is covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Code and either (i)
is maintained by a member of the Controlled Group for employees of a member of
the Controlled Group of which the Borrower or such Subsidiary is a part, (ii)
is maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group of which the Borrower or such
Subsidiary is a part is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
or (iii) under which a member of the Controlled Group of which the Borrower or
such Subsidiary is a part has any liability, including any liability by reason
of having been a substantial employer within the meaning of Section 4063 of
ERISA at any time during the preceding five years or by reason of being deemed
a contributing sponsor under Section 4069 of ERISA.
"Property" means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible, whether now owned or hereafter
acquired.
"Refinancing Borrowing" is defined in Section 2.3(d) hereof.
"Refunding Borrowing" is defined in Section 2.3(d) hereof.
"Rentals" shall mean and include as of the date of any determination thereof
all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of
the property) payable by the Borrower or a Consolidated Subsidiary, as lessee
or sublessee under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Borrower or a Consolidated
Subsidiary (whether or not designated as rents or additional rents) on account
of maintenance, repairs, insurance, taxes and similar charges. Fixed rents
under any so-called "percentage leases" shall be computed solely on the basis
of the minimum rents, if any, required to be paid by the lessee regardless of
sales volume or gross revenues.
"Required Banks" means as of the date of determination thereof, those Banks
holding at least 66-2/3% of the Commitments or, in the event that no
Commitments are outstanding hereunder, those Banks holding at least 66-2/3% in
aggregate principal amount of the Loans and Letter of Credit Utilization
outstanding hereunder.
"Revolving Credit" is defined in the introductory paragraph hereof.
"Revolving Credit Commitment" is defined in Section 1.1(a) hereof.
"Security" has the same meaning as in Section 2(l) of the Securities Act of
1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Set-Off" is defined in Section 12.7 hereof.
"Subordinated Indebtedness" means the Indebtedness for Borrowed Money of the
Borrower evidenced by the Gangelhoff Note and any other Indebtedness for
Borrowed Money of the Borrower for money borrowed the terms of which are
acceptable to the Required Banks and which is subordinated in right of payment
to the prior payment of the Obligations pursuant to subordination provisions
approved in writing by the Required Banks.
"Subsidiary" means any corporation of which more than fifty percent (50%) of
the outstanding Voting Stock is at the time directly or indirectly owned by
the Borrower, by one or more of its Subsidiaries, or by the Borrower and one
or more of its Subsidiaries.
"Tangible Assets" of any Person means, as of the date of any determination
thereof, the total amount of all assets of such Person (less depreciation,
depletion and other properly deductible valuation reserves) after deducting
the following: good will, patents, trade names, trade marks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, deferred assets, the excess of cost of shares acquired
over book value of related assets, any write-ups in the book value of any
asset resulting from a revaluation thereof, and such other assets as are
properly classified as "intangible assets" in accordance with Agreement
Account Principles.
"Termination Date" means December 31, 1999, as the same may be extended
pursuant to Section 4.2 hereof.
"The 1994 Credit Agreement" means that certain Credit Agreement dated as of
November 30, 1994 as amended among the Borrower, the Agent and the Banks
(other than Northern).
"Total Liabilities" means the total of the liabilities of the Borrower and its
Consolidated Subsidiaries on a consolidated basis determined in accordance
with Agreement Accounting Principles.
"Unfunded Vested Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all vested nonforfeitable
accrued benefits under such Plan exceeds (ii) the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the
PBGC or the Plan under Title IV of ERISA.
"Unrestricted Subsidiary" shall mean any Subsidiary designated as such on
Exhibit B hereto.
"U.S. Dollars" means lawful currency of the United States of America.
"U.S. Dollar Equivalent" means the amount of U.S. Dollars which would be
realized by converting an Alternative Currency into U.S. Dollars in the spot
market at the exchange rate quoted by the Agent at approximately 11:00 a.m.
(London, England time) two Business Days prior to the date on which a
computation thereof is required to be made, to major banks in the interbank
exchange market for the purchase of U.S. Dollars for such Alternative
Currency.
"Voting Stock" of any Person means capital stock of any class or classes
(however designated) having ordinary voting power for the election of
directors of such Person, other than stock having such power only by reason of
the happening of a contingency.
"Welfare Plan" means a "welfare plan," as said term is defined in Section 3(1)
of ERISA.
"Wholly-Owned" means a Subsidiary of which all of the issued and outstanding
shares of stock (other than directors' qualifying shares as required by law)
shall be owned by the Borrower and/or one or more of its Wholly-Owned
Subsidiaries.
Section 5.2. Interpretation;. The foregoing definitions shall be
equally applicable to both the singular and plural forms of the terms defined.
All references to times of day herein shall be references to Chicago, Illinois
time unless otherwise specifically provided. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with Agreement Accounting Principles as in effect from time to
time, to the extent applicable, except where such principles are inconsistent
with the specific provisions of this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES;.
The Borrower represents and warrants to the Banks as follows:
Section 6.1. Organization and Qualification;. The Borrower is
duly organized and validly existing in good standing under the laws of the
State of Delaware, has full and adequate corporate power to carry on its
business as now conducted, is duly licensed or qualified and in good standing
in each jurisdiction in which the nature of the business transacted by it or
the nature of the Property owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified and in good standing would not have a material adverse effect on the
financial condition or Property, business or operations of the Borrower and
the Consolidated Subsidiaries taken as a whole.
Section 6.2. Subsidiaries;. As of the date hereof, the only
Subsidiaries of the Borrower are designated in Exhibit B hereto; each
Subsidiary is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction in which it was incorporated, has
full and adequate corporate power to carry on its business as now conducted,
and is duly licensed or qualified and in good standing in each jurisdiction in
which the nature of the business transacted by it or the nature of the
Property owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified and in good
standing would not have a material adverse effect on the financial condition
or Property, business or operations of the Borrower and the Consolidated
Subsidiaries taken as a whole. Exhibit B hereto correctly sets forth, as to
each Subsidiary, whether or not it is a Consolidated Subsidiary, the
jurisdiction of its incorporation, the percentage of issued and outstanding
shares of each class of its capital stock owned by the Borrower and the
Subsidiaries and, if such percentage is not 100% (excluding directors'
qualifying shares as required by law), a description of each class of its
authorized capital stock and the number of shares of each class issued and
outstanding. All of the issued and outstanding shares of capital stock of
each Subsidiary are validly issued and outstanding and fully paid and
nonassessable and all such shares indicated in Exhibit B as owned by the
Borrower or a Subsidiary are owned, beneficially and of record, by the
Borrower or such Subsidiary, free of any Lien.
Section 6.3. Corporate Authority and Validity of Obligations;.
The Borrower has full right and authority to enter into this Agreement, to
make the borrowings herein provided for, to request that the Letters of Credit
be issued hereunder, to issue its Notes and execute and deliver the
Applications in evidence thereof and to perform all of its obligations
hereunder and under the Notes and Applications; this Agreement, each Note and
each Application delivered by the Borrower have been duly authorized, executed
and delivered by the Borrower and constitute valid and binding obligations of
the Borrower enforceable in accordance with their terms; and this Agreement,
the Notes and the Applications do not, nor does the performance or observance
by the Borrower or any Subsidiary of any of the matters or things therein
provided for, contravene any provision of law or any charter or by-law
provision of the Borrower or any Subsidiary or any material covenant,
indenture or agreement of or affecting the Borrower or any Subsidiary or a
substantial portion of their respective Properties.
Section 6.4. Not an Investment Company;. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 6.5. Margin Stock;. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its primary activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock, and neither the Borrower nor any of its Subsidiaries will use
the proceeds of any Loan or Letter of Credit in a manner that violates any
provision of Regulation U, G or X of the Board of Governors of the Federal
Reserve System.
Section 6.6. Financial Reports;. The consolidated statement of
financial condition of the Borrower and the Consolidated Subsidiaries as at
December 31, 1995 and the related statements of consolidated income and
consolidated cash flows of the Borrower and the Consolidated Subsidiaries for
the year then ended and accompanying notes thereto, which financial statements
are accompanied by the report of Price Waterhouse, independent public
accountants, and the unaudited statement of consolidated financial condition
of the Borrower and the Consolidated Subsidiaries as at September 30, 1996 and
the related statements of consolidated income and consolidated cash flows of
the Borrower and the Consolidated Subsidiaries for the nine months then ended
and accompanying notes, heretofore furnished to the Banks, fairly present the
consolidated financial conditions of the Borrower and the Consolidated
Subsidiaries as at such dates and the consolidated results of their operations
and their consolidated cash flows for the periods then ended in conformity
with generally accepted accounting principles applied on a consistent basis.
Section 6.7. No Material Adverse Change;. Since December 31,
1995, there has been no material adverse change in the condition, financial or
otherwise, or business prospects of the Borrower and the Consolidated
Subsidiaries taken as a whole.
Section 6.8. Litigation;. There is no litigation or governmental
proceeding pending, nor to the knowledge of the Borrower threatened, against
the Borrower or any Consolidated Subsidiary which if adversely determined
would (a) impair the validity or enforceability of, or materially impair the
ability of the Borrower to perform its obligations under, this Agreement, the
Notes or the Applications or (b) result in any material adverse change in the
financial condition or Property, business or operations of the Borrower and
the Consolidated Subsidiaries taken as a whole.
Section 6.9. Tax Returns;. The consolidated United States
federal income tax returns of the Borrower for the taxable year ended December
31, 1993 and for all taxable years ended prior to said date have been examined
by the Internal Revenue Service and have been approved as filed, and any
additional assessments in connection with any of such years have been paid or
the applicable statute of limitations therefor has expired. There are no
assessments in respect of the consolidated United States federal income tax
returns of the Borrower and the Consolidated Subsidiaries of a material nature
for any taxable year ended after December 31, 1993 pending, nor to the
knowledge of the Borrower is any such assessment threatened, other than for
those which are provided for by reserves which in the opinion of the Borrower
are adequate therefor.
Section 6.10. Approvals;. No authorization, consent, license,
exemption or filing or registration with any court or governmental department,
agency or instrumentality, or any approval or consent of the stockholders of
the Borrower or from any other Person, is necessary to the valid execution,
delivery or performance by the Borrower of this Agreement, the Notes or the
Applications.
Section 6.11. Liens;. There are no Liens on any of the Property
of the Borrower or any Subsidiary, except those which are permitted by Section
8.18 hereof.
Section 6.12. ERISA;. The Borrower and each Subsidiary are in
compliance in all material respects with the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), to the extent applicable to them
and have received no notice to the contrary from the Pension Benefit Guaranty
Corporation ("PBGC") or any other governmental entity or agency. As of
December 31, 1993 the liability of the Borrower and its Subsidiaries to PBGC
in respect of Unfunded Vested Liabilities would not have been in excess of
$99,000 if all employee pension benefit plans maintained by the Borrower and
its Subsidiaries had been terminated as of such date. No condition exists or
event or transaction has occurred with respect to any Plan which could
reasonably be expected to result in the incurrence by the Borrower or any
Subsidiary of any material liability, fine or penalty. Except as disclosed to
the Banks in writing, neither the Borrower nor any Subsidiary has any
contingent liability with respect to any post-retirement benefits under a
Welfare Plan, other than liability for continuation coverage described in Part
6 of Title I of ERISA and liability for post-retirement life insurance
benefits.
Section 6.13. Material Agreements;. Neither the Borrower nor any
Subsidiary is a party to any agreement or instrument or subject to any charter
or other corporate restriction materially and adversely affecting its
business, properties or assets, operations or condition (financial or
otherwise). Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party, which
default might have a material adverse effect on the business, properties or
assets, operations, or condition (financial or otherwise) of the Borrower and
its Subsidiaries taken as a whole or (ii) any agreement or instrument
evidencing or governing Indebtedness.
Section 6.14. Compliance with Environmental Laws;. (a) The
business and operation of the Borrower and its Subsidiaries comply in all
respects with all applicable federal, state, regional, county and local laws,
statutes, rules, regulations and ordinances relating to public health, safety
or the environment, including, without limitation, relating to releases,
discharges, emissions or disposals to air, water, land or groundwater, to the
withdrawal or use of groundwater, to the use, handling or disposal of
polychlorinated biphenyls (PCB's), asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances (including,
without limitation, petroleum, its derivatives, by-products or other
hydrocarbons), to exposure to toxic, hazardous or other controlled, prohibited
or regulated substances, to the transportations, storage, disposal management
or release or gaseous or liquid substances, and any regulation, order,
injunction, judgment, declaration, notice or demand issued thereunder, except
to the extent that such noncompliance would not have a material adverse effect
on the business, operations, properties, assets or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole.
(b) The Borrower has not given, nor should it give, nor has it
received, any notice, letter, citation, order, warning, complaint, inquiry,
claim or demand that: (i) the Borrower has violated, or is about to violate,
any federal, state, regional, county or local environmental, health or safety
statute, law, rule, regulation, ordinance, judgment or order; (ii) there has
been a release, or there is a threat of release, of hazardous substances
(including, without limitation, petroleum, its by-products or derivatives, or
other hydrocarbons) from the Borrower's property, facilities, equipment or
vehicles; (iii) the Borrower may be or is liable, in whole or in part, for the
costs or cleaning up, remediating or responding to a release of hazardous
substances (including, without limitation, petroleum, its by-products or
derivatives, or other hydrocarbons); (iv) any of the Borrower's property or
assets are subject to a Lien in favor of any governmental entity for any
liability, costs or damages, under any federal, state or local environmental
law, rule or regulation arising from, or costs incurred by such governmental
entity in response to, a release of a hazardous substance (including, without
limitation, petroleum, its by-products or derivatives, or other hydrocarbons),
except to the extent that such violation, release, liability or Lien could not
have a material adverse effect on the business, operations, properties, assets
or condition (financial or otherwise) of the Borrower and its Subsidiaries
taken as a whole.
SECTION 7. CONDITIONS PRECEDENT;.
The obligation of each Bank to make any Loan or any other financial
accommodation hereunder shall be subject to the following conditions
precedent:
Section 7.1. Initial Borrowing;. Prior to the initial Borrowing
and Letter of Credit hereunder:
(a) The Agent shall have received for each Bank the favorable
written opinion of Raymond J. Kulla, General Counsel of the Borrower, in
substantially the form of Exhibit C hereto, and otherwise in and substance
satisfactory to the Required Banks;
(b) The Agent shall have received for each Bank (i) certified
copies of resolutions of the Board of Directors of the Borrower authorizing
the execution and delivery of this Agreement, the Notes and the Applications,
indicating the authorized signers of this Agreement, the Notes and the
Applications and all other documents relating thereto and the specimen
signatures of such signers, (ii) copies of the Borrower's Articles of
Incorporation and by-laws certified by the Secretary or other appropriate
officer of the Borrower together with a certificate of good standing certified
by the appropriate governmental officer in the jurisdiction of the Borrower's
incorporation; and
(c) The Agent shall have received from the Borrower a list of its
Authorized Representatives.
Section 7.2. All Loans and Letters of Credit;. As of the time of
the making of each Borrowing, the issuance of each Letter of Credit (including
the initial Borrowing and Letter of Credit):
(a) The Agent shall have received for each Bank the Notes of the
Borrower and the notice required by Section 2.3 hereof;
(b) Each of the representations and warranties of the Borrower
set forth in Section 6 hereof (except for Section 6.7) shall be true and
correct as of said time, except to the extent that any such representation or
warranty relates solely to an earlier date;
(c) The Borrower shall be in full compliance with all of the
terms and conditions hereof, and no Default or Event of Default shall have
occurred and be continuing or would occur as a result of making such Borrowing
or issuing such Letter of Credit;
(d) After giving effect to the Borrowing or Letter of Credit the
aggregate principal amount of all Loans and Letter of Credit Utilization
outstanding hereunder shall not exceed the Commitments; and
(e) Such Borrowing or Letter of Credit shall not violate any
order, judgment or decree of any court or other authority or any provision of
law or regulation applicable to any Bank (including, without limitation,
Regulation U of the Board of Governors of the Federal Reserve System) as then
in effect, provided that if any such circumstances affects fewer than all the
Banks then the unaffected Banks shall not be relieved of their obligations to
make a Loan as part of a Refunding Borrowing.
Each request for a Borrowing or Letter of Credit shall be deemed to be a
representation and warranty by the Borrower on the date of such Borrowing as
to the facts specified in paragraphs (b) and (c) of this Section 7.2.
Section 7.3. Additional Conditions to Loans (other than Refunding
Borrowings), Letters of Credit;. In addition to the conditions set forth in
Sections 7.1 and 7.2 hereof, as of the time of each Borrowing (other than a
Refunding Borrowing), the issuance of each Letter of Credit, the
representations and warranties set forth in Section 6.7 hereof shall be true
as of said time, and the request for such Borrowing, as mentioned in Section
7.2., shall be and constitute a representation and warranty as to such matters
specified in Section 6.7 hereof.
Section 7.4. Letters of Credit;. As a further condition to the
issuance of each Letter of Credit, the Agent shall have received an
Application therefor.
Section 7.5. Termination of The 1994 Credit Agreement;. The
initial Loans hereunder shall be in an amount sufficient to repay all
indebtedness of the Borrower owing to the Banks and Agent under The 1994
Credit Agreement (other than with respect to letters of credit which shall
constitute Letters of Credit issued and outstanding hereunder) and the
Borrower hereby directs the Agent to such extent to so apply the proceeds of
such Loans at which time The 1994 Credit Agreement shall terminate. Anything
contained herein or in The 1994 Credit Agreement to the contrary
notwithstanding, substantially concurrently with this Agreement becoming
effective there shall be such nonratable borrowings and repayments so that
after giving effect thereto, each Bank holds its ratable share of the total
Loans outstanding in accordance with the Commitments hereunder; provided,
however, that if there are Eurocurrency Loans outstanding on such effective
date which, if prepaid, would require the Borrower to make a payment under
Section 2.10 of The 1994 Credit Agreement, then in that event and to that
extent the Borrower may defer such adjusting refunding borrowings until the
end of the Interest Period applicable to such Eurocurrency Loans and all Loans
made and repaid during such deferral period shall be allocated in such a
manner so as to reduce, to the extent practical, any disparity in the
percentage of the usage of the Commitments.
SECTION 8. COVENANTS;.
The Borrower agrees that, so long as any Note is outstanding hereunder or any
credit is available to or in use by the Borrower hereunder except to the
extent compliance in any case or cases is waived in writing by the Required
Banks:
Section 8.1. Corporate Existence;. The Borrower shall, and shall
cause each Subsidiary (other than an Unrestricted Subsidiary) to, preserve and
maintain its corporate existence, subject to the provisions of Section 8.15
hereof.
Section 8.2. Maintenance;. The Borrower will maintain, preserve
and keep its plants, properties and equipment deemed necessary to the proper
conduct of its business in reasonably good repair, working order and condition
and will from time to time make all reasonably necessary repairs, renewals,
replacements, additions and betterments thereto so that at all times such
plants, properties and equipment shall be reasonably preserved and maintained,
and will cause each Subsidiary so to do in respect of Property owned or used
by it; provided, however, that nothing in this Section shall prevent the
Borrower or a Subsidiary from discontinuing the operation or maintenance of
any such properties if such discontinuance is, in the judgment of the
Borrower, desirable in the conduct of its business or the business of the
Subsidiary and not disadvantageous in any material respect to the Banks or the
holders of the Notes.
Section 8.3. Taxes;. The Borrower will duly pay and discharge,
and will cause each Subsidiary to pay and discharge, all taxes, rates,
assessments, fees and governmental charges upon or against the Borrower or
such Subsidiary or against their respective Properties, in each case before
the same becomes delinquent and before penalties accrue thereon, unless and to
the extent that the same is being contested in good faith and by appropriate
proceedings and reserves are provided therefor that in the opinion of the
Borrower are adequate.
Section 8.4. Insurance;. The Borrower will insure, and keep
insured, and will cause each Subsidiary to insure, and keep insured, in good
and responsible insurance companies, all insurable Property owned by it which
is of a character usually insured by companies similarly situated and
operating like Property; and to the extent usually insured (subject to
self-insured retentions) by companies similarly situated and conducting
similar businesses, the Borrower will also insure, and cause each Subsidiary
to insure, employers' and public and product liability risks in good and
responsible insurance companies. The Borrower will upon request of the Agent
furnish a summary setting forth the nature and extent of the insurance
maintained pursuant to this Section 8.4.
Section 8.5. Financial Reports and Other Information;. The
Borrower will, and will cause each Subsidiary to, maintain a standard system
of accounting in accordance with generally accepted accounting principles and
will furnish to the Banks and their respective duly authorized representatives
such information respecting the business and financial condition of the
Borrower and the Subsidiaries as may be reasonably requested; and without any
request will furnish to each Bank:
(a) Within 90 days after the close of each fiscal year of the
Borrower, an audit report of the Borrower and its Consolidated Subsidiaries
for such year and accompanying financial statements certified by independent
certified public accountants of recognized national standing, prepared in
accordance with generally accepted accounting principles on a consolidated
basis, including a balance sheet as of the end of such period, related profit
and loss and reconciliation of surplus statement, and a statement of changes
in financial position, accompanied by any management letter prepared by said
accountants and by a certificate of said accountants that, in the course of
their examination necessary for their certification of the foregoing, they
have obtained no knowledge of any Default or Event of Default, or if, in the
opinion of such accountants, any Default or Event of Default shall exist,
stating the nature and status thereof.
(b) Within 60 days after the close of the first three quarterly
periods of each fiscal year of the Borrower, a consolidated unaudited balance
sheet as at the close of each such period and a consolidated profit and loss
and reconciliation of surplus statement and a statement of changes in
financial position for the period from the beginning of such fiscal year to
the end of such quarter, all certified by a responsible financial officer.
(c) Together with the financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit D hereto signed by
a responsible financial officer of the Borrower showing the calculations
necessary to determine compliance with this Agreement and stating that no
Default or Event of Default exists, or if any Default or Event of Default
exists, stating the nature and status thereof.
(d) Within 270 days after the close of each fiscal year, if any
Unfunded Vested Liabilities exist a statement of the Unfunded Vested
Liabilities of each Plan, certified as correct by an actuary enrolled under
ERISA.
(e) As soon as possible and in any event within 30 days after the
Borrower knows that any reportable event (as defined in ERISA) has occurred
with respect to any Plan, a statement, signed by a responsible financial
officer of the Borrower, describing said reportable event and the action which
the Borrower proposes to take with respect thereto.
(f) As soon as possible and in any event within 10 days after
receipt by a corporate officer of the Borrower, a copy of (i) any notice or
claim to the effect that the Borrower or any Subsidiary is or may be liable to
any Person as a result of the release by the Borrower, any of its Subsidiaries
or any other Person of any toxic or hazardous waste or substance into the
environment, which liability could have a material adverse effect on the
business, operation, properties, assets or conditions (financial or otherwise)
of the Borrower and the Subsidiaries taken as a whole and (ii) any notice
alleging any violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any Subsidiary which violation
could have a material adverse effect on the business, operation, properties,
assets or conditions (financial or otherwise) of the Borrower and the
Subsidiaries taken as a whole.
(g) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports and proxy statements
so furnished.
(h) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which the
Borrower or any Subsidiary files with the SEC.
(i) Promptly upon discovery thereof, notice of the occurrence of
any Default and of any other development, financial or otherwise, which might
materially adversely affect its ability to repay the Obligations.
(j) Promptly after incurrence thereof, notice of any Funded Debt
incurred by the Borrower after the date hereof.
(k) Such other information (including non-financial information)
as the Agent or any Bank may from time to time reasonably request.
Section 8.6. Consolidated Net Worth;. The Borrower will at all
times keep and maintain Consolidated Net Worth at an amount not less than the
sum of (i) $45,000,000 plus (ii) 50% of positive Consolidated Net Earnings
earned by the Borrower during each completed fiscal quarter on a cumulative
basis (without deduction for a net loss during a fiscal quarter) from January
1, 1997 through and including the date of determination.
Section 8.7. Leverage Ratio;. The Borrower will maintain at all
times a ratio of (a) the difference between (i) Consolidated Funded Debt less
(ii) Indebtedness with respect to commercial letters of credit ("Consolidated
Adjusted Funded Debt") to (b) the sum of (i) Consolidated Net Worth plus (ii)
Consolidated Adjusted Funded Debt (the "Leverage Ratio") of not more than .45
to 1.0.
Section 8.8. Fixed Charge Coverage Ratio;. As of the end of each
fiscal quarter, the Borrower will maintain a ratio of Earnings Available for
Fixed Charges to Fixed Charges, in each case for the previous four fiscal
quarters ending on the last day of such quarter (taken as a single accounting
period) (the "Fixed Charge Coverage Ratio") for the previous four fiscal
quarters ending on the last day of such quarter of not less than 1.0 to 1.0 at
September 30, 1996 and 2.0 to 1.0 at all times thereafter, provided however,
the foregoing to the contrary notwithstanding, the Fixed Charge Coverage Ratio
at December 31, 1996 shall be computed for the two fiscal quarters ending such
date and the Fixed Charge Coverage Ratio at March 31, 1997 shall be computed
for the three fiscal quarters ending such date.
Section 8.9. Minimum Current Ratio;. The Borrower will maintain
at all times a ratio of Consolidated Current Assets to Consolidated Current
Liabilities of not less than 1.5:1.0.
Section 8.10. Distributions;. The Borrower will not, except as
hereinafter provided:
(a) declare or pay any dividends, either in cash or property on
any class of its stock (except dividends payable solely in common stock of the
Borrower); or
(b) directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any of its stock or any warrants, rights or options to
purchase or otherwise acquire any shares of its stock (other than payments to
any officer of the Borrower in connection with the exercise of such officer's
stock appreciation rights granted pursuant to stock purchase plans of the
Borrower to the extent such payments are required to be deducted in the
calculation of Consolidated Net Earnings and so long as a Default or Event of
Default shall not have occurred and be continuing at the time of any such
payment or would occur as a result thereof, the Borrower acknowledging and
agreeing that all agreements relating to any such payments shall provide that
the Borrower's obligation to make such payments shall be subject to
satisfaction of the foregoing conditions); or
(c) make any other distribution, either directly or indirectly or
through any Subsidiary, in respect of its stock; (such declarations and
payments of dividends (computed without duplication), purchases, redemptions
or retirements of stock, warrants, rights or options and all such other
distributions being herein collectively called "Distributions"), if after
giving effect to any such Distribution, the aggregate amount of Distributions
declared or made outstanding (x) during the period from the date hereof
through and including December 31, 1996 would exceed the lesser of (i) 8 cents
per share or (ii) $320,000 and (y) during the period from and after January 1,
1997 to and including the date of the declaration or making of the
Distribution would exceed the sum of (i) $1,200,000 plus (ii) 50% of
Consolidated Net Earnings (or, if such Consolidated Net Earnings is a deficit
figure, then minus 100% of such deficit) for such period computed on a
cumulative basis for said entire period.
The Borrower will not declare any dividend payable more than 90 days after the
date of the declaration thereof and will not declare or make any Distribution
if a Default has occurred and is continuing or if, on the date thereof and
after giving effect thereto the payment would create a Default or Event of
Default.
For the purposes of this Section 8.10 the amount of any Distribution declared
or paid or distributed in property shall be deemed to be the greater of book
or fair market value as determined in good faith by the board of directors of
the Borrower (in each case after deducting any liabilities relating thereto,
which are, concurrently with the receipt of such Distribution, assumed by the
recipient thereof), of such property at the time of the making of the
Distribution in question.
Section 8.11. Indebtedness for Borrowed Money;. The Borrower
will not nor will it permit any Subsidiary to, issue, incur, assume, create or
have outstanding any Indebtedness for Borrowed Money; provided, however, that
the foregoing provisions shall not restrict nor operate to prevent:
(a) the indebtedness of the Borrower on the Notes and with
respect to the Letters of Credit;
(b) Funded Debt of the Borrower's Subsidiaries existing as of the
date hereof and disclosed on Exhibit E hereto and Funded Debt of the Borrower;
(c) purchase money indebtedness permitted by Section 8.18(f)
hereof;
(d) other existing short term indebtedness of the Borrower
disclosed on Exhibit E hereto;
(e) Subordinated Indebtedness;
(f) Indebtedness of General Housewares of Canada Inc. in respect
of a letter of credit line of up to 1,500,000 Canadian dollars and in respect
of a line of credit of up to 5,000,000 Canadian dollars and the comfort letter
of the Company in connection therewith."; and
(g) indebtedness not otherwise permitted by this Section
aggregating not more than $1,000,000 at any one time outstanding.
Section 8.12. Sale and Leaseback;. The Borrower will not, nor
will it permit any Subsidiary to, sell or transfer any property in order to
concurrently or subsequently lease as lessee such or similar property.
Section 8.13. Investments;. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments except
Permitted Investments.
Section 8.14. Capital Expenditures;. The Borrower will not, and
will not permit its Consolidated Subsidiaries to, expend or become obligated
for capital expenditures (as defined and classified in accordance with
Agreement Accounting Principles consistently applied) during any fiscal year
in excess of (a) the amount of all charges for depreciation of fixed assets
and amortization of Intangible Assets for the previous fiscal year computed on
a consolidated basis for the Borrower and the Consolidated Subsidiaries in
accordance with Agreement Accounting Principles plus (b) Consolidated Net
Earnings for the previous fiscal year less (c) dividends paid during the
previous fiscal year in the aggregate for the Borrower and its Consolidated
Subsidiaries, provided, that, the Borrower will not, nor will it permit its
Consolidated Subsidiaries to, make any capital expenditure if a Default or
Event of Default has occurred and is continuing, or if on the date thereof and
after giving effect thereto such expenditure would create a Default or Event
of Default.
Section 8.15. Mergers, Consolidations, Leases, and Sales;. The
Borrower:
(a) will not be a party to any merger or consolidation except
that a Subsidiary may merge into the Borrower or into any one or more
Subsidiaries; and
(b) will not, and will not permit any Consolidated Subsidiary to,
sell, assign, lease or otherwise transfer to any Person other than the
Borrower or one or more Consolidated Subsidiaries any Properties (including,
without limitation, any capital stock of any Consolidated Subsidiary), unless
such sale, assignment, lease or transfer is for a consideration not less than
the fair market value thereof and unless, after giving effect to such sale,
assignment, lease or transfer (i) the aggregate proceeds to the Borrower and
the Consolidated Subsidiaries of all such sales, assignments, leases and
transfers (other than sales of inventory in the ordinary course of its
business as conducted on the date hereof) during the calendar year in which
such sale, assignment, lease or transfer shall occur shall not exceed 10% of
Tangible Assets, (ii) no Default or Event of Default shall have occurred and
be continuing or would occur as a result thereof and (iii) the Borrower shall
have furnished to the Banks a certificate and historic pro forma calculations
reasonably satisfactory to the Required Banks showing that after giving effect
to such sale Consolidated Net Earnings for the immediately preceding twelve
month period ending on or about the date of such sale would not have been less
than 10% of actual Consolidated Net Earnings for such period.
Section 8.16. ERISA;. The Borrower will promptly pay and
discharge all obligations and liabilities arising under ERISA of a character
which if unpaid or unperformed might result in the imposition of a Lien
against any of its properties or assets and will promptly notify the Agent of
(i) the occurrence of any reportable event (as defined in ERISA) with respect
to a Plan, other than any such event of which the PBGC has waived notice by
regulation, (ii) receipt of any notice from PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor, (iii) its or any
Subsidiary's intention to terminate or withdraw from any Plan, and (iv) the
occurrence of any event with respect to any Plan which could result in the
incurrence by the Borrower or any Subsidiary of any material liability, fine
or penalty, or any material increase in the contingent liability of the
Borrower or any Subsidiary with respect to any post-retirement Welfare Plan
benefit.
Section 8.17. Conduct of Business;. The Borrower will not engage
in any business if, as a result, the general nature of the business which
would then be engaged in by the Borrower would be substantially changed from
the general nature of the business engaged in by the Borrower on the date of
this Agreement.
Section 8.18. Liens;. The Borrower will not nor will it permit
any Subsidiary to create, incur, permit to exist or to be incurred any Lien of
any kind on any Property owned by the Borrower or any Subsidiary; provided,
however, that this Section 8.18 shall not apply to nor operate to prevent:
(a) Liens for taxes, assessments or governmental charges or
levies on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty or are being contested in good faith
and by appropriate proceedings.
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due.
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.
(d) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the
use thereof in the business of the Borrower or the Subsidiaries.
(e) Liens existing on the date hereof and described in Exhibit F
hereto.
(f) Liens incurred to sellers in connection with purchase money
financing up to an aggregate amount outstanding at any time of $3,000,000.
Section 8.19. Use of Proceeds; Margin Stock';. The Borrower
shall only use the proceeds of the Loans for general corporate purposes, and
the Borrower shall not directly or indirectly use the proceeds of any of the
Loans to purchase or carry any Margin Stock, and at no time will Margin Stock
constitute 25% or more of the assets of the Borrower or of the consolidated
assets of the Borrower and the Subsidiaries.
Section 8.20. Compliance with Laws;. Without limiting any of the
other covenants of the Borrower in this Section 8, the Borrower will, and will
cause each of its Subsidiaries to, conduct its business, and otherwise be, in
compliance with all applicable laws, regulations, ordinances and orders of any
governmental or judicial authorities (including, without limitation, those of
the type mentioned in Section 6.14 hereof), non-compliance with which would
(a) impair the validity or enforceability or the ability of the Borrower to
perform its obligations under the Loan Documents or (b) result in any material
adverse change in the financial condition or properties, business or
operations of the Borrower and the Consolidated Subsidiaries taken as a whole;
provided, however, that the Borrower or any Subsidiary shall not be required
to comply with any such law, regulation, ordinance or order if it shall be
contesting such law, regulation, ordinance or order in good faith by
appropriate proceedings and reserves, if appropriate, shall have been
established therefor that are adequate in the Borrower's opinion.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES;.
Section 9.1. Events of Default;. Any one or more of the
following shall constitute an Event of Default:
(a) (i) default in the payment when due of any principal on any
Note or any Loan evidenced thereby, or of any reimbursement obligation with
respect to any Letter of Credit, whether at the stated maturity thereof or at
any other time provided in this Agreement; or (ii) default for a period of
five days in the payment when due of interest on any Note or any Loan
evidenced thereby or of any other sums required to be paid pursuant to this
Agreement;
(b) default by the Borrower in the observance or performance of
any covenant set forth in Sections 8.6 through 8.15 and Section 8.17 hereof;
(c) default by the Borrower in the observance or performance of
any other provision hereof not mentioned in (a) or (b) above, which is not
remedied within 30 days after notice thereof to the Borrower by the Agent or
any Bank;
(d) any representation or warranty made herein by the Borrower,
or in any statement or certificate furnished pursuant hereto by the Borrower,
or in any Application or in connection with any Loan or other extension of
credit made hereunder, proves untrue in any material respect as of the date of
the issuance or making thereof;
(e) the Borrower or any Subsidiary shall fail within thirty (30)
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $500,000, which is not stayed on appeal or otherwise
being appropriately contested in good faith;
(f) the Borrower or any other member of its Controlled Group
shall fail to pay when due an amount or amounts aggregating in excess of
$500,000 which it shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA; or notice of intent to terminate a Plan or Plans
having aggregate Unfunded Vested Liabilities in excess of $500,000
(collectively, a "Material Plan") shall be filed under Title IV of ERISA by
the Borrower or any other member of its Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any Material Plan or a proceeding shall be instituted
by a fiduciary of any Material Plan against the Borrower or any member of its
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within thirty (30) days thereafter;
or a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated;
(g) (A) default shall occur in the payment when due of any
indebtedness for borrowed money issued, assumed or guaranteed by the Borrower
or any Subsidiary aggregating in excess of $250,000, or (B) default shall
occur under any indenture, agreement or other instrument under which any
indebtedness for borrowed money of the Borrower or any Subsidiary may be
issued, assumed or guaranteed, and such default shall continue for a period of
time sufficient to permit the acceleration of the maturity of any such
indebtedness for borrowed money of the Borrower or any Subsidiary aggregating
in excess of $250,000 (whether or not such maturity is in fact accelerated),
provided, however, that the foregoing shall not constitute an Event of Default
with respect to the indebtedness owing to First Colony Life Insurance Company
and American Mayflower Life Insurance Company described on Exhibit H hereto so
long as such indebtedness is satisfied in full no later than November 18,
1996;
(h) the Borrower or any of its Subsidiaries shall (i) have
entered involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its inability
to pay, its debts generally as they become due, (iii) make an assignment for
the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any substantial part of its property, (v) institute
any proceeding seeking to have entered against it an order for relief under
the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, or (vi) fail to contest in good faith any
appointment or proceeding described in Section 9.1.(i) hereof; or
(i) a custodian, receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its
Subsidiaries or any substantial part of any of their Property, or a proceeding
described in Section 9.1(h)(v) shall be instituted against the Borrower, and
such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of sixty (60) days.
Section 9.2. Non-Bankruptcy Defaults;. When any Event of Default
other than those described in Sections 9.1.(h) or (i) has occurred and is
continuing, the Agent shall, if so directed by the Required Banks by notice to
the Borrower, take either or both of the following actions:
(a) terminate the remaining Commitments of the Banks hereunder on
the date stated in such notice (which may be the date thereof); and
(b) declare the principal of and the accrued interest on all
outstanding Notes and other outstanding Obligations of the Borrower to be
forthwith due and payable and thereupon all of said Notes and other
outstanding Obligations, including both principal and interest, shall be and
become immediately due and payable together with all other amounts payable
under this Agreement without further demand, presentment, protest or notice of
any kind.
The Agent, after giving notice to the Borrower pursuant to Section 9.1 or this
Section 9.2, shall also promptly send a copy of such notice to the other
Banks, but the failure to do so shall not impair or annul the effect of such
notice.
Section 9.3. Bankruptcy Defaults;. When any Event of Default
described in subsections (h) or (i) of Section 9.1. hereof has occurred and is
continuing, then all outstanding Notes and other Obligations shall immediately
become due and payable together with all other amounts payable under this
Agreement without presentment, demand, protest or notice of any kind, and the
obligation of the Banks to extend further credit pursuant to any of the terms
hereof shall immediately terminate.
Section 9.4. Letters of Credit;. When any Event of Default,
other than an Event of Default described in subsections (h) or (i) of Section
9.1 hereof has occurred and is continuing, the Borrower shall, upon demand of
the Agent, and when any Event of Default described in subsections (h) or (i)
of Section 9.1 has occurred, the Borrower shall, without notice or demand from
the Agent, immediately pay to the Agent the full amount of each Letter of
Credit, provided, however, that with respect to the undrawn face amount of
Letters of Credit, such amount shall be held by the Agent as collateral
security for such Obligations of the Borrower with respect to such Letters of
Credit, the Borrower hereby agreeing to immediately make each such payment and
acknowledging and agreeing the Agent would not have an adequate remedy at law
for failure of the Borrower to honor any such demand and that the Agent shall
have the right to require the Borrower to specifically perform such
undertaking whether or not any draws had been made under the Letters of
Credit.
Section 9.5. Expenses;. The Borrower agrees to pay to the Agent
and each Bank, or any other holder of any Note outstanding hereunder, all
costs and expenses incurred or paid by the Agent and such Bank or any such
holder, including reasonable attorneys' fees and court costs, in connection
with any Default or Event of Default by the Borrower hereunder or in
connection with the enforcement of any of the terms hereof or of the other
Loan Documents.
SECTION 10. CHANGE IN CIRCUMSTANCES;.
Section 10.1. Change of Law;. Notwithstanding any other
provisions of this Agreement or any Note, if at any time after the date hereof
any change in applicable law or regulation or in the interpretation thereof
makes it unlawful for any Bank to make or continue to maintain Eurocurrency
Loans or to give effect to its obligations as contemplated hereby, such Bank
shall promptly give notice thereof to the Borrower, with a copy to the Agent,
and such Bank's obligations to make or maintain Eurocurrency Loans under this
Agreement shall terminate until it is no longer unlawful for such Bank to make
or maintain Eurocurrency Loans. The Borrower shall prepay on demand the
outstanding principal amount of any such affected Eurocurrency Loans, together
with all interest accrued thereon and all other amounts then due and payable
to such Bank under this Agreement; provided, however, subject to all of the
terms and conditions of this Agreement, if denominated in U.S. Dollars, the
Borrower may then elect to borrow the principal amount of the affected
Eurocurrency Loan from such Bank by means of a Domestic Rate Loan from such
Bank that shall not be made ratably by the Banks but only from such affected
Bank and payments thereon shall be made contemporaneously with payments on the
relevant Borrowing of Eurocurrency Loans.
Section 10.2. Unavailability of Deposits or Inability to
Ascertain, or Inadequacy of, LIBOR;. If on or prior to the first day of any
Interest Period for any Borrowing of Eurocurrency Loans:
(a) the Agent advises the Borrower that deposits in the relevant
currency (in the applicable amounts) are not being offered to it in the
eurocurrency interbank market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that LIBOR as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of funding their
Eurocurrency Loans for such Interest Period,
then the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks
to make Eurocurrency Loans in the affected currency shall be suspended.
Section 10.3. Increased Cost and Reduced Return;. (a) If on or
after the date hereof, the adoption of any applicable law, rule or regulation,
or any change therein, 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 Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:
(i) shall subject any Bank (or its Lending Office) to any tax,
duty or other charge with respect to its Eurocurrency Loans, its Notes or its
obligation to make Eurocurrency Loans, or shall change the basis of taxation
of payments to any Bank (or its Lending Office) of the principal of or
interest on its Eurocurrency Loans or any other amounts due under this
Agreement in respect of its Eurocurrency Loans or its obligation to make
Eurocurrency Loans (except for changes in the rate of tax on the overall net
income of such Bank or its Lending Office imposed by the jurisdiction in which
such Bank's principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding with respect to any Eurocurrency Loans any such requirement
included in an applicable Eurocurrency Reserve Percentage) against assets of,
deposits with or for the account of, or credit extended by, any Bank (or its
Lending Office) or shall impose on any Bank (or its Lending Office) or on the
interbank market any other condition affecting its Eurocurrency Loans, its
Notes or its obligation to make Eurocurrency Loans; and the result of any of
the foregoing is to increase the cost to such Bank (or its Lending Office) of
making or maintaining any Eurocurrency Loan, or to reduce the amount of any
sum received or receivable by such Bank (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount deemed by such
Bank to be material, then, within fifteen (15) days after demand by such Bank
(with a copy to the Agent), the Borrower shall be obligated to pay to such
Bank such additional amount or amounts as will compensate such Bank for such
increased cost or reduction (computed commencing on the effective date of any
event mentioned herein). Each Bank agrees to use its best efforts to give the
Borrower notice of the occurrence of any event mentioned herein.
(b) The parties recognize that as of the date hereof the Banks
are subject to guidelines published by various banking regulators in the
United States and elsewhere with jurisdiction over the Banks, issued pursuant
to the risk-based capital framework developed by the Basle Committee of
Banking Regulation and Supervisory Practices, that call for the Banks to
maintain capital against, among other things, unfunded loan commitments with a
maturity of more than one year. The parties agree that each Bank shall have
the right to require a renegotiation of the fees payable to it under Section
3.1 hereof at any time by giving notice to the Borrower and the Agent of its
desire to so renegotiate such fees if such Bank determines it or any
corporation controlling it is required to maintain capital to support such
Bank's unused Commitment hereunder. Upon the Borrower receiving such notice
from a Bank, for a period of 30 days the Borrower and such Bank shall attempt
to renegotiate the fees payable to such Bank so that such fees shall be
acceptable to both parties in their discretion, which renegotiated fees, if
any, shall become effective on the date specified by the Borrower and Bank in
a written notice to the Agent setting forth such fee. If after such 30 day
period the Borrower and such Bank have been unable to reach such an agreement,
either such party shall have the right to terminate the relevant Bank's
Commitments hereunder by giving the other party and the Agent notice thereof,
whereupon the Commitment of such Bank shall terminate; provided that if any
Loans from such Bank are then outstanding hereunder the Borrower shall have
the right to require that the Commitment of such Bank remain in effect in the
amount of such outstanding Loans and thereafter continue to remain in effect
in the aggregate amount of all Loans of such Bank outstanding hereunder;
provided, however, that any repayment of such Bank's outstanding Loans (other
than through a Refunding Borrowing) shall automatically reduce the amount of
te Commitment of such Bank by the amount of such repayment. Without limiting
the effect of any other provision hereof, it is specifically understood that
each Bank may require the renegotiation of the fees payable to such Bank at
any time hereunder, and no failure or delay on the part of a Bank in requiring
such renegotiation shall be deemed a waiver of, or otherwise limited or
affect, the Bank's right to require such renegotiation.
Section 10.4. Lending Offices;. Each Bank may, at its option,
elect to make its Loans hereunder at the branch, office or affiliate specified
on the appropriate signature page hereof (each a "Lending Office") for each
type of Loan available hereunder or at such other of its branches, offices or
affiliates as it may from time to time elect and designate in a notice to the
Borrower and the Agent.
Section 10.5. Discretion of Bank as to Manner of Funding;.
Notwithstanding any other provision of this Agreement, each Bank shall be
entitled to fund and maintain its funding of all or any part of its Loans in
any manner it sees fit, it being understood, however, that for the purposes of
this Agreement all determinations hereunder shall be made as if each Bank had
actually funded and maintained each Eurocurrency Loan through the purchase of
deposits in the relevant market having a maturity corresponding to such Loan's
Interest Period and bearing an interest rate equal to LIBOR for such Interest
Period.
SECTION 11. THE AGENT;.
Section 11.1. Appointment and Authorization;. Each Bank hereby
irrevocably appoints Harris Trust and Savings Bank its Agent under this
Agreement and the other Loan Documents and hereby authorizes the Agent to take
such action as Agent and on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
Section 11.2. Agent and Affiliates;. The Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as
any other Bank and may exercise or refrain from exercising the same as though
it were not an Agent, and the Agent and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with the
Borrower or any Subsidiary or affiliate of the Borrower as if it were not an
Agent hereunder and thereunder.
Section 11.3. Action by Agent;. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder and under the other Loan
Documents unless the Agent shall be indemnified to its reasonable satisfaction
by the Banks against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. In all cases
in which this Agreement does not require the Agent to take certain actions,
the Agent shall be fully justified in using its discretion in failing to take
or in taking any action hereunder or under the other Loan Documents. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Event of Default, except as expressly
provided in Section 9.2. The Agent shall be acting as an independent
contractor hereunder and nothing herein shall be deemed to impose on the Agent
any fiduciary obligations to the Banks or the Borrower.
Section 11.4. Consultation with Experts;. The Agent may consult
with legal counsel, independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken by
it in good faith in accordance with the advice of such counsel, accountants or
experts.
Section 11.5. Liability of Agent;. No Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken
or not taken by it in connection herewith (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. The Agent nor any of its directors,
officers, agents or employees shall not be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or any borrowing or
other extension of credit hereunder or any other Loan Document; (ii) the
performance or observance of any of the covenants or agreements of the
Borrower in any Loan Document; (iii) the satisfaction of any condition
specified in Section 7, except receipt of items required to be delivered to
the Agent; or (iv) the validity, effectiveness or genuineness of this
Agreement, the Notes, the Letters of Credit, any other Loan Document or any
other instrument or writing furnished in connection herewith. The Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, request or statement, (whether written or oral) or other
documents believed by it to be genuine or to be signed by the proper party or
parties and, in the case of legal matters, in relying on the advice of counsel
(including counsel for the Borrower). The Agent may treat the Banks that are
named herein as the holders of the Notes and the indebtedness contemplated
herein unless and until the Agent receives notice of the assignment of the
Note and the indebtedness held by a Bank hereunder pursuant to an assignment
contemplated by Section 12.11 hereof.
Section 11.6. Indemnification;. Each Bank shall, ratably in
accordance with its Commitments (or, if the Commitments have been terminated
in whole, ratably in accordance with its outstanding Loans and Letter of
Credit Utilization), indemnify the Agent (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsels' fees and
disbursements), claim, demand, action, loss, obligation, damages, penalties,
judgments, suits or liability (except such as result from the Agent's gross
negligence or willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any other Loan Document or any action taken
or omitted by the Agent hereunder or thereunder.
Section 11.7. Credit Decision;. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent
or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement or any other Loan
Document.
Section 11.8. Resignation of the Agent;. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving written notice thereof to the Banks and the
Borrower. Upon any such resignation of the Agent, the Required Banks shall
have the right to appoint, with the consent of the Borrower, a successor
Agent. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$200,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 11 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
Section 11.9. Payments;. Unless the Agent shall have been
notified by a Bank prior to the date on which such Bank is scheduled to make
payment to the Agent of the proceeds of a Loan (which notice shall be
effective upon receipt) that such Bank does not intend to make such payment,
the Agent may assume that such Bank has made such payment when due and the
Agent may in reliance upon such assumption (but shall not be required to) make
available to the Borrower the proceeds of the Loan to be made by such Bank
and, if any Bank has not in fact made such payment to the Agent, such Bank
shall, on demand, pay to the Agent the amount made available to the Borrower
attributable to such Bank together with interest thereon in respect of each
day during the period commencing on the date such amount was made available to
the Borrower and ending on (but excluding) the date such Bank pays such amount
to the Agent at a rate per annum equal to the Federal Funds Rate (as
hereinafter defined). If such amount is not received from such Bank by the
Agent immediately upon demand, the Borrower will, on demand, repay to the
Agent the proceeds of the Loan attributable to such Bank with interest thereon
at a rate per annum equal to the interest rate applicable to the relevant
Loan, but without such payment being considered a payment or prepayment of a
Loan, so that the Borrower will have no liability under Section 2.10 hereof
with respect to such payment. "Federal Funds Rate" shall mean the "Federal
Funds (Effective)" rate described in Section 2.1(a)(ii) hereof.
SECTION 12. MISCELLANEOUS;.
Section 12.1. Withholding Taxes;. (a) Except as otherwise
required by law and subject to Section 12.1(b) hereof, each payment by the
Borrower under this Agreement or the Notes or in respect of the Letters of
Credit shall be made without setoff or counterclaim and without withholding
for or on account of any present or future taxes imposed by or within the
jurisdiction in which the Borrower is domiciled, any jurisdiction from which
the Borrower makes any payment hereunder, or (in each case) any political
subdivision or taxing authority thereof or therein. If any such withholding
is so required, the Borrower shall make the withholding, pay the amount
withheld to the appropriate governmental authority before penalties attach
thereto or interest accrues thereon and forthwith pay such additional amount
as may be necessary to ensure that the net amount actually received by each
Bank and the Agent free and clear of such taxes (including such taxes on such
additional amount) is equal to the amount which that Bank or the Agent (as the
case may be) would have received had such withholding not been made. If the
Agent or any Bank pays any amount in respect of any such taxes, penalties or
interest, the Borrower shall reimburse the Agent or that Bank for that payment
on demand in the currency in which such payment was made. If the Borrower
pays any such taxes, penalties or interest, it shall deliver official tax
receipts evidencing that payment or certified copies thereof to the Agent on
or before the thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Bank that is not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to the Borrower on or before the date the initial Borrowing
is made hereunder, duly completed and signed copies of either Form 1001
(relating to such Bank and entitling it to a complete exemption from
withholding on all amounts to be received by such Bank, including fees,
pursuant to this Agreement and the Loans) or Form 4224 (relating to all
amounts to be received by such Bank, including fees, pursuant to this
Agreement and the Loans) of the United States Internal Revenue Service.
Thereafter and from time to time, each such Bank shall submit to the Borrower
such additional duly completed and signed copies of one or the other of such
Forms (or such successor forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may be (i) notified by the
Borrower to such Bank and (ii) required under then-current United States law
or regulations to avoid or reduce United States withholding taxes on payments
in respect of all amounts to be received by such Bank, including fees,
pursuant to this Agreement or the Loans or the Letters of Credit. Upon the
request of the Borrower, each Bank that is a United States person (as such
term is defined in Section 7701(a)(30) of the Code) shall submit to the
Borrower a certificate to the effect that it is such a United States person.
(c) Inability of Bank to Submit Forms. If any Bank determines,
as a result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit to
the Borrower any form or certificate that such Bank is obligated to submit
pursuant to subsection (b) of this Section 12.1, or that such Bank is required
to withdraw or cancel any such form or certificate previously submitted or any
such form or certificate otherwise becomes ineffective or inaccurate, such
Bank shall promptly notify the Borrower of such fact and the Bank shall to
that extent not be obligated to provide any such form or certificate and will
be entitled to withdraw or cancel any affected form or certificate, as
applicable.
Section 12.2. No Waiver of Rights;. No delay or failure on the
part of any Bank or on the part of the holder or holders of any Note in the
exercise of any power or right shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise thereof
preclude any other or further exercise of any other power or right, and the
rights and remedies hereunder of the Banks and of the holder or holders of any
Notes are cumulative to, and not exclusive of, any rights or remedies which
any of them would otherwise have.
Section 12.3. Non-Business Day;. If any payment of principal or
interest on any Loan or of any fee hereunder shall fall due on a day which is
not a Business Day, interest at the rate such Loan bears for the period prior
to maturity or at the rate such fee accrues shall continue to accrue from the
stated due date thereof to and including the next succeeding Business Day, on
which the same shall be payable.
Section 12.4. Documentary Taxes;. The Borrower agrees that it
will pay any documentary, stamp or similar taxes payable in respect to this
Agreement, the Applications or any Note, including interest and penalties, in
the event any such taxes are assessed irrespective of when such assessment is
made and whether or not any credit is then in use or available hereunder.
Section 12.5. Survival of Representations;. All representations
and warranties made herein or in certificates given pursuant hereto shall
survive the execution and delivery of this Agreement, the Applications and of
the Notes, and shall continue in full force and effect with respect to the
date as of which they were made as long as any credit is in use or available
hereunder.
Section 12.6. Survival of Indemnities;. All indemnities and all
other provisions relative to reimbursement to the Banks of amounts sufficient
to protect the yield of the Banks with respect to the Loans, including, but
not limited to, Section 2.10 and Section 10.3 hereof, shall survive the
termination of this Agreement and the payment of the Loans, the Notes and
obligations in respect of the Letters of Credit.
Section 12.7. Sharing of Set-Off;. Each Bank agrees with each
other Bank a party hereto that if on or after the date of the occurrence of an
Event of Default and the acceleration of the maturity of the Notes pursuant to
Section 9.2 or 9.3 hereof such Bank shall receive and retain any payment,
whether by set-off or application of deposit balances or otherwise
("Set-off"), on any of the Obligations outstanding under this Agreement in
excess of its ratable share of payments on all Obligations then outstanding to
the Banks, then such Bank shall purchase for cash at face value, but without
recourse, ratably from each of the other Banks such amount of the Obligations
held by each such other Bank (or interest therein) as shall be necessary to
cause such Bank to share such excess payment ratably with all the other Banks;
provided, however, that if any such purchase is made by any Bank, and if such
excess payment or part thereof is thereafter recovered from such purchasing
Bank, the related purchases from the other Banks shall be rescinded ratably
and the purchase price restored as to the portion of such excess payment so
recovered, but without interest. Each Bank's ratable share of any such
Set-off shall be determined by the proportion that the aggregate amount of
Loans and Obligations with respect to outstanding Letters of Credit then due
and payable to such Bank bears to the total aggregate amount of the Loans and
Obligations with respect to outstanding Letters of Credit then due and payable
to all the Banks.
Section 12.8. Notices;. Except as otherwise specified herein,
all notices hereunder shall be in writing (including cable, telecopy or telex)
and shall be given to the relevant party at its address, telecopier number or
telex number set forth below, in the case of the Borrower, or on the
appropriate signature page hereof, in the case of the Banks and the Agent, or
such other address, telecopier number or telex number as such party may
hereafter specify by notice to the Agent and the Borrower, given by United
States certified or registered mail, by telecopy or by other telecommunication
device capable of creating a written record of such notice and its receipt.
Notices hereunder to the Borrower shall be addressed to:
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804-4066
Attention: Robert L. Gray
Telephone: (812) 232-1000, Ext. 288
Telecopy: (812) 232-7016
with a copy to:
General Housewares Corp.
1536 Beech Street
Terre Haute, Indiana 47804-4066
Attention: Raymond J. Kulla
Telephone: (812) 232-1000
Telecopy: (812) 232-7016
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier
number specified in this Section and a confirmation of such telecopy has been
received by the sender, (ii) if given by telex, when such telex is transmitted
to the telex number specified in this Section and the answerback is received
by sender, (iii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the addresses specified in this Section; provided that any notice given
pursuant to Section 1 hereof shall be effective only upon receipt.
Section 12.9. Counterparts;. This Agreement may be executed in
any number of counterparts, and by the different parties on different
counterparts, each of which when executed shall be deemed an original but all
such counterparts taken together shall constitute one and the same instrument.
Section 12.10. Successors and Assigns;. This Agreement shall be
binding upon the Borrower and its successors and assigns, and shall inure to
the benefit of each of the Banks and the benefit of their respective
successors and assigns, including any subsequent holder of any Note. The
Borrower may not assign any of its rights or obligations hereunder without the
written consent of all of the Banks.
Section 12.11. Participants and Note Assignees;. Each Bank shall
have the right at its own cost to grant participations (to be evidenced by one
or more agreements or certificates of participation) in the Loans made,
Commitments and/or Letters of Credit, by such Bank at any time and from time
to time, and to assign its rights under such Loans or the Notes evidencing
such Loans to a federal reserve bank; provided that no such participation or
assignment of a Note shall relieve any Bank of any of its obligations under
this Agreement, and provided further that no such assignee or participant
shall have any rights under this Agreement except as provided in this Section
12.11, and the Agent shall have no obligation or responsibility to such
participant or assignee, except that nothing herein provided is intended to
affect the rights of an assignee of a Note to enforce the Note assigned. Any
party to which such a participation or assignment has been granted shall have
the benefits of Section 2.10 and Section 10.3 hereof but shall not be entitled
to receive any greater payment under either such Section than the Bank
granting such participation or assignment would have been entitled to receive
with respect to the rights transferred.
Section 12.12. Assignment of Commitments by Banks;. Each Bank
shall have the right at any time, with the prior consent of Borrower (which
consent shall not be unreasonably withheld or delayed), to sell, assign,
transfer or negotiate all or any part of its Loans, Commitments and/or Letters
of Credit to one or more commercial banks or other financial institutions;
provided that such assignment is in an amount of at least $5,000,000 provided
further that no Bank may make any assignment if after giving effect thereto
the amount of its Commitment hereunder would be less than $5,000,000 and
provided further that without the consent of the Borrower or the Agent, any
Bank may so assign all or part of its Commitment to any affiliate of the
assigning Bank (provided that such affiliate complies with Section 12.1 hereof
at the time of such assignment). Upon any such assignment, and its
notification to the Agent, the assignee shall become a Bank hereunder, all
Loans and the Commitment it thereby holds shall be governed by all the terms
and conditions hereof, and the Bank granting such assignment shall have its
Commitment and its obligations and rights in connection therewith, reduced by
the amount of such assignment. Upon each such assignment, the Bank granting
such assignment shall pay to the Agent for the Agent's sole account a fee of
$2,500.
Section 12.13. Amendments;. Any provision of this Agreement, the
Applications or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by (a) the Borrower, (b) the
Required Banks, and (c) if the rights or duties of the Agent are affected
thereby, the Agent, as applicable; provided that:
(i) no amendment or waiver pursuant to this Section shall (A)
increase any Commitment of any Bank without the consent of such Bank or (B)
reduce the amount of or postpone the date for payment of any principal of or
interest on any Loan or of any fee payable hereunder without the consent of
the Bank to which such payment is owing or which has committed to make such
Loan or other credit hereunder; and
(ii) no amendment or waiver pursuant to this Section shall,
unless signed by each Bank, change the provisions of this Section, the
definition of Required Banks or Termination Date, or any condition precedent
set forth in Section 7 hereof or the provisions of Sections 9.1.(h), 9.1.(i)
or 9.3., or affect the number of Banks required to take any action hereunder.
Section 12.14. Non-Reliance on Margin Stock;. Each of the Banks
represents to the Agent and to each of the other Banks that it in good faith
is not relying upon any Margin Stock as collateral in the extension or
maintenance of the credit provided for in this Agreement.
Section 12.15. Legal Fees and Indemnification;. The Borrower
agrees to pay the reasonable fees and disbursements of Messrs. Chapman and
Cutler, counsel to the Agent, in connection with the preparation and execution
of this Agreement and the other Loan Documents, and any amendment, waiver or
consent related hereto, whether or not the transactions contemplated herein
are consummated. The Borrower further agrees to indemnify each Bank, its
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without
limitations, all expenses of litigation or preparation therefor whether or not
any Bank is a party thereto) which any of them may pay or incur arising out of
or relating to this Agreement, any other Loan Document, the transactions
contemplated hereby or thereby or the direct or indirect application or
proposed application of the proceeds of any Loan or Letter of Credit
hereunder, other than those which arise from the gross negligence or willful
misconduct of the party claiming indemnification. The obligations of the
Borrower under this Section shall survive the termination of this Agreement.
Section 12.16. Currency;. Each reference in this Agreement to
U.S. Dollars or to an Alternative Currency (the "relevant currency") is of the
essence. To the fullest extent permitted by law, the obligation of the
Borrower in respect of any amount due in the relevant currency under this
Agreement shall, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the relevant currency that the Bank entitled to receive such payment
may, in accordance with normal banking procedures, purchase with the sum paid
in such other currency (after any premium and costs of exchange) on the
Business Day immediately following the day on which such party receives such
payment. If the amount in the relevant currency that may be so purchased for
any reason falls short of the amount originally due, the Borrower shall pay
such additional amounts, in the relevant currency, as may be necessary to
compensate for the shortfall. Any obligations of the Borrower not discharged
by such payment shall, to the fullest extent permitted by applicable law, be
due as a separate and independent obligation and, until discharged as provided
herein, shall continue in full force and effect.
Section 12.17. Currency Equivalence;. If for the purposes of
obtaining judgment in any court it is necessary to convert a sum due from the
Borrower hereunder or under the Notes in the currency expressed to be payable
herein or under the Notes (the "specified currency") into another currency,
the parties agree that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase the
specified currency with such other currency on the Business Day preceding that
on which final judgment is given. The obligation of the Borrower in respect
of any such sum due to any Bank or the Agent hereunder or under any Note
shall, notwithstanding any judgment in a currency other than the specified
currency, be discharged only to the extent that on the Business Day following
receipt by such Bank or the Agent, as the case may be, of any sum adjudged to
be so due in such other currency, such Bank or the Agent, as applicable, may
in accordance with normal banking procedures purchase the specified currency
with such other currency. If the amount of the specified currency so
purchased is less than the sum originally due to such Bank or the Agent in the
specified currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Bank and the Agent
against such loss, and if the amount of the specified currency so purchased
exceeds the sum of (a) the amount originally due to the applicable Bank or the
Agent in the specified currency plus (b) any amounts shared with other Banks
as a result of allocations of such excess as a disproportionate payment to
such Bank under Section 12.7 hereof, such Bank or the Agent, as the case may
be, agrees to remit such excess to the Borrower.
Section 12.18. Governing Law;. This Agreement, the Applications
and the Notes, and the rights and duties of the parties hereto and thereto,
shall be construed and determined in accordance with the laws of the State of
Illinois, without regard to the internal laws thereof with respect to
conflicts of law.
Section 12.19. Headings;. Section headings used in this
Agreement are for reference only and shall not affect the construction of this
Agreement.
Section 12.20. Entire Agreement;. This Agreement constitutes the
entire understanding of the parties hereto with respect to the subject matter
hereof and any prior or contemporaneous agreements, whether written or oral,
with respect thereto are superseded hereby.
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set
forth.
Dated as of November 13, 1996.
GENERAL HOUSEWARES CORP.
(SEAL)
By./s/Robert L. Gray
Its Vice President-Finance and Treasurer
Accepted and Agreed to as of the day and year last above written.
Address and Amount of Commitment:
111 West Monroe Street HARRIS TRUST AND SAVINGS BANK, in
Chicago, Illinois 60690 its individual capacity as a Bank,
Attention: Mr. Peter Krawchuk as Agent
Emerging Majors East
Telecopy: (312) 461-2591
Telephone: (312) 461-2783
Revolving Credit
Commitment: $23,000,000 By:/s/Peter Krawchuk
Its Vice President
Lending Offices:
Domestic Rate Loans: 111 West Monroe Street
Chicago, Illinois 60690
Nassau Branch
Eurocurrency Loans: c/o 111 West Monroe Street
Chicago, Illinois 60690
One First National Plaza THE FIRST NATIONAL BANK OF
Chicago, Illinois 60670 CHICAGO
Attention: Mr. Steven Price
Mail Suite 0088
Telecopy: (312) 732-1117 By:/s/Stephen C. Price
Telephone: (312) 732-9099 Its Vice President
Revolving Credit
Commitment: $12,000,000
Lending Offices:
Domestic Rate Loans: One First National Plaza
Chicago, Illinois 60670
Eurocurrency Loans: One First National Plaza
Chicago, Illinois 60670
50 South LaSalle Street THE NORTHERN TRUST COMPANY
Chicago, Illinois 60675
Attention: Candelario Martinez
Telecopy: (312) 444-7028 By /s/Candelario Martinez
Telephone: (312) 557-2816 Its Second Vice President
Revolving Credit
Commitment: $10,000,000
Lending Offices:
Domestic Rate Loans: 50 South LaSalle Street
Chicago, Illinois 60675
Eurocurrency Loans: 50 South LaSalle Street
Chicago, Illinois 60675
EXHIBIT A
REVOLVING CREDIT NOTE
November 13, 1996
FOR VALUE RECEIVED, the undersigned, General Housewares Corp., a Delaware
corporation (the "Borrower"), promises to pay to the order of
________________________ _____________________________ (the "Bank") on the
Termination Date of the hereinafter defined Credit Agreement, at the principal
office of Harris Trust and Savings Bank in Chicago, Illinois (or, in the case
of Eurocurrency Loans denominated in an Alternative Currency, at such office
as the Agent has previously notified the Borrower), in immediately available
funds in the currency in which the applicable Loan was made, the aggregate
unpaid principal amount of all Loans made by the Bank to the Borrower under
its Commitments pursuant to the Credit Agreement and with each Loan to mature
and become payable on the last day of the Interest Period applicable thereto,
but in no event later than the Termination Date, together with interest on the
principal amount of each Loan from time to time outstanding hereunder at the
rates, and payable in the manner and on the dates, specified in the Credit
Agreement.
The Bank shall record on its books or records or on a schedule attached to
this Note, which is a part hereof, each Loan made by it pursuant to its
Commitment, together with all payments of principal and interest and the
principal balances from time to time outstanding hereon, whether the Loan is a
Domestic Rate Loan or a Eurocurrency Loan and the interest rate and Interest
Period applicable thereto and, in the case of any Eurocurrency Loan, the
currency thereof, provided that prior to the transfer of this Note all such
amounts shall be recorded on the schedule attached to this Note. The record
thereof, whether shown on such books or records or on the schedule to this
Note, shall be prima facie evidence of the same, provided, however, that the
failure of the Bank to record any of the foregoing or any error in any such
record shall not limit or otherwise affect the obligation of the Borrower to
repay all Loans made to it pursuant to the Credit Agreement together with
accrued interest thereon.
This Note is one of the Notes referred to in the Credit Agreement dated as of
November 13, 1996, among the Borrower, Harris Trust and Savings Bank, as
Agent, and others (the "Credit Agreement"), and this Note and the holder
hereof are entitled to all the benefits provided for thereby or referred to
therein, to which Credit Agreement reference is hereby made for a statement
thereof. All defined terms used in this Note, except terms otherwise defined
herein, shall have the same meaning as in the Credit Agreement. This Note
shall be governed by and construed in accordance with the laws of the State of
Illinois.
Prepayments may be made hereon and this Note may be declared due prior to the
expressed maturity hereof, all in the events, on the terms and in the manner
as provided for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of any kind
hereunder.
GENERAL HOUSEWARES CORP.
By /s/
Its _____________________________
EXHIBIT B
SUBSIDIARIES OF GENERAL HOUSEWARES CORP.
I. CONSOLIDATED SUBSIDIARIES
JURISDICTION OF PERCENTAGE
NAME INCORPORATION OF OWNERSHIP
Chicago Cutlery, Inc. Florida 100%
Chicago Cutlery etc., Inc. Indiana 100%
General Housewares Export U.S. Virgin Islands 100%
Corporation
General Housewares of Canada Inc. Province of Quebec, Canada 100%
II. SUBSIDIARIES WHICH ARE NOT CONSOLIDATED
NONE
EXHIBIT C
To each of the Banks named in the
hereinafter defined Credit Agreement
c/o Harris Trust and Savings Bank,
as Agent under the Credit Agreement
Gentlemen:
I am Secretary and General Counsel of General Housewares Corp., a Delaware
corporation (the "Borrower"), in connection with the authorization of and the
execution and delivery of the Credit Agreement dated as of November 13, 1996,
among the Borrower and you and the banks named therein (the "Credit
Agreement"). All terms used and not defined herein shall have the meanings
assigned to them in the Credit Agreement.
In rendering this opinion, I have made such investigations of fact and have
considered such questions of law as I have deemed necessary for the purposes
of this opinion, which is delivered to you pursuant to Section 7.1(a) of the
Credit Agreement. Based on the foregoing, it is my opinion that:
(i) The Borrower is duly organized and validly existing in good
standing under the laws of the State of Delaware; has the corporate power to
carry on its present business; is duly licensed or qualified in all states and
jurisdictions wherein the nature of the business carried on by it or the
assets and properties owned or leased by it requires such qualification or
licensing, except where the failure to be so licensed or qualified would not
have a material adverse effect on the financial condition or properties,
business or operations of the Borrower and the Consolidated Subsidiaries taken
as a whole; and has the corporate power and authority to enter into the Credit
Agreement and the Applications, to make the borrowings and request letters of
credit therein provided for, to issue its Notes and Applications and to
perform each and all of the matters and things therein provided for.
(ii) Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly licensed or qualified and is in good standing in
each jurisdiction in which the character of the properties owned or leased by
it or the nature of the business transacted by it makes such licensing or
qualification necessary and all of the issued and outstanding shares of
capital stock of each such Subsidiary have been duly issued, are fully paid
and non-assessable and are owned by the Borrower, by one or more Subsidiaries,
or by the Borrower and one or more Subsidiaries.
(iii) The Credit Agreement, Applications and the Notes delivered
on the date hereof have been duly authorized, executed, and delivered by and
on behalf of the Borrower and constitute legal, valid, and enforceable
obligations of the Borrower, except to the extent affected by bankruptcy,
insolvency or other similar laws relating to or affecting the enforcement of
creditors' rights and remedies generally and general principles of equity.
(iv) The Loan Documents do not, nor will the performance or
observance by the Borrower of any of the matters and things therein provided
for, contravene any provision of law applicable to the Borrower, or, to our
knowledge, any judgment or decree applicable to the Borrower, the Certificate
of Incorporation, as amended, or By-laws of the Borrower, or any indenture or
material agreement to which the Borrower is a party or by which it or any of
its properties is bound.
(v) All authorizations, consents, approvals, filings,
registrations, exemptions and regulatory approvals necessary to permit
borrowings and requests for letters of credit by the Borrower under the Credit
Agreement and the Applications have been obtained and remain in full force and
effect.
(vi) The making of the Loans and the application by the Borrower
of the proceeds thereof do not violate Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System.
(vii) The Borrower is not an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(viii) There is no litigation or governmental proceeding pending,
or to the best of my knowledge threatened, against the Borrower or any
Subsidiary which could reasonably be expected to (i) materially adversely
affect the business and properties of the Borrower and its Subsidiaries on a
consolidated basis or (ii) impair the validity or enforceability of any of the
Loan Documents or materially impair the ability of the Borrower to perform its
obligations under any of the Loan Documents.
The opinion of Raymond J. Kulla, Esq., shall cover such other matters relating
to the Credit Agreement as the Banks may reasonably request and may rely upon
an opinion of Canadian counsel with respect to the opinion required in
paragraph (ii) regarding the Borrower's Canadian Subsidiary. With respect to
matters of fact on which such opinion is based, such counsel shall be entitled
to rely on appropriate certificates of public officials and officers of the
Borrower.
Respectfully submitted,
EXHIBIT D
GENERAL HOUSEWARES CORP.
COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished to the Agent and the Banks pursuant
to that certain Credit Agreement dated as of November 13, 1996, by and among
the Borrower, the Agent and the Banks (the "Agreement"). Unless otherwise
defined herein, the terms used in this Compliance Certificate have the
meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ________________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or event which
constitutes a Default or Event of Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of
the Agreement, all of which data and computations are true, complete and
correct.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _____ day of
__________________, 19___.
SCHEDULE I
GENERAL HOUSEWARES CORP.
Compliance Calculations for Credit Agreement
Dated as of November 13, 1996
Calculations as of _________________, 19___
A. Leverage Ratio (Section 8.7)
1. Obligations for Borrowed Money $_____________
2. Conditional Sale Obligations ______________
3. Guaranties ______________
4. Take or pay (and similar) contract obligations _______________
5. Debt (to the extent not otherwise included
above) secured by liens or security interests _______________
6. Capitalized Lease Obligations (to the extent
not otherwise included above) _______________
7. Add Lines 1 through 6 (Total Indebtedness) _______________
8. Short term Indebtedness (other than current _______________
maturities of long term Indebtedness)
9. Line 7 minus Line 8 (Consolidated Funded Debt)
10. Total Stockholders Equity (Consolidated Net Worth$______________
11. Consolidated Funded Debt (Line 9 above) _______________
12. Add Line 10 and Line 11 (or subtract Line 10
from Line 11 if Line 11 is a negative number) _______________
13. Ratio of Line 9 to Line 12 _______: 1.0
14. Line 13 ratio must not be in an amount greater than .45:1.0
B. Consolidated Net Worth (Section 8.6).
1. Consolidated Net Worth
(Line A.10. above) $_______________
2. Line 1 must not be less than $45,000,000 (to be increased as
provided in Section 8.6)
C. Current Ratio (Section 8.9).
1. Consolidated current assets $_______________
2. Consolidated current liabilities $_______________
3. Ratio of Line 1 to Line 2 : 1.0
4. Line 3 ratio must not be in an amount less than 1.5 : 1.0
D. Fixed Charge Coverage Ratio (Section 8.8).
1. Consolidated Net Earnings (including non-
operating losses to the extent cash is reduced
and excluding non-operating gains) $_______________
2. Consolidated Interest Expense $_______________
3. Federal, state and local income taxes $_______________
4. Payments due under operating leases (Rentals) $_______________
5. Sum of Lines 1 through 4 (Earnings Available
for Fixed Charges) $
6. Consolidated Interest Expense
(including capitalized leases) $_______________
7. Payments due under operating leases (Line D.4.
above) _______________
8. Sum of Lines 6 and 7 $
9. Ratio of Line 5 to Line 8 to 1.0
10. Line 12 ratio must be equal to or greater than: 2.0 to 1.0
EXHIBIT E
FUNDED DEBT OF SUBSIDIARIES AND EXISTING SHORT TERM
INDEBTEDNESS OF BORROWER
1. Borrower's indebtedness to Merchant's Bank under $1,000,000 line of
credit.
EXHIBIT F
LIENS
None
EXHIBIT G
GUARANTIES
None
EXHIBIT H
DESCRIPTION OF FIRST COLONY AND AMERICAN MAYFLOWER DEBT
See Attached
GENERAL HOUSEWARES CORP.
THIRD LIMITED WAIVER AND
SECOND AMENDMENT TO NOTE AGREEMENTS
Dated as of November 15, 1996
Re: Note Agreements dated as of November 15, 1994
and
$10,000,000 8.41% Senior Notes
due November 15, 2004
TABLE OF CONTENTS
Parties
SECTION 1. WAIVERS
SECTION 2. AMENDMENTS TO NOTE AGREEMENTS
Section 2.1. Amendments to Section 5.7
Section 2.2. Amendments to Section 5.12
Section 2.3. Amendments to Section 8.1
SECTION 3. RIGHT TO PUT NOTES
SECTION 4. WARRANTIES AND REPRESENTATIONS
SECTION 5. CONDITIONS PRECEDENT
Section 5.1. Opinion of Counsel
Section 5.2. Consent
Section 5.3. Waiver and Amendment Fee
Section 5.4 Payment of Fees and Disbursements of Special Counsel
SECTION 6. MISCELLANEOUS PROVISIONS
Section 6.1. Effective Date
Section 6.2. Ratification of Note Agreements
Section 6.3. Counterparts
Section 6.4. Reference to Note Agreements
Signature Page
Attachments to Waiver and Amendment:
Schedule I Noteholders and Principal Amount of Notes Held
Annex A Representations and Warranties of the Company
Annex B Form of Closing Opinion of Counsel to the Company
GENERAL HOUSEWARES CORP.
THIRD LIMITED WAIVER AND
SECOND AMENDMENT TO NOTE AGREEMENTS
Re: Note Agreements dated as of November 15, 1994
and
$10,000,000 8.41% Senior Notes
due November 15, 2004
.c4.Parties;
To the Noteholders which are signatories Dated as of
to this Waiver and Amendment November 15, 1996
Ladies and Gentlemen:
Reference is hereby made to the separate Note Agreements, each dated as of
November 15, 1994 by and between General Housewares Corp., a Delaware
corporation (the "Company"), and each of Northern Life Insurance Company,
ReliaStar Bankers Security Life Insurance Society (formerly Bankers Security
Life Insurance Society, successor to The North Atlantic Life Insurance Company
of America) and Berkshire Life Insurance Company (herein referred to as the
"Noteholders") under and pursuant to which $10,000,000 8.41% Senior Notes due
November 15, 2004 of the Company were issued (such Note Agreements, as
heretofore amended by that certain First Amendment to Note Agreements dated as
of May 1, 1996 (the "First Amendment") among the Company and, among others,
the Noteholders, are herein referred to as the "Note Agreements"). Although
$20,000,000 of the 8.41% Senior Notes were originally issued, as hereinafter
discussed the Company has prepaid $10,000,000 of such Senior Notes on November
15, 1996 leaving $10,000,000 of such Senior Notes outstanding (herein, the
"Notes"). Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed thereto in the Note Agreements.
As set forth in that certain Certificate of the Company to the Noteholders
dated April 22, 1996, the Company heretofore intended to (i) dispose of
certain assets associated with its plant located in Sidney, Ohio which is
commonly referred to as the Sidney Division (the "Sidney Disposition") to New
Wagner, Inc., a corporation owned by William Cullen, and (ii) close certain
retail stores located in Florida City, Florida, Las Vegas, Nevada and Tilton,
New Hampshire (the "Store Closings"). The Company reported a net loss
attributable to the planned Sidney Disposition and the Store Closings on its
financial statements for the fiscal quarter ending on March 31, 1996 (the
"First Quarter Loss"). Due to the effect of the First Quarter Loss and
related matters on certain financial covenants in the Note Agreements, the
Note Agreements were amended as set forth in the First Amendment.
As a result of the death of William Cullen prior to the consummation of the
Sydney Disposition, the New Wagner, Inc. purchase of the Sidney Division was
terminated. Subsequently, a new purchase agreement was entered into with
Wagnerware Corporation (the "Wagnerware Purchase Agreement") to effect the
Sidney Disposition. Since the purchase price for the Sidney Division was less
under the Wagnerware Purchase Agreement than under the prior purchase
agreement and because additional losses were incurred by the Sidney Division
due to the deterioration of sales and earnings of the Sidney Division prior to
the consummation of the sale to Wagnerware Corporation, the Company, in
addition to the First Quarter Loss, recognized a loss of $771,000 attributable
to the reduced purchase price and such additional losses, on its financial
statements for the fiscal quarter ending June 30, 1996 (the "Second Quarter
Loss").
Section 5.7 of the Note Agreements requires that the Company maintain
as of the end of the fiscal quarter ending September 30, 1996 the ratio of
Earnings Available for Fixed Charges to Fixed Charges for the immediately
preceding period of four consecutive fiscal quarters at not less than 1.60 to
1.00 (the "Required Coverage Ratio").
Section 5.12 of the Note Agreements prohibits the Company from making
any Restricted Payments if after giving effect thereto the aggregate amount of
Restricted Payments made during the period from and after December 31, 1993 to
and including the date of the making of the Restricted Payment in question
would exceed the sum of (A) $4,000,000 plus (B) 50% of Consolidated Net Income
for the period from and after the Closing Date (as defined in the Note
Agreements) to and including the date of the making of the Restricted Payment
in question, computed on a cumulative basis for said entire period (or if such
Consolidated Net Income is a deficit figure, then minus 100% of such deficit)
(the "Restricted Payments Limitation").
The Company has prepaid on November 15, 1996 $10,000,000 aggregate principal
amount of the 8.41% Senior Notes held by First Colony Life Insurance Company
and its affiliate, American Mayflower Life Insurance Company, at an aggregate
prepayment price of $10,799,332.79, which prepayment price consists of (i)
$10,000,000 (aggregate principal amount outstanding on such Notes), plus (ii)
$786,832.79 (aggregate Make-Whole Amount for such Notes), plus (iii)
$12,500.00 (pro rata portion of the second half of the fee which the Company
agreed to pay to the holders of the Notes in connection with the Second
Limited Waiver dated August 13, 1996) (such prepayment of Notes is herein
referred to as the "First Colony Prepayment").
Due to the combined effect of the First Quarter Loss, the Second Quarter Loss,
smaller than expected earnings in the fiscal quarter ending September 30, 1996
and the First Colony Prepayment on its ability to comply with certain of its
financial covenants in the Note Agreement, the Company desires that the
Noteholders waive the Company's compliance with certain provisions of the Note
Agreements and desires that the Note Agreements be further amended all as
hereinafter set forth. Pursuant to Section 7.1 of the Note Agreements,
holders of at least 66-2/3% in aggregate principal amount of the outstanding
Notes (the "Requisite Holders") must waive compliance with such provisions and
consent to such amendments. Since you are the holders of the outstanding
Notes in the principal amounts set opposite your names on Schedule I, the
Company hereby requests that you accept the waivers and amendments as set
forth below. Upon satisfaction of the conditions precedent set forth in
Section 5 hereto this instrument shall constitute an agreement which waives
certain provisions of the Note Agreements and amends the Note Agreements as of
the Closing Date (defined below) in the respects, but only in the respects,
hereinafter set forth:
SECTION 1. WAIVERS;.
In consideration of the satisfaction of the conditions precedent set forth
below, the undersigned Noteholders hereby waive (i) any rights to be prepaid
pursuant to Section 7.2 of the Note Agreements in connection with the First
Colony Prepayment, (ii) the requirement of Section 5.7 of the Note Agreements
that the Company maintain the Required Coverage Ratio as of the end of the
fiscal quarter ending September 30, 1996, (iii) the requirement of Section
5.12 of the Note Agreements that the Company comply with the Restricted
Payments Limitation as it applies to the $300,000 quarterly dividend payment
made by the Company on or about September 30, 1996, and (iv) the requirements
of Section 5.12 of the Note Agreements, after giving effect to the amendments
thereto set forth herein, as it applies to the $300,000 quarterly dividend
payment which the Company expects to make on or about December 31, 1996.
SECTION 2. AMENDMENTS TO NOTE AGREEMENTS;.
Section 2.1. Amendments to Section 5.7;. Section 5.7 of the Note
Agreements is amended and restated to read in its entirety as follows:
"Section 5.7. Fixed Charges Coverage Ratio;. The Company will keep
and maintain the ratio of Earnings Available for Fixed Charges to Fixed
Charges as of the end of each fiscal quarter set forth below for the preceding
fiscal period hereinafter specified (the "Fiscal Period") at not less than
1.75 to 1.00: (a) as of the end of the fiscal quarter ending December 31,
1996, the Fiscal Period shall be the fiscal quarters ending September 30, 1996
and December 31, 1996 (taken as a single accounting period), (b) as of the end
of the fiscal quarter ending March 31, 1997, the Fiscal Period shall be the
fiscal quarters ending September 30, 1996, December 31, 1996 and March 31,
1997 (taken as a single accounting period) and (c) as of the end of any fiscal
quarter ending after March 31, 1996 (a "Later Fiscal Quarter"), the Fiscal
Period shall be the immediately preceding period of four consecutive fiscal
quarters (taken as a single accounting period) ending the last day of such
Later Fiscal Quarter; provided, however, that in calculating compliance with
this Section 5.7, Earnings Available for Fixed Charges and Fixed Charges shall
be calculated without giving effect to the payment of the First Colony Premium
or to the tax consequences resulting from such payment."
Section 2.2. Amendments to Section 5.12;. Section 5.12(a) of the
Note Agreements is amended and restated to read in its entirety as follows:
"Section 5.12. Restricted Payments;. (a) The Company will not except
as hereinafter provided:
(1) Declare or pay any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of common stock of the Company);
(2) Directly or indirectly, or through any Subsidiary or through
any Affiliate of the Company, purchase, redeem or retire any shares of its
capital stock of any class or any warrants, rights or options to purchase or
acquire any shares of its capital stock (other than (i) in exchange for or out
of the net cash proceeds to the Company from the substantially concurrent
issue or sale of shares of common stock of the Company or warrants, rights or
options to purchase or acquire any shares of its common stock, and (ii)
payments to any officer of the Company in connection with the exercise of such
officer's stock appreciation rights granted pursuant to stock purchase plans
of the Company and/or its Restricted Subsidiaries, to the extent such payments
are required to be deducted in the calculation of Consolidated Net Income); or
(3) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such
other payments or distributions being herein collectively called "Restricted
Payments"), if after giving effect thereto the aggregate amount of Restricted
Payments made during the period from and after December 31, 1993 to and
including the date of the making of the Restricted Payment in question would
exceed the sum of (A) $4,500,000 plus (B) 50% of Consolidated Net Income for
the period from and after January 1, 1995 to and including the date of the
making of the Restricted Payment in question, computed on a cumulative basis
for said entire period (or if such Consolidated Net Income is a deficit
figure, then minus 100% of such deficit); provided, however, that in
calculating compliance with this Section 5.12, Consolidated Net Income shall
be calculated without giving effect to the payment of the First Colony Premium
or to the tax consequences resulting from such payment."
Section 2.3. Amendments to Section 8.1;. (a) The definition of
"Take-Back Notes" in Section 8.1 of the Note Agreements is hereby restated to
read as follows:
"'Take-Back Notes' shall mean those certain promissory notes in the aggregate
principal amount of $3,000,000 issued to the Company by Wagnerware
Corporation, an Ohio corporation, as a portion of the purchase price for the
Sidney Division, pursuant to an Asset Purchase Agreement dated as of August 1,
1996 between the Company and Wagnerware Corporation"
(b) Section 8.1 of the Note Agreements is hereby amended by
adding the following definition in alphabetical order:
"First Colony Premium" shall mean the $786,832.79 aggregate Make-Whole Amount
paid to First Colony Life Insurance Company and its affiliate, American
Mayflower Life Insurance Company, in connection with the Company's prepayment
on November 15, 1996 of the Notes held by such parties."
SECTION 3. RIGHT TO PUT NOTES;.
If, at any time during the period from the Closing Date to and including March
31, 1997, a Default or Event of Default shall occur under the Note Agreements
or any event or condition occurs which would require the Company, in order to
avoid the occurrence or continuation of a Default or Event of Default, to
obtain a waiver or amendment of any provision of the Note Agreements with
respect to such period (any such Default, Event of Default or other event or
condition being herein referred to as a "Put Event"), then, within 30 days
after such holder shall have obtained actual knowledge of the occurrence of
any Put Event, any holder of a Note shall have the option and right by written
notice to the Company (a "Put Notice") to require the Company to prepay, and
if such option is exercised by such holder the Company shall prepay, its Notes
on the date specified by such holder in such Put Notice (which date shall be
not less than 10, nor more than 30, days after the date such Put Notice is
delivered to the Company) at a price equal to the outstanding principal amount
of such Notes plus accrued interest thereon to the date of such prepayment,
together with a premium equal to the Make Whole Amount, determined as of two
Business Days prior to the date of such prepayment. The Company shall provide
written notice to all holders of Notes of any Put Event within three Business
Days after the date on which a Responsible Officer of the Company acquires
knowledge of such Put Event.
SECTION 4. WARRANTIES AND REPRESENTATIONS;.
The Company represents and warrants that all representations and warranties
set forth in Annex A attached hereto are true and correct as of the Closing
Date.
SECTION 5. CONDITIONS PRECEDENT;.
The effectiveness of this Third Limited Waiver and Second Amendment to Note
Agreements (this "Waiver and Amendment") shall be subject to the fulfillment
by the Company of the following conditions precedent on November 18, 1996 (the
"Closing Date"):
Section 5.1. Opinion of Counsel;. You shall have received from
Raymond J. Kulla, Esq., counsel for the Company, his opinion dated the Closing
Date, in form and substance satisfactory to you, and covering the matters set
forth in Annex B hereto.
Section 5.2. Consent;. The Company shall have obtained the
written consent of the Requisite Holders, as evidenced by their signatures at
the foot of this Waiver and Amendment.
Section 5.3. Waiver and Amendment Fee;. Each of the Noteholders
shall have received the following fee (a "Waiver and Amendment Fee"), which
fee shall be paid by bank wire transfer pursuant to the wiring instructions in
Schedule I of the Note Agreements or pursuant to any other written
instructions provided to you:
NOTEHOLDERWaiver andAmendment FeeNorthern Life Insurance Company
$7,000.00
ReliaStar Bankers Security Life Insurance Society $2,500.00
Berkshire Life Insurance Company $2,500.00
Total $12,500.00
Section 5.4 Payment of Fees and Disbursements of Special
Counsel;. The Company shall have paid the reasonable fees and disbursements
of Chapman and Cutler, special counsel to the Noteholders..c1.Section 6.
Miscellaneous Provisions;.
Section 6.1. Effective Date;. When the conditions precedent set
forth in Section 3 hereof have been satisfied, this Waiver and Amendment shall
become effective on and as of the Closing Date.
Section 6.2. Ratification of Note Agreements;. Except as herein
expressly waived and/or amended, the Note Agreements are in all respects
ratified and confirmed. If and to the extent that any of the terms or
provisions of the Note Agreements are in conflict or inconsistent with any of
the terms or provisions of this Waiver and Amendment, this Waiver and
Amendment shall govern.
Section 6.3. Counterparts;. This Waiver and Amendment may be
simultaneously executed in any number of counterparts, and all such
counterparts together, each as an original, shall constitute but one and the
same instrument.
Section 6.4. Reference to Note Agreements;. Any and all notices,
requests, certificates and any other instruments, including the Notes, may
refer to the Note Agreements or the Note Agreements dated as of November 15,
1994, without making specific reference to this Waiver and Amendment, but all
such references shall be deemed to include this Waiver and Amendment.
The execution hereof by you shall constitute an agreement between us for the
uses and purposes hereinabove set forth, and this Waiver and Amendment may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one agreement.
.c4.Signature Page;
GENERAL HOUSEWARES CORP.
By /s/Robert L. Gray
Its Vice President of Finance/Treasurer
Accepted as of the Closing Date.
NORTHERN LIFE INSURANCE COMPANY
By /s/
Its
RELIASTAR BANKERS SECURITY LIFE INSURANCE SOCIETY
By /s/
Its
By /s/
Its
BERKSHIRE LIFE INSURANCE COMPANY
By /s/
Its
NAME OF NOTEHOLDER PRINCIPAL AMOUNT OF
NOTES HELD
Northern Life Insurance Company $6,000,000.00
Reliastar Bankers Security Life $2,000,000.00
Insurance SocietyBerkshire Life Insurance Company
$2,000,000.00
Representations and Warranties
The Company represents and warrants to you as follows:
1. Corporate Organization and Authority. The Company (a)
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on its
business as now conducted and as presently proposed to be conducted; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes
such licensing or qualification necessary.
2. Waiver and Amendment is Legal and Authorized. (a) The
compliance by the Company with all of the provisions of the Note Agreements,
as amended by the Waiver and Amendment
(i) is within the corporate powers of the Company; and
(ii) will not violate any provisions of any law or any order of
any court or governmental authority or agency and will not conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under the Articles of Incorporation or By-laws of the
Company or any indenture or other agreement or instrument to which the Company
is a party or by which it may be bound or result in the imposition of any
Liens or encumbrances on any property of the Company.
(b) The execution and delivery of the Waiver and Amendment has
been duly authorized by proper corporate action on the part of the Company (no
action by the stockholders of the Company being required by law, by the
Articles of Incorporation or By-laws of the Company or otherwise); and the
Waiver and Amendment has been executed and delivered by the Company and the
Note Agreements, as amended by the Waiver and Amendment, constitute the legal,
valid and binding obligations, contracts nd agreements of the Company
enforceable in accordance with their terms.
3. The Company on August 16, 1996 consummated the sale of the
Sidney Division to Wagnerware Corporation pursuant to the Asset Purchase
Agreement dated as of August 1, 1996 between the Company and Wagnerware
Corporation.
4. No Defaults. After giving effect to the Waiver and Amendment,
no Default or Event of Default has occurred and is continuing.
5. Governmental Consent. No approval, consent or withholding of
objection on the part of, or filing, registration or qualification with any
governmental body, Federal or state, is necessary in connection with the
execution and delivery of the Waiver and Amendment.
6. On November 15, 1996 the Company prepaid $10,000,000 aggregate
principal amount of Notes held by First Colony Life Insurance Company and its
affiliate, American Mayflower Life Insurance Company, at an aggregate
prepayment price of $10,799,332.79, which prepayment price consisted of (i)
$10,000,000 (aggregate outstanding principal amount of such Notes) plus (ii)
786,832.79 (aggregate Make-Whole Amount for such Notes) plus (iii) $12,500.00
(pro rata portion of the second half of the fee which the Company agreed to
pay to the holders of the Notes in connection with the Second Limited Waiver
dated August 13, 1996).
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of Raymond J. Kulla, Esq., counsel for the Company, which
is called for by 3.1 of the Waiver and Amendment, shall be dated the
Closing Date and addressed to the Noteholders, shall be satisfactory in scope
and form to the Noteholders and shall be to the effect that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, has the
corporate power and the corporate authority to execute and perform the Waiver
and Amendment and has the full corporate power and the corporate authority to
conduct the activities in which it is now engaged and is duly licensed or
qualified and is in good standing as a foreign corporation in each
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business transacted by it makes such licensing or
qualification necessary except where the failure to be so licensed or
qualified will not have a materially adverse effect on the business and
properties of the Company.
2. The Waiver and Amendment has been duly authorized by all
necessary corporate action on the part of the Company, has been duly executed
and delivered by the Company and the Note Agreements, as amended by the Waiver
and Amendment, constitute the legal, valid and binding contracts of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors' rights
generally, and general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or at
law).
3. No approval, consent or withholding of objection on the part
of, or filing, registration or qualification with, any governmental body,
Federal or state, is necessary in connection with the execution and delivery
of the Waiver and Amendment.
4. The execution, delivery and performance by the Company of the
Waiver and Amendment will not violate any provisions of any law or any order
of any court or governmental agency or authority and will not conflict with or
result in any breach of any of the provisions of, or constitute a default
under or result in the creation or imposition of any Lien upon any of the
property of the Company pursuant to the provisions of the Articles of
Incorporation or By-laws of the Company or any agreement or other instrument
known to such counsel to which the Company is a party or by which the Company
may be bound.
The opinion of Raymond J. Kulla, Esq. shall cover such other matters relating
to the execution and delivery of the Waiver and Amendment as the Noteholders
may reasonably request. With respect to matters of fact on which such opinion
is based, such counsel shall be entitled to rely on appropriate certificates
of public officials and officers of the Company. The opinion of Raymond J.
Kulla, Esq. may be relied upon by the Noteholders and their assignees and
transferees.
