-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QhBG0NzLNNCnkA+k+PB5PhzDnbsJcmbr2OveaVFRxjINhQnlDkWIaK67DqLQYqxx +0bsu03zbyTh+8br6ABMbw== 0000950144-97-003879.txt : 19970409 0000950144-97-003879.hdr.sgml : 19970409 ACCESSION NUMBER: 0000950144-97-003879 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970408 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINDMERE DURABLE HOLDINGS INC CENTRAL INDEX KEY: 0000217084 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 591028301 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10177 FILM NUMBER: 97576189 BUSINESS ADDRESS: STREET 1: 5980 MIAMI LAKES DR CITY: MIAMI LAKES STATE: FL ZIP: 33014 BUSINESS PHONE: 3053622611 MAIL ADDRESS: STREET 1: 5980 MIAMI LAKES DRIVE CITY: MIAMI LAKES STATE: FL ZIP: 33014 FORMER COMPANY: FORMER CONFORMED NAME: WINDMERE CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SAVE WAY INDUSTRIES INC DATE OF NAME CHANGE: 19830815 FORMER COMPANY: FORMER CONFORMED NAME: SAVE WAY BARBER & BEAUTY SUPPLIES INC DATE OF NAME CHANGE: 19770626 10-K/A 1 WINDMERE-DURABLE HOLDINGS, INC. 10-K/A 12/31/96 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (AMENDMENT NO. 1) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-10177 WINDMERE-DURABLE HOLDINGS, INC. (Exact name of Registrant as specified in its charter) Florida 59-1028301 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 5980 Miami Lakes Drive, Miami Lakes, Florida 33014 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (305) 362-2611 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - ------------------- ----------------------------------------- Common Stock $.10 Par Value New York Stock Exchange Special Preferred Stock Rights New York Stock Exchange Common Stock Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements 1 2 for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of March 24, 1997, the aggregate market value of the voting stock (based on the closing price as reported by NYSE of $14.375) held by non-affiliates of the Registrant was approximately $213,387,800. APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date. 17,475,038 Shares of Common Stock (as of the close of business on March 24, 1997) 2 3 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)1. FINANCIAL STATEMENTS 26 4 The following consolidated financial statements of Windmere- Durable Holdings, Inc. and subsidiaries are incorporated by reference in PART II, ITEM 8: AUDITOR'S REPORT Exhibit 13 CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1996 AND 1995 Exhibit 13 CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 Exhibit 13 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - THREE YEARS ENDED DECEMBER 31, 1996 Exhibit 13 CONSOLIDATED STATEMENTS OF CASH FLOWS - YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 Exhibit 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Exhibit 13 2. FINANCIAL STATEMENT SCHEDULES AUDITOR'S REPORT SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES - YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 Individual financial statements of the Company have been omitted since consolidated financial statements have been presented, and all subsidiaries included in the consolidated financial statements are wholly-owned. All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements or the notes thereto. 27 5 3. EXHIBITS (3) Articles of Incorporation and By-Laws. 3.1 Amended and Restated Articles of Incorporation of the Company filed with the Florida Secretary of State on May 17, 1984. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1984. 3.2 Articles of Amendment to the Articles of Incorporation of the Company filed with the Florida Secretary of State on May 16, 1986. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1986. 3.3 Articles of Amendment to the Articles of Incorporation of the Company filed with the Florida Secretary of State on June 23, 1986. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 3.4 By-Laws as amended through October 11, 1991. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 3.5 Amendment to October 11, 1991 By-Laws. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 3.6 Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company filed with the Florida Secretary of State on June 21, 1996. Filed herewith. (10) Material Contracts EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS 10.1 Employment Agreement dated as of January 27, 1983, between Belvin Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1982. 10.2 Employment Agreement, First Amendment, dated as of February 27, 1987, between Belvin Friedson and the Company. Incorporated by 28 6 reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1986. 10.3 Employment Agreement, Second Amendment, dated as of December 16, 1992, between Belvin Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.4 Employment Agreements dated as of July 18, 1983, between David M. Friedson, Barbara Friedson Garrett and Arnold Thaler, respectively, and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1983. 10.5 Employment Agreement, First Amendment, dated as of January 17, 1985, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1984. 10.6 Employment Agreement, Second Amendment and Nonqualified Stock Option, dated as of September 30, 1985, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1985. 10.7 Employment Agreement (Third Amendment) and Nonqualified Stock Option (First Amendment) dated as of October 28, 1987, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.8 Employment Agreement (Fourth Amendment) and Nonqualified Stock Option (Second Amendment) dated as of October 26, 1987, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.9 Employment Agreement (Fifth Amendment) dated as of December 16, 1992, between David M. Friedson and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 29 7 10.10 Nonqualified Stock Option dated as of January 5, 1987, granted by the Company to Barbara Friedson Garrett. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1986. 10.11 Employment Agreement (First Amendment) and Nonqualified Stock Option (First Amendment) dated as of October 26, 1987, between Barbara Friedson Garrett and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.12 Employment Agreement (Second Amendment) and Nonqualified Stock Option (Second Amendment) dated as of October 26, 1987 between Barbara Friedson Garrett and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.13 Employment Agreement (Third Amendment) dated as of December 16, 1992, between Barbara Friedson Garrett and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.14 Nonqualified Stock Option dated as of January 5, 1987, granted by the Company to Arnold Thaler. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1986. 10.15 Employment Agreement (First Amendment) and Nonqualified Stock Option (First Amendment) dated as of October 26, 1987 between Arnold Thaler and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.16 Employment Agreement (Second Amendment) and Nonqualified Stock Option (Second Amendment) dated as of October 26, 1987 between Arnold Thaler and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.17 Employment Agreement (Third Amendment) dated as of December 16, 1992, between Arnold Thaler and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 30 8 10.18 Employment Agreement dated May 31, 1987, between Robert Gorman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.19 Employment Agreement (First Amendment) dated as of December 16, 1992, between Robert Gorman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.20 1982 Employees Incentive Stock Option Plan. Incorporated by reference to Exhibit 4 to Post-Effective Amendment No. 1 to the Company's Form S-8 Registration Statement No. 2-92540. 10.21 Amendment to 1982 Employees Incentive Stock Option Plan. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.22 1992 Employees Incentive Stock Option Plan. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.23 Employment Agreement dated as of October 26, 1987 between Burton A. Honig and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987. 10.24 Employment Agreement (First Amendment) dated as of December 16, 1992, between Burton A. Honig and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.25 Consulting Agreement dated January 1, 1989 between Mr. Lai Kin, Chairman of Durable, and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988. 10.26 Employment Agreement dated January 3, 1989, between Harry Schulman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988. 31 9 10.27 Employment Agreement (First Amendment) dated as of June 4, 1990, between Harry Schulman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.28 Employment Agreement (Second Amendment) dated as of December 16, 1992, between Harry Schulman and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.29 1988 Director Stock Option Plan. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988. 10.30 1989 Employees 401(k) Profit Sharing Plan and Trust. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989. 10.31 Consulting Agreement, dated March 30, 1987, between Paragon Industries, Paragon Sales, Inc., William Weber, Jacqueline K. Weber and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.32 Amendment to Consulting Agreement, dated May 29, 1990, between Paragon Industries, Paragon Sales, Inc., William Weber, Jacqueline K. Weber and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.33 Second Amended and Restated Employment Agreement dated January 1, 1991, between David O'Neill and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.34 Second Amended and Restated Employment Agreement (First Amendment) dated December 16, 1992, between David O'Neill and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 31 10 OTHER MATERIAL CONTRACTS 10.35 Installment Purchase Contract dated as of May 1, 1985, between the Dade County Industrial Development Authority and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1985. 10.36 Asset Purchase Agreement dated September 30, 1988 between Sally Beauty Company, Alberto-Culver Company, the Company and certain of the Company's affiliates. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988. 10.37 Joint Venture Agreement, dated March 30, 1987, between Paragon Sales, Inc., William Weber, Jacqueline K. Weber and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.38 Amendment to Joint Venture Agreement, dated May 29, 1990, between Paragon Sales, Inc., William Weber, Jacqueline K. Weber and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.39 Exclusive Sales Agreement dated May 29, 1992 among the Company, American International Industries and Zvi and Betty Ryzman. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.40 Settlement Agreement dated May 6, 1992 between North American Philips Corporation and the Company. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.41 Letter of Credit Agreement dated July 31, 1992 between NationsBank and the Company. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.42 Agreement dated May 28, 1991, between Xingiao Economic Development Corporation and Durable. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 33 11 10.43 Agreement dated May 28, 1991, between Bogang Economic Development Company and Durable. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.44 Agreement dated May 28, 1991, between Wanfeng Economic Development Corporation and Durable. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.45 Warrant Agreement dated October 1, 1992, between American Stock Transfer and Trust Company and the Company. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.46 Stock Purchase Agreement dated May 29, 1992 between Glamour Industries, Inc. and the Company. Incorporated by reference to the Company's Form S-2 Registration Statement No. 33-51776. 10.47 Trademark Licensing Agreement dated January 11, 1994, between Helene Curtis, Inc. and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.48 Stock Acquisition Agreement dated April 1, 1994, between Durable, PPC Industries 1980 Limited, Ourimbah Investment, Limited and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 10.49 1995 Common Stock Purchase Rights Agreement dated March 6, 1995 between American Stock Transfer and Trust Company and the Company. Incorporated by reference to the Company's Form 8-A Registration Statement filed March 7, 1995. 10.50 Facility Letter dated June 3, 1995, from the Bank of East Asia, Limited to Durable, Durable Electric Limited and PPC Industries 1980 Limited. Incorporated by reference to the Company's Form 10-Q dated June 30, 1995. 10.51 Amended and Restated Letter Agreement dated July 28, 1995, between NationsBank and the Company. Incorporated by reference to the Company's Form 10-Q dated June 30, 1995. 34 12 10.52 Credit Agreement dated October 11, 1996, between Windmere Corporation, NationsBank National Association (South) and National Bank of Canada. Filed herewith. 10.53 Amendment No. 1 to Amended and Restated Letter Agreement, dated March 1, 1996, between NationsBank and the Company. Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1995. 10.54 Amendment Agreement No. 1 to the Credit Agreement (October 11, 1996) dated January 31, 1997. Previously filed in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. (13) Annual Report to Security Holders for the year ended December 31, 1996. Previously filed in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. (21) Subsidiaries of the Registrant. Previously filed in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. (23) Consents of experts and counsel. Filed herewith. (b) REPORTS ON FORM 8-K None. 35 13 AUDITOR'S CONSENT We have issued our report dated February 7, 1997, accompanying the consolidated financial statements and schedules incorporated by reference in the Annual Report of Windmere-Durable Holdings, Inc. on Form 10-K for the year ended December 31, 1996. We hereby consent to the incorporation by reference of the aforementioned report in the Registration Statements of Windmere-Durable Holdings, Inc. on Form S-8 (File No. 33-7681, effective September 30, 1986), Form S-8 (File No. 33-36424, effective August 17, 1990), Form S-2 (File No. 33-51776, effective January 19, 1993), and on Form S-8 (File No. 33-58574, effective February 22, 1993). GRANT THORNTON LLP Miami, Florida April 7, 1997 39 14 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WINDMERE-DURABLE HOLDINGS, INC. (Registrant) BY: /s/ Harry D. Schulman DATE: 4-7-97 --------------------------------- ------------------------ Harry D. Schulman Senior Vice President-Finance and Administration and Chief Financial Officer 40 EX-10.52 2 CREDIT AGREEMENT 10/11/96 1 --------------------------------------------------------------- CREDIT AGREEMENT by and among WINDMERE CORPORATION as Borrower, NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) as Agent and as Lender, NATIONAL BANK OF CANADA, as Lender and THE OTHER LENDERS PARTY HERETO FROM TIME TO TIME October 11, 1996 --------------------------------------------------------------- 2 TABLE OF CONTENTS
Page ARTICLE I Definitions and Terms.................................................. 2 1.1. Definitions............................................................................... 2 1.2. Rules of Interpretation...................................................................17 ARTICLE II The Revolving Credit Facility.........................................19 2.1. Revolving Loans...........................................................................19 2.2. Payment of Interest.......................................................................21 2.3. Payment of Principal......................................................................21 2.4. Manner of Payment.........................................................................22 2.5. Notes.....................................................................................22 2.6. Pro Rata Payments.........................................................................22 2.7. Reductions................................................................................23 2.8. Conversions and Elections of Subsequent Interest Periods..................................23 2.9. Increase and Decrease in Amounts..........................................................24 2.10. Unused Fee................................................................................24 2.11. Deficiency Advances.......................................................................24 2.12. Use of Proceeds...........................................................................24 2.13. Extension of Stated Termination Date......................................................24 ARTICLE III Letters of Credit....................................................26 3.1. Letters of Credit.........................................................................26 3.2. Reimbursement.............................................................................26 3.3. Letter of Credit Facility Fees............................................................29 3.4. Administrative Fees.......................................................................29 ARTICLE IV Security..............................................................31 4.1. Security..................................................................................31 4.2. Further Assurances........................................................................31 4.3. Information Regarding Collateral..........................................................31 ARTICLE V Yield Protection and Illegality........................................32 5.1. Additional Costs..........................................................................32 5.2. Suspension of Loans.......................................................................33 5.3. Illegality................................................................................34 5.4. Compensation..............................................................................34 5.5. Alternate Loan and Lender.................................................................35 5.6. Taxes.....................................................................................35 ARTICLE VI Conditions to Making Loans and Issuing Letters of Credit..............37 6.1. Conditions of Initial Advance.............................................................37 6.2. Conditions of Loans and Letter of Credit..................................................39
3 ARTICLE VII Representations and Warranties.......................................41 7.1. Organization and Authority................................................................41 7.2. Loan Documents............................................................................41 7.3. Solvency..................................................................................42 7.4. Subsidiaries and Stockholders.............................................................42 7.5. Ownership Interests.......................................................................42 7.6. Financial Condition.......................................................................42 7.7. Title to Properties.......................................................................43 7.8. Taxes.....................................................................................43 7.9. Other Agreements..........................................................................43 7.10. Litigation................................................................................44 7.11. Margin Stock..............................................................................44 7.12. Investment Company........................................................................44 7.13. Patents, Etc..............................................................................44 7.14. No Untrue Statement.......................................................................44 7.15. No Consents, Etc..........................................................................45 7.16. Employee Benefit Plans....................................................................45 7.17. No Default................................................................................46 7.18. Hazardous Materials.......................................................................46 7.19. Employment Matters........................................................................47 7.20. RICO......................................................................................47 ARTICLE VIII Affirmative Covenants...............................................48 8.1. Financial Reports, Etc....................................................................48 8.2. Maintain Properties.......................................................................49 8.3. Existence, Qualification, Etc.............................................................49 8.4. Regulations and Taxes.....................................................................49 8.5. Insurance.................................................................................49 8.6. True Books................................................................................49 8.7. Right of Inspection.......................................................................50 8.8. Observe all Laws..........................................................................50 8.9. Covenants Extending to Other Persons......................................................50 8.10. Officer's Knowledge of Default............................................................50 8.11. New Subsidiaries..........................................................................50 8.12. Financial Covenants.......................................................................51 ARTICLE IX Negative Covenants....................................................52 9.1. Negative Covenants........................................................................52 ARTICLE X Events of Default and Acceleration.....................................54 10.1. Events of Default.........................................................................54 10.2. Agent to Act..............................................................................57 10.3. Cumulative Rights.........................................................................57 10.4. No Waiver.................................................................................57 10.5. Allocation of Proceeds....................................................................57
4 ARTICLE XI The Agent.............................................................59 11.1. Appointment...............................................................................59 11.2. Attorneys-in-fact.........................................................................59 11.3. Limitation on Liability...................................................................59 11.4. Reliance..................................................................................59 11.5. Notice of Default.........................................................................60 11.6. No Representations........................................................................60 11.7. Indemnification...........................................................................61 11.8. Lender....................................................................................61 11.9. Resignation...............................................................................61 11.10. Sharing of Payments, etc..................................................................62 ARTICLE XII Miscellaneous........................................................63 12.1. Assignments and Participations............................................................63 12.2. Notices...................................................................................64 12.3. Setoff....................................................................................66 12.4. Survival..................................................................................66 12.5. Expenses..................................................................................67 12.6. Amendments................................................................................67 12.7. Counterparts..............................................................................68 12.8. Termination...............................................................................68 12.9. Indemnification; Limitation of Liability..................................................68 12.10. Severability..............................................................................69 12.11. Entire Agreement..........................................................................69 12.12. Agreement Controls........................................................................69 12.13. Usury Savings Clause......................................................................70 12.14. Governing Law; Waiver of Jury Trial.......................................................70 EXHIBIT A Applicable Commitment Percentages........................................................A-1 EXHIBIT B Form of Assignment and Acceptance........................................................B-1 EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative...........................................................................C-1 EXHIBIT D Form of Borrowing Notice.................................................................D-1 EXHIBIT E Form of Interest Rate Selection Notice...................................................E-1 EXHIBIT F Form of Note.............................................................................F-1 EXHIBIT G Form of Opinion of Borrower's Counsel....................................................G-1 EXHIBIT H Compliance Certificate...................................................................H-1 EXHIBIT I Form of Borrowing Base Certificate.......................................................I-1 EXHIBIT J Guaranty and Suretyship Agreement........................................................J-1 EXHIBIT K Surety Agreement - Accounts and Inventory................................................K-1 Schedule 4.3 Information Regarding Collateral.........................................................S-1 Schedule 7.4 Subsidiaries and Investments in Other Persons............................................S-2 Schedule 7.6 Indebtedness.............................................................................S-3 Schedule 7.7 Liens....................................................................................S-4 Schedule 7.8 Tax Matters..............................................................................S-5 Schedule 7.10 Litigation...............................................................................S-6
5 CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of October 11, 1996 (the "Agreement"), is made by and among WINDMERE CORPORATION, a Florida corporation having its principal place of business in Miami Lakes, Florida (the "Borrower"), NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association organized and existing under the laws of the United States, in its capacity as a Lender ("NationsBank"), National Bank of Canada and each other financial institution executing and delivering a signature page hereto and each other financial institution which may hereafter execute and deliver an instrument of assignment with respect to this Agreement pursuant to Section 12.1 (hereinafter such financial institutions may be referred to individually as a "Lender" or collectively as the "Lenders"), and NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association organized and existing under the laws of the United States, in its capacity as agent for the Lenders (in such capacity, and together with any successor agent appointed in accordance with the terms of Section 11.9, the "Agent"); W I T N E S S E T H: WHEREAS, the Borrower has requested that the Lenders make available to the Borrower a revolving credit facility of up to $30,000,000, the proceeds of which are to be used for general corporate purposes, including capital expenditures and the funding of Borrower's 50% or more owned joint ventures, and which shall include a letter of credit facility of up to $15,000,000 for the issuance of standby and documentary letters of credit; and WHEREAS, the Lenders are willing to make such revolving credit and letter of credit facilities available to the Borrower upon the terms and conditions set forth herein; NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as follows: 6 ARTICLE I Definitions and Terms I.1. Definitions. For the purposes of this Agreement, in addition to the definitions set forth above, the following terms shall have the respective meanings set forth below: "Acquisition" means the acquisition of (i) a controlling equity interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such equity interest or upon exercise of an option or warrant for, or conversion of securities into, such equity interest, or (ii) assets of another Person which constitute any material part of the assets of such Person or of a line or lines of business conducted by such Person. "Advance" means a borrowing under the Revolving Credit Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan. "Applicable Commitment Percentage" means, with respect to each Lender at any time, that percentage of the Total Revolving Credit Commitment set forth opposite the name of such Lender in Exhibit A; provided, however, that the Applicable Commitment Percentage of each Lender shall be increased or decreased to reflect any assignments to or by such Lender effected in accordance with Section 12.1. "Applicable Margin" means 1.50%. "Applicable Unused Fee" means 37.50 basis points. "Applications and Agreements for Letters of Credit" means, collectively, the Applications and Agreements for Letters of Credit, or similar documentation, executed by the Borrower from time to time and delivered to the Issuing Bank to support the issuance of Letters of Credit. "Assignment and Acceptance" shall mean an Assignment and Acceptance in the form of Exhibit B (with blanks appropriately filled in) delivered to the Agent in connection with an assignment of a Lender's interest under this Agreement pursuant to Section 12.1. "Authorized Representative" means any of the President or any Vice President of the Borrower or, with respect to financial matters, the chief financial officer of the Borrower, or any other Person expressly designated by the Board of Directors of the Borrower (or the appropriate committee thereof) as an Authorized Representative of the Borrower, as set forth from time to time in a certificate in the form of Exhibit C. 2 7 "Base Rate" means the per annum rate of interest equal to the greater of (i) the Prime Rate or (ii) the Federal Funds Effective Rate plus one-half of one percent (.50%). Any change in the Base Rate resulting from a change in the Prime Rate or the Federal Funds Effective Rate shall become effective as of 12:01 A.M. of the Business Day on which each such change occurs. The Base Rate is a reference rate used by Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit to any debtor. "Base Rate Loan" means a Loan for which the rate of interest is determined by reference to the Base Rate. "Base Rate Refunding Loan" means a Base Rate Loan made to satisfy Reimbursement Obligations arising from a drawing under a Letter of Credit. "Board" means the Board of Governors of the Federal Reserve System (or any successor body). "Borrower's Account" means a demand deposit account with the Agent, which may be maintained at one or more offices of the Agent or an agent of the Agent. "Borrowing Notice" means the notice delivered by an Authorized Representative in connection with an Advance under the Revolving Credit Facility, in the form of Exhibit D. "Borrowing Base" means, as of the date of determination thereof, (i) Eligible Receivables multiplied by 80% plus (ii) Eligible Inventory multiplied by 40% (the "Eligible Inventory Amount") provided that the Eligible Inventory Amount shall not exceed $10,000,000. "Borrowing Base Certificate" means a certificate of an Authorized Representative in the form attached hereto as Exhibit I. "Business Day" means, (i) with respect to any Base Rate Loan, any day which is not a Saturday, Sunday or a day on which banks in the States of New York and North Carolina are authorized or obligated by law, executive order or governmental decree to be closed and, (ii) with respect to any Eurodollar Rate Loan, any day which is a Business Day, as described above, and on which the relevant international financial markets are open for the transaction of business contemplated by this Agreement in London, England, New York, New York and Charlotte, North Carolina. "Capital Leases" means all leases which have been or should be capitalized in accordance with GAAP as in effect from time to time including Statement No. 13 of the Financial Accounting Standards Board and any successor thereof. 3 8 "Closing Date" means the date as of which this Agreement is executed by the Borrower, the Lenders and the Agent and on which the conditions set forth in Section 6.1 have been satisfied. "Code" means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. "Collateral" as defined under any Security Instrument. "Consistent Basis" in reference to the application of GAAP means the accounting principles observed in the period referred to are comparable in all material respects to those applied in the preparation of the audited financial statements of the Borrower referred to in Section 7.6(a). "Consolidated Interest Coverage Ratio" means, with respect to the Parent and its Subsidiaries, for the period of four consecutive fiscal quarters ending as of the date of determination, the ratio of (i) Consolidated Net Income plus Consolidated Interest Expense and income taxes to (ii) Consolidated Interest Expense. "Consolidated Interest Expense" means, with respect to any period of computation thereof, the gross interest expense of the Parent and its Subsidiaries, including without limitation (i) the amortization of debt discounts, (ii) the amortization of all fees payable in connection with the incurrence of Indebtedness to the extent included in interest expense, and (iii) the portion of any liabilities incurred in connection with Capital Leases allocable to interest expense, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Consolidated Net Income" means the gross revenues of the Parent and its Subsidiaries less all operating and non-operating expenses of the Parent and its Subsidiaries including taxes on income, all determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis; but excluding (i) gains and losses on the sale, conversion or other disposition of capital assets, (ii) gains and losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of the Parent or its Subsidiaries, (iii) gains and losses on the collection of proceeds of life insurance policies, (iv) any write-up of any asset, and (v) any other gain or credit or loss of an extraordinary nature as determined in accordance with GAAP applied on a Consistent Basis. "Consolidated Tangible Net Worth" means the total of Parent's and its Subsidiaries' shareholder equity as determined in accordance with GAAP, minus the sum of the following, (i) the book value of all assets as would be treated as intangible assets under GAAP and (ii) any prepaid advertising credits. "Consolidated Total Assets" means, as of any date on which the amount thereof 4 9 is to be determined, the net book value of all assets of the Parent and its Subsidiaries as determined on a consolidated basis in accordance with GAAP applied on a Consistent Basis. "Contingent Obligation" of any Person means all contingent liabilities required (or which, upon the creation or incurring thereof, would be required) to be included in the financial statements (including footnotes) of such Person in accordance with GAAP applied on a Consistent Basis, including Statement No. 5 of the Financial Accounting Standards Board, and any obligation of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including obligations of such Person however incurred: (1) to purchase such Indebtedness or other obligation or any property or assets constituting security therefor; (2) to advance or supply funds in any manner (i) for the purchase or payment of such Indebtedness or other obligation, or (ii) to maintain a minimum working capital, net worth or other balance sheet condition or any income statement condition of the primary obligor; (3) to grant or convey any lien, security interest, pledge, charge or other encumbrance on any property or assets of such Person to secure payment of such Indebtedness or other obligation; (4) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner or holder of such Indebtedness or obligation of the ability of the primary obligor to make payment of such Indebtedness or other obligation; or (5) otherwise to assure the owner of the Indebtedness or such obligation of the primary obligor against loss in respect thereof. Contingent Obligations shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represent the amount which can reasonably be expected to become an actual or matured liability of such Person. "Credit Party" means, collectively, the Borrower, each Guarantor and each other Person providing Collateral pursuant to any Security Instrument. "Default" means any event or condition which, with the giving or receipt of notice or lapse of time or both, would constitute an Event of Default hereunder. "Default Rate" means (i) with respect to each Eurodollar Rate Loan, until the 5 10 end of the Interest Period applicable thereto, a rate of two percent (2%) above the Eurodollar Rate applicable to such Loan, and thereafter at a rate of interest per annum which shall be two percent (2%) above the Base Rate, (ii) with respect to Base Rate Loans, at a rate of interest per annum which shall be two percent (2%) above the Base Rate and (iii) in any case, the maximum rate permitted by applicable law, if lower. "Dollars" and the symbol "$" means dollars constituting legal tender for the payment of public and private debts in the United States of America. "Domestic Subsidiary" means any Subsidiary which is incorporated under the laws of any state of the United States of America. "Eligible Inventory" means that domestic inventory of the Borrower and its Domestic Subsidiaries which is determined by the Agent in the reasonable exercise of its discretion to be Eligible Inventory; provided, however, that any of the following shall not be Eligible Inventory: (i) inventory that is kept in any location other than the (a) warehouses owned by the Borrower and located in Miami, Florida, (b) public warehouse located in Memphis, Tennessee and (c) public warehouse located in Sparkes, Nevada; and (ii) inventory that is unfinished. "Eligible Receivables" means those trade accounts receivable of the Borrower, the Parent and their Domestic Subsidiaries which are determined by the Agent in the reasonable exercise of its discretion to be an Eligible Receivable; provided, however, that any of the following shall not be Eligible Receivables: (i) intercompany receivables; (ii) receivables owed by the United States government or any of its states, departments, agencies or instrumentalities of any thereof; (iii) receivables owed by any person not a United States citizen or corporation, partnership or other entity organized under the laws of the United States whose principal office is not located within the United States; (iv) receivables of any customer more than 50% of which receivables due Borrower, the Parent or any of their Domestic Subsidiaries are more than 90 days past due; (v) receivables that are due or unpaid for more than ninety (90) days from the original due date thereof; and 6 11 (vi) any receivable which is subject to any offset, deduction, defense, dispute or counterclaim. "Employee Benefit Plan" means any employee benefit plan within the meaning of Section 3(3) of ERISA which (i) is maintained for employees of the Borrower, the Parent or any of their ERISA Affiliates or is assumed by the Borrower, the Parent or any of their ERISA Affiliates or (ii) has at any time been maintained for the employees of the Borrower, the Parent or any current or former ERISA Affiliate. "Environmental Laws" means, collectively, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air Act, as amended, the Clean Water Act, as amended, any other "Superfund" or "Superlien" law or any other federal, or applicable state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any pollutant, contaminant, or hazardous, toxic or dangerous waste, substance or material. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder. "ERISA Affiliate", as applied to the Borrower or the Parent, means any Person or trade or business which is a member of a group which is under common control with the Borrower or the Parent, who together with the Borrower, is treated as a single employer within the meaning of Section 414(b) and (c) of the Code. "Eurodollar Rate Loan" means a Loan for which the rate of interest is determined by reference to the Eurodollar Rate. "Eurodollar Rate" means the interest rate per annum calculated according to the following formula: Eurodollar = Interbank Offered Rate + Applicable Rate -------------------------------- Margin 1- Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means, for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D or any successor regulation, as the maximum reserve requirement (including any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar 7 12 Rate Loans is determined), whether or not the Agent or any Lender has any Eurocurrency liabilities subject to such requirements, without benefits of credits or proration, exceptions or offsets that may be available from time to time to the Agent or any Lender. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage. "Event of Default" means any of the occurrences set forth as such in Section 10.1. "Existing Letters of Credit" means LC Nos. L914790 and L916720, in the amount of, respectively, $3,000,000 and $2,250,000. "Facility Guaranty" means each Guaranty and Suretyship Agreement between one or more Guarantors and the Agent for the benefit of the Lenders, delivered as of the Closing Date and otherwise pursuant to Section 8.11, as the same may be amended, modified or supplemented. "Federal Funds Effective Rate" means, for any day, the rate per annum (rounded upward to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate quoted to the Agent on such day on such transaction as determined by the Agent. "Foreign Benefit Law" means any applicable statute, law, ordinance, code, rule, regulation, order or decree of any foreign nation or any province, state, territory, protectorate or other political subdivision thereof regulating, relating to, or imposing liability or standards of conduct concerning, any Employee Benefit Plan. "GAAP" or "Generally Accepted Accounting Principles" means generally accepted accounting principles, being those principles of accounting set forth in pronouncements of the Financial Accounting Standards Board, the American Institute of Certified Public Accountants or which have other substantial authoritative support and are applicable in the circumstances as of the date of a report. "Governmental Authority" shall mean any Federal, state, municipal, national or other governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United 8 13 States, the United States, or a foreign entity or government. "Guarantors" means the Parent and the Domestic Subsidiaries of the Borrower and the Parent. "Hazardous Material" means and includes any pollutant, contaminant, hazardous, toxic or dangerous waste, substance or material (including petroleum products, asbestos-containing materials and lead), the management, generation, handling, storage, transportation, disposal, treatment, release, discharge or emission of which is subject to any Environmental Law. "Indebtedness" means with respect to any Person, without duplication, all Indebtedness for Money Borrowed, all indebtedness of such Person for the acquisition of property other than purchases of property, product, merchandise and services in the ordinary course of business (so long as such amounts are payable in less than twelve (12) months), all indebtedness secured by any Lien on the property of such Person whether or not such indebtedness is assumed (except unperfected Liens incurred in the ordinary course of business and not in connection with the borrowing of money), all liability of such Person by way of endorsements (other than for collection or deposit in the ordinary course of business), all Contingent Obligations; provided that in no event shall the term Indebtedness include capital stock surplus and retained earnings, minority interests in the common stock of Subsidiaries, lease obligations (other than pursuant to Capital Leases), reserves for deferred income taxes and investment credits, other deferred credits or reserves, FASB 106 charges and deferred compensation obligations. "Indebtedness for Money Borrowed" means with respect to any Person, without duplication, all indebtedness in respect of money borrowed, including without limitation all Capital Leases and the deferred purchase price of any property or asset, evidenced by a promissory note, bond, debenture or similar written obligation for the payment of money (including conditional sales or similar title retention agreements), other than trade payables incurred in the ordinary course of business. "Interbank Offered Rate" means, for any Loan bearing interest at the Eurodollar Rate for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "Interbank Offered Rate" shall mean, for any Loan bearing interest at the Eurodollar Rate for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London Time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, 9 14 if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. "Interest Period" means, for each Eurodollar Rate Loan, a period commencing on the date such Eurodollar Rate Loan is made or converted and ending, at the Borrower's option, on the date one, two, three or six months thereafter as notified to the Agent by the Authorized Representative three (3) Business Days prior to the beginning of such Interest Period; provided, that, (i) if the Authorized Representative fails to notify the Agent of the length of an Interest Period three (3) Business Days prior to the first day of such Interest Period, the Loan for which such Interest Period was to be determined shall be deemed to be a Base Rate Loan as of the first day thereof; (ii) if an Interest Period for a Eurodollar Rate Loan would end on a day which is not a Business Day, such Interest Period shall be extended to the next Business Day (unless such extension would cause the applicable Interest Period to end in the succeeding calendar month, in which case such Interest Period shall end on the next preceding Business Day); (iii) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; (iv) no Interest Period shall extend past the Stated Termination Date; and (v) there shall not be more than ten (10) Interest Periods in effect on any day. "Interest Rate Selection Notice" means the written notice delivered by an Authorized Representative in connection with the election of a subsequent Interest Period for any Eurodollar Rate Loan or the conversion of any Eurodollar Rate Loan into a Base Rate Loan or the conversion of any Base Rate Loan into a Eurodollar Rate Loan in the form of Exhibit E. "Issuing Bank" means initially NationsBank and thereafter any Lender which is successor to NationsBank as issuer of Letters of Credit under Article III. "LC Account Agreement" means the LC Account Agreement dated as of the date hereof between the Borrower and the Agent, as amended, modified or supplemented from time to time. 10 15 "Lending Office" means, as to each Lender, the Lending Office of such Lender designated on the signature pages hereof or in an Assignment and Acceptance or such other office of such Lender (or of an affiliate of such Lender) as such Lender may from time to time specify to the Authorized Representative and the Agent as the office by which its Loans are to be made and maintained. "Letter of Credit" means (i) a standby or documentary letter of credit issued by the Issuing Bank for the account of the Borrower in favor of a Person advancing credit or securing an obligation on behalf of the Borrower and (ii) the Existing Letters of Credit. "Letter of Credit Commitment" means, with respect to each Lender, the obligation of such Lender to acquire Participations in respect of Letters of Credit and Reimbursement Obligations up to an aggregate amount at any one time outstanding equal to such Lender's Applicable Commitment Percentage of the Total Letter of Credit Commitment as the same may be increased or decreased from time to time pursuant to this Agreement. "Letter of Credit Facility" means the facility described in Article III providing for the issuance by the Issuing Bank for the account of the Borrower of Letters of Credit in an aggregate stated amount at any time outstanding not exceeding the Total Letter of Credit Commitment. "Letter of Credit Outstandings" means, as of any date of determination, the aggregate amount remaining undrawn under all Letters of Credit plus the principal amount of all Reimbursement Obligations then outstanding. "Lien" means any interest in property securing any obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. For the purposes of this Agreement, the Borrower and any Subsidiary shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale agreement, financing lease, or other arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes. "Loan" or "Loans" means any borrowing pursuant to an Advance under the Revolving Credit Facility. "Loan Documents" means this Agreement, the Notes, the Security Instruments, the Facility Guaranties, the LC Account Agreement, the Applications and Agreements for Letter of Credit, and all other instruments and documents heretofore or hereafter 11 16 executed or delivered to or in favor of any Lender, the Issuing Bank or the Agent in connection with the Loans made and transactions contemplated under this Agreement, as the same may be amended, supplemented or replaced from the time to time. "Material Adverse Effect" means a material adverse effect on (i) the business, properties, operations or condition, financial or otherwise, of the Borrower or any of its Subsidiaries or any other Credit Party, (ii) the ability of any Credit Party to pay or perform its respective obligations, liabilities and indebtedness under the Loan Documents as such payment or performance becomes due in accordance with the terms thereof, or (iii) the rights, powers and remedies of the Agent or any Lender under any Loan Document or the validity, legality or enforceability thereof (including for purposes of clauses (ii) and (iii) the imposition of burdensome conditions thereon). "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, contributions or has made, or been obligated to make, contributions within the preceding six (6) fiscal years. "Notes" means, collectively, the promissory notes of the Borrower evidencing Loans executed and delivered to the Lenders substantially in the form of Exhibit F. "Obligations" means the obligations, liabilities and Indebtedness of the Borrower with respect to (i) the principal and interest on the Loans as evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in respect of the Letters of Credit, and (iii) the payment and performance of all other obligations, liabilities and Indebtedness of the Borrower to the Lenders, the Issuing Bank or the Agent hereunder, under any one or more of the other Loan Documents or with respect to the Loans. "Parent" means Windmere-Durable Holdings, Inc., a Florida corporation. "Participation" means, with respect to any Lender (other than the Issuing Bank) and a Letter of Credit, the extension of credit represented by the participation of such Lender hereunder in the liability of the Issuing Bank in respect of a Letter of Credit issued by the Issuing Bank in accordance with the terms hereof. "PBGC" means the Pension Benefit Guaranty Corporation and any successor thereto. "Pension Plan" means any employee pension benefit plan within the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (i) is maintained for employees of the Borrower or any of its ERISA Affiliates or is assumed by the Borrower or any of its ERISA Affiliates or (ii) has at any time been maintained for the employees of the Borrower or any current or former ERISA Affiliate. 12 17 "Person" means an individual, partnership, corporation, trust, unincorporated organization, association, joint venture or a government or agency or political subdivision thereof. "Prime Rate" means the rate of interest per annum announced publicly by the Agent as its prime rate from time to time. The Prime Rate is not necessarily the best or the lowest rate of interest offered by the Agent. "Principal Office" means the office of the Agent at NationsBank, National Association, Independence Center, 15th Floor, NC1 001-15-04, Charlotte, North Carolina 28255, Attention: Agency Services, or such other office and address as the Agent may from time to time designate. "Regulation D" means Regulation D of the Board as the same may be amended or supplemented from time to time. "Regulatory Change" means any change effective after the Closing Date in United States federal or state laws or regulations (including Regulation D and capital adequacy regulations) or foreign laws or regulations or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks, which includes any of the Lenders, under any United States federal or state or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof or compliance by any Lender with any request or directive regarding capital adequacy, including those relating to "highly leveraged transactions," whether or not having the force of law, and whether or not failure to comply therewith would be unlawful and whether or not published or proposed prior to the date hereof. "Reimbursement Obligation" shall mean at any time, the obligation of the Borrower with respect to any Letter of Credit to reimburse the Issuing Bank and the Lenders to the extent of their respective Participations (including by the receipt by the Issuing Bank of proceeds of Loans pursuant to Section 3.2) for amounts theretofore paid by the Issuing Bank pursuant to a drawing under such Letter of Credit. "Required Lenders" means, as of any date, Lenders on such date having Credit Exposures (as defined below) aggregating at least 66-2/3% of the aggregate Credit Exposures of all the Lenders on such date. For purposes of the preceding sentence, the amount of the "Credit Exposure" of each Lender shall be equal to the aggregate principal amount of the Loans owing to such Lender plus the aggregate unutilized amounts of such Lender's Revolving Credit Commitment plus the amount of such Lender's Applicable Commitment Percentage of Letter of Credit Outstandings; provided that, if any Lender shall have failed to pay to the Issuing Bank its Applicable Commitment Percentage of any drawing under any Letter of Credit resulting in an outstanding Reimbursement Obligation, such Lender's Credit Exposure attributable to Letters of Credit and Reimbursement Obligations shall be deemed to be held by the 13 18 Issuing Bank for purposes of this definition. "Revolving Credit Commitment" means, with respect to each Lender, the obligation of such Lender to make Loans to the Borrower up to an aggregate principal amount at any one time outstanding equal to such Lender's Applicable Commitment Percentage of the Total Revolving Credit Commitment. "Revolving Credit Facility" means the facility described in Article II hereof providing for Loans to the Borrower by the Lenders in the aggregate principal amount of the Total Revolving Credit Commitment. "Revolving Credit Outstandings" means, as of any date of determination, the aggregate principal amount of all Loans then outstanding. "Revolving Credit Termination Date" means (i) the Stated Termination Date or (ii) such earlier date of termination of Lenders' obligations pursuant to Section 10.1 upon the occurrence of an Event of Default, or (iii) such date as the Borrower may voluntarily and permanently terminate the Revolving Credit Facility by payment in full of all Revolving Credit Outstandings and Letter of Credit Outstandings, together with all accrued and unpaid interest thereon and other Obligations incurred in connection therewith, and cancellation of all Letters of Credit. "Revolving Loan" means any borrowing pursuant to an Advance under the Revolving Credit Facility in accordance with Article II. "Security Agreements" means, collectively (or individually as the context may indicate), (i) the Security Agreement dated as of the date hereof by the Borrower to the Agent, and (ii) the Security Agreement dated as of the date hereof by the Parent and its Domestic Subsidiaries to the Agent, and (iii) any additional Security Agreement delivered to the Agent pursuant to Section 8.11, as hereafter modified, amended or supplemented from time to time. "Security Instruments" means, collectively, the Security Agreements, and all other agreements, instruments and other documents, whether now existing or hereafter in effect, pursuant to which the Borrower, the Parent or any Domestic Subsidiary of the Borrower or the Parent shall grant or convey to the Agent or the Lenders a Lien in property as security for all or any portion of the Obligations, as any of them may be amended, modified or supplemented from time to time. "Single Employer Plan" means any employee pension benefit plan covered by Title IV of ERISA in respect of which the Borrower or any Subsidiary is an "employer" as described in Section 4001(b) of ERISA and which is not a Multiemployer Plan. "Solvent" means, when used with respect to any Person, that at the time of 14 19 determination: (i) the fair value of its assets (both at fair valuation and at present fair saleable value on an orderly basis) is in excess of the total amount of its liabilities, including Contingent Obligations; and (ii) it is then able and expects to be able to pay its debts as they mature; and (iii) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. "Special Purpose Subsidiary" means a wholly-owned Subsidiary of the Borrower organized for the sole purpose of accomplishing a Year End Domestic Receivables Transaction and which engages in no other business, the proper name of which shall be furnished to the Agent promptly following its organization. "Stated Termination Date" means July 27, 1997 or such later date as the parties may agree pursuant to Section 2.13. "Subsidiary" means, except for Borrower's joint venture in Paragon Industries, any corporation in which more than 50% of its outstanding voting stock is owned directly or indirectly by the Parent or the Borrower and/or by one or more of the Borrower's or Parent's Subsidiaries or, in the case of a Person other than a corporation, the Borrower or the Parent, as the case may be, directly or indirectly, is entitled to more than 50% of the profits of such Person. "Termination Event" means: (i) a "Reportable Event" described in Section 4043 of ERISA and the regulations issued thereunder (unless the notice requirement has been waived by applicable regulation); or (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA; or (iii) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA; or (iv) the institution of proceedings to terminate a Pension Plan by the PBGC; or (v) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; or (vi) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA; or (viii) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA, respectively; or (ix) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution 15 20 by the PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA. "Total Letter of Credit Commitment" means an amount not to exceed $15,000,000. "Total Revolving Credit Commitment" means a principal amount equal to $30,000,000 up to and including January 31, 1997 and thereafter, a principal amount equal to $20,000,000, each such amount as reduced from time to time in accordance with Section 2.7. "Year End Domestic Receivables Transaction" means the transfer by the Borrower and/or its Domestic Subsidiaries to Windmere Holdings Corporation, a Guarantor, ("Holdings") or a Special Purpose Subsidiary on or about December 31 of any year of Domestic Receivables (as defined in the Security Agreement entered into by the Borrower or such Domestic Subsidiary), subject at all times to the existing and continuing Lien on such property in favor of the Agent for the benefit of the Lenders; provided that all of the following conditions are satisfied: (i) all Domestic Receivables transferred to Holdings or the Special Purpose Subsidiary on or about any December 31 and retransferred to the appropriate transferor not later than the fifth Business Day following January 1; (ii) immediately prior to giving effect to any such transfer, no Default or Event of Default shall have occurred and be continuing; (iii) Holdings and the Special Purpose Subsidiary shall incur no Indebtedness or other liabilities for the payment of money, other than those in favor of the Agent and the Lenders, corporate franchise taxes and similar unsecured obligations necessarily incurred to maintain its existence, and the obligation to retransfer Domestic Receivables as of the fifth Business Day following each January 1 to the appropriate transferor; (iv) immediately before giving effect to any such transfer on or about any December 31, Holdings and the Special Purpose Subsidiary shall not have become liable to any Person, and no Person shall have asserted any claim against Holdings or the Special Purpose Subsidiary (including without limitation the submission of any invoice) for the payment of any amount or the delivery of any property or interest therein other than routine invoices for the payment of operating costs in connection with liabilities expressly permitted under the immediately preceding clause (iii); (v) the Agent for the benefit of the Lenders shall have a duly perfected first priority security interest in the Domestic Receivables in which 16 21 Holdings or the Special Purpose Subsidiary may acquire any interest at any time, subject to no adverse claims of creditors of, or purchasers for value from, Holdings or the Special Purpose Subsidiary; (vi) the Special Purpose Subsidiary shall have been created in full compliance with the provisions of 8.11 hereof and there shall be then in effect an appropriate guaranty and an appropriate security agreement executed and delivered by and effective against the Special Purpose Subsidiary as contemplated in such Section; and (vii) the purpose of the Special Purpose Subsidiary shall be strictly limited, by charter or in such other manner as shall be acceptable to the Agent, to (A) the acquisition and retransfer or Domestic Receivables as contemplated in the preceding clauses of this definition and (B) the incurring of obligations and the grant of a Lien to the Agent and the Lenders as required by Section 8.11 hereof, and the operations and activities of the Special Purpose Subsidiary shall at all times be strictly limited to those actions necessary to accomplish such purposes. I.2. Rules of Interpretation. (a) All accounting terms not specifically defined herein shall have the meanings assigned to such terms and shall be interpreted in accordance with GAAP applied on a Consistent Basis. (b) Each term defined in Article 1 or 9 of the Florida Uniform Commercial Code shall have the meaning given therein unless otherwise defined herein, except to the extent that the Uniform Commercial Code of another jurisdiction is controlling, in which case such terms shall have the meaning given in the Uniform Commercial Code of the applicable jurisdiction. (c) The headings, subheadings and table of contents used herein or in any other Loan Document are solely for convenience of reference and shall not constitute a part of any such document or affect the meaning, construction or effect of any provision thereof. (d) Except as otherwise expressly provided, references herein to articles, sections, paragraphs, clauses, annexes, appendices, exhibits and schedules are references to articles, sections, paragraphs, clauses, annexes, appendices, exhibits and schedules in or to this Agreement. (e) All definitions set forth herein or in any other Loan Document shall apply to the singular as well as the plural form of such defined term, and all references to the masculine gender shall include reference to the feminine or neuter gender, and vice 17 22 versa, as the context may require. (f) When used herein or in any other Loan Document, words such as "hereunder", "hereto", "hereof" and "herein" and other words of like import shall, unless the context clearly indicates to the contrary, refer to the whole of the applicable document and not to any particular article, section, subsection, paragraph or clause thereof. (g) References to "including" means including without limiting the generality of any description preceding such term, and for purposes hereof the rule of ejusdem generis shall not be applicable to limit a general statement, followed by or referable to an enumeration of specific matters, to matters similar to those specifically mentioned. (h) All dates and times of day specified herein shall refer to such dates and times at Charlotte, North Carolina. (i) Each of the parties to the Loan Documents and their counsel have reviewed and revised, or requested (or had the opportunity to request) revisions to, the Loan Documents, and any rule of construction that ambiguities are to be resolved against the drafting party shall be inapplicable in the construing and interpretation of the Loan Documents and all exhibits, schedules and appendices thereto. (j) Any reference to an officer of the Borrower or any other Person by reference to the title of such officer shall be deemed to refer to each other officer of such Person, however titled, exercising the same or substantially similar functions. (k) All references to any agreement or document as amended, modified or supplemented, or words of similar effect, shall mean such document or agreement, as the case may be, as amended, modified or supplemented from time to time only as and to the extent permitted therein and in the Loan Documents. 18 23 ARTICLE II The Revolving Credit Facility II.1. Revolving Loans. (a) Commitment. Subject to the terms and conditions of this Agreement, each Lender severally agrees to make Advances to the Borrower under the Revolving Credit Facility from time to time from the Closing Date until the Revolving Credit Termination Date on a pro rata basis as to the total borrowing requested by the Borrower on any day determined by such Lender's Applicable Commitment Percentage up to but not exceeding the Revolving Credit Commitment of such Lender, provided, however, that the Lenders will not be required and shall have no obligation to make any such Advance (i) so long as a Default or an Event of Default has occurred and is continuing or (ii) if the Agent has accelerated the maturity of any of the Notes as a result of an Event of Default; provided further, however, that immediately after giving effect to each such Advance, the principal amount of Revolving Credit Outstandings plus Letter of Credit Outstandings shall not exceed the Total Revolving Credit Commitment or the Borrowing Base. Within such limits, the Borrower may borrow, repay and reborrow under the Revolving Credit Facility on a Business Day from the Closing Date until, but (as to borrowings and reborrowings) not including, the Revolving Credit Termination Date; provided, however, that (y) no Revolving Loan that is a Eurodollar Rate Loan shall be made which has an Interest Period that extends beyond the Stated Termination Date and (z) each Revolving Loan that is a Eurodollar Rate Loan may, subject to the provisions of Section 2.7, be repaid only on the last day of the Interest Period with respect thereto unless such payment is accompanied by the additional payment, if any, required by Section 5.4. (b) Amounts. Except as otherwise permitted by the Lenders from time to time, the aggregate unpaid principal amount of the Revolving Credit Outstandings plus Letter of Credit Outstandings shall not exceed at any time the Total Revolving Credit Commitment or the Borrowing Base, and, in the event there shall be outstanding any such excess, the Borrower shall immediately make such payments and prepayments as shall be necessary to comply with this restriction. Each Loan hereunder, other than Base Rate Refunding Loans, and each conversion under Section 2.8, shall be in an amount of at least $500,000, and, if greater than $500,000, an integral multiple of $100,000. (c) Advances. (i) An Authorized Representative shall give the Agent (1) at least three (3) Business Days' irrevocable written notice by telefacsimile transmission of a Borrowing Notice or Interest Rate Selection Notice (as applicable) with appropriate insertions, effective upon receipt, of each Loan that is a Eurodollar Rate Loan (whether representing an additional borrowing hereunder or the conversion of a borrowing hereunder from Base Rate Loans to Eurodollar Rate Loans) prior to 10:30 A.M. and (2) irrevocable written notice by telefacsimile transmission of a Borrowing Notice or Interest Rate Selection Notice (as applicable) with appropriate insertions, effective upon receipt, of each Revolving Loan (other 19 24 than Base Rate Refunding Loans to the extent the same are effected without notice pursuant to Section 2.1(c)(iv)) that is a Base Rate Loan (whether representing an additional borrowing hereunder or the conversion of borrowing hereunder from Eurodollar Rate Loans to Base Rate Loans) prior to 10:30 A.M. on the day of such proposed Loan. Each such notice shall specify the amount of the borrowing, the type of Loan (Base Rate or Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan, the Interest Period to be used in the computation of interest. Notice of receipt of such Borrowing Notice or Interest Rate Selection Notice, as the case may be, together with the amount of each Lender's portion of an Advance requested thereunder, shall be provided by the Agent to each Lender by telefacsimile transmission with reasonable promptness, but (provided the Agent shall have received such notice by 10:30 A.M.) not later than 1:00 P.M. on the same day as the Agent's receipt of such notice. (ii) Not later than 2:00 P.M. on the date specified for each borrowing under this Section 2.1, each Lender shall, pursuant to the terms and subject to the conditions of this Agreement, make the amount of the Advance or Advances to be made by it on such day available by wire transfer to the Agent in the amount of its pro rata share, determined according to such Lender's Applicable Commitment Percentage of the Loan or Loans to be made on such day. Such wire transfer shall be directed to the Agent at the Principal Office and shall be in the form of Dollars constituting immediately available funds. The amount so received by the Agent shall, subject to the terms and conditions of this Agreement, be made available to the Borrower by delivery of the proceeds thereof to the Borrower's Account or otherwise as shall be directed in the applicable Borrowing Notice by the Authorized Representative and reasonably acceptable to the Agent. (iii) The Borrower shall have the option to elect the duration of the initial and any subsequent Interest Periods and to convert the Loans in accordance with Section 2.8. Eurodollar Rate Loans and Base Rate Loans may be outstanding at the same time, provided, however, there shall not be outstanding at any one time Eurodollar Rate Loans having more than ten (10) different Interest Periods. If the Agent does not receive a Borrowing Notice or an Interest Rate Selection Notice giving notice of election of the duration of an Interest Period or of conversion of any Loan to or continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by Section 2.1(c) or 2.8, the Borrower shall be deemed to have elected to convert such Loan to (or continue such Loan as) a Base Rate Loan until the Borrower notifies the Agent in accordance with Section 2.8. (iv) Notwithstanding the foregoing, if a drawing is made under any Letter of Credit, such drawing is honored by the Issuing Bank prior to the Stated Termination Date, and the Borrower shall not immediately fully reimburse the Issuing Bank in respect of such drawing, (A) provided that the conditions to making a Loan as herein provided shall then be satisfied, the Reimbursement Obligation arising from such drawing shall be paid to the Issuing Bank by the Agent without the requirement of notice to or from the Borrower from immediately available funds which shall be advanced as a Base Rate Refunding Loan by each Lender under the Revolving Credit Facility in an amount equal to such Lender's Applicable Commitment Percentage of such Reimbursement Obligation, and (B) if the conditions to making a Loan as 20 25 herein provided shall not then be satisfied, each of the Lenders shall fund by payment to the Agent (for the benefit of the Issuing Bank) in immediately available funds the purchase from the Issuing Bank of their respective Participations in the related Reimbursement Obligation based on their respective Applicable Commitment Percentages of the Total Letter of Credit Commitment. If a drawing is presented under any Letter of Credit in accordance with the terms thereof and the Borrower shall not immediately reimburse the Issuing Bank in respect thereof, then notice of such drawing or payment shall be provided promptly by the Issuing Bank to the Agent and the Agent shall provide notice to each Lender by telephone or telefacsimile transmission. If notice to the Lenders of a drawing under any Letter of Credit is given by the Agent at or before 12:00 noon on any Business Day, each Lender shall, pursuant to the conditions specified in this Section 2.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of its Participation in the amount of such Lender's Applicable Commitment Percentage of such drawing or payment and shall pay such amount to the Agent for the account of the Issuing Bank at the Principal Office in Dollars and in immediately available funds before 2:30 P.M. on the same Business Day. If notice to the Lenders of a drawing under a Letter of Credit is given by the Agent after 12:00 noon on any Business Day, each Lender shall, pursuant to the conditions specified in this Section 2.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of its Participation in the amount of such Lender's Applicable Commitment Percentage of such drawing or payment and shall pay such amount to the Agent for the account of the Issuing Bank at the Principal Office in Dollars and in immediately available funds before 12:00 noon on the next following Business Day. Any such Base Rate Refunding Loan shall be advanced as, and shall continue as, a Base Rate Loan unless and until the Borrower converts such Base Rate Loan in accordance with the terms of Section 2.8. II.2. Payment of Interest. (a) The Borrower shall pay interest to the Agent for the account of each Lender on the outstanding and unpaid principal amount of each Loan made by such Lender for the period commencing on the date of such Loan until such Loan shall be paid, continued or converted, as the case may be, at the then applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for Eurodollar Rate Loans, as designated by the Authorized Representative pursuant to Section 2.1; provided, however, that if any amount shall not be paid when due (at maturity, by acceleration or otherwise), all amounts outstanding hereunder shall bear interest thereafter at the Default Rate. (b) Interest on each Loan shall be computed on the basis of a year of 360 days and calculated in each case for the actual number of days elapsed. Interest on each Revolving Loan shall be paid (i) quarterly in arrears on the last Business Day of each September, December, March and June, commencing December 31, 1996 for each Base Rate Loan, (ii) on the last day of the applicable Interest Period for each Eurodollar Rate Loan and, if such Interest Period extends for more than three (3) months, at intervals of three (3) months after the first day of such Interest Period, and (iii) upon payment in full of the principal amount of such Loan. II.3. Payment of Principal. The principal amount of each Loan shall be due and 21 26 payable to the Agent for the benefit of each Lender in full on the Revolving Credit Termination Date, or earlier as specifically provided herein. The principal amount of any Base Rate Loan may be prepaid in whole or in part at any time. The principal amount of any Eurodollar Rate Loan may be prepaid only at the end of the applicable Interest Period unless the Borrower shall pay to the Agent for the account of the Lenders the additional amount, if any, required under Section 5.4. All prepayments of Loans made by the Borrower shall be in the amount of $500,000 or such greater amount which is an integral multiple of $100,000, or the amount equal to all Revolving Credit Outstandings, or such other amount as necessary to comply with Section 2.1(b) or Section 2.7. II.4. Manner of Payment. (a) Each payment of principal (including any prepayment) and payment of interest and fees, and any other amount required to be paid to the Lenders with respect to the Loans, shall be made to the Agent at the Principal Office, for the account of each Lender, in Dollars and in immediately available funds before 12:30 P.M. on the date such payment is due. The Agent may, but shall not be obligated to, debit the amount of any such payment which is not made by such time to any ordinary deposit account, if any, of the Borrower with the Agent. (b) The Agent shall deem any payment made by or on behalf of the Borrower hereunder that is not made both in Dollars and in immediately available funds and prior to 12:30 P.M. to be a non-conforming payment. Any such payment shall not be deemed to be received by the Agent until the later of (i) the time such funds become available funds and (ii) the next Business Day. Any non-conforming payment may constitute or become a Default or Event of Default. Interest shall continue to accrue on any principal as to which a non-conforming payment is made until the later of (x) the date such funds become available funds or (y) the next Business Day at the Default Rate from the date such amount was due and payable. (c) In the event that any payment hereunder or under the Notes becomes due and payable on a day other than a Business Day, then such due date shall be extended to the next succeeding Business Day unless provided otherwise under clause (ii) of the definition of "Interest Period"; provided that interest shall continue to accrue during the period of any such extension and provided further, that in no event shall any such due date be extended beyond the Revolving Credit Termination Date. II.5. Notes. Loans made by each Lender shall be evidenced by the Note payable to the order of such Lender in the respective amount of its Applicable Commitment Percentage of the Revolving Credit Commitment, which Note shall be dated the Closing Date or a later date pursuant to an Assignment and Acceptance and shall be duly completed, executed and delivered by the Borrower. II.6. Pro Rata Payments. Except as otherwise provided herein, (a) each payment on account of the principal of and interest on the Loans and the fees described in Section 2.10 shall be made to the Agent for the account of the Lenders pro rata based on their Applicable 22 27 Commitment Percentages, (b) all payments to be made by the Borrower for the account of each of the Lenders on account of principal, interest and fees, shall be made without diminution, setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute to the Lenders in immediately available funds payments received in fully collected, immediately available funds from the Borrower. II.7. Reductions. The Borrower shall, by notice from an Authorized Representative, have the right from time to time but not more frequently than once each calendar month, upon not less than three (3) Business Days' written notice to the Agent, effective upon receipt, to reduce the Total Revolving Credit Commitment. The Agent shall give each Lender, within one (1) Business Day of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed in writing), of such reduction. Each such reduction shall be in the aggregate amount of $5,000,000 or such greater amount which is in an integral multiple of $1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall permanently reduce the Total Revolving Credit Commitment. Each reduction of the Total Revolving Credit Commitment shall be accompanied by payment of the Loans to the extent that the principal amount of Revolving Credit Outstandings plus Letter of Credit Outstandings exceeds the Total Revolving Credit Commitment or the Borrowing Base after giving effect to such reduction, together with accrued and unpaid interest on the amounts prepaid. No such reduction shall result in the payment of any Eurodollar Rate Loan other than on the last day of the Interest Period of such Eurodollar Rate Loan unless such prepayment is accompanied by amounts due, if any, under Section 5.4. II.8. Conversions and Elections of Subsequent Interest Periods. Provided that no Default or Event of Default shall have occurred and be continuing and subject to the limitations set forth below and in Article V, the Borrower may: (a) upon delivery, effective upon receipt, of a properly completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on any Business Day, convert all or a part of Eurodollar Rate Loans to Base Rate Loans on the last day of the Interest Period for such Eurodollar Rate Loans; and (b) upon delivery, effective upon receipt, of a properly completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M. three (3) Business Days' prior to the date of such election or conversion: (i) elect a subsequent Interest Period for all or a portion of Eurodollar Rate Loans to begin on the last day of the then current Interest Period for such Eurodollar Rate Loans; and (ii) convert Base Rate Loans to Eurodollar Rate Loans on any Business Day. Each election and conversion pursuant to this Section 2.8 shall be subject to the limitations on Eurodollar Rate Loans set forth in the definition of "Interest Period" herein and 23 28 in Sections 2.1, 2.3 and Article V. Notice of receipt of each such notice of election or conversion shall be provided by the Agent to each Lender by telefacsimile transmission with reasonable promptness, but (provided the Agent shall have received such notice by 10:30 A.M.) not later than 1:00 P.M. on the same Business Day as the Agent's receipt of such notice. All such continuations or conversions of Loans shall be effected pro rata based on the Applicable Commitment Percentages of the Lenders. II.9. Increase and Decrease in Amounts. The amount of the Total Revolving Credit Commitment which shall be available to the Borrower as Advances shall be reduced by the aggregate amount of Outstanding Letters of Credit. II.10. Unused Fee. For the period beginning on the Closing Date and ending on the Revolving Credit Termination Date, the Borrower agrees to pay to the Agent, for the pro rata benefit of the Lenders based on their Applicable Commitment Percentages, an unused fee equal to the Applicable Unused Fee multiplied by the average daily amount by which the Total Revolving Credit Commitment exceeds the sum of (i) Revolving Credit Outstandings plus (ii) Letter of Credit Outstandings. Such fees shall be due in arrears on the last Business Day of each September, December, March and June commencing December 31, 1996 to and on the Revolving Credit Termination Date. Notwithstanding the foregoing, so long as any Lender fails to make available any portion of its Revolving Credit Commitment when requested, such Lender shall not be entitled to receive payment of its pro rata share of such fee until such Lender shall make available such portion. Such fee shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. II.11. Deficiency Advances. No Lender shall be responsible for any default of any other Lender in respect to such other Lender's obligation to make any Loan or fund its purchase of any Participation hereunder nor shall the Revolving Credit Commitment of any Lender hereunder be increased as a result of such default of any other Lender. Without limiting the generality of the foregoing, in the event any Lender shall fail to advance funds to the Borrower as herein provided, the Agent may in its discretion, but shall not be obligated to, advance under the Note in its favor as a Lender all or any portion of such amount or amounts (each, a "deficiency advance") and shall thereafter be entitled to payments of principal of and interest on such deficiency advance in the same manner and at the same interest rate or rates to which such other Lender would have been entitled had it made such advance under its Note; provided that, upon payment to the Agent from such other Lender of the entire outstanding amount of each such deficiency advance, together with accrued and unpaid interest thereon, from the most recent date or dates interest was paid to the Agent by the Borrower on each Loan comprising the deficiency advance at the interest rate per annum for overnight borrowing by the Agent from the Federal Reserve Bank, then such payment shall be credited against the applicable Note of the Agent in full payment of such deficiency advance and the Borrower shall be deemed to have borrowed the amount of such deficiency advance from such other Lender as of the most recent date or dates, as the case may be, upon which any payments of interest were made by the Borrower thereon. II.12. Use of Proceeds. The proceeds of the Loans made pursuant to the Revolving 24 29 Credit Facility hereunder shall be used by the Borrower for general working capital needs and other corporate purposes, including capital expenditures and the funding at Borrower's 50% or more owned joint ventures. II.13. Extension of Stated Termination Date. At the request of the Borrower the Lenders may, in their sole discretion, elect to extend the Stated Termination Date then in effect for additional periods of one year each. The Borrower shall notify the Lenders of its request for such an extension by delivering to the Agent and the Lenders notice of such request signed by an Authorized Representative not more than ninety (90) days nor less than sixty (60) days prior to the Stated Termination Date then in effect. If the Lenders shall elect to so extend, the Agent shall notify the Borrower in writing within sixty (60) days of its receipt of such request for extension of the decision of the Lenders as to whether to extend the Stated Termination Date. Failure by any Lender to respond to a request for an extension shall constitute a refusal of such Lender to give its consent to such extension. Failure by the Agent to give such notice shall constitute refusal by the Lenders to extend the Stated Termination Date. 25 30 ARTICLE III Letters of Credit III.1. Letters of Credit. The Issuing Bank agrees, subject to the terms and conditions of this Agreement, upon request of the Borrower to issue from time to time for the account of the Borrower Letters of Credit upon delivery to the Issuing Bank of an Application and Agreement for Letter of Credit relating thereto in form and content acceptable to the Issuing Bank; provided, that (i) the Letter of Credit Outstandings shall not exceed the Total Letter of Credit Commitment and (ii) no Letter of Credit shall be issued if, after giving effect thereto, Letter of Credit Outstandings plus Revolving Credit Outstandings shall exceed the Total Revolving Credit Commitment or the Borrowing Base. No Letter of Credit shall have an expiry date (including all rights of the Borrower or any beneficiary named in such Letter of Credit to require renewal) or payment date occurring later than the earlier to occur of (x) (i) in the case of standby Letters of Credit, one year after the date of its issuance and (ii) in the case of documentary Letters of Credit, 120 days or (y) the Stated Termination Date. III.2. Reimbursement. (a) The Borrower hereby unconditionally agrees to pay to the Issuing Bank immediately on demand at the Principal Office all amounts required to pay all drafts drawn or purporting to be drawn under the Letters of Credit and all reasonable expenses incurred by the Issuing Bank in connection with the Letters of Credit, and in any event and without demand to place in possession of the Issuing Bank (which shall include Advances under the Revolving Credit Facility if permitted by Section 2.1) sufficient funds to pay all debts and liabilities arising under any Letter of Credit. The Issuing Bank agrees to give the Borrower prompt notice of any request for a draw under a Letter of Credit. The Issuing Bank may charge any account the Borrower may have with it for any and all amounts the Issuing Bank pays under a Letter of Credit, plus charges and reasonable expenses as from time to time agreed to by the Issuing Bank and the Borrower; provided that to the extent permitted by Section 2.1(c)(iv), amounts shall be paid pursuant to Advances under the Revolving Credit Facility. The Borrower agrees to pay the Issuing Bank interest on any Reimbursement Obligations not paid when due hereunder at the Base Rate plus two percent (2.0%), or the maximum rate permitted by applicable law, if lower, such rate to be calculated on the basis of a year of 360 days for actual days elapsed. (b) In accordance with the provisions of Section 2.1(c), the Issuing Bank shall notify the Agent of any drawing under any Letter of Credit promptly following the receipt by the Issuing Bank of such drawing. (c) Each Lender (other than the Issuing Bank) shall automatically acquire on the date of issuance thereof, a Participation in the liability of the Issuing Bank in respect of each Letter of Credit in an amount equal to such Lender's Applicable Commitment Percentage of such liability, and to the extent that the Borrower is obligated to pay the Issuing Bank under 26 31 Section 3.2(a), each Lender (other than the Issuing Bank) thereby shall absolutely, unconditionally and irrevocably assume, and shall be unconditionally obligated to pay to the Issuing Bank as hereinafter described, its Applicable Commitment Percentage of the liability of the Issuing Bank under such Letter of Credit. (i) Each Lender (including the Issuing Bank in its capacity as a Lender) shall, subject to the terms and conditions of Article II, pay to the Agent for the account of the Issuing Bank at the Principal Office in Dollars and in immediately available funds, an amount equal to its Applicable Commitment Percentage of any drawing under a Letter of Credit, such funds to be provided in the manner described in Section 2.1(c)(iv). (ii) Simultaneously with the making of each payment by a Lender to the Issuing Bank pursuant to Section 2.1(c)(iv)(B), such Lender shall, automatically and without any further action on the part of the Issuing Bank or such Lender, acquire a Participation in an amount equal to such payment (excluding the portion thereof constituting interest accrued prior to the date the Lender made its payment) in the related Reimbursement Obligation of the Borrower. The Reimbursement Obligations of the Borrower shall be immediately due and payable whether by Advances made in accordance with Section 2.1(c)(iv) or otherwise. (iii) Each Lender's obligation to make payment to the Agent for the account of the Issuing Bank pursuant to Section 2.1(c)(iv) and this Section 3.2(c), and the right of the Issuing Bank to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and shall be made without any offset, abatement, withholding or reduction whatsoever. If any Lender is obligated to pay but does not pay amounts to the Agent for the account of the Issuing Bank in full upon such request as required by Section 2.1(c)(iv) or this Section 3.2(c), such Lender shall, on demand, pay to the Agent for the account of the Issuing Bank interest on the unpaid amount for each day during the period commencing on the date of notice given to such Lender pursuant to Section 2.1(c) until such Lender pays such amount to the Agent for the account of the Issuing Bank in full at the interest rate per annum for overnight borrowing by the Agent from the Federal Reserve Bank. (iv) In the event the Lenders have purchased Participations in any Reimbursement Obligation as set forth in clause (ii) above, then at any time payment (in fully collected, immediately available funds) of such Reimbursement Obligation, in whole or in part, is received by Issuing Bank from the Borrower, Issuing Bank shall promptly pay to each Lender an amount equal to its Applicable Commitment Percentage of such payment from the Borrower. (d) Promptly following the end of each calendar quarter, the Issuing Bank shall deliver to the Agent a notice describing the aggregate undrawn amount of all Letters of Credit at the end of such quarter. Upon the request of any Lender from time to time, the 27 32 Issuing Bank shall deliver to the Agent, and the Agent shall deliver to such Lender, any other information reasonably requested by such Lender with respect to each Letter of Credit outstanding. (e) The issuance by the Issuing Bank of each Letter of Credit shall, in addition to the conditions precedent set forth in Article VI, be subject to the conditions that such Letter of Credit be in such form and contain such terms as shall be reasonably satisfactory to the Issuing Bank consistent with the then current practices and procedures of the Issuing Bank with respect to similar letters of credit, and the Borrower shall have executed and delivered such other instruments and agreements relating to such Letters of Credit as the Issuing Bank shall have reasonably requested consistent with such practices and procedures. All Letters of Credit shall be issued pursuant to and subject to the Uniform Customs and Practice for Documentary Credits, 1993 revision, International Chamber of Commerce Publication No. 500 and all subsequent amendments and revisions thereto. (f) The Borrower agrees that Issuing Bank may, in its sole discretion, accept or pay, as complying with the terms of any Letter of Credit, any drafts or other documents otherwise in order which may be signed or issued by an administrator, executor, trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, liquidator, receiver, attorney in fact or other legal representative of a party who is authorized under such Letter of Credit to draw or issue any drafts or other documents. (g) Without limiting the generality of the provisions of Section 12.9, the Borrower hereby agrees to indemnify and hold harmless the Issuing Bank, each other Lender and the Agent from and against any and all claims and damages, losses, liabilities, reasonable costs and expenses which the Issuing Bank, such other Lender or the Agent may incur (or which may be claimed against the Issuing Bank, such other Lender or the Agent) by any Person by reason of or in connection with the issuance or transfer of or payment or failure to pay under any Letter of Credit; provided that the Borrower shall not be required to indemnify the Issuing Bank, any other Lender or the Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, (i) caused by the willful misconduct or gross negligence of the party to be indemnified or (ii) caused by the failure of the Issuing Bank to pay under any Letter of Credit after the presentation to it of a request for payment strictly complying with the terms and conditions of such Letter of Credit, unless such payment is prohibited by any law, regulation, court order or decree. The indemnification and hold harmless provisions of this Section 3.2(g) shall survive repayment of the Obligations, occurrence of the Revolving Credit Termination Date and expiration or termination of this Agreement. (h) Without limiting Borrower's rights as set forth in Section 3.2(g), the obligation of the Borrower to immediately reimburse the Issuing Bank for drawings made under Letters of Credit and the Issuing Bank's right to receive such payment shall be absolute, unconditional and irrevocable, and that such obligations of the Borrower shall be performed strictly in accordance with the terms of this Agreement and such Letters of Credit and the related Applications and Agreement for any Letter of Credit, under all circumstances 28 33 whatsoever, including the following circumstances: (i) any lack of validity or enforceability of the Letter of Credit, the obligation supported by the Letter of Credit or any other agreement or instrument relating thereto (collectively, the "Related LC Documents"); (i) any amendment or waiver of or any consent to or departure from all or any of the Related LC Documents; (i) the existence of any claim, setoff, defense (other than the defense of payment in accordance with the terms of this Agreement) or other rights which the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any persons or entities for whom any such beneficiary or any such transferee may be acting), the Agent, the Lenders or any other Person, whether in connection with the Loan Documents, the Related LC Documents or any unrelated transaction; (ii) any breach of contract or other dispute between the Borrower and any beneficiary or any transferee of a Letter of Credit (or any persons or entities for whom such beneficiary or any such transferee may be acting), the Agent, the Lenders or any other Person; (j) any draft, statement or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (i) any delay, extension of time, renewal, compromise or other indulgence or modification granted or agreed to by the Agent, with or without notice to or approval by the Borrower in respect of any of Borrower's Obligations under this Agreement; or (ii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. III.3. Letter of Credit Facility Fees. The Borrower shall pay to the Agent, for the pro rata benefit of the Lenders based on their Applicable Commitment Percentages, an issuance fee on the aggregate amount available to be drawn on each (i) Letter of Credit which provides credit support, other than in connection with a commercial transaction, of 1.50% per annum, and (ii) Letter of Credit which provides credit support in a commercial transaction, of 1/4% for each 120 day term or part thereof of such Letter of Credit. Such fees shall be due with respect to each Letter of Credit quarterly in arrears on the last day of each December, March, June and September, the first such payment to be made on the first such date occurring after the date of issuance of a Letter of Credit. The fees described in this Section 3.3 shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. 29 34 III.4. Administrative Fees. The Borrower shall pay to the Issuing Bank (i) such administrative fee and other fees, if any, in connection with the Letters of Credit in such amounts and at such times as the Issuing Bank and the Borrower shall agree from time to time and (ii) a fronting fee for each Letter of Credit equal to 1/8% on the aggregate amount available to be drawn on each Letter of Credit. 30 35 ARTICLE IV Security IV.1. Security. As security for the full and timely payment and performance of all Obligations, the Credit Parties shall on or before the Closing Date do or cause to be done all things necessary in the opinion of the Agent and its counsel to grant to the Agent for the benefit of the Agent and the Lenders a duly perfected first priority security interest in all Collateral subject to no prior Lien or other encumbrance or restriction on transfer. IV.2. Further Assurances. At the request of the Agent, the Borrower will or will cause the Parent or its Domestic Subsidiaries, as the case may be, to execute, by its duly authorized officers, alone or with the Agent, any certificate, instrument, statement or document, or to procure any such certificate, instrument, statement or document, or to take such other action (and pay all connected costs) which the Agent reasonably deems necessary from time to time to create, continue or preserve the Liens and security interests in Collateral (and the perfection and priority thereof) of the Agent contemplated hereby and by the other Loan Documents. IV.3. Information Regarding Collateral. The Borrower represents, warrants and covenants that (i) the chief executive office of the Borrower and each other Person providing Collateral pursuant to a Security Instrument (each, a "Grantor") at the Closing Date is located at the address or addresses specified on Schedule 4.3, and (ii) Schedule 4.3 contains a true and complete list of (a) the name and address of each Grantor and of each other Person that has effected any merger or consolidation with a Grantor or contributed or transferred to a Grantor any property constituting Collateral at any time since August 1, 1991 (excluding Persons making sales in the ordinary course of their businesses to a Grantor of property constituting inventory in the hands of such seller), (b) each location of the chief executive office of each Grantor at any time since August 1, 1991, (c) each location in which goods constituting Collateral are or have been located since August 1, 1991 (together with the name of each owner of the property located at such address if not the applicable Grantor, and a summary description of the relationship between the applicable Grantor and such Person), and (d) each trade style used by any Grantor since August 1, 1991 and the purposes for which it was used. Borrower shall not change, and shall not permit any other Grantor to change, the location of its chief executive office or any location specified in clause (c) of the immediately preceding sentence, or use or permit any other Grantor to use, any additional trade style, except upon giving not less than thirty (30) days' prior written notice to the Agent and taking or causing to be taken all such action at Borrower's or such other Grantor's expense as may be reasonably requested by the Agent to perfect or maintain the perfection of the Lien of the Agent for the benefit of itself and the Lenders in Collateral. 31 36 ARTICLE V Yield Protection and Illegality V.1. Additional Costs. (a) The Borrower shall promptly pay to the Agent for the account of a Lender from time to time, without duplication, such amounts as such Lender may reasonably determine to be necessary to compensate it for any costs incurred by such Lender which it determines are attributable to its making or maintaining any Loan or its obligation to make any Loans, or the issuance or maintenance by the Issuing Bank of or any other Lender's Participation in any Letter of Credit issued hereunder, or any reduction in any amount receivable by such Lender under this Agreement or the Notes in respect of any of such Loans or the Letters of Credit, including reductions in the rate of return on a Lender's capital (such increases in costs and reductions in amounts receivable and returns being herein called "Additional Costs"), resulting from any Regulatory Change which: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement or the Notes in respect of any of such Loans or the Letters of Credit (other than taxes imposed on or measured by the income, revenues or assets); or (ii) imposes or modifies any reserve, special deposit, or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Lender (other than any such reserve, deposit or requirement reflected in the Prime Rate, Federal Funds Effective Rate or the Interbank Offered Rate, in each case computed in accordance with the respective definitions of such terms set forth in Section 1.1); or (iii) has or would have the effect of reducing the rate of return on capital of any such Lender to a level below that which the Lender could have achieved but for such Regulatory Change (taking into consideration such Lender's policies with respect to capital adequacy); or (iv) imposes any other condition adversely affecting the Agent or the Lenders under this Agreement, the Notes or the issuance or maintenance of, or any Lender's Participation in, the Letters of Credit (or any of such extensions of credit or liabilities). Each Lender will notify the Authorized Representative and the Agent of any event occurring after the Closing Date which would entitle it to compensation pursuant to this Section 5.1(a) as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. (b) Without limiting the effect of the foregoing provisions of this Section 5.1, in the event that, by reason of any Regulatory Change, any Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of the Lender which includes deposits by reference to which the interest rate on Eurodollar Rate Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of any Lender which includes Eurodollar Rate Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets which it may hold, then, if the Lender so elects by notice to the other Lenders, the obligation hereunder of such Lender to make, and to convert Base Rate Loans into, Eurodollar Rate Loans that are the subject of such restrictions shall be suspended until the date such Regulatory Change ceases to be in effect and the Borrower shall, on the last day(s) of the then current Interest Period(s) for outstanding Eurodollar Rate Loans convert such Eurodollar Rate Loans into Base Rate Loans; provided, however, that the suspension of such obligation and the 32 37 conversion of any Eurodollar Rate Loans into Base Rate Loans shall apply only to any Lender who is affected by such restrictions and who has provided such notice to the other Lenders, and the obligation of the other Lenders to make, and to convert Base Rate Loans into, Eurodollar Rate Loans shall not be affected by such restrictions. In the event that the obligation of some, but not all, of the Lenders to make, or to convert Base Rate Loans into, Eurodollar Rate Loans is suspended, then any request by the Borrower during the pendency of such suspension for a Eurodollar Rate Loan shall be deemed a request for such Eurodollar Rate Loan from the Lender(s) not subject to such suspension and for a Base Rate Loan from the Lender(s) who are subject to such suspension, in each case in the respective amounts based on the Lenders' respective Applicable Commitment Percentages. (c) Determinations by any Lender for purposes of this Section 5.1 of the effect of any Regulatory Change on its costs of making or maintaining, or being committed to make Loans, or by NationsBank as issuer of any Letter of Credit of the effect of any Regulatory Change on its costs in connection with the issuance or maintenance of, or any other Lender's Participation in, any Letter of Credit issued hereunder, or the effect of any Regulatory Change on amounts receivable by any Lender in respect of Loans or Letters of Credit, and of the additional amounts required to compensate the Lender in respect of any Additional Costs, shall be made taking into account such Lender's policies, or the policies of the parent corporation of such Lender, as to the allocation of capital, costs and other items and shall be conclusive absent manifest error. The Lender requesting such compensation shall furnish to the Authorized Representative and the Agent within one hundred eighty (180) days of the incurrence of any Additional Costs for which compensation is sought an explanation of the Regulatory Change and calculations, in reasonable detail, setting forth such Lender's determination of any such Additional Costs. V.2. Suspension of Loans. Anything herein to the contrary notwithstanding, if, on or prior to the determination of any interest rate for any Eurodollar Rate Loan for any Interest Period, the Agent determines (which determination made on a reasonable basis shall be conclusive absent manifest error) that: (a) quotations of interest rates for the relevant deposits referred to in the definition of "Eurodollar Rate" in Section 1.1 are not being provided in the relevant amounts or for the relevant maturities for purposes of determining the rate of interest for such Eurodollar Rate Loan as provided in this Agreement; or (b) the relevant rates of interest referred to in the definition of "Interbank Offered Rate" in Section 1.1 upon the basis of which the Eurodollar Rate for such Interest Period is to be determined do not adequately reflect the cost to the Lenders of making or maintaining such Eurodollar Rate Loan for such Interest Period; then the Agent shall give the Authorized Representative prompt notice thereof, and so long as such condition remains in effect, the Lenders shall be under no obligation to make Eurodollar Rate Loans that are subject to such condition, or to convert Base Rate Loans into Eurodollar 33 38 Rate Loans, and the Borrower shall on the last day(s) of the then current Interest Period(s) for outstanding Eurodollar Rate Loans, as applicable, convert such Eurodollar Rate Loans into another Eurodollar Rate Loan if such Eurodollar Rate Loan is not subject to the same or similar condition, or Base Rate Loans, if available hereunder. The Agent shall give the Authorized Representative notice describing in reasonable detail any event or condition described in this Section 5.2 promptly following the determination by the Agent that the availability of Eurodollar Rate Loans is, or is to be, suspended as a result thereof. V.3. Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender to honor its obligation to make or maintain Eurodollar Rate Loans hereunder, then such Lender shall promptly notify the Borrower thereof (with a copy to the Agent) and such Lender's obligation to make or continue Eurodollar Rate Loans, or to convert Base Rate Loans into Eurodollar Rate Loans, shall be suspended until such time as such Lender may again make and maintain Eurodollar Rate Loans, and such Lender's outstanding Eurodollar Rate Loans shall be converted into Base Rate Loans in accordance with Section 2.8 or earlier if required by applicable law. The conversion of any Eurodollar Rate Loans into Base Rate Loans shall apply only to any Lender who is affected by such restrictions and who has provided the notice described above, and the obligation of the other Lenders to make, and to convert Base Rate Loans into, Eurodollar Rate Loans shall not be affected by such restrictions. In the event that the obligation of some, but not all, of the Lenders to make, or to convert Base Rate Loans into, Eurodollar Rate Loans is so suspended, then any request by the Borrower during the pendency of such suspension for a Eurodollar Rate Loan shall be deemed a request for such Eurodollar Rate Loan from the Lender(s) not subject to such suspension and for a Base Rate Loan from the Lender(s) who are subject to such suspension, in each case in the respective amounts based on the Lenders' respective Applicable Commitment Percentages. V.4. Compensation. The Borrower shall promptly pay to each Lender, upon the request of such Lender, such amount or amounts as shall be sufficient (in the reasonable determination of Lender) to compensate it for any loss, cost or expense incurred by it as a result of: (a) any payment, prepayment or conversion of a Eurodollar Rate Loan on a date other than the last day of the Interest Period for such Eurodollar Rate Loan, including without limitation any conversion required pursuant to Sections 5.1, 5.2 or 5.3; or (b) any failure by the Borrower to borrow or convert a Eurodollar Rate Loan on the date for such borrowing or conversion specified in the relevant Borrowing Notice or Interest Rate Selection Notice under Article II; such compensation to include, without limitation, an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the principal amount so paid, prepaid or converted or not borrowed for the period from the date of such payment, prepayment or 34 39 conversion or failure to borrow or convert to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow or convert, the Interest Period for such Loan which would have commenced on the date scheduled for such borrowing or conversion) at the applicable rate of interest for such Eurodollar Rate Loan provided for herein over (ii) the Interbank Offered Rate (as reasonably determined by the Agent) for Dollar deposits of amounts comparable to such principal amount and maturities comparable to such period. A determination of a Lender as to the amounts payable pursuant to this Section 5.4 shall be conclusive, provided that such determinations are made on a reasonable basis. The Lender requesting compensation under this Section 5.4 shall promptly furnish to the Authorized Representative and the Agent calculations in reasonable detail setting forth such Lender's determination of the amount of such compensation. V.5. Alternate Loan and Lender. In the event any Lender suspends the making of any Eurodollar Rate Loan pursuant to this Article V (herein a "Restricted Lender"), the Restricted Lender's Commitment Percentage of any Eurodollar Rate Loan shall bear interest at the Base Rate or the Eurodollar Rate for which the suspension does not apply, as selected by Borrower, until the Restricted Lender once again makes available the applicable Eurodollar Rate Loan. Notwithstanding the provisions of Sections 2.2(b), interest shall be payable to the Restricted Lender in respect of Loans to which the suspension applies at the time and manner as paid to those Lenders making available Eurodollar Rate Loans. V.6. Taxes. (a) All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future excise, stamp or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding (i) franchise taxes, (ii) any taxes (other than withholding taxes) that would not be imposed but for a connection between a Lender or the Agent and the jurisdiction imposing such taxes (other than a connection arising solely by virtue of the activities of such Lender or the Agent pursuant to or in respect of this Agreement or any other Loan Document), (iii) any taxes imposed on or measured by any Lender's assets, net income, receipts or branch profits, and (iv) any taxes arising after the Closing Date solely as a result of or attributable to a Lender changing its designated lending office after the date such Lender becomes a party hereto (such non-excluded items being collectively called "Taxes"). In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will (x) pay directly to the relevant authority the full amount required to be so withheld or deducted; (y) promptly forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such authority; and (z) pay to the Agent for the account of each Lender such additional amount 35 40 or amounts as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required. (b) Prior to the date that any Lender or participant organized under the laws of a jurisdiction outside the United States becomes a party hereto, such Person shall deliver to the Borrower and the Agent such certificates, documents or other evidence, as required by the Code or Treasury Regulations issued pursuant thereto, properly completed, currently effective and duly executed by such Lender or participant establishing that payments to it hereunder and under the Notes are (i) not subject to United States Federal backup withholding tax and (ii) not subject to United States Federal withholding tax under the Code because such payment is either effectively connected with the conduct by such Lender or participant of a trade or business in the United States or totally exempt from United States Federal withholding tax by reason of the application of the provisions of a treaty to which the United States is a party or such Lender is otherwise exempt. (c) If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Agent, for the account of the respective Lender, the required receipts or other required documentary evidence, the Borrower shall indemnify the Lenders for any incremental Taxes, interest or penalties that may become payable by any Lender as a result of any such failure. For purposes of this Section 5.6, a distribution hereunder by the Agent or any Lender to or for the account of any Lender shall be deemed a payment by or on behalf of the Borrower. 36 41 ARTICLE VI Conditions to Making Loans and Issuing Letters of Credit VI.1. Conditions of Initial Advance. The obligation of the Lenders to make initial Advance under the Revolving Credit Facility, and of the Issuing Bank to issue any Letter of Credit, is subject to the conditions precedent that: (a) the Agent shall have received on the Closing Date, in form and substance satisfactory to the Agent and Lenders, the following: (i) executed originals of each of this Agreement, the Notes, the initial Facility Guaranties, the Security Instruments, the LC Account Agreement and the other Loan Documents, together with all schedules and exhibits thereto; (ii) the favorable written opinion or opinions with respect to the Loan Documents and the transactions contemplated thereby of counsel to the Credit Parties dated the Closing Date, addressed to the Agent and the Lenders and satisfactory to Smith Helms Mulliss & Moore, L.L.P., special counsel to the Agent, substantially in the form of Exhibit G; (iii) resolutions of the boards of directors or other appropriate governing body (or of the appropriate committee thereof) of each Credit Party certified by its secretary or assistant secretary as of the Closing Date, approving and adopting the Loan Documents to be executed by such Person, and authorizing the execution and delivery thereof; (iv) specimen signatures of officers of each Credit Party executing the Loan Documents on behalf of such Credit Party, certified by the secretary or assistant secretary of such Credit Party; (v) the charter documents of each Credit Party certified as of a recent date by the Secretary of State of its state of organization; (vi) the bylaws of each Credit Party certified as of the Closing Date as true and correct by its secretary or assistant secretary; (vii) certificates issued as of a recent date by the Secretaries of State of the respective jurisdictions of formation of each Credit Party as to the due existence and good standing of each Credit Party; (viii) appropriate certificates of qualification to do business, good standing and, where appropriate, authority to conduct business under assumed name, issued in respect of each Credit Party as of a recent date by the Secretary 37 42 of State or comparable official of each jurisdiction in which the failure to be qualified to do business or authorized so to conduct business could have a Material Adverse Effect; (ix) notice of appointment of the initial Authorized Representative(s); (x) certificate of an Authorized Representative dated the Closing Date demonstrating compliance with the financial covenants contained in Section 8.12 as of the Closing Date, substantially in the form of Exhibit H; (xi) evidence of all insurance required by the Loan Documents; (xii) an initial Borrowing Notice, if any, Borrowing Base Certificate, and, if elected by the Borrower, Interest Rate Selection Notice; (xiii) evidence of the filing of Uniform Commercial Code financing statements reflecting the filing in all places required by applicable law to perfect the Liens of the Agent under the Security Instruments as a first priority Lien as to items of Collateral in which a security interest may be perfected by the filing of financing statements, and such other documents and/or evidence of other actions as may be necessary under applicable law to perfect the Liens of the Agent under the Security Instruments as a first priority Lien in and to such other Collateral as the Agent may require. (xiv) landlord estoppal and waiver letters for the warehouse facilities located in Tennessee and Nevada; (xv) such other documents, instruments, certificates and opinions as the Agent or any Lender may reasonably request on or prior to the Closing Date in connection with the consummation of the transactions contemplated hereby; and (b) In the good faith judgment of the Agent and the Lenders: (i) there shall not have occurred or become known to the Agent or the Lenders any event, condition, situation or status since the date of the information contained in the financial and business projections, budgets, pro forma data and forecasts concerning the Credit Parties delivered to the Agent prior to the Closing Date that has had or could reasonably be expected to result in a Material Adverse Effect; (ii) no litigation, action, suit, investigation or other arbitral, administrative or judicial proceeding shall be pending or threatened which could reasonably be likely to result in a Material Adverse Effect; and 38 43 (iii) the Borrower, the Parent and their Subsidiaries shall have received all approvals, consents and waivers, and shall have made or given all necessary filings and notices as shall be required to consummate the transactions contemplated hereby without the occurrence of any default under, conflict with or violation of (A) any applicable law, rule, regulation, order or decree of any Governmental Authority or arbitral authority or (B) any agreement, document or instrument to which any of the Borrower, the Parent or any Subsidiary of the Borrower or the Parent is a party or by which any of them or their properties is bound; and (iv) there shall not have occurred or exist (A) an engagement in hostilities by the United States of America or other national or international emergency or calamity, (B) a general suspension of or material limitation on trading on the New York Stock Exchange or other national securities exchange, (C) the declaration of a general banking moratorium by any applicable Governmental Authority or the imposition by any applicable Governmental Authority of any material limitation on transactions of the type contemplated by the Loan Documents, or (D) any other material disruption of financial or capital markets that could reasonably be expected to adversely affect the transactions contemplated under the Loan Documents. VI.2. Conditions of Loans and Letter of Credit. The obligations of the Lenders to make any Loans, and the Issuing Bank to issue Letters of Credit, hereunder on or subsequent to the Closing Date are subject to the satisfaction of the following conditions: (a) the Agent shall have received a Borrowing Notice if required by Article II; (b) the representations and warranties of the Borrower, the Parent and their Subsidiaries set forth in Article VII and in each of the other Loan Documents shall be true and correct in all material respects on and as of the date of such Advance, with the same effect as though such representations and warranties had been made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date and except that the financial statements referred to in Section 7.6(a)(i) shall be deemed to be those financial statements most recently delivered to the Agent and the Lenders pursuant to Section 8.1 from the date financial statements are delivered to the Agent and the Lenders in accordance with such Section; (c) in the case of the issuance of a Letter of Credit, the Borrower shall have executed and delivered to the Issuing Bank an Application and Agreement for Letter of Credit in form and content acceptable to the Issuing Bank together with such other instruments and documents as it shall request; 39 44 (d) at the time of (and after giving effect to) each Advance or the issuance of a Letter of Credit, no Default or Event of Default specified in Article X shall have occurred and be continuing; and (e) immediately after giving effect to: (i) a Loan, the aggregate principal balance of all outstanding Loans for each Lender shall not exceed such Lender's Revolving Credit Commitment; (ii) a Letter of Credit or renewal thereof, the aggregate principal balance of all outstanding Participations in Letters of Credit and Reimbursement Obligations (or in the case of the Issuing Bank, its remaining interest after deduction of all Participations in Letters of Credit and Reimbursement Obligations of other Lenders) for each Lender and in the aggregate shall not exceed, respectively, (X) such Lender's Letter of Credit Commitment or (Y) the Total Letter of Credit Commitment; (iv) a Loan or a Letter of Credit or renewal thereof, the sum of Letter of Credit Outstandings plus Revolving Credit Outstandings shall not exceed the Total Revolving Credit Commitment or the Borrowing Base. 40 45 ARTICLE VII Representations and Warranties The Borrower represents and warrants with respect to itself, the Parent and their respective Subsidiaries (which representations and warranties shall survive the delivery of the documents mentioned herein and the making of Loans), that: VII.1. Organization and Authority. (a) The Borrower, the Parent and each Subsidiary is a corporation duly organized and validly existing under the laws of the jurisdiction of its formation; (b) The Borrower, the Parent and each Subsidiary (x) has the requisite power and authority to own its properties and assets and to carry on its business as now being conducted and as contemplated in the Loan Documents, and (y) is qualified to do business in every jurisdiction in which failure so to qualify would have a Material Adverse Effect; (c) The Borrower has the power and authority to execute, deliver and perform this Agreement and the Notes, and to borrow hereunder, and to execute, deliver and perform each of the other Loan Documents to which it is a party; (d) Each Credit Party has the power and authority to execute, deliver and perform the applicable Facility Guaranty and each of the other Loan Documents to which it is a party; and (e) When executed and delivered, each of the Loan Documents to which the Borrower or any other Credit Party is a party will be the legal, valid and binding obligation or agreement, as the case may be, of the Borrower or such Credit Party, enforceable against the Borrower or such Credit Party in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors' rights generally and to the effect of general principles of equity (whether considered in a proceeding at law or in equity). VII.2. Loan Documents. The execution, delivery and performance by the Borrower and each other Credit Party of each of the Loan Documents to which it is a party: (a) have been duly authorized by all requisite corporate action (including any required shareholder approval) of the Borrower and each other Credit Party required for the lawful execution, delivery and performance thereof; (b) do not violate any provisions of (i) applicable law, rule or regulation, (ii) 41 46 any judgment, writ, order, determination, decree or arbitral award of any Governmental Authority or arbitral authority binding on the Borrower or any other Credit Party or its properties, or (iii) the charter documents or bylaws of the Borrower or any other Credit Party; (c) does not and will not be in conflict with, result in a breach of or constitute an event of default, or an event which, with notice or lapse of time or both, would constitute an event of default, under any contract, indenture, agreement or other instrument or document to which Borrower or any other Credit Party is a party, or by which the properties or assets of Borrower or any other Credit Party are bound; and (d) does not and will not result in the creation or imposition of any Lien upon any of the properties or assets of Borrower or any other Credit Party except any Liens in favor of the Agent and the Lenders created by the Security Instruments. VII.3. Solvency. The Borrower and each other Credit Party is Solvent after giving effect to the transactions contemplated by the Loan Documents. VII.4. Subsidiaries and Stockholders. Neither the Borrower, nor the Parent has any Subsidiaries other than those Persons listed as Subsidiaries in Schedule 7.4 and additional Subsidiaries created or acquired after the Closing Date in compliance with Section 8.11; Schedule 7.4 states as of the date hereof the organizational form of each entity, the authorized and issued capitalization of each Subsidiary listed thereon, the number of shares or other equity interests of each class of capital stock or interest issued and outstanding of each such Subsidiary and the number and/or percentage of outstanding shares or other equity interest (including options, warrants and other rights to acquire any interest) of each such class of capital stock or other equity interest owned by Borrower, by Parent or by any such Subsidiary; the outstanding shares or other equity interests of each such Subsidiary have been duly authorized and validly issued and are fully paid and nonassessable; and Borrower, the Parent and each such Subsidiary owns beneficially and of record all the shares and other interests it is listed as owning in Schedule 7.4, free and clear of any Lien. VII.5. Ownership Interests. Neither the Borrower nor Parent owns any interest in any Person other than the Persons listed in Schedule 7.4 and additional Subsidiaries created or acquired after the Closing Date in compliance with Section 8.11. VII.6. Financial Condition. (a) The Borrower has heretofore furnished to each Lender an audited consolidated and related consolidating balance sheet of the Parent and its Subsidiaries (including Borrower) as at December 31, 1995 and the notes thereto and the related consolidated statements of income, stockholders' equity and cash flows for the fiscal year then ended as examined and certified by the Parent's independent certified public accountants, and unaudited consolidated and consolidating interim financial statements 42 47 of the Parent and its Subsidiaries (including Borrower) consisting of a consolidated and consolidating balance sheets and related consolidated and consolidating statements of income, stockholders' equity and cash flows, in each case without notes, for and as of the end of the six month period ending June 30, 1996. Except as set forth therein, such financial statements (including the notes thereto) present fairly the financial condition of the Parent and its Subsidiaries (including Borrower) as of the end of such fiscal year and 6 month period and results of their operations and the changes in its stockholders' equity for the fiscal year and interim period then ended, all in conformity with GAAP applied on a Consistent Basis, subject however, in the case of unaudited interim statements to year end audit adjustments; (b) since June 30, 1996 there has been no material adverse change in the condition, financial or otherwise, of the Parent and its Subsidiaries or the Borrower and its Subsidiaries or in the businesses, properties, performance, prospects or operations of the Borrower, the Parent or their Subsidiaries, nor have such businesses or properties been materially adversely affected as a result of any fire, explosion, earthquake, accident, strike, lockout, combination of workers, flood, embargo or act of God; and (c) except as set forth in the financial statements referred to in Section 7.6(a) or in Schedule 7.6, neither Parent, Borrower nor any Subsidiary of Parent or Borrower has incurred, other than in the ordinary course of business, any material Indebtedness, Contingent Obligation or other commitment or liability which remains outstanding or unsatisfied. VII.7. Title to Properties. The Borrower, the Parent and each of their Subsidiaries has good and marketable title to all its real and personal properties, subject to no transfer restrictions or Liens of any kind, except for the transfer restrictions and Liens described in Schedule 7.7. VII.8. Taxes. Except as set forth in Schedule 7.8, the Borrower, the Parent and each of their Subsidiaries has filed or caused to be filed all federal, state and local tax returns which are required to be filed by it and, except for taxes and assessments being contested in good faith by appropriate proceedings diligently conducted and against which reserves reflected in the financial statements described in Section 7.6(a) and satisfactory to the Borrower's independent certified public accountants have been established, have paid or caused to be paid all taxes as shown on said returns or on any assessment received by it, to the extent that such taxes have become due. VII.9. Other Agreements. Neither the Borrower, the Parent nor any of their Subsidiaries is: (a) a party to or subject to any judgment, order, decree, agreement, lease or instrument, or subject to other restrictions, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect; or 43 48 (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which the Borrower, the Parent or any Subsidiary is a party, which default has, or if not remedied within any applicable grace period could reasonably be likely to have, a Material Adverse Effect. VII.10. Litigation. Except as set forth in Schedule 7.10, there is no action, suit, investigation or proceeding at law or in equity or by or before any governmental instrumentality or agency or arbitral body pending, or, to the knowledge of the Borrower, threatened by or against the Borrower, the Parent or any of their Subsidiaries or affecting the Borrower, the Parent or any of their Subsidiaries or any properties or rights of the Borrower, the Parent or any of their Subsidiaries, which could reasonably be expected to have a Material Adverse Effect. VII.11. Margin Stock. The proceeds of the borrowings made hereunder will be used by the Borrower only for the purposes expressly authorized herein. None of such proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry margin stock or for any other purpose which might constitute any of the Loans under this Agreement a "purpose credit" within the meaning of said Regulation U or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any agent acting in its behalf has taken or will take any action which might cause this Agreement or any of the documents or instruments delivered pursuant hereto to violate any regulation of the Board or to violate the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or any state securities laws, in each case as in effect on the date hereof. VII.12. Investment Company. Neither the Borrower, the Parent nor any of their Subsidiaries is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C. Section 80a-1, et seq.). The application of the proceeds of the Loans and repayment thereof by the Borrower and the performance by the Borrower and the other Credit Parties of the transactions contemplated by the Loan Documents will not violate any provision of said Act, or any rule, regulation or order issued by the Securities and Exchange Commission thereunder, in each case as in effect on the date hereof. VII.13. Patents, Etc. The Borrower, the Parent and each of their Subsidiaries owns or has the right to use, under valid license agreements or otherwise, all material patents, licenses, franchises, trademarks, trademark rights, trade names, trade name rights, trade secrets and copyrights necessary to or used in the conduct of its businesses as now conducted and as contemplated by the Loan Documents, without known conflict with any patent, license, franchise, trademark, trade secret, trade name, copyright, other proprietary right of any other Person. 44 49 VII.14. No Untrue Statement. Neither (a) this Agreement nor any other Loan Document or certificate or document executed and delivered by or on behalf of the Borrower or any other Credit Party in accordance with or pursuant to any Loan Document nor (b) any statement, representation, or warranty provided to the Agent in connection with the negotiation or preparation of the Loan Documents contains any misrepresentation or untrue statement of material fact or omits to state a material fact necessary, in light of the circumstance under which it was made, in order to make any such warranty, representation or statement contained therein not misleading. VII.15. No Consents, Etc. Neither the respective businesses or properties of the Borrower, the Parent or any of their Subsidiaries, nor any relationship between the Borrower, the Parent or any of their Subsidiaries and any other Person, nor any circumstance in connection with the execution, delivery and performance of the Loan Documents and the transactions contemplated thereby, is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority or any other Person on the part of the Borrower, the Parent or any of their Subsidiaries as a condition to the execution, delivery and performance of, or consummation of the transactions contemplated by the Loan Documents, which, if not obtained or effected, would be reasonably likely to have a Material Adverse Effect, or if so, such consent, approval, authorization, filing, registration or qualification has been duly obtained or effected, as the case may be. VII.16. Employee Benefit Plans. (a) The Borrower, the Parent and each ERISA Affiliate is in compliance with all applicable provisions of ERISA and the regulations and published interpretations thereunder and in compliance with all Foreign Benefit Laws with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code. No material liability has been incurred by the Borrower, the Parent or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan; (b) Neither the Borrower, the Parent nor any ERISA Affiliate has (i) engaged in a nonexempt prohibited transaction described in Section 4975 of the Code or Section 406 of ERISA affecting any of the Employee Benefit Plans or the trusts created thereunder which could subject any such Employee Benefit Plan or trust to a material tax or penalty on prohibited transactions imposed under Internal Revenue Code Section 4975 or ERISA, (ii) incurred any accumulated funding deficiency with respect to any Employee Benefit Plan, whether or not waived, or any other liability to the PBGC which remains outstanding other than the payment of premiums and there are no 45 50 premium payments which are due and unpaid, (iii) failed to make a required contribution or payment to a Multiemployer Plan, or (iv) failed to make a required installment or other required payment under Section 412 of the Code, Section 302 of ERISA or the terms of such Employee Benefit Plan; (c) No Termination Event has occurred or is reasonably expected to occur with respect to any Pension Plan or Multiemployer Plan, and neither the Borrower, the Parent nor any ERISA Affiliate has incurred any unpaid withdrawal liability with respect to any Multiemployer Plan; (d) The present value of all vested accrued benefits under each Employee Benefit Plan which is subject to Title IV of ERISA, did not, as of the most recent valuation date for each such plan, exceed the then current value of the assets of such Employee Benefit Plan allocable to such benefits; (e) To the best of the Borrower's knowledge, each Employee Benefit Plan subject to Title IV of ERISA, maintained by the Borrower, the Parent or any ERISA Affiliate, has been administered in accordance with its terms in all material respects and is in compliance in all material respects with all applicable requirements of ERISA and other applicable laws, regulations and rules; (f) The consummation of the Loans and the issuance of the Letters of Credit provided for herein will not involve any prohibited transaction under ERISA which is not subject to a statutory or administrative exemption; and (g) No material proceeding, claim, lawsuit and/or investigation exists or, to the best knowledge of the Borrower after due inquiry, is threatened concerning or involving any Employee Benefit Plan. VII.17. No Default. As of the date hereof, there does not exist any Default or Event of Default hereunder. VII.18. Hazardous Materials. (a) The Borrower, the Parent and each of their Subsidiaries is in compliance with all applicable Environmental Laws in all material respects, and has been issued and maintains all required federal, state and local permits, licenses, certificates and approvals pertaining to Hazardous Materials that are germane to the conduct of its business. Neither the Borrower, the Parent nor any of their Subsidiaries has been notified of any pending or threatened action, suit, proceeding or investigation which, and neither the Borrower, the Parent nor any of their Subsidiaries is aware of any facts, which (i) calls into question, or could reasonably be expected to call into question, compliance by the Borrower, the Parent or any of their Subsidiaries with any Environmental Laws, (ii) seeks, or could reasonably be expected to form the basis of a meritorious proceeding to seek, to suspend, revoke or terminate any license, permit, certification or approval pertaining to Hazardous Material that is germane to the conduct of its business, or (iii) seeks to cause, or could 46 51 reasonably be expected to form the basis of a meritorious proceeding to cause, any property of the Borrower, the Parent or any of their Subsidiaries to be subject to any restrictions on ownership, use, occupancy or transferability under any Environmental Law; (b) Neither the Borrower, the Parent nor any of their Subsidiaries, nor, to the best of Borrower's knowledge, any previous owner or operator of any real property owned or operated by the Borrower, the Parent or any of their Subsidiaries or any other Person, has managed, generated, stored, released, treated, or disposed of any Hazardous Material on any portion of such property, or transferred or caused to be transferred any Hazardous Material from such property to any other location except in compliance with all Environmental Laws. Except for Hazardous Materials necessary for the routine maintenance of the Properties owned or operated by the Borrower, the Parent and their Subsidiaries and as used in the ordinary course of the Borrower's, the Parent's or their Subsidiaries' business, which Hazardous Material shall be used in accordance with all applicable Environmental Laws, the Borrower covenants it shall, and shall cause the Parent and each of their Subsidiaries to, not permit any Hazardous Materials to be brought on to the real property owned or operated by the Borrower, the Parent and their Subsidiaries, or if so brought or found located thereon, shall be immediately removed, with proper disposal, and all environmental cleanup requirements shall be diligently undertaken pursuant to all Environmental Laws. VII.19. Employment Matters. (a) None of the employees of the Borrower, the Parent or any of their Subsidiaries is subject to any collective bargaining agreement and there are no strikes, work stoppages, election or decertification petitions or proceedings, unfair labor charges, equal opportunity proceedings, or other material labor/employee related controversies or proceedings pending or, to the best knowledge of the Borrower, threatened against the Borrower, the Parent or any such Subsidiary or between the Borrower, the Parent or any such Subsidiary and any of their employees, other than employee grievances arising in the ordinary course of business which could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and (b) Except to the extent a failure to maintain compliance would not have a Material Adverse Effect, the Borrower, the Parent and each of their Subsidiaries is in compliance in all respects with all applicable laws, rules and regulations pertaining to labor or employment matters, including without limitation those pertaining to wages, hours, occupational safety and taxation and there is neither pending or threatened any litigation, administrative proceeding nor, to the knowledge of the Borrower, any investigation, in respect of such matters which, if decided adversely, could reasonably be likely, individually or in the aggregate, to have a Material Adverse Effect. VII.20. RICO. Neither the Borrower, the Parent nor any of their Subsidiaries is engaged in or has engaged in any course of conduct that could subject any of their respective properties to any Lien, seizure or other forfeiture under any criminal law, racketeer influenced and corrupt organizations law, civil or criminal, or other similar laws. 47 52 ARTICLE VIII Affirmative Covenants Until the Revolving Credit Termination Date, unless the Required Lenders shall otherwise consent in writing, the Borrower will, and where applicable will cause the Parent and each Subsidiary of the Borrower and the Parent to: VIII.1. Financial Reports, Etc. (a) As soon as practical and in any event (i) within 90 days of the end of the fiscal year of the Parent deliver or cause to be delivered to the Agent financial statements of the Parent and its Subsidiaries (including Borrower) on a consolidated and consolidating basis in form and content acceptable to the Agent, setting forth comparative financial statements for the preceding fiscal year, all prepared in accordance with GAAP and in the case of the consolidated statements containing an unqualified opinion of independent certified public accountants acceptable to the Agent, together with a certificate of the chief financial officer of the Parent demonstrating compliance with Section 8.12 hereof (which certificate shall be in the form of Exhibit H attached hereto); (ii) within 45 days of the end of each fiscal quarter of the Parent, other than the last, of each fiscal year deliver to the Agent financial statements of the Parent and its Subsidiaries (including the Borrower) on a consolidated and consolidating basis in form and content acceptable to the Agent for the period from the beginning of the fiscal year through the end of such reporting period, all prepared in accordance with GAAP subject to normal year end adjustments and certified by the chief financial officer of Parent to be accurate and correct, together with a certificate of the chief financial officer of Parent containing computations for such quarter comparable to that required pursuant to subparagraph (a)(i) herein; (iii) within 15 days following the last day of each calendar month deliver to the Agent (A) a summary and aging of Eligible Receivables, (B) a summary of Eligible Inventory and (C) a Borrowing Base Certificate to the Bank in the form of Exhibit I attached hereto; (iv) within five days of receipt thereof a copy of any management letter furnished to Parent by its public accountants; (v) within five days of mailing or filing any report filed with the Securities and Exchange Commission or any stock exchange and (vi) upon any officer of the Borrower obtaining knowledge of any litigation or other proceedings being instituted against the Borrower, the Parent or any of their Subsidiaries, or any attachment, levy, execution or other process being instituted against any assets of the Borrower, the Parent or any of their Subsidiaries, making a claim or claims in an aggregate amount greater than $1,000,000 not otherwise covered by insurance, promptly deliver to the Agent written notice thereof stating the nature and status of such litigation, dispute, proceeding, levy, execution or other process. (b) promptly, from time to time, deliver or cause to be delivered to the Agent and each Lender such other information regarding the Parent's, the Borrower's and any of their Subsidiaries' operations, business affairs and financial condition as the Agent or such Lender may reasonably request; The Agent and the Lenders are hereby authorized to deliver a copy of any such 48 53 financial or other information delivered hereunder to the Lenders (or any affiliate of any Lender) or to the Agent, to any Governmental Authority having jurisdiction over the Agent or any of the Lenders pursuant to any written request therefor or in the ordinary course of examination of loan files, or to any other Person who shall acquire or consider the assignment of, or acquisition of any participation interest in, any Obligation permitted by this Agreement. VIII.2. Maintain Properties. Maintain all properties necessary to their operations in good working order and condition, make all needed repairs, replacements and renewals to such properties, and maintain free from Liens all trademarks, trade names, patents, copyrights, trade secrets, know-how, and other intellectual property and proprietary information (or adequate licenses thereto), in each case as are reasonably necessary to conduct their business as currently conducted or as contemplated hereby, all in accordance with customary and prudent business practices. VIII.3. Existence, Qualification, Etc. Do or cause to be done all things necessary to preserve and keep in full force and effect their existence and all material rights and franchises, and maintain their licenses or qualifications to do business as foreign corporations and good standing in each jurisdiction in which their ownership or lease of property or the nature of their business makes such license or qualification necessary except where the failure to so qualify would not have a Material Adverse Effect. VIII.4. Regulations and Taxes. Comply in all material respects with or contest in good faith all statutes and governmental regulations and pay all taxes, assessments, governmental charges, claims for labor, supplies, rent and any other obligation which, if unpaid, would become a Lien against any of their properties except liabilities being contested in good faith by appropriate proceedings diligently conducted and against which adequate reserves acceptable to the Parent's independent certified public accountants have been established unless and until any Lien resulting therefrom attaches to any of their property and becomes enforceable against any of their creditors. VIII.5. Insurance. (a) Keep all of their insurable properties adequately insured at all times with responsible insurance carriers against loss or damage by fire and other hazards to the extent and in the manner as are customarily insured against by similar businesses owning such properties similarly situated, (b) maintain general public liability insurance at all times with responsible insurance carriers against liability on account of damage to persons and property and (c) maintain insurance under all applicable workers' compensation laws (or in the alternative, maintain required reserves if self-insured for workers' compensation purposes) such policies of insurance to have such limits, deductibles, exclusions, co-insurance and other provisions providing no less coverages than are maintained by similar businesses that are similarly situated,in any manner. such insurance policies to be in form reasonably satisfactory to the Agent. Each of the policies of insurance described in this Section 8.5 shall provide that the insurer shall give the Agent not less than thirty (30) days' prior written notice before any such policy shall be terminated, lapse or be altered 49 54 VIII.6. True Books. Keep true books of record and account in which full, true and correct entries will be made of all of their dealings and transactions, and set up on their books such reserves as may be required by GAAP with respect to doubtful accounts and all taxes, assessments, charges, levies and claims and with respect to its business in general, and include such reserves in interim as well as year-end financial statements. VIII.7. Right of Inspection. Permit any Person designated by any Lender or the Agent to visit and inspect any of the properties, corporate books and financial reports of the Parent, the Borrower or any of their Subsidiaries and to discuss their affairs, finances and accounts with their principal officers and independent certified public accountants, all at reasonable times, at reasonable intervals and with reasonable prior notice. VIII.8. Observe all Laws. Conform to and duly observe in all material respects all laws, rules and regulations and all other valid requirements of any Governmental Authority with respect to the conduct of their business. VIII.9. Covenants Extending to Other Persons. Cause each of its Subsidiaries, the Parent and each of the Parent's Subsidiaries to do with respect to itself, its business and its assets, each of the things required of the Borrower in Sections 8.2 through 8.9 inclusive. VIII.10. Officer's Knowledge of Default. Upon any officer of the Borrower or the Parent obtaining knowledge of any Default or Event of Default hereunder or under any other obligation of the Borrower, the Parent or any of their Subsidiaries to any Lender, or any event, development or occurrence which could reasonably be expected to have a Material Adverse Effect, cause such officer or an Authorized Representative to promptly notify the Agent of the nature thereof, the period of existence thereof, and what action the Borrower, the Parent or such Subsidiary proposes to take with respect thereto. VIII.11. New Subsidiaries. Upon the acquisition or creation of any Domestic Subsidiary of the Parent or the Borrower, cause to be delivered to the Agent for the benefit of the Lenders each of the following: (a) a Facility Guaranty executed by such Subsidiary substantially in the form of Exhibit J; (b) a Security Agreement of such Subsidiary substantially in the form of Exhibit K, together with such Uniform Commercial Code financing statements on Form UCC-1 or otherwise duly executed by such Subsidiary as "Debtor" and naming the Agent for the benefit of the Lenders as "Secured Party", in form, substance and number sufficient in the reasonable opinion of the Agent and its special counsel to be filed in all Uniform Commercial Code filing offices in all jurisdictions in which filing is necessary or advisable to perfect in favor of the Agent for the benefit of the Lenders the Lien on Collateral conferred under such Security Instrument to the extent such Lien may be perfected by Uniform Commercial Code filing; 50 55 (c) current copies of the charter documents, including partnership agreements and certificate of limited partnership, if applicable, and bylaws of such Subsidiary, minutes of duly called and conducted meetings (or duly effected consent actions) of the Board of Directors, partners, or appropriate committees thereof (and, if required by such charter documents, bylaws or by applicable law, of the shareholders) of such Subsidiary authorizing the actions and the execution and delivery of documents described in this Section 8.11. VIII.12. Financial Covenants. (a) Consolidated Tangible Net Worth. Maintain at all times Consolidated Tangible Net Worth equal to the sum of (i) $143,000,000 plus (ii) 50% of Consolidated Net Income for each quarterly period subsequent to June 30, 1996 plus (iii) the aggregate net proceeds of any equity offering (including net proceeds under any stock option or executive compensation plan) received by Parent after June 30, 1996; and (b) Consolidated Interest Coverage Ratio. Maintain at all times a Consolidated Interest Coverage Ratio of not less than 2.00 to 1.00. 51 56 ARTICLE IX Negative Covenants Until the Revolving Credit Termination Date, unless the Required Lenders shall otherwise consent in writing, the Borrower will not, nor will it permit the Parent or any of their Domestic Subsidiaries to: IX.1. Negative Covenants. (a) Sell, lease, transfer or dispose of all or any part of their United States assets except in the ordinary course of business and except for Year End Domestic Receivables Transactions; (b) Incur, create, assume or permit to exist aggregate Indebtedness in excess of 10% of Consolidated Tangible Net Worth, however evidenced, or guarantee, assume or endorse or otherwise become or remain liable in connection with any Contingent Obligation, other than (i) the Indebtedness evidenced by the Note and Indebtedness approved by the Agent and (ii) Indebtedness listed on Schedule 7.6; (c) Enter into any agreement, contract, binding commitment or other arrangement providing for any Acquisition or for forming any joint venture, or take any action to solicit the tender of securities or proxies in respect thereof in order to effect any Acquisition, unless (i), in the case of an Acquisition, the Person to be (or whose assets are to be) acquired does not oppose such Acquisition and the line or lines of business of the Person to be acquired are substantially the same as one or more line or lines of business conducted by the Borrower, the Parent or their Subsidiaries, (ii), in the case of an Acquisition or the forming of a joint venture, no Default or Event of Default shall have occurred and be continuing either immediately prior to or immediately after giving effect to such Acquisition or joint venture and the Borrower shall have furnished to the Agent, only in the event such Acquisitions and joint ventures have exceeded $5,000,000 during any fiscal year, (A) pro forma historical financial statements as of the end of the most recently completed fiscal year of the Borrower after giving effect to such Acquisition or joint venture and (B) a certificate in the form of Exhibit H prepared on a historical pro forma basis giving effect to such Acquisition or joint venture, which certificate shall demonstrate that no Default or Event of Default would exist immediately after giving effect thereto, (iii), in the case of an Acquisition, the Person acquired shall be a wholly-owned Subsidiary, or be merged into the Borrower, the Parent or any of their Subsidiaries, immediately upon consummation of the Acquisition (or if assets are being acquired, the acquiror shall be the Borrower, the Parent or any of their Subsidiaries) and (iv), in the case of an Acquisition or a joint venture, such Acquisitions and joint ventures have not exceeded 25% of Consolidated Tangible Net Worth during any fiscal year; 52 57 (d) Incur, create or permit to exist any Lien, charge or other encumbrance of any nature whatsoever with respect to any property or assets now owned or hereafter acquired by the Borrower, the Parent or any of their Subsidiaries, except for Liens in favor of the Agent and the Lenders created pursuant to the Security Instruments, purchase money security interests, and Liens listed on Schedule 7.7; (e) Make any redemption, conversion, exchange, retirement or similar payment, purchase or other acquisition (collectively a "Restricted Payment") for value, direct or indirect, of any shares of any class of stock of Parent now or hereafter outstanding, provided, however, that the Parent may purchase it's stock in an aggregate amount no greater than an amount equal to 15% of Consolidated Tangible Net Worth; (f) Change its fiscal year from that of a calendar year. 53 58 ARTICLE X Events of Default and Acceleration X.1. Events of Default. If any one or more of the following events (herein called "Events of Default") shall occur for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Governmental Authority), that is to say: (a) if default shall be made in the due and punctual payment of the principal of any Loan, Reimbursement Obligation or other Obligation, when and as the same shall be due and payable whether pursuant to any provision of Article II or Article III, at maturity, by acceleration or otherwise; or (b) if default shall be made in the due and punctual payment of any amount of interest on any Loan, Reimbursement Obligation or other Obligation or of any fees or other amounts payable to any of the Lenders, the Issuing Bank or the Agent on the date on which the same shall be due and payable; or (c) if a default shall be made in the performance or observance of, or shall occur under, any covenant, agreement or provision contained in this Agreement or the Notes (other than as described in clauses (a) or (b) above) and such default shall continue for 30 or more days after the earlier of receipt of notice of such default by the Authorized Representative from the Agent or an officer of the Borrower becomes aware of such default, or if a default shall be made in the performance or observance of, or shall occur under, any covenant, agreement or provision contained in any of the other Loan Documents (beyond any applicable grace period, if any, contained therein) or in any instrument or document evidencing or creating any obligation, guaranty, or Lien in favor of the Agent or any of the Lenders or delivered to the Agent or any of the Lenders in connection with or pursuant to this Agreement or any of the Obligations, or if any Loan Document ceases to be in full force and effect (other than in accordance with its terms in the absence of default or with the consent of the Agent and the Lenders), or if without the written consent of the Lenders, this Agreement or any other Loan Document shall be disaffirmed or shall terminate, be terminable or be terminated or become void or unenforceable for any reason whatsoever (other than in accordance with its terms in the absence of default or with the consent of the Agent and the Lenders); or (d) if there shall occur (i) a default, which is not waived, in the payment of any principal, interest, premium or other amount with respect to any Indebtedness (other than the Loans and other Obligations) of the Borrower, the Parent or any of their Subsidiaries in an amount not less than $50,000 in the aggregate outstanding, or (ii) a default, which is not waived, in the performance, observance or fulfillment of any term 54 59 or covenant contained in any agreement or instrument under or pursuant to which any such Indebtedness may have been issued, created, assumed, guaranteed or secured by the Borrower, the Parent or any of their Subsidiaries, or (iii) any other event of default as specified in any agreement or instrument under or pursuant to which any such Indebtedness may have been issued, created, assumed, guaranteed or secured by the Borrower, the Parent or any of their Subsidiaries, and such default or event of default shall continue for more than the period of grace, if any, therein specified, or such default or event of default shall permit the holder of any such Indebtedness (or any agent or trustee acting on behalf of one or more holders) to accelerate the maturity thereof; or (e) if any representation, warranty or other statement of fact contained in any Loan Document or in any writing, certificate, report or statement at any time furnished to the Agent or any Lender by or on behalf of the Borrower, the Parent or any of their Subsidiaries pursuant to or in connection with any Loan Document, or otherwise, shall be false or misleading in any material respect when given; or (f) if the Borrower, the Parent or any of their Subsidiaries shall be unable to pay its debts generally as they become due; file a petition to take advantage of any insolvency statute; make an assignment for the benefit of its creditors; commence a proceeding for the appointment of a receiver, trustee, liquidator or conservator of itself or of the whole or any substantial part of its property; file a petition or answer seeking liquidation, reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute; or (g) if a court of competent jurisdiction shall enter an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of the Borrower, the Parent or any of their Subsidiaries or of the whole or any substantial part of its properties and such order, judgment or decree continues unstayed and in effect for a period of sixty (60) days, or approve a petition filed against the Borrower, the Parent or any of their Subsidiaries seeking liquidation, reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state, which petition is not dismissed within sixty (60) days; or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction shall assume custody or control of the Borrower, the Parent or any of their Subsidiaries or of the whole or any substantial part of any of its properties, which control is not relinquished within sixty (60) days; or if there is commenced against the Borrower, the Parent or any of their Subsidiaries any proceeding or petition seeking reorganization, arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state which proceeding or petition remains undismissed for a period of sixty (60) days; or if the Borrower, the Parent or any of their Subsidiaries takes any action to indicate its consent to or approval of any such proceeding or petition; or 55 60 (h) if (i) one or more judgments or orders where the amount not covered by insurance (or the amount as to which the insurer denies liability) is in excess of $1,000,000 is rendered against the Borrower, the Parent or any of their Subsidiaries, or (ii) there is any attachment, injunction or execution against any of the Borrower's, the Parent's or their Subsidiaries' or properties for any amount in excess of $1,000,000 in the aggregate; and such judgment, attachment, injunction or execution remains unpaid, unstayed, undischarged, unbonded or undismissed for a period of thirty (30) days; or (i) if the Borrower, the Parent or any of their Subsidiaries shall suspend all or any part of its operations material to the conduct of the business of the Borrower, the Parent or such Subsidiary; or (j) if the Borrower or the Parent merges or dissolves (except that a Subsidiary may be merged into another Subsidiary or the Borrower); (k) if there shall occur and not be waived an Event of Default as defined in any of the other Loan Documents; or (l) if any Person or group of Persons acting in concert, other than the owners of more than 10% of outstanding securities of the Parent as of July 28, 1996 having voting rights in the election of directors, shall own or control, directly or indirectly, more than 30% of the outstanding securities of the Parent having voting rights in the election of directors, in each case to be determined on a fully diluted basis and taking into account any outstanding securities or contract rights exercisable, exchangeable or convertible into equity interests; then, and in any such event and at any time thereafter, if such Event of Default or any other Event of Default shall have not been waived, either or both of the following actions may be taken: (i) the Agent, with the consent of the Required Lenders, may, and at the direction of the Required Lenders shall, declare any obligation of the Lenders and the Issuing Bank to make further Loans or to issue additional Letters of Credit terminated, whereupon the obligation of each Lender to make further Loans and of the Issuing Bank to issue additional Letters of Credit, hereunder shall terminate immediately, and (ii) the Agent shall at the direction of the Required Lenders, at their option, declare by notice to the Borrower any or all of the Obligations to be immediately due and payable, and the same, including all interest accrued thereon and all other obligations of the Borrower to the Agent and the Lenders, shall forthwith become immediately due and payable without presentment, demand, protest, notice or other formality of any kind, all of which are hereby expressly waived, anything contained herein or in any instrument evidencing the Obligations to the contrary notwithstanding; provided, however, that notwithstanding the above, if there shall occur an Event 56 61 of Default under clause (g) or (h) above, then the obligation of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall automatically terminate and any and all of the Obligations shall be immediately due and payable without the necessity of any action by the Agent or the Required Lenders or notice to the Agent or the Lenders; the Borrower shall, upon demand of the Agent or the Required Lenders, deposit cash with the Agent in an amount equal to the amount of any Letter of Credit Outstandings, as collateral security for the repayment of any future drawings or payments under such Letters of Credit, and such amounts shall be held by the Agent pursuant to the terms of the LC Account Agreement; and the Agent and each of the Lenders shall have all of the rights and remedies available under the Loan Documents or under any applicable law. X.2. Agent to Act. In case any one or more Events of Default shall occur and not have been waived, the Agent may, and at the direction of the Required Lenders shall, proceed to protect and enforce their rights or remedies either by suit in equity or by action at law, or both, whether for the specific performance of any covenant, agreement or other provision contained herein or in any other Loan Document, or to enforce the payment of the Obligations or any other legal or equitable right or remedy. X.3. Cumulative Rights. No right or remedy herein conferred upon the Lenders or the Agent is intended to be exclusive of any other rights or remedies contained herein or in any other Loan Document, and every such right or remedy shall be cumulative and shall be in addition to every other such right or remedy contained herein and therein or now or hereafter existing at law or in equity or by statute, or otherwise. X.4. No Waiver. No course of dealing between the Borrower and any Lender or the Agent or any failure or delay on the part of any Lender or the Agent in exercising any rights or remedies under any Loan Document or otherwise available to it shall operate as a waiver of any rights or remedies and no single or partial exercise of any rights or remedies shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or of the same right or remedy on a future occasion. X.5. Allocation of Proceeds. If an Event of Default has occurred and not been waived, and the maturity of the Notes has been accelerated pursuant to Article X, all payments received by the Agent hereunder, in respect of any principal of or interest on the Obligations or any other amounts payable by the Borrower hereunder, shall be applied by the Agent in the following order: (a) amounts due to the Lenders pursuant to Sections 2.10, 3.3, 3.4 and 12.5; 57 62 (b) amounts due to the Agent pursuant to Section 11.11; (c) payments of interest on Loans and Reimbursement Obligations, to be applied for the ratable benefit of the Lenders; (d) payments of principal of Loans and Reimbursement Obligations, to be applied for the ratable benefit of the Lenders; (e) payments of cash amounts to the Agent in respect of outstanding Letters of Credit pursuant to Section 10.1; (f) amounts due to the Lenders pursuant to Sections 3.2(g) and 12.9; (g) payments of all other amounts due under any of the Loan Documents, if any, to be applied for the ratable benefit of the Lenders; (h) any surplus remaining after application as provided for herein, to the Borrower or otherwise as may be required by applicable law. 58 63 ARTICLE XI The Agent XI.1. Appointment. Each Lender hereby irrevocably designates and appoints NationsBank as the Agent for the Lenders under this Agreement, and each of the Lenders hereby irrevocably authorizes NationsBank as the Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers as are expressly delegated to the Agent by the terms of this Agreement and such other Loan Documents, together with such other powers as are reasonably incidental thereto. The Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any of the Lenders, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. XI.2. Attorneys-in-fact. The Agent may execute any of its duties under the Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence, gross negligence or willful misconduct of any agents or attorneys-in-fact selected by it with reasonable care. XI.3. Limitation on Liability. Neither the Agent nor any of its officers, directors, employees, agents or attorneys-in-fact shall be liable to the Lenders for any action lawfully taken or omitted to be taken by it or them under or in connection with the Loan Documents except for its or their own gross negligence or willful misconduct. Neither the Agent nor any of its affiliates shall be responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower, the Parent, any of their Subsidiaries, or any officer or representative thereof contained in any Loan Document, or in any certificate, report, statement or other document referred to or provided for in or received by the Agent under or in connection with any Loan Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Loan Document, or for any failure of the Borrower, the Parent or any of their Subsidiaries to perform its obligations under any Loan Document, or for any recitals, statements, representations or warranties made, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of any collateral. The Agent shall not be under any obligation to any of the Lenders to ascertain or to inquire as to the observance or performance of any of the terms, covenants or conditions of any Loan Document on the part of the Borrower, the Parent or any of their Subsidiaries or to inspect the properties, books or records of the Borrower, the Parent or any of their Subsidiaries. XI.4. Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent certificate, affidavit, letter, cablegram, telegram, telefacsimile or telex message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, 59 64 without limitation, counsel to any Credit Party), independent accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless an Assignment shall have been filed with and accepted by the Agent. The Agent shall be fully justified in failing or refusing to take any action under the Loan Documents unless it shall first receive advice or concurrence of the Lenders or the Required Lenders as provided in this Agreement or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under the Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all present and future holders of the Notes. XI.5. Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Agent has received notice from a Lender, the Authorized Representative or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall promptly give notice thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that, unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable in the best interests of the Lenders. XI.6. No Representations. Each Lender expressly acknowledges that neither the Agent nor any of its affiliates has made any representations or warranties to it and that no act by the Agent hereafter taken, including any review of the affairs of the Borrower, the Parent or their Subsidiaries, shall be deemed to constitute any representation or warranty by the Agent to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the financial condition, creditworthiness, affairs, status and nature of the Borrower, Parent and their Subsidiaries and made its own decision to enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under the Loan Documents and to make such investigation as it deems necessary to inform itself as to the status and affairs, financial or otherwise, of the Borrower, the Parent and their Subsidiaries. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower, the Parent and their Subsidiaries which may come into the possession of the Agent or any of its affiliates. 60 65 XI.7. Indemnification. Each of the Lenders agree to indemnify the Agent in its capacity as such (to the extent not reimbursed by the Borrower or any other Credit Party and without limiting any obligations of the Borrower or any other Credit Party to do so), ratably according to the respective principal amount of the Notes held by them (or, if no Notes are outstanding, ratably in accordance with their respective Applicable Commitment Percentages as then in effect) from and against any and all liabilities, obligations, losses (excluding any losses suffered by the Agent as a result of Borrower's or any other Credit Party's failure to pay any fee owing to the Agent), damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time (including without limitation at any time following the payment of the Notes) be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of any Loan Document or any other document contemplated by or referred to therein or the transactions contemplated thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. The agreements in this subsection shall survive the Revolving Credit Termination Date and the termination of this Agreement. XI.8. Lender. The Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower, the Parent and their Subsidiaries as though it were not the Agent hereunder. With respect to its Loans made or renewed by it and any Note issued to it, the Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not the Agent, and the terms "Lender" and "Lenders" shall, unless the context otherwise indicates, include the Agent in its individual capacity. XI.9. Resignation. If the Agent shall resign as Agent under this Agreement, then the Required Lenders may appoint, with the consent, so long as there shall not have occurred and be continuing a Default or Event of Default, of the Borrower, which consent shall not be unreasonably withheld, a successor Agent for the Lenders, which successor Agent shall be a commercial bank organized under the laws of the United States or any state thereof, having a combined surplus and capital of not less than $500,000,000, whereupon such successor Agent shall succeed to the rights, powers and duties of the former Agent and the obligations of the former Agent shall be terminated and canceled, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement; provided, however, that the former Agent's resignation shall not become effective until such successor Agent has been appointed and has succeeded of record to all right, title and interest in any collateral held by the Agent; provided, further, that if the Required Lenders and, if applicable, the Borrower cannot agree as to a successor Agent within ninety (90) days after such resignation, the Agent shall appoint a successor Agent which satisfies the criteria set forth above in this Section 11.9 for a successor Agent and the parties hereto agree to execute whatever documents are necessary to effect such action under this Agreement or any other document executed pursuant to this Agreement; provided, however that in such event all provisions of the Loan Documents, 61 66 shall remain in full force and effect. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article XI shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. XI.10. Sharing of Payments, etc. Each Lender agrees that if it shall, through the exercise of a right of banker's lien, set-off, counterclaim or otherwise, obtain payment with respect to its Obligations (other than pursuant to Article V) which results in its receiving more than its pro rata share of the aggregate payments with respect to all of the Obligations (other than any payment expressly provided hereunder to be distributed on other than a pro rata basis and payments pursuant to Article V), then (a) such Lender shall be deemed to have simultaneously purchased from the other Lenders a share in their Obligations so that the amount of the Obligations held by each of the Lenders shall be pro rata and (b) such other adjustments shall be made from time to time as shall be equitable to insure that the Lenders share such payments ratably; provided, however, that for purposes of this Section 11.10 the term "pro rata" shall be determined with respect to both the Revolving Credit Commitment of each Lender and to the Total Revolving Credit Commitments after subtraction in each case of amounts, if any, by which any such Lender has not funded its share of the outstanding Loans and Obligations. If all or any portion of any such excess payment is thereafter recovered from the Lender which received the same, the purchase provided in this Section 11.10 shall be rescinded to the extent of such recovery, without interest. The Borrower expressly consents to the foregoing arrangements and agrees that each Lender so purchasing a portion of the other Lenders' Obligations may exercise all rights of payment (including, without limitation, all rights of set-off, banker's lien or counterclaim) with respect to such portion as fully as if such Lender were the direct holder of such portion. 62 67 ARTICLE XII Miscellaneous XII.1. Assignments and Participations. (a) At any time after the Closing Date each Lender may, with the prior consent of the Agent and (so long as no Default or Event of Default shall have occurred and be continuing) the Borrower, which consents shall not be unreasonably withheld, assign to one or more banks or financial institutions all or a portion of its rights and obligations under the Loan Documents (including, without limitation, all or a portion of any Note payable to its order); provided, that (i) each such assignment shall be of a constant and not a varying percentage of all of the assigning Lender's rights and obligations under the Revolving Credit Facility and Letter of Credit Facility, (ii) for each assignment involving the issuance and transfer of a Note, the assigning Lender shall execute an Assignment and Acceptance and the Borrower hereby agrees to execute a replacement Note to give effect to the assignment, (iii) the amount of Revolving Credit Commitment and Letter of Credit Commitment which shall be assigned is a minimum of $5,000,000, and, if greater, an amount which is an integral multiple of $1,000,000, (iv) such assignee shall have an office located in the United States, and (v) no consent of the Borrower or the Agent shall be required in connection with any assignment by a Lender to another Lender or to an affiliate of any Lender. Upon such execution, delivery, approval and acceptance, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder or under any such Note have been assigned or negotiated to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and a holder of such Note and (y) the assignor thereunder shall, to the extent that rights and obligations hereunder or under such Note have been assigned or negotiated by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement. Any Lender who makes an assignment shall pay to the Agent a one-time administrative fee of $3,500 which fee shall not be reimbursed by the Borrower. (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) the assignment made under such Assignment and Acceptance is made under such Assignment and Acceptance without recourse; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower, the Parent or their Subsidiaries or the performance or observance by the Borrower or any other Credit Party of any of its obligations under any Loan Document or any other instrument or Document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements delivered pursuant to Section 7.6(a) or Section 8.1, as the case may be, and such other Loan Documents and other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall 63 68 deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under any Loan Document; (v) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender and a holder of such Notes. (c) The Agent shall maintain at its address referred to herein a copy of each Assignment and Acceptance delivered to and accepted by it. (d) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender, the Agent shall give prompt notice thereof to Borrower. (e) Nothing herein shall prohibit any Lender from pledging or assigning, without notice to or consent of the Borrower and without the payment of the administrative fee referred to in Section 11.1(a), any Note to any Federal Reserve Bank in accordance with applicable law or to any affiliate of any such Lender. (f) Each Lender may sell participations at its expense to one or more banks or other entities as to all or a portion of its rights and obligations under this Agreement; provided, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any Note issued to it for the purpose of this Agreement, (iv) such participations shall be minimum amount of $2,500,000 and, if greater, an amount which is an integral multiple of $500,000 and shall include an allocable portion of such Lender's Participation, (v) Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and with regard to any and all payments to be made under this Agreement; provided, that the participation agreement between a Lender and its participants may provide that such Lender will obtain the approval of such participant prior to such Lender's agreeing to any amendment or waiver of any provisions of any Loan Document which would (A) extend the maturity of any Note, (B) reduce the interest rates hereunder or (C) increase the Revolving Credit Commitment or Letter of Credit Commitment of the Lender granting the participation, and (vi) the sale of any such participations which require Borrower to file a registration statement with the United States Securities and Exchange Commission or under the securities regulations or laws of any state shall not be permitted. (g) The Borrower may not assign, nor shall it cause, suffer or permit any other Credit Party to assign any rights, powers, duties or obligations under this Agreement or the other Loan Documents without the prior written consent of all the Lenders. XII.2. Notices. Any notice shall be conclusively deemed to have been received by any party hereto and be effective (i) on the day on which delivered (including hand delivery by 64 69 commercial courier service) to such party (against receipt therefor), (ii) on the date of receipt at such address, telefacsimile number or telex number as may from time to time be specified by such party in written notice to the other parties hereto or otherwise received), in the case of notice by telegram, telefacsimile or telex, respectively (where the receipt of such message is verified by return), or (iii) on the fifth Business Day after the day on which mailed, if sent prepaid by certified or registered mail, return receipt requested, in each case delivered, transmitted or mailed, as the case may be, to the address, telex number or telefacsimile number, as appropriate, set forth below or such other address or number as such party shall specify by notice hereunder: (a) if to the Borrower: Windmere Corporation 5980 Miami Lakes Drive Miami Lakes, Florida 33014 Attn: Chief Financial Officer Telephone: (305) 362-2611 Telefacsimile: (305) 364-0635 With a copy to: Windmere-Durable Holdings, Inc. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 Attn: Chief Financial Officer Telephone: (305) 362-2611 Telefacsimile: (305) 364-0502 (b) if to the Agent: NationsBank, National Association (South) Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Telephone: (704) 386-8451 Telefacsimile: (704) 386-9923 with a copy to: NationsBank, National Association (South) NationsBank Tower 100 Southeast 2nd Street, 14th Floor Miami, Florida 33131 65 70 Attention: Corporate Finance Telephone: (305) 533-2418 Telefacsimile: (305) 523-2437 (c) if to the Lenders: At the addresses set forth on the signature pages hereof and on the signature page of each Assignment and Acceptance; (d) if to any other Credit Party, at the address set forth on the signature page of the Facility Guaranty or Security Instrument executed by such Credit Party, as the case may be. XII.3. Setoff. The Borrower agrees that the Agent and each Lender shall have a lien for all the Obligations of the Borrower upon all deposits or deposit accounts, of any kind, or any interest in any deposits or deposit accounts thereof, now or hereafter pledged, mortgaged, transferred or assigned to the Agent or such Lender or otherwise in the possession or control of the Agent or such Lender (other than for safekeeping) for any purpose for the account or benefit of the Borrower and including any balance of any deposit account or of any credit of the Borrower with the Agent or such Lender, whether now existing or hereafter established, hereby authorizing the Agent and each Lender from and after the occurrence of a Default or Event of Default at any time or times with or without prior notice to apply such balances or any part thereof to such of the Obligations of the Borrower to the Lenders then past due and in such amounts as they may elect, and whether or not the collateral or the responsibility of other Persons primarily, secondarily or otherwise liable may be deemed adequate. For the purposes of this paragraph, all remittances and property shall be deemed to be in the possession of the Agent or such Lender as soon as the same may be put in transit to it by mail or carrier or by other bailee. XII.4. Survival. All covenants, agreements, representations and warranties made herein shall survive the making by the Lenders of the Loans and the issuance of the Letters of Credit and the execution and delivery to the Lenders of this Agreement and the Notes and shall continue in full force and effect so long as any of Obligations remain outstanding or any Lender has any commitment hereunder or the Borrower has continuing obligations hereunder unless otherwise provided herein. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and permitted assigns of such party and all covenants, provisions and agreements by or on behalf of the Borrower which are contained in the Loan Documents shall inure to the benefit of the successors and permitted assigns of the Lenders or any of them. XII.5. Expenses. The Borrower agrees (a) to pay or reimburse the Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of, and any amendment, supplement or modification to, any of the Loan Documents (including due diligence expenses and travel expenses relating to closing), and the consummation of the transactions contemplated thereby, including the reasonable fees 66 71 and disbursements of counsel to the Agent, (b) to pay or reimburse the Agent and the Lenders for all their costs and expenses incurred in connection with the enforcement or preservation of any rights under the Loan Documents, including the reasonable fees and disbursements of their counsel and any payments in indemnification or otherwise payable by the Lenders to the Agent pursuant to the Loan Documents, and (c) to pay, indemnify and hold the Agent and the Lenders harmless from any and all recording and filing fees and any and all liabilities with respect to, or resulting from any failure to pay or delay in paying, documentary, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of any of the Loan Documents, or consummation of any amendment, supplement or modification of, or any waiver or consent under or in respect of, any Loan Document. XII.6. Amendments. No amendment, modification or waiver of any provision of any Loan Document and no consent by the Lenders to any departure therefrom by the Borrower or any other Credit Party shall be effective unless such amendment, modification or waiver shall be in writing and signed by the Agent, shall have been approved by the Required Lenders through their written consent, and the same shall then be effective only for the period and on the conditions and for the specific instances and purposes specified in such writing; provided, however, that, no such amendment, modification or waiver (i) which changes, extends or waives any provision of Section 2.6, Section 11.9 or this Section 12.6, the amount of or the due date of any scheduled installment of or the rate of interest payable on any Obligation, which changes the definition of "Required Lenders", which permits an assignment by any Credit Party of its Obligations under any Loan Document, which reduces the required consent of Lenders provided hereunder, which increases, decreases (other than pursuant to the express terms hereof) or extends (other than pursuant to the express terms hereof) the Revolving Credit Commitment or Letter of Credit Commitment of any Lender, or which waives any condition to the making of any Loan, shall be effective unless in writing and signed by each of the Lenders; (ii) which releases Collateral or the guaranty obligation under any Facility Guaranty (other than pursuant to the express terms hereof or thereof) shall be effective unless with the written consent of each of the Lenders; or (iii) which affects the rights, privileges or obligations of the Issuing Bank as issuer of Letters of Credit, shall be effective unless signed in writing by the Issuing Bank; (iv) which affects the rights, privileges, immunities or indemnities of the Agent shall be effective unless in writing and signed by the Agent. Notwithstanding any provision of the other Loan Documents to the contrary, as between the 67 72 Agent and the Lenders, execution by the Agent shall not be deemed conclusive evidence that the Agent has obtained the written consent of the Required Lenders. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances, except as otherwise expressly provided herein. No delay or omission on any Lender's or the Agent's part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default. XII.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such fully-executed counterpart. XII.8. Termination. The termination of this Agreement shall not affect any rights of the Borrower, the Lenders or the Agent or any obligation of the Borrower, the Lenders or the Agent, arising prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into or rights created or obligations incurred prior to such termination have been fully disposed of, concluded or liquidated and the Obligations arising prior to or after such termination have been irrevocably paid in full. The rights granted to the Agent for the benefit of the Lenders under the Loan Documents shall continue in full force and effect, notwithstanding the termination of this Agreement, until all of the Obligations have been paid in full after the termination hereof (other than Obligations in the nature of continuing indemnities or expense reimbursement obligations not yet due and payable, which shall continue) or the Borrower has furnished the Lenders and the Agent with an indemnification satisfactory to the Agent and each Lender with respect thereto. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until payment in full of the Obligations unless otherwise provided herein. Notwithstanding the foregoing, if after receipt of any payment of all or any part of the Obligations, any Lender is for any reason compelled to surrender such payment to any Person because such payment is determined to be void or voidable as a preference, impermissible setoff, a diversion of trust funds or for any other reason, this Agreement shall continue in full force and the Borrower shall be liable to, and shall indemnify and hold the Agent or such Lender harmless for, the amount of such payment surrendered until the Agent or such Lender shall have been finally and irrevocably paid in full. The provisions of the foregoing sentence shall be and remain effective notwithstanding any contrary action which may have been taken by the Agent or the Lenders in reliance upon such payment, and any such contrary action so taken shall be without prejudice to the Agent or the Lenders' rights under this Agreement and shall be deemed to have been conditioned upon such payment having become final and irrevocable. XII.9. Indemnification; Limitation of Liability. In consideration of the execution and delivery of this Agreement by the Agent and each Lender and the extension of credit under the Loans, the Borrower hereby indemnifies, exonerates and holds the Agent and each Lender and each of their respective affiliates, officers, directors, employees, agents and advisors 68 73 (collectively, the "Indemnified Parties") free and harmless from and against any and all claims, actions, causes of action, suits, losses, costs, liabilities and damages, and expenses incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (collectively, the "Indemnified Liabilities") that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of, or in connection with the execution, delivery, enforcement, performance or administration of this Agreement and the other Loan Documents, or any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Loan or Letter of Credit, whether or not such action is brought against the Agent or any Lender, the shareholders or creditors of the Agent or any Lender or an Indemnified Party or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated herein are consummated, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct, and if and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The Borrower agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to it, to the Parent or to any of their Subsidiaries, or any security holders or creditors thereof arising out of, related to or in connection with the transactions contemplated herein, except to the extent that such liability is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct; provided, however, in no event shall any Indemnified Party be liable for consequential, indirect or special, as opposed to direct, damages. XII.10. Severability. If any provision of this Agreement or the other Loan Documents shall be determined to be illegal or invalid as to one or more of the parties hereto, then such provision shall remain in effect with respect to all parties, if any, as to whom such provision is neither illegal nor invalid, and in any event all other provisions hereof shall remain effective and binding on the parties hereto. XII.11. Entire Agreement. This Agreement, together with the other Loan Documents, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all previous proposals, negotiations, representations, commitments and other communications between or among the parties, both oral and written, with respect thereto. XII.12. Agreement Controls. In the event that any term of any of the Loan Documents other than this Agreement conflicts with any express term of this Agreement, the terms and provisions of this Agreement shall control to the extent of such conflict. XII.13. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged under any of the Notes, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the 69 74 Highest Lawful Rate (as such term is defined below). If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate (as defined below), the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, the Borrower shall pay to the Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of the Lenders and the Borrower to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be canceled automatically and, if previously paid, shall at such Lender's option be applied to the outstanding amount of the Loans made hereunder or be refunded to the Borrower. As used in this paragraph, the term "Highest Lawful Rate" means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. XII.14. GOVERNING LAW; WAIVER OF JURY TRIAL. (A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE. (A) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN FLORIDA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND 70 75 UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING. (B) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN SECTION 12.2, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA. (C) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW. (D) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING. [Signatures on following pages] 71 76 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written. WINDMERE CORPORATION WITNESS: By: - ------------------------- ------------------------------- Name: Cindy Solovei - ------------------------- Title: Treasurer NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), AS AGENT AND LENDER By: -------------------------------- Name: ------------------------------ Title: ----------------------------- NATIONAL BANK OF CANADA, AS LENDER By: -------------------------------- Name: ------------------------------ Title: ----------------------------- Address: 5200 Town Center Circle, Suite 306 Boca Raton, Florida 33486 Attn: Michael Bloomenfeld, Vice President Tel: (561) 367-1700; Fax: (561) 367-1705 77 EXHIBIT A Applicable Commitment Percentages Up to and Including January 31, 1997
Lender Revolving Applicable Credit Commitment Commitment Percentage ---------- ---------- NationsBank, National Association (South) $17,000,000 56.666666667% National Bank of Canada 13,000,000 43.333333333% ---------- ------------ $30,000,000 100%
Applicable Commitment Percentages After January 31, 1997
Lender Revolving Applicable Credit Commitment Commitment Percentage ---------- ---------- NationsBank, National Association (South) $11,333,340 56.666666667% National Bank of Canada 8,666,660 43.333333333% ----------- ------------ $20,000,000 100%
A-1 78 EXHIBIT B Form of Assignment and Acceptance DATED ________________ , ___ Reference is made to the Credit Agreement dated as of October 11, 1996 (the "Agreement") among Windmere Corporation, a Florida corporation (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association (South), as Agent for the Lenders ("Agent"). Unless otherwise defined herein, terms defined in the Agreement are used herein with the same meanings. _____ (the "Assignor") and _______________________________ (the "Assignee") agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE, a _______% (1) interest in and to all of the Assignor's rights and obligations under the Agreement as of the Effective Date (as defined below), including, without limitation, such percentage interest in the Loans owing to the Assignor on the Effective Date, and evidenced by the Note held by the Assignor. 2. The Assignor (i) represents and warrants that, as of the date hereof, (A) the aggregate principal amount of Loans owing to it (without giving effect to the assignments thereof which have not yet become effective) is $__________ under a Note dated ____________, 19__ in the principal amount of $_________ and (B) the aggregate principal amount of the Participations purchased by it (without giving effect to the assignments thereof which have not yet become effective) is $_________; (ii) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (iii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Agreement or any of the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Agreement or any of the Loan Documents or any other instrument or document furnished pursuant thereto; (iv) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower, the Parent or any Subsidiary of the Borrower or the Parent or the performance or observance by the Borrower or any other Credit Party of any of their obligations under any of the Loan Documents or any other instrument or document furnished pursuant thereto and (v) attaches hereto the Note referred to in paragraph 1 above and requests that the Agent exchange such Note for replacement Notes as follows: a Note dated _____________, 19__ in the principal amount of $________________, payable to the order of (1) Specify percentage in no more than 4 decimal points. B-1 79 the Assignor, and a Note, dated ____________________________ 19__, in the principal amount of $_________________ payable to the order of the Assignee. 3. The Assignee (i) confirms that it has received a copy of the Agreement, together with copies of the financial statements referred to in Section 8.1 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor, or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Agreement; (iii) appoints and authorizes the Agent to take such actions on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (iv) will perform all of the obligations which by the terms of the Agreement are required to be performed by the Lender; and (v) specifies as its address for notices the office set forth beneath its name on the signature pages hereof. 4. The effective date for this Assignment and Acceptance shall be _____________________________ (the "Effective Date"). Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. 5. Upon such acceptance and recording, as of the Effective Date, (i) the Assignee shall be a party to the Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Agreement and the other Loan Documents. 6. Upon such acceptance and recording, from and after the Effective Date, the Agent shall make all payments under the Agreement and Note in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest, commitment fees and letter of credit fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Agreement and the Notes for periods prior to the Effective Date directly between themselves. B-2 80 7. This Assignment and Acceptance shall be governed by and construed in accordance with, the laws of the State of Florida. [NAME OF ASSIGNOR] By: ------------------------------ Name: ------------------------- Title: ------------------------ Notice Address: ------------------ ------------------ ------------------ After the Effective Date Outstanding Loans: $ ----------- Outstanding LC Participations: $ ----------- [NAME OF ASSIGNEE] By: ------------------------------ Name: -------------------------- Title: ------------------------- Notice Address/Lending Office Wire transfer Instructions: After the Effective Date Outstanding Loans: $ --------- Outstanding LC Participations: $ --------- B-3 81 Accepted this ____ day of _______, 19___ NATIONSBANK, NATIONAL ASSOCIATION, (SOUTH), as Agent By: ------------------------------ Name: -------------------------- Title: ------------------------- Consented to: WINDMERE CORPORATION By: ------------------------------ Name: -------------------------- Title: ------------------------- B-4 82 EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative Reference is hereby made to the Credit Agreement dated as of October 11, 1996 (the "Agreement") among Windmere Corporation, a Florida corporation (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association (South), as Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein shall have the respective meanings therefor set forth in the Agreement. The Borrower hereby nominates, constitutes and appoints each individual named below as an Authorized Representative under the Loan Documents, and hereby represents and warrants that (i) set forth opposite each such individual's name is a true and correct statement of such individual's office (to which such individual has been duly elected or appointed), a genuine specimen signature of such individual and an address for the giving of notice, and (ii) each such individual has been duly authorized by the Borrower to act as Authorized Representative under the Loan Documents: Name and Address Office Specimen Signature ----------------- ------------------- ------------------- ----------------- ----------------- ----------------- ------------------- ------------------- ----------------- ----------------- Borrower hereby revokes (effective upon receipt hereof by the Agent) the prior appointment of ________________ as an Authorized Representative. This the ___ day of __________________, 19__. ---------------------------- By: ------------------------- Title: ---------------------- C-1 83 EXHIBIT D Form of Borrowing Notice To: NationsBank, National Association (South), as Agent Reference is hereby made to the Credit Agreement dated as of October __, 1996 (the "Agreement") among Windmere Corporation (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association (South), as Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein shall have the respective meanings therefor set forth in the Agreement. The Borrower through its Authorized Representative hereby gives notice to the Agent that Loans of the type and amount set forth below be made on the date indicated:
Type of Loan Interest Aggregate (check one) Period(1) Amount(2) Date of Loan(3) ------------ --------- --------- -------------- Revolving Loan --------------- Base Rate Loan --------- --------- ------------- Eurodollar Rate Loan --------- --------- -------------
- ----------------------- (1) For any Eurodollar Rate Loan, one, two, three or six months. (2) Must be $500,000 or if greater an integral multiple of $100,000, unless a Base Rate Refunding Loan. (3) At least three (3) Business Days later if a Eurodollar Rate Loan; The Borrower hereby requests that the proceeds of Loans described in this Borrowing Notice be made available to the Borrower as follows: [insert transmittal instructions] . The undersigned hereby certifies that: 1. No Default or Event of Default exists either now or after giving effect to the borrowing described herein; and 2. All the representations and warranties set forth in Article VII of the Agreement and in the Loan Documents (other than those expressly stated to refer to a particular date) are true and correct as of the date hereof except that the reference to the financial statements in Section 7.6(a) of the Agreement are to those financial statements most recently delivered to D-1 84 you pursuant to Section 8.1 of the Agreement (it being understood that any financial statements delivered pursuant to Section 8.1(a)(ii) have not been certified by independent public accountants) and attached hereto are any changes to the Schedules referred to in connection with such representations and warranties. 3. All conditions contained in the Agreement to the making of any Loan requested hereby have been met or satisfied in full . WINDMERE CORPORATION BY: -------------------------------------- Authorized Representative DATE: ------------------------------------- D-2 85 EXHIBIT E Form of Interest Rate Selection Notice To: NationsBank, National Association (South), as Agent Reference is hereby made to the Credit Agreement dated as of October __, 1996 (the "Agreement") among Windmere Corporation (the "Borrower"), the Lenders (as defined in the Agreement), and NationsBank, National Association (South), as Agent for the Lenders ("Agent"). Capitalized terms used but not defined herein shall have the respective meanings therefor set forth in the Agreement. The Borrower through its Authorized Representative hereby gives notice to the Agent of the following selection of a type of Loan and Interest Period:
Type of Loan Interest Aggregate (check one) Period(1) Amount(2) Date of Loan(3) ------------ --------- --------- -------------- Revolving Loan --------------- Base Rate Loan --------- --------- ------------- Eurodollar Rate Loan --------- --------- -------------
- ----------------------- (1) For any Eurodollar Rate Loan [or Segment], one, two, three or six months. (2) Must be $500,000 or if greater an integral multiple of $100,000, unless a Base Rate Refunding Loan. (3) At least three (3) Business Days later if a Eurodollar Rate Loan. WINDMERE CORPORATION BY: ------------------------------ Authorized Representative DATE: ---------------------------- E-1 86 EXHIBIT F Form of Note Promissory Note (Revolving Loan) $-------------- ---------, -------------- ______ __, 199_ FOR VALUE RECEIVED, WINDMERE CORPORATION, a Florida corporation having its principal place of business located in Miami Lakes, Florida (the "Borrower"), hereby promises to pay to the order of __________________________________ (the "Lender"), in its individual capacity, at the office of NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as agent for the Lenders (the "Agent"), located at One Independence Center, 101 North Tryon Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places as the Agent may designate in writing) at the times set forth in the Credit Agreement dated as of October 11, 1996 among the Borrower, the financial institutions party thereto (collectively, the "Lenders") and the Agent (the "Agreement" -- all capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Agreement), in lawful money of the United States of America, in immediately available funds, the principal amount of ___________ DOLLARS ($__________) or, if less than such principal amount, the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to the Agreement on the Revolving Credit Termination Date or such earlier date as may be required pursuant to the terms of the Agreement, and to pay interest from the date hereof on the unpaid principal amount hereof, in like money, at said office, on the dates and at the rates provided in Article II of the Agreement. All or any portion of the principal amount of Loans may be prepaid or required to be prepaid as provided in the Agreement. If payment of all sums due hereunder is accelerated under the terms of the Agreement or under the terms of the other Loan Documents executed in connection with the Agreement, the then remaining principal amount and accrued but unpaid interest shall bear interest which shall be payable on demand at the rates per annum set forth in the proviso to Section 2.2 (a) of the Agreement. Further, in the event of such acceleration, this Note shall become immediately due and payable, without presentation, demand, protest or notice of any kind, all of which are hereby waived by the Borrower. In the event any amount evidenced by this Note is not paid when due at any stated or accelerated maturity, the Borrower agrees to pay, in addition to the principal and interest, all costs of collection, including reasonable attorneys' fees, and interest due hereunder thereon at the rates set forth above. F-1 87 Interest hereunder shall be computed as provided in the Agreement. This Note is one of the Notes in the aggregate principal amount of $30,000,000 referred to in the Agreement and is issued pursuant to and entitled to the benefits and security of the Agreement to which reference is hereby made for a more complete statement of the terms and conditions upon which the Loans evidenced hereby were or are made and are to be repaid. This Note is subject to certain restrictions on transfer or assignment as provided in the Agreement. All Persons bound on this obligation, whether primarily or secondarily liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive to the full extent permitted by law the benefits of all provisions of law for stay or delay of execution or sale of property or other satisfaction of judgment against any of them on account of liability hereon until judgment be obtained and execution issues against any other of them and returned satisfied or until it can be shown that the maker or any other party hereto had no property available for the satisfaction of the debt evidenced by this instrument, or until any other proceedings can be had against any of them, also their right, if any, to require the holder hereof to hold as security for this Note any collateral deposited by any of said Persons as security. Protest, notice of protest, notice of dishonor, diligence or any other formality are hereby waived by all parties bound hereon. F-2 88 IN WITNESS WHEREOF, the Borrower has caused this Note to be made, executed and delivered by its duly authorized representative as of the date and year first above written, all pursuant to authority duly granted. WINDMERE CORPORATION WITNESS: By: ---------------------------------------- - -------------------------- Name: - -------------------------- --------------------------------- Title: -------------------------------------- F-3 89 ACKNOWLEDGEMENT OF EXECUTION ON BEHALF OF WINDMERE CORPORATION STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG Before me, the undersigned, a Notary Public in and for said County and State on this ____ day of ___________, 199_ A.D., personally appeared ___________________ known to be the _________ of Windmere Corporation (the "Borrower"), who, being by me duly sworn, says he works at ____________________________________, _____________, and that by authority duly given by, and as the act of, the Borrower, the foregoing and annexed Note dated October 11, 1996, was signed by him as said ______________ on behalf of the Borrower. Witness my hand and official seal this ___ day of October, 1996. ----------------------------------- Notary Public (SEAL) My commission expires: __________ F-4 90 AFFIDAVIT OF _________________ The undersigned, being first duly sworn, deposes and says that: 1. He is an ________________________ of _____________________ ____________________________ (the "Bank") and works at ___________ _____________________________________________. 2. The Note of Windmere Corporation to the Bank in the principal amount of $_____________, dated October 11, 1996 was executed before him and delivered to him on behalf of the Bank in _________________________ on __________, 199__. This the ___ day of ________, 1996. ----------------------------------- Name: Acknowledgement of Execution STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG Before me, the undersigned, a Notary Public in and for said County and State on this ___ day of ________, 199_ A.D., personally appeared _________________ who before me affixed his signature to the above Affidavit. Witness my hand and official seal this ___ day of ________, 199_. ----------------------------------- Notary Public (SEAL) My Commission Expires: __________ F-5 91 EXHIBIT G Form of Opinion of Borrower's Counsel G-1 92 EXHIBIT H Compliance Certificate As of ________, 19__ To: NationsBank, National Association (South) Reference is hereby made to the Credit Agreement dated as of October 11, 1996 (the "Agreement") among Windmere Corporation (the "Borrower"), the lenders party thereto from time to time and NationsBank, National Association (South) as agent (the "Agent"). Capitalized terms used but not defined herein shall have the respective meanings therefor set forth in the Agreement. The Borrower through its Authorized Representative hereby certifies to you as of the date set forth above as follows: 1. Calculations: A. Compliance with Section 8.12 (a) of the Agreement: Consolidated Tangible Net Worth Consolidated Tangible Net Worth $_______________ REQUIRED: $143,000,000 PLUS 50% OF CUMULATIVE CONSOLIDATED NET INCOME SINCE JUNE 30, 1996 THROUGH THE LAST DAY OF THE FISCAL QUARTER FOR WHICH FINANCIAL STATEMENTS HAVE BEEN DELIVERED TO THE LENDERS PLUS THE AGGREGATE NET PROCEEDS OF ANY EQUITY OFFERING (INCLUDING NET PROCEEDS UNDER ANY STOCK OPTION OR EXECUTIVE COMPENSATION PLAN) - Base $ ----------------- - Cumulative Consolidated Net Income $ ----------------- - 50% of Cumulative Consolidated Net Income $ ----------------- - Aggregate Net Proceeds from Equity Offering $ ----------------- Required: $ -----------------
H-1 93 B. Compliance with Section 8.12(b) of the Agreement: Consolidated Interest Coverage Ratio 1. Consolidated Net Income $ ----------------- 2. Consolidated Interest Expense $ ----------------- 3. Income Tax Expense $ ----------------- 4. Sum of Items 1, 2 and 3 $ ----------------- 5. Ratio of Item 4 to Item 2 _____ to 1.00 REQUIRED: AT ANY TIME DURING ANY PERIOD OF FOUR CONSECUTIVE FISCAL QUARTERS THE CONSOLIDATED INTEREST COVERAGE RATIO SHALL NOT BE LESS THAN 2.00 TO 1.00. 2. No Default A. To the best knowledge of the undersigned, during the fiscal quarter ended as of the date set forth above, (a) no Default or Event of Default specified in the Agreement has occurred or (b) the following Default or Event of Default has occurred: --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- B. The Borrower proposes to take the following action with respect to any such Default or Event of Default described above: ---------------------------------------------- --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- (Note, if no Default or Event of Default has occurred, insert "Not Applicable"). The undersigned Authorized Representative hereby certifies that the information set forth above is true, correct and complete as of the date hereof. IN WITNESS WHEREOF, I have executed this Certificate this ___ day of _________, 19____. WINDMERE CORPORATION By: ------------------------------------- Authorized Representative H-2 94 EXHIBIT I Form of Borrowing Base Certificate The undersigned Authorized Representative of Windmere Corporation hereby certifies as follows: (a) Eligible Receivables as of this date: Total $__________________ x 80% = $_______________ (b) Eligible Inventory as of this date: Total $__________________ x 40% = $_______________(not (a) + (b) = $______________ EXECUTED THIS DAY OF , 199 . ---- ------------------ -- WINDMERE CORPORATION By: ----------------------------------- Authorized Representative I-1 95 EXHIBIT J-1 GUARANTY AND SURETYSHIP AGREEMENT (Domestic Subsidiaries/Affiliates) THIS GUARANTY AND SURETYSHIP AGREEMENT, dated as of October 11, 1996 (the "Guaranty"), made by WINDMERE HOLDINGS CORPORATION, a Delaware corporation, LITTER MAID, INC., a Florida corporation, WINDMERE FAN PRODUCTS, INC., a Florida corporation, JERDON PRODUCTS, INC., a Florida corporation, BAY BOOKS & TAPES, INC., a Florida corporation, CONSUMER PRODUCTS AMERICAS, INC., a Florida corporation, FORTUNE PRODUCTS, INC., a Florida corporation, EDI MASTERS, INC., a Florida corporation (collectively the "Guarantors" and individually a "Guarantor") to NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association, as Agent (the "Agent"), the Issuing Bank (as defined in the Agreement referenced below), and the Lenders (as defined below). Except as otherwise defined herein, terms used herein and defined in the Agreement referred to below shall be used herein as so defined. W I T N E S S E T H: WHEREAS, Windmere Corporation (the "Borrower"), the Lenders party thereto (the "Lenders"; together with the Agent and the Issuing Bank, the "Secured Parties") and the Agent have entered into a Credit Agreement dated as of the date hereof (as at any time amended, modified or supplemented, the "Agreement"); and WHEREAS, each of the Guarantors is an affiliated company with the Borrower; WHEREAS, the financial success of the Guarantors is dependant upon the prosperity of the Borrower and each of the Guarantors will materially benefit from the Loans made to the Borrower pursuant to the Agreement and the Letters of Credit to be issued thereunder; NOW, THEREFORE, in consideration of the premises and in order to induce the Agent and the Lenders to enter into the Agreement and to make the Loans pursuant to the Agreement and to induce the Issuing Bank to issue the Letters of Credit, the Guarantors hereby agree as follows: 1. GUARANTY AND SURETY. Each of the Guarantors does hereby, absolutely and unconditionally, jointly and severally, for the benefit of Secured Parties, guarantee and become surety for the full and timely payment when due (whether by acceleration or otherwise) (including amounts which, but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code (or any successor statute), would become due) of: J-1 96 A. all indebtedness, obligations and liabilities (direct, by way of guarantee or otherwise) of the Borrower, now or hereafter existing, under or in connection with the Agreement, any other Loan Document and any other instruments evidencing any of the foregoing, and whether of principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to the Borrower, would accrue), fees, expenses or otherwise; and B. all other indebtedness, obligations and liabilities of the Borrower under written financing arrangements stated by the Guarantors and the Secured Parties to be guaranteed hereby; in each case whether direct or indirect, joint or several, absolute or contingent, liquidated or unliquidated, now or hereafter existing, extended, renewed, replaced, refinanced or restructured, whether or not from time to time decreased or extinguished and later increased, created or incurred (all indebtedness, obligations and liabilities of the Borrower described in this Section 1 are collectively referred to as the "Secured Obligations"); provided, however, that the liability of any Guarantor with respect to the Secured Obligations shall not exceed at any time the Maximum Amount (as hereinafter defined) for such Guarantor less the amounts, if any, collected by or on behalf of the Secured Parties from such Guarantor pursuant to any other loan documents executed by such Guarantor. The "Maximum Amount" with respect to a Guarantor means 95% of (a) the fair salable value of the assets of such Guarantor (including the fair salable value of the amounts received or receivable by such Guarantor pursuant to the terms of Section 7 hereof) as of the date hereof minus (b) the total liabilities of such Guarantor (including contingent liabilities, but excluding liabilities of such Guarantor under this Guaranty and the other Loan Documents executed by such Guarantor) as of the date hereof; provided, however, that if the calculation of the Maximum Amount with respect to such Guarantor in the manner provided above as of the date payment is required of such Guarantor pursuant to this Guaranty would result in a greater positive number, then the Maximum Amount shall be deemed to be such greater positive number. 1. GUARANTY OF PAYMENT. This is a guaranty of payment and not merely of collection. In the event of any default by the original obligor in payment or otherwise on any of the Secured Obligations, the Guarantors will pay all or any portion of the Secured Obligations due or thereafter becoming due, whether by acceleration or otherwise, without offset of any kind whatsoever, without the Secured Parties first being required to make demand upon the original obligor or pursue any of their rights against the original obligor, or against any other Person, including other guarantors (whether or not party to this Guaranty); and without being required to liquidate or realize on any collateral security. In any right of action accruing to the Secured Parties, the Secured Parties may elect to proceed against (a) any Guarantor together with the original obligor; (b) any Guarantor and the original obligor individually; (c) any Guarantor only without having first commenced any action against the original obligor. 2. RIGHT TO DEAL WITH SECURED OBLIGATIONS. Subject to the terms and conditions J-2 97 of the Agreement, the Agent, for the benefit of the Lenders and the Issuing Bank, without notice to any of the Guarantors, may deal with any Secured Obligations and any collateral security therefor in such manner as it may deem advisable and may renew or extend the Secured Obligations or any part thereof; accept partial payment, or settle, release, compound, or compromise the same; demand additional collateral security therefor, and substitute or release the same; and may compromise or settle with or release and discharge from liability any of the Guarantors or any other guarantor of any Secured Obligation, or any other Person liable to the Secured Parties for all or any portion of the obligations of any original obligor; all without impairing the liability of each of the Guarantors hereunder. 3. WAIVER OF SUBROGATION. Each Guarantor hereby unconditionally waives with respect to this Guaranty any right of subrogation, indemnity, reimbursement or contribution from the Borrower. 4. OTHER WAIVERS. Each Guarantor hereby unconditionally waives with respect to this Guaranty: (a) notice of acceptance of this Guaranty by the Secured Parties and any notice of the incurring by the Borrower or any other Guarantor of any Secured Obligation; (b) presentment for payment, notice of nonpayment, demand, protest, notice of protest and notice of dishonor or default to any party including the Borrower and the Guarantors; (c) all other notices to which the Borrower and the Guarantors may be entitled but which may legally be waived; (d) demand for payments as a condition of liability under this Guaranty; (e) any disability of the original obligor or defense available to the original obligor, including absence or cessation of the original obligor's liability for any reason whatsoever; (f) any defense or circumstances which might otherwise constitute a legal or equitable discharge of a guarantor or surety; and (g) all rights under any state or federal statute dealing with or affecting the rights of creditors. 5. SUBORDINATION. Each Guarantor hereby unconditionally subordinates all present and future debts, liabilities or obligations of the Borrower to such Guarantor to the Secured Obligations, and all amounts due under such debts, liabilities, or obligations shall be collected and paid over to the Agent, on behalf of the Secured Parties on account of the Secured Obligations. Each Guarantor, at the request of the Agent on behalf of the Secured Parties, shall execute such further documents in favor of the Agent for the benefit of the Secured Parties to further evidence and support the purpose of this Section 6. Notwithstanding the foregoing, prior to the occurrence of an Event of Default (as defined herein), each Guarantor shall be entitled to receive payments from the Borrower with respect to the provision of services rendered to the Borrower on a basis no more favorable to the Guarantor than would be obtained in a comparable arm's length transaction with a Person not affiliated with or related to the Borrower. 6. CONTRIBUTION. If any Guarantor makes a payment in respect of the Secured Obligations, it shall have the rights of contribution set forth below against the other Guarantors; provided, however, that such Guarantor shall not enforce its right of contribution until all of the Secured Obligations shall have been paid in full. If any Guarantor makes a J-3 98 payment in respect of the Secured Obligations which is smaller in proportion to its tangible net worth (with respect to each Guarantor, as determined in the most recent audit conducted pursuant to the Agreement, its "Net Worth") than the payments made by the other Guarantors are in proportion to their respective Net Worth, the Guarantor making such proportionately smaller payment shall, when permitted by the preceding sentence, pay to the other Guarantors an amount such that the net payments made by the Guarantors in respect of the Secured Obligations shall be shared among the Guarantors pro rata in proportion to their respective Net Worth. Notwithstanding anything to the contrary contained in this Section 7, no liability that shall accrue pursuant to this Section 7 shall be paid nor shall it be deemed owed until all of the Secured Obligations shall be paid in full. Each Guarantor waives any other rights of contribution available under any other applicable law, statute or agreement. 7. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby affirms, repeats and ratifies to the Secured Parties that each of the representations and warranties contained in the Agreement and made by the Borrower with respect to the Guaranties is true and correct. 8. COVENANTS. Each Guarantor hereby repeats and ratifies each of the covenants set forth in Articles VIII and IX of the Agreement; and affirms that it will perform each of the covenants set forth in Articles VIII and IX of the Agreement. 9. NO WAIVER BY SECURED PARTIES. No failure or delay on the part of the Secured Parties in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. Failure by the Secured Parties to insist upon strict performance hereof shall not constitute a relinquishment of their right to demand strict performance at another time. Receipt by the Secured Parties of any payment by any person on any Secured Obligation, with knowledge of a default on any Secured Obligation or of a breach of this Guaranty, or both, shall not be construed as a waiver of the default or breach. 10. CONTINUING GUARANTY; TERMINATION. THIS GUARANTY IS A CONTINUING GUARANTY AND SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL SUCH TIME AS ALL SECURED OBLIGATIONS SHALL HAVE BEEN PAID IN FULL AND THE SECURED PARTIES SHALL BE UNDER NO FURTHER OBLIGATION TO LEND OR ADVANCE FUNDS TO THE BORROWER CONSTITUTING SECURED OBLIGATIONS. 11. BENEFITS OF AGREEMENT. This Guaranty is freely assignable and transferable by the Secured Parties to any assignee and transferee of any Secured Obligation; however, the duties and obligations of the Guarantors may not be delegated or transferred by the Guarantors without the written consent of the Agent. The rights and privileges of the Secured Parties shall inure to the benefit of their successors and assigns, and the duties and obligations of the Guarantors shall bind their respective successors and assigns. J-4 99 12. EXPENSES; INDEMNITY. The Guarantors will upon demand pay to the Secured Parties the amount of any and all reasonable expenses, including the reasonable fees and expenses of their counsel and of any experts and agents, which they may reasonably incur in connection with enforcement of this Guaranty or the failure by the Guarantors to perform or observe any of the provisions hereof. The Guarantors agree to indemnify and hold harmless the Secured Parties from and against any and all claims, demands, losses, judgments and liabilities (including liabilities for penalties) of whatsoever kind or nature, growing out of or resulting from this Guaranty or the exercise by the Secured Parties of any right or remedy granted to it hereunder or the Agreement, in the absence of gross negligence or willful misconduct on the part of the Secured Parties. If and to the extent that the obligations of any of the Guarantors under this Section 13 are unenforceable for any reason, the Guarantors hereby agree to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law. 13. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any provision of this Guaranty or consent to any departure by any of the Guarantors herefrom shall in any event be effective unless the same shall be in writing and signed by each Guarantor and the Agent on behalf of the Secured Parties, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 14. ADDRESSES FOR NOTICES. All notices and other communications provided for hereunder shall be in writing (including telecopy communication) and shall be sent by registered or certified mail, return receipt requested, or first class express mail or overnight courier, or by telecopy, in all cases with charges prepaid, and shall be effective when delivered against a receipt therefor or when telecopy transmission is confirmed, as the case may be. All notices shall be sent to the applicable party at the address stated on the signature page hereof, as set forth in the Agreement, or in accordance with the last unrevoked written direction from such party to the other parties hereto. 15. INTERPRETATION; PARTIAL INVALIDITY. Whenever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty. 16. MISCELLANEOUS; REMEDIES CUMULATIVE. Unless the context of this Guaranty otherwise clearly requires, references to the plural include the singular, the singular the plural and the part the whole and "or" has the inclusive meaning represented by the phrase "and/or." The section headings used herein are for convenience of reference only and shall not define, limit or extend the provisions of this Guaranty. All remedies hereunder are cumulative and are not exclusive of any other rights and remedies of the Secured Parties provided by law or under the Agreement, the other Loan Documents or other applicable agreements or instruments. The making of the Loans and issuance of the Letters of Credit to the Borrower pursuant to the Agreement shall be conclusively presumed to have been made or extended, respectively, in J-5 100 reliance upon the obligations of the Guarantors incurred pursuant to this Guaranty. 17. GOVERNING LAW. This Guaranty shall in all respects be governed by the law of the State of Florida. Each of the Guarantors hereby (i) submits to the jurisdiction and venue of the state and federal courts of Florida for the purposes of resolving disputes hereunder or under any of the other Loan Documents to which it is a party or for the purpose of collection and (ii) waives trial by jury in connection with any such litigation. 18. REPAYMENT OR RECOVERY. If claim is ever made upon the Secured Parties for repayment or recovery of any amount or amounts received in payment or on account of any of the Secured Obligations and the Secured Parties repay all or part of said amount by reason of (a) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property, or (b) any settlement or compromise of any such claim effected by such Secured Parties with any such claimant (including the original obligor), then and in such event each Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon it, notwithstanding any revocation hereof or the cancellation of any Note or other instrument evidencing any Secured Obligation or any security therefor, and each Guarantor shall be and remain liable to the Secured Parties for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Secured Parties. 19. SET-OFF. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of an Event of Default (as defined herein), each of the Guarantors agrees that the Agent, for the benefit of the Secured Parties, shall have a lien for all the liabilities of such Guarantor upon all deposits or deposit accounts, of any kind, or any interest in any deposits or deposit accounts thereof, now or hereafter pledged, mortgaged, transferred or assigned to the Agent or otherwise in the possession or control of the Agent, (other than for safekeeping) for any purpose for the account or benefit of such Guarantor and including any balance of any deposit account or of any credit of the Guarantor with the Agent, whether now existing or hereafter established, hereby authorizing the Agent, for the benefit of the Secured Parties, at any time or times with or without prior notice to apply such balances or any part thereof to such of the liabilities of such Guarantor to the Secured Parties then past due and in such amounts as it may elect, and whether or not the Collateral or the responsibility of other Persons primarily, secondarily or otherwise liable may be deemed adequate. For the purposes of this paragraph, all remittances and property shall be deemed to be in the possession of the Agent as soon as the same may be put in transit to it by mail or carrier or by other bailee. 20. EVENTS OF DEFAULT. The following shall constitute Events of Default ("Events of Default") under this Guaranty: A. The occurrence of an Event of Default (as defined in the Agreement); or B. Failure by any of the Guarantors to perform, observe or comply with any term, covenant, condition or provision contained in this Guaranty within 10 days J-6 101 after notice thereof by the Agent; or C. Any warranty, representation or other written statement made by any Guarantor herein or in any instrument furnished by any Guarantor to the Secured Parties pursuant to this Guaranty shall be false or misleading in any material respect on the date as of which it is made. 21. AGREEMENT CONTROLS. In the event that any term of this Guaranty conflicts with any term of the Agreement, then the terms of the Agreement shall control. J-7 102 IN WITNESS WHEREOF, each Guarantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. Witness: WINDMERE HOLDINGS CORPORATION - ----------------------- By: ------------------------- Name: ------------------------- - ----------------------- Address: BORROWER TO SUPPLY Telecopy No: J-8 103 Witness: WINDMERE FAN PRODUCTS, INC. - ----------------------- By: ------------------------- Name: ------------------------- - ----------------------- Address: Telecopy No: J-9 104 Witness: LITTER MAID, INC. - ------------------------ By: -------------------------- Name: ------------------------ - ------------------------ Address: Telecopy No: J-10 105 Witness: BAY BOOKS & TAPES, INC. - ------------------------ By: --------------------------- Name: -------------------------- - ------------------------ Address: Telecopy No: J-11 106 Witness: JERDON PRODUCTS, INC. - ------------------------- By: --------------------------- Name: ------------------------- - ------------------------- Address: Telecopy No: J-12 107 Witness: CONSUMER PRODUCTS AMERICAS, INC. - ------------------------- By: --------------------------- Name: ------------------------- - ------------------------- Address: Telecopy No: J-13 108 Witness: FORTUNE PRODUCTS, INC. - ------------------------- By: --------------------------- Name: ------------------------- - ------------------------- Address: Telecopy No: J-14 109 Witness: EDI MASTERS, INC. - ------------------------- By: --------------------------- Name: ------------------------- - ------------------------- Address: Telecopy No: J-15 110 EXHIBIT J-2 GUARANTY AND SURETYSHIP AGREEMENT (Parent) THIS GUARANTY AND SURETYSHIP AGREEMENT, dated as of October 11, 1996 (the "Guaranty"), made by WINDMERE-DURABLE HOLDINGS, INC., a Florida corporation, (the "Guarantor") to NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association, as Agent (the "Agent"), the Issuing Bank (as defined in the Agreement referred to below) and the Lenders (as defined below). Except as otherwise defined herein, terms used herein and defined in the Agreement referred to below shall be used herein as so defined. W I T N E S S E T H: WHEREAS, Windmere Corporation (the "Borrower"), the Lenders party thereto (the "Lenders"; together with the Agent and the Issuing Bank, the "Secured Parties") and the Agent have entered into a Credit Agreement dated as of the date hereof (as at any time amended, modified or supplemented, the "Agreement"); and WHEREAS, the Borrower is a direct, wholly-owned Subsidiary of the Guarantor, and the Guarantor will materially benefit from the Loans made to the Borrower pursuant to the Agreement and the Letters of Credit to be issued thereunder; NOW, THEREFORE, in consideration of the premises and in order to induce the Agent and the Lenders to enter into the Agreement and to make the Loans pursuant to the Agreement and to induce the Issuing Bank to issue the Letters of Credit, the Guarantor hereby agrees as follows: 1. GUARANTY AND SURETY. Guarantor does hereby, absolutely and unconditionally, for the benefit of Secured Parties, guarantee and become surety for the full and timely payment when due (whether by acceleration or otherwise) (including amounts which, but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code (or any successor statute), would become due) of: A. all indebtedness, obligations and liabilities (direct, by way of guarantee or otherwise) of the Borrower, now or hereafter existing, under or in connection with the Agreement, any other Loan Document and any other instruments evidencing any of the foregoing, and whether of principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to the Borrower, would accrue), fees, expenses or otherwise; and J-16 111 B. all other indebtedness, obligations and liabilities of the Borrower under written financing arrangements stated by the Guarantor and the Secured Parties to be guaranteed hereby; in each case whether direct or indirect, joint or several, absolute or contingent, liquidated or unliquidated, now or hereafter existing, extended, renewed, replaced, refinanced or restructured, whether or not from time to time decreased or extinguished and later increased, created or incurred (all indebtedness, obligations and liabilities of the Borrower described in this Section 1 are collectively referred to as the "Secured Obligations"). 1. GUARANTY OF PAYMENT. This is a guaranty of payment and not merely of collection. In the event of any default by the original obligor in payment or otherwise on any of the Secured Obligations, the Guarantor will pay all or any portion of the Secured Obligations due or thereafter becoming due, whether by acceleration or otherwise, without offset of any kind whatsoever, without the Secured Parties first being required to make demand upon the original obligor or pursuing any of their rights against the original obligor, or against any other Person, including other guarantors (whether or not party to this Guaranty); and without being required to liquidate or realize on any collateral security. In any right of action accruing to the Secured Parties, the Secured Parties may elect to proceed against (a) any Guarantor together with the original obligor; (b) any Guarantor and the original obligor individually; (c) any Guarantor only without having first commenced any action against the original obligor. 2. RIGHT TO DEAL WITH SECURED OBLIGATIONS. Subject to the terms and conditions of the Agreement, the Agent, for the benefit of the Lenders and the Issuing Bank, without notice to the Guarantor, may deal with any Secured Obligations and any collateral security therefor in such manner as it may deem advisable and may renew or extend the Secured Obligations or any part thereof; accept partial payment, or settle, release, compound, or compromise the same; demand additional collateral security therefor, and substitute or release the same; and may compromise or settle with or release and discharge from liability the Guarantor or any other guarantor of any Secured Obligation, or any other Person liable to the Secured Parties for all or any portion of the obligations of any original obligor; all without impairing the liability of the Guarantor hereunder. 3. WAIVER OF SUBROGATION. The Guarantor hereby unconditionally waives with respect to this Guaranty any right of subrogation, indemnity, reimbursement or contribution from the Borrower. 4. OTHER WAIVERS. The Guarantor hereby unconditionally waives with respect to this Guaranty: (a) notice of acceptance of this Guaranty by the Secured Parties and any notice of the incurring by the Borrower of any Secured Obligation; (b) presentment for payment, notice of nonpayment, demand, protest, notice of protest and notice of dishonor or default to any party including the Borrower and the Guarantor; (c) all other notices to which the J-17 112 Borrower and the Guarantor may be entitled but which may legally be waived; (d) demand for payments as a condition of liability under this Guaranty; (e) any disability of the original obligor or defense available to the original obligor, including absence or cessation of the original obligor's liability for any reason whatsoever; (f) any defense or circumstances which might otherwise constitute a legal or equitable discharge of a guarantor or surety; and (g) all rights under any state or federal statute dealing with or affecting the rights of creditors. 5. SUBORDINATION. The Guarantor hereby unconditionally subordinates all present and future debts, liabilities or obligations of the Borrower to the Guarantor to the Secured Obligations, and all amounts due under such debts, liabilities, or obligations shall be collected and paid over to the Agent on behalf of the Secured Parties on account of the Secured Obligations. The Guarantor, at the request of the Agent, on behalf of the Secured Parties, shall execute such further documents in favor of such Secured Parties to further evidence and support the purpose of this Section 6. Notwithstanding the foregoing, prior to the occurrence of an Event of Default (as defined herein), the Guarantor shall be entitled to receive payments from the Borrower with respect to the provision of services rendered to the Borrower on a basis no more favorable to the Guarantor than would be obtained in a comparable arm's length transaction with a Person not affiliated with or related to the Borrower. 6. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby affirms, repeats and ratifies to the Secured Parties that each of the representations and warranties contained in the Agreement and made by the Borrower with respect to the Guarantor is true and correct. 7. COVENANTS. The Guarantor hereby repeats and ratifies each of the covenants set forth in Articles VIII and IX of the Agreement; and affirms that it and each of its Subsidiaries (including the Borrower) as applicable, will perform each of the covenants set forth in Articles VIII and IX of the Agreement. 8. FINANCIAL INFORMATION, REPORTS, ETC. The Guarantor shall deliver or cause to be delivered (without duplication) to the Agent and each Lender hereunder any financial reports, accountant's letters, registration statements, proxy statements, management letters and other reports, documents and information required to be delivered by the Guarantor, the Borrower or any other Person to the Agent or any Lender pursuant to Article VIII or IX of the Agreement. 9. NO WAIVER BY SECURED PARTIES. No failure or delay on the part of the Secured Parties in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. Failure by the Secured Parties to insist upon strict performance hereof shall not constitute a relinquishment of their right to demand strict performance at another time. Receipt by the Secured Parties of any payment by any person on any Secured Obligation, with knowledge of a default on any Secured Obligation or of a breach of this Guaranty, or both, shall not be construed as a waiver of the default or breach. J-18 113 10. CONTINUING GUARANTY; TERMINATION. THIS GUARANTY IS A CONTINUING GUARANTY AND SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL SUCH TIME AS ALL SECURED OBLIGATIONS SHALL HAVE BEEN PAID IN FULL AND THE SECURED PARTIES SHALL BE UNDER NO FURTHER OBLIGATION TO LEND OR ADVANCE FUNDS TO THE BORROWER CONSTITUTING SECURED OBLIGATIONS. 11. BENEFITS OF AGREEMENT. This Guaranty is freely assignable and transferable by the Secured Parties to any assignee and transferee of any Secured Obligation; however, the duties and obligations of the Guarantor may not be delegated or transferred by the Guarantor without the written consent of the Agent. The rights and privileges of the Secured Parties shall inure to the benefit of their successors and assigns, and the duties and obligations of the Guarantor shall bind its respective successors and assigns. 12. EXPENSES; INDEMNITY. The Guarantor will upon demand pay to the Secured Parties the amount of any and all reasonable expenses, including the reasonable fees and expenses of their counsel and of any experts and agents, which they may reasonably incur in connection with enforcement of this Guaranty or the failure by the Guarantor to perform or observe any of the provisions hereof. The Guarantor agrees to indemnify and hold harmless the Secured Parties from and against any and all claims, demands, losses, judgments and liabilities (including liabilities for penalties) of whatsoever kind or nature, growing out of or resulting from this Guaranty or the exercise by the Secured Parties of any right or remedy granted to them hereunder or under the Agreement, in the absence of gross negligence or willful misconduct on the part of the Secured Parties. If and to the extent that the obligations of the Guarantor under this Section 13 are unenforceable for any reason, the Guarantor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law. 13. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any provision of this Guaranty or consent to any departure by any of the Guarantor herefrom shall in any event be effective unless the same shall be in writing and signed by Guarantor and the Agent, on behalf of the Secured Parties, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 14. ADDRESSES FOR NOTICES. All notices and other communications provided for hereunder shall be in writing (including telecopy communication) and shall be sent by registered or certified mail, return receipt requested, or first class express mail or overnight courier, or by telecopy, in all cases with charges prepaid, and shall be effective when delivered against a receipt therefor or when telecopy transmission is confirmed, as the case may be. All notices shall be sent to the applicable party at the address stated on the signature page hereof, or as set forth in the Agreement, or in accordance with the last unrevoked written direction from such party to the other parties hereto. J-19 114 15. INTERPRETATION; PARTIAL INVALIDITY. Whenever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty. 16. MISCELLANEOUS; REMEDIES CUMULATIVE. Unless the context of this Guaranty otherwise clearly requires, references to the plural include the singular, the singular the plural and the part the whole and "or" has the inclusive meaning represented by the phrase "and/or." The section headings used herein are for convenience of reference only and shall not define, limit or extend the provisions of this Guaranty. All remedies hereunder are cumulative and are not exclusive of any other rights and remedies of the Secured Parties provided by law or under the Agreement, the other Loan Documents or other applicable agreements or instruments. The making of the Loans to the Borrower pursuant to the Agreement shall be conclusively presumed to have been made or extended, respectively, in reliance upon the obligations of the Guarantor incurred pursuant to this Guaranty. 17. GOVERNING LAW. This Guaranty shall in all respects be governed by the law of the State of Florida. The Guarantor hereby (i) submits to the jurisdiction and venue of the state and federal courts of Florida for the purposes of resolving disputes hereunder or under any of the other Loan Documents to which it is a party or for the purpose of collection and (ii) waives trial by jury in connection with any such litigation. 18. REPAYMENT OR RECOVERY. If claim is ever made upon the Secured Parties for repayment or recovery of any amount or amounts received in payment or on account of any of the Secured Obligations and the Secured Parties repay all or part of said amount by reason of (a) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property, or (b) any settlement or compromise of any such claim effected by the Secured Parties with any such claimant (including the original obligor), then and in such event the Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon it, notwithstanding any revocation hereof or the cancellation of any Note or other instrument evidencing any Secured Obligation or any security therefor, and the Guarantor shall be and remain liable to the Secured Parties for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Secured Parties. 19. SET-OFF. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of an Event of Default (as defined herein), the Guarantor agrees that the Agent, for the benefit of the Secured Parties, shall have a lien for all the liabilities of Guarantor upon all deposits or deposit accounts, of any kind, or any interest in any deposits or deposit accounts thereof, now or hereafter pledged, mortgaged, transferred or assigned to the Agent or otherwise in the possession or control of the Agent, for the benefit of the Secured Parties, (other than for safekeeping) for any purpose for the account or benefit of Guarantor and including any balance of any deposit account or of any credit of the Guarantor with the Agent, for the benefit of the Secured Parties, whether now J-20 115 existing or hereafter established, hereby authorizing the Agent, for the benefit of the Secured Parties, at any time or times with or without prior notice to apply such balances or any part thereof to such of the liabilities of Guarantor to the Secured Parties then past due and in such amounts as it may elect, and whether or not the Collateral or the responsibility of other Persons primarily, secondarily or otherwise liable may be deemed adequate. For the purposes of this paragraph, all remittances and property shall be deemed to be in the possession of the Agent as soon as the same may be put in transit to it by mail or carrier or by other bailee. 20. EVENTS OF DEFAULT. The following shall constitute Events of Default ("Events of Default") under this Guaranty: A. The occurrence of an Event of Default (as defined in the Agreement); or B. Failure by the Guarantor to perform, observe or comply with any term, covenant, condition or provision contained in this Guaranty within 10 days after notice thereof by the Agent; or C. Any warranty, representation or other written statement made by Guarantor herein or in any instrument furnished by Guarantor to the Secured Parties pursuant to this Guaranty shall be false or misleading in any material respect on the date as of which it is made. 21. AGREEMENT CONTROLS. In the event that any term of this Guaranty conflicts with any term of the Agreement, then the terms of the Agreement shall control. IN WITNESS WHEREOF, Guarantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. Witness: WINDMERE-DURABLE HOLDINGS, INC. - ------------------------- By: --------------------------- Name: ------------------------- - ------------------------- Address: Telecopy No: J-21 116 EXHIBIT K-1 SECURITY AGREEMENT - ACCOUNTS AND INVENTORY (BORROWER) THIS SECURITY AGREEMENT, made and entered into as of October 11, 1996, by WINDMERE CORPORATION, a Florida corporation (herein called the "Borrower"), to NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association, as Agent (the "Agent"), the Issuing Bank (as defined in the Agreement referenced below) and the Lenders (as defined below). Except as otherwise defined herein, terms used herein and defined in the Agreement referred to below, shall be used herein as so defined. W I T N E S S E T H: WHEREAS, the Borrower, the Lenders party thereto (the "Lenders"; together with the Agent and the Issuing Bank, the "Secured Parties") have entered into a Credit Agreement of even date herewith (herein called the "Agreement"), pursuant to which the Lenders have agreed to make Loans to the Borrower and the Issuing Bank has agreed to issue Letters of Credit on behalf of the Borrower in the total aggregate amount of up to $30,000,000; and WHEREAS, the Lenders are not willing to make the Loans as described above and the Issuing Bank is not willing to issue the Letters of Credit unless the Borrower secures the indebtedness evidenced by the Note by the Collateral of the Borrower hereinafter described; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and promises herein contained, the parties hereto agree as follows: 1. Grant of Security Interest. As collateral security for the payment of all indebtedness of the Borrower evidenced by the Note, as the same may be extended, amended or substituted, and payment of all of the Borrower's liabilities and Obligations under the Agreement, the other Loan Documents and the Note (the "Liabilities"), Borrower hereby pledges and assigns to the Agent, for the benefit of the Secured Parties, and hereby grants to the Agent,for the benefit of the Secured Parties, a continuing security interest in, all of Borrower's right, title and interest in, to and under the following property, wherever located, whether now or hereafter existing (all of such property being referred to collectively as the "Collateral"): "Inventory" of Borrower, which means and includes, all domestic finished Inventory (as defined in the Uniform Commercial Code governing the perfection of such Inventory). "Domestic Receivables" of Borrower, which means and includes all trade accounts receivable, notes, bills, acceptances, choses in action, chattel paper, instruments, documents, and other forms of obligations at any time owing to the K-1 117 Borrower from a United States entity or payable within the United States, the proceeds thereof and all of the Borrower's rights with respect to any goods or services represented thereby, whether or not delivered or performed, together with all customer lists, books and records, ledger and account cards, computer tapes, software, disks, printouts and records, whether now in existence or hereafter created, relating to Domestic Receivables. "Account Debtor" means any person who is or who may become obligated to Borrower under or on account of a Domestic Receivable. 2. Security for Obligations. This Agreement (and the Collateral) secures the prompt payment in full and performance when due of all the Obligations. In addition, all advances, charges, costs and expenses, including reasonable attorney's fees, incurred or paid by the Agent, for the benefit of the Secured Parties, in exercising or enforcing any right, power or remedy conferred by this Agreement, shall become a part of the Obligations secured hereby. 3. Borrower Remains Liable. Anything herein to the contrary notwithstanding: (a) the Borrower shall remain liable under all Domestic Receivables and other Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by the Agent or the other Secured Parties of any rights hereunder shall not release the Borrower from any of its duties or obligations under any of the Collateral; and (c) neither the Agent, nor the other Secured Parties shall have any obligation or liability under any Collateral by reason of this Agreement, nor shall they be obligated to perform any of the obligations or duties of the Borrower thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. 4. Security Interest Absolute. All rights and security interests of the Agent, for the benefit of the Secured Parties, granted hereunder, and all obligations of the Borrower hereunder, shall be absolute and unconditional, irrespective of, and shall not be impaired or affected by: (a) any lack of validity or enforceability of the Agreement, this Security Agreement or any other Loan Document; (b) any change in the corporate existence, structure or ownership of the Borrower, or any bankruptcy or insolvency proceeding affecting the Borrower or any property of the Borrower or any resulting release or discharge of any Obligation contained in the Agreement, this Security Agreement or any other Loan Document; (c) the failure of the Secured Parties: K-2 118 (i) to assert any claim or demand or to enforce any right or remedy against the Borrower or any other Person under the provisions of the Agreement, this Security Agreement or any other Loan Document or under any applicable law, or (ii) to exercise any right or remedy against any Collateral; (d) any change in the time, manner, or place of payment of, or in any other term of, all or any Obligations, or any other amendment, modification, or waiver of, or any consent to or any departure from, the Agreement, this Security Agreement, any other Loan Document or any other Instrument relating to any thereof; (e) any increase, reduction, limitation, impairment or termination of the Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, irregularity, compromise, unenforceability, or lack of genuineness of, or any other event or occurrence affecting, any of the Obligations (and the Borrower hereby waives any right to or claim of any such defense or set-off, counterclaim, recoupment or termination); (f) any sale, exchange, release, surrender or non-perfection of any of the Collateral or any other collateral, or any release or amendment or waiver of, or any consent to or any departure from, any guaranty held by the Secured Parties securing or guaranteeing all or any of the Obligations; (g) any defense, set-off or counterclaim which may at any time be available to or be asserted by the Borrower against the Secured Parties; or (h) any other circumstances which might otherwise constitute a suretyship or other defense available to, or a legal or equitable discharge of, the Borrower. 5. Protection of Collateral. The Agent may from time to time, at its option, perform any act which the Borrower agrees hereunder to perform and which the Borrower shall fail to perform after being requested in writing to so perform and the Agent may from time to time take any other action which the Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of the security interests therein. 6. Agent Has No Duty. The powers conferred on the Agent hereunder are solely to protect the Secured Parties' interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for duties imposed by the U.C.C. upon secured creditors (unless otherwise modified hereby), the Agent and the other Secured Parties shall have no duty as to any Collateral or responsibility for taking any necessary steps to preserve rights against K-3 119 prior parties or any other rights pertaining to any Collateral. 7. Maintenance of Security Interest. The Borrower will, from time to time, upon the request of the Agent, deliver specific assignments of Collateral, together with such other instruments and documents, financing statements, amendments thereto, assignments or other writings as the Agent may reasonably request to carry out the terms of this Security Agreement or to protect or enforce the Secured Parties' security interest in the Collateral. With respect to any and all Collateral to be secured and conveyed under this Security Agreement, the Borrower agrees to do and cause to be done all things necessary to perfect and keep in full force the security interest granted in favor of the Secured Parties, including, but not limited to, the prompt payment of all fees and expenses incurred in connection with any filings made to perfect a security interest in the Collateral. The Borrower agrees to make appropriate entries upon its financial statements and its books and records disclosing the Secured Parties' security interest in the Collateral. 8. Collateral. (a) Inspection and Verification of Domestic Collateral. Any of the Agent's officers, employees or agents shall have the right, at any time or times hereafter, in the Agent's name or in the name of the Borrower, to verify the validity, amount or any other matter relating to Domestic Receivables by mail, telephone, telegraph or otherwise. The Agent (by any of its officers, employees and/or agents) shall have the right, at any time or times during Borrower's usual business hours and upon prior reasonable notice to the Borrower, to inspect the Collateral, all records related thereto (and to make extracts from such records), and the premises upon which any of the Collateral is located, to discuss Borrower's business affairs and finances with any Person, and to verify the amount, quality, quantity, value and condition of, or any other matter relating to, the Collateral. (b) Records of Collateral. Borrower shall keep accurate and complete records of the Collateral, and, upon request by the Agent, Borrower shall deliver to the Agent, in form and substance acceptable to the Agent, a detailed aged trial balance and records of all then existing Domestic Receivables of Borrower specifying the names, addresses, face value, dates of invoices for each Account Debtor and any other relevant information and, upon demand, copies of proof of delivery and the original copy of all documents, including, without limitation, repayment histories and present status reports, relating to the Domestic Receivables and such other matters and information relating to the status of then existing Domestic Receivables as the Agent shall reasonably request. (c) Notice Regarding Disputed Domestic Receivables. In the event any amounts due and owing in excess of $100,000 are in dispute between any Account K-4 120 Debtor and the Borrower relating to Domestic Receivables, the Borrower shall provide the Agent with written notice thereof within 30 days of becoming aware of the dispute explaining in detail the reason for the dispute, all claims related thereto and the amount in controversy. (d) Change of Name, Etc. The Borrower hereby covenants and agrees that it will not change its name, identity or corporate structure in any manner which might make any financing or continuation statement filed hereunder seriously misleading within the meaning of Section 9-402(7) of the U.C.C. (or any other then applicable provision of the U.C.C.) unless the Borrower shall have given the Agent at least ninety (90) days' prior written notice thereof and shall have taken all action (or made arrangements to take such action substantially simultaneously with such change if it is impossible to take such action in advance) necessary or reasonably requested by the Agent to amend such financing statement or continuation statement so that it is not seriously misleading. 9. Warranties Regarding Collateral. (a) The Borrower warrants and represents that it is and will continue to be the owner of the Collateral, now owned and upon the acquisition of the same, free and clear of all encumbrances and security interest, other than the security interest in favor of the Secured Parties hereunder and Liens expressly permitted by the Agreement, and that it will defend the Collateral and any products and proceeds thereof against all claims and demands of all persons at any time claiming the same or any interest therein adverse to the Secured Parties. (b) The Borrower will not sell, exchange, lease, mortgage, encumber, pledge (except as permitted herein), or otherwise dispose of the Collateral, except in the ordinary course of business or pursuant to a Year End Domestic Receivables Transaction or replace the same, without the prior written consent of the Agent or as otherwise provided in the Agreement. (c) The chief place of business and chief executive office of the Borrower is located at 5980 Miami Lakes Drive, Miami Lakes, Florida 33014. As of the date hereof, the Collateral owned by the Borrower is kept at the Borrower's chief executive office and at the other locations specified in Schedule 1 attached hereto and incorporated herein by reference. Records pertaining to the Collateral are kept at the same such locations. (d) The execution and delivery of this Security Agreement, together with the filing of the UCC-1 Financing Statements identified in Schedule 2 attached hereto and incorporated herein by reference (each of which Financing Statements is in proper form, and has been duly executed by the Borrower and delivered to the Agent for the benefit of the Secured Parties) will create a valid, enforceable and perfected security K-5 121 interest in all the Collateral securing the Obligations, which security interest will be a first priority security interest. (e) The Borrower has not, since January 1, 1995, transacted business, and does not transact business, under any names or trade names other than as identified on Schedule 3 attached hereto. 10. Warranties and Representations Concerning Collateral. With respect to the Collateral, Borrower warrants and represents to the Secured Parties that the Secured Parties may rely on all statements, representations and records made by Borrower, unless otherwise indicated in writing by Borrower, that: (a) The Domestic Receivables are genuine, are in all respects what they purport to be, are not evidenced by a judgment and, if evidenced by an instrument or document, are only evidenced by one original instrument or document; (b) The Collateral has not been pledged to any Person other than to the Secured Parties under this Security Agreement; (c) To the best of Borrower's knowledge, there are no facts, events or occurrences which in any way impair the validity or enforcement of the Domestic Receivables or tend to reduce the amount payable thereunder; (d) Borrower has no knowledge of any fact or circumstance which would impair the validity or collectibility of any Domestic Receivable; (e) To the best of Borrower's knowledge, there are no proceedings or actions which are threatened or pending which might result in any material adverse change in its financial condition; (f) To the best of Borrower's knowledge, there are no setoffs, counterclaims or disputes existing or asserted with respect to any Domestic Receivable and Borrower has not made any agreement with any Account Debtor thereunder for any deduction therefrom, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto; (g) Domestic Receivables relating to Account Debtors represent bona fide transactions completed for services rendered and/or goods delivered, and, unless otherwise noted, are not known by the Borrower to be in dispute; and (h) To the best of Borrower's knowledge without any inquiry, all Account Debtors under any Domestic Receivable (i) had the capacity to contract at the time any contract or other document giving rise to the Domestic Receivable was executed and (ii) are Solvent. K-6 122 11. Remedies. All obligations of Borrower to the Secured Parties pursuant to the Agreement may, at the option of the Secured Parties, be declared and become immediately due and owing, if any representation or warranty of Borrower made herein or pursuant hereto should prove untrue or misleading in any respect or if Borrower violates any covenant or agreement contained herein which violation remains unremedied for 10 days after notice thereof by the Agent, or upon the occurrence of any Event of Default (as defined in the Agreement) and the expiration of any applicable grace periods. Upon and after an Event of Default, the Secured Parties shall have the following rights and remedies, the exercise of any of which shall not operate to limit the availability of any others: (a) All of the rights and remedies of a secured party under the Uniform Commercial Code of the state where such rights and remedies are asserted, or under other applicable law, all of which rights and remedies shall be cumulative, and none of which shall be exclusive, to the extent permitted by law, in addition to any other rights and remedies contained in this Security Agreement, the Agreement and in all of the other Loan Documents; (b) The right to open Borrower's mail addressed to Borrower in care of the Agent and collect any and all amounts due to the Borrower from Account Debtors; (c) The right to (i) demand payment of the Domestic Receivables; (ii) enforce payment of the Domestic Receivables, by legal proceedings or otherwise; (iii) exercise all of Borrower's rights and remedies with respect to the collection of the Domestic Receivables; (iv) settle, adjust, compromise, extend or renew the Domestic Receivables; (v) settle, adjust or compromise any legal proceedings brought to collect the Domestic Receivables; (vi) if permitted by applicable law, sell or assign the Collateral, upon such terms, for such amounts and at such time or times as the Agent, on behalf of the Secured Parties, deems advisable; (vii) discharge and release the Domestic Receivables; (viii) take control, in any manner, of any item of payment of or proceeds derived from the disposition of any Collateral; (ix) prepare, file and sign Borrower' name on a Proof of Claim in Bankruptcy or similar document against any Account Debtor; (x) prepare file and sign Borrower's name on any notice of lien, assignment or satisfaction of lien, or similar document in connection with the Collateral; (xi) endorse the name of the Borrower upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Collateral; (xii) use Borrower's stationery and sign the name of the Borrower to verifications of the Domestic Receivables, and notices thereof to Account Debtors; and (xiii) use the information recorded on or contained in any data processing equipment and computer hardware and software relating to the Domestic Receivables, to which the Borrower has access; (d) The right, through self-help or the assistance of a court, to take possession of all Collateral, to the extent permitted by law. All monies, or any part K-7 123 thereof, received by the Secured Parties under this paragraph from time to time shall be applied by the Secured Parties to the Liabilities secured hereby and those owing under the Note; (e) The right to sell or to otherwise dispose of all or any Collateral in its then condition, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as the Agent, in its sole discretion, may deem advisable; such sales may be adjourned from time to time with or without notice. The Agent shall have the right to conduct such sales on Borrower's premises or elsewhere and shall have the right to use Borrower's premises without charge for such sales for such time or times as they may see fit. The Agent is hereby granted a license or other right to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in advertising for sale and selling any Collateral and Borrower's rights under all licenses and all franchise agreements shall inure to the Agent's benefit, for the benefit of the Secured Parties. The Agent, on behalf of the Secured Parties, shall have the right to sell, lease or otherwise dispose of the Collateral, or any part thereof, for cash, credit or any combination thereof, and any of the Secured Parties may purchase all or any part of the Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Liabilities of the Borrower under the Agreement. The proceeds realized from the sale of any Collateral shall be applied to (i) the reasonable costs and expenses, including the reasonable fees and expenses of the Secured Parties' attorneys, incurred by the Secured Parties for collection and for acquisition, completion, protection, sale and delivery of the Collateral; (ii) interest due upon the indebtedness due under the Note; (iii) the principal of the indebtedness due under the Note; and (iv) all other Obligations. If any deficiency shall arise, the Borrower shall remain liable to the Secured Parties therefor; and (f) The rights and remedies provided to the Secured Parties under the Agreement and under any other Loan Documents. 12. Waiver. Neither the failure nor any delay on the part of the Secured Parties to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise of any other right, power or privilege of the Secured Parties. 13. General. The descriptive section headings herein have been inserted for convenience only and shall not be deemed to limit or otherwise offset the construction of any provision hereof. 14. Governing Law. This Security Agreement shall be construed and its performance governed in accordance with the laws of the State of Florida, including to the K-8 124 extent applicable, the Uniform Commercial Code of that State. 15. Benefits. This Security Agreement is freely assignable and transferrable by the Secured Parties to any assignee and transferree of any Secured Obligation, however, the duties and obligations of the Borrower may not be delegated or transferred without the written consent of the Agent. The rights and privileges of the Secured Parties shall inure to the benefit of their successors and assigns, and the duties and obligations of the Borrower shall bind its successors and assigns. 16. Notices. All notices and other communication provided for hereunder shall be in the manner and to the addresses as set forth in the Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed by authority duly given as of the day and year first above written. WITNESS: WINDMERE CORPORATION By: - ------------------------- --------------------------- Name: ------------------------- NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as Agent By: --------------------------- Title: ------------------------- K-9 125 Schedule 1 Locations of Collateral and Records WINDMERE CORPORATION 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee K-10 126 Schedule 2 Filings WINDMERE CORPORATION Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State K-11 127 Schedule 3 Trade Names None K-12 128 EXHIBIT K-2 SECURITY AGREEMENT - ACCOUNTS AND INVENTORY (GUARANTORS) THIS SECURITY AGREEMENT, made and entered into as of October 11, 1996, by WINDMERE-DURABLE HOLDINGS, INC., a Florida corporation (the "Parent"), WINDMERE HOLDINGS CORPORATION , a Delaware corporation, LITTER MAID, INC., a Florida corporation, BAY BOOKS & TAPES, INC., a Florida corporation, WINDMERE FAN PRODUCTS, INC., a Florida corporation, JERDON PRODUCTS, INC., a Florida corporation, CONSUMER PRODUCTS AMERICAS, INC., a Florida corporation, FORTUNE PRODUCTS, INC., a Florida corporation, EDI MASTERS, INC., a Florida corporation (with the Parent, collectively the "Guarantors" and individually a "Guarantor"), to NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking association, as Agent (the "Agent"), the Issuing Bank (as defined in the Agreement referenced below) and the Lenders (as defined below). Except as otherwise defined herein, terms used herein and defined in the Agreement referred to below, shall be used herein as so defined. W I T N E S S E T H: WHEREAS, Windmere Corporation, a Florida corporation (the "Borrower"), the Lenders party thereto (the "Lenders"; together with the Agent and the Issuing Bank, the "Secured Parties") have entered into a Credit Agreement of even date herewith (herein called the "Agreement"), pursuant to which the Lenders have agreed to make Loans to the Borrower and the Issuing Bank has agreed to issue Letters of Credit on behalf of the Borrower in the total aggregate amount of up to $30,000,000; WHEREAS, the Borrower is a direct, wholly-owned Subsidiary of the Parent and the Parent will materially benefit from the Loans made to the Borrower pursuant to the Agreement and the Letters of Credit to be issued thereunder; WHEREAS, the Parent has entered into that certain Guaranty and Suretyship Agreement (Parent) dated as of the date hereof in favor of the Agent for the benefit of the Secured Parties guaranteeing, among other things, the payment of the Obligations (the "Parent Guaranty"); WHEREAS, each of the other Guarantors is an affiliated company with the Borrower and the financial success of such Guarantors is dependant upon the prosperity of the Borrower and each of such Guarantors will materially benefit from the Loans made to the Borrower pursuant to the Agreement and the Letters of Credit to be issued thereunder; WHEREAS, each of such Guarantors has entered into that certain Guaranty and Suretyship Agreement (Domestic Subsidiaries) dated as of the date hereof in favor of the Agent for the benefit of the Secured Parties guaranteeing, among other things, the payment of the K-13 129 Obligations (the "Subsidiary Guaranty"; together with the Parent Guaranty, the "Guaranties"); and WHEREAS, the Lenders are not willing to make the Loans as described above and the Issuing Bank is not willing to issue the Letters of Credit unless the Guarantors secure the indebtedness evidenced by the Note and the obligations of the Guarantors under the Guaranties by the Collateral of the Guarantors hereinafter described; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and promises herein contained, the parties hereto agree as follows: 1. Grant of Security Interest. As collateral security for the payment of all indebtedness of the Borrower evidenced by the Note, as the same may be extended, amended or substituted, and payment of all of the Borrower's liabilities and Obligations under the Agreement, the other Loan Documents and the Note (the "Liabilities"), the Guarantors hereby pledge and assign to the Agent, for the benefit of the Secured Parties, and hereby grant to the Agent, for the benefit of the Secured Parties, a continuing security interest in, all of the Guarantors' right, title and interest in, to and under the following property, wherever located, whether now or hereafter existing (all of such property being referred to collectively as the "Collateral"): "Inventory" of each Guarantor, which means and includes all domestic finished Inventory (as such term is defined in the Uniform Commercial Code applicble to the perfection of such inventory). "Domestic Receivables" of each Guarantor, which means and includes all trade accounts receivable, notes, bills, acceptances, choses in action, chattel paper, instruments, documents, and other forms of obligations at any time owing to each Guarantor (or, in the case of Windmere Holdings Corporation ("Holdings"), owing to the Borrower or any of the Borrower's Domestic Subsidiaries and assigned to Holdings pursuant to a Year End Domestic Receivables Transaction) from a United States entity or payable within the United States, the proceeds thereof and all of each Guarantor's rights with respect to any goods or services represented thereby, whether or not delivered or performed, together with all customer lists, books and records, ledger and account cards, computer tapes, software, disks, printouts and records, whether now in existence or hereafter created, relating to Domestic Receivables. "Account Debtor" means any person who is or who may become obligated to a Guarantor under or on account of a Domestic Receivable. 2. Security for Obligations. This Agreement (and the Collateral) secures the prompt payment in full and performance when due of all the Obligations. In addition, all advances, charges, costs and expenses, including reasonable attorney's fees, incurred or paid by the Agent, for the benefit of the Secured Parties, in exercising or enforcing any right, power or remedy conferred by this Agreement, shall become a part of the Obligations secured hereby. K-14 130 3. Guarantors Remain Liable. Anything herein to the contrary notwithstanding: (a) the Guarantors shall remain liable under all Domestic Receivables and other Collateral to the extent set forth therein to perform all of their duties and obligations thereunder to the same extent as if this Security Agreement had not been executed; (b) the exercise by the Agent or the other Secured Parties of any rights hereunder shall not release the Guarantors from any of their duties or obligations under any of the Collateral; and (c) neither the Agent, nor the other Secured Parties shall have any obligation or liability under any Collateral by reason of this Security Agreement, nor shall they be obligated to perform any of the obligations or duties of the Guarantors thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. 4. Security Interest Absolute. All rights and security interests of the Agent, for the benefit of the Secured Parties, granted hereunder, and all obligations of the Guarantors hereunder, shall be absolute and unconditional, irrespective of, and shall not be impaired or affected by: (a) any lack of validity or enforceability of the Agreement, this Security Agreement or any other Loan Document; (b) any change in the corporate existence, structure or ownership of the Guarantors, or any bankruptcy or insolvency proceeding affecting the Guarantors or any property of the Guarantors or any resulting release or discharge of any Obligation contained in the Agreement, this Security Agreement or any other Loan Document; (c) the failure of the Secured Parties: (i) to assert any claim or demand or to enforce any right or remedy against the Guarantors or any other Person under the provisions of the Agreement, this Security Agreement or any other Loan Document or under any applicable law, or (ii) to exercise any right or remedy against any Collateral; (d) any change in the time, manner, or place of payment of, or in any other term of, all or any Obligations, or any other amendment, modification, or waiver of, or any consent to or any departure from, the Agreement, this Security Agreement, any other Loan Document or any other Instrument relating to any thereof; K-15 131 (e) any increase, reduction, limitation, impairment or termination of the Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, irregularity, compromise, unenforceability, or lack of genuineness of, or any other event or occurrence affecting, any of the Obligations (and the Guarantors hereby waive any right to or claim of any such defense or set-off, counterclaim, recoupment or termination); (f) any sale, exchange, release, surrender or non-perfection of any of the Collateral or any other collateral, or any release or amendment or waiver of, or any consent to or any departure from, any guaranty held by the Secured Parties securing or guaranteeing all or any of the Obligations; (g) any defense, set-off or counterclaim which may at any time be available to or be asserted by any of the Guarantors against the Secured Parties; or (h) any other circumstances which might otherwise constitute a suretyship or other defense available to, or a legal or equitable discharge of, the Guarantors. 5. Protection of Collateral. The Agent may from time to time, at its option, perform any act which the Guarantors agree hereunder to perform and which the Guarantors shall fail to perform after being requested in writing to so perform and the Agent may from time to time take any other action which the Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of the security interests therein. 6. Agent Has No Duty. The powers conferred on the Agent hereunder are solely to protect the Secured Parties' interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for duties imposed by the U.C.C. upon secured creditors (unless otherwise modified hereby), the Agent and the other Secured Parties shall have no duty as to any Collateral or responsibility for taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. 7. Maintenance of Security Interest. The Guarantors will, from time to time, upon the request of the Agent, deliver specific assignments of Collateral, together with such other instruments and documents, financing statements, amendments thereto, assignments or other writings as the Agent may reasonably request to carry out the terms of this Security Agreement or to protect or enforce the Secured Parties' security interest in the Collateral. With respect to any and all Collateral to be secured and conveyed under this Security Agreement, the Guarantors agree to do and cause to be done all things necessary to perfect and keep in full force the security interest granted in favor of the Secured Parties, including, but not limited to, the prompt payment of all fees and expenses incurred in connection with any filings made to perfect a security interest in the Collateral. K-16 132 The Guarantors agree to make appropriate entries upon their financial statements and their books and records disclosing the Secured Parties' security interest in the Collateral. 8. Collateral. (a) Inspection and Verification of Collateral. Any of the Agent's officers, employees or agents shall have the right, at any time or times hereafter, in the Agent's name or in the name of the Guarantors, to verify the validity, amount or any other matter relating to Domestic Receivables by mail, telephone, telegraph or otherwise. The Agent (by any of its officers, employees and/or agents) shall have the right, at any time or times during Guarantors' usual business hours and upon prior reasonable notice to the applicable Guarantors, to inspect the Collateral, all records related thereto (and to make extracts from such records), and the premises upon which any of the Collateral is located, to discuss the Guarantors' business affairs and finances with any Person, and to verify the amount, quality, quantity, value and condition of, or any other matter relating to, the Collateral. (b) Records of Collateral. Guarantors shall keep accurate and complete records of the Collateral, and, upon request by the Agent, shall deliver to the Agent, in form and substance acceptable to the Agent, a detailed aged trial balance and records of all then existing Domestic Receivables of Guarantors specifying the names, addresses, face value, dates of invoices for each Account Debtor and any other relevant information and, upon demand, copies of proof of delivery and the original copy of all documents, including, without limitation, repayment histories and present status reports, relating to the Domestic Receivables and such other matters and information relating to the status of then existing Domestic Receivables as the Agent shall reasonably request. (c) Notice Regarding Disputed Domestic Receivables. In the event any amounts due and owing in excess of $100,000 are in dispute between any Account Debtor and any Guarantor relating to Domestic Receivables, such Guarantor shall provide the Agent with written notice thereof within 30 days of becoming aware of the dispute explaining in detail the reason for the dispute, all claims related thereto and the amount in controversy. (d) Change of Name, Etc. The Guarantors hereby covenant and agree that they will not change their name, identity or corporate structure in any manner which might make any financing or continuation statement filed hereunder seriously misleading within the meaning of Section 9-402(7) of the U.C.C. (or any other then applicable provision of the U.C.C.) unless such Guarantor shall have given the Agent at least ninety (90) days' prior written notice thereof and shall have taken all action (or made arrangements to take such action substantially simultaneously with such change if it is impossible to take such action in advance) necessary or reasonably requested by the K-17 133 Agent to amend such financing statement or continuation statement so that it is not seriously misleading. 9. Warranties Regarding Collateral. (a) The Guarantors warrant and represent that they are and will continue to be the owners of the Collateral, now owned and upon the acquisition of the same, free and clear of all encumbrances and security interest, other than the security interest in favor of the Secured Parties hereunder and Liens expressly permitted by the Agreement, and that they will defend the Collateral and any products and proceeds thereof against all claims and demands of all persons at any time claiming the same or any interest therein adverse to the Secured Parties. (b) The Guarantors will not sell, exchange, lease, mortgage, encumber, pledge (except as permitted herein), or otherwise dispose of the Collateral, except in the ordinary course of business or replace the same, without the prior written consent of the Agent or as otherwise provided in the Agreement. (c) The chief places of business and chief executive offices of the Guarantors are located at the addresses underneath their signatures hereto. As of the date hereof, the Collateral owned by each Guarantor is kept at such Guarantor's chief executive office and at the other locations specified in Schedule 1 attached hereto and incorporated herein by reference. Records pertaining to the Collateral are kept at the same such locations. (d) The execution and delivery of this Security Agreement, together with the filing of the UCC-1 Financing Statements identified in Schedule 2 attached hereto and incorporated herein by reference (each of which Financing Statements is in proper form, and has been duly executed by the Guarantors and delivered to the Agent for the benefit of the Secured Parties) will create a valid, enforceable and perfected security interest in all the Collateral securing the Obligations, which security interest will be a first priority security interest. (e) No Guarantor has, since January 1, 1995, transacted business, and does transact business, under any names or trade names other than as identified on Schedule 3 attached hereto. 10. Warranties and Representations Concerning Collateral. With respect to the Collateral, Guarantors warrant and represent to the Secured Parties that the Secured Parties may rely on all statements, representations and records made by Guarantors, unless otherwise indicated in writing by Guarantors, that: (a) The Domestic Receivables are genuine, are in all respects what they purport to be, are not evidenced by a judgment and, if evidenced by an instrument or K-18 134 document, are only evidenced by one original instrument or document; (b) The Collateral has not been pledged to any Person other than to the Secured Parties under this Security Agreement; (c) To the best of Guarantors' knowledge, there are no facts, events or occurrences which in any way impair the validity or enforcement of the Domestic Receivables or tend to reduce the amount payable thereunder; (d) No Guarantor has knowledge of any fact or circumstance which would impair the validity or collectibility of any Domestic Receivable; (e) To the best of Guarantors' knowledge, there are no proceedings or actions which are threatened or pending which might result in any material adverse change in any of their financial condition; (f) To the best of each Guarantor's knowledge, there are no setoffs, counterclaims or disputes existing or asserted with respect to any Domestic Receivable and no Guarantor has made any agreement with any Account Debtor thereunder for any deduction therefrom, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto; (g) The Domestic Receivables relating to Account Debtors represent bona fide transactions completed for services rendered and/or goods delivered, and, unless otherwise noted, are not known by the Guarantors to be in dispute; and (h) To the best of Guarantors' knowledge without any inquiry, all Account Debtors under the Domestic Receivables (i) had the capacity to contract at the time any contract or other document giving rise to the Domestic Receivable was executed and (ii) are Solvent. 11. Remedies. All obligations of Guarantors to the Secured Parties pursuant to the Agreement may, at the option of the Secured Parties, be declared and become immediately due and owing, if any representation or warranty of any Guarantor made herein or pursuant hereto should prove untrue or misleading in any respect or if any Guarantor violates any covenant or agreement contained herein which violation remains unremedied for 10 days after notice thereof by the Agent, or upon the occurrence of any Event of Default (as defined in the Agreement) and the expiration of any applicable grace periods. Upon and after an Event of Default, the Secured Parties shall have the following rights and remedies, the exercise of any of which shall not operate to limit the availability of any others: (a) All of the rights and remedies of a secured party under the Uniform Commercial Code of the state where such rights and remedies are asserted, or under other applicable law, all of which rights and remedies shall be cumulative, and none of which shall be exclusive, to the extent permitted by law, in addition to any other rights K-19 135 and remedies contained in this Security Agreement, the Agreement and in all of the other Loan Documents; (b) The right to open all Guarantors' mail addressed to such Guarantor in care of the Agent and collect any and all amounts due to the Guarantors from Account Debtors; (c) The right to (i) demand payment of the Domestic Receivables; (ii) enforce payment of the Domestic Receivables, by legal proceedings or otherwise; (iii) exercise all of Guarantors' rights and remedies with respect to the collection of the Domestic Receivables; (iv) settle, adjust, compromise, extend or renew the Domestic Receivables; (v) settle, adjust or compromise any legal proceedings brought to collect the Domestic Receivables; (vi) if permitted by applicable law, sell or assign the Collateral, upon such terms, for such amounts and at such time or times as the Agent, on behalf of the Secured Parties, deems advisable; (vii) discharge and release the Domestic Receivables; (viii) take control, in any manner, of any item of payment of or proceeds derived from the disposition of a Domestic Receivable; (ix) prepare, file and sign the Guarantors' names on a Proof of Claim in Bankruptcy or similar document against any Account Debtor; (x) prepare file and sign the Guarantors' names on any notice of lien, assignment or satisfaction of lien, or similar document in connection with the Collateral; (xi) endorse the name of the Guarantors upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Collateral; (xii) use the Guarantors' stationery and sign the name of the Guarantors to verifications of the Domestic Receivables, and notices thereof to Account Debtors; and (xiii) use the information recorded on or contained in any data processing equipment and computer hardware and software relating to the Domestic Receivables, to which the Guarantors have access; (d) The right, through self-help or the assistance of a court, to take possession of all Collateral, to the extent permitted by law. All monies, or any part thereof, received by the Secured Parties under this paragraph from time to time shall be applied by the Secured Parties to the Liabilities secured hereby and those owing under the Note; (e) The right to sell or to otherwise dispose of all or any Collateral in its then condition, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as the Agent, in its sole discretion, may deem advisable; such sales may be adjourned from time to time with or without notice. The Agent shall have the right to conduct such sales on any Guarantor's premises or elsewhere and shall have the right to use such premises without charge for such sales for such time or times as it may see fit. The Agent is hereby granted a license or other right to use, without charge, Guarantors' labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in advertising for sale and K-20 136 selling any Collateral and Guarantors' rights under all licenses and all franchise agreements shall inure to the Agent's benefit, for the benefit of the Secured Parties. The Agent, on behalf of the Secured Parties, shall have the right to sell, lease or otherwise dispose of the Collateral, or any part thereof, for cash, credit or any combination thereof, and any of the Secured Parties may purchase all or any part of the Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Liabilities of the Borrower under the Agreement. The proceeds realized from the sale of any Collateral shall be applied to (i) the reasonable costs and expenses, including the reasonable fees and expenses of the Secured Parties' attorneys, incurred by the Secured Parties for collection and for acquisition, completion, protection, sale and delivery of the Collateral; (ii) interest due upon the indebtedness due under the Note; (iii) the principal of the indebtedness due under the Note; and (iv) all other Obligations. If any deficiency shall arise, the Guarantors shall remain liable to the Secured Parties therefor; and (f) The rights and remedies provided to the Secured Parties under the Agreement, this Security Agreement and under any other Loan Documents. 12. Waiver. Neither the failure nor any delay on the part of the Secured Parties to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise of any other right, power or privilege of the Secured Parties. 13. General. The descriptive section headings herein have been inserted for convenience only and shall not be deemed to limit or otherwise offset the construction of any provision hereof. 14. Governing Law. This Security Agreement shall be construed and its performance governed in accordance with the laws of the State of Florida, including to the extent applicable, the Uniform Commercial Code of that State. 15. Benefits. This Security Agreement is freely assignable and transferrable by the Secured Parties to any assignee and transferee of any Secured Obligation, however, the duties and obligations of the Guarantors may not be delegated or transferred without the written consent of the Agent. The rights and privileges of the Secured Parties shall inure to the benefit of their successors and assigns, and the duties and obligations of the Guarantors shall bind their successors and assigns. 16. Notices. All notices and other communication provided for hereunder shall be in the manner and to the addresses as set forth in the Guaranties. K-21 137 IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed by authority duly given as of the day and year first above written. WITNESS: WINDMERE-DURABLE HOLDINGS, INC. - ------------------------- By: ------------------------------- Name: ----------------------------- K-22 138 Witness: WINDMERE HOLDINGS CORPORATION - ----------------------- By: --------------------------- Name: ------------------------- - ----------------------- K-23 139 Witness: WINDMERE FAN CORPORATION - ----------------------- By: --------------------------- Name: ------------------------- - ----------------------- K-24 140 Witness: LITTER MAID, INC. - ------------------------ By: --------------------------------- Name: ------------------------------- - ------------------------ K-25 141 Witness: BAY BOOKS & TAPES, INC. - ------------------------ By: ----------------------------- Name: --------------------------- - ------------------------ K-26 142 Witness: JERDON PRODUCTS, INC. - ------------------------- By: ------------------------------ Name: --------------------------- - ------------------------- K-27 143 Witness: CONSUMER PRODUCTS AMERICAS, INC. - ------------------------- By: ------------------------- Name: ----------------------- - ------------------------- K-28 144 Witness: FORTUNE PRODUCTS, INC. - ------------------------- By: ------------------------- Name: ----------------------- - ------------------------- K-29 145 Witness: EDI MASTERS, INC. - ------------------------- By: ------------------------- Name: ----------------------- - ------------------------- K-30 146 NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as Agent By: ------------------------------------ Title: --------------------------------- K-31 147 Schedule 1 Locations of Collateral and Records WINDMERE-DURABLE HOLDINGS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee WINDMERE HOLDINGS CORPORATION 1105 North Market Street, Suite 1036 Wilmington, Delaware 19899 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee WINDMERE FAN PRODUCTS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee JERDON PRODUCTS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee K-32 148 363 Burma Drive (Public Warehouse) Memphis, Tennessee CONSUMER PRODUCTS AMERICAS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee EDI MASTERS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee LITTER MAID, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee BAY BOOKS & TAPES, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee K-33 149 363 Burma Drive (Public Warehouse) Memphis, Tennessee FORTUNE PRODUCTS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee K-34 150 Schedule 2 Filings WINDMERE-DURABLE HOLDINGS, INC. Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State WINDMERE HOLDINGS CORPORATION Delaware Secretary of State Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State WINDMERE FAN PRODUCTS, INC. Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State JERDON PRODUCTS, INC. Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State CONSUMER PRODUCTS AMERICAS, INC. Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State EDI MASTERS, INC. Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State LITTER MAID, INC. Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State BAY BOOKS & TAPES, INC. Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State FORTUNE PRODUCTS, INC. Florida Secretary of State Nevada Secretary of State Tennesee Secretary of State K-35 151 Schedule 3 Trade Names None K-36 152 Schedule 4.3 Information Regarding Collateral WINDMERE CORPORATION 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee WINDMERE-DURABLE HOLDINGS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee WINDMERE HOLDINGS CORPORATION 1105 North Market Street, Suite 1036 Wilmington, Delaware 19899 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee WINDMERE FAN PRODUCTS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada S-1 153 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee JERDON PRODUCTS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee CONSUMER PRODUCTS AMERICAS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee EDI MASTERS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee LITTER MAID, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) S-2 154 Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee BAY BOOKS & TAPES, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) Memphis, Tennessee FORTUNE PRODUCTS, INC. 5980 Miami Lakes Drive Miami Lakes, Florida 33014 1285 Southern Way (Public Warehouse) Sparks, Nevada 394 Titan Drive (Public Warehouse) Memphis, Tennessee 363 Burma Drive (Public Warehouse) S-3 155 Schedule 7.4 Subsidiaries and Investments in Other Persons Windmere-Durable Holdings, Inc. Windmere Corporation Windmere Holdings Corporation Windmere Consumer Products, Inc. (Canada) Eclat Investments, Ltd. (Foreign) Litter Maid, Inc. Investment in NewM-Tech Investment in Salton/Maxim Housewares, Inc. Consumer Products Americas, Inc. Windmere Corporation Bay Books & Tapes, Inc. Jerdon Products, Inc. Fortune Products, Inc. Windmere Fan Products, Inc. Paragon Industries (Foreign) Investment in Breakroom of Tennessee, Inc. Windmere Holdings, Inc. Durable Europe, Ltd. (Foreign) EDI Masters, Inc. PPC Industries, Ltd. (Foreign) Remdale Investments Durable Electric, Ltd. Durable Electrical Metal Factory Ltd. Investment in PX Distributors, Inc. S-4 156 Schedule 7.6 Indebtedness (a) Dade County Industrial Development Authority Variable Rate Demand Industrial Development Revenue Bonds (Windmere Corporation Project) Series 1985 ($7,500,000), and related documents thereto, including, but not limited to, (i) Guaranty Agreement, dated as of May 1, 1985, between Windmere Corporation and Bankers Trust Company, and (ii) Letter of Credit Agreement, dated as of July 31, 1992, between Windmere Corporation and NationsBank of Florida, N.A. (b) Banking Facility or Facilities in an aggregate principal amount not to exceed $8,000,000 granted by the Bank of East Asia, Limited or other financial institution to Durable Electrical Metal Factory, Ltd. and/or other Subsidiaries. (c) Guarantee by Windmere Corporation of the Indebtedness described in (b) above. (d) Equipment leases existing at July 28, 1995. (e) $5,000,000 Standby Letter of Credit from Bank of Tokyo Limited-Hong Kong (through Miami office) to provide working capital. (f) $3,000,000 8% promissory note to New M-Tech Corporation due April 15, 1998. (g) $2,000,000 8% promissory note to New M-Tech Corporation due April 15, 2001. (h) $800,000 8% convertible promissory note to Fred Berens due April 15, 2001 (assigned form New M-Tech Corporation). (i) $1,200,000 8% convertible promissory note to Sloan Corporation due April 15, 2001 (assigned from New M-Tech Corporation). (j) $10,847,620 8% promissory note to Salton/Maxim Housewares, Inc., due July 11, 2001. S-5 157 Schedule 7.7 Liens (a) those granted to Salton/Maxim Housewares, Inc. which are subordinated to those granted hereunder. S-6 158 Schedule 7.8 Tax Matters None S-7 159 Schedule 7.10 Litigation S-8 -----END PRIVACY-ENHANCED MESSAGE-----