Credit Agreement

Exhibit 10.1



EXECUTION COPY










CREDIT AGREEMENT



dated as of September 28, 2007,



among



SPECTRUM BRANDS, INC.,



as the Borrower,



the Subsidiaries of the Borrower party hereto,



WACHOVIA BANK, NATIONAL ASSOCIATION,



as the Administrative Agent, the Collateral Agent and an LC Issuer,



GOLDMAN SACHS CREDIT PARTNERS L.P.,



as the Syndication Agent,



and



the LENDERS Party Hereto

____________________



GOLDMAN SACHS CREDIT PARTNERS L.P.,



Joint Lead Arranger and Sole Bookrunner



WACHOVIA CAPITAL MARKETS LLC,



Joint Lead Arranger



BANK OF AMERICA, N.A.,



GENERAL ELECTRIC CAPITAL CORPORATION



and



WELLS FARGO FOOTHILL, LLC,



Documentation Agents








TABLE OF CONTENTS



Page




ARTICLE I



DEFINITIONS AND ACCOUNTING TERMS



Section 1.01. Defined Terms 1
Section 1.02. Other Interpretive Provisions 32
Section 1.03. Accounting Terms 32
Section 1.04. Times of Day 33
Section 1.05. Currency Equivalents Generally 33
Section 1.06. Designation as Senior Debt 33






ARTICLE II



THE COMMITMENTS AND CREDIT EXTENSIONS



Section 2.01. Commitments 33
Section 2.02. Borrowings, Conversions and Continuations of Revolving Loans 34
Section 2.03. Letters of Credit 35
Section 2.04. Swingline Loans 40
Section 2.05. Special Agent Loans 41
Section 2.06. Prepayments 42
Section 2.07. Termination, Reduction and Increase of Commitments 44
Section 2.08. Repayment of Loans 46
Section 2.09. Interest 46
Section 2.10. Fees 47
Section 2.11. Computation of Interest and Fees 48
Section 2.12. Evidence of Indebtedness 48
Section 2.13. Payments Generally; Administrative Agent's Clawback; Administrative

Agent's Authority to Request Borrowings; Miscellaneous 48
Section 2.14. Sharing of Payments by Lenders 50
Section 2.15. Concerning the Designated Subsidiaries 51




ARTICLE III



TAXES, YIELD PROTECTION AND ILLEGALITY



Section 3.01. Taxes 52
Section 3.02. Illegality 54
Section 3.03. Inability to Determine Rates 55
Section 3.04. Increased Costs; Reserves on Eurodollar Rate Loans 55
Section 3.05. Compensation for Losses 56
Section 3.06. Mitigation Obligations; Replacement of Lenders 57
Section 3.07. Survival 58






ii






ARTICLE IV



CONDITIONS PRECEDENT



Section 4.01. Conditions Precedent to Effectiveness 58
Section 4.02. Conditions Precedent to Each Credit Extension 60




ARTICLE V



REPRESENTATIONS AND WARRANTIES



Section 5.01. Existence, Qualification and Power; Compliance with Laws 61
Section 5.02. Authorization; No Contravention 61
Section 5.03. Governmental Authorization; Other Consents 61
Section 5.04. Binding Effect 62
Section 5.05. Financial Statements; No Material Adverse Effect 62
Section 5.06. Litigation 62
Section 5.07. No Default 63
Section 5.08. Ownership of Property 63
Section 5.09. Environmental Compliance 63
Section 5.10. Insurance 64
Section 5.11. Taxes 64
Section 5.12. ERISA Compliance 64
Section 5.13. Subsidiaries; Equity Interests 65
Section 5.14. Margin Regulations; Investment Company Act 65
Section 5.15. Disclosure 65
Section 5.16. Intellectual Property; Licenses, Etc 66
Section 5.17. Solvency 66
Section 5.18. Senior Debt Status 66
Section 5.19. Certain Accounts 66




ARTICLE VI



AFFIRMATIVE COVENANTS



Section 6.01. Financial Statements 67
Section 6.02. Certificates; Other Information 68
Section 6.03. Notices 69
Section 6.04. Nonpublic Information 69
Section 6.05. Payment of Obligations 69
Section 6.06. Preservation of Existence, Etc 70
Section 6.07. Maintenance of Properties 70
Section 6.08. Maintenance of Insurance 70
Section 6.09. Compliance with Laws 70
Section 6.10. Books and Records 70
Section 6.11. Inspection Rights 71
Section 6.12. Use of Proceeds 71
Section 6.13. Information Regarding the ABL Collateral; Additional Subsidiaries 71
Section 6.14. Compliance with Environmental Laws 72





iii




Section 6.15. Further Assurances 72
Section 6.16. Certain Post-Closing Collateral Obligations 72
Section 6.17. Collateral Reporting 72
Section 6.18. Evaluations of the Borrowing Base and Related Assets 73




ARTICLE VII



NEGATIVE COVENANTS



Section 7.01. Liens 74
Section 7.02. Indebtedness 76
Section 7.03. Investments 78
Section 7.04. Fundamental Changes 81
Section 7.05. Dispositions 81
Section 7.06. Restricted Payments 83
Section 7.07. Change in Nature of Business 83
Section 7.08. Transactions with Affiliates 83
Section 7.09. Burdensome Agreements 84
Section 7.10. Use of Proceeds 84
Section 7.11. Amendment of Certain Documents 84
Section 7.12. Accounting Changes 85
Section 7.13. Prepayments, Etc 85
Section 7.14. Speculative Transactions 85
Section 7.15. Senior Debt Status 85




ARTICLE VIII



EVENTS OF DEFAULT AND REMEDIES



Section 8.01. Events of Default 85
Section 8.02. Remedies Upon Event of Default 88




ARTICLE IX



ADMINISTRATIVE AGENT



Section 9.01. Appointment of Agents 88
Section 9.02. Powers and Duties 89
Section 9.03. General Immunity 89
Section 9.04. Agents Entitled to Act as Lender 90
Section 9.05. Lenders' Representations, Warranties and Acknowledgments 90
Section 9.06. Right to Indemnity 91
Section 9.07. Successor Agents 91
Section 9.08. Collateral Documents and Related Collateral Matters 92
Section 9.09. No Arranger Duties 94






iv






ARTICLE X



MISCELLANEOUS



Section 10.01. Amendments, Waivers, Etc 94
Section 10.02. Notices and Other Communications 96
Section 10.03. No Waiver; Cumulative Remedies 98
Section 10.04. Expenses; Indemnity; Damage Waiver 98
Section 10.05. Payments Set Aside 99
Section 10.06. Successors and Assigns 100
Section 10.07. Confidentiality 103
Section 10.08. Right of Setoff 103
Section 10.09. Counterparts; Effectiveness; Integration 104
Section 10.10. Survival of Representations and Warranties 104
Section 10.11. Severability 104
Section 10.12. Replacement of Lenders 105
Section 10.13. Governing Law; Jurisdiction; Etc 105
Section 10.14. WAIVER OF JURY TRIAL 106
Section 10.15. Patriot Act 107
Section 10.16. Concerning the ABL Intercreditor Agreement 107
Section 10.17. Joint and Several Liability of Loan Parties 107





v



SCHEDULES



1.1(a) Initial Designated Subsidiaries
1.01(b) Specified Account Debtors
2.01 Commitments and Applicable Percentages
5.06 Litigation
5.09 Environmental Matters
5.13 Subsidiaries; Other Equity Interests
5.16 Intellectual Property Claims
7.01(b) Existing Permitted Liens
7.02(h) Existing Permitted Indebtedness
7.03(f) Existing Permitted Investments
7.05 Certain Dispositions
7.08 Certain Transactions with Affiliates
7.09 Certain Existing Restrictions
10.02 Administrative Agent's Office, Certain Addresses for Notices


EXHIBITS



A Form of ABL Guarantee and Collateral Agreement
B Form of ABL Facility Intercreditor Agreement
C Form of Assignment and Assumption
D Form of Borrowing Base Certificate
E Form of Committed Loan Notice
F Form of Compliance Certificate
G Subordination Terms of Certain Intercompany Indebtedness



vi




Table of Contents



This CREDIT AGREEMENT (this " Agreement ") is entered into as of September 28, 2007, among Spectrum Brands, Inc., a Wisconsin corporation (the " Borrower "); the Subsidiaries of the Borrower party hereto; Wachovia Bank, National Association (" Wachovia "), as the Administrative Agent, the Collateral Agent and an LC Issuer; Goldman Sachs Credit Partners L.P. (" GSCP "), as the Syndication Agent; and the Lenders (as defined below) from time to time party hereto.



The parties hereto covenant and agree as follows:



ARTICLE I



DEFINITIONS AND ACCOUNTING TERMS



Section 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:



" 2013 New Indenture " means the Indenture, dated as of March 30, 2007, among the Borrower, the guarantors named therein and Wells Fargo Bank, N.A. as trustee.



" 2013 New Notes " means the Variable Rate Toggle Senior Subordinated Notes due 2013 issued pursuant to the 2013 New Indenture.



" 2013 Original Indenture " means the Indenture, dated as of September 30, 2003, among the Borrower, the guarantors named therein and U.S. Bank National Association, as trustee, as heretofore supplemented (including by the Fifth Supplemental Indenture thereto dated as of March 29, 2007).



" 2013 Original Notes " means the 8-1/2% Senior Subordinated Notes of the Borrower due 2013, issued pursuant to the 2013 Original Indenture.



" 2015 Indenture " means the Indenture, dated as of February 7, 2005, among the Borrower, the guarantors named therein and U.S. Bank National Association, as trustee.



" 2015 Notes " means the 7-3/8% Senior Subordinated Notes of the Borrower due 2015, issued pursuant to the 2015 Indenture.



" ABL Collateral " has the meaning specified in the ABL Guarantee and Collateral Agreement.



" ABL Guarantee and Collateral Agreement " means the ABL Guarantee and Collateral Agreement among the Borrower, the Subsidiary Loan Parties and the Collateral Agent, substantially in the form of Exhibit A hereto.



" ABL Intercreditor Agreement " means the Intercreditor Agreement among the Administrative Agent, the administrative agent under the Term Credit Agreement and the Borrower, substantially in the form of Exhibit B hereto.



" Acceptable Bank " has the meaning specified in the definition of "Cash Equivalents".






Table of Contents



2





" Accession Agreement " has the meaning specified in Section 2.07(d) .



" account debtor " means any Person obligated on an Account.



" Accounts " means, as to the Borrower or any Designated Subsidiary, all present and future rights of the Borrower or such Designated Subsidiary to payment of a monetary obligation, whether or not earned by performance, that is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred or (d) arising out of the use of a credit or charge card or information contained on or for use with the card.



" Accounts Borrowing Base Availability " means, at any time, the Borrowing Base at such time, minus any amount thereof attributable to Eligible Inventory.



" Accrued Right to Offset Accounts " means all accrued rebates, co-op allowances, slotting fees, trade allowances and other accrued allowances or rebates.



" Acquisition " means any transaction or series of related transactions by the Borrower or its Subsidiaries for the purpose of, or resulting directly or indirectly in, (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of more than 50% of the capital stock, partnership interests, membership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary).



" Administrative Agent " means Wachovia, in its capacity as the administrative agent under this Agreement, or any successor administrative agent.



" Administrative Agent's Office " means the Administrative Agent's address and, as appropriate, account set forth on Schedule 10.02 , or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.



" Administrative Questionnaire " means an Administrative Questionnaire in a form supplied by the Administrative Agent.



" Affiliate " means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.



" Agents " means, collectively, the Administrative Agent, the Collateral Agent and the Syndication Agent.



" Agreement " means this Credit Agreement.






Table of Contents

3



"Applicable Percentage" means, as to any Lender, the percentage (carried out to the ninth decimal place) of the aggregate Commitments

represented by such Lender's Commitment. If the Commitments have terminated or expired, the Applicable Percentage shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.



" Applicable Rate " means (a) in the case of Eurodollar Rate Loans, 2.25% per annum and (b) in the case of Base Rate Loans, 1.25% per annum.



" Approved Electronic Communications " means any notice, communication, information, document or other material that any Loan Party provides to the Administrative Agent pursuant to any Loan Document or the transactions contemplated therein that is distributed to the Lenders and the LC Issuers by means of electronic communications pursuant to Section 10.02(b) .



" Arrangers " means GSCP, in its capacity as joint lead arranger and sole bookrunner for the Facility, and Wachovia Capital Markets LLC, in its capacity as joint lead arranger for the Facility.



" Assignment and Assumption " means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required under Section 10.06(d) ), and accepted by the Administrative Agent, substantially in the form of Exhibit C or any other form approved by the Administrative Agent.



" Assignment Effective Date " has the meaning specified in Section 10.06(c) .



" Attributable Indebtedness " means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount of the remaining lease thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease and (c) all Synthetic Debt of such Person as of such date.



" Availability Block " means $25,000,000.



" Availability Period " means the period from and including the Closing Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.



" Availability Triggering Event " means that the unused availability under the Borrowing Base shall have been less than $50,000,000 (without giving effect to the Availability Block) for five consecutive Business Days. An Availability Triggering Event shall be deemed to be continuing until such time as such unused availability is greater than $50,000,000 (without giving effect to the Availability Block) for 60 consecutive days.



" Base Rate " means, for any day, a fluctuating rate per annum equal to the higher of (a) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (b) the Prime Rate in effect on such day. Any change in the Base Rate due to a change in the Federal Funds Rate or the Prime Rate shall be effective on the effective day of such change in the Federal Funds Rate or the Prime Rate, respectively.




Table of Contents

4



" Base Rate Loan " means a Loan that bears interest based on the Base Rate.



" Borrower " has the meaning specified in the introductory paragraph hereto.



" Borrowing " means (a) a Revolving Borrowing, (b) a Swingline Loan or (c) a Special Agent Loan.



" Borrowing Base " means, at any time, (a) the sum of (i) 85% of the Eligible Accounts of the Borrower and the Designated Subsidiaries, minus the Dilution Reserve, and (ii) the lesser of (A) 65% of the Value of the Eligible Inventory of the Borrower and the Designated Subsidiaries and (B) 85% of the Net Recovery Percentage multiplied by the Value of such Eligible Inventory, minus, without duplication, (b) the Other Reserves (other than (except for purposes of Section 2.06(b)(i) ), the Specified Reserves) in effect at such time. The Borrowing Base in effect at any time shall be reasonably determined by the Administrative Agent, based on the Borrowing Base Certificate most recently delivered by the Borrower prior to such time pursuant to Section 2.15(a) , 4.01(a)(xi) or 6.17(a) , but subject to (x) any adjustments thereto as a result of any Designated Subsidiary ceasing to be such as provided in Section 2.15(b) or the consummation of any Disposition and (y) the Other Reserves established by the Administrative Agent.



" Borrowing Base Certificate " means a certificate of the Borrower substantially in the form of Exhibit D (with such changes thereto as may be reasonably requested by the Administrative Agent from time to time to reflect the components of and reserves against the Borrowing Base as provided for hereunder from time to time).



" Business Day " means any day other than (a) a Saturday, Sunday or other day on which commercial banks in New York are authorized to close under the Laws of the State of New York or are in fact closed in the State where the Administrative Agent's Office is located and (b) if such day relates to a Eurodollar Rate Loan, a day on which banks are not open for general business in London.



" Capitalized Leases " means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.



" Cash Collateral Account " means a blocked deposit account of the Borrower at a commercial bank that is in the name of the Administrative Agent and under the sole dominion and control of the Administrative Agent and in which the Administrative Agent has a perfected security interest, all in a manner reasonably satisfactory to the Administrative Agent.



" Cash Equivalents " means any of the following types of Investments:



(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States, an OECD Member, any member of the European Economic Union or any agency or instrumentality thereof having maturities of not more than 365 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America, such OECD Member or such member of the European Economic Union is pledged in support thereof;






Table of Contents

5



(b) time deposits with, or insured certificates of deposit or bankers' acceptances of, any commercial bank that (each such bank, an " Acceptable Bank ") (i) (A) is a Lender, (B) is organized under the laws of the United States, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia, and is a member of the Federal Reserve System or (C) is a member of the applicable central bank of any OECD Member or any member of the European Economic Union, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $250,000,000 (or the equivalent in the applicable currency), in each case with maturities of not more than 365 days from the date of acquisition thereof;



(c) commercial paper issued by any Person organized under the laws of any state of the United States or the District of Columbia, any member state of the European Economic Union or any OECD Member or any Acceptable Bank and rated at least "Prime-1" (or the then equivalent grade) by Moody's or Fitch or at least "A-1" (or the then equivalent grade) by S&P, or guaranteed by any industrial company with long-term unsecured debt rating (at the time of investment) of at least Aa by Moody's or Fitch or at least AA by S&P, in each case with maturities of not more than 365 days from the date of acquisition thereof;



(d) investments, classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs that are administered by financial institutions that have the highest rating obtainable from either Moody's or S&P, and the portfolios of which are limited solely to investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition;



(e) repurchase agreements with any Lender or any primary dealer maturing within 365 days from the date of investment that are fully collateralized by investment instruments that would otherwise be Cash Equivalents; provided that the terms of such repurchase agreements comply with the guidelines set forth in the Federal Financial Institutions Examination Council Supervisory Policy ? Repurchase Agreements of Depository Institutions With Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985;



(f) sterling bills of exchange eligible for rediscount at the Bank of England and accepted by an Acceptable Bank (or their dematerialized equivalents);



(g) any other debt security approved by the Required Lenders; and



(h) any investment made by a Foreign Subsidiary in its jurisdiction of organization that is of character, credit quality and maturity similar to one of the investments described in clauses (a) through (f) above.



" Casualty Event " means any casualty or other insured damage to, or any taking under any power of eminent domain or condemnation or similar proceeding of, any assets of the Borrower or any of its Subsidiaries.






Table of Contents

6



" CERCLA " means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.



" CERCLIS " means the Comprehensive Environmental Response, Compensation, and Liability Information System maintained by the U.S. Environmental Protection Agency.



" Change in Law " means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.



" Change of Control " means, an event or series of events by which:



(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than THLee or any group of which THLee is a member becomes the " beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have " beneficial ownership" of all securities that such person or group has the right to acquire (such right, an " option right "), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 40% or more of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests of the Borrower;



(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower ceases to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of clauses (ii) and (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or



(c) the occurrence of a "Change of Control" (or a similar event, however denominated) under, and as defined in, any Indenture or any agreement, instrument or document governing or evidencing any Material Indebtedness of the Borrower that refinanced Indebtedness under any Indenture (in each case, after givin ...