3.6 Conditions Subsequent to the Initial Extension of Credit. The obligation of the Lender Group (or any member thereof) to continue to make Advances (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of each of the conditions subsequent set forth below (the failure by Borrowers to so perform or cause to be performed constituting an Event of Default):
(a) on or prior to the date that is 60 days after the Closing Date, Borrowers shall deliver to Agent certified copies of the policies of insurance, together with the endorsements thereto, as are required bySection 5.8, the form and substance of which shall be satisfactory to Agent and its counsel;
(b) on or prior to the date that is 60 days after the Closing Date, Agent shall have received a Collateral Access Agreement with respect to: (a) the following locations: 100 American Metro Boulevard, Suite 108, Hamilton, NJ 08619; 100 Eldredge Street, Binghamton, NY 13902; 6421 Congress Avenue, Suite 201, Boca Raton, FL 33487; 2000 Lenox Drive, Suite 202, Lawrenceville, NJ 08648; 275 Finchdene Square, Scarborough, ON Canada M1X 1C7; Rogers Service Group, 93 Ely Street, Binghamton, NY 13902; Servicecraft, Inc., 6565 Knott Avenue, Buena Park, CA 90621; Kane Warehousing, DC-5 Stauffer Industrial Park, Taylor, PA 18517; Distribution Technology, 1411 Continental Blvd., Charlotte, NC 28273; and Park Ridge Workshop, 220 S. 7th Street, Montrose, IA 52639; and (b) the following locations where “Brand Inventory” (as defined in the Acquisition Agreement) will be located during the term of the Transition Services Agreement: Coty, Inc., 1400 Broadway Road, Sanford, NC 27332; CSCS, 520 Northridge Park Drive, Rural Hall, NC 27045; Autumn Harp, 61 Pine Street, Bristol, VT 05443; Korex Canada, 78 Titan Road, Toronto, Ontario, Canada, M8Z 2J8; Coughlan Products Corp., 357 Hamburg Tpk, Wayne, NJ 07474; Marietta Corp., 37 Huntington Street, PO Box 5250, Cortland, NY 13045; Strive Group, 400 Broadacres Drive, Bloomfield, NJ 07003; Marketing Horizons Display, LLC, 59 Spence Street, Bayshore, NY 11706; Twincraft Soap, 2 Tigan Street, Winooski, VT 05404; USC Solutions Inc., 546 Harvey Faulk Road, Sanford, NC 27330; COPAK Services, 6420 Saddle Creek Court, Harrisburg, NC 28075;provided,however, if 60 days after the Closing Date Borrowers have failed to obtain Collateral Access Agreements with respect to any location, an Event of Default shall not have occurred if Agent shall have established a reserve pursuant toSection 2.1(b) of two months’ rent (plus any amounts of rent that are past due) payable with respect to any such locations;
(c) on or prior to the date that is 7 days after the Closing Date, Borrowers shall have taken the following actions with respect to Intellectual Property:
(i) assignment and filing for recordation in the United States Patent and Trademark Office and Canadian Intellectual Property Office of patents assigned from Coty S.A.S. to Lander Intangibles Corporation;
(ii) assignment and filing for recordation of trademarks from Coty Canada Inc. or Coty B.V. to Lander Intangibles Corporation; and
(iii) release of security interest and filing for recordation in the United States Patent and Trademark Office by Prencen Lending LLC of (A) trademarks and patents of Lander Intangibles Corporation and (B) trademarks of Lander Co., Inc.;
(d) as soon as is reasonably practicable after the Closing Date, Borrowers shall use their best efforts to obtain an assignment and filing for recordation with the United States Patent and Trademark Office of the patent “Repeating pattern for an embossed wipe or similar surface” from the inventor to Playtex Products Inc. and the execution and filing for recordation with the United States Patent and Trademark Office of releases of security interest in such patent from General Electric Capital Corporation and Wells Fargo Bank, N.A.;
(e) on or prior to April 30, 2007, Parent shall have taken all necessary corporate action to amend its Certificate of Incorporation to delete Article VII thereof and shall have delivered reasonably satisfactory evidence thereof to Agent;
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(f) on or prior to the date that is 30 days after the Closing Date, Agent shall have received a Control Agreement with respect to account no. 0054-8098-9445 of Cenuco, Inc. with Bank of America, National Association;provided,however, that if Borrowers are unable to obtain such Control Agreement within 30 days after the Closing Date, Borrowers shall have an additional 30 days to (y) close and move such Deposit Account to a Cash Management Bank reasonably satisfactory to Agent and (z) obtain a Control Agreement with respect to such Deposit Account; and
(g) on or prior to the date that is 5 Business Days after the Closing Date, Agent shall have received the original Stock certificate of Cenuco, Inc. as well as a Stock power with respect thereto endorsed in blank.
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, each Credit Party makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement;provided,however, that the representations and warranties set forth in this Article IV shall not apply to Lander Canada so long as Lander Canada’s total assets are less than $8,000,000 at any time.
4.1 No Encumbrances. With the exception of the personal property referred to in Section 4.16 to which the separate representations and warranties of that section apply, each Credit Party and its Subsidiaries has good and marketable title to, or a valid leasehold interest in, their personal property assets and good and marketable title to, or a valid leasehold interest in, their Real Property, in each case, free and clear of Liens except for Permitted Liens.
4.2 Eligible Accounts. As to each Account that is identified by a Borrower as an Eligible Account in a borrowing base report submitted to Agent, such Account is (a) a bona fide existing payment obligation of the applicable Account Debtor created by the sale and delivery of Inventory or the rendition of services to such Account Debtor in the ordinary course of Borrowers’ business, (b) owed to Borrowers without any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation, and (c) not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Accounts.
4.3 Eligible Inventory. As to each item of Inventory that is identified by Administrative Borrower as Eligible Inventory in a borrowing base report submitted to Agent, such Inventory is (a) of good and merchantable quality, free from known defects, and (b) not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Inventory.
4.4 Equipment. Each material item of Equipment of each Credit Party and their respective Subsidiaries is used or held for use in their business and is in good working order, ordinary wear and tear and damage by casualty excepted.
4.5 Location of Inventory and Equipment. Except as provided onSchedule 4.5, the Inventory and Equipment (other than vehicles or Equipment out for repair) of Borrowers and their Subsidiaries are not stored with a bailee, warehouseman, or similar party and are located only at, or in-transit between, the locations identified on Schedule 4.5 (as such Schedule may be updated pursuant toSection 5.9).
4.6 Inventory Records. Each Borrower that holds inventory keeps records that are correct and accurate in all material respects itemizing and describing the type, quality, and quantity of its and its Subsidiaries’ Inventory and the book value thereof, except during the term of the Transition Services Agreement, with respect to Inventory acquired in the Acquisition Transaction.
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4.7 Jurisdiction of Organization; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims.
(a) The name of (within the meaning of Section 9-503 of the Code) and jurisdiction of organization of each Credit Party and each of its Subsidiaries is set forth onSchedule 4.7(a) (as such Schedule may be updated from time to time to reflect changes permitted to be made underSection 6.5).
(b) The chief executive office of each Credit Party and each of its Subsidiaries is located at the address indicated onSchedule 4.7(b) (as such Schedule may be updated from time to time to reflect changes permitted to be made underSection 5.9).
(c) Each Credit Party’s and each of its Subsidiaries’ tax identification numbers (or, in the case of Lander Canada, the business number assigned by the Canada Revenue Agency) and organizational identification numbers, if any, are identified onSchedule 4.7(c) (as such Schedule may be updated from time to time to reflect changes permitted to be made underSection 6.5).
(d) As of the Closing Date, the Credit Parties and their Subsidiaries do not hold any commercial tort claims, except as set forth onSchedule 4.7(d).
4.8 Due Organization and Qualification; Subsidiaries.
(a) Each Credit Party is duly organized and existing and in good standing, if applicable, under the laws of the jurisdiction of its organization and qualified to do business in any state, province or territory where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change.
(b) Set forth onSchedule 4.8(b) (as such Schedule may be updated from time to time to reflect changes permitted to be made underSection 5.16), is a complete and accurate description of the authorized capital Stock of each Credit Party, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described onSchedule 4.8(b), there are no subscriptions, options, warrants, or calls relating to any shares of each Credit Party’s capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. No Credit Party is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock.
(c) Set forth onSchedule 4.8(c) (as such Schedule may be updated from time to time to reflect changes permitted to be made underSection 5.16), is a complete and accurate list of each Credit Party’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries, and (iii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by the applicable Credit Party. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth onSchedule 4.8(c), there are no subscriptions, options, warrants, or calls relating to any shares of any Credit Party’s Subsidiaries’ capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. No Credit Party or any of its respective Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of any Credit Party’s Subsidiaries’ capital Stock or any security convertible into or exchangeable for any such capital Stock.
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4.9 Due Authorization; No Conflict.
(a) As to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the other Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, provincial or local law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on any Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any Material Contract of any Borrower, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Borrower, other than Permitted Liens, or (iv) require any approval of any Borrower’s interest holders or any approval or consent of any Person under any Material Contract of any Borrower, other than consents or approvals that have been obtained and that are still in force and effect.
(c) Other than the filing of financing statements, the recordation of the Mortgages, recordation of notice filings related to security interests in Intellectual Property with the U.S. Copyright Office and U.S. Patent and Trademark Office (and equivalent offices in foreign jurisdictions), and other filings or actions necessary to perfect Liens granted to Agent in the Collateral, and other than the filing of a Current Report on Form 8-K pursuant to the Exchange Act, the execution, delivery, and performance by each Borrower of this Agreement and the other Loan Documents to which such Borrower is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect.
(d) As to each Borrower, this Agreement and the other Loan Documents to which such Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Borrower will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.
(e) The Agent’s Liens are validly created, perfected (other than (i) in respect of motor vehicles and (ii) any Deposit Accounts and Securities Accounts not subject to a Control Agreement as permitted bySection 6.12, and subject only to the filing of financing statements and the recordation of the Mortgages), and first priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, provincial or local law or regulation applicable to such Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or decree of any court or other Governmental Authority binding on such Guarantor, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any Material Contract of such Guarantor, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of such Guarantor, other than Permitted Liens, or (iv) require any approval of such Guarantor’s interest holders or any approval or consent of any Person under any Material Contract of such Guarantor, other than consents or approvals that have been obtained and that are still in force and effect.
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(h) Other than the filing of financing statements and the recordation of the Mortgages, recordation of notice filings related to security interests in Intellectual Property with the U.S. Copyright Office and U.S. Patent and Trademark Office (and equivalent offices in foreign jurisdictions), and other filings or actions necessary to perfect Liens granted to Agent in the Collateral, and other than the filing of a Current Report on Form 8-K pursuant to the Exchange Act, the execution, delivery, and performance by each Guarantor of the Loan Documents to which such Guarantor is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect.
(i) The Loan Documents to which each Guarantor is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Guarantor will be the legally valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.
4.10 Litigation. Other than those matters disclosed onSchedule 4.10, and other than matters arising after the Closing Date that reasonably could not be expected to result in a Material Adverse Change, there are no actions, suits, or proceedings pending or, to the best knowledge of each Credit Party, threatened against any Credit Party or any of its Subsidiaries with an amount in controversy of at least $300,000.
4.11 No Material Adverse Change. All financial statements relating to the Credit Parties and their respective Subsidiaries that have been delivered by the Credit Parties to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year- end audit adjustments) and present fairly in all material respects, the Credit Parties’ and their respective Subsidiaries’ financial condition as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change with respect to the Credit Parties and their respective Subsidiaries since August 26, 2006.
4.12 Fraudulent Transfer.
(a) The Credit Parties and each Subsidiary of a Credit Party, taken as a whole, are Solvent.
(b) No transfer of property is being made by any Credit Party or any Subsidiary of a Credit Party and no obligation is being incurred by any Credit Party or any Subsidiary of a Credit Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Credit Party or their its Subsidiaries.
4.13 Employee Benefits.
(a) Set forth onSchedule 4.13(a) is a complete and accurate list of all Plans currently maintained or contributed to by any Credit Party, any of their respective Subsidiaries or any of their respective ERISA Affiliates as of the Closing Date.
(b) The Credit Parties, their respective Subsidiaries, and their respective ERISA Affiliates are in compliance in all material respects with all applicable provisions and requirements of ERISA and the regulations and published interpretations thereunder with respect to each Plan, and have performed all their obligations in all material respects under each Plan.
(c) Except as set forth onSchedule 4.13(c), to the best knowledge of each Credit Party, no ERISA Event has occurred or is reasonably expected to occur.
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(d) Except to the extent required under Section 4980B of the IRC, or as described onSchedule 4.13(d) hereto, no Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of any Credit Party, any of their respective Subsidiaries or any of their respective ERISA Affiliates.
(e) As of the most recent valuation date for any Pension Plan, the amount of outstanding benefit liabilities (as defined in Section 4001(a)(19) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities), does not exceed $500,000.
(f) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which taxes could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the IRC. For purposes of this Section 4.13(f), the Credit Parties may assume that none of the Advances or Term Loans will constitute “plan assets” within the meaning of Department of Labor Regulation § 2510.3-101.
(g) All material liabilities under each Plan are (i) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing the Plans, (ii) insured with a reputable insurance company, (iii) provided for or recognized in the financial statements most recently delivered to Agent pursuant toSection 5.3 hereof to the extent required by GAAP or (iv) estimated in the formal notes to the financial statements most recently delivered to Agent pursuant toSection 5.3 hereof to the extent required by GAAP.
(h) To the best knowledge of each Credit Party, there are no circumstances which may give rise to a liability in relation to any Plan which is not funded, insured, provided for, recognized or estimated in the manner described in subsection (g) above, which liability could reasonably be expected to result in a Material Adverse Change.
(i) The Credit Parties and their respective Subsidiaries are not and will not be a “plan” within the meaning of Section 4975(e) of the IRC; (ii) the assets of the Credit Parties and their respective Subsidiaries do not and will not constitute “plan assets” within the meaning of the United States Department of Labor Regulations set forth in 29 C.F.R. §2510.3-101; (iii) the Credit Parties and their Subsidiaries are not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA; and (iv) transactions by or with the Credit Parties and their respective Subsidiaries are not and will not be subject to state statutes applicable to the Credit Parties and their respective Subsidiaries regulating investments of fiduciaries with respect to governmental plans.
4.14 [Intentionally omitted.]
4.15 Environmental Condition. Except as set forth onSchedule 4.15, (a) to each Credit Party’s knowledge, no Credit Party’s or its Subsidiaries’ properties or assets has ever been used by such Person, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such use, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) to each Credit Party’s knowledge, no Credit Party’s or its Subsidiaries’ properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) none of the Credit Parties or their respective Subsidiaries have received notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by Borrowers or their Subsidiaries, and (d) none of the Credit Parties nor any of their respective Subsidiaries have received a summons, citation, notice, or directive from the United States Environmental Protection Agency or any other federal, state or provincial governmental agency concerning any action or omission by any Credit Party or any Subsidiary of a Credit Party resulting in the releasing or disposing of Hazardous Materials into the environment.
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4.16 Intellectual Property. Except as disclosed onSchedule 4.16, with respect to any Intellectual Property:
(a) Schedule 4.16 contains a complete and accurate listing as of the Closing Date of all Intellectual Property, including, but not limited to the following: (i) state, U.S. and foreign trademark registrations, applications for trademark registration and common law trademarks, (ii) U.S. and foreign patents and patents applications, together with all reissuances, continuations, continuations in part, revisions, extensions, and reexaminations thereof, (iii) U.S. and foreign copyright registrations and applications for registration, (iv) trade secrets, (v) foreign industrial design registrations and industrial design applications, (vi) domain names, (vii) proprietary computer software, (viii) all forms of Intellectual Property described in clauses (i)-(iii) above that are owned by a third party and licensed to the Credit Parties or a Subsidiary of a Credit Party or otherwise used by the Credit Parties or a Subsidiary of a Credit Party under contract, and (ix) the names of any Person who has been granted rights in respect thereof outside of the ordinary course of business. All of the U.S. registrations, applications for registration or applications for issuance of the Intellectual Property, with the exception of registrations and applications listed as “inactive” onSchedule 4.16, are valid and subsisting, in good standing and are recorded or is in the process of being recorded in the name of the applicable Credit Party or a Subsidiary of a Credit Party;
(b) such U.S. Intellectual Property, with the exception of the registrations and applications listed as “inactive” onSchedule 4.16, is valid, subsisting, unexpired (where registered) and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part except as could not be reasonably expected to result in a Material Adverse Change;
(c) except as set forth onSchedule 4.16, with the exception of in- bound licenses, no Person other than the respective Credit Party or a Subsidiary of a Credit Party has any right or interest of any kind or nature in or to the Intellectual Property, including any right to sell, license, lease, transfer, distribute, use or otherwise exploit the Intellectual Property or any portion thereof outside of the ordinary course of the respective Credit Party and its Subsidiaries’ business. With the exception of the registrations and applications listed as “inactive” onSchedule 4.16, the Credit Parties and their respective Subsidiaries have good, marketable and exclusive title to, and the valid and enforceable power and right to sell, license, transfer, distribute, use and otherwise exploit, the U.S. Intellectual Property, subject, in the case of the rights derived by the Credit Parties pursuant to the Calgon License Documents, to the conditions set forth therein;
(d) the Credit Parties and their respective Subsidiaries have taken or caused to be taken steps so that none of the Intellectual Property, the value of which to the Credit Parties and their respective Subsidiaries are contingent upon maintenance of the confidentiality thereof, have been disclosed by the Credit Parties or any of their respective Subsidiaries to any Person other than employees, contractors, customers, representatives and agents of the Credit Parties or a Subsidiary of a Credit Party who are parties to customary confidentiality and nondisclosure agreements with the Credit Parties or a Subsidiary of a Credit Party;
(e) to each Credit Party’s knowledge, no Person has violated, infringed upon or breached, or is currently violating, infringing upon or breaching, any of the rights of the Credit Parties or a Subsidiary of a Credit Party to the Intellectual Property or has breached or is breaching any duty or obligation owed to the Credit Parties or a Subsidiary of a Credit Party in respect of the Intellectual Property except where those breaches, individually or in the aggregate, could not be reasonably expected to result in a Material Adverse Change;
(f) no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by any Credit Party or any Subsidiary of a Credit Party or to which any Credit Party or any Subsidiary of a Credit Party is bound that adversely affects its rights to own or use any Intellectual Property except as could not be reasonably expected to result in a Material Adverse Change, in each case individually or in the aggregate;
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(g) other than as set forth inSchedule 4.10, no Credit Party nor any Subsidiary of a Credit Party has received any written notice that remains outstanding challenging the validity, enforceability, or ownership of any Intellectual Property except where those challenges could not reasonably be expected to result in a Material Adverse Change, and to such Credit Party’s knowledge at the date hereof there are no facts upon which such a challenge could be made;
(h) each Credit Party owns directly or is entitled to use, by license or otherwise, all Intellectual Property necessary for the conduct of such Credit Party’s business;
(i) each Credit Party and each Subsidiary of a Credit Party uses adequate standards of quality in the manufacture, distribution and sale of all products sold and in the provision of all services rendered under or in connection with all trademarks and has taken all commercially reasonable action necessary to insure that all licensees of the trademarks owned or licensed by such Credit Party use such adequate standards of quality, except where the failure to use adequate standards of quality could not reasonably be expected to result in a Material Adverse Change; and
(j) the consummation of the transactions contemplated by this Agreement will not result in the termination or material impairment of any of the Intellectual Property.
4.17 Leases. Each Credit Party and its Subsidiaries enjoys peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating and all of such material leases are valid and subsisting and no material default by such Credit Party or its Subsidiaries exists under any of them.
4.18 Deposit Accounts and Securities Accounts. Set forth onSchedule 4.18 is a listing of all of each Credit Party’s and its Subsidiaries’ Deposit Accounts and Securities Accounts, including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person.
4.19 Complete Disclosure. All factual information (taken as a whole) furnished by or on behalf of Credit Parties or their respective Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents, the Acquisition Documents, or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of the Credit Parties or their respective Subsidiaries in writing to Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. On the Closing Date, the Closing Date Projections represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent the Credit Parties’ good faith estimate of their and their respective Subsidiaries’ future performance for the periods covered thereby based upon assumptions believed by the Credit Parties to be reasonable at the time of the delivery thereof to Agent (it being understood that such projections and forecasts are subject to uncertainties and contingencies, many of which are beyond the control of the Credit Parties and their respective Subsidiaries and no assurances can be given that such projections or forecasts will be realized).
4.20 Indebtedness. Set forth onSchedule 4.20 is a true and complete list of all Indebtedness of each Credit Party and each Subsidiary of a Credit Party outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately sets forth the aggregate principal amount, maturity date and interest rate of such Indebtedness.
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4.21 Material Contracts. Set forth onSchedule 4.21 is a description of all Material Contracts of Parent and its Subsidiaries, showing the parties and principal subject matter thereof and amendments and modifications thereto in effect on the Closing Date;provided,however, that Borrower may amendSchedule 4.21 to add additional Material Contracts so long as such amendment occurs by written notice to Agent by no later than the date on which the next monthly Compliance Certificate is required to be delivered to Agent. Except for matters which, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change, each Material Contract (other than those that have expired at the end of their normal terms or have otherwise been terminated by the parties thereto prior to the Closing Date) (a) is in full force and effect and is binding upon and enforceable against Parent or its Subsidiary and, to the best of Parent’s and each Credit Party’s knowledge, each other Person that is a party thereto in accordance with its terms, (b) has not been otherwise amended or modified (other than amendments or modifications permitted bySection 6.7(d)), except that there have been no amendments or modifications to the Acquisition Documents without the requisite consent provided for hereunder, and (c) is not in default due to the action or inaction of Parent or any of its Subsidiaries.
4.22 Acquisition Documents.
(a) (i) No party to any Acquisition Document is in default on any of its material obligations under such Acquisition Document, (ii) all representations and warranties made by any Credit Party in the Acquisition Documents and in the certificates delivered in connection therewith are true and correct in all material respects as of the date hereof and, to the best knowledge of each Credit Party, all material representations and warranties made in the Acquisition Documents by or on behalf of the Seller or any other party thereto other than a Credit Party, are true and correct in all material respects as of the date hereof, (iii) all written information with respect to the Acquisition Transaction furnished to the Agent by any Credit Party or on behalf of any Credit Party, was, at the time the same was so furnished, complete and correct in all material respects, or has been subsequently supplemented by other written information, to the extent necessary to give the Lender Group true and accurate knowledge of the subject matter thereof, (iv) no representation, warranty or statement made by any Credit Party or, to the best knowledge of each Credit Party, the Seller or any other party thereto other than a Credit Party, at the time made in any Acquisition Document, or any agreement, certificate, statement or document required to be delivered pursuant to any Acquisition Document contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements contained in such Acquisition Documents not misleading in light of the circumstances in which they were made, and (v) in connection with the Acquisition Transaction, Ascendia Brands and Lander Intangibles are acquiring the Acquired Assets, and, on the date hereof, after giving effect to the transactions contemplated by the Acquisition Documents, will have good title to the Acquired Assets, free and clear of all Liens other than Permitted Liens.
(b) (i) The Credit Parties have delivered to the Agent complete and correct copies of all of the Acquisition Documents, including all schedules and exhibits thereto, (ii) each Acquisition Document sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby, (iii) no Acquisition Document has been amended or otherwise modified without the prior written consent of the Agent, (iv) the execution, delivery and performance of each of the Acquisition Documents have been duly authorized by all necessary action on the part of each Credit Party who is a party thereto and, to the best knowledge of each Credit Party, each other Person party thereto, (v) the Acquisition Transaction has been effected in accordance with the terms of the Acquisition Documents and all applicable law, (vi) at the time of consummation of the Acquisition Transaction, there does not exist any judgment, order or injunction prohibiting or imposing any material adverse condition upon the consummation of the Acquisition Transaction, (vii) at the time of consummation thereof, all consents and approvals of, and filings and registrations with, and all other actions in respect of, all Government Authorities and any other Persons required in order to consummate the Acquisition Transaction shall have been obtained, given, filed or taken and shall be in full force and effect, (viii) all actions taken by the Credit Parties pursuant to or in furtherance of the Acquisition Transaction have been taken in compliance in all material respects with the Acquisition Documents and the applicable law, (ix) the Credit Parties did not incur or assume any liabilities or obligations pursuant to or in connection with the Acquisition Transaction other than those liabilities and obligations set forth in the Acquisition Agreement, and (x) each Acquisition Document is the legal, valid and binding obligation of each Credit Party who is a party thereto and, to the best knowledge of each Credit Party, the other parties thereto, enforceable against such Persons in accordance with its terms.
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4.23 Second Lien Loan Documents. The Credit Parties have delivered to Agent true and correct copies of the Second Lien Loan Documents. All of the representations and warranties of the Credit Parties contained in the Second Lien Loan Documents are true and correct in all material respects (except where any such representation or warranty is already subject to a materiality standard, in which case such representation or warranty is true and correct in all respects) as of the Closing Date or, to the extent that any such representation or warranty relates solely to an earlier date, as of such earlier date.
4.24 Third Lien Loan Documents. The Credit Parties have delivered to Agent true and correct copies of the Third Lien Loan Documents. All of the representations and warranties of the Credit Parties contained in the Third Lien Loan Documents are true and correct in all material respects (except where any such representation or warranty is already subject to a materiality standard, in which case such representation or warranty is true and correct in all respects) as of the Closing Date or, to the extent that any such representation or warranty relates solely to an earlier date, as of such earlier date.
4.25 [Intentionally Omitted.]
4.26 Product Liability Claims. Except for product liability claims set forth onSchedule 4.26, there have been no payments for claims exceeding $5,000 per claim or any aggregate claims per the Credit Parties’ brands exceeding $100,000 per year since August 26, 2006, and there are no product liability claims (whether or not covered by insurance) pending, or to any Credit Party’s knowledge threatened, relating to any of the Credit Parties’ brands in excess of such amounts. There have been no product recalls arising out of the sales of the Credit Parties’ brands in the past three (3) years and, to the knowledge of the Credit Parties, no product recall is threatened or likely to occur.
4.27 Suppliers and Customers.Schedule 4.27 lists the 10 largest (in terms of dollar amount) suppliers and the 10 largest (in terms of dollar amount) customers of Ascendia Brands Co., Inc. brands for the year ended on December 31, 2006.
4.28 Customer Accommodations. Other than programs conducted in the ordinary course of business, there are no material special programs with customers for the Credit Parties’ brands (including off invoice allowances, co-op advertising allowances, advertising commitments, coupons and account specific programs) except as listed onSchedule 4.28. All expenses for all material customer accommodations (including all items enumerated onSchedule 4.28) have been accounted for in the Credit Parties’ financial statements in a manner consistent with the Credit Parties’ internal accounting practices.
4.29 Labor Matters. No Credit Party is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Change. There is (i) no unfair labor practice complaint pending against any Credit Party, or to the knowledge of the Credit Parties, threatened against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against any Credit Party or to the knowledge of the Credit Parties, threatened against any of them, (ii) no strike or work stoppage in existence or threatened involving any Credit Party, and (iii) to the knowledge of the Credit Parties, no union representation question existing with respect to the employees of the Credit Parties and, to the best knowledge of the Credit Parties, no union organization activity that is taking place, except (with respect to any matter specified in clause (i), (ii) or (iii) above, either individually or in the aggregate) such as is not reasonably likely to result in a Material Adverse Change.
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4.30 Non-Assignable Assets.. The Credit Parties and their respective Subsidiaries have no knowledge that any of the Intellectual Property to be acquired in the Acquisition Transaction is or will be deemed a “Non-Assignable Asset” as such term is defined in the Acquisition Agreement.
4.31 Licensed Products and Licensed Patents.Schedule 4.31 sets forth all of (i) “Licensed Products” in the “Territory” and (ii) the “Licensed Patents”, in each case, as such terms are defined in the Patent License Agreement between Coty Inc. and Lander Intangibles Corporation.
4.32 Maintenance of Corporate Formalities. Since the acquisition (directly or indirectly) of such Credit Party by Parent, Parent has caused each Credit Party to: (i) maintain entity records and books of account separate from those of any other Credit Party; and (ii) not commingle its funds or assets with those of any other Credit Party; and to Parent’s knowledge, all appropriate meetings to authorize and approve each Credit Party’s actions to the extent such meetings were required, were separate from those of other Credit Parties.
4.33 Permits. Except as set forth inSchedule 4.33, each Credit Party has all rights and franchises, licenses and permits (including any required pursuant to any Environmental Law) material to the conduct its business.
4.34 Certain Contracts. Except as set forth onSchedule 4.34, none of the Credit Parties is a party to or bound by (i) any non-competition agreement or any other agreement or obligation which purports to limit the manner in which, or localities in which, the current business of the Credit Parties is conducted or (ii) any executory agreement or obligation which pertains to the acquisition or disposition of any business or asset, or which provides any third party any Lien, claim or preferential right with regard thereto, except, in the case of this clause (ii), for Permitted Liens and for such agreements or obligations that would not reasonably be expected to result in a Material Adverse Change.
5. AFFIRMATIVE COVENANTS.
Each Credit Party covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, such Credit Party shall and shall cause each of their respective Subsidiaries to do all of the following:
5.1 Accounting System. Maintain a system of accounting that enables Credit Parties to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Borrowers also shall keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to their and their Subsidiaries’ sales.
5.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the reports set forth onSchedule 5.2 at the times specified therein. In addition, each Borrower agrees to cooperate fully with Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of each of the items set forth above.
5.3 Financial Statements, Reports, Certificates. Deliver to Agent, with copies to each Lender, each of the financial statements, reports, or other items set forth onSchedule 5.3 at the times specified therein. In addition, each Credit Party agrees that none of its Subsidiaries will have a fiscal year different from that of such Credit Party.
5.4 Guarantor Reports. Cause each Guarantor to deliver its annual financial statements at the time when Parent provides its audited financial statements to Agent, but only to the extent such Guarantor’s financial statements are not consolidated with Parent’s financial statements.
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5.5 Inspection. Permit Agent, each Lender, and each of their duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees at such reasonable times and intervals as Agent or any such Lender may designate and, so long as no Default or Event of Default exists, with reasonable prior notice to Administrative Borrower. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, the Agent shall not perform more than two (2) collateral audits during any calendar year and so long as the sum of Availability and Qualified Cash is at least $12,000,000 on average of the last ninety (90) days preceding a request for an inventory appraisal, no more than one inventory appraisal shall be performed during any calendar year.
5.6 Maintenance of Properties. Maintain and preserve all of their properties which are necessary or useful in the proper conduct of their business in good working order and condition, ordinary wear, tear, and casualty excepted (and except where the failure to do so could not be expected to result in a Material Adverse Change), and comply at all times with the provisions of all material leases to which it is a party as lessee, so as to prevent any loss or forfeiture thereof or thereunder.
5.7 Taxes. Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against such Credit Party, its Subsidiaries, or any of their respective assets to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Each Credit Party will and will cause its Subsidiaries to make timely payment or deposit of all tax payments and withholding taxes required of them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, provincial and federal income taxes, and will, upon request, furnish Agent with proof satisfactory to Agent indicating that the applicable Credit Party or Subsidiary of a Credit Party has made such payments or deposits.
5.8 Insurance.
(a) At the Credit Parties’ expense, maintain insurance respecting their and their Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrowers also shall maintain business interruption, public liability, and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance shall be in such amounts and with such insurance companies as are reasonably satisfactory to Agent. The Credit Parties shall deliver copies of all such policies to Agent with an endorsement naming Agent as the loss payee (under a satisfactory lender’s loss payable endorsement) or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever.
(b)�� Administrative Borrower shall give Agent prompt notice of any loss exceeding $250,000 covered by such insurance. So long as no Event of Default has occurred and is continuing, Borrowers shall have the exclusive right to adjust any losses payable under any such insurance policies which are less than $500,000. Following the occurrence and during the continuation of an Event of Default, or in the case of any losses payable under such insurance exceeding $500,000, Agent shall have the exclusive right (subject to the rights of the Second Lien Collateral Agent pursuant to the Second Lien Intercreditor Agreement and the Third Lien Agent pursuant to the Third Lien Intercreditor Agreement) to adjust any losses payable under any such insurance policies, without any liability to the Credit Parties whatsoever in respect of such adjustments.
5.9 Location of Inventory and Equipment. Keep the Credit Parties’ and their respective Subsidiaries’ Inventory and Equipment (other than vehicles and Equipment out for repair) only at the locations identified onSchedule 4.5 and their chief executive offices only at the locations identified onSchedule 4.7(b);
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provided,however, that Administrative Borrower may amendSchedule 4.5 orSchedule 4.7 so long as such amendment occurs by written notice to Agent not less than 10 Business Days prior to the date on which such Inventory or Equipment is moved to such new location or such chief executive office is relocated, so long as such new location is within the continental United States (or Canada with respect to Lander Canada), and so long as, at the time of such written notification, the applicable Credit Party provides Agent a Collateral Access Agreement with respect thereto.
5.10 Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change.
5.11 Leases. Pay when due all rents and other amounts payable under any material leases to which any Credit Party or any Subsidiary of a Credit Party is a party or by which any Credit Party’s or any of its Subsidiaries’ properties and assets are bound, unless such payments are the subject of a Permitted Protest.
5.12 Existence. Except as set forth onSchedule 5.12, at all times preserve and keep in full force and effect each Credit Party’s and each of its Subsidiaries’, valid existence and good standing and, except as could not reasonably be expected to result in a Material Adverse Change, any rights, franchises, permits, licenses, accreditations, authorizations, or other approvals material to their businesses.
5.13 Environmental.
(a) Keep any property either owned or operated by any Credit Party or any Subsidiary of a Credit Party free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably requests, (c) promptly notify Agent of any release of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Credit Party or any Subsidiary of a Credit Party and take any Remedial Actions required to abate said release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly, but in any event within 5 days of its receipt thereof, provide Agent with written notice of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of any Credit Party or any Subsidiary of a Credit Party, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against any Credit Party or any Subsidiary of a Credit Party, and (iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change.
5.14 Disclosure Updates. Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to the Lender Group contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto.
5.15 Control Agreements. Take all reasonable steps requested by Agent in order for Agent to obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject to the proviso contained inSection 6.12) all of its Securities Accounts, Deposit Accounts, electronic chattel paper, investment property, and letter-of-credit rights.
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5.16 Formation of Subsidiaries. At the time that any Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, such Borrower or such Guarantor shall (a) cause such new Subsidiary to provide to Agent a joinder to the Guaranty and the Security Agreement, together with such other security documents (including Mortgages with respect to any Real Property of such new Subsidiary), as well as appropriate financing statements (and with respect to all property subject to a Mortgage, fixture filings), all in form and substance satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Agent a pledge agreement and appropriate certificates and powers or UCC financing statements, hypothecating all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to Agent, and (c) provide to Agent all other documentation, including one or more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property subject to a Mortgage). Any document, agreement, or instrument executed or issued pursuant to thisSection 5.16 shall be a Loan Document.
5.17 Further Assurances. At any time upon the request of Agent, the Credit Parties shall execute or deliver to Agent, and shall cause their respective Subsidiaries to execute or deliver to Agent, any and all financing statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, mortgages, deeds of trust, opinions of counsel, and all other documents (collectively, the “Additional Documents”) that Agent may reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and continue perfected or to better perfect the Agent’s Liens in all of the properties and assets of the Credit Parties and their respective Subsidiaries (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal), to create and perfect Liens in favor of Agent in any Real Property acquired by the Credit Parties or their respective Subsidiaries after the Closing Date, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, the Credit Parties authorize Agent to execute any such Additional Documents in the Credit Parties’ or their respective Subsidiaries’ names, as applicable, and authorizes Agent to file such executed Additional Documents in any appropriate filing office.
5.18 ERISA Compliance.
(a) Each Credit Party shall do, and shall cause each of its Subsidiaries and ERISA Affiliates to do, each of the following: (i) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the IRC or other federal or state law; (ii) cause each Qualified Plan to maintain its qualified status under Section 401(a) of the IRC; (iii) make all required contributions to any Plan; (iv) not become a party to any Multiemployer Plan; (v) ensure that all liabilities under each Plan are (A) funded to at least the minimum level required by law or, if higher, to the level required by the terms governing such Plan; (B) insured with a reputable insurance company; or (C) provided for or recognized in the financial statements most recently delivered to Agent underSection 5.3 (to the extent required by GAAP); and (vi) ensure that the contributions or premium payments to or in respect of each Plan is and continues to be promptly paid at no less than the rates required under the rules of such Plan and in accordance with the most recent actuarial advice received in relation to such Plan and applicable law.
(b) Deliver to Agent such certifications or other evidence of compliance with the provisions ofSection 4.13 as Agent may from time to time reasonably request.
(c) Promptly notify Agent of any of the following ERISA events affecting any Credit Party, any of their respective Subsidiaries or any ERISA Affiliates (but in no event more than ten (10) days after such event), together with a copy of any notice with respect to such event that may be required to be filed with a Governmental Authority and any notice delivered by a Governmental Authority to any Credit Party, any of their respective Subsidiaries or any ERISA Affiliates with respect to such event:
(i) an ERISA Event;
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(ii) the adoption of any new Pension Plan by any Credit Party, any of their respective Subsidiaries or any ERISA Affiliates;
(iii) the adoption of any amendment to a Pension Plan, if such amendment will result in a material increase in benefits or unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA); or
(iv) the commencement of contributions by any Credit Party, any of their respective Subsidiaries or any ERISA Affiliate to any Plan that is subject to Title IV of ERISA or section 412 of the IRC;
(d) Promptly deliver to Agent copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Credit Party, any of their respective Subsidiaries or any ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (ii) all notices received by any Credit Party, any of their respective Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (iii) such other documents or governmental reports or filings relating to any Plan as Agent shall reasonably request.
(e) Promptly notify Agent of any labor negotiations affecting any Credit Party that could reasonably be expected to result in a strike, labor dispute, work slow down or stoppage.
5.19 Material Contracts. Contemporaneously with the delivery of each Compliance Certificate pursuant hereto, provide Agent with copies of (a) each Material Contract entered into since the delivery of the previous Compliance Certificate, and (b) each amendment or modification of any Material Contract entered into since the delivery of the previous Compliance Certificate.
5.20 Acquisition Transaction
(a) Contemporaneously with the initial extensions of credit hereunder: (i) cause all transactions contemplated by the Acquisition Documents to be consummated, except to the extent such transactions are consummated at a later date under the terms of the Acquisition Documents; (ii) cause the Acquisition Transaction to become effective; and (iii) furnish to Agent certified (as of the Closing Date) true and complete copies of the Acquisition Documents which shall be in compliance with all applicable laws and all necessary approvals shall have been obtained in connection therewith.
(b) Promptly provide Agent with true and complete copies of any and all material documents delivered to any Person pursuant to, or in connection with, the Acquisition Transaction.
5.21 Second Lien Loan Documents.
(a) Contemporaneously with the initial extensions of credit hereunder, (i) cause all transactions contemplated by the Second Lien Loan Documents to be consummated and (ii) furnish to Agent (A) certified (as of the Closing Date) true and complete copies of the Second Lien Loan Documents and (B) all necessary consents and approvals required to be obtained in connection therewith.
(b) Promptly provide Agent with true and complete copies of any and all material documents delivered to any Person pursuant to, or in connection with, the Second Lien Loan Documents (unless such documents have previously been provided to Agent pursuant to this Agreement).
5.22 Third Lien Loan Documents.
(a) Contemporaneously with the initial extensions of credit hereunder, (i) cause all transactions contemplated by the Third Lien Loan Documents to be consummated and (ii) furnish to Agent (A)
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certified (as of the Closing Date) true and complete copies of the Third Lien Loan Documents and (B) all necessary consents and approvals required to be obtained in connection therewith.
(b) Promptly provide Agent with true and complete copies of any and all material documents delivered to any Person pursuant to, or in connection with, the Third Lien Loan Documents (unless such documents have previously been provided to Agent pursuant to this Agreement).
5.23 Assumption of Intellectual Property Licenses. In the event that Borrowers file for relief under the Bankruptcy Code or in the event of an involuntary bankruptcy filing pursuant to 11 U.S.C. § 303, Borrowers shall promptly move (but in no event later than 30 days after the filing of the petition) under 11 U.S.C. § 365 to assume any and all material intellectual property licenses (other than exclusive licenses which are not subject to section 365),provided that such motion and/or assumption is consistent with Borrowers’ fiduciary obligation as a debtor-in-possession. Borrowers agree to take all actions necessary to effectuate an assumption of such licenses, and to protect the right to assume such license. Borrowers further agree to timely provide Agent with all notices, pleadings and demands filed or served in connection with such intellectual property licenses, and to provide Agent with timely and sufficient notice so as to accord Agent a reasonable opportunity to appear and to be heard in connection with any such motion or proceeding. Borrowers agree that Agent has an economic and financial stake in the intellectual property licenses, and that it is entitled to intervene and/or to be heard in any motion involving the intellectual property licenses, including but not limited to any motion to assume, reject, or compel any debtor to assume or reject any such executory contract, whether under 11 U.S.C. § 1109 or any other permitted mode of intervention in a contested matter or adversary proceeding.
5.24 Notice of Acquisition of Stock of Parent. Parent shall notify the Agent promptly (but in any event within five (5) days) after it has knowledge that a Person (other than a Permitted Holder) has acquired more than 4.99% of the then-outstanding Stock of Parent having the right to vote for the election of members of the Board of Directors.
5.25 Maintenance of Corporate Formalities. Parent will cause each Credit Party to: (a) maintain entity records and books of account separate from those of any other Credit Party; (b) not commingle its funds or assets with those of any other Credit Party; and (c) provide that its board of directors or other analogous governing body will hold all appropriate meetings to authorize and approve such Credit Party’s actions, which meetings will be separate from those of other Credit Parties.
5.26 M2 Consulting Agreement. Parent shall terminate the M2 Consulting Agreement on or before February 28, 2007 and the termination fee to paid on the Closing Date with respect to such agreement shall not exceed $2,700,000. After the Closing Date, no further payments shall be made by the Credit Parties pursuant to the M2 Consulting Agreement.
6. NEGATIVE COVENANTS.
Each Credit Party covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, such Credit Party will not and will not permit any of their respective Subsidiaries to do any of the following:
6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan Documents,
(b) subject to any restrictions set forth in the Second Lien Intercreditor Agreement, the Second Lien Indebtedness,
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(c) Indebtedness set forth onSchedule 4.20 and any Refinancing Indebtedness in respect of such Indebtedness,
(d) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in respect of such Indebtedness,
(e) endorsement of instruments or other payment items for deposit,
(f) [intentionally omitted]
(g) subject to the restrictions set forth in the Third Lien Intercreditor Agreement, the Third Lien Indebtedness,
(h) the Seller Note, provided that such Seller Note (i) matures on a date that is at least six months after the maturity date of the Second Lien Indebtedness, (ii) is subordinated to the Obligations on terms and conditions acceptable to Required Lenders, and (iii) is otherwise on terms and conditions (including all economic terms and the absence of covenants) acceptable to Required Lenders,
(i) unsecured Indebtedness of any Credit Party to another Credit Party that is subject to the Intercompany Subordination Agreement,
(j) unsecured guaranties in the ordinary course of business of the obligations of suppliers, customers, lessees and licensees of the Credit Parties in an aggregate amount not to exceed $1,000,000 at any one time outstanding,
(k) Hedge Agreements to the extent not entered into for speculative purposes,
(l) unsecured Indebtedness of the Credit Parties that is incurred on the date of the consummation of a Permitted Non-Cash Acquisition solely for the purpose of consummating such Permitted Non-Cash Acquisition so long as (i) no Event of Default has occurred and is continuing or would result therefrom, (ii) such unsecured Indebtedness is not incurred for working capital purposes, (iii) such unsecured Indebtedness does not mature prior to the date that is 12 months after the Maturity Date, (iv) such Indebtedness is subordinated in right of payment to the Obligations on terms and conditions reasonably satisfactory to Agent, and (v) the only interest that accrues with respect to such Indebtedness is payable in kind,
(m) unsecured Indebtedness issued to Seller in accordance with the terms of the Acquisition Agreement (as in effect on the Closing Date without any amendment or modification thereto) to pay up to $5,000,000 of the Earn-Out Payment, so long as (i) no Default or Event of Default has occurred and is continuing, (ii) Parent shall have Excess Availability plus Qualified Cash in an amount equal to at least $10,000,000 at all times during the thirty (30) days immediately prior to and after giving effect to the issuance of such Indebtedness, and (iii) such Indebtedness is subordinated in right of payment to the Obligations on terms satisfactory to Agent in its Permitted Discretion, and
(n) other unsecured Indebtedness in an aggregate amount not to exceed $5,000,000 at any one time outstanding.
6.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens.
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6.3 Restrictions on Fundamental Changes.
(a) Other than in order to consummate a Permitted Acquisition, and except as provided onSchedule 6.3, enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock,
(b) Except as provided onSchedule 6.3, liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution),
(c) Except as provided onSchedule 6.3, suspend or go out of a substantial portion of its or their business.
6.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of (or enter into an agreement to convey, sell, lease, license, assign, transfer, or otherwise dispose of) any of the assets of any Credit Party or any Subsidiary of a Credit Party.
6.5 Change Name. Change any Credit Party’s or any of its Subsidiaries’ name, organizational identification number, state of organization or organizational identity;provided,however, that a Credit Party or a Subsidiary of a Credit Party may change its name upon at least 10 Business Days prior written notice by Administrative Borrower to Agent of such change and so long as, at the time of such written notification, such Credit Party or such Subsidiary provides any financing statements necessary to perfect and continue perfected the Agent’s Liens.
6.6 Nature of Business. Make any change in the nature of their business as described in Schedule 6.6 or acquire any properties or assets that are not reasonably related or incidental to the conduct of such business activities except as otherwise described onSchedule 6.6.
6.7 Prepayments and Amendments. Except in connection with Refinancing Indebtedness permitted bySection 6.1,
(a) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Credit Party or any Subsidiary of a Credit Party, other than (i) the Obligations in accordance with this Agreement and (ii) any payment that is permitted pursuant to paragraph (b) of thisSection 6.7,
(b) make any payment on account of Indebtedness (other than (i) certain payments of penalties and fees under the Third Lien Loan Documents and payment of 15% of the Exchange Amount (as defined in the Third Lien Notes as in effect on the date hereof without any amendment or modification thereto), in each case, solely to the extent permitted under, and as described in, Section 9 of the Third Lien Intercreditor Agreement, and (ii) the conversion or exchange of all or a portion of any Third Lien Note into Parent’s common stock and/or New Securities and the conversion of all or any portion of the New Securities into Parent’s common stock, in each case to the extent provided in the Third Lien Notes and solely to the extent permitted under, and as described in, Section 9 of the Third Lien Intercreditor Agreement) that has been contractually subordinated in right of payment if such payment is not permitted at such time under the subordination terms and conditions,
(c) directly or indirectly, amend, modify, alter, increase, or change any of the terms or conditions of (i) any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted underSection 6.1(c),(d), or(h), (ii) any other Material Contract except to the extent that such amendment, modification, alteration, increase, or change could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change, (iii) any Second Lien Loan Documents to the extent such amendment, modification or waiver is prohibited pursuant to the terms of the Second Lien Intercreditor Agreement or (iv) any Third Lien Loan Documents to the extent such amendment, modification or waiver is prohibited pursuant to the terms of the Third Lien Intercreditor Agreement, and
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(d) make any principal payment on account of the Second Lien Indebtedness (other than principal payments permitted underSection 2.4(d)(iii)); for the avoidance of doubt, Borrowers shall be permitted to make regularly scheduled interest payments on account of the Second Lien Indebtedness.
6.8 [Intentionally Omitted.]
6.9 Consignments. Consign any of their Inventory or sell any of their Inventory on bill and hold or other conditional terms of sale (other than sale on approval or sale on return) other than in an aggregate amount not to exceed $1,000,000 in any year.
6.10 Distributions. Make any distribution or declare or pay any dividends (in cash or other property, other than common Stock or warrants with respect thereto) on, or purchase, acquire, redeem, or retire any of any Credit Party’s Stock, of any class, whether now or hereafter outstanding, or make any Earn-Out Payment in cash or make any expense reimbursement, premium payment, redemption payment and/or any other payment whatsoever on or in connection with any Stock (and/or any documents, instruments or agreements relating to any Stock);provided,however, that (a) so long as no Event of Default shall have occurred and be continuing or would result therefrom,Subsidiaries of Credit Parties may make dividends or distributions to other Credit Parties for the sole purpose of allowing Parent to, and Parent shall use the proceeds thereof solely to, pay local, federal, provincial and state taxes solely arising out of the consolidated operations of Parent and its Subsidiaries, after taking into account all available credits and deductions, (b) Subsidiaries of Credit Parties may make dividends or distributions to other Credit Parties for the sole purpose of allowing such Credit Party to make payments otherwise permitted pursuant to this Agreement, (c) so long as (i) no Default or Event of Default has occurred and is continuing and (ii) Parent shall have Excess Availability plus Qualified Cash in an amount equal to at least $10,000,000 at all times during the thirty (30) days immediately prior to and after giving effect to such Earn-Out Payment, Borrowers may pay the cash portion of the Earn-Out Payment in an aggregate amount not to exceed $15,000,000 and (d) solely to the extent provided therein, make the payments described in Section 9 of the Third Lien Intercreditor Agreement.
6.11 Accounting Methods. Modify or change their fiscal year or their method of accounting (other than as may be required to conform to GAAP).
6.12 Investments. Except for Permitted Investments, directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment;provided,however, that no Credit Party or any of its Subsidiaries shall have Permitted Investments (other than in (a) the Cash Management Accounts, (b) segregated accounts used exclusively for payroll and (c) the Deposit Accounts of Lander Canada with TD Canada Trust up to an aggregate amount of $50,000 for all such Deposit Accounts) in Deposit Accounts or Securities Accounts in an aggregate amount in excess of $50,000 at any one time unless such Credit Party or its Subsidiary, as applicable, and the applicable securities intermediary or bank have entered into Control Agreements governing such Permitted Investments in order to perfect (and further establish) the Agent’s Liens in such Permitted Investments. Subject to the foregoing proviso, the Credit Parties shall not and shall not permit their Subsidiaries to establish or maintain any Deposit Account or Securities Account unless Agent shall have received a Control Agreement in respect of such Deposit Account or Securities Account.
6.13 Transactions with Affiliates. Directly or indirectly shall, without the consent of the Agent and Lenders (which consent may be withheld by the Agent or any Lender in its sole and absolute discretion):
(a) enter into or make payments under any consulting, management agreement and/or similar agreement or arrangement with the Prencen Group and/or any of its Affiliates;
(b) enter into any Subsequent Placement (as defined in the Securities Purchase Agreements) with the Prencen Group and/or any of its Affiliates;provided,however, that no such consent shall be required if (1) such Subsequent Placement is on commercially reasonable terms and on an arm’s-length basis, and (2) such Subsequent Placement is approved by a majority of the non-interested members of the board of directors of Parent meeting in a separate session;
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(c) enter into any debt financing agreement or other financing arrangement (other than a Subsequent Placement) with the Prencen Group and/or any of its Affiliates; or
(d) except as provided in the foregoing clause (c), enter into any transaction with any Affiliate of Parent and/or the Prencen Group, other than for (A) ordinary course executive and employee compensation arrangements, including, without limitation, salary, equity compensation and bonuses, for directors, officers and employees of Parent approved by the compensation committee of Parent’s board of directors, (B) the exchange contemplated in the Third Lien Loan Documents, (C) any transaction or transactions providing for payments which do not and cannot, in the aggregate, exceed $250,000 per annum and (D) the performance of Parent’s obligations pursuant to the Third Lien Loan Documents;provided,however, that for the purposes of the foregoing clauses (A) and (C), such transactions must be on arm’s-length terms and approved by a majority of the non-interested directors of the board of directors of Parent.
6.14 Use of Proceeds. Use the proceeds of (a) the Advances, the Term Loans and the Second Lien Indebtedness for any purpose other than (i) on the Closing Date, (A) to refinance a portion of the outstanding principal, accrued interest, and accrued fees and expenses owing to Existing Lender, (B) to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, (C) to partially finance the consummation of the Acquisition Transaction and (D) the prepayment of up to $5,000,000 in principal (together with fees payable in connection with such prepayment) of and the payment of accrued but unpaid interest on Indebtedness owing to Affiliates of Prentice and the reasonable fees and expenses of counsel to Prentice and its Affiliates, and (ii) thereafter, consistent with the terms and conditions hereof, to financing the ongoing working capital, capital expenditure and general corporate needs of the Borrowers or (b) the Second Lien Indebtedness for any purpose other than to partially finance the consummation of the Acquisition Transaction.
6.15 Inventory and Equipment with Bailees. Store the Inventory or Equipment of the Credit Parties or their respective Subsidiaries at any time now or hereafter with a bailee, warehouseman, or similar party that has not delivered a Collateral Access Agreement to Agent.
6.16 Financial Covenants.
(a) Minimum EBITDA. Fail to achieve EBITDA, measured on a quarter-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:
| | |
| Applicable Amount | Applicable Period |
| $8,278,000 | For the three month period
ending May 31, 2007 |
| $15,427,000 | For the six month period
ending August 31, 2007 |
| $28,745,000 | For the nine month period
ending November 30, 2007 |
| $36,323,000 | For the four quarter period
ending February 28, 2008 |
| $37,784,000 | For the four quarter period
ending May 31, 2008 |
| $39,254,000 | For the four quarter period
ending August 31, 2008 |
| $42,775,000 | For the four quarter period
ending November 30, 2008 |
| $44,012,000 | For the four quarter period
ending February 28, 2009 |
| $44,000,000 | For the four quarter period
ending each quarter thereafter |
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(b) Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio, measured on a quarter-end basis, less than the required amount set forth in the following table for the applicable period set forth opposite thereto:
| | |
| Applicable Ratio | Applicable Period |
| 1.70:1.0 | For the three month period
ending May 31, 2007 |
| 1.60:1.0 | For the six month period
ending August 31, 2007 |
| 1.80:1.0 | For the nine month period
ending November 30, 2007 |
| 1.60:1.0 | For the four quarter period
ending February 28, 2008 |
| 1.60:1.0 | For the four quarter period
ending each quarter thereafter |
(c) Leverage Ratio. Have a Leverage Ratio, measured on a quarter-end basis, more than the applicable ratio set forth in the following table for the applicable date set forth opposite thereto:
| | |
| Applicable Ratio | Applicable Period |
| 3.91:1.0 | For the three month period
ending May 31, 2007 |
| 4.23:1.0 | For the six month period
ending August 31, 2007 |
| 3.43:1.0 | For the nine month period
ending November 30, 2007 |
| 3.37:1.0 | For the four quarter period
ending February 28, 2008 |
| 3.30:1.0 | For the four quarter period
ending May 31, 2008 |
| 3.30:1.0 | For the four quarter period
ending August 31, 2008 |
| 2.67:1.0 | For the four quarter period
ending November 30, 2008 |
| 2.59:1.0 | For the four quarter period
ending February 28, 2009 |
| 2:50:1.0 | For the four quarter period
ending each quarter thereafter |
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(d) Minimum Liquidity. Have Excess Availability plus Qualified Cash at all times of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:
| | |
| Applicable Amount | Applicable Period |
| $7,500,000 | From the Closing Date through the date, if any, on which the financial covenants set forth inSections 6.16(a),6.16(b) and6.16(c) for the three month period ending May 31, 2007 have been both tested and satisfied |
| $5,000,000 | Except as provided in the immediately succeeding row of this table, at all times from the date on which the financial covenants set forth inSections 6.16(a),6.16(b) and6.16(c) for the three month period ending May 31, 2007 have been both tested and satisfied |
| $0 | During each quarterly period after Agent’s receipt of a Compliance Certificate evidencing that the Leverage Ratio is 2:50:1.0 or less |
(e) Maximum Capital Expenditures. Permit Capital Expenditures to exceed $10,000,000 in any fiscal year.
6.17 Acquisition Documents. Amend, modify or waive in any way materially adverse to Parent, Borrowers, or the Lender Group, any term or provision of the Acquisition Documents.
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6.18 ERISA. (a) Terminate, or permit any of their ERISA Affiliates to terminate, any Pension Plan so as to result in a Material Adverse Change or any material liability to any ERISA Affiliate, (b) permit to exist any ERISA Event, or any other event or condition, which presents the risk of a Material Adverse Change or a material liability to any ERISA Affiliate, (c) make a complete or partial withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in a Material Adverse Change or any material liability to any ERISA Affiliate, (d) enter into any new Plan or modify any existing Plan so as to increase its obligations thereunder which would reasonably be expected to result in a Material Adverse Change or any material liability to any ERISA Affiliate, (e) permit the present value of all nonforfeitable accrued benefits under any Plan (using the actuarial assumptions utilized by the PBGC upon termination of a Plan) materially to exceed the fair market value of Plan assets allocable to such benefits, all determined as of the most recent valuation date for each such Plan, or (f) engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Agent or any Lender of any of their rights under this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under ERISA or Section 4975 of the IRC.
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement:
7.1 If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of 3 Business Days, or (b) all or any portion of the principal of the Obligations;
7.2 If any Credit Party or any Subsidiary of any Credit Party:
(a) fails to perform or observe any covenant or other agreement contained in any ofSections 2.7,5.2,5.3,5.4,5.5,5.8,5.12,5.14,5.16,5.24,5.25 and5.26 and6.1 through6.18 of this Agreement or Section 6 of the Security Agreement;
(b) fails to perform or observe any covenant or other agreement contained in any of Sections5.6,5.7,5.9,5.10,5.11,5.13,5.15,5.17,5.18,5.19,5.20,5.21, and5.22 of this Agreement and such failure continues for a period of 10 days after the earlier of (i) the date on which such failure shall first become known to any officer of any Credit Party or (ii) written notice thereof is given to Administrative Borrower by Agent; or
(c) fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is the subject of another provision of thisSection 7 (in which event such other provision of thisSection 7 shall govern), and such failure continues for a period of 30 days after the earlier of (i) the date on which such failure shall first become known to any officer of any Credit Party or (ii) written notice thereof is given to Administrative Borrower by Agent;
7.3 If any material portion of any Credit Party’s or any of its Subsidiaries’ assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any third Person and the same is not discharged before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such property or asset is subject to forfeiture by such Credit Party or the applicable Subsidiary;
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7.4 If an Insolvency Proceeding is commenced by any Credit Party or any Subsidiary of a Credit Party (other than in connection with the liquidation of Cenuco, Inc. and/or Lander Canada as permitted under clause (e) of the definition of Permitted Disposition but solely to the extent that (a) the proceeds are applied in accordance withSection 2.4, (b) no other Credit Party or Subsidiary thereof (other than Cenuco, Inc. or Lander Canada, as the case may be) has commenced an Insolvency Proceeding, (c) the filing of any such Insolvency Proceeding, or any actions taken during the course of any such Insolvency Proceeding, does not, and does not threaten to, cause a material loss to Agent, to the value of any remaining Collateral or to the ability of the Credit Parties (other than Cenuco, Inc. and/or Lander Canada, as the case may be) to fully perform their obligations under this Agreement or any other Loan Document and (d) no motion or other action shall be made or taken to substantively consolidate any other Credit Party);
7.5 If an Insolvency Proceeding is commenced against any Credit Party or any Subsidiary of a Credit Party, and any of the following events occur: (a) the applicable Credit Party or Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, any Credit Party or any Subsidiary of a Credit Party, or (e) an order for relief shall have been issued or entered therein;
7.6 If any Credit Party or any Subsidiary of a Credit Party is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;
7.7 If one or more judgments, orders, or awards involving an aggregate amount of $500,000 or more (to the extent such amounts are in excess of amounts covered by insurance pursuant to which the insurer has acknowledged coverage) shall be entered or filed against any Credit Party or any Subsidiary of any Credit Party or with respect to any of their respective assets, and the same is not released, discharged, bonded against, or stayed pending appeal before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such asset is subject to being forfeited by the applicable Credit Party or the applicable Subsidiary;
7.8 If there is a default in one or more agreements to which any Credit Party or any Subsidiary of a Credit Party is a party with one or more third Persons relative to Indebtedness of any Credit Party or any Subsidiary of any Credit Party involving an aggregate amount of $250,000 or more, and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of the applicable Credit Party’s or Subsidiary’s obligations thereunder;
7.9 If any warranty, representation, statement, or Record made herein or in any other Loan Document or delivered to Agent or any Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof;
7.10 If the obligation of any Guarantor under the Guaranty is limited or terminated by operation of law or by such Guarantor, or any such Guarantor becomes the subject of an Insolvency Proceeding;
7.11 If the Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby, except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement;
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7.12 Any provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by any Credit Party or any Subsidiary of a Credit Party, or a proceeding shall be commenced by any Credit Party or any Subsidiary of a Credit Party, or by any Governmental Authority having jurisdiction over any Credit Party or any Subsidiary of a Credit Party, seeking to establish the invalidity or unenforceability thereof, or any Credit Party or any Subsidiary of a Credit Party shall deny that it has any liability or obligation purported to be created under any Loan Document;
7.13 If any Change of Control shall have occurred;
7.14 If (a) there shall occur and be continuing any “Event of Default” (or any comparable term) by any Credit Party or any of its Subsidiaries under, and as defined in (i) any Second Lien Loan Document, (ii) any Third Lien Loan Document, or (iii) the Seller Note, (b) any of the Obligations for any reason shall cease to be “First Lien Obligations” (or any comparable term) under, and as defined in any Second Lien Loan Document or Third Lien Loan Document, (c) Agent’s Liens securing the Obligations for any reason shall cease to be “Permitted Liens” (or any comparable term) under, and as defined in any Second Lien Loan Document or Third Lien Loan Document, (d) the Second Lien Intercreditor Agreement shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against the Second Lien Administrative Agent, the Second Lien Collateral Agent, any Second Lien Lender or any other holder of Second Lien Indebtedness or (e) the Third Lien Intercreditor Agreement shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against the Third Lien Agent, any Third Lien Lender or any other holder of Third Lien Indebtedness; or
7.15 If there occurs one or more ERISA Events which individually or in the aggregate results in or otherwise is associated with liability of any Credit Party, any of their respective Subsidiaries or any of their respective ERISA Affiliates in excess of $500,000 during the term of this Agreement; or there exists, an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities) which exceeds $500,000.
8. THE LENDER GROUP’S RIGHTS AND REMEDIES.
8.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by each Credit Party:
(a) Declare all or any portion of the Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of Borrowers under this Agreement, under any of the Loan Documents, or under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent’s Liens in the Collateral and without affecting the Obligations; and
(d) The Lender Group shall have all other rights and remedies available at law or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described inSection 7.4 orSection 7.5, in addition to the remedies set forth above, without any notice to any Credit Party or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations then outstanding, together with all accrued and unpaid interest thereon and all fees and all other
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amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by each Credit Party.
8.2 Remedies Cumulative. The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.
9. TAXES AND EXPENSES.
If any Credit Party or its Subsidiaries fail to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, Agent, in its sole discretion and without prior notice to any Credit Party, may do any or all of the following: (a) make payment of the same or any part thereof, (b) set up such reserves against the Borrowing Base or the Maximum Revolver Amount as Agent deems necessary to protect the Lender Group from the exposure created by such failure, or (c) in the case of the failure to comply withSection 5.8 hereof, obtain and maintain insurance policies of the type described inSection 5.8 and take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing.
10. WAIVERS; INDEMNIFICATION.
10.1 Demand; Protest; etc. Each Credit Party waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which any such Credit Party may in any way be liable.
10.2 The Lender Group’s Liability for Collateral. Each Credit Party hereby agrees that: (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by the Credit Parties.
10.3 Indemnification. Each Credit Party shall pay, indemnify, defend, and hold the Agent- Related Persons, the Lender-Related Persons, and each Participant (each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of any Credit Party’s and its Subsidiaries’ compliance with the terms of the Loan Documents, (b) with respect to any
47
investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by any Credit Party or any of its Subsidiaries or any Environmental Actions, Environmental Liabilities and Costs or Remedial Actions related in any way to any such assets or properties of any Credit Party or any of its Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, the Credit Parties shall have no obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which the Credit Parties were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by the Credit Parties with respect thereto.WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
11. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by any Credit Party or Agent to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Administrative Borrower or Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as the case may be, at its address set forth below:
| | | | |
| | If to any Credit Party, in care of Administrative Borrower: | | ASCENDIA BRANDS, INC. |
| | | | 100 American Metro Boulevard, Suite 108 |
| | | | Hamilton, New Jersey 08619 |
| | | | Attn: Chief Financial Officer |
| | | | Fax No.: (609) 890-8458 |
| | | | |
| | with copies to: | | KRAMER LEVIN NAFTALIS FRANKEL LLP |
| | | | 1177 Avenue of the Americas |
| | | | New York, New York 10036 |
| | | | Attn: Thomas D. Balliett, Esq. |
| | | | Fax No.: (212) 715-8000 |
| | | | |
| | If to Agent: | | WELLS FARGO FOOTHILL, INC. |
| | | | One Boston Place, 18th Floor |
| | | | Boston, MA 02108 |
| | | | Attn: Business Finance Division Manager |
| | | | Fax No.: (627) 722-9493 |
| | | | |
| | with copies to: | | BINGHAM MCCUTCHEN LLP |
| | | | 399 Park Avenue |
| | | | New York, NY 10022-4698 |
| | | | Attn: Mark B. Joachim, Esq. |
| | | | Fax No.: (212) 702-3608 |
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Agent and the Credit Parties may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with thisSection 11, other than notices by Agent in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Each Credit Party acknowledges and agrees that notices sent by the Lender Group in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK;PROVIDED,HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH CREDIT PARTY AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OFFORUMNONCONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THISSECTION 12(b). IN THE EVENT THAT ANY, OR ALL, OF THE BORROWERS FILES FOR RELIEF UNDER THE BANKRUPTCY CODE, SUCH BORROWER(S) AGREES THAT IT WILL, TO THE EXTENT PERMITTED BY LAW, FILE ANY SUCH PROCEEDING IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. EACH BORROWER FURTHER AGREES AND ACKNOWLEDGES THAT THE VENUE FOR SUCH A VOLUNTARY FILING PROPERLY LIES IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK PURSUANT TO 28 U.S.C. § 1408. BORROWERS FURTHER AGREE THAT REGARDLESS OF WHERE SUCH A FILING MAY OCCUR, IN THE EVENT THAT AGENT FILES A MOTION TO CHANGE VENUE PURSUANT TO 28 U.S.C. § 1412, OR AS OTHERWISE PROVIDED BY LAW, BORROWERS WILL CONSENT TO THE RELIEF REQUESTED AND WILL NOT OPPOSE SUCH MOTION IN ANY FASHION.
(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH CREDIT PARTY AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
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CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH CREDIT PARTY AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
13.1 Assignments and Participations.
(a) Any Lender may assign and delegate to one or more assignees (each an “Assignee”) that are Eligible Transferees all or any portion, of the Obligations, the Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount (unless waived by the Agent) of $5,000,000 (except such minimum amount shall not apply (x) to an assignment or delegation by any Lender to any other Lender or an Affiliate of any Lender or any Related Fund, (y) to a group of new Lenders, each of whom is an Affiliate of each other or a fund or account managed by any such new Lender or an Affiliate of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $5,000,000 or (z) during the continuance of an Event of Default);provided,however, that Borrowers and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Administrative Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Administrative Borrower and Agent an Assignment and Acceptance and Agent has notified the assigning Lender of its receipt thereof in accordance withSection 13.1(b), and (iii) unless waived by the Agent, the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in the amount of $3,500. Anything contained herein to the contrary notwithstanding, the payment of any fees shall not be required and the Assignee need not be an Eligible Transferee (xx) if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of the assigning Lender or (yy) if the assignee is a Lender or an Affiliate of a Lender or a Related Fund.
(b) From and after the date that Agent notifies the assigning Lender (with a copy to Administrative Borrower) that it has received an executed Assignment and Acceptance and, if applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents (including the Second Lien Intercreditor Agreement and the Third Lien Intercreditor Agreement), and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect toSection 10.3 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, the Second Lien Intercreditor Agreement, the Third Lien Intercreditor Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation among Borrowers, the assigning Lender, and the Assignee;provided,however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations underSection 15 andSection 17.9(a) of this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or
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representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Credit Parties or the performance or observance by the Credit Parties of any of their obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement, the Second Lien Intercreditor Agreement, the Third Lien Intercreditor Agreement and the other Loan Documents as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon Agent’s receipt of the required processing fee, if applicable, and delivery of notice to the assigning Lender pursuant toSection 13.1(b), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lenderpro tanto.
(e) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents;provided,however, that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled principal repayments or prepayments or premiums, and (v) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collections of Borrowers or their Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves.
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(f) In connection with any such assignment or participation or proposed assignment or participation, a Lender may, subject to the provisions ofSection 17.9, disclose all documents and information which it now or hereafter may have relating to the Credit Parties and their respective Subsidiaries and their respective businesses.
(g) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR § 203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.
(h) Agent (on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name of a Lender as the registered owner of each Advance and Term Loan held by such Lender. Other than in connection with an assignment by a Lender of all or any portion of the Advances and Term Loans held by such Lender to an Affiliate of such Lender, (i) a Registered Loan (and the Registered Note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each Registered Note shall expressly so provide) and (ii) any assignment or sale of all or part of such Registered Loan (and the Registered Note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the Registered Note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such Registered Note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new Registered Notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the Registered Note, if any evidencing the same), Borrowers shall treat the Person in whose name such Registered Loan (and the Registered Note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. In the case of any assignment by a Lender of all or any portion of the Advances and Term Loans held by such Lender to an Affiliate of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register.
(i) In the event that a Lender sells participations in the Registered Loan, such Lender, on behalf of Borrowers, shall maintain a register on which it enters the name of all participants in the Registered Loans held by it (the “Participant Register”). A Registered Loan (and the Registered Note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each Registered Note shall expressly so provide). Any participation of such Registered Loan (and the Registered Note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.
13.2 Successors. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties;provided,however, that the Credit Parties may not assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutelyvoid ab initio. No consent to assignment by the Lenders shall release any Credit Party from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant toSection 13.1 hereof and, except as expressly required pursuant toSection 13.1 hereof, no consent or approval by any Credit Party is required in connection with any such assignment.
14. AMENDMENTS; WAIVERS.
14.1 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document (other than Bank Product Agreements or the Fee Letter), and no consent with respect to any departure by any Credit Party therefrom, shall be effective unless the same shall be in writing
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and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Administrative Borrower (on behalf of all Credit Parties) and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given;provided,however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders directly affected thereby and Administrative Borrower (on behalf of all Credit Parties), do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document,
(d) change the Pro Rata Share that is required to take any action hereunder,
(e) amend or modify this Section or any provision of this Agreement providing for consent or other action by all Lenders,
(f) other than as permitted bySection 15.11, release Agent’s Lien in and to any of the Collateral,
(g) change the definition of “Required Lenders,” “Required Revolver/Term Loan A-1 Lenders,” “Required Term Loan A-2 Lenders,” or “Pro Rata Share”,
(h) other than as set forth in the Second Lien Intercreditor Agreement, contractually subordinate any of the Agent’s Liens,
(i) other than in connection with a merger, liquidation, dissolution or sale of such Person expressly permitted by the terms hereof or the other Loan Documents, release any Borrower or any Guarantor from any obligation for the payment of money,
(j) amend any of the provisions ofSection 2.4(b)(i) or (ii),
(k) amend any of the provisions ofSection 2.3(d),
(l) change the definition of Borrowing Base or the definitions of Eligible Accounts, Eligible Inventory, Maximum Revolver Amount, Term Loan A-1 Amount, Term Loan A-2 Amount or changeSection 2.1(b), or
(m) amend any of the provisions ofSection 15,
and,provided further,however, that no amendment, waiver or consent shall, unless in writing and signed by Agent or Swing Lender, as applicable, affect the rights or duties of Agent or Swing Lender, as applicable, under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of the Credit Parties, shall not require consent by or the agreement of any Credit Party.
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14.2 Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender (“Holdout Lender”) fails to give its consent, authorization, or agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Lenders (each, a “Replacement Lender”), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.
(b) Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Holdout Lender being repaid its share of the outstanding Obligations without any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Holdout Lender shall be made in accordance with the terms ofSection 13.1. Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances.
14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by the Credit Parties of any provision of this Agreement. Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.
15. AGENT; THE LENDER GROUP.
15.1 Appointment and Authorization of Agent. Each Lender hereby designates and appoints WFF as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in thisSection 15. The provisions of thisSection 15 are solely for the benefit of Agent and the Lenders, and the Credit Parties and their respective Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word “Agent” is for convenience only, that WFF is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a)
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maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to the Credit Parties or their respective Subsidiaries, the Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents and (h) when a Borrower or Guarantor is to be released from its obligations hereunder and under the other Loan Documents as the result of a Permitted Disposition pursuant to clause (e) of the definition of Permitted Dispositions, at Borrowers’ sole expense, execute and deliver discharge or release documents as are reasonably necessary to release such Borrower or Guarantor from its obligations hereunder and under the other Loan Documents.
15.2 Delegation of Duties. Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.
15.3 Liability of Agent. None of the Agent Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Credit Party or any of its Subsidiaries or Affiliates, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Credit Party or its Subsidiaries or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of any Credit Party or its Subsidiaries.
15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Credit Party or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.
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15.5 Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject toSection 15.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance withSection 8;provided,however, that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.
15.6 Credit Decision. Each Lender acknowledges that none of the Agent Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of any Credit Party and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent- Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of any Credit Party or any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Credit Parties or any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Credit Party or any other Person party to a Loan Document that may come into the possession of any of the Agent Related Persons.
15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not any Credit Party is obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of any Credit Party and their Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses by any Credit Party or their Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Agent such Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of any Credit Party and without limiting the obligation of the Credit Parties to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities;provided,however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder. Without
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limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of any Credit Party. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.
15.8 Agent in Individual Capacity. WFF and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with any Credit Party or its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though WFF were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, WFF or its Affiliates may receive information regarding a Credit Party or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Credit Party or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms “Lender” and “Lenders” include WFF in its individual capacity.
15.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders (unless such notice is waived by the Required Lenders). If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of thisSection 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.
15.10 Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with the Credit Parties and their respective Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding the Credit Parties or their Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of the Credit Parties or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them.
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15.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by the Credit Parties of all Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Administrative Borrower certifies to Agent that the sale or disposition is permitted underSection 6.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Credit Party or its Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to a Credit Party or its Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Administrative Borrower at any time, the Lenders will confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to thisSection 15.11;provided,however, that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Credit Parties in respect of) all interests retained by the Credit Parties, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by any Credit Party or its Subsidiaries or is cared for, protected, or insured or has been encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein.
15.12 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set off against the Obligations, any amounts owing by such Lender to any Credit Party or its Subsidiaries or any deposit accounts of any Credit Party or its Subsidiaries now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings to enforce any Loan Document against the Borrowers or Guarantors or to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares;provided,however, that to the extent that such excess
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payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.
15.13 Agency for Perfection. Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.
15.14 Payments by Agent to the Lenders. All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.
15.15 Concerning the Collateral and Related Loan Documents. Each member of the Lender Group authorizes and directs Agent to enter into this Agreement, the Second Lien Intercreditor Agreement, the Third Lien Intercreditor Agreement and the other Loan Documents. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement, the Second Lien Intercreditor Agreement, the Third Lien Intercreditor Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.
15.16 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information. By becoming a party to this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report respecting Borrowers or their Subsidiaries (each a “Report” and collectively, “Reports”) prepared by or at the request of Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Borrowers or their Subsidiaries and will rely significantly upon the Credit Parties’ and their respective Subsidiaries’ books and records, as well as on representations of the Credit Parties’ personnel,
(d) agrees to keep all Reports and other material, non-public information regarding the Credit Parties and their respective Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance withSection 17.9, and
(e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify,
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defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by the Credit Parties or their respective Subsidiaries to Agent that has not been contemporaneously provided by the Credit Parties or their respective Subsidiaries to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from the Credit parties or their respective Subsidiaries, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of Administrative Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Administrative Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.
15.17 Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided inSection 15.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to any Credit Party or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.
15.18 Pari Passu Treatment; Single Lien. It is the intention of the Lenders that (a) the Advances, Term Loan A-1 and Term Loan A-2 be treated aspari passu (subject to the payment priorities inSection 2.4) and (b) the Agent’s Liens secure all of the Advances, Term Loan A-1 and Term Loan A-2 as part of one single indivisible grant of Liens.
16. WITHHOLDING TAXES.
(a) All payments made by any Credit Party hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Taxes, and in the event any deduction or withholding of Taxes is required, each Credit Party shall comply with the penultimate sentence of thisSection 16(a). “Taxes” shall mean, any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein measured by or based on the net income or net profits of any Lender) and all interest, penalties or similar liabilities with respect thereto. If any Taxes are so levied or imposed, each Credit Party agrees to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to thisSection 16(a) after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein; provided,
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however, that the Credit Party shall not be required to increase any such amounts if the increase in such amount payable results from Agent’s or such Lender’s own willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction). Each Credit Party will furnish to Agent as promptly as possible after the date the payment of any Tax is due pursuant to applicable law certified copies of tax receipts evidencing such payment by any Credit Party.
(b) If a Lender claims an exemption from United States withholding tax, Lender agrees with and in favor of Agent and any Credit Party, to deliver to Agent:
(i) if such Lender claims an exemption from United States withholding tax pursuant to its portfolio interest exception, (A) a statement of the Lender, signed under penalty of perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Credit Party (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation related to any Credit Party within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or any Credit Party;
(ii) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed and executed IRS Form W-8BEN before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or any Credit Party;
(iii) if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or any Credit Party; or
(iv) such other form or forms, including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or any Credit Party.
Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction.
(c) If a Lender claims an exemption from withholding tax in a jurisdiction other than the United States, Lender agrees with and in favor of Agent and the Credit Parties, to deliver to Agent any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Administrative Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction.
(d) If any Lender claims exemption from, or reduction of, withholding tax and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Credit Parties to such Lender, such Lender agrees to notify Agent and Administrative Borrower of the percentage amount in which it is no longer the beneficial owner of Obligations of the Credit Parties to such Lender. To the extent of such percentage amount, Agent and the Credit Parties will treat such Lender’s documentation provided pursuant toSections 16(b) or 16(c) as no longer valid. With respect to such percentage amount, Lender may provide new documentation, pursuant toSections 16(b) or16(c), if applicable.
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(e) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (b) or (c) of thisSection 16 are not delivered to Agent, then Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax.
(f) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or for the account of any Lender due to a failure on the part of the Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid, directly or indirectly, by Agent, as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under thisSection 16, together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed effective when executed by the Credit Parties, Agent, and each Lender whose signature is provided for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or the Credit Parties, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
17.5 Bank Product Providers. Each Bank Product Provider shall be deemed a party hereto for purposes of any reference in a Loan Document to the parties for whom Agent is acting; it being understood and agreed that the rights and benefits of such Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and collections out of the Collateral as more fully set forth herein. In connection with any such distribution of payments and collections, Agent shall be entitled to assume no amounts are due to any Bank Product Provider unless such Bank Product Provider has notified Agent in writing of the amount of any such liability owed to it prior to such distribution.
17.6 Lender-Creditor Relationship. The relationship between the Lenders and Agent, on the one hand, and the Credit Parties, on the other hand, is solely that of creditor and debtor. No member of the Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to the Credit Parties arising out of or in connection with, and there is no agency or joint venture relationship between the members of the Lender Group, on the one hand, and the Credit Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein.
17.7 Counterparts; Electronic Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same
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Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Documentmutatis mutandis.
17.8 Revival and Reinstatement of Obligations. If the incurrence or payment of the Obligations by any Borrower or Guarantor or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state, provincial or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (each, a “Voidable Transfer”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers or Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.
17.9 Confidentiality.
(a) Agent and Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding the Credit Parties and their respective Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except: (i) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group, (ii) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product Providers), provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of thisSection 17.9, (iii) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (iv) as may be agreed to in advance by Administrative Borrower or its Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (v) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders), (vi) in connection with any assignment, participation or pledge of any Lender’s interest under this Agreement, provided that any such assignee, participant, or pledgee shall have agreed in writing to receive such information hereunder subject to the terms of this Section, and (vii) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents. The provisions of thisSection 17.9(a) shall survive for 2 years after the payment in full of the Obligations.
(b) Anything in this Agreement to the contrary notwithstanding, Agent may provide information concerning the terms and conditions of this Agreement and the other Loan Documents to loan syndication and pricing reporting services.
17.10 Lender Group Expenses. The Credit Parties agree to pay any and all Lender Group Expenses promptly after demand therefor by Agent and agrees that their obligations contained in thisSection 17.10 shall survive payment or satisfaction in full of all other Obligations.
17.11 USA PATRIOT Act. Each Lender that is subject to the requirements of the USA Patriot Act (Title 111 of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies Borrowers that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies Borrowers, which information includes the name and address of Borrowers and other information that will allow such Lender to identify Borrowers in accordance with the Act.
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17.12 Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.
17.13 Parent as Agent for Borrowers. Each Borrower hereby irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (i) to provide Agent with all notices with respect to Advances obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Advances and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral of Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to any Borrower or any other Credit Party as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and Collateral of Borrowers as herein provided, (b) the Lender Group’s relying on any instructions of the Administrative Borrower, or (c) any other action taken by the Lender Group hereunder or under the other Loan Documents, except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under thisSection 17.13 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.
17.14 Release of Borrower or Guarantor. When a Borrower or Guarantor is to be released from its obligations hereunder and under the other Loan Documents as the result of a Permitted Disposition pursuant to clause (e) of the definition of Permitted Dispositions, Agent shall, at Borrowers’ sole expense, execute and deliver termination, discharge or release documents as are reasonably necessary to release such Borrower or Guarantor from its obligations hereunder and under the other Loan Documents and to release any security interests in the assets of such Borrower or Guarantor granted pursuant to the Loan Documents.
[Signature pages to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.
| | |
| | ASCENDIA BRANDS, INC.,
a Delaware corporation |
| | |
| | /s/ Joseph A. Falsetti |
| | By: Joseph A. Falsetti
Title: President and Chief Executive Officer |
| | |
| | HERMES ACQUISITION COMPANY I LLC,
a Delaware limited liability company |
| | |
| | By Ascendia Brands, Inc., as Manager |
| | |
| | /s/ Joseph A. Falsetti |
| | By: Joseph A. Falsetti
Title: President and Chief Executive Officer |
| | |
| | CENUCO, INC.,
a Florida corporation |
| | |
| | /s/ Robert Picow |
| | By: Robert Picow
Title: President |
| | |
| | ASCENDIA REAL ESTATE LLC,
a New York limited liability company |
| | |
| | By Hermes Acquisition Company I LLC, as Manager,
By Ascendia Brands, Inc., as Manager |
| | |
| | /s/ Joseph A. Falsetti |
| | By: Joseph A. Falsetti
Title: President and Chief Executive Officer |
| | |
| | ASCENDIA BRANDS CO., INC.,
a New Jersey corporation |
| | |
| | /s/ Joseph A. Falsetti |
| | By: Joseph A. Falsetti
Title: President and Chief Executive Officer |
| | |
| | LANDER CO., INC.,
a Delaware corporation |
| | |
| | /s/ Franco S. Pettinato |
| | By: Franco S. Pettinato
Title: Chief Licensing and Technology Officer |
[Signature Page to Lien Credit Agreement]
65
| | |
| | LANDER INTANGIBLES CORPORATION,
a Delaware corporation |
| | |
| | /s/ Franco S. Pettinato |
| | By: Franco S. Pettinato
Title: Chief Licensing and Technology Officer |
[Signature Page to Lien Credit Agreement]
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| | |
| | WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent and as a Lender |
| | |
| | /s/ Katherine L. McDonald |
| | By: Katherine L. McDonald
Title: Vice President, Underwriter |
[Signature Page to Lien Credit Agreement]
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| | |
| | PLAINFIELD DIRECT LLC,
a Delaware limited liability company,
as a Lender |
| | |
| | /s/ Thomas X. Fritsch |
| | By: Thomas X. Fritsch
Title: Authorized Individual |
[Signature Page to Lien Credit Agreement]
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TABLE OF CONTENTS
| | | | |
| | | | Page |
| 1. | DEFINITIONS AND CONSTRUCTION | 1 |
| | 1.1 | Definitions | 1 |
| | 1.2 | Accounting Terms | 1 |
| | 1.3 | Code | 1 |
| | 1.4 | Construction | 1 |
| | 1.5 | Schedules and Exhibits | 2 |
| 2. | LOAN AND TERMS OF PAYMENT | 2 |
| | 2.1 | Revolver Advances | 2 |
| | 2.2 | Term Loans | 3 |
| | 2.3 | Borrowing Procedures and Settlements | 3 |
| | 2.4 | Payments | 8 |
| | 2.5 | Overadvances | 13 |
| | 2.6 | Interest Rates: Rates, Payments, and Calculations | 13 |
| | 2.7 | Cash Management | 14 |
| | 2.8 | Crediting Payments | 15 |
| | 2.9 | Designated Account | 15 |
| | 2.10 | Maintenance of Loan Account; Statements of Obligations | 15 |
| | 2.11 | Fees | 16 |
| | 2.12 | [Intentionally Omitted.] | 16 |
| | 2.13 | LIBOR Option | 16 |
| | 2.14 | Capital Requirements | 18 |
| | 2.15 | Joint and Several Liability of Borrowers | 18 |
| | 2.16 | Registration of Notes | 20 |
| 3. | CONDITIONS; TERM OF AGREEMENT | 20 |
| | 3.1 | Conditions Precedent to the Initial Extension of Credit | 21 |
| | 3.2 | Conditions Precedent to all Extensions of Credit | 21 |
| | 3.3 | Term | 21 |
| | 3.4 | Effect of Termination | 21 |
| | 3.5 | Early Termination by Borrowers | 21 |
| | 3.6 | Conditions Subsequent to the Initial Extension of Credit | 22 |
| 4. | REPRESENTATIONS AND WARRANTIES | 23 |
| | 4.1 | No Encumbrances | 23 |
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TABLE OF CONTENTS
(continued)
| | | | |
| | | | Page |
| | 4.2 | Eligible Accounts | 23 |
| | 4.3 | Eligible Inventory | 23 |
| | 4.4 | Equipment | 23 |
| | 4.5 | Location of Inventory and Equipment | 23 |
| | 4.6 | Inventory Records | 23 |
| | 4.7 | Jurisdiction of Organization; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims | 24 |
| | 4.8 | Due Organization and Qualification; Subsidiaries | 24 |
| | 4.9 | Due Authorization; No Conflict | 25 |
| | 4.10 | Litigation | 26 |
| | 4.11 | No Material Adverse Change | 26 |
| | 4.12 | Fraudulent Transfer | 26 |
| | 4.13 | Employee Benefits | 26 |
| | 4.14 | [Intentionally omitted.] | 27 |
| | 4.15 | Environmental Condition | 27 |
| | 4.16 | Intellectual Property | 28 |
| | 4.17 | Leases | 29 |
| | 4.18 | Deposit Accounts and Securities Accounts | 29 |
| | 4.19 | Complete Disclosure | 29 |
| | 4.20 | Indebtedness | 29 |
| | 4.21 | Material Contracts | 29 |
| | 4.22 | Acquisition Documents | 30 |
| | 4.23 | Second Lien Loan Documents | 31 |
| | 4.24 | Third Lien Loan Documents | 31 |
| | 4.25 | [Intentionally Omitted.] | 31 |
| | 4.26 | Product Liability Claims | 31 |
| | 4.27 | Suppliers and Customers | 31 |
| | 4.28 | Customer Accommodations | 31 |
| | 4.29 | Labor Matters | 31 |
| | 4.30 | Non-Assignable Assets. | 32 |
| | 4.31 | Licensed Products and Licensed Patents | 32 |
| | 4.32 | Maintenance of Corporate Formalities | 32 |
| | 4.33 | Permits | 32 |
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TABLE OF CONTENTS
(continued)
| | | | |
| | | | Page |
| | 4.34 | Certain Contracts | 32 |
| 5. | AFFIRMATIVE COVENANTS | 32 |
| | 5.1 | Accounting System | 32 |
| | 5.2 | Collateral Reporting | 32 |
| | 5.3 | Financial Statements, Reports, Certificates | 32 |
| | 5.4 | Guarantor Reports | 32 |
| | 5.5 | Inspection | 33 |
| | 5.6 | Maintenance of Properties | 33 |
| | 5.7 | Taxes | 33 |
| | 5.8 | Insurance | 33 |
| | 5.9 | Location of Inventory and Equipment | 33 |
| | 5.10 | Compliance with Laws | 34 |
| | 5.11 | Leases | 34 |
| | 5.12 | Existence | 34 |
| | 5.13 | Environmental | 34 |
| | 5.14 | Disclosure Updates | 34 |
| | 5.15 | Control Agreements | 34 |
| | 5.16 | Formation of Subsidiaries | 34 |
| | 5.17 | Further Assurances | 35 |
| | 5.18 | ERISA Compliance | 35 |
| | 5.19 | Material Contracts | 36 |
| | 5.20 | Acquisition Transaction | 36 |
| | 5.21 | Second Lien Loan Documents | 36 |
| | 5.22 | Third Lien Loan Documents | 36 |
| | 5.23 | Assumption of Intellectual Property Licenses | 37 |
| | 5.24 | Notice of Acquisition of Stock of Parent | 37 |
| | 5.25 | Maintenance of Corporate Formalities | 37 |
| | 5.26 | M2 Consulting Agreement | 37 |
| 6. | NEGATIVE COVENANTS | 37 |
| | 6.1 | Indebtedness | 37 |
| | 6.2 | Liens | 38 |
| | 6.3 | Restrictions on Fundamental Changes | 38 |
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TABLE OF CONTENTS
(continued)
| | | | |
| | | | Page |
| | 6.4 | Disposal of Assets | 39 |
| | 6.5 | Change Name | 39 |
| | 6.6 | Nature of Business | 39 |
| | 6.7 | Prepayments and Amendments | 39 |
| | 6.8 | [Intentionally Omitted.] | 40 |
| | 6.9 | Consignments | 40 |
| | 6.10 | Distributions | 40 |
| | 6.11 | Accounting Methods | 40 |
| | 6.12 | Investments | 40 |
| | 6.13 | Transactions with Affiliates. | 40 |
| | 6.14 | Use of Proceeds | 41 |
| | 6.15 | Inventory and Equipment with Bailees | 41 |
| | 6.16 | Financial Covenants. | 41 |
| | 6.17 | Acquisition Documents | 44 |
| | 6.18 | ERISA | 44 |
| 7. | EVENTS OF DEFAULT | 44 |
| 8. | THE LENDER GROUP’S RIGHTS AND REMEDIES | 46 |
| | 8.1 | Rights and Remedies | 46 |
| | 8.2 | Remedies Cumulative | 47 |
| 9. | TAXES AND EXPENSES | 47 |
| 10. | WAIVERS; INDEMNIFICATION | 47 |
| | 10.1 | Demand; Protest; etc. | 47 |
| | 10.2 | The Lender Group’s Liability for Collateral | 47 |
| | 10.3 | Indemnification | 47 |
| 11. | NOTICES | 48 |
| 12. | CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER | 49 |
| 13. | ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS | 50 |
| | 13.1 | Assignments and Participations | 50 |
| | 13.2 | Successors | 52 |
| 14. | AMENDMENTS; WAIVERS | 53 |
| | 14.1 | Amendments and Waivers | 53 |
| | 14.2 | Replacement of Holdout Lender | 54 |
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TABLE OF CONTENTS
(continued)
| | | | |
| | | | Page |
| | 14.3 | No Waivers; Cumulative Remedies | 54 |
| 15. | AGENT; THE LENDER GROUP | 54 |
| | 15.1 | Appointment and Authorization of Agent | 54 |
| | 15.2 | Delegation of Duties | 55 |
| | 15.3 | Liability of Agent | 55 |
| | 15.4 | Reliance by Agent | 55 |
| | 15.5 | Notice of Default or Event of Default | 56 |
| | 15.6 | Credit Decision | 56 |
| | 15.7 | Costs and Expenses; Indemnification | 56 |
| | 15.8 | Agent in Individual Capacity | 57 |
| | 15.9 | Successor Agent | 57 |
| | 15.10 | Lender in Individual Capacity | 57 |
| | 15.11 | Collateral Matters | 58 |
| | 15.12 | Restrictions on Actions by Lenders; Sharing of Payments | 58 |
| | 15.13 | Agency for Perfection | 59 |
| | 15.14 | Payments by Agent to the Lenders | 59 |
| | 15.15 | Concerning the Collateral and Related Loan Documents | 59 |
| | 15.16 | Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information | 59 |
| | 15.17 | Several Obligations; No Liability | 60 |
| | 15.18 | Pari Passu Treatment; Single Lien | 60 |
| 16. | WITHHOLDING TAXES | 60 |
| 17. | GENERAL PROVISIONS | 62 |
| | 17.1 | Effectiveness | 62 |
| | 17.2 | Section Headings | 62 |
| | 17.3 | Interpretation | 62 |
| | 17.4 | Severability of Provisions | 62 |
| | 17.5 | Bank Product Providers | 62 |
| | 17.6 | Lender-Creditor Relationship | 62 |
| | 17.7 | Counterparts; Electronic Execution | 63 |
| | 17.8 | Revival and Reinstatement of Obligations | 63 |
| | 17.9 | Confidentiality | 63 |
| | 17.10 | Lender Group Expenses | 64 |
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TABLE OF CONTENTS
(continued)
| | | | |
| | | | Page |
| | 17.11 | USA PATRIOT Act | 64 |
| | 17.12 | Integration | 64 |
| | 17.13 | Parent as Agent for Borrowers | 64 |
| | 17.14 | Release of Borrower or Guarantor | 64 |
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EXHIBITS AND SCHEDULES
| | | |
| Exhibit A-1 | | Form of Assignment and Acceptance |
| Exhibit B-1 | | Form of Borrowing Base Certificate |
| Exhibit C-1 | | Form of Compliance Certificate |
| Exhibit L-1 | | Form of LIBOR Notice |
| | | |
| Schedule A-1 | | Agent’s Account |
| Schedule A-2 | | Authorized Persons |
| Schedule C-1 | | Commitments |
| Schedule D-1 | | Designated Account |
| Schedule E-1 | | Eligible Inventory Locations |
| Schedule P-1 | | Permitted Dispositions |
| Schedule P-2 | | Permitted Liens |
| Schedule R-1 | | Real Property Collateral |
| Schedule 1.1 | | Definitions |
| Schedule 2.7(a) | | Cash Management Banks |
| Schedule 3.1 | | Conditions Precedent |
| Schedule 4.5 | | Locations of Inventory and Equipment |
| Schedule 4.7(a) | | States of Organization |
| Schedule 4.7(b) | | Chief Executive Offices |
| Schedule 4.7(c) | | Organizational Identification Numbers |
| Schedule 4.7(d) | | Commercial Tort Claims |
| Schedule 4.8(b) | | Capitalization of Credit Parties |
| Schedule 4.8(c) | | Capitalization of Credit Parties’ Subsidiaries |
| Schedule 4.10 | | Litigation |
| Schedule 4.13(a) | | Plans |
| Schedule 4.13(c) | | ERISA Events |
| Schedule 4.13(d) | | Benefits to Retired or Former Employees |
| Schedule 4.15 | | Environmental Matters |
| Schedule 4.16 | | Intellectual Property |
| Schedule 4.18 | | Deposit Accounts and Securities Accounts |
| Schedule 4.20 | | Permitted Indebtedness |
| Schedule 4.21 | | Material Contracts |
| Schedule 4.26 | | Product Liability Claims |
| Schedule 4.27 | | Suppliers and Customers |
| Schedule 4.28 | | Customer Accommodations |
| Schedule 4.31 | | Non-Assignable Assets, Licensed Products and Licensed Patents |
| Schedule 5.2 | | Collateral Reporting |
| Schedule 5.3 | | Financial Statements, Reports, Certificates |
| Schedule 5.12 | | Exceptions to Existence Covenant |
| Schedule 6.3 | | Permitted Fundamental Changes |
| Schedule 6.6 | | Nature of Business |
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EXECUTION VERSION
Schedule 1.1
As used in the Agreement, the following terms shall have the following definitions:
“Account” means an account (as that term is defined in the Code).
“Account Debtor” means any Person who is obligated on an Account, chattel paper, or a general intangible.
“ACH Transactions” means any cash management or related services (including the Automated Clearing House processing of electronic fund transfers through the direct Federal Reserve Fedline system) provided by a Bank Product Provider for the account of Administrative Borrower or its Subsidiaries.
“Acquisition” means (a) a Stock Acquisition, or (b) an Asset Acquisition, as the context requires.
“Acquisition Agreement” has the meaning specified therefor in the Recitals to this Agreement.
“Acquisition Documents” means the Acquisition Agreement, the Transition Services Agreement and the other documents, instruments and agreements executed and delivered in connection with the Acquisition Transaction, or otherwise relating thereto, including the Seller Note.
“Acquisition Transaction” has the meaning specified therefor in the Recitals to this Agreement.
“Acquired Assets” has the meaning specified therefor in the Recitals to this Agreement.
“Act” has the meaning specified therefor inSection 17.11.
“Additional Documents” has the meaning specified therefor inSection 5.17.
“Administrative Borrower” has the meaning specified therefor inSection 17.13.
“Advances” has the meaning specified therefor inSection 2.1(a).
“Affiliate” means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise;provided, however, that, for purposes of the definition of Eligible Accounts andSection 6.13 of the Agreement: (a) any Person which owns directly or indirectly 10% or more of the Stock having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership in which a Person is a general partner shall be deemed an Affiliate of such Person.
“Agent” has the meaning specified therefor in the preamble to the Agreement.
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“Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.
“Agent’s Account” means the Deposit Account of Agent identified onSchedule A-1.
“Agent’s Liens” means the Liens granted by any Credit Party to Agent under the Loan Documents.
“Agreement” means the Credit Agreement to which thisSchedule 1.1 is attached.
“Applicable Prepayment Premium” has the meaning specified in the Fee Letter.
“Asset Acquisition” means the purchase or other acquisition by a Person or its Subsidiaries of all or substantially all of the assets of any other Person.
“Assignee” has the meaning specified therefor inSection 13.1(a).
“Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in the form ofExhibit A-1.
“Authorized Person” means any one of the individuals identified onSchedule A-2.
“Availability” means, as of any date of determination, the amount that Borrowers are entitled to borrow as Advances underSection 2.1 of the Agreement (after giving effect to all then outstanding Obligations (other than Bank Product Obligations) and all sublimits and reserves then applicable hereunder).
“Bank Product” means any financial accommodation extended to any Credit Party or its Subsidiaries by a Bank Product Provider (other than pursuant to the Agreement) including: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) transactions under Hedge Agreements.
“Bank Product Agreements” means those agreements entered into from time to time by any Credit Party or its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products.
“Bank Product Collateralization” means providing cash collateral (pursuant to documentation reasonably satisfactory to Agent) to be held by Agent for the benefit of the Bank Product Providers in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure with respect to the then existing Bank Products.
“Bank Product Obligations” means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by any Credit Party or its Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that any Credit Party or its Subsidiaries are obligated to reimburse to Agent or any member of the Lender Group as a result of Agent or such member of the Lender Group purchasing participations from, or executing indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to any Credit Party or its Subsidiaries.
2
“Bank Product Provider” means Wells Fargo or any of its Affiliates or such other provider as to which the Agent shall consent in its sole discretion.
“Bank Product Reserve” means, as of any date of determination, the lesser of (a) $2,500,000 and (b) the amount of reserves that Agent has established (based upon the Bank Product Providers’ reasonable determination of the credit exposure of the Credit Parties and their respective Subsidiaries in respect of Bank Products) in respect of Bank Products then provided or outstanding, provided the Agent shall have furnished the calculations on which it based its reasonable determination of such credit exposure to the Administrative Borrower.
“Bankruptcy Code” means (a) title 11 of the United States Code, (b) the Bankruptcy and Insolvency Act (Canada) or (c) the Companies’ Creditors Arrangement Act (Canada) or any similar legislation in a relevant jurisdiction, each as applicable and in effect from time to time.
“Base LIBOR Rate” means the rate per annum, determined by Agent in accordance with its customary procedures, and utilizing such electronic or other quotation sources as it considers appropriate, to be the rate at which Dollar deposits (for delivery on the first day of the requested Interest Period) are offered to major banks in the London interbank market 2 Business Days prior to the commencement of the requested Interest Period, for a term and in an amount comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Administrative Borrower in accordance with the Agreement, which determination shall be conclusive in the absence of manifest error.
“Base Rate” means the greater of (a) the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate and (b) 7.50% per annum.
“Base Rate Loan” means the portion of the Advances or the Term Loans that bears interest at a rate determined by reference to the Base Rate.
“Base Rate Margin” means, as of any date of determination:
(a) For the period from and including the Closing Date to but excluding the effective date of any determination of the Base Rate Margin pursuant to clause (c) below, (i) in the case of Advances that are Base Rate Loans, 1.75 percentage points per annum (the “Initial Revolver Base Rate Margin”), (ii) in the case of Base Rate Loans under the Term Loan A-1, 2.75 percentage points per annum (the “Initial Term Loan A-1 Base Rate Margin”), and (iii) in the case of Base A-2, 5.75 percentage points per annum (the “Initial Term Loan A-2 Base Rate Margin”).
(b) Thereafter, so long as no Event of Default has occurred and is continuing, the relevant Base Rate Margin set forth in the table below that corresponds to the applicable Senior Secured Indebtedness Ratio of Parent and its Subsidiaries set forth opposite thereto (as determined in accordance with clause (c) below). At any time that an Event of Default has occurred and is continuing, the “Base Rate Margin” shall be reset to (i) the Initial Revolver Base Rate Margin in the case of Advances that are Base Rate Loans, (ii) the Initial Term Loan A-1 Base Rate Margin in the case of Base Rate Loans under Term Loan A-1 and (iii) the Initial Term Loan A-2 Base Rate Margin in the case of Base Rate Loans under Term Loan A-2.
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| Senior Secured Indebtedness Ratio | | Base Rate Margin for Advances that are Base Rate Loans | | Base Rate Margin for Base Rate Loans under Term Loan A-1 | | Base Rate Margin for Base Rate Loans under Term Loan A-2 |
| Greater than 2.25:1.00 | | 1.75 percentage points | | 2.75 percentage points | | 5.75 percentage points |
| Greater than 1.50:1.00 but less than or equal to 2.25:1.00 | | 1.75 percentage points | | 2.50 percentage points | | 5.50 percentage points |
| Less than or equal to 1.50:1.00 | | 1.75 percentage points | | 2.25 percentage points | | 5.25 percentage points |
(c) The Base Rate Margin shall be determined from time to time pursuant to clause (b) above on the first day of the month following the date on which Parent delivers to Agent a quarterly Compliance Certificate in accordance with Section 5.3, commencing with the delivery by Parent of the Compliance Certificate for the fiscal year of Parent ended February 28, 2008. In the event that a quarterly Compliance Certificate is not provided to Agent in accordance with Section 5.3, the Base Rate Margin shall be set at (i) the Initial Revolver Base Rate Margin in the case of Advances that are Base Rate Loans, (ii) the Initial Term Loan A-1 Base Rate Margin in the case of Base Rate Loans under Term Loan A-1 and (iii) the Initial Term Loan A-2 Base Rate Margin in the case of Base Rate Loans under Term Loan A-2 as of the first day of the month following the date on which such quarterly Compliance Certificate was required to be delivered until the date on which such quarterly Compliance Certificate is delivered (on which date (but not retroactively), without constituting a waiver of any Default or Event of Default arising as a result of Parent’s and Borrowers’ failure to timely deliver such quarterly Compliance Certificate, the Base Rate Margin shall be set at the relevant Base Rate Margin set forth in the table above based upon the calculation of the Senior Secured Indebtedness Ratio of Parent and its Subsidiaries set forth in such quarterly Compliance Certificate). If the aforementioned financial statements are at any time restated or otherwise revised (including as a result of an audit) or if the information set forth in such financial statements otherwise proves to be false or incorrect such that the Base Rate Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under the Agreement shall immediately be recalculated at such higher rate for any applicable periods and shall be due and payable on demand.
“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of ERISA) for which any Credit Party or any Subsidiary or ERISA Affiliate of any Credit Party has been an “employer” (as defined in Section 3(5) of ERISA) within the past six years.
“Board of Directors” means the board of directors (or comparable managers) of Parent or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).
“Borrower” and “Borrowers” have the respective meanings specified therefor in the preamble to the Agreement.
“Borrowing” means a borrowing hereunder consisting of Advances made on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the case of a Protective Advance, in each case, to Administrative Borrower.
“Borrowing Base” means, as of any date of determination, the result of:
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(a) 85% of the amount of Eligible Accounts,lessthe amount, if any, of the Dilution Reserve,and
(b) the lowest of
(i) $20,000,000
(ii) 65% of the value of Eligible Inventory, and
(iii) 85% times the most recently determined Net Liquidation Percentage times the book
value of Borrowers’ Inventory, minus
(c) the sum of (i) the Bank Product Reserve, and (ii) the aggregate amount of reserves, if any, established by Agent under Section 2.1(b).
“Borrowing Base Certificate” means a certificate in the form ofExhibit B-1.
“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of New York, except that, if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market.
“Calgon License Documents” means that certain Consent and Amendment Agreement effective as of January 11, 2007 by and among Calgon Corporation, Coty Inc., Reckitt Benckiser N.V., Joh. A. Benckiser SE, Coty Canada Inc., Coty US LLC (f/k/a Coty US Inc.) and certain of the Borrowers.
“Canadian Guarantee” means that certain Guarantee executed and delivered by Lander Canada in favor of the Agent for the benefit of the Lender Group and the Bank Product Providers, in form and substance satisfactory to the Agent.
“Canadian Security Agreement” means a security agreement, in form and substance satisfactory to Agent, executed and delivered by Lander Canada to Agent.
“Capital Expenditures” means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed.
“Capitalized Lease Obligation” means that portion of the obligations under a Capital Lease that is required to be capitalized in accordance with GAAP.
“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.
“Cash Equivalents” means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or Canada or issued by any agency thereof and backed by the full faith and credit of the United States or Canada, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued by any state of the United States or any province or territory of Canada or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”) or such other comparable rating agencies in Canada, (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1
5
from Moody’s or such other comparable rating agencies in Canada, (d) certificates of deposit or bankers’ acceptances maturing within 1 year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof or Canada or any province or territory thereof, in each case having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof or Canada or any province or territory thereof, in each case so long as the amount maintained with any such other bank is less than or equal to $100,000 and is insured by the Federal Deposit Insurance Corporation, and (f) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (e) above.
“Cash Management Account” has the meaning specified therefor inSection 2.7(a).
“Cash Management Agreements” means those certain cash management agreements, in form and substance satisfactory to Agent, each of which is among a Credit Party, Agent, the Second Lien Collateral Agent, the Third Lien Collateral Agent and one of the Cash Management Banks.
“Cash Management Bank” has the meaning specified therefor inSection 2.7(a).
“Change of Control” means that (a) entities managed by or affiliated with Prentice cease to hold (i) securities of Parent having an aggregate Stated Value of Forty Million Dollars ($40,000,000) or (ii) less than 898,000 shares of common stock of Parent, (b) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of 25%, or more, of the Stock of Parent having the right to vote for the election of members of the Board of Directors, (c) a majority of the members of the Board of Directors do not constitute Continuing Directors or (d) except as permitted pursuant toSection 6.3 or6.4, Parent fails to own and control, directly or indirectly, 100% of the Stock of each of its Subsidiaries.
“Closing Date” means the date of the making of the initial Advance (or other extension of credit) hereunder.
“Code” means the New York Uniform Commercial Code, as in effect from time to time, and when used to describe a category or categories of Collateral owned or hereafter acquired by Lander Canada, such term shall mean the equivalent category or categories of Collateral set out under the PPSA.
“Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Credit Party in or upon which a Lien is granted under any of the Loan Documents.
“Collateral Access Agreement” means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in any Credit Party’s or its Subsidiaries’ books and records, Equipment, or Inventory, in each case, in form and substance reasonably satisfactory to Agent.
“Collections” meansall cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds).
“Commitment” means, with respect to each Lender, its Revolver Commitment, its Term Loan A-1 Commitment, its Term Loan A-2 Commitment or its Total Commitment, as the context requires, and, with respect to all Lenders, their Revolver Commitments, their Term Loan A-1 Commitments, their Term Loan A-2 Commitments or their Total Commitments, as the context requires, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading onSchedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions ofSection 13.1.
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“Compliance Certificate” means a certificate substantially in the form ofExhibit C-1 delivered by the chief financial officer of Parent to Agent.
“Continuing Director” means (a) any member of the Board of Directors who was a director (or comparable manager) of Parent on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or nominated for election to the Board of Directors by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Parent and whose initial assumption of office resulted from such contest or the settlement thereof.
“Control Agreement” means a control agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by a Credit Party, Agent, Second Lien Collateral Agent, Third Lien Collateral Agent and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account).
“Copyright Security Agreement” has the meaning specified therefor in the Security Agreement.
“Credit Parties” means, collectively, Borrowers and the Guarantors, and “Credit Party” means any one of them.
“Daily Balance” means, as of any date of determination and with respect to any Obligation, the amount of such Obligation owed at the end of such day.
“Default” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.
“Defaulting Lender” means any Lender that fails to make any Advance (or other extension of credit) that it is required to make hereunder on the date that it is required to do so hereunder.
“Defaulting Lender Rate” means (a) for the first 3 days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).
“Deposit Account” means any deposit account (as that term is defined in the Code).
“Designated Account” means the Deposit Account of Administrative Borrower identified onSchedule D-1.
“Designated Account Bank” has the meaning specified therefor inSchedule D-1.
“Dilution” means, as of any date of determination, a percentage, based upon the experience of the immediately prior six months, that is the result of dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to Borrowers’ Accounts during such period, by (b) Borrowers’ billings with respect to Accounts during such period.
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“Dilution Reserve” means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by 1 percentage point for each percentage point by which Dilution is in excess of five percent (5%).
“Discharge of First Lien Priority Obligations” means the “Discharge of First Lien Priority Obligations” as such term is defined in the Second Lien Intercreditor Agreement.
“Dollars” or “$” means United States dollars.
“Earn-Out Payment” means the payment of the Additional Purchase Price (as such term is defined in the Acquisition Agreement (as in effect on the Closing Date without any amendment or modification thereto)).
“EBITDA” means, with respect to any fiscal period, Parent’s and its Subsidiaries’ consolidated net earnings (or loss), minus extraordinary gains and interest income, plus interest expense, income taxes, depreciation and amortization, non-cash extraordinary losses, non- cash non-recurring charges, and cash payments relating to employment agreements made prior to February 28, 2008 in an amount not to exceed $2,900,000 in the aggregate, in each case, determined on a consolidated basis in accordance with GAAP. For the purposes of calculating EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”), if at any time during such Reference Period (and after the Closing Date) Borrowers or any of their Subsidiaries shall have made a Permitted Acquisition, EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto in accordance with Regulation S-X promulgated under the Exchange Act or in such other manner acceptable to the Agent as if the Permitted Acquisition occurred on the first day of such Reference Period.
“Eligible Accounts” means those Accounts created by a Borrower in the ordinary course of its business, that arise out of its sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below;provided,however, that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any audit performed by Agent from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits and unapplied cash. Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within ninety (90) days of original invoice date or Accounts with selling terms of more than sixty (60) days (or solely with respect to certain extended contract accounts, which shall be identified in writing by the Administrative Borrower to Agent, at Agent’s sole discretion, Accounts that the Account Debtor has failed to pay within the earlier of one hundred twenty (120) days of original invoice date or sixty (60) days from due date),
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an Affiliate of any Borrower or an employee or agent of any Borrower or any Affiliate of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional (other than sale on approval or sale on return),
(e) Accounts that are not payable in Dollars,
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(f) Accounts with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States, or (ii) is not organized under the laws of the United States or any state thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (y) the Account is supported by an irrevocable letter of credit satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, or (z) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which the applicable Borrower has complied, to the reasonable satisfaction of Agent, with the Assignment of Claims Act, 31 USC § 3727), or (ii) any state of the United States,
(h) Accounts with respect to which the Account Debtor is a creditor of any Borrower, has or has asserted a right of setoff, or has disputed its obligation to pay all or any portion of the Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total obligations owing to Borrowers exceed 10% (such percentage, as applied to a particular Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts, to the extent of the obligations owing by such Account Debtor in excess of such percentage;provided,however, that as to the following Account Debtor, a percentage limitation of 50% (in lieu of 10%) shall apply for purposes hereof: WalMart;providedfurther,however, that, in each case, the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,
(j) Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which a Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is located in a state or jurisdiction (e.g., New Jersey, Minnesota, and West Virginia) that requires, as a condition to access to the courts of such jurisdiction, that a creditor qualify to transact business, file a business activities report or other report or form, or take one or more other actions, unless the applicable Borrower has so qualified, filed such reports or forms, or taken such actions (and, in each case, paid any required fees or other charges), except to the extent that the applicable Borrower may qualify subsequently as a foreign entity authorized to transact business in such state or jurisdiction and gain access to such courts, without incurring any cost or penalty viewed by Agent to be significant in amount, and such later qualification cures any access to such courts to enforce payment of such Account,
(l) Accounts, the collection of which, Agent, in its Permitted Discretion, believes to be doubtful by reason of the Account Debtor’s financial condition,
(m) Accounts that are not subject to a valid and perfected first priority Agent’s Lien,
(n) Accounts with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor, or
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(o) Accounts that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by the applicable Borrower of the subject contract for goods or services.
“Eligible Inventory” means Inventory of Borrowers consisting of first quality finished goods held for sale in the ordinary course of Borrowers’ business, that complies with each of the representations and warranties respecting Eligible Inventory made in the Loan Documents, and that is not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, however, that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any audit or appraisal performed by Agent from time to time after the Closing Date. In determining the amount to be so included, Inventory shall be valued at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices. An item of Inventory shall not be included in Eligible Inventory if:
(a) a Borrower does not have good and marketable title thereto,
(b) it is not located at one of the locations in the continental United States set forth onSchedule E-1 (or in-transit from one such location to another such location),
(c) it is located on real property leased by a Borrower or in a contract warehouse, in each case, unless it is subject to a Collateral Access Agreement executed by the lessor or warehouseman, as the case may be, and unless it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises,
(d) it is not subject to a valid and perfected first priority Agent’s Lien,
(e) it consists of goods returned or rejected by a Borrower’s customers to the extent such returned or rejected goods are not in saleable condition, or
(f) it consists of goods that are obsolete or slow moving, restrictive or custom items, work-in-process, or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in a Borrower’s business, bill and hold goods, defective goods, “seconds,” or Inventory acquired on consignment.
“Eligible Transferee” means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $250,000,000, (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development or a political subdivision of any such country and which has total assets in excess of $250,000,000, provided that such bank is acting through a branch or agency located in the United States, (c) a finance company, insurance company, financial institution, or fund that is engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of its business and having (together with its Affiliates) total assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Transferee for all purposes hereof), (e) so long as no Event of Default has occurred and is continuing, any other Person approved by Agent and Administrative Borrower (which approval of Agent and Administrative Borrower shall not be unreasonably withheld, delayed, or conditioned), and (f) during the continuation of an Event of Default, any other Person approved by Agent;provided, that neither Parent nor any Affiliate of Parent shall, in any event, be an Eligible Transferee.
“Environmental Actions” means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials from (a) any assets, properties, or businesses of any Credit Party, any Subsidiary of a Credit Party, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any Credit Party, any Subsidiary of a Credit Party, or any of their predecessors in interest.
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“Environmental Law” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on any Credit Party or any Subsidiary of a Credit Party, relating to the environment, the effect of the environment on employee health, or Hazardous Materials, in each case as amended from time to time, and any state, provincial and local or foreign counterparts or equivalents.
“Environmental Liabilities” means all liabilities, monetary obligations, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action.
“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.
“Equipment” means equipment (as that term is defined in the Code).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.
“ERISA Affiliate” means each business or entity which is, or within the last six years was, a member of a “controlled group of corporations”, under “common control” or an “affiliated service group” with a Credit Party or any its Subsidiaries within the meaning of Section 414(b), (c) or (m) of the IRC, required to be aggregated with a Credit Party or any of its Subsidiaries under Section 414(o) of the IRC, or is, or within the last six years was, under “common control” with a Credit Party or any of its Subsidiaries, within the meaning of Section 4001(a)(14) of ERISA.
“ERISA Event” means (a) a reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section with respect to a Pension Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; (b) the applicability of the requirements of Section 4043(b) of ERISA with respect to a contributing sponsor, as defined in Section 4001(a) (13) of ERISA, to any Pension Plan where an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such plan within the following 30 days; (c) a withdrawal by any Credit Party, any of their respective Subsidiaries, or any ERISA Affiliate from a Pension Plan or the termination of any Pension Plan resulting in liability under Sections 4063 or 4064 of ERISA; (d) the withdrawal of any Credit Party, any of their respective Subsidiaries, or ERISA Affiliate in a complete or partial withdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by any Credit Party, any of their respective Subsidiaries, or ERISA Affiliate of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA; (e) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) the imposition of liability on any Credit Party, any of their respective Subsidiaries, or any ERISA Affiliate pursuant to Sections 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the failure by any Credit Party, any of
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their respective Subsidiaries, or any ERISA Affiliate to make any required contribution to a Plan, or the failure to meet the minimum funding standard of Section 412 of the IRC with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the IRC) or the failure to make by its due date a required installment under Section 412(m) of the IRC with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan, except, in all cases, for a failure that is promptly and fully corrected to Agent’s reasonable satisfaction; (h) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (i) the imposition of any liability under Title I or Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Credit Party, any of their respective Subsidiaries or any ERISA Affiliate; (j) an application for a funding waiver under Section 303 of ERISA or an extension of any amortization period pursuant to Section 412 of the IRC with respect to any Pension Plan; (k) the occurrence of a non exempt prohibited transaction under Sections 406 or 407 of ERISA which reasonably could be expected to result in material liability for any Credit Party, or any of their respective Subsidiaries; (l) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the IRC by any fiduciary or disqualified person for which any Credit Party, any of their respective Subsidiaries or any ERISA Affiliate may reasonably be expected to incur material liability; (m) the occurrence of an act or omission which could give rise to the imposition on any Credit Party, any of their respective Subsidiaries, or any ERISA Affiliate of fines, penalties, taxes or related charges under Chapter 43 of the IRC or under Sections 409, 502(c), (i) or (1) or 4071 of ERISA; (n) the assertion of a material claim (other than routine claims for benefits) against any Plan or the assets thereof, or against any Credit Party, or any their respective Subsidiaries in connection with any such plan; (o) receipt from the Internal Revenue Service of notice of the failure of any Qualified Plan to qualify under Section 401(a) of the IRC, or the failure of any trust forming part of any Qualified Plan to fail to qualify for exemption from taxation under Section 501(a) of the IRC; (p) the imposition of any lien on any of the rights, properties or assets of any Credit Party, any of their respective Subsidiaries, or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions of the IRC or to Section 401(a)(29) or 412 of the IRC; or (q) the establishment or amendment by any Credit Party, or any of their respective Subsidiaries, of any “welfare plan”, as such term is defined in Section 3(1) of ERISA, that provides post-employment welfare benefits in a manner that would increase the liability of any Credit Party, or any of their respective Subsidiaries.
“Event of Default” has the meaning specified therefor inSection 7.
“Excess Availability” means, as of any date of determination, the amount equal to Availabilityminus the aggregate amount, if any, of all trade payables of Borrowers and their Subsidiaries aged in excess of their historical levels with respect thereto and all book overdrafts of Borrowers and their Subsidiaries in excess of their historical practices with respect thereto, in each case as determined by Agent in its Permitted Discretion.
“Excess Cash Amount” has the meaning specified therefor inSection 2.4(c)(vi).
“Excess Cash Flow” means, with respect to any fiscal period and with respect to Parent determined on a consolidated basis in accordance with GAAP (a) TTM EBITDA,minus (b) the sum of (i) the cash portion of Interest Expense paid during such fiscal period, (ii) the cash portion of income taxes paid during such period, (iii) all scheduled principal payments made in respect of the Term Loans and the Second Lien Indebtedness during such period, and (iv) the cash portion of Capital Expenditures (net of (y) any proceeds reinvested in accordance with the proviso toSection 2.4(c)(ii) of the Agreement, and (z) any proceeds of related financings with respect to such expenditures) made during such period.
“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time.
“Existing Lender” means The CIT Group/Commercial Services, Inc.
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“Extraordinary Protective Advances” has the meaning specified therefor inSection 2.3(d)(i)(B).
“Extraordinary Receipts” means any Net Cash Proceeds in excess of $250,000 in the aggregate received by any Credit Party or any of its Subsidiaries not in the ordinary course of business, including (a) foreign, United States, state or local tax refunds, (b) pension plan reversions, (c) proceeds of insurance (including key man life insurance, but excluding any casualty insurance and business interruption insurance), (d) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (e) indemnity payments, and (f) any purchase price adjustment received in connection with any purchase agreement.
“Fee Letter” means that certain fee letter between Borrowers and Agent, in form and substance satisfactory to Agent.
“Fixed Charges” means, with respect to any fiscal period and with respect to Parent and its Subsidiaries determined on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) cash Interest Expense required to be paid during such period and (b) principal payments in respect of Indebtedness that are required to be paid in cash during such period.
“Fixed Charge Coverage Ratio” means, for any period, the ratio of (i) EBITDA for such periodminus Capital Expenditures made (to the extent not already incurred in a prior period and to the extent not financed other than with proceeds of loans made hereunder) or incurred during such period and minus all federal, state and local income taxes paid in cash during such period, to (ii) Fixed Charges for such period.
“Funded Indebtedness” means, as of any date of determination, all indebtedness for borrowed money or letters of credit of Parent, determined on a consolidated basis in accordance with GAAP, that by its terms matures more than one year after the date of calculation, and any such Indebtedness maturing within one year from such date that is renewable or extendable at the option of Parent or its Subsidiaries, as applicable, to a date more than one year from such date, including, in any event, but without duplication, with respect to Parent and its Subsidiaries, the Revolver Usage, the Term Loans, and the Second Lien Indebtedness but excluding the Seller Note and the Third Lien Indebtedness.
“Funding Date” means the date on which a Borrowing occurs.
“Funding Losses” has the meaning specified therefor inSection 2.13(b)(ii).
“GAAP” means generally accepted accounting principles as in effect from time to time in the United States (or with respect to Lander Canada, Canada), consistently applied.
“Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.
“Governmental Authority” means any federal, state, provincial, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.
“Guarantors” means (a) Lander Canada and (b) each Subsidiary of a Borrower that executes a Guaranty after the Closing Date in accordance withSection 5.16, and “Guarantor” means any one of them.
“Guaranty” means (a) means that certain general continuing guaranty executed and delivered by each Guarantor, in favor of Agent, for the benefit of the Lender Group and the Bank Product Providers, in form and substance satisfactory to Agent, and (b) any other guaranty at any time executed and delivered by any other Guarantor in favor of Agent, for the benefit of the Lender Group and the Bank Product Providers, whether by execution of a joinder to the guaranty described in the foregoing clause (a) or otherwise.
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“Hazardous Materials” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million.
“Hedge Agreement” means any and all agreements, or documents now existing or hereafter entered into by any Credit Party or any of its Subsidiaries that provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging such Credit Party’s or any of its Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency valuations or commodity prices.
“Holdout Lender” has the meaning specified therefor inSection 14.2(a).
“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices), (f) all obligations owing under Hedge Agreements, and (g) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (f) above.
“Indemnified Liabilities” has the meaning specified therefor inSection 10.3.
“Indemnified Person” has the meaning specified therefor inSection 10.3.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Intellectual Property” has the meaning specified therefor in the Security Agreement.
“Intercompany Subordination Agreement” means a subordination agreement executed and delivered by the Credit Parties, each of their respective Subsidiaries, and Agent, the form and substance of which is satisfactory to Agent.
“Interest Expense” means, for any period, the aggregate of the interest expense of Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
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“Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, or 3 or 6 months thereafter;provided,however, that (a) if any Interest Period would end on a day that is not a Business Day, such Interest Period shall be extended (subject to clauses (c)-(e) below) to the next succeeding Business Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (c) any Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (d) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2, or 3 or 6 months after the date on which the Interest Period began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf thereof) may not elect an Interest Period which will end after the Maturity Date.
“Inventory” means inventory (as that term is defined in the Code).
“Investment” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the ordinary course of business consistent with past practice), purchases or other acquisitions of Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.
“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.
“Lander Canada” means Lander Co. Canada Limited, an Ontario limited company.
“Lender” and “Lenders” have the respective meanings set forth in the preamble to the Agreement, and shall include any other Person made a party to the Agreement in accordance with the provisions ofSection 13.1.
“Lender Group” means, individually and collectively, each of the Lenders and Agent.
“Lender Group Expenses” means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by a Credit Party or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in connection with the Lender Group’s transactions with the Credit Party or their respective Subsidiaries, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication, appraisal (including periodic collateral appraisals or business valuations to the extent of the fees and charges (and up to the amount of any limitation) contained in the Agreement or the Fee Letter), real estate surveys, real estate title policies and endorsements, and environmental audits, (c) reasonable costs and expenses incurred by Agent in the disbursement of funds to Borrowers or other members of the Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) reasonable audit fees and expenses of Agent related to any inspections or audits to the extent of the fees and charges (and up to the amount of any limitation) contained in the Agreement or the Fee Letter, (g) reasonable
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costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group’s relationship with any Credit Party or any Subsidiary of a Credit Party, (h) Agent’s (and, if an Event of Default shall have occurred and be continuing, the Lenders’) reasonable costs and expenses (including attorneys fees) incurred in advising, structuring, drafting, reviewing, administering, syndicating (including rating the Term Loans), or amending the Loan Documents, (i) Agent’s and each Lender’s reasonable costs and expenses (including attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any Credit Party or any Subsidiary of a Credit Party or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral and (j) Agent’s and each Lender’s costs and expenses (including attorneys, accountants, consultants, and other advisors fees and expenses) incurred following the occurrence and during the continuance of an Event of Default or an “Event of Default” (as such term is defined in the Second Lien Credit Agreement).
“Lender-Related Person” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.
“Leverage Ratio” means, as of any date of determination, (a) the amount of Parent’s Funded Indebtedness as of such date,divided by (b) TTM EBITDA;provided, that (i) for the three-month period ended May 31, 2007, TTM EBITDA for purposes of this definition shall equal EBITDA for such three-month period multiplied by four, (ii) for the six-month period ended August 31, 2007, TTM EBITDA for purposes of this definition shall equal EBITDA for such six-month period multiplied by two, and (iii) for the nine-month period ended November 30, 2007, TTM EBITDA for purposes of this definition shall equal EBITDA for such nine-month period multiplied by 4/3.
“LIBOR Deadline” has the meaning specified therefor inSection 2.13(b)(i).
“LIBOR Notice” means a written notice in the form ofExhibit L-1.
“LIBOR Option” has the meaning specified therefor inSection 2.13(a).
“LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the greater of (a) the rate per annum determined by Agent bydividing (i) the Base LIBOR Rate for such Interest Period, by (ii) 100%minus the Reserve Percentage and (b) 5.00% per annum. The LIBOR Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.
“LIBOR Rate Loan” means each portion of an Advance or the Term Loans that bears interest at a rate determined by reference to the LIBOR Rate.
“LIBOR Rate Margin” means, as of any date of determination:
(a) For the period from and including the Closing Date to but excluding the effective date of any determination of the LIBOR Rate Margin pursuant to clause (c) below, (i) in the case of Advances that are LIBOR Rate Loans, 2.75 percentage points per annum (the “Initial Revolver LIBOR Rate Margin”), (ii) in the case of LIBOR Rate Loans under the Term Loan A-1, 3.75 percentage points per annum (the “Initial Term Loan A-1 LIBOR Rate Margin”), and (iii) in the case of LIBOR Rate Loans under Term Loan A-2, 6.75 percentage points per annum (the “Initial Term Loan A-2 LIBOR Rate Margin”).
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(b) Thereafter, so long as no Event of Default has occurred and is continuing, the relevant LIBOR Rate Margin set forth in the table below that corresponds to the applicable Senior Secured (as determined in accordance with clause (c) below). At any time that an Event of Default has occurred and is continuing, the “LIBOR Rate Margin” shall be reset to (i) the Initial Revolver LIBOR Rate Margin in the case of Advances that are LIBOR Rate Loans, (ii) the Initial Term Loan A-1 LIBOR Rate Margin in the case of LIBOR Rate Loans under Term Loan A-1 and (iii) the Initial Term Loan A-2 LIBOR Rate Margin in the case of LIBOR Rate Loans under Term Loan A-2.
Senior Secured Indebtedness Ratio
| | LIBOR Rate Margin for Advances that are LIBOR Rate Loans
| | LIBOR Rate Margin for LIBOR Rate Loans under Term Loan A-1
| | LIBOR Rate Margin for LIBOR Rate Loans under Term Loan A-2
|
| Greater than 2.25:1.00 | | 2.75 percentage points | | 3.75 percentage points | | 6.75 percentage points |
| Greater than 1.50:1.00 but less than or equal to 2.25:1.00 | | 2.75 percentage points | | 3.50 percentage points | | 6.50 percentage points |
| Less than or equal to 1.50:1.00 | | 2.75 percentage points | | 3.25 percentage points | | 6.25 percentage points |
(c) The LIBOR Rate Margin shall be determined from time to time pursuant to clause (b) above on the first day of the month following the date on which Parent delivers to Agent a quarterly Compliance Certificate in accordance withSection 5.3, commencing with the delivery by Parent of the Compliance Certificate for the fiscal year of Parent ended February 28, 2008. In the event that a quarterly Compliance Certificate is not provided to Agent in accordance withSection 5.3, the LIBOR Rate Margin shall be set at (i) the Initial Revolver LIBOR Rate Margin in the case of Advances that are LIBOR Rate Loans, (ii) the Initial Term Loan A-1 LIBOR Rate Margin in the case of LIBOR Rate Loans under Term Loan A-1 and (iii) the Initial Term Loan A-2 LIBOR Rate Margin in the case of LIBOR Rate Loans under Term Loan A-2 as of the first day of the month following the date on which such quarterly Compliance Certificate was required to be delivered until the date on which such quarterly Compliance Certificate is delivered (on which date (but not retroactively), without constituting a waiver of any Default or Event of Default arising as a result of Parent’s and Borrowers’ failure to timely deliver such quarterly Compliance Certificate, the LIBOR Rate Margin shall be set at the relevant LIBOR Rate Margin set forth in the table above based upon the calculation of the Senior Secured Indebtedness Ratio of Parent and its Subsidiaries set forth in such quarterly Compliance Certificate). If the aforementioned financial statements are at any time restated or otherwise revised (including as a result of an audit) or if the information set forth in such financial statements otherwise proves to be false or incorrect such that the LIBOR Rate Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under the Agreement shall immediately be recalculated at such higher rate for any applicable periods and shall be due and payable on demand.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security arrangement and any other preference, priority, or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor under a Capital Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.
“Loan Account” has the meaning specified therefor inSection 2.10.
“Loan Documents” means the Agreement, the Bank Product Agreements, any Borrowing Base Certificate, the Canadian Guarantee, the Canadian Security Agreement, the Cash Management Agreements, the Control Agreements, the Copyright Security Agreement, the Fee Letter, the Guaranty, the Intercompany Subordination Agreement, the Mortgages, the Patent Security Agreement, the Second Lien
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Intercreditor Agreement, the Security Agreement, the Third Lien Intercreditor Agreement, the Trademark Security Agreement, any note or notes executed by a Borrower in connection with the Agreement and payable to a member of the Lender Group, and any other agreement entered into, now or in the future, by any Credit Party or any of their Subsidiaries, and the Lender Group in connection with the Agreement.
“Loan Limit” has the meaning specified therefor inSection 2.4(c)(i).
“Limiter Excess” has the meaning specified therefor inSection 2.4(c)(i).
“Material Adverse Change” means (a) a material adverse change in the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Borrowers and any of the Credit Parties and their respective Subsidiaries, taken as a whole, (b) a material impairment of the Credit Parties’ ability to perform their obligations under the Loan Documents or of the Lender Group’s ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the Agent’s Liens with respect to the Collateral as a result of an action or failure to act on the part of a Credit Party or a Subsidiary of a Credit Party.
“Material Contract” means, with respect to any Person, (i) the Acquisition Documents, (ii) the Second Lien Loan Documents, (iii) the Third Lien Loan Documents, (iv) the Calgon License Documents, (v) material contracts as defined in Item 601 of Regulation S-K of the Rules and Regulations of the SEC, and (vi) all other contracts or agreements material to the business, operations, condition (financial or otherwise), performance, or properties of such Person or such Subsidiary, in effect on the date of determination, the loss of which, either individually or in the aggregate, reasonably could be expected to result in a Material Adverse Change.
“Maturity Date” has the meaning specified therefor inSection 3.3.
“Maximum Revolver Amount” means $30,000,000.
“Moody’s” has the meaning specified therefor in the definition of Cash Equivalents.
“Mortgage Policy” has the meaning specified therefor inSchedule 3.1(w).
“Mortgages” means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a Borrower or a Subsidiary of a Borrower in favor of Agent, in form and substance satisfactory to Agent, that encumber the Real Property Collateral.
“M2 Consulting Agreement” means the Letter Agreement dated May 27, 2005 between M2 Holdings LLC (as assignee of The Hermes Group LLC) and Lander Company.
“Multiemployer Plan” means a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) to which any Credit Party, any of their respective Subsidiaries, or any ERISA Affiliate makes, is making, or is obligated or has ever been obligated to make, contributions.
“Net Cash Proceeds” means:
(a) with respect to any sale or disposition by any Credit Party or a Subsidiary of a Credit Party of property or assets, the amount of cash proceeds received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of any Credit Party or a Subsidiary of a Credit Party, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any Lender under the Agreement or the other Loan Documents and (B) Indebtedness assumed by the
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purchaser of such asset) which is required to be, and is, repaid in connection with such sale or disposition, (ii) reasonable fees, commissions, and expenses related thereto and required to be paid by such Credit Party or such Subsidiary of a Credit Party in connection with such sale or disposition and (iii) taxes paid or payable to any taxing authorities by such Credit Party or such Subsidiary of a Credit Party in connection with such sale or disposition, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of a Credit Party or a Subsidiary of a Credit Party, and are properly attributable to such transaction; and
(b) with respect to the issuance or incurrence of any Indebtedness by any Credit Party or a Subsidiary of a Credit Party, or the issuance by any Credit Party or a Subsidiary of a Credit Party of any shares of its Stock, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of such Credit Party or such Subsidiary in connection with such issuance or incurrence, after deducting therefrom only (i) reasonable fees, commissions, and expenses related thereto and required to be paid by such Credit Party or such Subsidiary in connection with such issuance or incurrence, (ii) taxes paid or payable to any taxing authorities by such Credit Party or such Subsidiary in connection with such issuance or incurrence, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of a Credit Party or Subsidiary of a Credit Party, and are properly attributable to such transaction; and
(c) with respect to Extraordinary Receipts received by any Credit Party or a Subsidiary of a Credit Party, the aggregate amount of cash or Cash Equivalents received (directly or indirectly) from time to time by or on behalf of such Credit Party or such Subsidiary in connection therewith, after deducting therefrom only (i) reasonable costs and expenses related to the collection thereof incurred by such Credit Party or such Subsidiary, (ii) sales, transfer and other similar taxes paid or payable by such Person or such Subsidiary in connection therewith, and (iii) net income taxes to be paid or payable by such Credit Party or such Subsidiary in connection therewith (after taking into account any tax credits or deductions and any tax sharing arrangements), in each case, to the extent, but only to the extent, that the amounts so deducted are (x) actually paid to a Person that, except in the case of reasonable out-of-pocket expenses, is not an Affiliate of such Credit Party or such Subsidiary and (y) properly attributable to such transaction.
“Net Liquidation Percentage” means the percentage of the book value of Borrowers’ Inventory that is estimated to be recoverable in an orderly liquidation of such Inventory net of all associated costs and expenses of such liquidation, such percentage to be as determined from time to time by an appraisal company selected by Agent.
“New Securities” means the “New Securities” as defined in the Third Lien Notes, as in effect on the date hereof without any amendment or modification thereto.
“Obligations” means (a) all loans (including the Term Loans), Advances, debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), premiums, liabilities (including all amounts charged to Borrowers’ Loan Account pursuant to the Agreement), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), lease payments, guaranties, covenants, and duties of any kind and description owing by Borrowers to the Lender Group pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts that Borrowers are required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, and (b) all Bank Product Obligations. Any reference in the Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.
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“Originating Lender” has the meaning specified therefor inSection 13.1(e).
“Overadvance” has the meaning specified therefor inSection 2.5.
“Parent” has the meaning specified therefor in the preamble to the Agreement.
“Participant” has the meaning specified therefor inSection 13.1(e).
“Participant Register” has the meaning set forth inSection 13.1(i).
“Patent Security Agreement” has the meaning specified therefor in the Security Agreement.
“Pension Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (a) that is or was at any time maintained or sponsored by any Credit Party, any of their respective Subsidiaries, or any ERISA Affiliate or to which any Credit Party, any of their respective Subsidiaries, or any ERISA Affiliate has ever made, or was obligated to make, contributions, and (b)that is or was subject to Section 412 of the IRC, Section 302 of ERISA or Title IV of ERISA.
“Permitted Acquisition” means (a) a Permitted Cash Acquisition, or (b) a Permitted Non-Cash Acquisition, as the context requires.
“Permitted Cash Acquisition” means any Acquisition as to which each of the following is applicable;
(a) such Acquisition qualifies as a Permitted Non-Cash Acquisition except that the consideration payable in respect of the proposed Acquisition includes some form of consideration other than solely the consideration specified in clause (b) of the definition of Permitted Non-Cash Acquisition;
(b) Parent has provided Agent with forecasted balance sheets, profit and loss statements, and cash flow statements of the Person to be acquired, all prepared on a basis consistent with such Person’s historical financial statements, together with appropriate supporting details and a statement of underlying assumptions for the 3 year period following the date of the proposed Acquisition (on a year by year basis, and for the 1 year period following the date of the proposed Acquisition, on a month by month basis), in form and substance (including as to scope and underlying assumptions) reasonably satisfactory to Agent;
(c) Parent shall have Excess Availability plus Qualified Cash in an amount equal to at least $10,000,000 immediately after giving effect to the consummation of the proposed Acquisition,
(d) subject to compliance with clauses (f) and (g) below, the assets being acquired (other than ade minimisamount of assets in relation to the assets being acquired) are located within the United States, Canada or the United Kingdom, or the Person whose Stock is being acquired is organized in a jurisdiction located within the United States, Canada or the United Kingdom,
(e) with respect to such Acquisition, (i) the purchase consideration payable in any consideration other than Permitted Non-Cash Consideration in respect of all Permitted Cash Acquisitions, in the aggregate (including the proposed Acquisition and including deferred payment obligations) shall not exceed $10,000,000 in the aggregate;provided,however, that the purchase price of any single Permitted Cash Acquisition or series of related Permitted Cash Acquisitions that is payable in consideration other than Permitted Non-Cash Consideration shall not exceed $5,000,000 in the aggregate, and (ii) the purchase consideration payable in respect of all Permitted Cash Acquisitions that is composed of Permitted Non-Cash Consideration shall not exceed $25,000,000 in the aggregate;
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(f) in the case of an Asset Acquisition (and notwithstanding any contrary provisions ofSection 5.16 or any other contrary provision of the Agreement), Borrower or the Guarantor, as applicable, shall have executed and delivered any and all documentation reasonably requested by Agent in order to provide Agent with a first priority perfected security interest, subject to Permitted Liens, in such assets, and
(g) in the case of a Stock Acquisition (and notwithstanding any contrary provisions ofSection 5.16 or any other contrary provision of the Agreement), (i) the Person whose Stock is being acquired shall have executed and delivered any and all documentation reasonably requested by Agent in order to become a Guarantor, (ii) the Person whose Stock is being acquired shall have executed and delivered any and all documentation reasonably requested by Agent in order to provide Agent with a first priority perfected security interest, subject to Permitted Liens, in the assets of such Person, and (iii) the owner of the Stock subject to such Stock Acquisition shall have executed and delivered any and all documentation reasonably requested by Agent in order to provide Agent with a first priority perfected security interest in such Stock.
“Permitted Discretion” means a determination made in the exercise of reasonable (from the perspective of a secured lender) business judgment.
“Permitted Dispositions” means (a) sales or other dispositions of Equipment that is substantially worn, damaged, or obsolete in the ordinary course of business, (b) sales of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents, (d) the licensing to a Person in the United States, on a non-exclusive basis, and to a Person outside the United States, on an exclusive or a non-exclusive basis, in each case, in the ordinary course of business, to make, use, sell, import and export products covered under patents, trademarks, copyrights and other intellectual property rights owned or controlled by a Credit Party, (e) sales or other dispositions set forth onSchedule P-1 and (f) the abandonment of Trademarks and Patents owned by any Credit Party that in the judgment of the applicable Credit Party are no longer necessary or beneficial in the operation of the business of such Credit Party or any Subsidiary of such Credit Party, except with respect to material Trademarks in the U.S., including, without limitation, Lander, Healing Garden, Ogilvie, Baby Magic, Mr. Bubble, Mr. Bubble design, Dorothy Gray, Tussy, TEK and Bianca, and as to which such Credit Party shall have provided Agent with prior written notice of such abandonment and obtained the consent of the Agent at least ten (10) Business Days prior to such abandonment, such consent not to be unreasonably withheld;provided, that if Agent shall not have objected to such abandonment within five (5) Business Days after receipt of such notice, Agent shall be deemed to have consented to such abandonment.
“Permitted Holder” means each of Prentice, MarNan, LLC, Dana Holdings, LLC, Coty, Inc. and each of their respective Affiliates.
“Permitted Investments” means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) Investments received in settlement of amounts due to any Credit Party or any Subsidiary of a Credit Party effected in the ordinary course of business or owing to a Credit Party or any Subsidiary of a Credit Party as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of any Credit Party or any Subsidiary of a Credit Party and (e) Investments in Subsidiaries that are Credit Parties.
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“Permitted Liens” means (a) Liens held by Agent to secure the Obligations, (b) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent, or (ii) do not have priority over the Agent’s Liens and the underlying taxes, assessments, or charges or levies and are the subject of Permitted Protests, (c) judgment Liens that do not constitute an Event of Default underSection 7.7 of the Agreement, (d) Liens set forth onSchedule P-2, provided that any such Lien only secures the Indebtedness that it secures on the Closing Date and any Refinancing Indebtedness in respect thereof, (e) the interests of lessors under operating leases, (f) purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as (i) such Lien attaches only to the asset purchased or acquired and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that was incurred to acquire the asset purchased or acquired or any Refinancing Indebtedness in respect thereof, (g) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (h) Liens on amounts deposited in connection with obtaining worker’s compensation or other unemployment insurance, (i) Liens on amounts deposited in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money, (j) Liens on amounts deposited as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of business, (k) with respect to any Real Property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof, (l) Liens of the Second Lien Collateral Agent securing the Second Lien Indebtedness (but only to the extent such Liens remain subject to the Second Lien Intercreditor Agreement), (m) Liens of the Third Lien Agent securing the Third Lien Indebtedness (but only to the extent such Liens remain subject to the Third Lien Intercreditor Agreement), and (n) Liens securing Indebtedness permitted underSection 6.1(g).
“Permitted Non-Cash Acquisition” means any Acquisition so long as:
(a) no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition and the proposed Acquisition is consensual,
(b) the consideration payable in respect of the proposed Acquisition shall be composed solely of Permitted Non-Cash Consideration;
(c) no Indebtedness will be incurred, assumed, or would exist with respect to Parent or its Subsidiaries as a result of such Acquisition, other than Indebtedness permitted under clauses (d) or (l) ofSection 6.1 and no Liens will be incurred, assumed, or would exist with respect to the assets of Parent or its Subsidiaries as a result or such Acquisition other than Liens permitted under clause (f) of the definition of Permitted Liens;
(d) Parent has provided Agent with written confirmation, supported by reasonably detailed calculations, that on apro forma basis, created by adding the historical combined financial statements of Parent (including the combined financial statements of any other Person or assets that were the subject of a prior Permitted Acquisition during the relevant period) to the historical consolidated financial statements of the Person to be acquired (or the historical financial statements related to the assets to be acquired) pursuant to the proposed Acquisition (adjusted to eliminate expense items that would not have been incurred and to include income items that would have been recognized, in each case, if the combination had been accomplished at the beginning of the relevant period; such eliminations and inclusions to be mutually and reasonably agreed upon by Parent and Agent), Parent and its Subsidiaries (i) would have been in compliance with the financial covenants inSection 6.16 for the 12 month period ended immediately prior to the proposed date of consummation of such proposed Acquisition, and (ii) are projected to be in compliance with the financial covenants inSection 6.16 for the 12 month period ended one year after the proposed date of consummation of such proposed Acquisition, together with copies of all such historical financial statements of the Person or assets being acquired,
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(e) Parent has provided Agent with written notice of the proposed Acquisition at least 30 Business Days prior to the anticipated closing date of the proposed Acquisition and, not later than 5 Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the acquisition agreement and other material documents relative to the proposed Acquisition, which agreement and documents must be reasonably acceptable to Agent,
(f) the assets being acquired (other than ade minimis amount of assets in relation to Parent and its Subsidiaries’ total assets), or the Person whose Stock is being acquired, are useful in or engaged in, as applicable, the business of Parent and its Subsidiaries or a business reasonably related thereto, and
(g) the subject assets or Stock, as applicable, are being acquired directly by Borrowers or one of their Subsidiaries that is a Guarantor, and (i) in the case of an Asset Acquisition, Borrowers or such Guarantor, as applicable, shall have executed and delivered or authorized, as applicable, any and all documentation reasonably requested by the Agent in order to include the newly acquired assets within the collateral hypothecated under the Loan Documents, and (ii) in the case of a Stock Acquisition, Borrowers or the Guarantor, as applicable, shall have complied withSection 5.16 of the Agreement.
“Permitted Non-Cash Consideration” means (a) common Stock of Parent, (b) Permitted Preferred Stock of Parent, or (c) proceeds of Indebtedness incurred pursuant to clause (l) ofSection 6.1.
“Permitted Preferred Stock” means and refers to any Preferred Stock issued by Parent (and not by one or more of its Subsidiaries) that is not Prohibited Preferred Stock.
“Permitted Protest” means the right of any Credit Party or any of its Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on a Credit Party’s or any of its Subsidiaries’ books and records in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by any Credit Party or any of its Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Agent’s Liens.
“Permitted Purchase Money Indebtedness” means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing Date in an aggregate principal amount outstanding at any one time not in excess of $500,000.
“Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.
“Plan” means (a) an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan which is or was at any time during the past six years maintained or sponsored by any Credit Party or any of their respective Subsidiaries or to which Borrower or any of its Subsidiaries during the past six years has made, or was obligated to make, contributions, (b) a Pension Plan, or (c) a Qualified Plan.
“PPSA” means the Personal Property Security Act of Ontario (as amended and in effect from time to time), or analogous legislation of the applicable Canadian province in respect to Lander Canada.
“Preferred Stock” means, as applied to the Stock of any Person, the Stock of any class or classes (however designated) that is preferred with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Stock of any other class of such Person.
“Prencen Group” means Prencen Lending LLC, Prencen LLC and/or Prencen Capital Management, L.P.
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“Prencen Securities Purchase Agreement” means that certain Third Amended and Restated Securities Purchase Agreement dated as of February 9, 2007 by and among Parent, Prencen LLC and Prencen Lending LLC.
“Prencen Third Lien Note” means that certain secured convertible promissory note (as the same may be amended from time to time) in the initial aggregate principal amount of $91,000,000 (less the initial aggregate principal amount of the Watershed Third Lien Note) issued by Parent to Prencen Lending LLC, which secured convertible promissory note shall be secured by a third lien on the assets of Borrowers.
“Prentice” means Prentice Capital Management, LP.
“Prohibited Preferred Stock” means any Preferred Stock that by its terms is mandatorily redeemable or subject to any other cash payment obligation (including any obligation to pay dividends, other than dividends of shares of Preferred Stock of the same class and series payable in kind or dividends of shares of common stock) on or before a date that is less than 1 year after the Maturity Date, or, on or before the date that is less than 1 year after the Maturity Date, is redeemable at the option of the holder thereof for cash or assets or securities (other than distributions in kind of shares of Preferred Stock of the same class and series or of shares of common stock).
“Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, all prepared on a basis consistent with Parent’s historical financial statements, together with appropriate supporting details and a statement of underlying assumptions.
“Pro Rata Share” means, as of any date of determination:
(a) with respect to a Lender’s obligation to make Advances and right to receive payments of principal, interest, fees, costs, and expenses with respect thereto, (i) prior to the Revolver Commitments being terminated or reduced to zero, the percentage obtained by dividing (y) such Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from and after the time that the Revolver Commitments have been terminated or reduced to zero, the percentage obtained by dividing (y) the aggregate outstanding principal amount of such Lender’s Advances by (z) the aggregate outstanding principal amount of all Advances,
(b) with respect to a Lender’s obligation to make the Term Loan A-1 and right to receive payments of interest, fees, and principal with respect thereto, (i) prior to the making of the Term Loan A-1, the percentage obtained by dividing (y) such Lender’s Term Loan A-1 Commitment, by (z) the aggregate amount of all Lenders’ Term Loan A-1 Commitments, and (ii) from and after the making of the Term Loan A-1, the percentage obtained by dividing (y) the principal amount of such Lender’s portion of the Term Loan A-1 by (z) the principal amount of the Term Loan A-1,
(c) with respect to a Lender’s obligation to make the Term Loan A-2 and right to receive payments of interest, fees, and principal with respect thereto, (i) prior to the making of the Term Loan A-2, the percentage obtained by dividing (y) such Lender’s Term Loan A-2 Commitment, by (z) the aggregate amount of all Lenders’ Term Loan A-2 Commitments, and (ii) from and after the making of the Term Loan A-2, the percentage obtained by dividing (y) the principal amount of such Lender’s portion of the Term Loan A-2 by (z) the principal amount of the Term Loan A-2, and
(d) with respect to all other matters as to a particular Lender (including the indemnification obligations arising underSection 15.7), the percentage obtained by dividing (i) such Lender’s Revolver Commitment plus the outstanding principal amount of such Lender’s portion of the Term Loans, by (ii) the aggregate amount of Revolver Commitments of all Lenders plus the outstanding principal amount of the Term Loans;provided,however, that in the event the Revolver Commitments have been terminated or reduced to zero, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the outstanding principal amount of such Lender’s Advances plus the outstanding principal amount of such Lender’s portion of the Term Loans, by (B) the outstanding principal amount of all Advances plus the outstanding principal amount of the Term Loans.
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“Protective Advances” has the meaning specified therefor inSection 2.3(d)(i)(A).
“Purchase Money Indebtedness” means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.
“Qualified Cash” means, as of any date of determination, the amount of unrestricted cash and Cash Equivalents of Borrowers and their Subsidiaries that is in Deposit Accounts or in Securities Accounts, or any combination thereof, and which such Deposit Account or Securities Account is the subject of a Control Agreement and is maintained by a branch office of the bank or securities intermediary located within the United States.
“Qualified Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (a) that is or was at any time maintained or sponsored by any Credit Party, any Subsidiary of a Credit Party or any ERISA Affiliate or to which any Credit Party, any Subsidiary of a Credit Party or any ERISA Affiliate has ever made, or was ever obligated to make, contributions, and (b) that is intended to be tax qualified under Section 401(a) of the IRC.
“Real Property” means any estates or interests in real property now owned or hereafter acquired by any Credit Party or a Subsidiary of any Credit Party and the improvements thereto.
“Real Property Collateral” means the Real Property identified onSchedule R-1 and any Real Property hereafter acquired by a Credit Party or any Subsidiary of a Credit Party.
“Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
“Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness so long as: (a) the terms and conditions of such refinancings, renewals, or extensions do not, in Agent’s reasonable judgment, materially impair the prospects of repayment of the Obligations by Borrowers or materially impair Borrowers’ creditworthiness, (b) such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Indebtedness so refinanced, renewed, or extended, (c) such refinancings, renewals, or extensions do not result in an increase in the interest rate with respect to the Indebtedness so refinanced, renewed, or extended, (d) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a whole, are materially more burdensome or restrictive to Borrowers, (e) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension must include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or extended Indebtedness, and (f) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended.
“Register” has the meaning specified therefor inSection 13.1(h).
“Registered Loan” means any loan recorded on the Register pursuant toSection 13.1(h).
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“Registered Note” has the meaning specified therefor inSection 2.16.
“Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor (and any swap counterparty to such Lender or any of its Affiliates).
“Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials authorized by Environmental Laws.
“Replacement Lender” has the meaning specified therefor inSection 14.2(a).
“Report” has the meaning specified therefor inSection 15.16.
“Required Availability” means that the sum of (a) Excess Availability,plus(b) Qualified Cash exceeds $10,000,000.
“Required Lenders” means, at any time, (a) Required Revolver/Term Loan A-1 Lenders and (b) Required Term Loan A-2 Lenders.
“Required Prepayment Date” has the meaning specified therefor inSection 2.4(d)(iii).
“Required Revolver/Term Loan A-1 Lenders” means, at any time, those Lenders whose aggregate Pro Rata Shares (calculated with respect to the Revolver Commitment and Term Loan A-1) exceed 50.1%.
“Required Term Loan A-2 Lenders” means, at any time, those Lenders whose aggregate Pro Rata Shares (calculated with respect to Term Loan A-2) exceed 50.1%.
“Reserve Percentage” means, on any day, for any Lender, the maximum percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not required or directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be zero.
“Revolver Commitment” means, with respect to each Lender, its Revolver Commitment, and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading onSchedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions ofSection 13.1.
“Revolver Usage” means, as of any date of determination, the amount of outstanding Advances.
“SEC” means the United States Securities and Exchange Commission and any successor thereto.
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“Second Lien Administrative Agent” means Watershed Administrative, LLC, in its capacity as administrative agent for the Second Lien Lenders, together with its successors and assigns acting in such capacity.
“Second Lien Agent’s Account” means the “Agent’s Account” as such term is defined in the Second Lien Credit Agreement.
“Second Lien Collateral Agent” means WFF in its capacity as collateral agent for the Second Lien Lenders, together with its successors and assigns acting in such capacity.
“Second Lien Credit Agreement” means that certain Credit Agreement, dated as of the date hereof, by and among Second Lien Administrative Agent, Second Lien Collateral Agent, Second Lien Lenders, and Borrowers pursuant to which the Second Lien Lenders agree to provide to Borrowers a term loan in the original principal amount of $50,000,000, as amended, modified, supplemented, restated, renewed, extended, refinanced or replaced from time to time in accordance with the terms thereof and the terms of the Agreement and the Second Lien Intercreditor Agreement.
“Second Lien Indebtedness” means any and all Indebtedness of any Borrower, any Guarantor or their respective Subsidiaries arising under or in connection with any Second Lien Loan Documents.
“Second Lien Intercreditor Agreement” means an intercreditor agreement executed and delivered by Agent, Second Lien Administrative Agent and Second Lien Collateral Agent, and acknowledged and consented to by each Borrower, as amended, modified, supplemented or restated from time to time.
“Second Lien Lenders” means the Persons from time to time party to the Second Lien Credit Agreement as lenders.
“Second Lien Loan Documents” means (a) the Second Lien Credit Agreement and (b) the other “Loan Documents” as such term is defined in the Second Lien Credit Agreement, in each case, as amended, modified, supplemented, restated, renewed, extended, refinanced or replaced from time to time in accordance with the terms thereof and the terms of the Agreement and the Second Lien Intercreditor Agreement.
“Second Lien Obligations” means the “Obligations” as such term is used in the Second Lien Credit Agreement, as amended, modified, supplemented, restated, renewed, extended, refinanced or replaced from time to time in accordance with the terms thereof and the terms of the Agreement and the Second Lien Intercreditor Agreement.
“Securities Account” means a securities account (as that term is defined in the Code).
“Securities Purchase Agreements” means the Prencen Securities Purchase Agreement and the Watershed Securities Purchase Agreement.
“Security Agreement” means a security agreement, in form and substance satisfactory to Agent, executed and delivered by Borrowers and Guarantors (other than Lander Canada) to Agent.
“Seller” has the meaning specified in the Recitals.
“Seller Note” means that certain Promissory Note owing from Parent to Coty, Inc. in connection with the consummation of the transactions contemplated by the Acquisition Agreement.
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“Senior Secured Indebtedness Ratio” means, as of any date of determination (a) (i) the amount of outstanding Advances as of such dateplus (ii) the aggregate outstanding principal amount of the Term Loans as of such date, divided by (b) TTM EBITDA.
“Settlement” has the meaning specified therefor inSection 2.3(e)(i).
“Settlement Date” has the meaning specified therefor inSection 2.3(e)(i).
“Solvent” means (a) with respect to any Person that is a United States citizen or is organized under the laws of any state of the United States or the District of Columbia, that at the time of determination: (i) the assets of such Person, at a fair valuation, are in excess of the total amount of its debts (including, without limitation, contingent liabilities); (ii) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; (iii) it is then able to pay its debts (including, without limitation, contingent debts and other commitments) as they mature; and (iv) it is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which it has unreasonably small capital, or (b) with respect to any Person that is a Canadian citizen or is organized under the laws of Canada or any province or territory thereof, on a particular date, that such Person is not an “insolvent person” (as such term is defined in the Bankruptcy and Insolvency Act (Canada)) or a “debtor company” (as defined in the Companies’ Creditors Arrangement Act (Canada)). For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“S&P” has the meaning specified therefor in the definition of Cash Equivalents.
“Stated Value” means the (a) aggregate principal amount of any convertible debt securities of Parent plus (b) the aggregate stated value of any convertible preferred securities of Parent.
“Stock” means all shares, options, warrants, interests, participations, equity interests or other equivalents or similar instruments (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).
“Subsidiary” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.
“Swing Lender” means WFF or any other Lender that, at the request of Administrative Borrower and with the consent of Agent agrees, in such Lender’s sole discretion, to become the Swing Lender underSection 2.3(b).
“Swing Loan” has the meaning specified therefor inSection 2.3(b).
“Taxes” has the meaning specified therefor inSection 16(a).
“Term Loan A-1” has the meaning specified therefor inSection 2.2(a).
“Term Loan A-1 Amount” means $40,000,000.
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“Term Loan A-1 Commitment” means, with respect to each Lender, its Term Loan A-1 Commitment, and, with respect to all Lenders, their Term Loan A-1 Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading onSchedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions ofSection 13.1.
“Term Loan A-2” has the meaning specified therefor inSection 2.2(b).
“Term Loan A-2 Amount” means $40,000,000.
“Term Loan A-2 Commitment” means, with respect to each Lender, its Term Loan A-2 Commitment, and, with respect to all Lenders, their Term Loan A-2 Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading onSchedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions ofSection 13.1.
“Term Loans” has the meaning specified therefor inSection 2.2.
“Third Lien Agent” means WFF, in its capacity as collateral agent pursuant to the Third Lien Loan Documents, together with its successors and assigns acting in such capacity.
“Third Lien Indebtedness” means any and all Indebtedness of any Borrower, any Guarantor or their respective Subsidiaries arising under or in connection with any Third Lien Loan Document, in an aggregate amount not to exceed $190,000,000(including any additional Indebtedness incurred thereunder in connection with PIK interest payments).
“Third Lien Intercreditor Agreement” means an intercreditor agreement executed and delivered by Agent, Second Lien Collateral Agent, Second Lien Administrative Agent, Third Lien Agent and Third Lien Lenders, and acknowledged and consented to by each Borrower, as amended, modified, supplemented or restated from time to time.
“Third Lien Lenders” means the Persons from time to time party to the Third Lien Loan Documents as lenders.
“Third Lien Loan Documents” means (a) the Prencen Lending Note, (b) the Watershed Third Lien Note, (c) the Prencen Securities Purchase Agreement, (d) the “Transaction Documents” as such term is defined in the Prencen Securities Purchase Agreement, (e) the Watershed Securities Purchase Agreement and (f) the “Transaction Documents” as such term is defined in the Watershed Securities Purchase Agreement, in each case, as amended, modified, supplemented, restated, renewed, extended, refinanced or replaced from time to time in accordance with the terms thereof and the terms of the Agreement and the Third Lien Intercreditor Agreement.
“Third Lien Notes” means the Prencen Lending Note and the Watershed Third Lien Note.
“Total Commitment” means, with respect to each Lender, its Total Commitment, and, with respect to all Lenders, their Total Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading onSchedule C-1 attached hereto or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions ofSection 13.1.
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“Trademark Security Agreement” has the meaning specified therefor in the Security Agreement.
“Transition Services Agreement” means the Transition Services Agreement dated as of February 9, 2007 between Ascendia Brands and Coty US LLC.
“Triggering Event” means (a) an Event of Default has occurred, or (b) as of any date of determination, the sum of Excess Availabilityplus Qualified Cash at any time is less than $10,000,000.
“TTM EBITDA” means, as of any date of determination, EBITDA of Parent determined on a consolidated basis in accordance with GAAP, for the 12 month period most recently ended.
“TTM PF EBITDA” means TTM EBITDA, adjusted in a manner consistent with the methodology used by CTS in the report delivered to Agent prior to the Closing Date.
“United States” means the United States of America.
“Voidable Transfer” has the meaning specified therefor inSection 17.8.
“Waivable Mandatory Prepayment” has the meaning specified therefor inSection 2.4(d)(iii).
“Watershed Lenders” means Watershed Capital Asset Management, L.L.C. and funds managed by Watershed Asset Capital Management, L.L.C.
“Watershed Securities Purchase Agreement” means that certain Securities Purchase Agreement dated as of February 9, 2007 by and among Parent and the Watershed Lenders.
“Watershed Third Lien Note” means that certain convertible promissory note (as the same may be amended from time to time) issuable by Parent to the Watershed Lenders upon exercise of the Watershed Lenders’ right, at the closing of the Acquisition Transaction, to purchase up to $10,000,000 in aggregate principal amount of said convertible promissory note, which convertible promissory note shall be secured by a third lien on the assets of Borrowers.
“Wells Fargo” means Wells Fargo Bank, National Association, a national banking association.
“WFF” means Wells Fargo Foothill, Inc., a California corporation.
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Schedule 3.1
The obligation of each Lender to make its initial extension of credit provided for in the Agreement is subject to the fulfillment, to the satisfaction of Agent and each Lender (the making of such initial extension of credit by any Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent:
(a) the Closing Date shall occur on or before February 9, 2007;
(b) Agent shall have received a letter duly executed by each Borrower and each Guarantor authorizing Agent to file appropriate financing statements in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the security interests to be created by the Loan Documents;
(c) Agent shall have received evidence that appropriate financing statements have been duly filed in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the Agent’s Liens in and to the Collateral, and Agent shall have received searches reflecting the filing of all such financing statements;
(d) Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force and effect:
(i) the Canadian Guarantee,
(ii) the Canadian Security Agreement,
(iii) Cash Management Agreements,
(iv) the Control Agreements,
(v) a disbursement letter executed and delivered by Borrowers to Agent regarding the extensions of credit to be made on the Closing Date, the form and substance of which is satisfactory to Agent (which disbursement letter shall provide for the payments to be made by Borrowers on the Closing Date and provide that any payment made to M2 Holdings, LLC on the Closing Date shall not exceed $2,700,000),
(vi) the Fee Letter,
(vii) the Intercompany Subordination Agreement,
(viii) the Mortgages,
(ix) the Patent Security Agreement,
(x) a letter, in form and substance satisfactory to Agent, from the Existing Lender to Agent respecting the amount necessary to repay all of the obligations of the Credit Parties and their respective Subsidiaries owing to Existing Lender and obtain a release of all of the Liens existing in favor of Existing Lender in and to the assets of the Credit Parties and their Subsidiaries, together with termination statements and other documentation evidencing the termination by Existing Lender of its Liens in and to the properties and assets of the Credit Parties and their Subsidiaries,
(xi) the Second Lien Intercreditor Agreement,
(xii) the Security Agreement, together with all certificates representing the shares of Stock pledged thereunder, as well as Stock powers with respect thereto endorsed in blank,
(xiii) the Seller Note,
(xiv) the Third Lien Intercreditor Agreement, and
(xv) the Trademark Security Agreement.
(e) Agent shall have received a certificate from the Secretary of each Borrower (i) attesting to the resolutions of such Borrower’s Board of Directors authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which such Borrower is a party, (ii) authorizing specific officers of such Borrower to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of such Borrower;
(f) Agent shall have received copies of each Borrower’s Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of such Borrower;
(g) Agent shall have received a certificate of status with respect to each Borrower, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Borrower, which certificate shall indicate that such Borrower is in good standing in such jurisdiction;
(h) Agent shall have received certificates of status with respect to each Borrower, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Borrower) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such Borrower is in good standing in such jurisdictions;
(i) Agent shall have received a certificate from the Secretary of each Guarantor (i) attesting to the resolutions of such Guarantor’s Board of Directors authorizing its execution, delivery, and performance of the Loan Documents to which such Guarantor is a party, (ii) authorizing specific officers of such Guarantor to execute the same and (iii) attesting to the incumbency and signatures of such specific officers of Guarantor;
(j) Agent shall have received copies of each Guarantor’s Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of such Guarantor;
(k) Agent shall have received a certificate of status with respect to each Guarantor, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Guarantor, which certificate shall indicate that such Guarantor is in good standing in such jurisdiction;
(l) Agent shall have received certificates of status with respect to each Guarantor, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Guarantor) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such Guarantor is in good standing in such jurisdictions;
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(m) Agent shall have received a certificate of insurance, together with the endorsements thereto, as are required bySection 5.8, the form and substance of which shall be satisfactory to Agent;
(n) [Intentionally omitted.]
(o) Agent shall have received an opinion of Credit Parties’ counsel in form and substance satisfactory to Agent;
(p) Borrowers shall have the Required Availability after giving effect to the initial extensions of credit hereunder and the payment of all fees and expenses required to be paid by Borrowers on the Closing Date under this Agreement, the other Loan Documents, the Acquisition Documents, the Second Lien Loan Documents and the Third Lien Loan Documents and Agent shall have received satisfactory evidence of the payment of such amounts;
(q) Agent shall have completed its business, legal, and collateral due diligence, including (i) a collateral audit and review of the Credit Parties’ and their respective Subsidiaries’ books and records and verification of the Credit Parties’ representations and warranties to the Lender Group, the results of which shall be satisfactory to Agent, (ii) an inspection of each of the locations where the Credit Parties’ and their respective Subsidiaries’ Inventory is located, the results of which shall be satisfactory to Agent, (iii) USA Patriot Act searches, the results of which shall be satisfactory to Agent, (iv) UCC, PPSA, tax lien and judgment searches, the results of which shall be satisfactory to Agent and (v) review of all pending litigation affecting the Credit Parties;
(r) Agent shall have received completed reference checks with respect to Credit Parties’ senior management, the results of which are satisfactory to Agent in its sole discretion;
(s) Agent shall have received a finalized quality of earnings report (performed by CTS Capital Advisors), the results of which are satisfactory to Agent in its sole discretion and which support no less than $40,000,000 of the Credit Parties’ TTM PF EBITDA;
(t) Agent shall have received an appraisal of Borrowers’ and their Subsidiaries’ Inventory and a brand valuation, performed by a valuation firm acceptable to Agent, with the results of the inventory appraisal and brand valuation each acceptable to Agent;
(u) Agent shall have received a set of Projections of the Parent and its Subsidiaries for the 3 year period following the Closing Date (on a year by year basis, and for the 1 year period following the Closing Date, on a month by month basis), in form and substance (including as to scope and underlying assumptions) satisfactory to Agent;
(v) Credit Parties shall have paid all Lender Group Expenses incurred in connection with the transactions evidenced by this Agreement;
(w) Agent shall have received mortgagee title insurance policies (or marked commitments to issue the same) for the Real Property Collateral issued by a title insurance company satisfactory to Agent (each a “Mortgage Policy” and, collectively, the “Mortgage Policies”) in amounts satisfactory to Agent assuring Agent that the Mortgages on such Real Property Collateral are valid and enforceable first priority mortgage Liens on such Real Property Collateral free and clear of all defects and encumbrances except Permitted Liens, and the Mortgage Policies otherwise shall be in form and substance satisfactory to Agent;
(x) Agent shall have received copies of each Material Contract, together with a certificate of the Secretary of Administrative Borrower certifying each such document as being a true, correct, and complete copy thereof, and the results of Agent’s and its counsel’s review thereof, and of the Credit Parties’ corporate structure upon consummation of the Acquisition Transaction, shall be satisfactory to Agent;
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(y) Credit Parties and each of their respective Subsidiaries shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority and (ii) all necessary shareholder and third party approvals, in each case in connection with the execution and delivery by Credit Parties or their respective Subsidiaries of the Loan Documents or with the consummation of the transactions contemplated thereby;
(z) Agent shall have received confirmation that those portions of the Credit Parties’ capital structure that are not a part of the credit facility set forth in the Loan Documents are no less than $70,000,000 in equity or subordinated debt, and subject to terms satisfactory to Agent;
(aa) Agent shall have received copies of each Acquisition Document, together with a certificate of the Secretary of Administrative Borrower certifying that as of the Closing Date (i) each such document is a true, correct, and complete copy thereof, (ii) such documents have been entered into by the Credit Parties in compliance with all Applicable Laws and all necessary approvals and are in full force and effect, and (iii) there is no (A) litigation, investigation or proceeding (judicial or administrative) pending or, to the best knowledge of each Credit Party, threatened, against any Credit Party, or any of their respective Subsidiaries by any Governmental Authority arising out of the transactions contemplated by or effected in connection with the Acquisition Documents or the Loan Documents, (B) injunction, writ or restraining order restraining or prohibiting the transactions contemplated by the Acquisition Documents or the consummation of the financing arrangements contemplated under the Loan Documents, or (C) suit, action, investigation, proceeding (judicial or administrative) or ERISA Event pending or, to the best knowledge of each Credit Party, threatened against any Credit Party or any of their respective Subsidiaries which could reasonably be expected to cause a Material Adverse Change;
(bb) all applicable waiting periods with respect to consummation of the Acquisition Transaction shall have expired and Credit Parties and each of their respective Subsidiaries shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority or other Person in connection with the execution and delivery by the Credit Parties of the Loan Documents, the Acquisition Documents, and with the consummation of the transactions contemplated thereby;
(cc) simultaneously with the extensions of the credit by the Lenders to the Credit Parties on the Closing Date, the parties to the Acquisition Documents shall have consummated all transactions contemplated thereby and furnished to Agent evidence thereof in form and substance satisfactory to Agent;
(dd) in the opinion of Agent, (i) no law or regulation restrains, prevents or imposes material adverse conditions upon any aspect of the Acquisition Transaction and (ii) no claim, action, suit, investigation, litigation or proceeding is pending or threatened in any court or before any Governmental Authority which relates to the transactions contemplated hereby or by the Acquisition Documents or which may have a material adverse effect on the Acquisition Transaction or the ability of the Credit Parties to perform the terms of the Loan Documents;
(ee) Agent shall have received (i) duly executed copies of the Second Lien Loan Documents, the form and substance of which shall be reasonably satisfactory to Agent, together with copies of all necessary consents and approvals required to be obtained in connection therewith, and (ii) evidence, in form and substance satisfactory to Agent, that all of the conditions to funding set forth in the Second Lien Credit Agreement have been satisfied;
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(ff) Agent shall have received (i) duly executed copies of the Third Lien Loan Documents, the form and substance of which shall be reasonably satisfactory to Agent, together with copies of all necessary consents and approvals required to be obtained in connection therewith, and (ii) evidence, in form and substance satisfactory to Agent, that all of the conditions to funding set forth in the Third Lien Loan Documents have been satisfied;
(gg) Agent shall have received a duly executed copy of the Calgon License Documents, the form and substance of which shall be reasonably satisfactory to Agent;
(hh) all cash utilized in calculating Required Availability shall be wired to Agent prior to funding;
(ii) Agent shall have received interim financial statements for the year-to-date period ending November 30, 2006, and such financial statements shall be in form and substance satisfactory to Agent;
(jj) Agent shall have received a certificate from the chief financial officer of Parent in form and substance satisfactory to Agent, supporting the conclusions that after giving effect to the Acquisition and the related transactions contemplated hereby, that the Credit Parties and each Subsidiary of a Credit Party, taken as a whole, are Solvent; and
(kk) all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to Agent.
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Schedule 5.2
Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the documents set forth below at the following times in form satisfactory to Agent:
| Weekly | | (a) an Account roll-forward with supporting details supplied from sales journals, collection journals, credit registers and any other records,
(b) notice of all claims, offsets, or disputes asserted by Account Debtors with respect to Credit Parties’ and their respective Subsidiaries’ Accounts,
(c) copies of invoices together with corresponding shipping and delivery documents, and credit memos together with corresponding supporting documentation, with respect to invoices and credit memos in excess of an amount determined in the sole discretion of Agent, from time to time,
(d) Inventory system/perpetual reports specifying the cost and the wholesale market value of the Credit Parties’ and their respective Subsidiaries’ Inventory, by category, with additional detail showing additions to and deletions therefrom (delivered electronically in an acceptable format, if Credit Parties have implemented electronic reporting), and
(e) a detailed report regarding Credit Parties’ and their Subsidiaries’ cash and Cash Equivalents, including an indication of which amounts constitute Qualified Cash. |
| Monthly (no later than the 10th day of each month) | | (f) a Borrowing Base Certificate,
(g) a detailed aging, by total, of Credit Parties’ Accounts, together with a reconciliation to Credit Parties’ general ledger accounts and supporting documentation for any reconciling items noted (delivered electronically in an acceptable format, if Credit Parties have implemented electronic reporting),
(h) a detailed calculation of those Accounts that are not eligible for the Borrowing Base, if Credit Parties have not implemented electronic reporting,
(i) a detailed Inventory system/perpetual report together with a reconciliation to Credit Parties’ general ledger accounts (delivered electronically in an acceptable format, if Credit Parties have implemented electronic reporting),
(j) a detailed calculation of Inventory categories that are not eligible for the Borrowing Base, if Credit Parties have not implemented electronic reporting,
(k) a summary aging, by vendor, of Credit Parties’ and their respective Subsidiaries’ accounts payable and any book overdrafts (delivered electronically in an acceptable format, if Credit Parties have implemented electronic reporting) and an aging, by vendor, of any held checks, together with a reconciliation to Credit Parties’ general ledger accounts,
(l) a monthly Account roll-forward, in a format acceptable to Agent in its discretion, tied to the beginning and ending account receivable balances of Credit Parties’ general ledgers, |
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| | | (m) reporting of any deemed dividend tax liability,
(n) rent roll; and
(o) proof of payment by Credit Parties of any applicable taxes, including real estate, ad valorem and Canadian taxes. |
| Monthly (no later than the 30th day of each month) | | (p) a reconciliation of Accounts, trade accounts payable, and Inventory of Credit Parties’ general ledger accounts to their monthly financial statements including any book reserves related to each category. |
| Quarterly | | (q) a report regarding Credit Parties’ and their respective Subsidiaries’ accrued, but unpaid,ad valoremtaxes. |
| Annually | | (r) a detailed list of Credit Parties’ and their respective Subsidiaries’ customers, with address and contact information. |
| Promptly upon receipt thereof by any Borrower or any Affiliate of a Borrower | | (s) copies of any Acquisition Documents not previously delivered to Agent and any notices or material correspondences received from any Governmental Authority in connection with the Acquisition Transaction. |
| Promptly upon request by Agent | | (t) copies of purchase orders and invoices for Inventory and Equipment acquired by Credit Parties or their Subsidiaries, and
(u) such other reports as to the Collateral or the financial condition of Credit Parties and their Subsidiaries, as Agent may reasonably request. |
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Schedule 5.3
Deliver to Agent, with copies to each Lender, each of the financial statements, reports, or other items set forth set forth below at the following times in form satisfactory to Agent:
| as soon as available, but in any event within 30 days (45 days in the case of a month that is the end of one of Parent’s fiscal quarters) after the end of each month during each of Parent’s fiscal years | | (a) an unaudited consolidated and consolidating balance sheet, income statement, and statement of cash flow covering Parent’s and its Subsidiaries’ operations during such period, together with a comparison to (i) the Projections for such monthly period and (ii) the corresponding monthly period of the prior fiscal year, and
(b) a Compliance Certificate, including any updated schedules, if any. |
| as soon as available, but in any event within 90 days after the end of each of Parent’s fiscal years | | (c) consolidated and consolidating financial statements of Parent and its Subsidiaries for each such fiscal year, audited by independent certified public accountants reasonably acceptable to Agent and certified, without any qualifications (including any (A) “going concern” or like qualification or exception, (B) qualification or exception as to the scope of such audit, or (C) qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item, the effect of which would be to cause any noncompliance with the provisions of Section 6.18), by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, and statement of cash flow and, if prepared, such accountants’ letter to management), and
(d) a Compliance Certificate, including any updated schedules, if any. |
| as soon as available, but in any event within 30 days prior to the start of each of Parent’s fiscal years, | | (e) copies of Parent’s Projections, in form and substance (including as to scope and underlying assumptions) satisfactory to Agent, in its Permitted Discretion, for the forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by month, certified by the chief financial officer of Administrative Borrower as being such officer’s good faith estimate of the financial performance of Parent and its Subsidiaries during the period covered thereby. |
| within 2 Business Days after filing by any Credit Party, | | (f) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports,
(g) any other filings made by any Credit Party with the SEC, and
(h) any other information that is provided by Parent to its shareholders generally. |
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| promptly, but in any event within 5 days after a Credit Party has knowledge of any event or condition that constitutes a Default or an Event of Default, | | (i) notice of such event or condition and a statement of the curative action that Credit Parties proposes to take with respect thereto.
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promptly after the commencement thereof, but in any event within 5 Business Days after the service of process with respect thereto on any Credit Party or any Subsidiary of a Credit Party,
| | (j) notice of all actions, suits, or proceedings brought by or against any Credit Party or any Subsidiary of a Credit Party before any Governmental Authority which reasonably could be expected to result in a Material Adverse Change.
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| promptly , but in any event within 5 Business Days after a Credit Party has knowledge of such event or condition | | (k) notice of any labor negotiations affecting any Credit Party that could reasonably be expected to result in a strike, labor dispute, work slow down or stoppage, and
(l) notice of the cancellation or termination of any Material Contract.
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| upon the request of Agent, | | (m) any other information reasonably requested relating to the financial condition of Credit Parties or their respective Subsidiaries. |
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