Term Loan Agreement

Exhibit 10.4 TERM LOAN AGREEMENT
Dated as of December 28, 2007
among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.
as the Administrative and Collateral Agent
and
SALTON, INC.,
APPLICA INCORPORATED,
APPLICA CONSUMER PRODUCTS, INC.,
APPLICA AMERICAS, INC.,
APN HOLDING COMPANY, INC.,
HP DELAWARE, INC.,
HPG LLC,
APPLICA MEXICO HOLDINGS, INC.,
SONEX INTERNATIONAL CORPORATION,
HOME CREATIONS DIRECT LTD.,
SALTON HOLDINGS INC.,
ICEBOX LLC,
TOASTMASTER INC.,
FAMILY PRODUCTS INC.,
ONE:ONE COFFEE LLC, and
SALTON TOASTMASTER LOGISTICS LLC
as the Borrowers
and
APPLICA ASIA LIMITED and
APPLICA CANADA CORPORATION
as Guarantors


ARTICLE 1 TERM LOAN 2 1.1 Term Loan 2 1.2 Procedure for Term Loan 3 1.3 Making of Term Loan 3 1.4 Multi-Borrower Provisions 4 ARTICLE 2 INTEREST AND FEES 6 2.1 Interest 6 2.2 Continuation and Conversion Elections 7 2.3 Maximum Interest Rate 8 ARTICLE 3 PAYMENTS AND PREPAYMENTS 9 3.1 Mandatory Payments of Term Loan 9 3.2 Early Termination Fee 9 3.3 Reserved 10 3.4 Reserved 10 3.5 LIBOR Loan Prepayments 10 3.6 Payments by the Loan Parties 10 3.7 Reserved 10 3.8 Apportionment, Application and Reversal of Payments 10 3.9 Indemnity for Returned Payments 11 3.10 Agent' s and Lenders' Books and Records; Monthly Statements 11 ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY 12 4.1 Taxes 12 4.2 Illegality 13 4.3 Increased Costs and Reduction of Return 14 4.4 Funding Losses 14 4.5 Inability to Determine Rates 15 4.6 Certificates of Agent 15 4.7 Obligation to Mitigate 15 4.8 Survival 16 ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES 16 5.1 Books and Records 16 5.2 Financial Information 16 5.3 Notices to the Lenders 19 5.4 Revisions or Updates to Schedules 21 ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS 22 6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents 22 6.2 Validity and Priority of Security Interest 22 6.3 Organization and Qualification 22 6.4 Reserved 23 6.5 Subsidiaries 23 6.6 Financial Statements and Projections 23 6.7 Reserved 24 6.8 Solvency 24 6.9 Debt 24


6.10 Distributions 24 6.11 Real Estate; Leases 24 6.12 Proprietary Rights 24 6.13 Trade Names 25 6.14 Litigation 25 6.15 Labor Disputes 25 6.16 Environmental Laws 25 6.17 No Violation of Law 26 6.18 No Default 26 6.19 Plan Compliance 27 6.20 Taxes 27 6.21 Regulated Entities 27 6.22 Margin Regulations 28 6.23 Copyrights, Patents, Trademarks and Licenses, etc. 28 6.24 Material Agreements 28 6.25 Bank Accounts 28 6.26 Governmental Authorization 28 6.27 Capitalization 28 6.28 No Material Adverse Change 29 6.29 Full Disclosure 29 6.30 Common Enterprise 29 6.31 Anti-Terrorism Laws 29 ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS 30 7.1 Taxes and Other Obligations 30 7.2 Legal Existence and Good Standing 31 7.3 Compliance with Law and Agreements; Maintenance of Licenses 31 7.4 Maintenance of Property; Inspection of Property 31 7.5 Insurance 31 7.6 Insurance and Condemnation Proceeds 32 7.7 Environmental Laws 32 7.8 Compliance with ERISA 32 7.9 Asset Dispositions, Mergers, Dissolutions 32 7.10 Distributions; Capital Change; Restricted Investments 34 7.11 Acquisitions 34 7.12 Third Party Guaranties 34 7.13 Debt 34 7.14 Payments; Prepayments 35 7.15 Transactions with Affiliates 35 7.16 [Reserved] 35 7.17 [Reserved] 35 7.18 [Reserved] 35 7.19 [Reserved] 35 7.20 Investment Banking and Finder' s Fees 35 7.21 Business Conducted 35 7.22 Liens 36 7.23 [Reserved] 36 7.24 New Subsidiaries 36 7.25 Fiscal Year 36 7.26 [Reserved] 36 7.27 [Reserved] 36

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7.28 Use of Proceeds 37 7.29 [Reserved] 37 7.30 Anti-Terrorism Laws 37 7.31 [Reserved] 37 7.32 Blocked Accounts 37 7.33 Additional Debt Documents 39 7.34 Applica Asia Covenants 39 7.35 Post-Closing Covenants 40 7.36 Further Assurances 41 ARTICLE 8 CONDITIONS OF LENDING 41 8.1 Conditions Precedent to Making of Term Loan 41 8.2 Limited Waiver of Conditions Precedent 45 ARTICLE 9 DEFAULT; REMEDIES 45 9.1 Events of Default 45 9.2 Remedies 48 ARTICLE 10 TERM AND TERMINATION 48 10.1 Term 48 10.2 Termination by Agent 48 10.3 Effect of Termination 48 ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS 49 11.1 Amendments and Waivers 49 11.2 Assignments; Participations 50 ARTICLE 12 THE AGENT 52 12.1 Appointment and Authorization 52 12.2 Delegation of Duties 53 12.3 Liability of Agent 53 12.4 Reliance by Agent 53 12.5 Notice of Default 53 12.6 Credit Decision 54 12.7 Indemnification 54 12.8 Agent in Individual Capacity 55 12.9 Successor Agent 55 12.10 Withholding Tax 55 12.11 Collateral Matters 57 12.12 Restrictions on Actions by Lenders; Sharing of Payments 58 12.13 Agency for Perfection 58 12.14 Payments by Agent to Lenders 58 12.15 Settlement 59 12.16 Reserved 60 12.17 Concerning the Collateral and the Related Loan Documents 60 12.18 Field Audit and Examination Reports; Disclaimer by Lenders 61 12.19 Reserved 61 12.20 Relation Among Lenders 61 12.21 The Register 62

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ARTICLE 13 JUDGMENT CURRENCY; SERVICE OF PROCESS 62 13.1 Judgment Currency 62 13.2 Agent for Service of Process 63 ARTICLE 14 MISCELLANEOUS 63 14.1 No Waivers; Cumulative Remedies 63 14.2 Severability 63 14.3 Governing Law; Choice of Forum; Service of Process 63 14.4 WAIVER OF JURY TRIAL 64 14.5 Survival of Representations and Warranties 65 14.6 Other Security and Guaranties 65 14.7 Fees and Expenses 65 14.8 Notices 66 14.9 Waiver of Notices 67 14.10 Binding Effect 67 14.11 Indemnity of the Agent and the Lenders by the Borrowers 68 14.12 Amendment and Restatement of Second Amended Credit Agreement; Release 68 14.13 Final Agreement 69 14.14 Counterparts 69 14.15 Captions 69 14.16 Right of Setoff 69 14.17 Confidentiality 70 14.18 Conflicts with Other Loan Documents 71 14.19 Agency of the Borrowers for Each Other Loan Party 71 14.20 Express Waivers By Loan Parties In Respect of Cross Guaranties and Cross Collateralization 72 14.21 USA PATRIOT Act Notice 73 14.22 Intercreditor Agreement 73

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ANNEXES, EXHIBITS AND SCHEDULES ANNEX A DEFINED TERMSANNEX B COMMITMENTS EXHIBIT A RESERVEDEXHIBIT B NOTICE OF BORROWINGEXHIBIT C NOTICE OF CONTINUATION/CONVERSIONEXHIBIT D ASSIGNMENT AND ACCEPTANCE AGREEMENT SCHEDULE 6.3 ORGANIZATION AND QUALIFICATIONSSCHEDULE 6.5 SUBSIDIARIES AND AFFILIATESSCHEDULE 6.9 DEBTSCHEDULE 6.11 REAL ESTATE; LEASESSCHEDULE 6.12 PROPRIETARY RIGHTSSCHEDULE 6.13 TRADE NAMESSCHEDULE 6.14 LITIGATIONSCHEDULE 6.15 LABOR DISPUTESSCHEDULE 6.16 ENVIRONMENTAL LAWSCHEDULE 6.19 PLAN COMPLIANCESCHEDULE 6.24 MATERIAL AGREEMENTSSCHEDULE 6.25 BANK ACCOUNTSSCHEDULE 6.27 CAPITALIZATIONSCHEDULE A-1 PERMITTED LIENSSCHEDULE A-2 RESTRICTED INVESTMENTS

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TERM LOAN AGREEMENT TERM LOAN AGREEMENT (the " Agreement" ) is made as of December 28, 2007, by and among SALTON, INC. , a Delaware corporation (" Parent" ), APPLICA INCORPORATED , a Florida corporation (" Applica" ), APN HOLDING COMPANY, INC. , a Delaware corporation (" APN" ), APPLICA CONSUMER PRODUCTS, INC. , a Florida corporation (" ACP" ), APPLICA AMERICAS , INC. , a Delaware corporation (" AAI" ), HP DELAWARE , INC. , a Delaware corporation (" HP" ), HPG LLC , a Delaware limited liability company (" HPG" ), APPLICA MEXICO HOLDINGS , INC. , a Delaware corporation (" Applica Mexico" ), SONEX INTERNATIONAL CORPORATION , a Delaware corporation (" Sonex" ), HOME CREATIONS DIRECT LTD. , a Delaware corporation (" HCD" ), SALTON HOLDINGS INC. , a Delaware corporation (" SHI" ), ICEBOX LLC , an Illinois limited liability company (" Icebox" ), TOASTMASTER INC. , a Missouri corporation (" Toastmaster" ), FAMILY PRODUCTS INC. , a Delaware corporation (" Family Products" ), ONE:ONE COFFEE LLC , a Delaware limited liability company (" One Coffee" ), and SALTON TOASTMASTER LOGISTICS LLC , a Delaware limited liability company (" STL" ; Parent, Applica, APN, ACP, AAI, HP, HPG, Applica Mexico, Sonex, HCD, SHI, Icebox, Toastmaster, Family Products, One Coffee and STL, being sometimes referred to herein individually as a " Borrower" and collectively as " Borrowers" ), and APPLICA ASIA LIMITED , a Hong Kong company (" Applica Asia" ), and APPLICA CANADA CORPORATION , a Nova Scotia company (" Applica Canada" ); the financial institutions listed on the signature pages hereof and their respective successors and permitted assigns which become " Lenders" as provided herein; HARBINGER CAPITAL PARTNERS MASTER FUND I , LTD. , in its capacity as administrative agent and collateral agent for the Lenders pursuant to ARTICLE 12 hereof (together with its successors in such capacity, " Agent" ). Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in Annex A , which is attached hereto and incorporated herein. The rules of construction contained in Annex A shall govern the interpretation of this Agreement, and all Annexes, Exhibits and Schedules attached hereto are incorporated herein by reference. Recitals: Parent, certain other Loan Parties, Agent, certain financial institutions (" Original Lenders" ), and the other parties named therein were parties to a certain Reimbursement and Senior Secured Credit Agreement dated October 1, 2007 (as at any time amended, modified, supplemented or restated, the " Original Credit Agreement" ), pursuant to which the Original Lenders agreed to reimburse certain obligations and make term loans and other financial accommodations to Parent and its Subsidiaries. In connection with the Original Credit Agreement, certain subsidiary guarantors of the Parent (the " Original Guarantors" ) executed the Subsidiary Guaranty, dated as of October 1, 2007 (as at any time amended, modified, supplemented or restated, the " Original Guarantee" ), in favor of the Agent pursuant to which the Original Guarantors guaranteed the obligations of Parent and its Subsidiaries under the Original Credit Agreement. Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (collectively, the " Equity Investors" ) have formed APN which


owns all of the equity interests of Applica. SFP Merger Sub, Inc., a Delaware corporation (" SFP" ) and wholly-owned subsidiary of Parent, will be merged with and into APN, with APN being the surviving corporation of such merger. After giving effect to such merger, all of the issued and outstanding shares of common stock of APN will be owned by Parent. As used in this Agreement, the foregoing series of transactions shall be referred to as the " Merger ." In connection with the Merger, Parent and the other Loan Parties have requested that Lenders provide a credit facility to Borrowers to finance their mutual and collective business enterprise and have requested that the Original Credit Agreement and the Original Guarantee be amended and restated in their entirety to become effective and binding on the Loan Parties pursuant to the terms hereof, and the Agent and the Lenders (including the Original Lenders that are parties hereto) have agreed, subject to the terms of this Agreement, to amend and restate the Original Credit Agreement and the Original Guarantee in their entirety to read as set forth herein, and it has been agreed by the parties hereto that (a) the commitments which the Original Lenders that are parties hereto agreed to extend to Parent under the Original Credit Agreement and the commitments of new Lenders that become parties hereto shall be extended or advanced upon the amended and restated terms and conditions contained in this Agreement, (b) the Loans and other Obligations outstanding under the Original Credit Agreement shall be governed by and deemed to be outstanding under the amended and restated terms and conditions contained herein and (c) the guarantees provided pursuant to the Original Guaranty by the Original Guarantors that are parties hereto and the guarantees of new Guarantors that became party hereto shall be governed by the amended and restated terms and conditions contained in this Agreement. All Obligations incurred pursuant hereto shall be secured by, among other things, the Security Agreement, the Applica Canada Security Agreement and the other Loan Documents and shall be guaranteed pursuant to the Applica Asia Guaranty and the Applica Canada Guaranty. In addition, all existing Obligations (and all Obligations incurred pursuant hereto) shall be secured by, among other things, Liens on a portion of the assets of certain Persons that, prior to the effective date of the Merger, constituted Consolidated Applica Parties. NOW, THEREFORE, the parties hereto hereby agree to amend and restate the Original Credit Agreement and the Original Guaranty, and the Original Credit Agreement and the Original Guaranty are hereby amended and restated, in their entirety as follows: ARTICLE 1
TERM LOAN 1.1 Term Loan . Subject to all of the terms and conditions of this Agreement, each Lender severally, but not jointly, agrees to make a loan to Borrowers on the Closing Date, in an amount not to exceed such Lender' s Pro Rata Share of the original principal amount of $110,000,000 (each, a " Loan" and, together, the " Term Loan" ). Amounts paid or prepaid in respect of the Term Loan may not be reborrowed.

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1.2 Procedure for Term Loan . (a) (1) The Term Loan shall be made upon the Borrower Agent' s written notice delivered to the Agent in the form of a notice of borrowing (" Notice of Borrowing" ), which must be received by the Agent prior to 1:00 p.m. (New York time) on the Closing Date, specifying the duration of the initial Interest Period for the Term Loan (and if not specified, it shall be deemed a request for an Interest Period of one month). (2) In lieu of delivering a Notice of Borrowing, a Responsible Officer may give Agent telephonic notice of such request for advances to a Designated Account on or before the deadline set forth in clause (1) above and the Agent at all times shall be entitled to rely on such telephonic notice in making the Term Loan, regardless of whether any written confirmation is received. (b) Reliance upon Authority . Prior to the Closing Date, the Borrowers shall deliver to the Agent a notice setting forth an account (" Designated Account" ) to which the Agent is authorized by the Borrowers to transfer the proceeds of the Term Loan. The Designated Account must be reasonably satisfactory to the Agent. The Agent is entitled to rely conclusively on any individual' s request for the Term Loan on behalf of the Borrowers, so long as the proceeds thereof are to be transferred to a Designated Account. The Agent has no duty to verify the identity of any individual representing himself or herself as a person authorized by the Borrowers to make such requests on their behalf. (c) No Liability . The Agent shall not incur any liability to the Loan Parties as a result of acting upon any notice referred to in Sections 1.2(b) and (c) , which the Agent believes in good faith to have been given by an officer or other person duly authorized by the Borrowers to request the Term Loan on its behalf. The crediting of the Term Loan to the Designated Account or to such Persons as the Borrowers may direct shall conclusively establish the obligation of the Borrowers to repay such Term Loan as provided herein. (d) Notwithstanding the foregoing, each Loan Party authorizes Agent and Lenders to extend, convert or continue Loans, effect selections of interest rates, and transfer funds to or on behalf of the Loan Parties based on telephonic or e-mailed instructions. If requested to do so by Agent, the Loan Parties shall confirm each such request by prompt delivery to Agent of a Notice of Borrowing or Notice of Continuation/Conversion, if applicable, but if it differs in any material respect from the action taken by Agent or Lenders, the records of Agent and Lenders shall govern. Neither Agent nor any Lender shall have any liability for any loss suffered by a Loan Party as a result of Agent or any Lender acting upon its understanding of telephonic or e-mailed instructions from a person believed in good faith by Agent or any Lender to be a person authorized to give such instructions on a Loan Party' s behalf. 1.3 Making of Term Loan . Promptly after receipt of the Notice of Borrowing (or telephonic notice in lieu thereof) on the Closing Date, the Agent shall notify the Lenders by telecopy, telephone or e-mail of the requested Term Loan. Each Lender shall transfer its Pro Rata Share of the Term Loan to the Agent in immediately available funds, to the account from time to time designated by Agent, not later than 2:00 p.m. (New York time) on the Closing Date. After

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the Agent' s receipt of all proceeds of such Term Loan, the Agent shall make the proceeds of such Term Loan available to the Borrowers on the Closing Date by transferring same day funds as directed by the Borrowers. 1.4 Multi-Borrower Provisions . (a) Each Borrower hereby designates ACP (" Borrower Agent" ) as its representative and agent for all purposes under the Loan Documents, including requesting the Term Loan, designation of any Interest Period, delivery or receipt of communications, preparation and delivery of financial reports, receipt and payment of Obligations, requests for waivers, amendments or other accommodations, actions under the Loan Documents (including in respect of compliance with covenants), and all other dealings with Agent or any Lender. Borrower Agent hereby accepts such appointment. Agent and Lenders shall be entitled to rely upon, and shall be fully protected in relying upon, any notice or communication (including the Notice of Borrowing) delivered by Borrower Agent on behalf of any Borrower. Agent and Lenders may give any notice or communication with a Borrower hereunder to Borrower Agent on behalf of such Borrower. Each of Agent and Lenders shall have the right, in its discretion, to deal exclusively with Borrower Agent for any or all purposes under the Loan Documents. Each Borrower agrees that any notice, election, communication, representation, agreement or undertaking made on its behalf by Borrower Agent shall be binding upon and enforceable against it. (b) Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all Obligations and all agreements under the Loan Documents. Each Borrower agrees that its guaranty of obligations hereunder constitutes a continuing guaranty of payment and performance and not of collection, that such obligations shall not be discharged until full payment of the Obligations, and that such obligations are absolute and unconditional, irrespective of (a) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Obligor is or may become a party or liable; (b) the absence of any action to enforce this Agreement (including this Section) or any other Loan Document, or any waiver, consent or indulgence of any kind by Agent or any Lender with respect thereto; (c) the existence, value or condition of, or failure to perfect a Lien or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Agent or any Lender in respect thereof (including the release of any security or guaranty); (d) the insolvency of any Loan Party; (e) any election by Agent or any Lender in an insolvency proceeding for the application of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance of any claims of Agent or any Lender against any Loan Party for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except full payment of all Obligations. (c) Each Borrower expressly waives all rights that it may have now or in the future under any statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to proceed against any Loan Party, other Person or security for the payment or performance of any Obligations before, or as a condition to, proceeding against such Borrower. It is agreed among each Borrower, Agent and Lenders that the provisions of this Section 1.6 are of the essence of the transaction contemplated by the Loan Documents and that, but for such provisions, Agent and Lenders would decline to make the Term Loan. Notwithstanding anything

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to the contrary in any Loan Document, and except as set forth in this Section 1.6 , each Borrower expressly waives all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off, as well as all defenses available to a surety, guarantor or accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant to this Section is necessary to the conduct and promotion of its business, and can be expected to benefit such business. (d) Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem appropriate, including realization upon Collateral by judicial foreclosure or non judicial sale or enforcement, without affecting any rights and remedies under this Section 1.6 . If, in taking any action in connection with the exercise of any rights or remedies, Agent or any Lender shall forfeit any other rights or remedies, including the right to enter a deficiency judgment against any Borrower or other Person, whether because of any Applicable Laws pertaining to " election of remedies" or otherwise, each Borrower consents to such action and waives any claim based upon it, even if the action may result in loss of any rights of subrogation that any Borrower might otherwise have had. Any election of remedies that results in denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair any other Borrower' s obligation to pay the full amount of the Obligations. Each Borrower waives all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure with respect to any security for the Obligations, even though that election of remedies destroys such Borrower' s rights of subrogation against any other Person. Agent may bid all or a portion of the Obligations at any foreclosure or trustee' s sale or at any private sale, and the amount of such bid need not be paid by Agent but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Agent or any other Person is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral, and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this Section 1.6 , notwithstanding that any present or future law or court decision may have the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at any such sale. (e) Notwithstanding anything herein to the contrary, each Borrower' s liability under this Section 1.6 shall be limited to the greater of (i) all amounts for which such Borrower is primarily liable, as described below, and (ii) such Borrower' s Allocable Amount. The " Allocable Amount" for any Borrower shall be the maximum amount that could then be recovered from such Borrower under this Section 1.6 without rendering such payment voidable under Section 548 of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or similar statute or common law. (f) If any Borrower makes a payment under this Section 1.6 of any Obligations (other than amounts for which such Borrower is primarily liable) (a " Co-Borrower Payment" ) that, taking into account all other Co-Borrower Payments previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Co-Borrower Payments in the same proportion that such Borrower' s Allocable Amount bore to the total Allocable Amounts of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Co-Borrower Payment.

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(g) Nothing contained in this Section 1.6 shall limit the liability of any Borrower to pay the Term Loan made directly or indirectly to that Borrower (including portions thereof advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder. (h) Each Borrower has requested that Agent and Lenders make this credit facility available to Borrowers on a combined basis, in order to finance Borrowers' business most efficiently and economically. Borrowers' business is a mutual and collective enterprise, and Borrowers believe that consolidation of their credit facility will enhance the borrowing power of each Borrower and ease the administration of their relationship with Lenders, all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that Agent' s and Lenders' willingness to extend credit to Borrowers and to administer the Collateral on a combined basis, as set forth herein, is done solely as an accommodation to Borrowers and at Borrowers' request. (i) Each Borrower hereby subordinates any claims, including any right of payment, subrogation, contribution and indemnity, that it may have at any time against any other Loan Party, howsoever arising, to the full payment of all Obligations. ARTICLE 2
INTEREST AND FEES 2.1 Interest . (a) Interest Rates . The Term Loan shall bear interest on the unpaid principal amount thereof (including, to the extent permitted by law, on interest thereon not paid when due) from the date made until paid in full in cash at a rate determined by reference to the Base Rate or the LIBOR Rate plus the Applicable Margin, but not to exceed the Maximum Rate. Any of the Loans may be converted into, or continued as LIBOR Loans, subject to and in the manner provided in Section 2.2 . If at any time Loans are outstanding with respect to which the Borrowers have not delivered to the Agent a notice specifying the basis for determining the interest rate applicable thereto, those Loans shall bear interest at a rate determined by reference to the Base Rate until notice to the contrary has been given to the Agent in accordance with this Agreement and such notice has become effective. Except as otherwise provided herein, the outstanding Obligations shall bear interest as follows: (i) For all Base Rate Loans, at a fluctuating per annum rate equal to the Base Rate plus the Applicable Margin; and (ii) For all LIBOR Loans, at a per annum rate equal to the LIBOR Rate plus the Applicable Margin.Each change in the Base Rate shall be reflected in the interest rate applicable to Base Rate Loans as of the effective date of such change. All interest charges shall be computed on the basis of a year of 360 days and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). The Borrowers shall pay to the Agent, for the ratable benefit of Lenders, interest accrued on all Base Rate Loans in arrears on the first day of each month hereafter and on the Termination Date. The Borrowers shall pay to the Agent, for the ratable benefit of Lenders, interest on all LIBOR Loans in arrears on each LIBOR Interest Payment Date. For the purposes of the Interest Act (Canada), (i) whenever any interest or fee under this Agreement or any other Loan Document is calculated using a rate ba ...