EXHIBIT 10.1
------------
EXECUTION VERSION
REVOLVING LOAN AND GUARANTY AGREEMENT
dated as of March 20, 2007
among
FEDDERS NORTH AMERICA, INC.,
EMERSON QUIET KOOL CORPORATION,
COLUMBIA SPECIALTIES, INC.,
TRION, INC.,
ENVIRCO CORPORATION,
EUBANK COIL COMPANY,
FEDDERS ADDISON COMPANY, INC.,
FEDDERS ISLANDAIRE, INC. and
ISLAND METAL FABRICATING, INC.,
as Borrowers,
FEDDERS CORPORATION,
as Holdings and a Guarantor,
CERTAIN SUBSIDIARIES OF FEDDERS CORPORATION,
as Guarantors,
VARIOUS LENDERS,
BANK OF AMERICA, N.A.,
as Administrative Agent and Collateral Agent,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent
and
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Sole Lead Arranger, Sole Bookrunner
and Sole Syndication Agent
--------------------------------------------------------
$40,000,000 Senior Secured Revolving Loan Facility
--------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS AND INTERPRETATION...........................1
1.1.
Definitions..................................................1
1.2.
Accounting Terms............................................32
1.3.
Interpretation, etc.........................................32
SECTION 2.
REVOLVING LOANS.........................................32
2.1.
Revolving Loan Commitments..................................32
2.2.
Borrowing Mechanics for Revolving Loans.....................33
2.3.
Notes.......................................................35
2.4.
Pro Rata Shares; Availability of Funds......................35
2.5.
Use of Proceeds.............................................36
2.6.
Evidence of Debt; Register; Lenders' Books and Records......36
2.7.
Interest on Revolving Loans.................................36
2.8.
Conversion/Continuation.....................................38
2.9.
Default Interest............................................38
2.10.
Fees........................................................38
2.11.
Letter of Credit Facility...................................39
2.12.
Voluntary Prepayments; Commitment Reductions................41
2.13.
Mandatory Prepayments.......................................41
2.14. One
Obligation..............................................43
2.15.
Application of Prepayments..................................43
2.16.
General Provisions Regarding Payments.......................44
2.17.
Ratable Sharing.............................................45
2.18.
Making or Maintaining Eurodollar Rate Loans.................46
2.19.
Increased Costs; Capital Adequacy...........................47
2.20.
Taxes; Withholding, etc.....................................48
2.21. Obligation to
Mitigate......................................50
2.22.
Removal or Replacement of a Lender..........................51
2.23.
Effect of Termination.......................................51
2.24.
Borrower Agent..............................................52
SECTION 3.
CONDITIONS PRECEDENT....................................52
3.1.
Closing Date................................................52
3.2.
Conditions Precedent to All Credit Extensions...............57
SECTION 4.
REPRESENTATIONS AND WARRANTIES..........................57
4.1.
Organization; Requisite Power and Authority; Qualification..57
i
<PAGE>
4.2.
Capital Stock and Ownership.................................58
4.3.
Due Authorization...........................................58
4.4.
No Conflict.................................................58
4.5.
Governmental Consents.......................................58
4.6.
Binding Obligation..........................................58
4.7.
Historical Financial Statements.............................58
4.8.
Projections.................................................59
4.9.
No Material Adverse Change..................................59
4.10. No
Restricted Junior Payments...............................59
4.11.
Adverse Proceedings, etc....................................59
4.12.
Payment of Taxes............................................59
4.13.
Properties..................................................59
4.14.
Environmental Matters.......................................60
4.15. No
Defaults.................................................60
4.16.
Material Contracts..........................................60
4.17.
Governmental Regulation.....................................60
4.18.
Margin Stock................................................61
4.19.
Employee Matters............................................61
4.20.
Employee Benefit Plans......................................61
4.21.
Certain Fees................................................62
4.22.
Solvency....................................................62
4.23.
Compliance with Statutes, etc...............................62
4.24.
Disclosure..................................................62
4.25.
Patriot Act.................................................63
SECTION 5.
AFFIRMATIVE COVENANTS...................................63
5.1.
Financial Statements and Other Reports......................63
5.2.
Existence...................................................68
5.3.
Payment of Taxes and Claims.................................68
5.4.
Maintenance of Properties...................................68
5.5.
Insurance...................................................69
ii
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
5.6.
Books and Records; Inspections..............................69
5.7.
Lenders Meetings............................................69
5.8.
Compliance with Laws........................................69
5.9.
Environmental...............................................69
5.10.
Subsidiaries................................................71
5.11.
Additional
Real Estate Assets...............................71
5.12.
Further Assurances..........................................72
5.13. Cash
Management Services....................................72
5.14.
Lien
Waivers................................................72
5.15.
Control Accounts; Approved Deposit Accounts.................72
5.16.
Post-Closing Obligations with respect to Foreign Collateral.73
SECTION 6.
NEGATIVE COVENANTS......................................73
6.1.
Indebtedness................................................74
6.2.
Liens.......................................................76
6.3.
Equitable Lien..............................................77
6.4.
No Further Negative Pledges.................................78
6.5.
Restricted Junior Payments..................................78
6.6.
Restrictions on Subsidiary Distributions....................78
6.7.
Investments.................................................79
6.8.
Financial Covenants.........................................80
6.9.
Fundamental Changes; Disposition of Assets; Acquisitions....82
6.10.
Disposal of Subsidiary Interests............................83
6.11.
Sales and Lease-Backs.......................................83
6.12.
Transactions with Shareholders and Affiliates...............84
6.13.
Conduct of Business.........................................84
6.14.
Permitted Activities of Holdings............................84
6.15.
Amendments or Waivers of Organizational Documents
and Senior Notes Documents..................................84
6.16.
Fiscal Year.................................................84
6.17. No
Speculative Transactions.................................84
iii
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
6.18.
Margin Regulations..........................................85
SECTION 7.
GUARANTY................................................85
7.1.
Guaranty of the Obligations.................................85
7.2.
Contribution by Guarantors..................................85
7.3.
Payment by Guarantors.......................................85
7.4.
Liability of Guarantors Absolute............................86
7.5.
Waivers by Guarantors.......................................87
7.6.
Guarantors' Rights of Subrogation, Contribution, etc........88
7.7.
Subordination of Other Obligations..........................88
7.8.
Continuing Guaranty.........................................89
7.9.
Authority of Guarantors or Borrower.........................89
7.10.
Financial Condition of Borrower.............................89
7.11.
Default, Remedies...........................................89
7.12.
Bankruptcy, etc.............................................89
7.13.
Waiver of Judicial Bond.....................................90
7.14.
Discharge of Guaranty Upon Sale of Guarantor................90
7.15.
Indemnity...................................................90
SECTION 8.
EVENTS OF DEFAULT.......................................90
8.1.
Events of Default...........................................90
8.2.
Borrowers' Right to Cure Minimum EBITDA Covenant Default....94
SECTION 9.
AGENTS..................................................95
9.1.
Appointment of Agents.......................................95
9.2.
Powers and Duties...........................................95
9.3.
General Immunity............................................95
9.4.
Agents Entitled to Act as Lender............................96
9.5.
Lenders' Representations, Warranties and Acknowledgment.....97
9.6.
Right to Indemnity..........................................97
9.7.
Successor Administrative Agent and Collateral Agent.........97
9.8.
Collateral Documents and Guaranty...........................98
SECTION 10.
MISCELLANEOUS...........................................99
iv
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
10.1.
Notices.....................................................99
10.2.
Expenses....................................................99
10.3.
Indemnity..................................................100
10.4.
Set-Off....................................................100
10.5.
Amendments and Waivers.....................................101
10.6.
Successors and Assigns; Participations.....................102
10.7.
Independence of Covenants..................................105
10.8.
Survival of Representations, Warranties and Agreements.....105
10.9. No
Waiver; Remedies Cumulative.............................105
10.10.
Marshalling; Payments Set Aside............................105
10.11.
Severability...............................................105
10.12.
Obligations Several; Independent Nature of Lenders' Rights.105
10.13.
Headings...................................................106
10.14.
APPLICABLE LAW.............................................106
10.15. CONSENT
TO JURISDICTION....................................106
10.16. WAIVER OF
JURY TRIAL.......................................106
10.17.
Confidentiality............................................107
10.18. Usury
Savings Clause.......................................107
10.19.
Counterparts...............................................108
10.20.
Effectiveness..............................................108
10.21. Patriot
Act................................................108
10.22.
Electronic Execution of Assignments........................109
10.23. Joint and
Several Liability................................109
10.24. Judgment
Currency..........................................109
10.25.
Limitations Act 2002.......................................110
10.26. Goldman
Sachs Credit Partners Not a Party..................110
v
<PAGE>
TABLE OF CONTENTS
(Continued)
APPENDICES:
A Revolving Loan
Commitments
B Notice
Addresses
SCHEDULES:
1.1 Customers
granted terms greater than N60
3.1(h) Closing
Date Mortgaged Properties
4.1
Jurisdictions of Organization and Qualification
4.2 Capital
Stock and Ownership
4.13
Real Estate Assets
4.20
Benefits to Retired or Former Employees
6.1 Certain
Indebtedness
6.2 Certain
Liens
6.6 Certain
Restrictions on Subsidiary Distributions
6.7 Certain
Investments
6.12
Certain Affiliate Transactions
8.1(k)
Environmental Matters
EXHIBITS:
A-1 Funding
Notice
A-2
Conversion/Continuation Notice
B
Note
C
Compliance Certificate
D-1 Opinion of
Skadden, Arps, Slate,
Meagher & Flom LLP, special counsel
D-2 Opinion of
Landry & Ludewig, LLP,
New Mexico counsel
D-3 Opinion of
Ballard, Spahr, Andrews & Ingersoll,
LLP, Pennsylvania
counsel
D-4 Opinion of
Fasken Martineau DuMoulin LLP,
Canada counsel
E
Assignment and Assumption Agreement
F
Certificate Re Non-bank Status
G-1 Closing
Date Certificate
G-2 Solvency
Certificate
H
Counterpart Agreement
I
Pledge and Security Agreement
J
Mortgage (Fee/Leasehold)
K
Landlord Waiver and Consent Agreement
L
Intercreditor Agreement
vi
<PAGE>
REVOLVING LOAN AND GUARANTY AGREEMENT
This
REVOLVING LOAN AND GUARANTY AGREEMENT, dated as of March 20, 2007, is
entered into by and among FEDDERS NORTH AMERICA, INC., a Delaware corporation
("FNA"), EMERSON QUIET
KOOL CORPORATION, a
Delaware corporation
("Emerson"),
COLUMBIA SPECIALTIES, INC., a Delaware corporation ("Columbia"),
TRION, INC., a
Pennsylvania
corporation
("Trion"),
ENVIRCO CORPORATION,
a New Mexico
corporation
("Envirco"), EUBANK
COIL COMPANY, a Texas corporation ("Eubank"),
FEDDERS ADDISON
COMPANY, INC., a Delaware corporation ("Addison"), FEDDERS
ISLANDAIRE, INC.,
a New York corporation ("Islandaire") and ISLAND METAL
FABRICATING, INC., a
New York corporation
("Island Metal";
and together with
FNA, Emerson,
Columbia, Trion,
Envirco, Eubank,
Addison and Islandaire, each
individually a "Borrower" and collectively, "Borrowers"), FEDDERS CORPORATION,
as Holdings
and a Guarantor, a Delaware corporation ("Holdings"), CERTAIN
SUBSIDIARIES OF FEDDERS CORPORATION, as Guarantors, Lenders party hereto from
time to time, BANK OF AMERICA, N.A. ("Bank of America"), as
Administrative Agent
(together with
its permitted successors in such capacity, "Administrative
Agent") and as Collateral Agent (together with its permitted
successors in such
capacity,
"Collateral
Agent"), and
GENERAL ELECTRIC CAPITAL CORPORATION
("GECC"), as Documentation Agent (in such capacity, "Documentation
Agent").
RECITALS:
WHEREAS, capitalized terms used in these Recitals shall have the
respective
meanings set forth for such terms in Section 1.1 hereof;
WHEREAS, Lenders
have agreed to extend a revolving loan facility to
Borrowers, in an
aggregate amount not
to exceed $40,000,000,
the proceeds of
which will be used to provide for the ongoing working capital requirements of
Borrowers and for general corporate purposes;
WHEREAS, Borrowers have agreed to secure all of its Obligations by
granting
to Collateral Agent,
for the benefit of Secured Parties, a First Priority Lien
on the Current Asset
Collateral and a
Second Priority Lien
on the Fixed Asset
Collateral; and
WHEREAS, Guarantors
have agreed to
guarantee the obligations of Borrowers
hereunder and to secure their respective Obligations by granting to
Collateral
Agent, for the benefit
of the Secured
Parties, a First
Priority Lien on the
Current Asset
Collateral
and a Second Priority Lien on the Fixed Asset
Collateral.
NOW,
THEREFORE,
in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1.
DEFINITIONS AND INTERPRETATION
1.1.
Definitions.
The following terms used herein, including in the
preamble, recitals,
exhibits and
schedules hereto, shall have the following
meanings:
"Account Debtor" as defined in the UCC and includes any Person
obligated in
respect of an Account.
"Accounts" as defined in the UCC, including all rights to payment
for goods
sold or leased, or for services rendered.
<PAGE>
"Accounts Formula Amount" means 85% of the sum of (i) the Value of
Eligible
Accounts of
Borrowers plus (ii) the Value of
Eligible Accounts of Fedders
Canada; provided,
however, that such percentage shall be reduced by 1.0% for
each whole percentage
point (or portion
thereof) that the Dilution Percent
exceeds 5%.
"Addison" as defined in the preamble hereto.
"Adjusted Eurodollar
Rate" means, for any Interest Rate Determination Date
with respect to an
Interest Period for a
Eurodollar
Rate Loan,
the rate per
annum obtained by
dividing (and rounding
upward to the next whole multiple of
1/16 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%)
equal to the rate
determined by
Administrative
Agent to be the
offered rate
which appears on the
page of the Telerate
Screen which displays an average
British Bankers Association Interest Settlement Rate (such
page currently being
page number 3740 or 3750, as applicable) for deposits (for delivery
on the first
day of such period) with a term equivalent to such period in
Dollars, determined
as of approximately
11:00 a.m.
(London, England time) on such Interest Rate
Determination Date,
or (b) in the event
the rate referenced
in the preceding
clause (a) does not
appear on such page or
service or if such
page or service
shall cease to be available, the rate per annum (rounded to the
nearest 1/100 of
1%) equal to the rate determined by Administrative Agent to be the offered rate
on such other page or other service which displays an average British Bankers
Association Interest Settlement Rate for deposits (for delivery on
the first day
of such period) with a term equivalent to such period in Dollars,
determined as
of approximately
11:00 a.m. (London, England time) on such Interest Rate
Determination Date,
or (c) in the event
the rates referenced
in the preceding
clauses (a) and (b)
are not available,
the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the offered quotation rate to first
class banks in
the London interbank market by Bank of America for deposits (for
delivery on the
first day of the
relevant period)
in Dollars of amounts in same day funds
comparable to
the principal amount of the applicable Revolving Loan of
Administrative Agent,
in its capacity as a Lender, for which the Adjusted
Eurodollar Rate is
then being determined
with maturities comparable to such
period as of approximately 11:00 a.m. (London, England time) on such Interest
Rate Determination
Date, by (ii) an amount equal to (a) one minus (b) the
Applicable Reserve Requirement.
"Administrative Agent" as defined in the preamble hereto.
"Adverse
Proceeding" means
any action, suit, proceeding (whether
administrative,
judicial or
otherwise),
governmental
investigation
or
arbitration (whether
or not purportedly on behalf of Holdings or any of its
Subsidiaries) at law or in equity, or before or by any Governmental
Authority,
domestic or foreign (including any Environmental Claims), whether
pending or, to
the knowledge
of Holdings or any of
its Subsidiaries,
threatened
against or
affecting Holdings or any of its Subsidiaries or any property of
Holdings or any
of its Subsidiaries.
"Affected Lender" as defined in Section 2.18(b).
"Affected Revolving Loans" as defined in Section 2.18(b).
"Affiliate" means, as
applied to any Person,
any other Person directly or
indirectly
controlling,
controlled by, or
under common
control with, that
Person. For
the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and
"under common
control with"),
as applied to any
Person, means the
possession,
directly or
indirectly, of the
power (i) to vote 5% or more of the Securities having
ordinary voting
power for the
election of directors
of such Person or (ii) to
direct or cause the
direction of the
management
and policies of that
Person,
whether through the ownership of voting securities or by contract
or otherwise.
2
<PAGE>
"Agent" means
each of Administrative Agent, Collateral Agent and
Documentation Agent.
"Aggregate Amounts Due" as defined in Section 2.17.
"Aggregate Payments" as defined in Section 7.2.
"Agreement" means this Revolving Loan and Guaranty Agreement, dated as of
March 20, 2007, as it may be amended, supplemented or otherwise modified from
time to time.
"Applicable Financial
Plan" means, for the purposes of agreeing and
determining any
financial covenant
levels pursuant to Section 6.8, the
first
Financial Plan delivered after the Closing Date pursuant to Section
5.1(j).
"Applicable Reserve
Requirement"
means, at any time, for any
Eurodollar
Rate Loan,
the maximum rate, expressed as a decimal, at which reserves
(including, without
limitation,
any basic marginal, special, supplemental,
emergency or other
reserves) are required to be maintained with respect thereto
against "Eurocurrency
liabilities"
(as such term is
defined in Regulation
D)
under regulations
issued from time to
time by the Board of
Governors or other
applicable banking regulator. Without limiting the effect of the
foregoing, the
Applicable Reserve
Requirement shall
reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of
liabilities
which includes deposits by reference to which the applicable
Adjusted Eurodollar
Rate or any other interest rate of a Revolving Loan is to be
determined, or (ii)
any category of extensions of credit or other assets which
include Eurodollar
Rate Loans. A
Eurodollar Rate Loan
shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve
requirements
without
benefits of credit for
proration, exceptions
or offsets that may be
available
from time to time to the applicable Lender. The rate of interest on
Eurodollar
Rate Loans shall be adjusted automatically on and as of the effective
date of
any change in the Applicable Reserve Requirement.
"Approved Deposit
Account" means a
Deposit Account that is the subject of
an effective Deposit
Account Control Agreement and that is maintained
by any
Credit Party with a Deposit Account Bank. "Approved Deposit Account" includes
all monies on deposit in a Deposit Account and all certificates and
instruments,
if any, representing or evidencing such Deposit Account.
"Approved Securities
Intermediary"
means a "securities intermediary",
"commodity intermediary" or "futures intermediary" (as such terms
are defined in
the UCC) selected or approved by Administrative Agent; it being understood and
agreed that the "securities intermediaries", "commodities intermediaries" and
"futures
intermediaries" of the Credit Parties on the Closing Date are
Approved
Securities Intermediaries.
"Asset Sale" means a
sale, lease or
sub-lease (as lessor
or sublessor),
sale and leaseback, assignment, conveyance, transfer or other
disposition to, or
any exchange of property with, any Person (other than any
Borrower or Guarantor
Subsidiary), in one transaction or a series of transactions,
of all or any part
of Holdings' or any of its Subsidiaries' businesses, assets or
properties of any
kind, whether
real, personal, or mixed and whether tangible or intangible,
whether now owned or hereafter acquired, including, without limitation, the
Capital Stock of any of Holdings' Subsidiaries, other than (i)
inventory sold or
leased in the
ordinary course of business (excluding any such sales by
operations or divisions discontinued or to be
discontinued), and
(ii) sales of
other assets for aggregate consideration of less than $100,000 with respect
to
any transaction or series of related transactions and less than
$250,000 in the
aggregate during any Fiscal Year.
3
<PAGE>
"Assignment
Agreement" means
an Assignment and Assumption Agreement
substantially in the form of Exhibit E, with such amendments or
modifications as
may be approved by Administrative Agent.
"Assignment Effective Date" as defined in Section 10.6(b).
"Authorized Officer"
means, as applied to any Person, any individual
holding the position of chairman of the board (if an officer),
chief executive
officer, president or
one of its vice
presidents (or the equivalent thereof),
and such Person's chief financial officer or treasurer.
"Availability" means,
as of any date, the amount that Borrowers are
entitled to borrow as
Revolving Loans, being the Borrowing Base minus the
principal balance of all Revolving Loans.
"Availability Block" means, at all times, $8,000,000; provided that, if on
or after December
31, 2007, Holdings is in compliance with Section 6.8(c),
determined on a pro
forma basis to
reflect the exclusion of the financial
results attributable
to any Credit Party or assets, business units or business
lines of any Credit Party sold, transferred or otherwise disposed
of during the
nine Fiscal Month Period then ended, then the "Availability Block" shall mean,
at all times thereafter, $5,000,000, it being acknowledged that any waiver
by
the Lenders of any Event of Default arising from Holdings'
violation of
Section
6.8(c) shall not constitute compliance with such Section
6.8(c).
"Availability Reserve"
means the sum (without duplication) of (i) the
Inventory Reserve; (ii) the Rent and Charges Reserve; (iii) the LC
Reserve; (iv)
the Bank Product
Reserve; (v) the
aggregate amount of
liabilities secured
by
Liens upon
Eligible Accounts and Eligible Inventory that are senior to
Collateral Agent's
Liens (but imposition of any such reserve shall not waive an
Event of Default arising therefrom); (vi) the Availability Block;
and (vii) such
additional reserves,
in such amounts and with respect to such matters, as
Administrative Agent
in its Credit Judgment
may elect to impose
from time to
time.
"Bank of America" as defined in the preamble hereto.
"Bank Product" means any of the following products, services or facilities
extended to any Borrower or Subsidiary of Holdings by any Lender or any
of its
Affiliates: (i) Cash
Management Services; (ii) products under Hedge Agreements;
(iii) commercial credit card and merchant card services;
and (iv) other
banking
products or services
as may be requested
by any Borrower or Subsidiary of
Holdings, other than
Letters of Credit; provided, that for any of the foregoing
to be included as an "Obligation" for purposes of a distribution
under Section
2.15(c), the
applicable
Bank Product Secured Party and Obligor must have
previously provided written notice to Administrative Agent of (a) the existence
of such Bank Product,
(b) the maximum
dollar amount of obligations arising
thereunder to be included as a Bank Product Reserve ("Bank Product
Amount"), and
(iii) the methodology to be used by such parties in determining the
Bank Product
Debt owing from time to time. The Bank Product Amount may be changed from
time
to time upon written notice to Administrative Agent by the Bank Product
Secured
Party and Obligor. No Bank Product Amount may be established or
increased at any
time that a Default or Event of Default exists, or if a reserve in such amount
would cause an Overadvance.
"Bank Product Amount" as defined in the definition of Bank
Product.
"Bank Product Debt" means Indebtedness and other obligations
of an Obligor
relating to Bank Products.
4
<PAGE>
"Bank Product Reserve" means the aggregate amount of reserves established
by Agent from time to time in its Credit Judgment in respect of Bank Product
Debt, which shall be at least equal to the sum of all Bank Product
Amounts.
"Bank Product Secured Party" means any provider of Bank
Products.
"Bankruptcy Code"
means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor
statute.
"Base Rate"
means, for any day, a rate per annum announced by Bank of
America from time to time as its prime rate. Such rate is a reference rate
only
and Bank of America may make loans or other extensions of credit at, above or
below it. Any change in the prime rate announced by Bank of America
shall take
effect at the opening of business on the effective date specified in the public
announcement of the change.
"Base Rate
Loan" means a Revolving Loan bearing interest at a rate
determined by reference to the Base Rate.
"Beneficiary" means each Agent, Lender and Lender Counterparty.
"Blockage Notice"
means a notice of
"control" (as defined in the UCC)
contemplated to be delivered pursuant to each Deposit Account
Control Agreement.
"Board of Governors"
means the Board of
Governors of the United States
Federal Reserve System, or any successor thereto.
"Borrower" and "Borrowers" as defined in the preamble hereto.
"Borrowing" means a
group of Revolving
Loans of one Type that are made on
the same day or are converted into Revolving Loans of one Type on
the same day.
"Borrower Agent" as defined in Section 2.24.
"Borrowing Base"
means, on any date of
determination, an
amount equal to
the lesser of (i) the aggregate amount of Revolving Loan
Commitments, minus
the
LC Reserve,
minus the Availability Block; or (ii) the sum of the
Accounts
Formula Amount,
plus the Inventory Formula Amount, minus the Availability
Reserve.
"Borrowing Base
Certificate"
means a certificate,
in form and
substance
satisfactory to Administrative Agent, by which Borrowers certify
calculation of
the Borrowing Base.
"Business Day" means
(i) any day excluding
Saturday, Sunday and any day
which is a legal
holiday under the laws of the State of New York or is a day on
which banking
institutions located
in such state are authorized or required by
law or other governmental action to close and (ii) with
respect to all notices,
determinations, fundings and payments in connection with the
Adjusted Eurodollar
Rate or any Eurodollar
Rate Loans,
the term "Business
Day" shall mean any day
which is a Business
Day described in clause (i) and which is also a day
for
trading by and between banks in Dollar deposits in the London
interbank market.
"Canadian Dollars" means the lawful money of Canada.
5
<PAGE>
"Canadian Subsidiary"
means any existing or subsequently acquired or
organized Subsidiary
of Holdings organized under the laws of Canada or any
political subdivision thereof, including Fedders Canada.
"Capital Lease" means, as applied to any Person, any lease of any property
(whether real,
personal or mixed) by
that Person as lessee that, in conformity
with GAAP, is or should be accounted for as a capital lease on the
balance sheet
of that Person.
"Capital Stock"
means any and all
shares, interests,
participations
or
other equivalents
(however designated)
of capital stock of a corporation, any
and all equivalent
ownership interests in
a Person (other than a corporation),
including, without limitation, partnership interests, trust units
and membership
interests, and any and
all warrants,
rights or options to
purchase or other
arrangements or rights to acquire any of the foregoing.
"Cash" means money,
currency or a credit
balance in any demand or Deposit
Account.
"Cash Collateral"
means Cash,
and any interest or other income earned
thereon, that is
delivered to Collateral Agent to Cash Collateralize any
Obligations.
"Cash Collateral
Account" means any Deposit Account or Securities Account
that is (i) established by any Agent from time to time in its sole
discretion to
receive cash and Cash
Equivalents (or
purchase cash or Cash
Equivalents with
funds received)
from the Credit Parties or Persons acting on their behalf
pursuant to the Credit
Documents, (ii) with
such depositaries
and securities
intermediaries as such Agent may determine in its sole discretion,
(iii) in the
name of Collateral Agent (although such account may also have words
referring to
any Borrower and the account's purpose), (iv) under the control, and
subject to
a First Priority
perfected Lien, of
Collateral Agent and
(v) in the case of a
Securities Account,
with respect to which Collateral Agent shall be the
Entitlement Holder and
the only Person
authorized to give
Entitlement Orders
with respect thereto.
"Cash Collateralize"
means the delivery of
Cash to Collateral
Agent, as
security for the payment of Obligations, in an amount equal to (i) with
respect
to LC Obligations,
105% of the aggregate LC Obligations, and (ii) with respect
to any inchoate or contingent Obligations (including Obligations arising
under
Bank Products),
Administrative Agent's good faith estimate of the amount due or
to become due, including all fees and other amounts relating to such
Obligations. "Cash Collateralization" has a correlative
meaning.
"Cash Equivalents" means, as at any date of determination, (i) any
evidence
of Indebtedness
with a maturity date of ninety (90) days or less issued or
directly and fully
guaranteed or insured by the United States of America or the
Government of Canada or any agency or instrumentality thereof; provided, that,
the full faith and credit of the United States of America or the
Government of
Canada, as applicable,
is pledged in support
thereof; (ii) certificates of
deposit or bankers'
acceptances with a
maturity of ninety (90) days or less of
any financial
institution that is a
member of the Federal
Reserve System or a
bank listed on Schedule I of the Bank Act (Canada) having
combined capital and
surplus and undivided profits of not less than $1,000,000,000;
(iii) commercial
paper (including variable rate demand notes) with a maturity of
ninety (90) days
or less issued by a
corporation (except an
Affiliate of Borrower or Guarantor)
organized under the
laws of any State of the United States of America or the
District of Columbia
and rated at least A-1
by S&P or at least P-1 by Moody's;
(iv) repurchase
obligations
with a term of not
more than thirty (30) days for
underlying securities
of the types
described in clause
(i) above entered into
with any financial institution having combined capital and surplus
and undivided
profits of not less than $1,000,000,000; (v) repurchase agreements and reverse
repurchase agreements
relating to marketable direct obligations issued or
unconditionally
guaranteed by the
United
6
<PAGE>
States of America or issued by any governmental agency thereof and
backed by the
full faith and credit of the United States of America, in each case maturing
within ninety (90) days or less from the date of acquisition; provided, that,
the terms of such agreements comply with the guidelines set forth
in the Federal
Financial Agreements
of Depository
Institutions with
Securities
Dealers and
Others, as adopted by
the Comptroller of the
Currency on October 31, 1985; and
(vi) investments
in money market funds and mutual funds which invest
substantially all of
their assets
in securities of the types described in
clauses (i) through (v) above.
"Cash Management Services" means any services provided from time to
time to
any Borrower or Domestic Subsidiary of Holdings in
connection with
operating,
collections, payroll,
trust, or other depository or disbursement accounts,
including automatic
clearinghouse,
controlled
disbursement,
depository,
electronic funds
transfer, information reporting, lockbox, stop payment,
overdraft and/or wire transfer services.
"Certificate re Non-Bank Status" means a certificate
substantially in
the
form of Exhibit F.
"Change of Control"
means, at any time,
(i) any Person or "group" (within
the meaning of Rules
13d-3 and 13d-5
under the Exchange Act) (a) shall have
acquired beneficial
ownership of a majority on a fully
diluted basis of the
voting and/or
economic interest in the Capital Stock of
Holdings or (b) shall
have obtained the
power (whether or not
exercised) to elect a
majority of the
members of the board of directors (or similar governing body) of
Holdings,* (ii)
the majority of the
seats (other than
vacant seats) on the
board of directors
(or similar
governing body) of Holdings cease to be occupied by Persons
who
either (a) were
members of the board of directors of Holdings on the Closing
Date or (b) were nominated for election by the board of directors
of Holdings, a
majority of whom
were directors on the Closing Date or whose election or
nomination for election was previously approved by a majority of
such directors;
(iii) Holdings
shall cease to
beneficially
own and control 100% on a fully
diluted basis of the
economic and voting
interest in the Capital Stock of FNA,
Fedders International, Inc. or Fedders Investment Corporation
unless as a result
of a transaction expressly permitted under Section 6.9 or Section
6.10; (iv) FNA
shall cease to beneficially own and control directly or
indirectly 100% (or, in
the case of Islandaire
and Island
Metal, (1) prior to FNA's purchase of the
remaining 20% of the Capital Stock of Islandaire and Island Metal, 80% and (2)
after such purchase,
100%) on a fully
diluted basis of the economic and voting
interest in the Capital Stock of any Guarantor Subsidiary, unless
as a result of
a transaction
expressly permitted under Section 6.9 or Section 6.10; or (v)
any
"change of control" or similar event under the Term Loan Agreement
or the Senior
Notes Indenture shall occur.
"Chattel Paper" as defined in the UCC.
"Claims" means all liabilities, obligations, losses, damages, penalties,
judgments,
proceedings, costs and
expenses of any kind (including remedial
response costs,
reasonable attorneys'
fees and Extraordinary
Expenses) at any
time (including
after Full Payment of the Obligations, resignation or
replacement of any Agent, or replacement of any Lender)
incurred by or
asserted
against any
Indemnitee
in any way
relating to (i) any Credit Document or
transactions relating
thereto, (ii) any
action taken or omitted to be taken by
any Indemnitee in connection with any Credit Document, (iii) the existence or
perfection of any Liens, or realization upon any Collateral, (iv) exercise of
any rights or remedies
under any Credit
Document or applicable law, rule,
regulation or order of any Governmental Authority, or (v) failure
by any Obligor
to perform or observe any terms of any Credit Document, in each case including
all costs and expenses relating to any investigation, litigation,
arbitration or
other proceeding (including an Insolvency Proceeding or appellate
proceedings),
whether or not the applicable Indemnitee is a party thereto.
-----------------
* Confidential
information has been omitted pursuant to a request to the
Securities
and Exchange Commission for confidential treatment. The
information has been separately filed with the Commission.
7
<PAGE>
"Closing Date" means the date on which the
initial Credit
Extensions are
made, which occurred on March 20, 2007.
"Closing Date Certificate" means a Closing Date Certificate
substantially
in the form of Exhibit G-1.
"Closing Date Mortgaged Property" as defined in Section 3.1(h).
"Collateral" means,
collectively,
all of the
real, personal and mixed
property (including
Capital Stock) in which Liens are
purported to be granted
pursuant to the Collateral Documents as security for the
Obligations.
"Collateral Agent" as defined in the preamble hereto.
"Collateral Documents"
means the Pledge and Security Agreement, the
Mortgages, all
executed Deposit Account Control Agreements, Securities Account
Control Agreements and Intellectual Property Security Agreements of
Borrowers or
the Guarantors, the
Landlord Personal Property Collateral Access Agreements, if
any, and all other instruments, documents and agreements delivered
by any Credit
Party pursuant to this
Agreement or any of the other Credit Documents in order
to grant to Collateral Agent, for the benefit of Secured Parties,
a Lien on any
real, personal
or mixed property of such Credit Party as security for the
Obligations or to preserve, protect or perfect such Lien.
"Collateral
Questionnaire" means a
certificate in form
satisfactory
to
Collateral Agent that provides information with respect to the
personal or mixed
property of each Credit Party.
"Columbia" as defined in the preamble hereto.
"Commodity Account" has the meaning given to such term in the
UCC.
"Compliance
Certificate" means a Compliance Certificate substantially in
the form of Exhibit C.
"Consolidated Adjusted
EBITDA" means, for any period, an amount determined
for Holdings and its Subsidiaries on a consolidated basis equal to (i) the sum,
without duplication,
of the amounts for
such period of (a)
Consolidated
Net
Income, (b)
Consolidated Interest
Expense, (c) provisions for taxes based
on
income, (d) total depreciation expense, (e) total amortization expense, (f)
extraordinary and non-recurring charges (including restructuring charges not
exceeding $5,000,000 in any Fiscal Year and $7,500,000 in the
aggregate) and (g)
other non-Cash
items reducing Consolidated Net Income (excluding any such
non-Cash item to the
extent that it
represents
an accrual or reserve for
potential Cash items in any future period or amortization of a
prepaid Cash item
that was paid in a prior period), minus (ii) the sum, without
duplication, for
such period of (a)
extraordinary
and non-recurring income and gains and (b)
other non-Cash
items increasing Consolidated Net Income for such period
(excluding any such non-Cash item to the extent it represents the
reversal of an
accrual or reserve for potential Cash item in any prior
period).
"Consolidated Capital Expenditures" means, for any period, the
aggregate of
all expenditures of Holdings and its Subsidiaries during such period determined
on a consolidated basis that, in accordance with GAAP, are or
should be included
in "purchase
of property
and equipment" or similar items reflected in the
consolidated statement of cash flows of Holdings and its
Subsidiaries.
8
<PAGE>
"Consolidated Current
Assets" means, as at any date of determination, the
total assets of Holdings and its Subsidiaries on a consolidated
basis that may
properly be classified as current assets in conformity with GAAP,
excluding Cash
and Cash Equivalents.
"Consolidated Current
Liabilities" means, as at any date of determination,
the total liabilities
of Holdings and its Subsidiaries on a consolidated basis
that may properly be classified as current liabilities in conformity with
GAAP,
excluding the current portion of long-term debt.
"Consolidated Interest
Expense" means, for any period, total interest
expense (including
that portion
attributable
to Capital Leases in
accordance
with GAAP and
capitalized interest)
of Holdings and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Holdings and
its Subsidiaries,
including all commissions, discounts and other fees and
charges owed with respect to letters of credit and net costs under
Interest Rate
Agreements, but
excluding,
however, any amount not payable in Cash and any
amounts referred to in Section 2.10 payable on or before the
Closing Date.
"Consolidated Net
Income" means,
for any period,
(i) the net income
(or
loss) of Holdings and its Subsidiaries on a consolidated
basis for such
period
taken as a single
accounting period
determined in
conformity with GAAP, minus
(ii) (a) the income
(or loss) of any Person (other than a Subsidiary of
Holdings) in
which any other Person (other than Holdings or any of its
Subsidiaries) has a
joint interest,
except to the extent of the amount of
dividends or
other distributions actually paid to Holdings or any of its
Subsidiaries by such Person during such period, (b) the income (or loss) of
any
Person accrued
prior to the date it
becomes a Subsidiary
of Holdings or is
merged into or
consolidated with
Holdings or any of its
Subsidiaries or
that
Person's assets are
acquired by Holdings
or any of its
Subsidiaries, (c)
the
income (or
loss) of any Subsidiary of Holdings to the extent that the
declaration or payment of dividends or similar distributions by that
Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree,
order, statute, rule or
governmental
regulation applicable to that Subsidiary, (d) any after-tax gains
or losses attributable
to Asset Sales or returned surplus assets of any Pension
Plan, and (e) (to the
extent not included in clauses (a) through (d) above) any
net extraordinary gains or net extraordinary losses.
"Consolidated Secured
Debt" means, as at any
date of determination,
the
aggregate stated balance sheet amount of all Indebtedness (other
than the Senior
Notes) of Holdings
and its Subsidiaries which is secured by a Lien on any
of
their respective
assets, determined on
a consolidated basis in accordance with
GAAP.
"Consolidated Working Capital" means, as at any date of
determination, the
excess of Consolidated Current Assets over Consolidated Current
Liabilities.
"Consolidated Working
Capital Adjustment" means, for any period on a
consolidated basis,
the amount (which may be a negative number) by which
Consolidated Working
Capital as of the
beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such
period.
"Contractual
Obligation" means, as applied to any Person, any provision of
any Security issued by that Person or of any indenture, mortgage,
deed of trust,
contract, undertaking,
agreement or other
instrument to which that Person is a
party or by which it or any of its properties is bound or to which it
or any of
its properties is subject.
"Contributing Guarantors" as defined in Section 7.2.
9
<PAGE>
"Control Account"
means a Securities
Account or Commodity Account that is
the subject of an effective Securities Account Control Agreement and that is
maintained by any
Credit Party with an Approved Securities Intermediary.
"Control Account" includes all Financial Assets held in a
Securities Account
or
a Commodity Account and all certificates and instruments,
if any, representing
or evidencing the Financial Assets contained therein.
"Conversion/Continuation Date" means the effective
date of a
continuation
or conversion,
as the case may be, as set forth in the applicable
Conversion/Continuation Notice.
"Conversion/Continuation Notice" means a Conversion/Continuation
Notice
substantially in the form of Exhibit A-2.
"Core Credit Parties" means, collectively, (i) the Domestic Credit
Parties,
(ii) each Canadian Subsidiary which is a Foreign Guarantor
Subsidiary and
(iii)
each other Foreign Guarantor Subsidiary that (in the case of
this clause (iii))
(x) guarantees the Obligations in full on terms not materially less
favorable to
the Lenders than the
guaranty provisions contained in Section 7 and (y)
have
granted to Collateral
Agent a perfected
Lien (having the priority required
herein) on substantially all of its assets to secure the
guaranty described
in
clause (x) above.
"Counterpart
Agreement" means a Counterpart Agreement substantially in the
form of Exhibit H delivered by a Credit Party pursuant to Section
5.10.
"Credit Document"
means any of this
Agreement,
the Notes,
if any, the
Collateral Documents,
the Intercreditor Agreement, the LC Documents and all
other documents,
instruments or
agreements executed
and delivered by a Credit
Party for the benefit of any Agent or any Lender in connection
herewith.
"Credit Extension"
means the making of a Revolving Loan or the issuance of
a Letter of Credit.
"Credit
Judgment" means
Administrative
Agent's
judgment exercised
reasonably and in good faith, based upon its consideration of any
factor that it
believes (a) could
adversely affect the quantity, quality, mix or value of
Collateral (including
any applicable law that may inhibit collection of an
Account), the
enforceability
or priority of
Collateral Agent's
Liens, or the
amount that Agents and Lenders could receive in liquidation
of any Collateral;
(b) suggests that any collateral report or financial information delivered by
any Obligor is incomplete, inaccurate or misleading in any material
respect; (c)
materially increases
the likelihood of any Insolvency Proceeding involving an
Obligor; or (d)
creates or could
reasonably be expected to result in a Default
or Event of Default.
In exercising
such judgment, Administrative Agent may
consider any factors that could increase the credit risk of lending
to Borrowers
on the security of the Collateral.
"Credit Party" means, collectively, Borrowers and the
Guarantors.
"Currency Agreement"
means any foreign
exchange contract,
currency swap
agreement, futures
contract, option contract, synthetic cap or other similar
agreement or
arrangement,
each of which is for
the purpose
of hedging the
foreign currency risk associated with Holdings' and its
Subsidiaries' operations
and not for speculative purposes.
"Current Asset Collateral" as defined in the Intercreditor
Agreement.
"[*]"
-----------------
* Confidential
information has been omitted pursuant to a request to the
Securities
and Exchange Commission for confidential treatment. The
information has been separately filed with the Commission.
10
<PAGE>
"Default" means a condition or event that, after notice or lapse of
time or
both, would constitute an Event of Default.
"Deposit Account" means a demand, time, savings, passbook or like account
with a bank, savings
and loan association,
credit union or like
organization,
other than an account evidenced by a negotiable certificate of
deposit.
"Deposit Account Bank" means a financial institution selected or approved
by Administrative Agent; it being understood and agreed that the
deposit account
banks of the Credit Parties on the Closing Date are Deposit Account
Banks.
"Deposit Account Control Agreement" has the meaning specified in
the Pledge
and Security Agreement.
"Dilution Percent" means, as of any given date, the percent,
determined on
a trailing
twelve-month basis,
adjusted monthly, equal to (a) all non-cash
credits to Accounts
(other than Accounts owing by Wal-Mart Stores, Inc., Home
Depot, Inc. and B.J. Wholesale Club, Inc.), divided by (b) gross
sales.
"Document" as defined in the UCC.
"Documentation Agent" as defined in the preamble hereto.
"Dollars" and the sign
"$" mean the lawful
money of the United
States of
America.
"Domestic Credit
Party" means each Credit Party other than the Foreign
Guarantor Subsidiaries.
"Domestic Subsidiary"
means any Subsidiary organized under the laws of the
United States of America, any State thereof or the District of
Columbia.
"Dominion Account"
means any special
account established by
Borrowers at
Bank of America or another bank acceptable to Administrative Agent, over which
Administrative Agent has exclusive control for withdrawal
purposes.
"Draft Financial
Statements" means the
draft audited financial statements
of Holdings and its
Subsidiaries dated as
of March 15, 2007,
for Fiscal Year
2006, consisting of
balance sheets and the related consolidated statements of
income, stockholders' equity and cash flows for such Fiscal
Year.
"Eligible Account" means an Account owing to any Borrower or
Fedders Canada
that arises in the
ordinary course of business from the sale of goods,
is
payable in
Dollars or Canadian Dollars (as applicable) and is deemed by
Administrative Agent,
in its discretion,
to be an Eligible
Account. Without
limiting the
foregoing, no Account
shall be an Eligible
Account if (i) it
is
unpaid for more than (x) 90 days after the original invoice date for invoices
with terms of N60 or
less, and (y) 30 days
after the original due date for
invoices with terms greater than N60, the aggregate outstanding amount of which
invoices shall not
exceed the lesser of (A) $15,000,000 or (B) fifty percent
(50% of the Borrowing
Base; (ii) 50% or more of the Accounts owing by the
Account Debtor are not Eligible Accounts under the foregoing
clause; (iii) when
aggregated with other
Accounts owing by the Account Debtor, it exceeds 20% of
the aggregate
Eligible Accounts; (iv) it does not conform with a
covenant or
representation herein or in any of the Collateral Documents;
(v) it is owing by
a creditor
or supplier, or is otherwise subject to a potential offset,
counterclaim,
dispute, deduction,
discount, recoupment, reserve, defense,
chargeback,
11
<PAGE>
credit or allowance (but ineligibility shall be limited to the amount
thereof);
(vi) an Insolvency
Proceeding
has been commenced by or against the Account
Debtor; or the
Account Debtor has failed, has suspended or ceased doing
business, is
liquidating,
dissolving
or winding up its affairs, or is not
solvent (within
the meaning given that term and similar terms under the
Bankruptcy Code (or under any other applicable bankruptcy,
insolvency or similar
law now or hereafter
in effect) and
applicable
laws relating to fraudulent
transfers and
conveyances in the
jurisdiction of
organization of such Account
Debtor and the
jurisdiction in which
such Account
Debtor's chief executive
office is located);
(vii) the Account
Debtor is organized or has its principal
offices or assets
outside the United States or Canada; (viii) it is owing by a
Governmental
Authority, unless the
Account Debtor is (x)
the United States or
any department,
agency or instrumentality thereof and the Account has been
assigned to Collateral
Agent in compliance with the Assignment of Claims Act or
(y) the Government
of Canada or any department, agency or instrumentality
thereof and the Account has been assigned to Collateral Agent in
compliance with
the Financial
Administration
Act (Canada); (ix) it is not subject to a
duly
perfected, First
Priority Lien in favor of Collateral Agent, or is subject to
any other Lien (other than a Second Priority Lien in favor of Term
Loan Facility
Agent); (x) the goods
giving rise to it have not been delivered to and accepted
by the Account Debtor,
the services giving rise to it have not been accepted by
the Account Debtor, or
it otherwise does not represent a final sale; (xi) it is
evidenced by Chattel
Paper or an Instrument of any kind, or has been reduced to
judgment; (xii) its
payment has been
extended, the Account
Debtor has made a
partial payment
(other than with respect to an Account not in excess of
$100,00), or it arises from a sale on a cash-on-delivery basis;
(xiii) it arises
from a sale to an Affiliate, or from a sale on a bill-and-hold,
guaranteed sale,
sale or return, sale
on approval,
consignment, or other
repurchase or
return
basis; (xiv) it
represents a progress billing or retainage; (xv) it includes a
billing for interest,
fees or late charges,
but ineligibility shall be limited
to the extent thereof; and (xvi) it arises from a retail sale to a
Person who is
purchasing for personal, family or household purposes. In
calculating delinquent
portions of Accounts
under clauses (i) and (ii), credit balances more than 90
days old will be excluded.
"Eligible Assignee"
means (i) any Lender,
any Affiliate of any Lender and
any Related
Fund (any two or more
Related Funds being treated as a single
Eligible Assignee
for all purposes hereof), and (ii) any commercial bank,
insurance company,
investment
or mutual fund or other entity that is an
"accredited investor"
(as defined in Regulation D under the Securities Act) and
which extends credit or buys loans; provided, no Affiliate of Holdings
shall be
an Eligible Assignee.
"Eligible
In-Transit
Inventory" means
Eligible In-Transit Foreign
Subsidiary Inventory
and Eligible
In-Transit Other Inventory. Notwithstanding
anything to the contrary set forth herein, at no time shall
Eligible
In-transit
Inventory constitute
more than $[16,000,000] of the Value of Eligible Inventory
for the purposes of the Inventory Formula Amount.
"Eligible In-Transit Foreign Subsidiary Inventory" means such Inventory
of
any Borrower
or Fedders Canada that (i) is in transit from any Foreign
Subsidiary to a United
States or Canada port for delivery to such Credit Party,
(ii) would otherwise
constitute Eligible Inventory under the criteria set forth
in clauses (i) through (xii) of the definition of Eligible
Inventory and
(iii)
satisfies the following additional criteria: (a) an agreement with respect
to
such Inventory
with each customs broker used by such Borrower in form and
substance acceptable
to Agent is in full force and effect, and (b) such
Inventory is subject to a First Priority perfected security
interest in favor of
Collateral Agent.
"Eligible In-Transit
Other Inventory" means such Inventory of any Borrower
or Fedders Canada that
(i) is in transit from
any Person other than
a Foreign
Subsidiary to a United
States or Canada port for delivery to such Credit Party,
(ii) would otherwise
constitute Eligible Inventory under the criteria set forth
in clauses (i) through (xii) of the definition of Eligible
Inventory and
(iii)
satisfies the following additional criteria: (a)(1) such Inventory
has been paid
for in full by
Issuing Bank and reimbursed by such Borrower under sight
commercial letters
of credit issued by Issuing Bank or paid in
12
<PAGE>
full by such Borrower under documentary collections using documents against
payment (D/P) terms presented through Issuing Bank or (2) time
drafts have been
accepted by such
Borrower with
respect to such
Inventory under documentary
collections using
documents against
acceptance (D/A) terms
presented through
Issuing Bank, (b) such Inventory is evidenced by a full set of
clean, original,
negotiable ocean bills of lading consigned to the order of
Collateral Agent with
all said original bills of lading required to be presented under
each commercial
letter of credit and documentary collection, (c) each such bill of lading
with
respect to such
Inventory includes a
clause stating that
one original bill of
lading must be surrendered in order to obtain goods at the United
States port of
disembarkation, (d) an
agreement with respect to such Inventory with each
customs broker used by
such Borrower in form and substance acceptable to Agent
is in full force and
effect, and (e) such Inventory is subject to a First
Priority perfected security interest in favor of Collateral
Agent.
"Eligible Inventory"
means Inventory owned by any Borrower or Fedders
Canada that
Administrative
Agent, in its discretion, deems to be Eligible
Inventory. Without
limiting the foregoing, no Inventory shall be Eligible
Inventory unless
it (i) is finished goods (including, without limitation,
service parts), or raw materials and not work-in-process,
packaging or
shipping
materials, labels,
samples, display items, bags or manufacturing supplies; (ii)
is not held on consignment, nor subject to any deposit or
downpayment (but
not
to the extent that any such deposit or downpayment has not been deducted from
the Value of Eligible
Accounts); (iii) is in
new and saleable condition and is
not damaged,
defective,
shopworn or otherwise unfit for sale; (iv) is not
slow-moving, obsolete
or unmerchantable,
and does not
constitute returned
or
repossessed
goods; (v)
meets all standards imposed by any applicable
Governmental
Authority, and does
not constitute
hazardous materials under any
Environmental Law; (vi) conforms with the covenants and
representations
herein;
(vii) is subject to Collateral Agent's duly perfected, First Priority Lien, and
no other Lien (other than a Second Priority Lien in favor of Term
Loan Facility
Agent); (viii) is
within the continental
United States or Canada and is not in
transit except
between locations of Borrowers; (ix) is not subject to any
warehouse receipt or negotiable Document; (x) is not subject to any License
or
other arrangement
that restricts Borrowers' or Collateral Agent's right to
dispose of such Inventory, unless Collateral Agent has received an
appropriate
Landlord Personal Property Collateral Access Agreement;
(xi) is not located
on
leased premises or in
the possession of a warehouseman, processor, repairman,
mechanic, shipper,
freight forwarder or other Person, unless the lessor or such
Person has delivered a Lien Waiver or an appropriate Rent and Charges Reserve
has been established;
(xii) is reflected in
the details of a current perpetual
inventory report;
and (xiii) in respect
of Inventory owned by
Fedders Canada,
does not consist of Inventory which (w) has been delivered to
Fedders Canada by
or on behalf of a supplier (other than a Subsidiary of Holdings)
within 30 days
of the date of determination, (x) is in the same state as such
Inventory was on
delivery, (y) remains
identifiable as having been supplied by such supplier and
(z) is not subject to any agreement for sale at arm's length. Notwithstanding
any of the foregoing (including, without limitation, clause (viii)), Eligible
In-Transit Inventory shall be deemed Eligible Inventory for all
purposes hereof.
"Emerson" as defined in the preamble hereto.
"Employee Benefit Plan" means (i) in respect of any Credit Party
other than
any Canadian Subsidiary, any "employee benefit plan" as
defined in Section 3(3)
of ERISA which is or was sponsored, maintained or contributed to
by, or required
to be contributed
by, Holdings, any of its Subsidiaries or any of their
respective ERISA Affiliates and (ii) in respect of any Canadian
Subsidiary, any
employee benefit
plan of any nature or
kind that is not a Pension Plan and is
maintained by or contributed to, or required to be maintained
by or contributed
to, by any Canadian Subsidiary.
"Enforcement Action"
means any action to enforce any Obligations or Credit
Documents or to
realize upon any Collateral (whether by judicial action,
self-help, notification of Account Debtors, exercise of setoff or
recoupment, or
otherwise).
13
<PAGE>
"Entitlement Holder" has the meaning given such term in the
UCC.
"Entitlement Order" has the meaning given such term in the UCC.
"Envirco" as defined in the preamble hereto.
"Environmental Claim" means any investigation, notice, notice of
violation,
claim, action,
suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any Governmental Authority
or any other
Person, arising
(i) pursuant to or in connection with any actual or alleged
violation of any
Environmental
Law; (ii) in connection with any Hazardous
Material or any actual
or alleged Hazardous
Materials Activity; or (iii) in
connection with any actual or alleged damage, injury, threat or harm to
health,
safety, natural resources or the environment.
"Environmental Laws"
means any and all current or future foreign or
domestic, federal or
state (or any
subdivision of either
of them),
statutes,
ordinances,
orders,
orders-in-council rules, regulations, judgments,
Governmental
Authorizations,
or any other requirements of Governmental
Authorities relating to (i) environmental matters, including those relating to
any Hazardous
Materials
Activity;
(ii)
the generation, use, storage,
transportation or disposal of Hazardous Materials; or (iii) occupational safety
and health, industrial
hygiene, land use or the protection of
human, plant or
animal health or
welfare, in any manner
applicable
to Holdings or any of
its
Subsidiaries or any Facility.
"Equipment" means, as
to each Credit Party, all of such Credit Party's now
owned and hereafter acquired equipment, wherever located, including machinery,
data processing and computer equipment (whether owned or
licensed and including
embedded software),
vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever
located.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA Affiliate"
means, as applied to any Person,
(i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the
Internal Revenue Code of which that Person
is a member;
(ii) any trade or business (whether or not incorporated)
which is a member of
a
group of trades or businesses under common control within the
meaning of Section
414(c) of the Internal Revenue Code of which that Person is a
member; and (iii)
any member of an affiliated service group within the meaning
of Section 414(m)
or (o) of the Internal
Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a
member. Any former ERISA Affiliate of Holdings or any of its
Subsidiaries shall
continue to be considered an ERISA Affiliate of Holdings or
any such Subsidiary
within the meaning of
this definition with
respect to the
period such entity was an ERISA Affiliate of Holdings or such Subsidiary and
with respect to liabilities arising after such period for which
Holdings or such
Subsidiary could be liable under the Internal Revenue Code or
ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section
4043 of ERISA and the regulations issued thereunder with respect to
any Pension
Plan (excluding those
for which the provision for 30-day notice to the PBGC has
been waived
by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect
to any Pension
Plan (whether or not
waived in accordance
with Section 412(d) of
the Internal
Revenue Code) or the
failure to make by its due date a
required installment
under Section
412(m) of the Internal
Revenue Code with
respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer
Plan;
(iii) the provision by the administrator of any Pension Plan
pursuant to Section
4041(a)(2) of ERISA of
a
14
<PAGE>
notice of intent to terminate such plan in a distress termination described in
Section 4041(c)
of ERISA; (iv) the withdrawal by Holdings, any of its
Subsidiaries or any of their respective ERISA Affiliates from any Pension
Plan
with two or more
contributing sponsors
or the termination of
any such Pension
Plan resulting in liability to Holdings, any of its Subsidiaries or
any of their
respective Affiliates
pursuant to Section 4063 or 4064 of ERISA; (v) the
institution by the
PBGC of proceedings
to terminate
any Pension Plan, or
the
occurrence of any event or condition which might constitute
grounds under
ERISA
for the termination
of, or the
appointment
of a trustee to
administer,
any
Pension Plan;
(vi) the imposition of liability on Holdings, any of its
Subsidiaries or any of their respective ERISA Affiliates pursuant to Section
4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of
ERISA; (vii) the withdrawal of Holdings, any of its Subsidiaries or
any of their
respective ERISA
Affiliates
in a complete or
partial withdrawal
(within the
meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer
Plan if there
is any potential
liability therefor, or the receipt by Holdings,
any of its
Subsidiaries or any of
their respective
ERISA Affiliates of notice from any
Multiemployer Plan
that it is in
reorganization
or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or
has terminated
under Section
4041A or 4042 of ERISA; (viii) the occurrence of an act or
omission which
could give rise to the imposition on Holdings, any of its
Subsidiaries or any of their respective ERISA Affiliates of fines, penalties,
taxes or related charges under Chapter 43 of the Internal
Revenue Code or
under
Section 409, Section 502(c), (i) or (l), or Section 4071 of
ERISA in respect of
any Employee Benefit
Plan; (ix) the
assertion of a material claim (other than
routine claims for
benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or
the assets
thereof, or against Holdings, any of its
Subsidiaries or any of their respective ERISA Affiliates in
connection with any
Employee Benefit Plan;
(x) receipt from the Internal Revenue Service of notice
of the failure of any Pension Plan (or any other Employee
Benefit Plan
intended
to be qualified under
Section 401(a) of the
Internal Revenue Code)
to qualify
under Section 401(a)
of the Internal
Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption
from taxation under
Section 501(a) of the
Internal Revenue Code;
or (xi) the imposition
of a Lien
pursuant to
Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"Eubank" as defined in the preamble hereto.
"Eurodollar Rate Loan"
means a Revolving Loan
bearing interest at a
rate
determined by reference to the Adjusted Eurodollar Rate.
"Event of Default"
means each of the conditions or events set forth in
Section 8.1.
"Excess Availability"
means, as of any date,
the sum of (i)
Availability
plus (ii) the
Availability Block
plus (iii) the
aggregate amount of Cash of
Borrowers and Guarantors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from
time to time, and any successor statute.
"Excluded Foreign
Entity" means each
Foreign Subsidiary or
Joint Venture
that has no revenues and tangible assets of less than $250,000 in
the aggregate.
"Extraordinary
Expenses" means all
costs, expenses or
advances that any
Agent may incur during a Default or Event of Default, or during the pendency of
an Insolvency
Proceeding of an
Obligor, including
those relating to (i) any
audit, inspection,
repossession,
storage,
repair, appraisal, insurance,
manufacture,
preparation or advertising for sale, sale, collection, or other
preservation of or realization upon any Collateral; (ii) any
action, arbitration
or other proceeding (whether instituted by or against any Agent,
any Lender, any
Obligor, any
representative of
creditors of an Obligor or any other Person) in
any way relating to any Collateral (including the validity,
perfection, priority
or avoidability
of
15
<PAGE>
Collateral Agent's
Liens with respect to any Collateral), Credit Documents or
Obligations, including any lender liability or other Claims; (iii)
the exercise,
protection or
enforcement
of any rights or
remedies of any Agent in, or the
monitoring of, any Insolvency Proceeding; (iv) settlement or
satisfaction of any
taxes, charges or
Liens with respect to
any Collateral;
(v) any Enforcement
Action; (vi) negotiation and documentation of any modification,
waiver, workout,
restructuring or
forbearance
with
respect to any Credit Documents or
Obligations; or (vii)
Protective Advances.
Such costs,
expenses and
advances
include transfer
fees, taxes, storage fees, insurance costs, permit fees,
utility reservation and standby fees, legal fees, appraisal fees, brokers' fees
and commissions,
auctioneers'
fees and commissions, accountants' fees,
environmental study fees, wages and salaries paid to employees of
any Obligor or
independent contractors in liquidating any Collateral, and travel
expenses.
"Facility" means any
real property
(including all buildings, fixtures or
other improvements
located thereon) now, hereafter or heretofore owned, leased,
operated or
used by Holdings or any of its Subsidiaries or any of their
respective predecessors or Affiliates.
"Fair Share Contribution Amount" as defined in Section 7.2.
"Fair Share" as defined in Section 7.2.
"Fedders Canada" means
Fedders, Inc., a
corporation organized
under the
laws of the Province of Ontario, Canada.
"Fedders Xinle" means Fedders Xinle Co., Ltd., a People's Republic
of China
joint venture company.
"Federal Funds
Effective Rate" means for any day, the rate per annum
(expressed, as a
decimal, rounded
upwards, if necessary, to the next higher
1/100 of 1%) equal to the weighted average of the rates on
overnight Federal
funds transactions
with members of the Federal Reserve System arranged by
Federal funds brokers
on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day; provided,
(i) if such day
is not a Business Day, the Federal Funds Rate for such day shall be
such rate on
such transactions on the next preceding Business Day as so
published on the next
succeeding Business
Day, and (ii) if no
such rate is so published on such next
succeeding Business
Day, the Federal Funds Rate for such day shall be the
average rate charged to Administrative Agent, in its capacity as a
Lender, on
such day on such transactions as determined by Administrative
Agent.
"Financial Officer
Certification"
means, with respect to the financial
statements for which such certification is required,
the certification of the
chief financial
officer of
Holdings that such financial statements fairly
present, in all
material respects, the
financial condition of Holdings and its
Subsidiaries as at the dates indicated and the results of their
operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments.
"Financial Plan" as defined in Section 5.1(j).
"First Priority" means, with respect to any Lien purported to be
created in
any Current Asset Collateral pursuant to any Collateral Document,
that such Lien
is the only Lien to which such Collateral is subject,
other than any
Permitted
Liens which
are junior in priority to Collateral Agent's Lien on such
Collateral, mortgages existing on the Closing Date and set forth on
Schedule 6.2
and inchoate Liens arising by operation of law for which amounts
are not yet due
and payable.
"Fiscal Month" means a fiscal month of any Fiscal Year.
16
<PAGE>
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Holdings and its
Subsidiaries ending
on December 31 of each calendar year.
"Fixed Asset Collateral" as defined in the Intercreditor
Agreement.
"Flood Hazard
Property" means any
Real Estate Asset subject to a mortgage
in favor of Collateral
Agent, for the benefit of the Secured Parties, and
located in an area
designated by the
Federal Emergency
Management
Agency as
having special flood or mud slide hazards.
"FNA" as defined in the preamble hereto.
"Foreign Guarantor
Subsidiary" means (a) each Canadian Subsidiary and (b)
each Foreign Subsidiary at any time having tangible assets of at
least $500,000;
provided, that
no such Foreign Subsidiary shall be a "Foreign Guarantor
Subsidiary" under this
clause (b) if its guarantee of the Obligations would (i)
result in a Credit
Party incurring
material adverse tax consequences, (ii)
violate (x) applicable
law (except to the
extent such guarantee may be limited
without violation of
applicable law) or (y) any Contractual Obligation of such
Foreign Subsidiary
in effect on the Closing Date or entered into with the
consent of
Administrative Agent
following the Closing
Date in connection with
the incurrence of
Indebtedness of such Foreign Subsidiary pursuant to Section
6.1, or (iii)
reasonably be expected
to prevent
Indebtedness of such
Foreign
Subsidiaries from being renewed; provided, that Fedders Xinle (so
long as it is
a Joint Venture) shall not be a Foreign Guarantor Subsidiary.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary
or a Canadian Subsidiary.
"Full Payment" means,
with respect to any
Obligations,
(i) the full and
indefeasible cash
payment thereof, including any interest, fees and other
charges accruing during an Insolvency Proceeding (whether or not allowed
in the
proceeding); (ii)
if such Obligations are LC Obligations or inchoate or
contingent in nature, Cash Collateralization thereof (or delivery of a
standby
letter of credit acceptable to Agent in its discretion, in the amount of
required Cash Collateral); and (iii) a release of any Claims of
Obligors against
Agent, Lenders
and Issuing
Bank arising on or before the
payment date. No
Revolving Loans shall
be deemed to have been paid in full until all Commitments
related to such Loans have expired or been terminated.
"Funding Guarantors" as defined in Section 7.2.
"Funding Notice" means a notice substantially in the form of
Exhibit A-1.
"GAAP" means, subject
to the limitations on
the application
thereof set
forth in Section 1.2, United States generally accepted accounting
principles in
effect as of the date of determination thereof.
"GECC" as defined in the preamble hereto.
"General Intangible" as defined in the UCC.
"Governmental Authority" means any federal, state, provincial, municipal,
national or
other government, governmental department, commission, board,
bureau, court,
agency, central bank, tribunal or
instrumentality or political
subdivision thereof or any entity or officer exercising
executive,
17
<PAGE>
legislative, judicial,
regulatory or
administrative functions of or pertaining
to any government or any court, in each case whether associated with a state of
the United States, the United States, or a foreign entity or
government.
"Governmental
Authorization" means
any permit,
license, authorization,
plan, directive,
consent order or
consent decree of or
from any
Governmental
Authority.
"Grantor" as defined in the Pledge and Security Agreement.
"Guaranteed Obligations" as defined in Section 7.1.
"Guarantor" means
Holdings and each
Subsidiary
of Holdings
(other than
Borrowers).
"Guarantor Subsidiary" means each Guarantor other than
Holdings.
"Guaranty" means the guaranty of each Guarantor set forth in
Section 7.
"Hazardous Materials" means any chemical, material or substance,
exposure
to which is prohibited, limited or regulated by any
Governmental
Authority or
which may or could
pose a hazard
to the health and safety of the owners,
occupants or any
Persons in the
vicinity of any
Facility or to the
indoor or
outdoor environment.
"Hazardous Materials
Activity" means any past, current, proposed or
threatened activity,
event or occurrence
involving any Hazardous Materials,
including the
use, manufacture, possession, storage, holding, presence,
existence,
location, Release,
threatened
Release, discharge, placement,
generation,
transportation,
processing,
construction,
treatment,
abatement,
removal, remediation,
disposal, disposition or handling of any Hazardous
Materials, and any
corrective action or
response action with respect to any of
the foregoing.
"Hedge Agreement" means an Interest Rate Agreement or a Currency
Agreement
entered into with a Lender Counterparty in order to satisfy
the requirements of
this Agreement or
otherwise in the
ordinary course of
Holdings' or any of its
Subsidiaries' businesses.
"Highest Lawful Rate"
means the maximum lawful interest rate, if any, that
at any time or from time to time may be contracted for, charged, or received
under the laws applicable to any Lender which are presently in
effect or, to the
extent allowed by law,
under such
applicable
laws which may
hereafter be in
effect and
which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"Historical Financial
Statements"
means as of the
Closing Date, (i)
the
audited financial statements of Holdings and its Subsidiaries,
for Fiscal Years
2003, 2004, and 2005,
consisting of balance sheets and the related consolidated
statements of income, stockholders' equity and cash flows for such
Fiscal Years,
and (ii) the unaudited financial statements of Holdings and its
Subsidiaries as
at the most recently ended Fiscal Month for which such financial
statements are
available, consisting of a balance sheet and the related
consolidated statements
of income,
stockholders'
equity and cash flows for the period since the
beginning of Fiscal Year 2006 ending on such date.
"Holdings" as defined in the preamble hereto.
"Holdings Guarantees" as defined in Section 6.1(j).
18
<PAGE>
"Increased-Cost Lenders" as defined in Section 2.22.
"Indebtedness", as
applied to any Person, means, without duplication, (i)
all indebtedness
for borrowed
money; (ii) that portion of obligations with
respect to Capital
Leases that is
properly classified as a liability on a
balance sheet in conformity with GAAP; (iii) notes payable and drafts
accepted
representing
extensions of credit whether or not representing obligations for
borrowed money;
(iv) any obligation owed for all or any part of the
deferred
purchase price of property or services (excluding any such
obligations
incurred
under ERISA), which purchase price is (a) due more than six months
from the date
of incurrence of the obligation in respect thereof or (b) evidenced
by a note or
similar written
instrument;
(v) all indebtedness secured by any Lien on any
property or asset
owned or held by that Person regardless of whether the
indebtedness secured
thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person; (vi) the face amount of any letter
of
credit issued
for the account of that Person or as to which that Person is
otherwise liable for
reimbursement
of drawings;
(vii) the direct or
indirect
guaranty, endorsement
(otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale
with recourse
by such Person of the indebtedness obligation of another; (viii) any
obligation
of such Person the primary purpose or intent of which is to provide
assurance to
an obligee that the indebtedness obligation of the obligor thereof
will be paid,
or any agreement relating to such indebtedness obligation will be
complied with,
or the holders thereof
will be protected (in
whole or in part) against loss in
respect thereof;
(ix) any liability of such Person for the indebtedness
obligation of another
through any agreement
(contingent or
otherwise) (a) to
purchase, repurchase
or otherwise acquire such obligation or any security
therefor, or to
provide funds for the
payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases,
capital
contributions
or otherwise) or (b)
to maintain the solvency or any balance sheet item, level
of income or financial
condition of another if, in the case of any
agreement
described under
subclauses (a) or (b)
of this clause (ix), the primary purpose
or intent thereof is as described in clause (viii) above; and (x) all
obligations of such Person in respect of any exchange traded or
over the counter
derivative
transaction,
including, without
limitation,
any Interest Rate
Agreement and
Currency Agreement, whether entered into for hedging or
speculative purposes; provided, in no event shall obligations under
any Interest
Rate Agreement
and any Currency Agreement be deemed "Indebtedness" for any
purpose under Section 6.8.
"Indemnified
Liabilities" means,
collectively,
any and all
liabilities,
obligations, losses,
damages (including
natural resource damages), penalties,
claims (including
Environmental
Claims), actions, judgments, suits, costs
(including the costs of any investigation, study, sampling, testing,
abatement,
cleanup, removal,
remediation
or other response
action necessary to remove,
remediate, clean up or
abate any Hazardous
Materials Activity),
expenses and
disbursements of any
kind or nature
whatsoever (including
the reasonable fees
and
disbursements of
counsel for Indemnitees in connection with any
investigative,
administrative or judicial proceeding commenced or threatened
by
any Person, whether or not any such Indemnitee shall be designated
as a party or
a potential party thereto, and any fees or expenses
incurred by
Indemnitees in
enforcing this indemnity), whether direct, indirect or
consequential and whether
based on any federal,
state or foreign laws,
statutes, rules or regulations
(including securities
and commercial laws,
statutes, rules or
regulations and
Environmental Laws),
on common law or equitable cause or on contract or
otherwise, that may be
imposed on, incurred
by, or asserted
against any such
Indemnitee, in any
manner relating to or
arising out of (i) this Agreement or
the other Credit
Documents or the transactions contemplated hereby or thereby
(including Lenders'
agreement to make
Credit Extensions or the use or intended
use of the proceeds
thereof, or any
enforcement of any of the Credit Documents
(including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Guaranty)); (ii) the statements contained
in the commitment
letter delivered by any Lender to
Borrowers with respect to
the transactions
contemplated
by this Agreement;
or (iii) any
Environmental
Claim or any Hazardous
Materials Activity relating to or
19
<PAGE>
arising from, directly or indirectly, any past or present activity,
operation,
land ownership, or practice of Holdings or any of its
Subsidiaries.
"Indemnitee" as defined in Section 10.3.
"Insolvency
Proceeding" means
any case or proceeding commenced by or
against a Person under any state, provincial, federal or foreign
law for, or any
agreement of such
Person to,
(i) the entry of an
order for relief
under the
Bankruptcy Code, or any other insolvency, debtor relief or debt adjustment
law;
(ii) the appointment
of a receiver, receiver-manager, trustee, liquidator,
administrator, conservator or other custodian for such Person or
any part of its
Property; or (iii) an assignment or trust mortgage for the benefit
of creditors.
"Instrument" as defined in the UCC.
"Interest Coverage
Ratio" means the ratio of (i)
Consolidated
Adjusted
EBITDA for the
twelve-Fiscal
Month period then ended to (ii) Consolidated
Interest Expense for such twelve-Fiscal Month period.
"Intellectual Property" as defined in the Pledge and Security
Agreement.
"Intellectual Property
Security Agreement" as defined in the Pledge and
Security Agreement.
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated
as of the date hereof,
among FNA, Holdings,
Administrative Agent,
Collateral
Agent and the Term Loan Facility Agent in the form attached hereto
as Exhibit L.
"Interest Payment
Date" means with respect to (i) any Base Rate Loan, the
first Business Day of
each month commencing
on April 1, 2007 and the Revolving
Loan Maturity
Date and (ii) any
Eurodollar
Rate Loan, the last day of each
Interest Period
applicable to such
Eurodollar Rate Loan and the Revolving Loan
Maturity Date;
provided, in the case of each Interest Period of longer than
three months, "Interest Payment Date" shall also include each date
that is three
months, or an integral multiple thereof, after the commencement of
such Interest
Period; and upon prepayment, in each case payable in arrears.
"Interest Period"
means, in connection with a Eurodollar Rate Loan, an
interest period of one-, two-, three- or six-months, as selected by
Borrowers in
the applicable Funding Notice or Conversion/Continuation
Notice, (i)
initially,
commencing on the Closing Date or Conversion/Continuation
Date thereof, as
the
case may be; and (ii) thereafter, commencing on the day on which
the immediately
preceding Interest
Period expires;
provided, (a) if an Interest Period
would
otherwise expire on a day that is not a Business Day, such Interest
Period shall
expire on the next succeeding Business Day unless no further
Business Day occurs
in such month, in which case such Interest Period shall expire on the
immediately preceding
Business Day; (b) any
Interest Period that begins on the
last Business
Day of a calendar month (or on a day for which there is no
numerically
corresponding day in the calendar month at the end of such
Interest
Period) shall,
subject to clause (c) of this definition, end on the first
Business Day of the immediately following calendar month; and (c) no Interest
Period with respect to
any portion of Revolving Loans shall extend beyond the
Revolving Loan Maturity Date.
"Interest Rate Agreement" means any interest rate swap agreement,
interest
rate cap agreement,
interest rate collar agreement, interest rate hedging
agreement or other similar agreement or
20
<PAGE>
arrangement, each of
which is for the
purpose of hedging
the interest rate
exposure associated with Holdings' and its Subsidiaries'
operations and not
for
speculative purposes.
"Interest Rate
Determination
Date" means, with respect to any Interest
Period, the date
that is two
Business Days prior to the first day of such
Interest Period.
"Internal Revenue
Code" means the Internal Revenue Code of 1986, as
amended.
"Inventory" as defined
in the UCC, including
all goods intended for sale,
lease, display or
demonstration, all
work in process and all raw materials and
other materials and supplies of any kind that are or could be used
in connection
with the manufacture,
printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in
Borrowers'
business
(but excluding Equipment).
"Inventory
Formula Amount" means the lesser of (i) the sum of
(a) 65% of
the Value of
Eligible Inventory of Borrowers, plus (b) the lesser of (x)
$5,000,000 and (y) 60% of the Value of Eligible Inventory of Fedders Canada;
or
(ii) 85% of the NOLV Percentage of the Value of Eligible Inventory;
except that,
Administrative Agent
may, in its Credit Judgment and subject to Section
10.5(b)(viii),
adjust the
aforesaid advance rates based upon Inventory
appraisals performed from time to time.
"Inventory Reserve" means reserves established by Administrative
Agent in
its Credit Judgment to reflect factors that may negatively
impact the Value
of
Inventory, including
change in salability,
obsolescence,
seasonality,
theft,
shrinkage, imbalance,
change in composition or mix, markdowns and vendor
chargebacks, and freight and duty charges.
"Inverse Inventory
Advance Rate" means,
for LC Obligations relating to
documentary
Letters of
Credit issued to support Borrowers' purchase of
Inventory, a
percentage equal to 100% minus the advance rate applicable to
such
Inventory.
"Investment" means (i) any direct or indirect purchase or other
acquisition
by Holdings or any of its Subsidiaries of, or of a beneficial
interest in, any
of the Securities of any other Person (other than a Guarantor
Subsidiary); (ii)
any direct or indirect redemption, retirement, purchase or other
acquisition for
value, by any Subsidiary of Holdings from any Person (other than
Holdings or any
Guarantor Subsidiary), of any Capital Stock of such Person; and
(iii) any direct
or indirect
loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar
expenditures in
the ordinary course of business) or capital contributions by Holdings or any
of
its Subsidiaries
to any other
Person (other than Holdings or any Guarantor
Subsidiary), including
all indebtedness and accounts receivable from that other
Person that are not
current assets or did not arise
from sales to that
other
Person in the ordinary course of business. The amount of any
Investment shall be
the original cost of such Investment plus the cost of all additions thereto,
without any
adjustments for
increases or decreases
in value, or write-ups,
write-downs or write-offs with respect to such Investment, and the outstanding
amount thereof,
in each case, at any time shall be calculated net of any
principal repayment
or return of capital
with respect thereto
following the
Closing Date
(such repayment or return not to be in excess of the
original
amount invested).
"Islandaire" as defined in the preamble hereto.
"Island Metal" as defined in the preamble hereto.
"Issuing Bank" means
Bank of America or an Affiliate of Bank of America.
21
<PAGE>
"Issuing Bank Indemnitees" means Issuing Bank and its officers,
directors,
employees, Affiliates, agents and attorneys.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form;
provided, in
no event shall any
corporate Subsidiary
of any Person be
considered
to be a
Joint Venture to which such Person is a party.
"Judgment Conversion Date" as defined in Section 10.24(a).
"Judgment Currency" as defined in Section 10.24(a).
"Landlord Consent
and Estoppel" means, with respect to any Leasehold
Property, a letter,
certificate or other
instrument in writing from the lessor
under the related
lease, pursuant to
which, among other
things, the
landlord
consents to the granting of a Mortgage on such Leasehold
Property by the
Credit
Party tenant,
such Landlord Consent and Estoppel to be in form
and substance
acceptable to Collateral Agent in its reasonable
discretion,
but in any event
sufficient for
Collateral
Agent to obtain a
Title Policy with respect to such
Mortgage.
"Landlord Personal
Property Collateral
Access Agreement" means a Landlord
Waiver and Consent
Agreement
substantially in the
form of Exhibit K with such
amendments or modifications as may be approved by Collateral
Agent.
"LC
Application" means an application by Borrower Agent to Issuing Bank
for
issuance of a Letter of Credit, in form and substance reasonably
satisfactory to
Issuing Bank.
"LC
Conditions" means the following conditions necessary for issuance
of a
Letter of Credit: (i)
each of the conditions
set forth in Section
3.2; (ii)
after giving effect to such issuance, total LC Obligations do not exceed the
Letter of Credit Subline, no Overadvance exists and, if no Revolving Loans
are
outstanding, the LC Obligations do not exceed the Borrowing Base
(without giving
effect to the LC Reserve for purposes of this calculation); (iii)
the expiration
date of such Letter of Credit is (a) no more than 365 days from
issuance, in the
case of standby Letters of Credit, (b) no more than 120 days from
issuance, in
the case of
documentary Letters of
Credit, and (c) at
least 20 Business
Days
prior to the Revolving
Loan Maturity Date; (iv) the Letter of Credit and
payments thereunder are denominated in Dollars; and (v) the form of
the proposed
Letter of Credit is reasonably satisfactory to Administrative
Agent and Issuing
Bank in their discretion.
"LC
Documents" means all documents, instruments and agreements
(including
LC Requests and LC
Applications)
delivered by Borrowers or any other Person to
Issuing Bank or Agent in connection with issuance, amendment or renewal of, or
payment under, any Letter of Credit.
"LC
Obligations"
means the sum (without
duplication)
of (i) all amounts
owing by Borrowers for any drawings under Letters of Credit;
(ii) the aggregate
undrawn amount of all
outstanding
Letters of
Credit; and (iii) all fees and
other amounts owing with respect to Letters of Credit.
"LC
Request" means a request for issuance of a Letter of Credit,
to be
provided by Borrower Agent to Issuing Bank, in form reasonably satisfactory to
Agent and Issuing Bank.
"LC
Reserve" means the aggregate of all LC Obligations, other than (i)
those that have been
Cash Collateralized,
and (ii) if no
Default or Event
of
Default exists, those
constituting charges owing to the Issuing Bank, and (iii)
the Inverse
Inventory
Advance Rate times the amount of LC
22
<PAGE>
Obligations
attributable to
documentary
Letters of Credit
issued to support
Borrowers' purchase of Inventory.
"Leasehold Property"
means any leasehold
interest of any Credit
Party as
lessee under any lease of real property, other than any such leasehold
interest
designated from time
to time by Collateral
Agent in its sole discretion as not
being required to be included in the Collateral.
"Lender" means each
financial institution
listed on the
signature pages
hereto as a Lender, and any other Person that becomes a party
hereto pursuant to
an Assignment Agreement.
"Lender Counterparty"
means each Lender or any Affiliate of a Lender
counterparty to a Hedge Agreement (including any Person who is a
Lender (and any
Affiliate thereof) as
of the Closing Date but subsequently, whether before or
after entering into a Hedge Agreement, ceases to be a Lender)
including, without
limitation, each such
Affiliate that enters into a joinder agreement with
Collateral Agent.
"Letter of Credit" means any standby or documentary letter of
credit issued
by Issuing Bank for the account of any Borrower, or any indemnity, guarantee,
exposure transmittal
memorandum
or similar form of
credit support
issued by
Issuing Bank for the benefit of any Borrower.
"Letter of Credit Subline" means $10,000,000.
"License" means
any license or agreement under which an Obligor is
authorized to use
Intellectual
Property in connection
with any manufacture,
marketing, distribution or disposition of Collateral, any use of
Property or any
other conduct of its business.
"Licensor" means any
Person from whom an Obligor obtains the right to use
any Intellectual Property.
"Lien" means (i) any lien, mortgage, pledge, assignment, security
interest,
hypothec, deemed
trust, charge or encumbrance of any kind (including any
agreement to give any
of the foregoing,
any conditional sale or other title
retention agreement,
and any lease in the nature thereof) and any option, trust
or other preferential
arrangement
having the
practical effect of any of the
foregoing and (ii) in
the case of
Securities, any
purchase option, call or
similar right of a third party with respect to such Securities.
"Lien Waiver" means
(i) a Landlord
Personal Property
Collateral
Access
Agreement and (ii) any other agreement, in form and substance satisfactory to
Administrative Agent,
by which (a) for any
Collateral held by a
warehouseman,
processor, shipper or
freight forwarder, such Person waives or subordinates any
Lien it may
have on the Collateral, agrees to hold any Documents in its
possession relating to
the Collateral as agent for Collateral Agent, and agrees
to deliver
the Collateral to Collateral Agent upon request; (b) for any
Collateral held by a
repairman, mechanic or
bailee, such Person
acknowledges
Collateral Agent's
Lien, waives or subordinates any Lien it may have on the
Collateral, and agrees
to deliver
the Collateral to Collateral Agent upon
request; and
(c) for any Collateral subject to a Licensor's Intellectual
Property rights, the
Licensor grants to Collateral Agent the right, vis-a-vis
such Licensor,
to enforce Collateral Agent's Liens with respect to the
Collateral, including
the right to dispose of it with the benefit of the
Intellectual Property,
whether or not a
default exists
under any applicable
License.
"Margin Stock" as
defined in Regulation
U of the Board of Governors as in
effect from time to time.
23
<PAGE>
"Material Adverse
Effect" means a material adverse effect on and/or
material adverse
developments
with respect to (i)
the business,
operations,
properties, assets,
condition (financial or otherwise) or prospects of Holdings
and its Subsidiaries
taken as a whole; (ii)
the ability of any Credit Party to
fully and timely perform its Obligations; (iii) the legality, validity,
binding
effect or enforceability against a Credit Party of a Credit
Document to which it
is a party; or (iv) the material rights, remedies and benefits available
to, or
conferred upon,
any Agent and any
Lender or any Secured Party under any Credit
Document.
"Material Contract"
means (a) any contract or other agreement (other than
the Credit Documents),
written or oral, of any Borrower or Guarantor involving
monetary liability of or to any Person in an amount in excess of
$500,000 in any
Fiscal Year and (b) any other contract or other arrangement to
which Holdings or
any of its
Subsidiaries is a party (other than the Credit Documents) for which
breach,
nonperformance,
cancellation or
failure to renew could
reasonably be
expected to have a Material Adverse Effect.
"Moody's" means Moody's Investor Services, Inc.
"Mortgage" means a
Mortgage substantially
in the form of Exhibit J, as it
may be amended, supplemented or otherwise modified from time to
time.
"Multiemployer
Plan" means
any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NAIC" means The National Association of Insurance Commissioners, and any
successor thereto.
"Narrative Report"
means, with respect to the financial
statements
for
which such narrative
report is required,
a narrative
report describing the
operations of
Holdings and its Subsidiaries in the form prepared for
presentation to senior management thereof for the applicable month,
Fiscal Month
or Fiscal Year and for the period from the beginning of the then
current Fiscal
Year to the end of such period to which such financial statements
relate.
"Net
Asset Sale Proceeds" means, with respect to any Asset Sale (other
than
(except when there is no Indebtedness outstanding under the Term
Loan Agreement)
any Asset Sale with respect to Fixed Asset Collateral),
an amount equal to:
(i)
Cash payments
(including any Cash received by way of deferred payment pursuant
to, or by monetization of, a note receivable or otherwise,
but only as and
when
so received)
received by Holdings
or any of its
Subsidiaries from such
Asset
Sale, minus (ii) any
bona fide direct costs
incurred in connection
with such
Asset Sale,
including (a) income or gains taxes payable by the seller as a
result of any gain recognized in connection with such Asset Sale,
(b) payment of
the outstanding principal amount of, premium or penalty, if any,
and interest on
any Indebtedness
(other than the
Revolving Loans) that is secured by a Lien on
the stock or assets in
question and that is
required to be repaid under the
terms thereof as a
result of such Asset Sale and (c) a reasonable reserve for
any indemnification
payments (fixed or contingent) attributable to seller's
indemnities and
representations and
warranties to purchaser in respect of such
Asset Sale undertaken by Holdings or any of its Subsidiaries in connection
with
such Asset Sale.
"Net
Insurance/Condemnation
Proceeds" means an amount equal to: (i) any
Cash payments or proceeds received by Holdings or any of its
Subsidiaries
(a)
under any casualty
insurance policy in
respect of a covered loss thereunder or
(b) as a result of the taking of any assets of Holdings or any of its
Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation
or otherwise, or
pursuant to a sale of any such assets to a purchaser with such
power under threat of
such a
24
<PAGE>
taking, minus (ii) (a)
any actual and reasonable costs incurred by Holdings or
any of its
Subsidiaries in
connection with the adjustment or settlement of any
claims of Holdings or such Subsidiary in respect thereof,
and (b) any bona
fide
direct costs incurred in connection with any sale of such assets as
referred to
in clause (i)(b) of this definition, including income taxes payable as
a result
of any gain recognized in connection therewith, in each case other than
(except
when there is no
Indebtedness
outstanding under the
Term Loan Agreement) with
respect to assets which are Fixed Asset Collateral.
"NOLV Percentage"
means the percentage of the Value of Inventory expected
to be realized at an orderly, negotiated sale held within a
reasonable period of
time, net of all
liquidation
expenses, as determined from the most recent
appraisal of
Borrowers'
Inventory performed by an appraiser and on terms
reasonably satisfactory to Administrative Agent.
"Nonpublic
Information" means
information which has not been disseminated
in a manner making it
available to investors
generally, within the
meaning of
Regulation FD.
"Non-US Lender" as defined in Section 2.20(c).
"Note" means a
promissory
note in the
form of Exhibit B, as it may be
amended, supplemented or otherwise modified from time to time.
"Notice" means a Funding Notice, or a Conversion/ Continuation
Notice.
"Obligation Currency" as defined in Section 10.24(a).
"Obligations" means
all (i) principal of and premium, if any, on the
Revolving Loans,
(ii) LC Obligations and other obligations of Obligors with
respect to Letters of
Credit, (iii)
interest, expenses, fees and other sums
payable by Obligors
under the Credit
Documents, (iv)
obligations of
Obligors
under any indemnity for Claims, (v) Extraordinary Expenses, (vi) Bank Product
Debt, and (vii) other
Indebtedness,
obligations
and liabilities of any kind
owing by Obligors
pursuant to the Credit
Documents,
whether now
existing or
hereafter arising, whether evidenced by a note or other writing,
whether allowed
in any Insolvency
Proceeding,
whether arising from an extension of credit,
issuance of a letter of credit, acceptance, loan, guaranty, indemnification or
otherwise, and whether
direct or indirect,
absolute or
contingent, due or
to
become due, primary or secondary, or joint or several.
"Obligor" means each
Borrower, Guarantor and other Person that is
liable
for payment of any Obligations or that has granted a Lien in favor
of Collateral
Agent on its assets to secure any Obligations.
"Obligee Guarantor" as defined in Section 7.7.
"Organizational
Documents" means (i) with respect to any corporation, its
certificate or articles of incorporation or organization, as amended, and its
by-laws, as
amended, (ii) with respect to any limited partnership, its
certificate of limited partnership, as amended, and its partnership
agreement,
as amended, (iii) with
respect to any
general partnership, its partnership
agreement, as amended,
and (iv) with respect
to any limited liability company,
its articles of
organization,
as amended,
and its operating agreement, as
amended. In the
event any term or
condition of this Agreement or any other
Credit Document
requires any Organizational Document to be certified by a
secretary of state or similar governmental official, the reference to any such
"Organizational
Document" shall
only be to a document
of a type customarily
certified by such governmental official.
"Overadvance" as defined in Section 2.1(b).
25
<PAGE>
"Overadvance Loan"
means a Base Rate Loan made when an Overadvance exists
or is caused by the funding thereof.
"Payment Item" means each check, draft or other item of payment
payable to
any Borrower, including those constituting proceeds of any
Collateral.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan"
means (i) in respect
of any Credit
Party other than any
Canadian Subsidiary, any Employee Benefit Plan, other than a
Multiemployer Plan,
which is subject to Section 412 of the Internal Revenue Code or Section 302 of
ERISA and (ii) in respect of any Canadian Subsidiary, each pension,
supplementary pension,
retirement
savings or other
retirement income plan
or
arrangement of any kind, registered or non-registered, established, maintained
or contributed
to by any Canadian Subsidiary for its employees or former
employees, but does
not include the Canada
Pension Plan or the Quebec Pension
Plan that is maintained by the Government of Canada or the
Province of Quebec,
respectively.
"Permitted Acquisition" means any acquisition by any Borrower or
any of its
wholly-owned
Subsidiaries, whether
by purchase, merger or otherwise, of all or
substantially all of
the assets of, all of the Capital Stock of, or a business
line or unit or a division of, any Person, in each case made only
with the prior
written consent of the Requisite Lenders and Administrative
Agent.
"Permitted Liens"
means each of the
Liens permitted
pursuant to
Section
6.2.
"Person" means
and includes natural persons, corporations, limited
partnerships, general
partnerships,
limited liability companies, unlimited
liability companies,
limited liability partnerships, joint stock companies,
Joint Ventures,
associations,
companies, trusts,
banks, trust companies, land
trusts, business
trusts or other organizations, whether or not legal entities,
and Governmental Authorities.
"Platform" as defined in Section 5.1(q).
"Pledge and Security
Agreement" means the Pledge and Security Agreement to
be executed by each Borrower and Guarantor substantially in the form of
Exhibit
I, as it may be amended, supplemented or otherwise modified from
time to time.
"Prime Rate" means the rate of interest quoted in The Wall Street
Journal,
Money Rates
Section as the Prime
Rate (currently
defined as the base
rate on
corporate loans
posted by at least 75%
of the nation's
thirty (30) largest
banks), as in effect
from time to time. The
Prime Rate is a reference rate and
does not necessarily
represent the lowest or best rate actually charged to any
customer. Agent or any
other Lender may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.
"Principal
Office" means,
for Administrative Agent, such Person's
"Principal Office" as set forth on Appendix B, or such other office
or office of
a third party or sub-agent, as appropriate, as such Person may from
time to time
designate in writing to Borrower Agent and each Lender.
"Projections" as defined in Section 4.8.
"Property" means any
interest in any kind
of property or asset,
whether
real, personal or mixed, or tangible or intangible.
26
<PAGE>
"Pro
Rata Share" means with respect to all payments, computations and
other
matters relating to
the Revolving Loans
and LC Obligations of any Lender, the
percentage obtained by
dividing (i) the Revolving Loan Exposure of that Lender
by (ii) the aggregate Revolving Loan Exposure of all Lenders.
"Protective Advance" as defined in Section 2.1(c).
"Real Estate Asset" means, at any time of determination, any
interest (fee,
leasehold or otherwise) then owned by any Credit Party in any real
property.
"Record Document"
means, with respect to any Leasehold Property, (i) the
lease evidencing such Leasehold Property or a memorandum
thereof, executed and
acknowledged by the owner of the affected real property,
as lessor,
or (ii) if
such Leasehold
Property was acquired or subleased from the holder of a
Recorded
Leasehold Interest, the applicable assignment or sublease document,
executed and
acknowledged by such
holder, in each case in form sufficient to give such
constructive
notice upon
recordation
and otherwise in form reasonably
satisfactory to Collateral Agent.
"Recorded Leasehold
Interest" means a
Leasehold Property
with respect to
which a Record Document has been recorded in all places
necessary or
desirable,
in Collateral Agent's reasonable judgment, to give constructive notice of
such
Leasehold Property to
third-party purchasers
and encumbrancers of the affected
real property.
"Refinanced Indebtedness" means, collectively, the Indebtedness and other
obligations
outstanding under (a)
that certain Amended
and Restated Loan
and
Security Agreement,
dated as of January
31, 2006, among FNA, certain of its
subsidiaries as
borrowers and
guarantors, the
lenders and issuing banks party
thereto and Wachovia Bank, N.A. (formerly Wachovia Bank,
National Association)
as administrative
agent, as amended prior to the Closing
Date (the
"Existing
Loan Agreement") and
(b) each other loan
agreement, credit
agreement,
note,
guaranty, mortgage or other agreement, document or instrument in
connection with
the Existing Loan Agreement.
"Refinancing" means the refinancing of the Refinanced Indebtedness
with the
proceeds of the Term Loans.
"Reimbursement Date" as defined in Section 2.11(b).
"Register" as defined in Section 2.6(b).
"Regulation D" means
Regulation D of the Board of Governors, as in effect
from time to time.
"Regulation FD" means Regulation FD as promulgated by the US
Securities and
Exchange Commission
under the Securities Act and Exchange Act as in effect from
time to time.
"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.
"Release" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of any Hazardous Material into the indoor or outdoor
environment
(including the
abandonment
or disposal of any
barrels,
27
<PAGE>
containers or other
closed receptacles
containing
any Hazardous Material),
including the movement of any Hazardous Material through the air, soil,
surface
water or groundwater.
"Rent and Charges Reserve" means the aggregate of (a) all past due
rent and
other amounts
owing by an Obligor to
any landlord,
warehouseman,
processor,
repairman, mechanic,
shipper, freight forwarder or other Person
who possesses
any Collateral or
could assert a Lien on any Collateral; and (b) a reserve at
least equal to three months rent and other charges that could be payable to
any
such Person, unless it has executed a Lien Waiver; provided, however, that the
maximum amount of the
Rent and Charges
Reserve shall not
exceed the aggregate
value of the Collateral in the possession or located on the
premises of all such
Persons.
"Replacement Lender" as defined in Section 2.22.
"Reporting Month"
means each
Fiscal Month other than any Fiscal Month
ending the same date as any Fiscal Quarter.
"Requisite Lenders"
means (i) at all times
while there are two or fewer
Lenders hereunder,
all of the
Lenders, and (ii) at all times while there
are
three or more Lenders,
one or more Lenders
having or holding
Revolving Loan
Exposure and representing at least 662/3% of the sum of the
aggregate
Revolving
Loan Exposure of all Lenders.
"Restricted Junior
Payment" means (i) any dividend or other distribution,
direct or indirect,
on account of any
shares of any class of stock of Holdings
or any Borrower now or hereafter outstanding, except a dividend payable
solely
in shares of that class of stock to the holders of that class; (ii) any
redemption,
retirement, sinking
fund or similar
payment, purchase or other
acquisition for value,
direct or indirect, of
any shares of any class of stock
of Holdings or any Borrower now or hereafter outstanding; (iii) any
cash payment
made to retire, or to obtain the surrender of, any outstanding
warrants, options
or other rights to
acquire shares of any class of stock of Holdings or any
Borrower now or hereafter outstanding, (iv) any loan or advance by any
Borrower
or its Subsidiaries to
Holdings and (v) any payment or prepayment of principal,
of premium,
if any, or interest on or redemption, purchase, retirement,
defeasance (including in substance or legal defeasance), sinking
fund or similar
payment with respect to the Senior Notes;
"Revolving Loan"
means a Revolving Loan made by a Lender to Borrowers
pursuant to Section 2.1, including, without limitation, an Overadvance Loan or
Protective Advance, and any Swingline Loan.
"Revolving Loan
Commitment"
means the commitment of a Lender to make
or
otherwise fund a
Revolving Loan and to participate in LC Obligations and
"Revolving Loan
Commitments"
means such commitments of all Lenders in the
aggregate. The amount of each Lender's Revolving Loan Commitment is
set forth on
Appendix A or in the applicable Assignment Agreement, subject to any adjustment
or reduction pursuant
to the terms and conditions hereof, including, without
limitation, Section
8.2. The aggregate amount of the Revolving Loan Commitments
as of the Closing Date is $40,000,000.
"Revolving Loan Exposure" means, with respect to any Lender, as of
any date
of determination while
Revolving Loans and LC Obligations are outstanding, the
aggregate outstanding
principal amount of Revolving Loans and LC Obligations of
such Lender; provided,
at any time no
Revolving Loans and LC
Obligations are
outstanding, the
Revolving Loan Exposure of any Lender shall be
equal to the
outstanding amount of the Revolving Loan Commitment of such
Lender.
28
<PAGE>
"Revolving Loan Maturity Date" means the earlier of (i) September
20, 2009,
and (ii) the date that all Revolving Loans shall become due and payable
in full
hereunder, whether by acceleration or otherwise.
"S&P" means
Standard & Poor's Ratings Group, a division of The McGraw
Hill
Corporation.
"Second Priority"
means, with respect to any Lien created in any Fixed
Asset Collateral
pursuant to any Collateral Document, that such Lien is
subordinated solely to
the Liens on such
Collateral created
by the Term Loan
Documents and inchoate
Liens arising by
operation of law for which amounts are
not yet due and payable.
"Secured Leverage
Ratio" means the ratio of (i) Consolidated Secured Debt
as of such day to (ii) Consolidated Adjusted EBITDA for the
twelve-Fiscal Month
period ending on such date.
"Secured Parties" has
the meaning assigned
to that term in the Pledge and
Security Agreement.
"Securities" means any stock, shares, partnership interests,
trust units,
voting trust
certificates,
certificates of
interest or
participation in
any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or
otherwise,
or in general any
instruments
commonly known as
"securities" or any
certificates
of interest, shares or participations in
temporary or interim
certificates for the
purchase or
acquisition of, or
any
right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Account" has the meaning given to such term in the
UCC.
"Securities Account
Control Agreement" has the meaning
specified in the
Pledge and Security Agreement.
"Securities Act" means
the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Senior Notes" means
the 97/8% Senior Notes
due March 1, 2014,
issued by
FNA pursuant to the Senior Notes Indenture in the aggregate
principal amount
of
$155,000,000, as the
same now exists or may hereafter be (as permitted
hereunder) amended,
modified, supplemented, extended, renewed, restated or
replaced.
"Senior Notes Documents"
means, collectively,
the Senior Notes, the Senior
Notes Guaranty, the
Senior Notes Indenture and each other agreement or document
in connection therewith.
"Senior Notes Guaranty" means the "Guaranty" of the Senior Notes by
each of
the Senior Notes Guarantors under the Senior Notes Indenture.
"Senior Notes Indenture" means, the Indenture, dated as of March 8, 2004,
among FNA, Holdings
and certain Subsidiaries of Holdings as "Guarantors"
thereunder and the
Senior Notes Trustee,
as amended and
supplemented
by the
First Supplemental
Indenture and Waiver,
dated as of September 13, 2005, among
FNA, Holdings and such
"Guarantors" and the Senior Notes Trustee, in effect on
the date hereof or as may hereafter be (as permitted hereby)
amended, modified,
supplemented, extended, renewed, restated or replaced.
29
<PAGE>
"Senior Notes Interest
Payment" means that certain interest payment with
respect to the Senior Notes due on March 1, 2007, overdue as of the
date hereof.
"Senior Notes Trustee" means U.S. Bank, National Association, as trustee
under the Senior Notes
Indenture,
and its successors and assigns, and any
replacement trustee permitted pursuant to the terms and conditions
of the Senior
Notes Indenture.
"Settlement Confirmation" as defined in Section 10.6(b).
"Settlement Service" as defined in Section 10.6(d).
"Settlement Report"
means a report
delivered by
Administrative Agent
to
Lenders summarizing
the Revolving Loans
and participations
in LC Obligations
outstanding as of a given settlement date, allocated to Lenders in
accordance
with their Pro Rata Shares of their respective Revolving Loan
Commitments.
"Solvency Certificate"
means a Solvency Certificate of the chief financial
officer of Holdings substantially in the form of Exhibit G-2.
"Solvent" means,
with respect to (x)
Borrowers (on a consolidated basis)
and (y) the Credit Parties (taken as a whole) that as of the date of
determination, both
(i) (a) the respective
sums of such
Credit Party's and
Credit Parties'
debt (including contingent liabilities) do not exceed the
present fair saleable value of such Credit Party's and Credit
Parties' present
assets; (b) such
Credit Party's and Credit Parties' capital is not unreasonably
small in relation to their respective businesses as contemplated on the
Closing
Date and reflected in the Projections or with respect to any transaction
contemplated or
undertaken
after the Closing Date; and (c) such Person and
Persons have not
incurred and do not intend to incur,
or believe (nor
should
they reasonably
believe) that they will incur, debts beyond their abilities
to
pay such debts as they become due (whether at maturity or otherwise),
respectively; and (ii)
such Person and Persons are "solvent" within the meaning
given that term and similar terms under the Bankruptcy Code and applicable laws
relating to
fraudulent
transfers and conveyances in the jurisdiction of
organization of such
Person and Persons and the state in which each such
Person's chief executive office is located, respectively. For purposes of this
definition, the amount of any contingent liability at any time
shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents
the amount that can
reasonably be expected
to become an
actual or matured liability (irrespective of whether such
contingent liabilities
meet the criteria for accrual under Statement of Financial
Accounting
Standard
No. 5).
"Subject Transaction" as defined in Section 6.8(e).
"Subsidiary"
means, with
respect to any Person, any corporation,
partnership, limited
liability company, association, joint venture or other
business entity of
which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the
occurrence of
any contingency)
to vote in the
election of the Person or Persons (whether
directors, managers,
trustees or other
Persons performing
similar functions)
having the power to direct or cause the direction of the management
and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a
combination
thereof; provided,
in determining the
percentage of ownership interests of any
Person controlled by
another Person, no
ownership interest in
the nature of a
"qualifying share" of the former Person shall be deemed to be
outstanding.
"Swingline Loan"
means any Borrowing of Base Rate Loans funded with
Administrative Agent's
funds, until such Borrowing is settled among Lenders
pursuant to Section 2.2(c).
30
<PAGE>
"Tax" means any
present or future tax,
levy, impost,
duty, assessment,
charge, fee, deduction or withholding of any nature and whatever
called, imposed
by a Governmental
Authority;
provided, "Tax on the overall net income" of a
Person shall be construed as a reference to a tax imposed by the
jurisdiction in
which that Person is organized or in which that Person's applicable principal
office (and/or,
in the case of a
Lender, its lending
office) is located or in
which that Person
(and/or, in the case of a Lender,
its lending office) is
deemed to be doing
business on all or part of the net income, profits or gains
(whether worldwide,
or only insofar as such income, profits or gains are
considered to arise in or to relate to a particular jurisdiction,
or otherwise)
of that Person (and/or, in the case of a Lender, its applicable
lending office).
"Term Loan
Commitments" means the
term loan commitments made to FNA under
and pursuant to the Term Loan Agreement.
"Term Loan Agreement" means that certain Term Loan and Guaranty
Agreement,
dated as of the date hereof, among FNA, the guarantors party
thereto, the Term
Loan Facility Agent, Goldman Sachs Credit Partners, L.P., as sole
lead arranger,
sole bookrunner and sole syndication agent, and the other financial
institutions
party thereto,
together with any
agreements or
instruments entered
into from
time to time in connection with any refinancing, restatement, replacement or
refunding, in whole or in part, of the obligations incurred
thereunder.
"Term Loan Documents" has the meaning given to the term "Credit
Documents"
in the Term Loan Agreement.
"Term Loan Facility" as defined in the Term Loan Agreement.
"Term Loan Facility
Agent" means Goldman Sachs Credit Partners, L.P., in
its capacity as
administrative agent
and collateral agent
under the Term Loan
Agreement, together with its permitted successors in such
capacity.
"Term Loan Facility
Secured Parties" has the meaning given to the term
"Secured Parties" in the Term Loan Agreement.
"Term Loans"
means the loans made
to FNA under and
pursuant to the
Term
Loan Agreement.
"Terminated Lender" as defined in Section 2.22.
"Title Policy" as defined in Section 3.1(h).
"Transaction Costs" means the fees, costs and expenses payable by
Holdings,
Borrowers or any of Holdings' Subsidiaries pursuant to Section 10.2
on or before
the Closing Date in connection with the transactions contemplated by the Credit
Documents.
"Trion" as defined in the preamble hereto.
"Type" means, with
respect to Term Loans, a Base Rate Loan or a Eurodollar
Rate Loan.
"UCC" means the
Uniform Commercial Code (or any similar or equivalent
legislation) as in
effect in any applicable jurisdiction; provided that where
the perfection, effect of perfection or non-perfection or priority
of
any Lien granted under
any Collateral
Document is governed
by the laws
31
<PAGE>
as the Province of Ontario, UCC shall include the Personal Property
Security Act
(Ontario) as the context requires.
"Value" means (i) for Inventory, its value determined on the basis of the
lower of cost or market, calculated on a first-in, first out basis;
and (ii) for
an Account, its face amount, net of any returns, rebates,
discounts
(calculated
on the shortest terms), credits, allowances or Taxes (including
sales, excise or
other taxes)
that have been or
could be claimed by the Account Debtor or any
other Person.
"Vienna Property"
means that certain real property located at Vienna
Industrial Park, Vienna, Georgia, owned by Eubank Coil Company.
"Walkersville Property" means that certain real property located at
8301 B.
Retreat Road, Walkersville, Maryland, owned by Rotorex Company,
Inc..
1.2.
Accounting Terms.
Except as otherwise
expressly provided herein, all
accounting terms not otherwise defined herein shall have the
meanings assigned
to them in conformity
with GAAP. Financial
statements
and other information
required to be
delivered by Holdings
to Lenders
pursuant to Section
5.1(b),
5.1(c) and 5.1(d) shall be prepared in accordance with GAAP as in effect at the
time of such
preparation
(and delivered together with the reconciliation
statements provided
for in Section 5.1(f), if applicable). Subject to the
foregoing, calculations in connection with the definitions,
covenants and
other
provisions hereof shall utilize accounting principles and policies
in conformity
with those used to prepare the Historical Financial Statements.
1.3.
Interpretation,
etc. Any of the terms
defined herein may, unless the
context otherwise requires, be used in the singular or the plural,
depending on
the reference.
References herein to any Section, Appendix, Schedule or Exhibit
shall be to a Section,
an Appendix, a
Schedule or an Exhibit, as the case may
be, hereof unless otherwise specifically provided. The use herein of the word
"include" or "including", when following any general
statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar
items
or matters, whether or
not non-limiting
language (such as "without limitation"
or "but not limited
to" or words of
similar import) is used with reference
thereto, but rather
shall be deemed to refer to all other items or matters that
fall within the
broadest possible
scope of such
general statement, term or
matter. Unless the
prior written consent
of the Requisite
Lenders is required
hereunder for an amendment, restatement, supplement or other
modification to any
such agreement and such consent is not obtained, references in this
Agreement to
such agreement shall be to such agreement as so amended, restated,
supplemented
or modified.
References
in this Agreement to any statute shall be to such
statute as
amended or modified from time to time and to any successor
legislation thereto, in each case as in effect at the time any such
reference is
operative. The terms
"Lender," "Administrative Agent," "Collateral Agent,"
"Documentation Agent," and "Agent" include, without limitation,
their respective
successors.
SECTION 2.........
REVOLVING LOANS
2.1.
Revolving Loan Commitments.
(a) Revolving Loans.
Subject to the terms and conditions hereof, each
Lender severally
agrees to make,
from time to time
through the Revolving Loan
Maturity Date,
Revolving Loans to Borrowers in an aggregate amount outstanding
at any time not greater than such Lender's Revolving Loan
Commitment.
Borrowers
may not make a Borrowing under the Revolving Loan Commitment on the Closing
Date. Any amount borrowed under this Section 2.1(a) and
subsequently
repaid or
prepaid may be
reborrowed. Subject to
Section 2.13, all amounts owed hereunder
with respect
to the Revolving Loans
32
<PAGE>
shall be paid in full no later than the Revolving Loan Maturity Date. Each
Lender's Revolving
Loan Commitment
shall terminate immediately and without
further action on the
Revolving Loan
Maturity Date. In no
event shall Lenders
have any obligation
to honor a
request for a Revolving Loan if the unpaid
balance of Revolving
Loans outstanding
at such time
(including the
requested
Revolving Loan) would exceed the Borrowing Base.
(b) Overadvances.
If the aggregate Revolving Loans exceed the
Borrowing Base
("Overadvance") or the
aggregate Revolving
Loan Commitments at
any time, the excess amount shall be payable by Borrowers on demand by
Administrative Agent, but all such Revolving Loans shall
nevertheless constitute
Obligations secured by the Collateral and entitled to all benefits
of the Credit
Documents. Unless its
authority has been revoked in writing by Requisite
Lenders,
Administrative Agent
may require Lenders to honor requests for
Overadvance
Loans and to forbear from requiring Borrowers to cure an
Overadvance, (a) when
no other Event of Default is known to Administrative
Agent, as long as (i)
the Overadvance
does not continue for more than 30
consecutive days (and
no Overadvance
may exist for at least
five consecutive
days thereafter before
further Overadvance
Loans are required),
and (ii) the
Overadvance is not known by Administrative Agent to exceed $2,000,000;
and (b)
regardless of whether
an Event of
Default exists, if Administrative Agent
discovers an Overadvance not previously known by it to exist, as long as from
the date of such
discovery the
Overadvance
(i) is not increased
by more than
$1,000,000, and (ii)
does not continue for more than 30 consecutive days;
provided, that in no
event shall
Lenders be required
to honor requests for
Overadvance Loans if
an Overadvance
has existed on more than 90 days in any
consecutive twelve-month period. In no event shall Overadvance
Loans be required
that would cause the
outstanding Revolving
Loans and LC
Obligations to exceed
the aggregate Revolving Loan Commitments. Any funding of an Overadvance Loan
or
sufferance of an
Overadvance shall not
constitute a waiver by
Administrative
Agent or Lenders of
the Event of Default
caused thereby. In no event shall
Borrowers or any other
Obligor be deemed a beneficiary of this Section 2.1(b)
nor authorized to enforce any of its terms.
(c) Protective Advances. Administrative Agent shall be
authorized, in
its discretion,
at any time that a
Default or Event of
Default exists or
any
conditions in
Section 3.2 are not satisfied, to make Base Rate Loans
("Protective
Advances") (a) if Administrative Agent deems such Revolving
Loans
necessary to
preserve or protect any Collateral, or to enhance the
collectibility or
repayment of
Obligations
(other than Bank
Product Debt);
provided that, the
Protective Advances
shall not be outstanding for more than
ninety (90)
consecutive
days after the
initial date of any such Protective
Advances without
the consent of Requisite Lenders; or (b) to pay any other
amounts chargeable to Obligors under any Credit Documents,
including costs, fees
and expenses (other
than costs, fees and
expenses relating to
any Enforcement
Action). All
Protective
Advances shall be Obligations, secured by the
Collateral, and shall
be treated for all
purposes as
Extraordinary
Expenses.
Each Lender shall
participate in each
Protective Advance on
the basis of such
Lender's Pro Rata Share. Requisite Lenders may at any time revoke
Administrative
Agent's authorization
to make further Protective Advances by written notice to
Administrative
Agent. Absent
such
revocation,
Administrative
Agent's
determination that
funding of a
Protective
Advance is
appropriate
shall be
conclusive.
2.2. Borrowing
Mechanics for Revolving Loans.
(a) Funding Notice.
(i) Borrower
Agent shall deliver to Administrative Agent a fully executed
Funding Notice no later than 11:00 a.m. (x) on the Business Day of
the
proposed Borrowing, in the case of Base Rate Loans, and (y) at
least 3
Business Days prior to the date of the proposed Borrowing, in the
case
of Eurodollar Rate Loans. Notices received after 11:00 a.m. shall
be
deemed received on the next Business Day. Each Notice of
Borrowing
shall be irrevocable.
33
<PAGE>
Promptly upon receipt by Administrative Agent of
such Funding Notice, Administrative Agent shall notify each Lender
of
the proposed Borrowing.
(ii)
Unless payment is otherwise timely made by Borrowers, the becoming
due
of any Obligations (whether principal, interest, fees or other
charges,
including Extraordinary Expenses, LC Obligations, Cash Collateral
and
Bank Product Debt) shall be deemed to be a request for Base Rate
Loans
on the due date and in the amount of such Obligations. The proceeds
of
such Revolving Loans shall be disbursed as direct payment of
the
relevant Obligation.
(iii) If
Borrowers establish a controlled disbursement account with
Administrative Agent or any Affiliate of Administrative Agent, then
the
presentation for payment of any check or other item of payment
drawn on
such account at a time when there are insufficient funds to cover
it
shall be deemed to be a request for Base Rate Loans on the date of
such
presentation, in the amount of the check and items presented
for
payment. The proceeds of such Revolving Loans may be disbursed
directly
to the controlled disbursement account or other appropriate
account.
(b) Fundings by Lenders. Each Lender shall make its Revolving Loan,
as
the case may be, available to Administrative Agent not later than
2:00 p.m. (New
York City time) on the date of each proposed Borrowing, by wire
transfer of same
day funds in Dollars,
at the Principal
Office designated by Administrative
Agent. Upon
satisfaction
or waiver of the
conditions precedent
specified in
Section 3.2, Administrative Agent shall make the proceeds of the
Revolving Loans
available to
Borrowers on the date of each proposed Borrowing by causing an
amount of same day funds in Dollars equal to the proceeds of all
such Revolving
Loans received
by Administrative Agent from Lenders to be credited to the
account of Borrowers at the Principal Office designated by
Administrative
Agent
or to such other account as may be designated in writing to
Administrative Agent
by Borrower Agent.
(c) Swingline Loans; Settlement.
(i) Administrative
Agent may,
but shall not be
obligated to,
advance Swingline
Loans to Borrowers
out of Administrative Agent's own
funds, up to an
aggregate outstanding
amount of $4,000,000, unless the
funding is specifically required to be made by all Lenders
hereunder. Each
Swingline Loan shall
constitute a Revolving Loan for all purposes, except
that
payments thereon shall be made to
Administrative
Agent for its own
account. The
obligation
of Borrowers to repay
Swingline Loans shall be
evidenced by the records of Administrative Agent and need not be
evidenced
by
any promissory note.
(ii)
To facilitate administration of the Revolving Loans, Lenders
and
Administrative
Agent agree (which
agreement is solely among them, and
not
for the benefit of or enforceable by Borrowers) that settlement among
them
with respect to
Swingline Loans and
other Revolving
Loans may take
place periodically on a date determined from time to time by
Administrative
Agent, which shall
occur at least once every five Business Days. On each
settlement date,
settlement
shall be made with
each Lender in accordance
with
the Settlement Report
delivered by
Administrative Agent
to Lenders.
Between settlement dates, Administrative Agent may in its
discretion apply
payments on
Revolving Loans to Swingline Loans, regardless of any
designation by
Borrowers or any
provision herein to
the contrary.
Each
Lender's obligation
to make settlements with Administrative Agent is
absolute and unconditional, without offset, counterclaim or
other defense,
and
whether or not the
Revolving Loan
Commitments
have terminated, an
Overadvance exists, or
the conditions in Section 3 are satisfied. If, due
to
an Insolvency Proceeding with respect to any Borrower or otherwise,
any
Swingline Loan may not be settled among Lenders hereunder, then
each Lender
shall be deemed to have purchased from
34
<PAGE>
Administrative Agent a
participation
equal to its Pro Rata
Share in each
unpaid Swingline Loan
and shall transfer the amount of such participation
to
Administrative
Agent, in immediately available funds, within one
Business Day after Administrative Agent's request therefor.
2.3.
Notes. If so requested by any Lender by written
notice to Borrower
Agent (with a copy to Administrative Agent) at least two Business Days
prior to
the Closing Date, or at any time thereafter, Borrowers shall
execute and deliver
to such Lender (and/or, if applicable and if so specified in such
notice, to any
Person who is an
assignee of such
Lender pursuant to Section 10.6) on the
Closing Date (or, if such notice is delivered after the Closing Date,
promptly
after Borrower Agent's
receipt of such notice) a Note or Notes to evidence such
Lender's Revolving Loan.
2.4.
Pro Rata Shares; Availability of Funds.
(a) Pro Rata Shares.
All Revolving Loans shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata
Shares, it being
understood that no
Lender shall be
responsible
for any default by any other
Lender in such other
Lender's obligation
to make a Revolving
Loan requested
hereunder nor shall any Revolving Loan Commitment of any Lender be
increased or
decreased as a result
of a default by any other Lender in such other Lender's
obligation to make a Revolving Loan requested hereunder.
(b) Availability of Funds.
(i) Unless
Administrative Agent
shall have been notified by any
Lender prior to the
date of any proposed
Borrowing that such
Lender does
not
intend to make
available to
Administrative
Agent the amount of
such
Lender's Revolving
Loan requested on such date, Administrative Agent may
assume that such Lender has made such amount available to Administrative
Agent on such date and
Administrative Agent
may, in its sole
discretion,
but
shall not be obligated to, make available to Borrowers a
corresponding
amount on such
date. If such corresponding amount is not in fact made
available to
Administrative
Agent by such Lender,
Administrative
Agent
shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from the date of
such
proposed Borrowing
until the date such
amount is paid to
Administrative
Agent, at the customary rate set by Administrative Agent for the
correction
of
errors among banks for three Business Days and thereafter at the Base
Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall
promptly
notify Borrower
Agent
and Borrowers shall immediately pay such
corresponding
amount to Administrative Agent together with interest
thereon, for each day
from the date of such proposed Borrowing until the
date
such amount is paid to Administrative Agent, at the rate payable
hereunder for Base
Rate Loans. Nothing in
this Section
2.4(b) shall be
deemed to relieve any Lender from its obligation to fulfill its Revolving
Loan
Commitments
hereunder or to
prejudice any rights that Borrowers may
have against any Lender as a result of any default by such Lender
hereunder.
(ii) If a Lender
fails to make any
payment to Administrative
Agent that is required hereunder, Administrative Agent may (but shall not
be
required to), in its discretion, retain payments that would
otherwise be
made
to such defaulting
Lender hereunder, apply the payments to such
Lender's defaulted
obligations
or readvance the funds to Borrowers in
accordance with
this Agreement. The failure of any Lender to fund a
Revolving Loan or to
make a payment in respect of an LC Obligation shall
not
relieve any other Lender of its obligations hereunder, and no Lender
shall be responsible for default by another Lender. Lenders and
Administrative Agent
agree (which agreement
is solely among them, and not
for
the benefit of or
35
<PAGE>
enforceable by
Borrowers)
that, solely for purposes of determining a
defaulting Lender's
right to vote on matters relating to the Credit
Documents and
to share in payments, fees and Collateral proceeds
thereunder, a
defaulting Lender shall not be deemed to be a "Lender" until
all
its defaulted obligations have been cured.
2.5.
Use of Proceeds. The
proceeds of the Revolving Loans shall be applied
by Borrowers
to provide for the ongoing working capital requirements of
Borrowers and for general corporate purposes of Holdings and its
Subsidiaries.
No portion of the proceeds of any Credit Extension shall be used in any manner
that causes or might
cause such Credit
Extension or the
application
of such
proceeds to violate
Regulation T,
Regulation U or Regulation X of the Board of
Governors or any other regulation thereof or to violate the
Exchange Act.
2.6.
Evidence of Debt; Register; Lenders' Books and Records.
(a) Lenders'
Evidence of Debt. Each Lender shall maintain on its
internal records an account or accounts evidencing the Obligations of
Borrowers
to such Lender, including the amounts of the Revolving Loans made
by it and each
repayment and
prepayment in respect
thereof. Any such recordation shall be
conclusive and binding on Borrowers, absent manifest error; provided,
that the
failure to make any such recordation, or any error in such recordation, shall
not affect Borrowers'
Obligations in respect of any applicable Revolving Loans;
and provided further, in the event of any inconsistency between the
Register and
any Lender's records, the recordations in the Register shall
govern.
(b) Register.
Administrative
Agent (or its agent or sub-agent
appointed by it) shall
maintain at its Principal Office a register for the
recordation of the
names and addresses of
Lenders and Revolving
Loans and LC
Obligations of each
Lender from time to
time (the "Register").
The Register
shall be available for
inspection by Borrower Agent or any Lender (with respect
to any entry relating to such Lender's Revolving Loans and LC Obligations) at
any reasonable
time and from time to time upon reasonable prior notice.
Administrative Agent
shall record, or shall cause to be recorded, in the
Register the
Revolving Loans and LC Obligations in accordance with the
provisions of Section 10.6, and each repayment or prepayment in respect
of the
principal amount
of the Revolving Loans and LC Obligations, and any such
recordation shall be conclusive and binding on Borrowers and each
Lender, absent
manifest error; provided, failure to make any such recordation,
or any error in
such recordation,
shall not affect
Borrowers'
Obligations
in respect of any
Revolving Loan or LC Obligation. Borrowers hereby designate Bank of America
to
serve as Borrowers'
agent solely for
purposes of
maintaining the
Register as
provided in this
Section 2.6, and
Borrowers hereby agree
that, to the
extent
Bank of America serves in such capacity, and its officers,
directors, employees,
agents, sub-agents and affiliates shall constitute
"Indemnitees."
2.7.
Interest on Revolving Loans.
(a) Except as otherwise set forth herein, each Revolving Loan shall
bear interest on the unpaid principal amount thereof from the
date made through
repayment (whether by acceleration or otherwise) thereof as
follows:
(i) if a Base Rate
Loan, at the Base Rate
plus 1.00% per annum;
or
(ii) if a Eurodollar
Rate Loan, at the Adjusted Eurodollar Rate
plus
2.00% per annum;
(b) The basis for determining the rate of interest with respect to
any
Revolving Loan,
and the Interest
Period with respect to
any Eurodollar
Rate
Loan, shall be
selected by Borrowers
36
<PAGE>
and notified to
Administrative
Agent and Lenders
pursuant to the
applicable
Funding Notice or Conversion/Continuation Notice, as the case may be;
provided,
until the date that
Administrative
Agent notifies Borrower Agent that the
primary syndication of the Revolving Loans has been completed,
as determined by
Administrative Agent,
the Revolving Loans shall be maintained as either (1)
Eurodollar Rate Loans
having an Interest
Period of no longer than one month or
(2) Base Rate Loans. If on any day a Revolving Loan is outstanding
with respect
to which a Funding
Notice or a Conversion/Continuation
Notice has not been
delivered to Administrative Agent in accordance with the terms
hereof specifying
the applicable basis
for determining
the rate of interest,
then for that day
such Revolving Loan shall be a Base Rate Loan.
(c) In connection with
Eurodollar
Rate Loans there shall
be no more
than seven (7) Interest Periods outstanding at any time. In the
event Borrowers
fail to specify
between a Base Rate Loan or a Eurodollar Rate Loan in the
applicable Funding Notice or Conversion/Continuation Notice, such
Revolving Loan
(if outstanding as a Eurodollar Rate Loan) will be automatically
converted into
a Base Rate Loan on the last day of the then-current Interest Period for such
Revolving Loan (or if outstanding as a Base Rate Loan will remain
as, or (if not
then outstanding)
will be made as, a
Base Rate Loan). In
the event
Borrowers
fail to specify an Interest Period for any Eurodollar Rate Loan in the
applicable Funding Notice or Conversion/Continuation Notice, Borrowers shall be
deemed to have selected an Interest Period of one month. As soon as
practicable
after 10:00 a.m. (New York City time) on each Interest Rate
Determination
Date,
Administrative Agent shall determine (which determination shall,
absent manifest
error, be final, conclusive and binding upon all parties) the
interest rate that
shall apply to the
Eurodollar
Rate Loans for which
an interest
rate is then
being determined
for the applicable Interest Period and shall promptly give
notice thereof (in
writing or by
telephone confirmed
in writing) to
Borrower
Agent and each Lender.
(d) Interest payable
pursuant to Section 2.7(a) shall be computed (i)
in the case of Base Rate Loans on the basis of a 365-day or 366-day
year, as the
case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a
360-day year,
in each case for the
actual number of days elapsed in the period
during which it accrues. In computing interest on any Revolving Loan,
the date
of the making of such
Revolving Loan or the first day of an
Interest Period
applicable to such
Revolving Loan or, with respect to a Base Rate Loan
being
converted from a Eurodollar Rate Loan, the date of conversion of
such Eurodollar
Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the
date of payment of such Revolving Loan or the expiration date of an Interest
Period applicable to
such Revolving
Loan or, with respect
to a Base Rate Loan
being converted to a
Eurodollar Rate Loan,
the date of conversion of such Base
Rate Loan to such
Eurodollar Rate Loan,
as the case may be, shall be excluded;
provided, if a Revolving Loan is repaid on the same day on which it
is made, one
day's interest shall be paid on that Revolving Loan.
(e) Except as otherwise set forth herein, interest on each Revolving
Loan (i) shall accrue
on a daily basis and
shall be payable in arrears on each
Interest Payment
Date with respect to interest accrued on and to each such
payment date; (ii) shall accrue on a daily basis and shall be
payable in arrears
upon any prepayment of the Revolving Loans, whether voluntary or mandatory,
to
the extent accrued on
the amount being
prepaid; and (iii) shall accrue on a
daily basis and shall be payable in arrears at maturity of the
Revolving Loans,
including final maturity of the Revolving Loans; provided, however,
with respect
to any voluntary
prepayment of a Base Rate Loan, accrued interest shall instead
be payable on the applicable Interest Payment Date.
(f) For purposes of disclosure pursuant to the Interest Act
(Canada),
the annual rates of
interest or fees to which the rates of
interest or fees
provided in this Agreement and the other Credit Documents (and stated herein
or
therein, as
applicable,
to be computed on the basis of a period
of time
37
<PAGE>
less than a calendar year) are equivalent are the rates so
determined multiplied
by the actual number of days in the applicable calendar year and divided by
the
number of days in such period of time.
2.8.
Conversion/Continuation.
(a) Subject
to Section 2.18 and so long as no
Default or Event
of
Default shall have
occurred and then be
continuing, Borrowers
shall have the
option:
(i) to convert at any time all or any part of any Revolving
Loan
equal to $1,000,000 and integral multiples of $1,000,000 in excess
of that
amount from one Type of Revolving Loan to another Type of Revolving
Loan;
provided, a Eurodollar Rate Loan may only be converted on the
expiration of
the
Interest Period applicable to such Eurodollar Rate Loan unless
Borrowers shall pay
all amounts due under Section 2.18 in connection with
any
such conversion; or
(ii) upon the expiration of any Interest Period applicable to
any
Eurodollar Rate Loan, to continue all or any portion of such
Revolving Loan
equal to $1,000,000 and integral multiples of $1,000,000 in excess
of that
amount as a Eurodollar Rate Loan.
(b) Borrower Agent shall deliver a Conversion/Continuation
Notice to
Administrative Agent
no later than 11:00 a.m. (New York City time) at least one
Business Day in
advance of the proposed conversion date (in the case of a
conversion to a Base
Rate Loan) and at least three Business Days in advance of
the proposed
conversion/continuation date (in the case of a conversion to, or
a
continuation of, a Eurodollar Rate Loan). Except as otherwise
provided herein, a
Conversion/Continuation Notice for conversion to, or continuation of, any
Eurodollar Rate
Loans (or telephonic notice in lieu thereof) shall be
irrevocable, and Borrowers shall be bound to effect a conversion or
continuation
in accordance therewith.
2.9. Default Interest. Upon the occurrence and during the
continuance of
any Event of Default,
the principal amount
of all Revolving Loans
outstanding
and, to the extent
permitted by
applicable law, any
interest payments on
the
Revolving Loans or any
fees or other amounts owed hereunder, shall thereafter
bear interest
(including
post-petition interest
in any proceeding
under the
Bankruptcy Code or other applicable bankruptcy laws) payable on
demand at a rate
that is 2% per annum in excess of the interest rate otherwise
payable hereunder
with respect to the applicable Revolving Loans (or, in the case of
any such fees
and other amounts,
at a rate which is 2% per annum in excess of
the interest
rate otherwise payable hereunder for Base Rate Loans); provided, in the case of
Eurodollar Rate Loans,
upon the expiration of
the Interest Period in effect at
the time any such increase in interest rate is effective
such Eurodollar Rate
Loans shall thereupon
become Base Rate Loans and shall thereafter bear interest
payable upon
demand at a rate which
is 2% per annum in excess of the interest
rate otherwise payable
hereunder for Base Rate Loans. Payment or acceptance of
the increased
rates of interest provided for in this Section 2.9 is not a
permitted alternative to timely payment and shall not constitute a
waiver of any
Event of Default or
otherwise prejudice
or limit any
rights or remedies of
Administrative Agent or any Lender.
2.10. Fees.
(a) Unused Line Fee. Borrowers shall pay to Administrative
Agent, for
the benefit of Lenders in proportion to their respective Pro Rata Shares, a
fee
equal to 0.375%
per annum times the amount by which the Revolving Loan
Commitments exceed the
average daily balance of Revolving Loans and stated
amount of Letters
of Credit during any month. Such fee shall be payable in
arrears, on
38
<PAGE>
the first day of each month and on the Revolving Loan Maturity Date. The unused
line fee shall be computed for the actual days elapsed based on a year of 360
days.
(b) Letter
of Credit Facility Fees. Borrowers shall pay (a) to
Administrative Agent,
for the benefit of Lenders in proportion to their
respective Pro Rata Shares, a fee equal to 2.00% times the average
daily maximum
aggregate amount
available to be drawn
under all Letters of Credit, which fee
shall be payable quarterly in arrears, on the first day of each Fiscal
Quarter;
(b) to Administrative
Agent, for its own account, a fronting fee equal to 0.25%
of the stated amount
of each Letter of Credit, which fee shall be payable
upon
issuance of the Letter of Credit and on each anniversary date of such
issuance,
and shall be payable on any increase in stated amount made between any such
dates; and (c) to
Issuing Bank,
for its own account,
all customary charges
associated with
the issuance, amending, negotiating, payment, processing,
transfer and administration of Letters of Credit, which charges
shall be paid as
and when incurred.
During an Event of Default, the fee payable under clause (a)
shall be increased
by 2.00% per
annum. The Letter of Credit fees shall be
computed for the actual days elapsed based on a year of 360
days.
2.11. Letter of Credit Facility.
(a) Issuance
of Letters of Credit. Issuing Bank agrees to issue
Letters of Credit from
time to time until 20 days prior to the Revolving Loan
Maturity Date, on the terms set forth herein, including the
following:
(i) Borrowers
acknowledge that
Issuing Bank's
willingness
to
issue any Letter of Credit is conditioned upon Issuing Bank's
receipt of an
LC
Application with respect to the requested Letter of Credit, as well as
such
other instruments
and agreements as Issuing Bank may customarily
require for
issuance of a letter of credit of similar
type and amount.
Issuing Bank shall have no obligation to issue any Letter of
Credit unless
(i)
Issuing Bank receives an LC Request and LC Application at least three
Business Days prior to
the requested
date of issuance;
and (ii) each LC
Condition is
satisfied. If Issuing
Bank receives
written notice from a
Lender at least one
Business Day before issuance of a Letter of Credit that
any
LC Condition
has not been satisfied, Issuing Bank shall have no
obligation to issue
the requested
Letter of Credit (or
any other) until
such
notice is withdrawn in writing by that Lender or until Requisite
Lenders have waived such condition in accordance with this
Agreement. Prior
to
receipt of any such
notice, Issuing Bank shall not be deemed to
have
knowledge of any failure of LC Conditions.
(ii) Letters of Credit may be requested by a Borrower only (i)
to
support obligations
of such Borrower
incurred in the
ordinary course of
business; or (ii) for
other purposes as
Administrative Agent
and Lenders
may
approve from time to
time in writing. The
renewal or extension of any
Letter of Credit
shall be treated as the issuance of a new Letter of
Credit, except that
delivery of a new LC Application shall be required at
the discretion of
Issuing Bank.
(iii) Borrowers
assume all risks of the acts, omissions or
misuses of any Letter
of Credit by the
beneficiary. In
connection
with
issuance of any Letter of Credit, none of Administrative Agent,
Collateral
Agent, Issuing Bank or
any Lender shall be responsible for the existence,
character, quality,
quantity, condition, packing, value or delivery of any
goods purported to be
represented by any
Documents;
any differences or
variation in the character, quality, quantity, condition, packing,
value or
delivery of any goods
from that expressed in any Documents; the form,
validity, sufficiency,
accuracy, genuineness or legal effect of any
Documents or of any endorsements thereon; the time, place, manner
or order
in
which shipment of goods is made; partial or incomplete shipment of, or
failure to ship, any
goods referred to in a
39
<PAGE>
Letter of Credit or Documents; any deviation from instructions, delay,
default or fraud by any shipper or other Person in connection with any
goods
