Exhibit 10(u)

 

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CREDIT AGREEMENT

 

DATED AS OF NOVEMBER 28, 2005

 

by and among

 

PLAYTEX LIMITED,

 

as Borrower

 

and

 

THE OTHER PERSONS PARTY HERETO THAT ARE

DESIGNATED AS CREDIT PARTIES

 

and

 

GE CANADA FINANCE HOLDING COMPANY

as Agent and a Lender

 

and

 

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

as Lenders

 

and

 

GE CAPITAL MARKETS, INC.

as Lead Arranger

 

 

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Exhibit 10(u)

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

SECTION 1. AMOUNTS AND TERMS OF LOANS

2

 

1.1

Loans.

2

 

1.2

Interest and Applicable Margins.

8

 

1.3

Fees.

12

 

1.4

Payments.

13

 

1.5

Prepayments.

14

 

1.6

Maturity.

15

 

1.7

Eligible Accounts.

15

 

1.8

Eligible Inventory.

18

 

1.9

[Intentionally Omitted]

19

 

1.10

Loan Accounts.

19

 

1.11

Yield Protection; Illegality.

20

 

1.12

Taxes.

20

 

1.13

Common Enterprise.

22

SECTION 2. AFFIRMATIVE COVENANTS

23

 

2.1

Compliance With Laws and Contractual Obligations.

23

 

2.2

Insurance; Damage to or Destruction of Collateral.

23

 

2.3

Inspection; Lender Meeting.

24

 

2.4

Organizational Existence.

25

 

2.5

Environmental Matters.

25

 

2.6

Landlords’ Agreements, Mortgagee Agreements, Bailee and Processor Letters and
Real Estate Purchases.

26

 

2.7

Conduct of Business.

26

 

2.8

Further Assurances.

26

SECTION 3. NEGATIVE COVENANTS

27

 

3.1

Indebtedness.

27

 

3.2

Liens and Related Matters.

28

 

3.3

Investments.

29

 

3.4

Contingent Obligations.

29

 

3.5

Restricted Payments.

30

 

3.6

Restriction on Fundamental Changes.

30

 

3.7

Disposal of Assets or Subsidiary Stock.

31

 

3.8

Transactions with Affiliates.

31

 

3.9

Conduct of Business.

31

 

3.10

Changes Relating to Indebtedness.

31

 

3.11

Fiscal Year.

32

 

3.12

Press Release; Public Offering Materials.

32

 

3.13

Subsidiaries.

32

 

3.14

Bank Accounts.

32

 

3.15

Hazardous Materials.

33

 

3.16

Pensions and Benefit Plans.

33

 

3.17

Sale-Leasebacks.

33

 

 

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3.18

Prepayments of Other Indebtedness.

33

 

3.19

Changes to Material Contracts.

33

SECTION 4. FINANCIAL COVENANTS/REPORTING

33

 

4.1

[Intentionally Omitted]

34

 

4.2

Financial Statements and Other Reports.

34

 

4.3

Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.

40

SECTION 5. REPRESENTATIONS AND WARRANTIES

40

 

5.1

Disclosure.

40

 

5.2

No Material Adverse Effect.

41

 

5.3

No Conflict.

41

 

5.4

Organization, Powers, Capitalization and Good Standing.

41

 

5.5

Financial Statements and Projections.

42

 

5.6

Intellectual Property.

42

 

5.7

Investigations, Audits, Etc.

42

 

5.8

Employee Matters.

42

 

5.9

Solvency.

43

 

5.10

Litigation; Adverse Facts.

43

 

5.11

Use of Proceeds.

43

 

5.12

Ownership of Real Property; Liens.

43

 

5.13

Environmental Matters.

44

 

5.14

Canadian Pension and Benefits Plans.

45

 

5.15

Brokers.

45

 

5.16

Deposit and Disbursement Accounts.

45

 

5.17

Agreements and Other Documents.

45

 

5.18

Insurance.

46

 

5.19

Senior Secured Note Documents and Senior Subordinated Note Documents.

46

 

5.20

Compliance.

46

SECTION 6. DEFAULT, RIGHTS AND REMEDIES

46

 

6.1

Event of Default.

46

 

6.2

Suspension or Termination of Commitments.

49

 

6.3

Acceleration and other Remedies.

49

 

6.4

Performance by Agent.

49

 

6.5

Application of Proceeds.

50

SECTION 7. CONDITIONS TO LOANS

50

 

7.1

Conditions to Initial Loans.

50

 

7.2

Conditions to All Loans.

51

SECTION 8. ASSIGNMENT AND PARTICIPATION

51

 

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8.1

Assignment and Participations.

51

 

8.2

Agent.

54

 

8.3

Set Off and Sharing of Payments.

59

 

8.4

Disbursement of Funds.

59

 

8.5

Disbursements of Advances; Payment.

60

SECTION 9. MISCELLANEOUS

62

 

9.1

Indemnities.

62

 

9.2

Amendments and Waivers.

62

 

9.3

Notices.

63

 

9.4

Failure or Indulgence Not Waiver; Remedies Cumulative.

65

 

9.5

Marshaling; Payments Set Aside.

66

 

9.6

Severability.

66

 

9.7

Lenders’ Obligations Several; Independent Nature of Lenders’ Rights.

66

 

9.8

Headings.

66

 

9.9

Applicable Law.

66

 

9.10

Successors and Assigns.

66

 

9.11

No Fiduciary Relationship; Limited Liability.

66

 

9.12

Construction.

67

 

9.13

Confidentiality.

67

 

9.14

CONSENT TO JURISDICTION.

67

 

9.15

WAIVER OF JURY TRIAL.

68

 

9.16

Survival of Warranties and Certain Agreements.

68

 

9.17

Entire Agreement.

68

 

9.18

Counterparts; Effectiveness.

68

 

9.19

Replacement of Lenders.

68

 

9.20

Delivery of Termination Statements and Mortgage Releases.

70

 

9.21

Judgment Currency.

70

INDEX OF APPENDICES

 

iii

 

 

 

 

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INDEX OF APPENDICES

 

Annexes

 

Annex A

-

Definitions

 

Annex B

-

Pro Rata Shares and Commitment Amounts

Annex C

-

Closing Checklist

 

Annex D

-

Lenders’ Bank Accounts

 

 

Exhibits

 

Exhibit 1.1(a)(i)

-

Revolving Note

 

Exhibit 1.1(a)(ii)

-

Notice of Revolving Credit Advance

Exhibit 1.1(c)(i)

Notice of Swing Line Advance

 

Exhibit 1.1(c)(ii)

-

Swing Line Note

 

Exhibit 1.2(e)

-

Notice of Continuation/Conversion

 

Exhibit 4.2(d)

-

Borrowing Base Certificate

 

Exhibit 4.2(k)

-

Compliance Certificate

 

Exhibit 8.1

-

Assignment Agreement

 

 

Schedules

Schedule 2.7

-

Corporate and Trade Names

 

Schedule 3.1

-

Indebtedness

 

Schedule 3.2

-

Liens

 

Schedule 3.3

-

Investments

 

Schedule 3.4

-

Contingent Obligations

 

Schedule 3.8

-

Affiliate Transactions

 

Schedule 3.9

-

Business Description

 

Schedule 5.4(a)

-

Jurisdictions of Organization and Qualifications

Schedule 5.4(b)

-

Capitalization

 

Schedule 5.6

-

Intellectual Property

 

Schedule 5.7

-

Investigations and Audits

 

Schedule 5.8

-

Employee Matters

 

Schedule 5.10

-

Litigation

 

Schedule 5.11

Use of Proceeds

 

Schedule 5.12

-

Real Estate

 

Schedule 5.13

-

Environmental Matters

 

Schedule 5.16

-

Deposit and Disbursement Accounts

 

Schedule 5.17

-

Agreements and Other Documents

 

Schedule 5.18

Insurance

 

 

 

iv

 

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Exhibit 10(u)

 

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT is dated as of November 28, 2005 and entered into by and
among PLAYTEX LIMITED, a Nova Scotia corporation (“Borrower”), the other persons
designated as “Credit Parties” on the signature pages hereof, the financial
institutions who are or hereafter become parties to this Agreement as Lenders,
and GE CANADA FINANCE HOLDING COMPANY, a Nova Scotia unlimited liability company
(in its individual capacity, “GE Finance”), as Agent.

R E C I T A L S:

 

WHEREAS, Borrower desires that Lenders extend a revolving credit facility to
Borrower to provide working capital financing for Borrower and for other general
corporate purposes; and

WHEREAS, Borrower desires to secure all of its Obligations (as hereinafter
defined) under the Loan Documents (as hereinafter defined) by granting to Agent,
for the benefit of Agent and Lenders, a security interest in and hypothecs and
lien upon substantially all of its personal, movable and material owned real and
immovable property; and

WHEREAS, Borrower’s parent company, Playtex Products, Inc. (“Playtex US”) is
willing to guarantee all of the Obligations of Borrower and to grant or cause to
be granted to Agent, for the benefit of Agent and Lenders, a pledge of all of
the Stock of Borrower and a security interest in and lien upon substantially all
of its other personal, movable and material owned real and immovable property to
secure the Obligations; and

WHEREAS, all capitalized terms herein shall have the meanings ascribed thereto
in Annex A hereto which is incorporated herein by reference.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, Borrower, the other Credit Parties, Lenders and
Agent agree as follows:

 

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SECTION 1.

AMOUNTS AND TERMS OF LOANS

1.1       Loans. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower and the other
Credit Parties contained herein:

(a)

Revolving Loans.

(i)        Each Revolving Lender agrees, severally and not jointly, to make
available to Borrower from time to time until the Commitment Termination Date
its Pro Rata Share of advances (each a “Revolving Credit Advance”) of Revolving
Loans requested by Borrower hereunder. The Pro Rata Share of the Revolving Loan
of any Revolving Lender (including, without duplication, Swing Line Loans) shall
not at any time exceed its separate Revolving Loan Commitment. Revolving Credit
Advances may be repaid and reborrowed; provided, that the amount of any
Revolving Credit Advance to be made at any time shall not exceed Borrowing
Availability at such time. Borrowing Availability may be further reduced by
Reserves imposed by Agent in accordance with this Agreement. All Revolving Loans
shall be repaid in full on the Commitment Termination Date. Borrower shall
execute and deliver to each Revolving Lender a note to evidence the Revolving
Loan Commitment of that Revolving Lender. Each note shall be in the principal
amount of the Revolving Loan Commitment of the applicable Revolving Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(a)(i) (each
a “Revolving Note” and, collectively, the “Revolving Notes”). Other than
pursuant to Section 1.1(a)(ii), if at any time the Borrowing Availability is
less than $0 (Revolving Loans that result in such Borrowing Availability
deficiency are herein referred to collectively as “Overadvances”), Lenders shall
not be obligated to make Revolving Credit Advances, no additional Letters of
Credit shall be issued and, except as provided in Section 1.1(a)(ii) below,
Revolving Loans must be repaid immediately and Letters of Credit cash
collateralized in an amount sufficient to eliminate any Overadvances. All
Overadvances shall constitute Index Rate Loans and shall bear interest at the
Default Rate. Revolving Loans which are Index Rate Loans may be requested in any
amount with one (1) Business Day prior written notice required for funding
requests equal to or greater than $10,000,000. For funding requests for such
Loans less than $10,000,000, written notice must be provided by 1:00 p.m.
(Toronto time) on the Business Day on which the Loan is to be made. All BA Rate
Loans require two (2) Business Days prior written notice. Written notices for
funding requests shall be in the form attached as Exhibit 1.1(a)(ii) (“Notice of
Revolving Credit Advance”).

(ii)       If Borrower requests that Revolving Lenders make, or permit to remain
outstanding any Overadvances, Agent may, in its sole discretion, elect to make,
or permit to remain outstanding such Overadvances; provided, however, that Agent
may not cause Revolving Lenders to make, or permit to remain outstanding,
(a) aggregate Revolving Loans (including, without duplication, Swing Line Loans)
in excess of the Maximum Amount or (b) Overadvances in an aggregate amount in
excess of 5% of the Revolving Loan Commitment. If an Overadvance is made, or
permitted to remain outstanding, pursuant to the preceding sentence, then all
Revolving Lenders shall be bound to make, or permit to remain outstanding such
Overadvance based upon their Pro Rata Shares of the Revolving Loan Commitment in
accordance with the terms of this Agreement. If an Overadvance remains
outstanding for more

 

2

 

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than ninety (90) days during any one hundred eighty (180) day period, Revolving
Loans must be repaid immediately in an amount sufficient to eliminate all of
such Overadvances. Furthermore, holders of a majority of the Revolving Loan
Commitment may prospectively revoke Agent’s ability to make or permit
Overadvances by written notice to Agent. Any Overadvance may be made as a Swing
Line Advance.

(b)

Swing Line Facility.

(i)        Agent shall notify the Swing Line Lender upon Agent’s receipt of any
Notice of Revolving Credit Advance. Subject to the terms and conditions hereof,
the Swing Line Lender (1) may, if the applicable Notice of Revolving Credit
Advance request is for an Index Rate Loan, in its discretion, make available
from time to time until the Commitment Termination Date advances in accordance
with any such notice and (2) shall upon Agent’s receipt of a notice of Swing
Line Advance in the form attached as Exhibit 1.1(c)(i) (“Notice of Swing Line
Advance”) by Borrower, make available from time to time until the Commitment
Termination Date advances in accordance with any such notice (each advance
pursuant to this Section 1.1(c) a “Swing Line Advance”). The provisions of this
Section 1.1(c) shall not relieve Revolving Lenders of their obligations to make
Revolving Credit Advances under Section 1.1(a); provided, that if the Swing Line
Lender makes a Swing Line Advance pursuant to any notice described in clause (1)
above, such Swing Line Advance shall be in lieu of any Revolving Credit Advance
that otherwise may be made by Revolving Lenders pursuant to such notice. Except
as provided in Section 1.1(a)(ii) above, the aggregate amount of Swing Line
Advances outstanding shall not exceed at any time the lesser of (A) the Swing
Line Commitment and (B) Borrowing Availability (“Swing Line Availability”).
Until the Commitment Termination Date, Borrower may from time to time borrow,
repay and reborrow under this Section 1.1(c). Each Swing Line Advance shall be
made pursuant to a Notice of Revolving Credit Advance delivered by Borrower to
Agent in accordance with Section 1.1(a) or pursuant to a Notice of Swing Line
Advance provided by 1:00p.m. (Toronto time) on the Business Day on which the
Swing Line Loan is to be made. Unless the Swing Line Lender has received at
least one (1) Business Day’s prior written notice from Requisite Revolving
Lenders instructing it not to make a Swing Line Advance due to the failure of
any condition to borrowing contained in Section 7.2 to be satisfied, the Swing
Line Lender shall, notwithstanding the failure of any condition precedent set
forth in Section 7.2, be entitled (but not required) to fund that Swing Line
Advance, and to have each Revolving Lender make Revolving Credit Advances in
accordance with Section 1.1(c)(iii) or purchase participating interests in
accordance with Section 1.1(c)(iv). Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan shall constitute an
Index Rate Loan. The entire unpaid balance of the Swing Line Loan and all other
non-contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date if not sooner
paid in full.

(ii)       Borrower shall execute and deliver to the Swing Line Lender a
promissory note to evidence the Swing Line Commitment. Such note shall be in the
principal amount of the Swing Line Commitment of the Swing Line Lender, dated
the Closing Date and substantially in the form of Exhibit 1.1(c)(ii) (the “Swing
Line Note”). The Swing Line Note shall represent the obligation of Borrower to
pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid
principal amount of all Swing Line Advances made to Borrower together with
interest thereon as prescribed in Section 1.2.

 

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(iii)      The Swing Line Lender, at any time and from time to time in its sole
and absolute discretion but no less frequently than once weekly, shall on behalf
of Borrower (and Borrower hereby irrevocably authorizes the Swing Line Lender to
so act on its behalf), and Borrower may, at any time and from time to time in
its sole and absolute discretion, request each Revolving Lender (including the
Swing Line Lender) to make a Revolving Credit Advance to Borrower (which shall
be an Index Rate Loan) in an amount equal to that Revolving Lender’s Pro Rata
Share of the principal amount of the Swing Line Loan (the “Refunded Swing Line
Loan”) outstanding on the date such notice is given. Unless any of the events
described in Sections 6.1(f) and 6.1(g) has occurred (in which event the
procedures of Section 1.1(c)(iv) shall apply) and regardless of whether the
conditions precedent set forth in this Agreement to the making of a Revolving
Credit Advance are then satisfied, each Revolving Lender shall disburse directly
to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the
Swing Line Lender, prior to 3:00 p.m. (Toronto time), in immediately available
funds on the Business Day next succeeding the date that notice is given. The
proceeds of those Revolving Credit Advances shall be immediately paid to the
Swing Line Lender and applied to repay the Refunded Swing Line Loan.

(iv)      If, prior to refunding a Swing Line Loan with a Revolving Credit
Advance pursuant to Section 1.1(c)(iii), one of the events described in Sections
6.1(f) or 6.1(g) has occurred, then, subject to the provisions of Section
1.1(c)(v) below, each Revolving Lender shall, on the date such Revolving Credit
Advance was to have been made for the benefit of Borrower, purchase from the
Swing Line Lender an undivided participation interest in the Swing Line Loan in
an amount equal to its Pro Rata Share (determined with respect to Revolving
Loans) of such Swing Line Loan. Upon request, each Revolving Lender shall
promptly transfer to the Swing Line Lender, in immediately available funds, the
amount of its participation interest.

(v)       Each Revolving Lender’s obligation to make Revolving Credit Advances
in accordance with Section 1.1(c)(iii) and to purchase participation interests
in accordance with Section 1.1(c)(iv) shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right that such Revolving Lender may
have against the Swing Line Lender, Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of any Default or Event of
Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
Swing Line Lender shall be entitled to recover, on demand, from each Revolving
Lender the amounts required pursuant to Sections 1.1.(c)(iii) or 1.1(c)(iv), as
the case may be. If any Revolving Lender does not make available such amounts to
Agent or the Swing Line Lender, as applicable, the Swing Line Lender shall be
entitled to recover, on demand, such amount on demand from such Revolving
Lender, together with interest thereon for each day from the date of non-payment
until such amount is paid in full at the Bank Rate for the first two Business
Days and at the Index Rate thereafter.

(c)       Letters of Credit. The Revolving Loan Commitment may, in addition to
advances under the Revolving Loan, be utilized, upon the request of Borrower,
for the issuance of Letters of Credit. Each Letter of Credit issued by an L/C
Issuer shall be guaranteed by the L/C Guarantor, provided, that if the L/C
Issuer is a Revolving Lender, then such letters of Credit

 

4

 

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shall not be guaranteed by the L/C Guarantor but rather each Revolving Lender
shall, immediately upon the issuance of such Letter of Credit and without
further action on the part of Agent or any of the Lenders, be deemed to have
purchased from such L/C Issuer a participation in such Letter of Credit (or in
its obligation under a risk participation agreement with respect thereto) equal
to such Revolving Lender’s Pro Rata Share of the aggregate amount available to
be drawn under such Letter of Credit.

(i)        Maximum Amount. The aggregate amount of Letter of Credit Obligations
with respect to all Letters of Credit outstanding at any time shall not exceed
$5,000,000 (“L/C Sublimit”).

(ii)       Reimbursement. Borrower shall be irrevocably and unconditionally
obligated forthwith without presentment, demand, protest or other formalities of
any kind, to reimburse any L/C Issuer on demand in immediately available funds
for any amounts paid by such L/C Issuer with respect to a Letter of Credit,
including all reimbursement payments, Fees, Charges, costs and expenses paid by
such L/C Issuer. Borrower hereby authorizes and directs Agent, at Agent’s
option, to debit Borrower’s account (by increasing the outstanding principal
balance of the Revolving Credit Advances) in the amount of any payment made by
an L/C Issuer with respect to any Letter of Credit. All amounts paid by an L/C
Issuer with respect to any Letter of Credit that are not immediately repaid by
Borrower with the proceeds of a Revolving Credit Advance or otherwise shall bear
interest at the interest rate applicable to Revolving Loans which are Index Rate
Loans plus, at the election of Agent or Requisite Revolving Lenders, an
additional two percent (2.00%) per annum. Each Revolving Lender agrees to fund
its Pro Rata Share of any Revolving Loan made pursuant to this Section
1.1(d)(ii). In the event Agent elects not to debit Borrower’s account and
Borrower fails to reimburse the L/C Issuer in full on the date of any payment in
respect of a Letter of Credit, Agent shall promptly notify each Revolving Lender
of the amount of such unreimbursed payment and the accrued interest thereon and
each Revolving Lender, on the next Business Day prior to 3:00 p.m. (Toronto
time), shall deliver to Agent an amount equal to its Pro Rata Share thereof in
same day funds. Each Revolving Lender hereby absolutely and unconditionally
agrees to pay to the L/C Issuer upon demand by the L/C Issuer such Revolving
Lender’s Pro Rata Share of each payment made by the L/C Issuer in respect of a
Letter of Credit and not immediately reimbursed by Borrower or satisfied through
a debit of Borrower’s account (by increasing the outstanding principal balance
of the Revolving Credit Advances). Each Revolving Lender acknowledges and agrees
that its obligations pursuant to this subsection in respect of Letters of Credit
are absolute and unconditional and shall not be affected by any circumstance
whatsoever, including setoff, counterclaim, the occurrence and continuance of a
Default or an Event of Default or any failure by Borrower to satisfy any of the
conditions set forth in Section 7.2. If any Revolving Lender fails to make
available to the L/C Issuer the amount of such Revolving Lender’s Pro Rata Share
of any payments made by the L/C Issuer in respect of a Letter of Credit as
provided in this Section 1.1(d)(ii), the L/C Issuer shall be entitled to recover
such amount on demand from such Revolving Lender together with interest at the
Index Rate.

(iii)      Request for Letters of Credit. Borrower shall give Agent at least
three (3) Business Days prior written notice specifying the date a Letter of
Credit is requested to be issued, the amount and the name and address of the
beneficiary and a description of the transactions proposed to be supported
thereby. If Agent informs Borrower that the L/C Issuer

 

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cannot issue the requested Letter of Credit directly, Borrower may request that
L/C Issuer arrange for the issuance of the requested Letter of Credit under a
risk participation agreement with another financial institution reasonably
acceptable to Agent, L/C Issuer and Borrower. The issuance of any Letter of
Credit under this Agreement shall be subject to the conditions that the Letter
of Credit is in a form and contains such terms and conditions as are reasonably
satisfactory to the L/C Issuer and, in the case of standby letters of credit,
Agent. The initial notice requesting the issuance of a Letter of Credit shall be
accompanied by the form of the Letter of Credit and an application for a letter
of credit, if any, then required by the L/C Issuer completed in a manner
reasonably satisfactory to such L/C Issuer. If any provision of any application
or reimbursement agreement is inconsistent with the terms of this Agreement,
then the provisions of this Agreement, to the extent of such inconsistency,
shall control.

(iv)      Expiration Dates of Letters of Credit. The expiration date of each
Letter of Credit shall be on a date which is not later than the earlier of
(a) one year from its date of issuance or (b) the thirtieth (30th) day prior to
the date set forth in clause (a) of the definition of the term Commitment
Termination Date. Notwithstanding the foregoing, a Letter of Credit may provide
for automatic extensions of its expiration date for one (1) or more successive
one (1) year periods provided that the L/C Issuer has the right to terminate
such Letter of Credit on each such annual expiration date and no renewal term
may extend the term of the Letter of Credit to a date that is later than the
thirtieth (30th) day prior to the date set forth in clause (a) of the definition
of the term Commitment Termination Date. The L/C Issuer may elect not to renew
any such Letter of Credit and, upon direction by Agent or Requisite Revolving
Lenders, shall not renew any such Letter of Credit at any time during the
continuance of an Event of Default, provided that, in the case of a direction by
Agent or Requisite Revolving Lenders, the L/C Issuer receives such directions
prior to the date notice of non-renewal is required to be given by the L/C
Issuer and the L/C Issuer has had a reasonable period of time to act on such
notice.

(v)       Obligations Absolute. The obligation of Borrower to reimburse the L/C
Issuer, Agent and Lenders for payments made in respect of Letters of Credit
issued by the L/C Issuer shall be unconditional and irrevocable and shall be
paid under all circumstances strictly in accordance with the terms of this
Agreement, including the following circumstances: (a) any lack of validity or
enforceability of any Letter of Credit; (b) any amendment or waiver of or any
consent or departure from all or any of the provisions of any Letter of Credit
or any Loan Document; (c) the existence of any claim, set-off, defense or other
right which Borrower, any of its Subsidiaries or Affiliates or any other Person
may at any time have against any beneficiary of any Letter of Credit, Agent, any
L/C Guarantor, any L/C Issuer, any Lender or any other Person, whether in
connection with this Agreement, any other Loan Document or any other related or
unrelated agreements or transactions; (d) any draft or other document presented
under any 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; or (e)  any other act or omission to act or delay of any kind of
any L/C Guarantor, any L/C Issuer, Agent, any Lender or any other Person or any
other event or circumstance whatsoever that might, but for the provisions of
this Section 1.1(d)(v), constitute a legal or equitable discharge of Borrower’s
obligations hereunder.

(vi)      Obligations of L/C Issuers. Each L/C Issuer (other than GE Finance)
hereby agrees that it will not issue a Letter of Credit hereunder until it has
provided Agent with written notice specifying the amount and intended issuance
date of such Letter of

 

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Credit and Agent has returned a written acknowledgment of such notice to L/C
Issuer. Each L/C Issuer (other than GE Finance) further agrees to provide to
Agent: (a) a copy of each Letter of Credit issued by such L/C Issuer promptly
after its issuance; (b) a weekly report summarizing available amounts under
Letters of Credit issued by such L/C Issuer, the dates and amounts of any draws
under such Letters of Credit, the effective date of any increase or decrease in
the face amount of any Letters of Credit during such week and the amount of any
unreimbursed draws under such Letters of Credit; and (c) such additional
information reasonably requested by Agent from time to time with respect to the
Letters of Credit issued by such L/C Issuer. Without limiting the generality of
the foregoing, it is expressly understood and agreed by Borrower that the
absolute and unconditional obligation of Borrower to Agent and Lenders hereunder
to reimburse payments made under a Letter of Credit will not be excused by the
gross negligence or willful misconduct of the L/C Issuer. However, the foregoing
shall not be construed to excuse an L/C Issuer from liability to Borrower to the
extent of any direct damages (as opposed to consequential damages, with Borrower
hereby waiving all claims for any consequential damages to the extent permitted
by applicable law) suffered by Borrower that are subject to indemnification
under Section 1.1(c)(vii).

(vii)     Indemnification. In addition to amounts payable as elsewhere provided
in the Agreement, Borrower hereby agrees to pay and to protect, indemnify, and
save harmless Agent, L/C Guarantor and each Lender from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable legal fees and allocated costs of internal counsel) that
Agent, L/C Guarantor or any Lender may incur or be subject to as a consequence,
direct or indirect, of (a) the issuance of any Letter of Credit or guarantee
thereof, or (b) the failure of Agent, L/C Guarantor or any Lender seeking
indemnification or of any L/C Issuer to honor a demand for payment under any
Letter of Credit or guarantee thereof as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority, in each case, other than to the extent as
a result of the gross negligence or willful misconduct of Agent or such Lender
(as finally determined by a court of competent jurisdiction).

As between Agent, L/C Guarantor and any Lender and Borrower, Borrower assumes
all risks of the acts and omissions of, or misuse of any Letter of Credit by
beneficiaries of any Letter of Credit. In furtherance and not in limitation of
the foregoing, to the fullest extent permitted by law, none of Agent, L/C
Guarantor nor any Lender shall be responsible for: (a) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by any
party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
fraudulent or forged provided that it complies on its face with the terms of the
Letter of Credit; (b) the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (c) failure of the
beneficiary of any Letter of Credit to comply fully with conditions required in
order to demand payment under such Letter of Credit; provided, that the demand
for payment under such Letter of Credit or guarantee thereof complies on its
face with any applicable requirements for a demand for payment under such Letter
of Credit or guarantee thereof; (d) errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they may be in cipher; (e) errors in interpretation of
technical terms; (f) any loss or delay in the transmission or otherwise

 

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of any document required in order to make a payment under any Letter of Credit
or guarantee thereof or of the proceeds thereof; (g) the credit of the proceeds
of any drawing under any Letter of Credit or guarantee thereof; and (h) any
consequences arising from causes beyond the control of Agent, L/C Guarantor or
any Lender. None of the above shall affect, impair, or prevent the vesting of
any of Agent’s, L/C Guarantor’s or any Lender’s rights or powers hereunder or
under the Agreement.

Nothing contained herein shall be deemed to limit or to expand any waivers,
covenants or indemnities made by Borrower in favor of any L/C Issuer in any
letter of credit application, reimbursement agreement or similar document,
instrument or agreement between Borrower and such L/C Issuer.

(d)       Funding Authorization. The proceeds of all Loans made pursuant to this
Agreement subsequent to the Closing Date are to be funded by Agent by wire
transfer to the account designated by Borrower below (the “Disbursement
Account”):

Bank:

TD Canada Trust

 

ID Number:

004

 

Transfer No.:

1552

 

Bank Address:

Rexdale CBC

 

 

2038 Kipling Ave

 

Rexdale, Ontario

 

 

M9W 4K1

 

 

Account No.:

0556 0311836

 

Reference:

Playtex Limited

 

Borrower shall provide Agent with written notice of any change in the foregoing
instructions at least three (3) Business Days before the desired effective date
of such change.

1.2

Interest and Applicable Margins.

(a)       Borrower shall pay interest to Agent, for the ratable benefit of
Lenders, in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates:
(i) with respect to the Revolving Credit Advances which are designated as Index
Rate Loans, the Index Rate plus the Applicable Revolver Index Margin per annum
or, with respect to Revolving Credit Advances which are designated as BA Rate
Loans, the applicable BA Rate plus the Applicable Revolver BA Rate Margin per
annum; and (ii) with respect to the Swing Line Loan, the Index Rate plus the
Applicable Revolver Index Margin per annum.

 

As of the date hereof, the Applicable Margins are as follows:

Applicable Revolver Index Margin

1.0%

 

 

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Applicable Revolver BA Rate Margin

2.25%

 

The applicable Margins shall be adjusted (up or down) prospectively on a
quarterly basis as determined by Playtex US’s and its Subsidiaries’ consolidated
financial performance, commencing with the first day of the first calendar month
that occurs more than one (1) day after delivery of Playtex US’s quarterly
Financial Statements to Lenders for the Fiscal Quarter ending closest to
December 31, 2005. Adjustments in Applicable Margins will be determined by
reference to the following grids:

If Interest Coverage Ratio is

Level of Applicable Margins:

< 1.00

Level I

< 2.00, but ≥ 1.00

Level II

< 2.50, but ≥ 2.00

Level III

< 3.00, but ≥ 2.50

Level IV

≥ 3.00

Level V

 

 

Applicable Margins

 

Level I

Level II

Level III

Level IV

Level V

Applicable Revolver Index Margin

1.50%

1.25%

1.00%

0.75%

0.50%

Applicable Revolver LIBOR Margin

2.75%

2.50%

2.25%

2.00%

1.75%

 

All adjustments in the Applicable Margins shall be implemented quarterly on a
prospective basis, for each calendar month commencing (A) at least one (1) day
after the date of delivery to Lenders of the Financial Statements of Playtex US
and its Subsidiaries pursuant to Sections 4.2(a) and 4.2(b), as applicable,
evidencing the need for an adjustment or (B) at least one (1) day after the date
of delivery to Lenders of an Interim Annual Pricing Certificate if, at the
option of the Borrower, such Interim Annual Pricing Certificate is delivered in
accordance with Section 4.2(k)(ii), provided, however, that if, after a delivery
of an Interim Annual Pricing Certificate, the audited Financial Statements of
Playtex US and its Subsidiaries delivered pursuant to Section 4.2(b) with
respect to the Fiscal Year covered by such Interim Annual Pricing Certificate
demonstrate a need for an increase in the Applicable Margin as compared to the
Applicable Margin implemented based on the Interim Annual Pricing Certificate,
Borrower shall pay on demand to the Agent, and, in any event, the Agent shall be
permitted to charge to the Revolving Loan, for the ratable benefit of the
Lenders, the amount of interest that would have

 

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accrued on the Loans at those increased Applicable Margins from the date of the
implementation of the Applicable Margins based on the Interim Annual Pricing
Certificate less the amount of interest paid by the Borrower for such period;
and provided, further, however, that failure to timely deliver the audited
Financial Statements of Playtex US and its Subsidiaries pursuant to Section
4.2(b) with respect to the Fiscal Year covered by such Interim Annual Pricing
Certificate shall, in addition to any other remedy provided for in this
Agreement, result in an increase in the Applicable Margins to the highest level
set forth in the foregoing grid, commencing retroactively from the date of the
implementation of the Applicable Margins based on the applicable Interim Annual
Pricing Certificate until the first day of the first calendar month following
the delivery of those Financial Statements demonstrating that such an increase
is not required.

Concurrently with the delivery of each Financial Statements pursuant to Sections
4.2(a) and 4.2(b), as applicable, Borrower shall deliver to Agent and Lenders
the Pricing Certificate, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Applicable Margins.

If any Default or Event of Default has occurred and is continuing at the time
any reduction in the Applicable Margins is to be implemented, that reduction
shall be deferred until the first day of the first calendar month following the
date on which all Defaults or Events of Default are waived or cured.

(b)       If any payment on any Loan becomes due and payable on a day other than
a Business Day, the maturity thereof will be extended to the next succeeding
Business Day (except as set forth in the definition of BA Period) and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.

(c)       All computations of Fees calculated on a per annum basis shall be made
by Agent on the basis of a 360-day year, in each case for the actual number of
days occurring in the period for which such Fees are payable. All computation of
interest calculated on a per annum basis shall be made by Agent on the basis of
a 365-day year with respect to BA Rate Loans and on the basis of a 365/366-day
year with respect to Index Rate Loans, in each case for the actual number of
days occurring for which such interest is payable. The Index Rate is a floating
rate determined for each day. Each determination by Agent of an interest rate
and Fees hereunder shall be final, binding and conclusive on Borrower, absent
manifest error.

(d)       So long as an Event of Default has occurred and is continuing under
Section 6.1(a), (f) or (g) and without notice of any kind, or so long as any
other Event of Default has occurred and is continuing and at the election of
Agent (or upon the written request of Requisite Lenders) confirmed by written
notice from Agent to Borrower, the interest rates applicable to the Loans and
the Letter of Credit Fee shall, subject to the Interest Act (Canada), be
increased by two percentage points (2%) per annum above the rates of interest or
the rate of such Fee otherwise applicable hereunder (“Default Rate”). Interest
and Letter of Credit Fees at the Default Rate shall accrue from the initial date
of such Event of Default until that Event of Default is cured or waived and
shall be payable upon demand, but in any event, shall be payable on the next
regularly scheduled Interest Payment Date set forth herein for such Obligation.

 

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(e)       Borrower shall have the option to (i) request that any Revolving
Credit Advance be made as a BA Rate Loan, (ii) convert at any time all or any
part of outstanding Loans (other than the Swing Line Loan) from Index Rate Loans
to BA Rate Loans, (iii) convert any BA Rate Loan to an Index Rate Loan, subject
to payment of the BA Breakage Cost in accordance with Section 1.3(d) if such
conversion is made prior to the expiration of the BA Period applicable thereto,
or (iv) continue all or any portion of any Loan (other than the Swing Line Loan)
as a BA Rate Loan upon the expiration of the applicable BA Period and the
succeeding BA Period of that continued Loan shall commence on the first day
after the last day of the BA Period of the Loan to be continued. Any Loan or
group of Loans having the same proposed BA Period to be made or continued as, or
converted into, a BA Rate Loan must be in a minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of such amount. Any such election must
be made by 1:00 p.m. (Toronto time) on the 2nd Business Day prior to (1) the
date of any proposed Revolving Credit Advance which is to bear interest at the
BA Rate, (2) the end of each BA Period with respect to any BA Rate Loans to be
continued as such, or (3) the date on which Borrower wishes to convert any Index
Rate Loan to a BA Rate Loan for a BA Period designated by Borrower in such
election. If no election is received with respect to a BA Rate Loan by 1:00 p.m.
(Toronto time) on the 2nd Business Day prior to the end of the BA Period with
respect thereto, that BA Rate Loan shall be converted to an Index Rate Loan at
the end of its BA Period. Borrower must make such election by notice to Agent in
writing, by fax or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a “Notice
of Conversion/Continuation”) in the form of Exhibit 1.2(e). No Loan shall be
made, converted into or continued as a BA Rate Loan, if an Event of Default has
occurred and is continuing and Agent or Requisite Lenders have determined not to
make or continue any Loan as a BA Rate Loan as a result thereof.

(f)        Limitation on Interest. If any provision of this Agreement or of any
of the other Loan Documents would obligate Borrower or any other Credit Party to
make any payment of interest or other amount payable to any Lender in an amount
or calculated at a rate which would be prohibited by law or would result in a
receipt by such Lender of interest at a criminal rate (as such terms are
construed under the Criminal Code (Canada)) then, notwithstanding such
provisions, such amount or rate shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by law or so result in a receipt by such
Lender of interest at a criminal rate, such adjustment to be effected, to the
extent necessary, as follows: (1) firstly, by reducing the amount or rate of
interest required to be paid to such Lender under this Section 1.2, and (2)
thereafter, by reducing any fees, commissions, premiums and other amounts
required to be paid to such Lender which would constitute “interest” for
purposes of Section 347 of the Criminal Code (Canada). Notwithstanding the
foregoing, and after giving effect to all adjustments contemplated thereby, if a
Lender shall have received an amount in excess of the maximum permitted by that
section of the Criminal Code (Canada), Borrower shall be entitled, by notice in
writing to such Lender, to obtain reimbursement from such Lender in an amount
equal to such excess and, pending such reimbursement, such amount shall be
deemed to be an amount payable by such Lender to Borrower. Any amount or rate of
interest referred to in this Section 1.2(f) shall be determined in accordance
with generally accepted actuarial practices and principles as an effective
annual rate of interest over the term that the applicable Loan remains
outstanding on the assumption that any charges, fees or expenses that fall
within the meaning of “interest” (as defined in the Criminal Code (Canada))
shall, if they relate to a specific period of time, be pro-rated over that
period of

 

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time and otherwise be pro-rated over the period from the Closing Date to the
Termination Date and, in the event of a dispute, a certificate of a Fellow of
the Canadian Institute of Actuaries appointed by Agent shall be conclusive for
the purposes of such determination.

(g)       Interest Act (Canada). For purposes of disclosure pursuant to the
Interest Act (Canada), the annual rates of interest or fees to which the rates
of interest or fees provided in this Agreement and the other Loan Documents (and
stated herein or therein, as applicable, to be computed on the basis of a 360
day year or any other period of time less than a calendar year) are equivalent
are the rates so determined multiplied by the actual number of days in the
applicable calendar year and divided by 360 or such other period of time,
respectively.

1.3

Fees.

(a)       Fee Letter. Borrower shall pay to GE Finance, individually, the Fees
specified in that certain fee letter dated as of the date hereof between
Borrower and GE Finance (the “GE Finance Fee Letter”), at the times specified
for payment therein.

(b)       Unused Line Fee. As additional compensation for the Revolving Lenders,
Borrower shall pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each Fiscal Quarter prior to the
Commitment Termination Date and on the Commitment Termination Date, a fee for
Borrower’s non-use of available funds in respect of Revolving Loan Commitments
in an amount equal to the product of three eighths of one percent (0.375%) per
annum (calculated on the basis of a 360 day year for actual days elapsed)
multiplied by (ii) the difference of the Maximum Amount minus the average for
the period of the daily closing balances of the Revolving Loan (including,
without duplication, Swing Line Loans) outstanding during the period for which
such Fee is due.

(c)       Letter of Credit Fee. Borrower agrees to pay to Agent for the benefit
of Revolving Lenders, as compensation to such Revolving Lenders for Letter of
Credit Obligations incurred hereunder, (i) without duplication of fees and other
amounts payable to the applicable L/C Issuer, all costs and expenses incurred by
Agent, any L/C Guarantor or any Lender on account of such Letter of Credit
Obligations, and (ii) for each Fiscal Quarter during which any Letter of Credit
Obligation shall remain outstanding, a fee (the “Letter of Credit Fee”) in an
amount equal to the Applicable Revolver BA Rate Margin multiplied by the maximum
amount available from time to time to be drawn under the applicable Letter of
Credit. Such fee shall be paid to Agent for the benefit of the Revolving Lenders
in arrears, on the first Business Day of each month and on the Commitment
Termination Date. In addition, Borrower shall pay to the Agent, for the account
of any L/C Issuer, on demand, such reasonable, customary and documented fees,
charges and expenses of such L/C Issuer in respect of the issuance, negotiation,
acceptance, amendment, transfer and payment of such Letter of Credit or
otherwise payable pursuant to the application and related documentation under
which such Letter of Credit is issued.

(d)       BA Breakage Cost. Upon (i) any default by Borrower in making any
borrowing of, conversion into or continuation of any BA Rate Loan following
Borrower’s delivery to Agent of any BA Rate Loan request in respect thereof or
(ii) any payment of a BA Rate Loan on any day that is not the last day of the BA
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the source of such prepayment and whether voluntary, by acceleration or
otherwise), Borrower shall pay Agent, for the benefit of all Lenders that funded
or were prepared to fund any such BA Rate Loan, the BA Breakage Cost.

(e)       Expenses and Attorneys’ Fees. Borrower agrees to promptly pay all
reasonable and documented out-of-pocket fees, charges, costs and expenses
(including reasonable attorneys’ fees and expenses of either outside counsel or
internal legal staff, but not both; it being understood and agreed that the
documentation of counsel’s fees and expenses may omit information that such
counsel reasonably deems privileged) incurred by Agent in connection with any
matters arising out of the Loan Documents, in connection with the examination,
review, due diligence investigation, documentation, negotiation and closing of
the transactions contemplated herein and in connection with the continued
administration of the Loan Documents including any amendments, modifications,
consents and waivers. Without limiting the foregoing, Borrower agrees to
promptly pay all reasonable and documented out-of-pocket costs and expenses
(including reasonable fees and expenses) of external auditors or, in the case of
internal auditors, a per diem charge at the rate of US$800 per person per day
for each such auditor in the field and office plus all reasonable and documented
out-of-pocket costs and expenses (including, without limitation, air fare,
lodging and meals) incurred in connection with or relating to audits to be
conducted pursuant to Section 4.2(e)(i). Borrower agrees to promptly pay all
reasonable and documented out-of-pocket fees, charges, costs and expenses
(including fees, charges, costs and expenses of either outside counsel or
internal legal staff, but not both; it being understood and agreed that the
documentation of counsel’s fees and expenses may omit information that such
counsel reasonably deems privileged), auditors (whether internal (at a per diem
charge at the rate of US$800 per person per day for each such auditor) or
external), appraisers, consultants and advisors) incurred by Agent in connection
with any Event of Default, work-out or action to enforce any Loan Document or to
collect any payments due from Borrower or any other Credit Party. In addition,
in connection with any work-out or action to enforce any Loan Document or to
collect any payments due from Borrower or any other Credit Party, Borrower
agrees to promptly pay all reasonable and documented out-of-pocket fees,
charges, costs and expenses incurred by Lenders for one (1) counsel in each of
Canada and the United States acting for all Lenders other than Agent. All fees,
charges, costs and expenses for which Borrower is responsible under this
Section 1.3(e) shall be deemed part of the Obligations when incurred, payable
upon demand or in accordance with the final sentence of Section 1.4 and secured
by the Collateral.

 

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1.4       Payments. All payments by Borrower of the Obligations shall be without
deduction, defense, setoff or counterclaim and shall be made in same day funds
and delivered to Agent, for the benefit of Agent and Lenders, as applicable, by
wire transfer to the following account or such other place as Agent may from
time to time designate in writing.

 

Bank No. 003

Transfer No. 00002

Account Number 1209329

Royal Bank of Canada, Main Branch

Toronto, Ontario

ACCOUNT NAME: GE Canada Finance Holding Company Receipts

Reference: Playtex Limited

 

Borrower shall receive credit on the day of receipt for funds received by Agent
by 2:00 p.m. (Toronto time). In the absence of timely receipt, such funds shall
be deemed to have been paid on the next Business Day. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest and Fees
due hereunder.

Borrower hereby authorizes Lenders to make Revolving Credit Advances or Swing
Line Advances, on the basis of their Pro Rata Shares, for the payment of
(i) Letter of Credit reimbursement obligations and any amounts required to be
deposited with respect to outstanding Letter of Credit Obligations pursuant to
Sections 1.5(f) or 6.3(d), and (ii) after the occurrence and during the
continuance of an Event of Default, interest, Fees and expenses (it being agreed
that Agent will send a notice to Borrower promptly after any such Revolving
Credit Advance or Swing Line Advance is made).

1.5

Prepayments.

(a)       Voluntary Prepayments of Loans. At any time, Borrower may prepay the
Loans, in whole or in part, without premium or penalty but subject to the
payment of BA Breakage Costs, if applicable.

(b)       Prepayments from Asset Dispositions. Immediately upon receipt of any
Net Proceeds which, when added to all other Net Proceeds received after the
Closing Date, exceed $1,000,000, Borrower shall prepay the Loans in an amount
equal to the amount of such Net Proceeds. Notwithstanding the foregoing,
Borrower or any Subsidiary may reinvest the Net Proceeds of an Asset
Disposition, within three hundred and sixty (360) days, in replacement assets
(other than Intellectual Property) of a kind then used or usable in the business
of Borrower or the applicable Guarantor and Borrower shall not be obligated to
prepay Loans to the extent Borrower or any Subsidiary so reinvests. If Borrower
or the applicable Guarantor does not intend to so reinvest such Net Proceeds or
if the period set forth in the immediately preceding sentence expires without
Borrower or the applicable Guarantor having reinvested such Net Proceeds,
Borrower shall, to the extent otherwise required by the first sentence of this
Section 1.5(b), prepay the Loans in an amount equal to such Net Proceeds. The
payments shall be applied in accordance with Section 1.5(d).

 

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(c)

[Intentionally Omitted]

(d)       Application of Proceeds. With respect to any prepayments described in
Section 1.5(b), such prepayments shall be applied as follows: first, to reduce
the outstanding

 

principal balance of the Swing Line Loan outstanding until the same has been
repaid in full (but not as a permanent reduction of the Swing Line Commitment);
and second, to the Revolving Credit Advances outstanding until the same has been
repaid in full but not as a permanent reduction of the Revolving Loan
Commitment. Considering each type of Loan being prepaid separately, any such
prepayment shall be applied first to Index Rate Loans of the type required to be
prepaid before application to BA Rate Loans of the type required to be prepaid,
in each case in a manner which minimizes any resulting BA Breakage Cost.

(e)       Application of Prepayments from Insurance Proceeds. Prepayments from
insurance proceeds and condemnation proceeds in accordance with Section 2.2
shall be applied as follows: first, to the Swing Line Loans and, second, to the
Revolving Credit Advances. Neither the Revolving Loan Commitment nor the Swing
Line Loan Commitment shall be permanently reduced by the amount of any such
prepayments.

(f)        Letter of Credit Obligations. In the event any Letters of Credit are
outstanding at the time that the Revolving Loan Commitment is terminated,
Borrower shall (1) deposit with Agent for the benefit of all Revolving Lenders
cash or deliver duly issued letter(s) of credit satisfactory to Agent in support
of all outstanding Letters of Credit in an amount equal to 105% of the aggregate
outstanding Letter of Credit Obligations to be available to Agent to reimburse
payments of drafts drawn under such Letters of Credit and pay any Fees and
expenses related thereto and (2) prepay the fee payable under Section 1.3(c)
with respect to such Letters of Credit for the full remaining terms of such
Letters of Credit. Upon termination of any such Letter of Credit, the unearned
portion of such prepaid fee attributable to such Letter of Credit shall be
refunded to Borrower.

1.6       Maturity. All of the Obligations shall become due and payable as
otherwise set forth herein, but in any event all of the remaining Obligations
shall become due and payable upon the Commitment Termination Date. Until all
Obligations have been fully paid and satisfied (other than contingent
indemnification obligations to the extent no unsatisfied claim has been
asserted), the Revolving Loan Commitment has been terminated and all Letters of
Credit have been terminated or otherwise secured to the reasonable satisfaction
of Agent in accordance with Section 1.5(f), Agent shall be entitled to retain
the security interests in the Collateral granted under the Collateral Documents
and the ability to exercise all rights and remedies available to them under the
Loan Documents and applicable laws. Notwithstanding anything contained in this
Agreement to the contrary, upon any termination of the Revolving Loan
Commitment, all of the Obligations shall be due and payable.

1.7       Eligible Accounts. All of the Accounts owned by the Credit Parties and
reflected in the most recent Borrowing Base Certificate delivered by Borrower to
Agent shall be “Eligible Accounts” for purposes of this Agreement, except any
Account to which any of the exclusionary criteria set forth below applies. In
addition to Reserves established on the Closing Date, following notice by Agent
to Borrower given reasonably in advance, Agent shall have the right to establish
or modify Reserves against Eligible Accounts from time to time in its good faith

 

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credit judgment based on its analysis of facts or events to reflect changes in
the collectability of Accounts arising or discovered by Agent after the Closing
Date. Eligible Accounts shall not include any Account of any Credit Party:

(a)       that does not arise from the sale of goods or the performance of
services by such Credit Party in the ordinary course of its business;

(b)       (i) upon which such Credit Party’s right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) as to which such Credit Party is not able to bring suit or otherwise
enforce its remedies against the Account Debtor through judicial process, or
(iii) if the Account represents a progress billing consisting of an invoice for
goods sold or used or services rendered pursuant to a contract under which the
Account Debtor’s obligation to pay that invoice is subject to such Credit
Party’s completion of further performance under such contract or is subject to
the equitable lien of a surety bond issuer;

(c)       to the extent of any defense, counterclaim, setoff or dispute that is
asserted as to such Account;

(d)       that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered;

(e)       with respect to which an invoice has not been sent to the applicable
Account Debtor;

(f)        that (i) is not owned by such Credit Party or (ii) is subject to any
right, claim, security interest, hypothec or other interest of any other Person,
other than Liens in favour of Agent, on behalf of itself and Lenders, and other
than Prior Claims;

(g)       that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer with
any Credit Party;

(h)       that is the obligation of an Account Debtor that is the Canadian
government (Her Majesty The Queen in Right of Canada) or a political subdivision
thereof, or any province, territory or municipality or department, agency or
instrumentality thereof or that is the United States government or a political
subdivision thereof, or any state, county or municipality or department, agency
or instrumentality thereof which, when added to the other obligations of Account
Debtors that are the Canadian government (Her Majesty The Queen in Right of
Canada) or a political subdivision thereof, or any province, territory or
municipality or department, agency or instrumentality thereof or the United
States government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof, exceeds
$1,000,000 in the aggregate unless (i) Agent, in its sole discretion, has agreed
to the contrary in writing, (ii) the Account is assignable by way of security
and (iii) such Credit Party, if necessary or desirable, has complied with the
Financial Administration Act (Canada) and any amendments thereto, with the
Federal Assignment of Claims Act of 1940, or any applicable state, provincial,
county or municipal law of similar purpose and effect restricting the assignment
thereof with respect to such obligation;

 

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(i)        that is the obligation of an Account Debtor located in a foreign
country other than the United States unless payment thereof is assured by a
letter of credit assigned and delivered to Agent, reasonably satisfactory to
Agent as to form, amount and issuer;

(j)        to the extent such Credit Party or any Subsidiary of Borrower that is
not a Credit Party is liable for goods sold or services rendered by the
applicable Account Debtor to such Credit Party or such Subsidiary but only to
the extent of the potential offset;

(k)       that arises with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;

(l)

if any of the following applies to such Account:

(i)        the Account is not paid within the earlier of: 60 days following its
due date set forth in its original invoice or, unless the Account is a Dating
Account, 90 days following its original invoice date;

(ii)       the Account Debtor obligated upon such Account suspends business,
makes a general assignment for the benefit of creditors or fails to pay its
debts generally as they come due; or

(iii)      an assignment or petition is filed by or against any Account Debtor
obligated upon such Account or any application for an order to stay proceedings
against such Account Debtor is filed in any case or proceeding, in each case,
under any bankruptcy law or any other federal, provincial or foreign (including
any state) receivership, insolvency relief or other law or laws for the relief
of debtors;

(m)      that is the obligation of an Account Debtor if 50% or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under
the other criteria set forth in this Section 1.7;

(n)       as to which Agent’s Lien thereon, on behalf of itself and Lenders, is
not a first priority perfected Lien, subject to Prior Claims;

(o)       as to which any of the representations or warranties in the Loan
Documents are untrue;

(p)       to the extent such Account is evidenced by a judgment, Instrument or
Chattel Paper, unless, in the case of an Instrument or Chattel Paper, such
Instrument or Chattel Paper, as the case may be, has been delivered to Agent as
collateral security for the Obligations and Agent has obtained a first priority
perfected Lien on such Instrument or Chattel Paper, subject to Prior Claims;

(q)       to the extent that such Account, together with all other Accounts
owing by such Account Debtor and its Affiliates (determined, solely for the
purposes of this clause (q), as if the “10%” set forth in clause (a) of the
definition of “Affiliate” were “51%” and without giving effect to clause (c) or
clause (d) of such definition), as of any date of determination

 

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exceed 10% of all Eligible Accounts of all Credit Parties, other than (x) solely
with respect to an Account owing by Loblaws or Shopper’s Drugmart, in which case
such Account shall be ineligible to the extent that such Account, together with
all other Accounts owing by either Loblaws or Shopper’s Drugmart and its
Affiliates (determined, solely for the purposes of this clause (q), as if the
“10%” set forth in clause (a) of the definition of “Affiliate” were “51%” and
without giving effect to clause (c) or clause (d) of such definition), as of any
date of determination exceed 25% of all Eligible Accounts of all Credit Parties
and (y) solely with respect to an Account owing by an Investment Grade Account
Debtor, in which case such Account shall be ineligible to the extent that such
Account, together with all other Accounts owing by such Investment Grade Account
Debtor and its Affiliates (determined, solely for the purposes of this clause
(q), as if the “10%” set forth in clause (a) of the definition of “Affiliate”
were “51%” and without giving effect to clause (c) or clause (d) of such
definition), as of any date of determination exceed 20% of all Eligible Accounts
of all Credit Parties;

(r)

that is payable in any currency other than Dollars; or

(s)

that is a Chargeback Account.

 

1.8       Eligible Inventory. All of the Inventory owned by the Credit Parties
and reflected in the most recent Borrowing Base Certificate delivered by
Borrower to Agent shall be “Eligible Inventory” for purposes of this Agreement,
except any Inventory to which any of the exclusionary criteria set forth below
applies. In addition to Reserves established on the Closing Date, following
notice by Agent to Borrower given reasonably in advance, Agent shall have the
right to establish or modify Reserves against Eligible Inventory from time to
time in its good faith credit judgment based on its analysis of facts or events
to reflect changes in the salability of Inventory arising or discovered by Agent
after the Closing Date. Eligible Inventory shall not include any Inventory of
any Credit Party that:

(a)       is not owned by such Credit Party free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments, the rights of a surety that has issued a bond to assure such
Credit Party’s performance with respect to that Inventory and the rights of
suppliers under section 81.1 of the Bankruptcy and Insolvency Act (Canada)),
except the Liens in favour of Agent, on behalf of itself and Lenders, and except
the Permitted Encumbrances described in clause (a), clause (e) and clause (l) of
the definition of the term “Permitted Encumbrances” (other than the claims of
suppliers under section 81.1 of the Bankruptcy and Insolvency Act (Canada));

(b)       (i) is not located on premises owned, leased or rented by such Credit
Party and set forth in Schedule 5.12 (as Schedule 5.12 may be updated from time
to time in writing by listing additional locations or deleting existing
locations delivered by Borrower to Agent on or prior to each such change of
locations), (ii) is stored at a leased location, unless listed on Schedule 5.12
or Agent has received prior written notice thereof from Borrower and unless
(x) a reasonably satisfactory landlord waiver has been delivered to Agent or no
statutory or contractual landlord lien exists with respect to such Inventory, or
(y) Reserves satisfactory to Agent have been established with respect thereto,
(iii) is stored with a bailee or warehouseman unless a reasonably satisfactory
bailee letter has been received by Agent and Reserves reasonably satisfactory to
Agent have been established with respect thereto, (iv) is located at an

 

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owned location subject to a mortgage in favour of a lender other than Agent,
unless a reasonably satisfactory mortgagee waiver has been delivered to Agent,
(v) is located at any site if the aggregate book value of Inventory at any such
location is less than $50,000, or (vi) is located on the premises of, or is in
the possession of, a processor;

(c)

is placed on consignment or is in transit;

(d)       is covered by a negotiable document of title, unless such document has
been delivered to Agent with all necessary endorsements, free and clear of all
Liens except those in favour of Agent and Lenders, subject to Prior Claims;

(e)       is excess, obsolete, unsaleable, shopworn, seconds, damaged or unfit
for sale;

(f)        consists of display items or packing or shipping materials,
manufacturing supplies or replacement parts;

(g)

consists of goods which have been returned by the buyer;

(h)       is not of a type held for sale in the ordinary course of such Credit
Party’s business;

(i)        is not subject to a first priority lien in favour of Agent on behalf
of itself and Lenders, subject to Prior Claims;

(j)        breaches any of the representations or warranties pertaining to
Inventory set forth in the Loan Documents;

(k)       consists of Hazardous Materials or goods that can be handled,
transported or sold only with permits, licenses, approvals or authorizations
that are not readily available;

(l)        is not covered by casualty insurance required to be maintained under
Section 2.2 of this Agreement or otherwise reasonably acceptable to Agent;

(m)      with respect to which Agent does not have the right, in Agent’s
reasonable determination, to freely transfer Inventory or complete the
production of Inventory without the need for any license, sublicense or consent
which has not been obtained; or

(n)       consists of Inventory (excluding Inventory supplied by Playtex US)
which (i) has been delivered to such Credit Party by or on behalf of a supplier
within thirty (30) days of the date of determination; (ii) is in the same state
as such Inventory was on delivery; (iii) remains identifiable as having been
supplied by such supplier; and (iv) is not subject to any agreement for sale at
arm’s length.

1.9

[Intentionally Omitted]

1.10     Loan Accounts. Agent shall maintain a loan account (the “Loan Account”)
on its books to record: all Advances, all payments made by Borrower, and all
other debits and credits

 

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as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent’s customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent’s most recent printout or
other written statement, shall, absent manifest error, be presumptive evidence
of the amounts due and owing to Agent and Lenders by

 

Borrower; provided, that any failure to so record or any error in so recording
shall not limit or otherwise affect Borrower’s duty to pay the Obligations.
Agent shall render to Borrower a monthly accounting of transactions with respect
to the Loans setting forth the balance of the Loan Account for the immediately
preceding month. Unless Borrower notifies Agent in writing of any objection to
any such accounting (specifically describing the basis for such objection),
within one hundred eighty (180) days after the date thereof, each and every such
accounting shall, absent manifest error, be deemed final, binding and conclusive
on Borrower in all respects as to all matters reflected therein. Only those
items expressly objected to in such notice shall be deemed to be disputed by
Borrower. Notwithstanding any provision herein contained to the contrary, any
Lender may elect (which election may be revoked) to dispense with the issuance
of Notes to that Lender and may rely on the Loan Account as evidence of the
amount of Obligations from time to time owing to it.

1.11

Yield Protection; Illegality.

(a)       Capital Adequacy and Other Adjustments. In the event that any Lender
shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from any central bank or governmental
agency or body having jurisdiction does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation controlling such Lender and thereby reducing the rate
of return on such Lender’s or such corporation’s capital as a consequence of its
obligations hereunder, then Borrower shall from time to time within fifteen (15)
days after notice and demand from such Lender (together with the certificate
referred to in the next sentence and with a copy to Agent) pay to Agent, for the
account of such Lender, additional amounts sufficient to compensate such Lender
for such reduction. A certificate in reasonable detail as to the amount of such
cost and showing the basis of the computation of such cost submitted by such
Lender to Borrower and Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.

(b)       Increased BA Funding Costs; Illegality. Notwithstanding anything to
the contrary contained herein but without duplication with Lender’s rights to
compensation under Section 1.11(a), if after the date hereof, the introduction
of, change in or interpretation of any law, rule, regulation, treaty or
directive would impose or increase reserve requirements or otherwise increase
the cost (other than any taxes described in Section 1.12) to any Lender of
making or maintaining a BA Rate Loan, then Borrower shall from time to time
within fifteen (15) days after notice and demand from Agent to Borrower
(together with the certificate referred to in the next sentence) pay to Agent,
for the account of all such affected Lenders, additional amounts sufficient to
compensate such Lenders for such increased cost. A certificate in reasonable
detail as to the amount of such cost and showing the basis of the computation of
such

 

 

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cost submitted by Agent on behalf of all such affected Lenders to Borrower
shall, absent manifest error, be final, conclusive and binding for all purposes.

1.12

Taxes.

 

(a)       No Deductions. Except as otherwise required by law, any and all
payments or reimbursements made hereunder or under any of the other Loan
Documents shall be made free and clear of and without deduction for any and all
Charges, taxes, levies, imposts, deductions or withholdings, and all liabilities
with respect thereto of any nature whatsoever imposed by any taxing authority,
excluding (A) net income or capital taxes, franchise taxes (imposed in lieu of
net income taxes) and branch profits taxes, in each case imposed on Agent or any
Lender as a result of a present or former connection between Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising from Agent’s or such Lender’s having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document ); or (B) any taxes, including withholding
taxes imposed on amounts payable to a Lender that is or becomes a party to this
Agreement at the Closing Date or the time such Lender becomes a party,
respectively, except, in the case of an assignment, to the extent that such
Lender’s assignor was entitled, at the time of assignment, to receive additional
amounts from the Borrower with respect to any Charges, taxes, levies, imposts,
deductions or withholdings (other than those excluded pursuant to clause (A)
above). If Borrower or any other Credit Party shall be required by law to deduct
any Charges, taxes, levies, imposts, deductions or withholdings (other than
those excluded pursuant to clause (A) or clause (B) above) from or in respect of
any sum payable hereunder or under any other Loan Document to any Lender or
Agent, then the sum payable hereunder or under any other Loan Document shall be
increased as may be necessary so that, after making all required deductions,
such Lender or Agent receives an amount equal to the sum it would have received
had no such deductions been made.

(b)       Changes in Tax Laws. In the event that, subsequent to the Closing
Date, (1) any changes in any existing law, regulation, treaty or directive or in
the interpretation or application thereof or (2) any new law, regulation, treaty
or directive enacted or any interpretation or application thereof:

(i)        does or shall subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement, the other Loan Documents or any Loans
made or Letters of Credit issued hereunder, or change the basis of taxation of
payments to Agent or such Lender of principal, fees, interest or any other
amount payable hereunder (except for Charges, taxes, levies, imposts, deductions
or withholdings excluded pursuant to clause (A) or clause (B) in subsection
1.12(a), net income or capital taxes, or franchise taxes imposed in lieu of net
income taxes, imposed generally by federal, provincial or local taxing
authorities with respect to principal, fees, interest or any other amount
payable hereunder or changes in the rate of tax on the overall net income of
Agent or such Lender); or

(ii)       does or shall impose on Agent or any Lender any other condition or
increased cost in connection with the transactions contemplated hereby or
participations herein;

 

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and the result of any of the foregoing is to increase the cost to Agent or any
such Lender of issuing any Letter of Credit or making or continuing any Loan
hereunder, as the case may be, or to reduce any amount receivable hereunder,
then, in any such case, Borrower shall promptly pay to Agent or such Lender,
upon its demand, any additional amounts necessary to compensate Agent or such
Lender, on an after-tax basis, for such additional cost or reduced amount
receivable, as determined by Agent or such Lender with respect to this Agreement
or the other Loan Documents. If Agent or such Lender becomes entitled to claim
any additional amounts pursuant to this Section 1.12(b), it shall promptly
notify Borrower of the event by reason of which Agent or such Lender has become
so entitled. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Agent or such Lender to Borrower (with a copy to
Agent) shall, absent manifest error, be final, conclusive and binding for all
purposes.

(c)       Eligible Lenders. As of the date of this Agreement, Agent and each
Lender represents and warrants to Borrower that it is either (i) not a
non-resident of Canada within the meaning of the Income Tax Act (Canada), or
(ii) an “authorized foreign bank” that is entering into this Agreement and
receiving all amounts payable hereunder in respect of its “Canadian banking
business” as both terms are defined for the purposes of the Income Tax Act
(Canada).

(d)       Change in Lending Office. Each Lender agrees that, upon the occurrence
of any event giving rise to the operation of Section 1.12 with respect to such
Lender in a manner that requires Borrower to pay additional amounts to or for
the account of such Lender, such Lender will, if reasonably requested by
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event with the object of avoiding the consequences of such event; provided, that
such designation is made on terms that, in the sole judgment of such Lender,
cause such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
1.12(d) shall affect or postpone any of the obligations of Borrower or the
rights of any Lender pursuant to Sections 1.12(a), (b) or (c).

1.13     Common Enterprise. Playtex US is the direct or indirect and beneficial
owner and holder of all of the issued and outstanding Stock in Borrower. Playtex
US, together with other Subsidiaries of Playtex US, and Borrower make up a
related organization of various entities constituting a single economic and
business enterprise so that Playtex US, together with other Subsidiaries of
Playtex US, and Borrower share a substantial identity of interests such that any
benefit received by any one of them benefits the others. Playtex US and
Borrower, together with other Subsidiaries of Playtex US, render services to or
for the benefit of Playtex US and/or Borrower and/or other Subsidiaries of
Playtex US, as the case may be, purchase or sell and supply goods to or from or
for the benefit of the other, make loans, advances and provide other financial
accommodations to or for the benefit of Playtex US and Borrower and other
Subsidiaries of Playtex US (including inter alia, the payment by Playtex US and
Borrower of creditors of Playtex US or Borrower and guarantees by Playtex US and
Borrower of indebtedness of Playtex US and Borrower and provide administrative,
marketing, payroll and management services to or for the benefit of Playtex US
and Borrower). Playtex US and Borrower, together with other Subsidiaries of
Playtex US, have centralized accounting, have substantially the same common
officers and directors and are in certain circumstances, identified

 

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to creditors as a single economic and business enterprise. Playtex US and
Borrower agree that the foregoing shall continue to be true in all material
respects until the Termination Date.

SECTION 2.

AFFIRMATIVE COVENANTS

Each Credit Party executing this Agreement jointly and severally agrees as to
all Credit Parties that from and after the date hereof and until the Termination
Date:

2.1       Compliance With Laws and Contractual Obligations. Each Credit Party
will (a) comply with and shall cause each of its Subsidiaries to comply with
(i) the requirements of all applicable laws, rules, regulations and orders of
any Governmental Authority (including, without limitation, laws, rules,
regulations and orders relating to taxes, employer and employee contributions,
securities, employee retirement and welfare benefits, environmental protection
matters and employee health and safety) as now in effect and which may be
imposed in the future in all jurisdictions in which any Credit Party or any of
its Subsidiaries is now doing business or may hereafter be doing business and
(ii) the obligations, covenants and conditions contained in all Contractual
Obligations of such Credit Party or any of its Subsidiaries other than those
laws, rules, regulations, orders and provisions of such Contractual Obligations
the noncompliance with which could not be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect, and (b) maintain or
obtain and shall cause each of its Subsidiaries to maintain or obtain all
licenses, qualifications and permits now held or hereafter required to be held
by such Credit Party or any of its Subsidiaries, for which the loss, suspension,
revocation or failure to obtain or renew, could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. This
Section 2.1 shall not preclude any Credit Party or its Subsidiaries from
contesting any taxes or other payments, if they are being diligently contested
in good faith in a manner which stays enforcement thereof and if appropriate
expense provisions have been recorded in conformity with GAAP, subject to
Section 3.2.

2.2

Insurance; Damage to or Destruction of Collateral.

(a)       The Credit Parties shall, at their sole cost and expense, maintain or
cause to be maintained the policies of insurance described on Schedule 5.18 as
in effect on the date hereof or otherwise in form and amounts reasonably
acceptable to Agent and with the insurers that have a Financial Strength Rating
of “A” or better and a Long-Term Debt Rating of “a” or better as rated by A.M.
Best Company or any similar or successor rating organization. Such policies of
insurance (or the loss payable and additional insured endorsements delivered to
Agent) shall contain provisions pursuant to which the insurer agrees to provide
30 days prior written notice to Agent in the event of any non-renewal,
cancellation or amendment of any such insurance policy. If any Credit Party at
any time or times hereafter shall fail to obtain or maintain or cause to be
obtained or maintained any of the policies of insurance required above or to pay
or cause to be paid all premiums relating thereto, Agent may at any time or
times thereafter upon notice to Borrower obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
that Agent deems advisable. Agent shall have no obligation to obtain insurance
for any Credit Party or pay any premiums therefor. By doing so, Agent shall not
be deemed to have waived any Default or Event of Default arising

 

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from any Credit Party’s failure to maintain such insurance or pay any premiums
therefor. All sums so disbursed, including legal fees, court costs and other
charges related thereto, shall be payable on demand by Borrower to Agent and
shall be additional Obligations hereunder secured by the Collateral.

(b)       Each Credit Party shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all “All Risk” and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each
Credit Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as any Default or
Event of Default has occurred and is continuing, as each Credit Party’s true and
lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under such “All Risk” policies of insurance, endorsing the name
of each Credit Party on any cheque or other item of payment for the proceeds of
such “All Risk” policies of insurance and for making all determinations and
decisions with respect to such “All Risk” policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney. Credit Parties shall promptly notify Agent of any
loss, damage, or destruction to the Collateral of any Credit Party in the amount
of $500,000 or more, whether or not covered by insurance. To the extent any
insurance proceeds or condemnation proceeds received after the Closing Date do
not exceed $2,500,000 for any occurrence or are business interruption insurance
proceeds, Borrower may receive and retain such insurance proceeds or
condemnation proceeds. To the extent any insurance proceeds (other than business
interruption insurance proceeds) or condemnation proceeds exceed $2,500,000 for
any occurrence, Borrower may use such insurance proceeds or condemnation
proceeds, or any part thereof, to replace, repair, restore or rebuild the
Collateral of any Credit Party in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as existed before
the loss, damage or destruction if Borrower completes such replacement,
restoration, repair or rebuilding within 360 days of such casualty. If Borrower
does not complete such replacement, restoration, repair or rebuilding within 360
days of such casualty, after deducting from any insurance or condemnation
proceeds the expenses, if any, incurred by Agent in the collection or handling
thereof, Agent may apply such insurance or condemnation proceeds to the
Obligations in accordance with Section 1.5(e) (and to the extent such proceeds
have not been paid to the Agent, the Borrower shall make a payment to the Agent
in the amount to be so applied). All insurance or condemnation proceeds that are
to be made available to Borrower or to another Credit Party to replace, repair,
restore or rebuild the Collateral of any Credit Party may be applied by
Borrower, at its option, to reduce the outstanding principal balance of the
Revolving Loan (which application shall not result in a permanent reduction of
the Revolving Loan Commitment). To the extent not used to replace, repair,
restore or rebuild the Collateral of any Credit Party, such insurance proceeds
shall be applied in accordance with Section 1.5(e).

2.3       Inspection; Lender Meeting. Each Credit Party shall permit any
authorized representatives of Agent to visit, audit and inspect any of the
properties of such Credit Party, including its financial and accounting records,
and to make copies and take extracts therefrom, and to discuss its affairs,
finances and business with its officers, at reasonable times during normal
business hours, which visits, audits and inspections, unless an Event of Default
has occurred and is continuing, shall be made upon reasonable prior notice to
such Credit Party and which shall not be conducted more than twice during any
twelve consecutive month period.

 

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Representatives of each Lender will be permitted to accompany representatives of
Agent during each visit, inspection and discussion referred to in the
immediately preceding sentence. Without in any way limiting the foregoing, each
Credit Party will participate and will cause key management personnel of each
Credit Party to participate in a meeting with Agent and Lenders at least once
during each year, which meeting shall be held at such time and such place as may
be reasonably requested by Agent and approved by the Borrower, which approval
shall not be unreasonably withheld, conditioned or delayed by Borrower.

2.4       Organizational Existence. Except as otherwise permitted by Section
3.6, each Credit Party will and will cause its Subsidiaries to at all times
preserve and keep in full force and effect its organizational existence and all
rights and franchises material to its business.

2.5        Environmental Matters.Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) to the extent Real Estate owned by one or more
Credit Parties constitutes an asset included in the Borrowing Base (it being
understood and agreed that whether to include any such Real Estate in the
Borrowing Base, and the terms and conditions thereof, shall be determined by
Agent and Lenders in their sole discretion), implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability assuming continued use as an
industrial facility of such Real Estate and, in the case of all Real Estate
owned by Credit Parties (whether or not included in the Borrowing Base),
implement any and all investigation, remediation, removal and response actions
that are appropriate or necessary to comply in all material respects with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party or any Person within
its control becomes aware of any violation of Environmental Laws or
Environmental Permits or any Release on, at, in, under, above, to, from or about
any Real Estate or any order or any intention to issue any order under any
Environmental Laws that is reasonably likely to result in Environmental
Liabilities to a Credit Party or its Subsidiaries in excess of $500,000; and
(d) promptly forward to Agent a copy of any material, non-privileged order,
notice, request for information or any communication or report received by such
Credit Party or any Person within its control in connection with any such
violation, Release or order or any other matter relating to any Environmental
Laws or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $500,000, in each case whether or not any
Governmental Authority has taken or threatened any action in connection with any
such violation, Release, order or other matter. If Agent at any time has a
reasonable basis to believe that there may be a violation of any Environmental
Laws or Environmental Permits by any Credit Party or any Person under its
control or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate or of the issuance or threat to issued any order under Environmental
Laws, that, in each case, could reasonably be expected to have a Material
Adverse Effect, then each Credit Party and its Subsidiaries shall, upon Agent’s
written request (i) cause the performance of such environmental audits including
subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrower’s expense, as Agent may from time to time
reasonably request, which shall be conducted by

 

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reputable environmental consulting firms reasonably acceptable to Agent and
shall be in form and substance reasonably acceptable to Agent, and (ii) if the
Credit Party fails to cause the performance of such environmental audit, permit
Agent or its representatives to have access to all Real Estate for the purpose
of conducting such environmental audits and testing as Agent deems appropriate
in its reasonable judgment, including subsurface sampling of soil and
groundwater. Borrower shall reimburse Agent for the costs of such audits and
tests and the same will constitute a part of the Obligations secured hereunder.

2.6       Landlords’ Agreements, Mortgagee Agreements, Bailee and Processor
Letters and Real Estate Purchases Each Credit Party shall use commercially
reasonable efforts to obtain a landlord’s agreement, mortgagee agreement or
bailee or processor letter, as applicable, from the lessor of each leased
property, mortgagee of owned property, bailee or processor with respect to any
warehouse, processor or converter facility or other location where Collateral of
any Credit Party (in each case where Collateral of any Credit Party with a fair
market value of greater than $50,000 is located) is stored or located, which
agreement or letter shall contain a waiver or subordination of all Liens or
claims that the landlord, mortgagee, bailee or processor may assert against the
Collateral of any Credit Party at that location, and shall otherwise be
reasonably satisfactory in form and substance to Agent. With respect to such
locations or warehouse space leased or owned as of the Closing Date and
thereafter, if Agent has not received a landlord or mortgagee agreement or
bailee or processor letter as of the Closing Date (or, if later, as of the date
such location is acquired or leased), the Eligible Inventory, Eligible Processor
Inventory, Eligible Returned Inventory or Eligible Remnant Inventory at that
location shall, in Agent’s discretion, be subject to such Reserves as may be
established by Agent in its reasonable credit judgment. After the Closing Date,
no real property or warehouse space shall be leased by any Credit Party or its
Subsidiary, no Inventory shall be shipped to a processor or converter under
arrangements established after the Closing Date unless and until (i) such other
locations are described in writing to the Agent in advance of lease, shipment or
transfer, and (ii) a satisfactory landlord agreement or bailee letter, as
appropriate, shall first have been obtained with respect to such location,
unless, in each case, the fair market value of such Collateral of any Credit
Party at such location is less than $50,000). Each Credit Party shall and shall
cause its Subsidiaries to timely and fully pay and perform their obligations in
all material respects under all leases and other agreements with respect to each
leased location or public warehouse where any Collateral of any Credit Party
with a fair market value in excess of $50,000 is or may be located.

2.7       Conduct of Business. Each Credit Party shall at all times maintain,
preserve and protect all of its material assets and properties used or useful in
the conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices; and transact business only in such corporate and trade names
as are set forth in Schedule 2.7 unless such Credit Party has given Agent 15
days prior written notice of any additional or changed corporate or trade name.

2.8

Further Assurances.

 

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(a)       Each Credit Party shall, from time to time, execute such guarantees,
financing statements, documents, security agreements and reports as Agent or
Requisite Lenders at any time may reasonably request to evidence, perfect or
otherwise implement the guarantees and security for repayment of the Obligations
contemplated by the Loan Documents.

(b)       In the event that, after the Closing Date, any Credit Party acquires
an ownership interest in fee simple in any real property which has a fair market
value in excess of $1,000,000 or which is adjacent or contiguous to any real
property subject to Mortgage, such Credit Party shall deliver to Agent a fully
executed mortgage or deed of trust over such real property in form and substance
reasonably satisfactory to Agent, together with such title insurance policies,
surveys, evidence of insurance, legal opinions, environmental assessments and
other documents and certificates as shall be reasonably required by Agent.

(c)       Each Credit Party shall (i) cause each Person, upon its becoming a
Subsidiary of such Credit Party (provided, that this shall not be construed to
constitute consent by any of the Lenders to any transaction referred to above
which is not expressly permitted by the terms of this Agreement), promptly to
guarantee the Obligations and to grant to Agent, for the benefit of Agent and
Lenders, a security interest in the real, personal and mixed property of such
Person to secure the Obligations and (ii) pledge, or cause to be pledged, to
Agent, for the benefit of Agent and Lenders, all of the Stock of any additional
Subsidiary of any Credit Party to secure the Obligations. The documentation for
such guarantee, security and pledge shall be substantially similar to the Loan
Documents executed concurrently herewith with such modifications as are
reasonably requested by Agent and as are acceptable to Borrower, which
acceptance shall not be unreasonably denied, conditioned or delayed by Borrower,
and shall be accompanied by such opinions, certificates and other documents and
instruments as reasonably requested by Agent.

SECTION 3.

NEGATIVE COVENANTS

Each Credit Party executing this Agreement jointly and severally agrees as to
all Credit Parties that from and after the date hereof until the Termination
Date:

3.1       Indebtedness. The Credit Parties shall not and shall not cause or
permit their Subsidiaries directly or indirectly to create, incur, assume, or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness (other than pursuant to a Contingent Obligation permitted under
Section 3.4) except:

(a)

the Obligations;

(b)       Indebtedness consisting of intercompany loans and advances made by
Borrower to any Guarantor or to Personal Care Group Pty Ltd. in an aggregate
principal amount not to exceed $5,000,000 or by a Guarantor to Borrower or any
other Subsidiary of Playtex US;

(c)       Indebtedness outstanding on the Closing Date described in Schedule 3.1
and refinancings thereof or amendments or modifications thereto that do not have
the effect of (i) increasing the principal amount thereof (other than with
respect to refinancing costs and

 

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premiums) or changing the amortization thereof (other than to extend the same),
(ii) increasing the interest rate on such Indebtedness being refinanced, amended
or modified; (iii) changing the dates upon which payments of principal are due
on such Indebtedness being refinanced, amended or modified (other than to extend
the due date thereof); (iv) changing any event of default or add or make more
restrictive any covenant with respect to such Indebtedness being refinanced,
amended or modified; (v) changing the redemption or prepayment provisions of the
Indebtedness being refinanced, amended or modified; (vi) changing the
subordination provisions of the Indebtedness being refinanced, amended or
modified (or the subordination terms of any guarantee thereof); (vii) granting
Liens on additional collateral or securing all or any part of the Indebtedness
being refinanced, amended or modified that is unsecured or (viii) increasing the
portion of interest payable in cash with respect to any Indebtedness being
refinanced, amended or modified for which interest is payable by the issuance of
payment-in-kind notes or is permitted to accrue;

(d)       Indebtedness of Credit Parties in a principal amount not to exceed
$2,000,000 in the aggregate at any time outstanding secured by purchase money
Liens or incurred with respect to Capital Leases;

(e)       other unsecured Subordinated Debt of Credit Parties incurred after the
Closing Date in a principal amount not to exceed $500,000 in the aggregate at
any time outstanding; and

(f)        other unsecured Indebtedness of Credit Parties incurred after the
Closing Date in a principal amount not to exceed $500,000 in the aggregate at
any time outstanding.

3.2

Liens and Related Matters.

(a)       No Liens. The Credit Parties shall not and shall not cause or permit
their Subsidiaries to directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of such Credit Party
or any such Subsidiary, whether now owned or hereafter acquired, or any income
or profits therefrom, except Permitted Encumbrances (including, without
limitation, those Liens constituting Permitted Encumbrances existing on the date
hereof and renewals and extensions thereof, as set forth on Schedule 3.2).

(b)       No Negative Pledges. The Credit Parties shall not and shall not cause
or permit their Subsidiaries to directly or indirectly enter into or assume any
agreement (other than the Loan Documents and the loan documents in respect of
the US Credit Facility and (y) any purchase money mortgages evidencing purchase
money Liens or Capital Leases permitted hereunder (in which case, any
prohibition or limitation shall only be effective against the assets financed
thereby)) prohibiting the creation or assumption of any Lien upon its properties
or assets, whether now owned or hereafter acquired.

(c)       No Restrictions on Subsidiary Distributions to Borrower. Except as
provided herein, each as in effect on the Closing Date, the Credit Parties shall
not and shall not cause or permit their Subsidiaries to directly or indirectly
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to:
(1) pay dividends or make any other distribution on any of such

 

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Subsidiary’s Stock owned by Borrower or any other Subsidiary; (2) pay any
Indebtedness owed to Borrower or any other Subsidiary; (3) make loans or
advances to Borrower or any other Subsidiary; or (4) transfer any of its
property or assets to Borrower or any other Subsidiary.

3.3       Investments. The Credit Parties shall not and shall not cause or
permit their Subsidiaries to directly or indirectly make or own any Investment
in any Person except:

(a)       Borrower and its Subsidiaries may make and own Investments in Cash
Equivalents;

(b)       Borrower may make intercompany loans to one or more Guarantors or to
Personal Care Group Pty Ltd. in an aggregate principal amount not to exceed
$5,000,000;

(c)       Guarantors may make intercompany loans to Borrower or other
Subsidiaries of Playtex US;

(d)       Borrower and its Subsidiaries may make loans and advances to employees
for moving, entertainment, travel and other similar expenses in the ordinary
course of business not to exceed $250,000 in the aggregate at any time
outstanding;

(e)

each Credit Party may make Investments in its Domestic Subsidiaries;

(f)

extensions of trade credit in the ordinary course of business;

 

(g)       Investments in existence on the date hereof (and not otherwise
included in any subsection of this Section 3.3) listed on Schedule 3.3 and
extensions, renewals, or restatements thereof that are on terms and conditions
no less favourable to Agent or any Lender and on terms and conditions not
materially less favourable to any Credit Party, in each case as determined by
Agent in its reasonable discretion, than the terms and conditions of the
Investment being extended, renewed or restated;

(h)       Investments in Foreign Subsidiaries in an aggregate amount not to
exceed $250,000 at any one time outstanding;

(i)        if in the reasonable judgment of the Borrower or any of its
Subsidiaries, any customer is deemed to be in a reorganization or unable to make
a timely cash payment on Indebtedness of such customer owing to it, each of the
Borrower and its Subsidiaries may invest in securities issued by such customer
or any affiliate thereof in lieu of cash payments; provided, that the Borrower
or such Subsidiary, as the case may be, has paid no new consideration (other
than the forgiveness of Indebtedness or other obligations) therefor; and

(j)

other Investments in an aggregate amount not to exceed $1,000,000.

3.4       Contingent Obligations. The Credit Parties shall not and shall not
cause or permit their Subsidiaries to directly or indirectly create or become or
be liable with respect to any Contingent Obligation except:

(a)

Letter of Credit Obligations;

 

 

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(b)       those resulting from endorsement of negotiable instruments for
collection in the ordinary course of business;

(c)

those existing on the Closing Date and described in Schedule 3.4;

(d)       those arising under indemnity agreements to title insurers to cause
such title insurers to issue to Agent mortgagee title insurance policies;

(e)       those incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and other similar
obligations not exceeding at any time outstanding $250,000 in aggregate
liability;

(f)        those incurred with respect to Indebtedness permitted by Section 3.1,
provided, that any such Contingent Obligation is subordinated to the Obligations
to the same extent as the Indebtedness to which it relates is subordinated to
the Obligations;

(g)       Contingent Obligations of the Borrower in respect of obligations of
one or more Domestic Subsidiaries of the Borrower; and

(h)       other Contingent Obligations not permitted by clauses (a) through (g)
above as long as such other Contingent Obligations, in the aggregate at any time
outstanding, do not exceed $250,000.

3.5       Restricted Payments. The Credit Parties shall not and shall not cause
or permit their Subsidiaries to directly or indirectly declare, order, pay, make
or set apart any sum for any Restricted Payment, except that:

(a)       Subsidiaries of Borrower may make Restricted Payments to Borrower or
any Domestic Subsidiary;

(b)       Borrower may reimburse reasonable out-of-pocket expenses payable to
Stockholders of the Borrower; provided, that no Default or Event of Default
exists at the time of any such Restricted Payment or would occur as a result
thereof;

(c)       Borrower may make Restricted Payments of the type set forth in parts
(a) and (f) of that definition to Playtex US; and

(d)       Borrower may make cash payments in connection with transactions
permitted under Section 3.8(b).

3.6       Restriction on Fundamental Changes. The Credit Parties shall not and
shall not cause or permit their Subsidiaries to directly or indirectly:
(a) amend, modify or waive any term or provision of its organizational
documents, including its articles of incorporation, certificates of designations
pertaining to preferred stock, by-laws, partnership agreement or operating
agreement unless required by law or unless doing so would not have a Material
Adverse Effect; (b) consummate any transaction of merger or consolidation
except, upon not less than five (5) Business Days prior written notice to Agent,
any wholly-owned Subsidiary of Borrower may be merged with or into Borrower
(provided, that Borrower is the surviving entity) or any other

 

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wholly-owned Subsidiary of Borrower; (c) liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution); or (d) acquire by purchase or
otherwise all or any substantial part of the business or assets of any other
Person.

3.7       Disposal of Assets or Subsidiary Stock. The Credit Parties shall not
and shall not cause or permit their Subsidiaries to directly or indirectly
convey, sell, lease (as lessor), sublease (as sublessor), transfer or otherwise
dispose of, or grant any Person an option to acquire, in one transaction or a
series of related transactions, any of its property, business or assets, whether
now owned or hereafter acquired, except for (a) sales of inventory in the
ordinary course of business and dispositions of worn out or obsolete equipment,
fixtures or real estate not used or useful in the business, (b) Asset
Dispositions by Borrower and its Subsidiaries (excluding sales of Accounts and
Stock of any of Subsidiaries) if all of the following conditions are met: (i) 
the aggregate market value of assets sold or otherwise disposed of in any Fiscal
Year does not exceed $5,000,000; (ii) the consideration received is at least
equal to the fair market value of such assets; (iii) at least 75% of the
consideration received is cash; (iv) the Net Proceeds of such Asset Disposition
are applied as required by Section 1.5(b); and (v) no Default or Event of
Default then exists or would result from such Asset Disposition, (c) sales,
leases, transfers or other dispositions of assets by any Subsidiary to Borrower
or any other Credit Party, (d) sales, leases, transfers or other dispositions
constituting Investments permitted by Section 3.3, and (e) sales, leases,
transfers or other dispositions of Investments permitted by Section 3.3.

3.8       Transactions with Affiliates. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to directly or indirectly enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any management, consulting, investment
banking, advisory or other similar services) with any Affiliate or with any
director, officer or employee of any Credit Party, except (a) as set forth on
Schedule 3.8, (b) transactions pursuant to the reasonable requirements of the
business of any such Credit Party or any of its Subsidiaries and upon fair and
reasonable terms which are no less favourable to any such Credit Party or any of
its Subsidiaries than would be obtained in a comparable arm’s length transaction
with a Person that is not an Affiliate, (c) payment of reasonable compensation
(including employee benefit arrangements) to officers and employees for services
actually rendered to any such Credit Party or any of its Subsidiaries,
(d) payment of director’s fees, (e) any employee benefit plan available to
employees of Borrower generally and (f) transactions among Credit Parties
otherwise permitted by this Agreement.

3.9       Conduct of Business. The Credit Parties shall not and shall not cause
or permit their Subsidiaries to directly or indirectly engage in any business
other than businesses of the type described on Schedule 3.9 or any other
business reasonably related thereto or extensions thereof, except for
Subsidiaries established, created or acquired with the proceeds of an Investment
to the extent such Investment is permitted under and in accordance with Section
3.3.

3.10     Changes Relating to Indebtedness. The Credit Parties shall not and
shall not cause or permit their Subsidiaries to directly or indirectly change or
amend the terms of any of its Indebtedness permitted by Sections 3.1(c) and (d)
if the effect of such amendment is to: (a) increase the interest rate on such
Indebtedness; (b) change the dates upon which payments of principal or interest
are due on or principal amount of such Indebtedness; (c) change any event of
default or add or make more restrictive any covenant with respect to such
Indebtedness;

 

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(d) change the redemption or prepayment provisions of such Indebtedness;
(e) change the subordination provisions thereof (or the subordination terms of
any guarantee thereof); (f) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights on the holder of such Indebtedness in a manner
adverse to any Credit Party or Lenders; or (g) increase the portion of interest
payable in cash with respect to any Indebtedness for which interest is payable
by the issuance of payment-in-kind notes or is permitted to accrue.

3.11     Fiscal Year. No Credit Party shall change its Fiscal Year or permit any
of its Subsidiaries to change their respective fiscal years.

3.12     Press Release; Public Offering Materials. Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in the future
issue any public disclosure, other than any prospectus, proxy statement or other
materials filed with any Governmental Authority, using the name of GE Finance or
its affiliates without at least two (2) Business Days’ prior notice to GE
Finance and without the prior written consent of GE Finance unless (and only to
the extent that) such Credit Party or Affiliate is required to do so under law
and then, in any event, such Credit Party or Affiliate will consult with GE
Finance before issuing such public disclosure. Each Credit Party consents to the
publication by Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement.
Agent or such Lender shall provide a draft of any such tombstone or similar
advertising material to each Credit Party for review and comment prior to the
publication thereof. Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.

3.13     Subsidiaries. The Credit Parties shall not and shall not cause or
permit their Subsidiaries to directly or indirectly establish, create or acquire
any new Subsidiary, except for Subsidiaries established, created or acquired
with the proceeds of any Investment to the extent such Investment is permitted
under and in accordance with Section 3.3.

3.14     Bank Accounts. The Credit Parties shall not and shall not cause or
permit their Subsidiaries to establish any new bank accounts without prior
written notice to Agent and unless Agent and the bank at which the account is to
be opened enter into a tri-party agreement regarding such bank account pursuant
to which such bank acknowledges the security interest of Agent in such bank
account, agrees to comply with instructions originated by Agent directing
disposition of the funds in the bank account without further consent from such
Credit Party or Subsidiary, agrees to subordinate and limit any security
interest the bank may have in the bank account on terms reasonably satisfactory
to Agent and agrees, from and after the receipt of a notice from Agent (which
may be given by Agent at any time at which an Event of Default has occurred and
is continuing), to forward immediately all amounts in each account to the
collection account of Agent set forth in Section 1.4 and to commence the process
of daily sweeps from such bank account into such collection account. No Credit
Party shall, or shall cause or permit any Subsidiary thereof to, accumulate or
maintain cash in any disbursement account or payroll accounts as of any date of
determination in excess of cheques and debits outstanding against such accounts
as of that date and amounts necessary to meet minimum balance requirements.

 

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3.15     Hazardous Materials. The Credit Parties shall not and shall not cause
or permit their Subsidiaries to cause or permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the Real Estate
where such Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities by the Credit Parties or any of their Subsidiaries
under, any Environmental Laws or Environmental Permits or (b) otherwise
adversely impact the value or marketability of any of the Real Estate or any of
the Collateral, in each case other than such violations, Environmental
Liabilities or adverse impacts of value or marketability that could not
reasonably be expected to have a Material Adverse Effect.

3.16     Pensions and Benefit Plans. No Credit Party shall permit, or allow any
of its Subsidiaries to permit, its unfunded pension fund and other employee
benefit plan obligations and liabilities to remain unfunded to any material
extent other than in accordance with applicable law..

3.17     Sale-Leasebacks. The Credit Parties shall not and shall not cause or
permit any of their Subsidiaries to engage in any sale-leaseback, synthetic
lease or similar transaction involving any of its assets.

3.18     Prepayments of Other Indebtedness. No Credit Party shall, directly or
indirectly, voluntarily purchase, redeem, defease or prepay any principal of,
premium, if any, interest or other amount payable in respect of any
Indebtedness, other than (i) the Obligations and (ii) intercompany Indebtedness
reflecting amounts owing to Borrower or any Guarantor.

3.19     Changes to Material Contracts. The Credit Parties shall not and shall
not cause or permit any of their Subsidiaries to change or amend the terms of
any of the following material contracts: (i) Amended Trademark License Agreement
dated November 19, 1991 by and between Playtex Marketing Corporation, a Delaware
corporation, as licensor, and Playtex Apparel, Inc., a Delaware corporation, and
Playtex Family Products Corporation, a Delaware corporation, as licensees
(relating to “Playtex” and “Living” marks in United States and Canada);
(ii) Trademark License Agreement (U.S.), dated 1995 and executed February 24,
1995, by and between Reckitt & Colman, Inc., a Delaware corporation, as
licensor, and Borrower, as licensee (relating to “Woolite” mark in United
States); (iii) Trademark License Agreement (Canada), dated 1999 by and between
Reckitt & Colman Canada, Inc., a Canada corporation, as licensor, and Borrower
(relating to “Woolite” mark in Canada); and (iv) License Agreement dated as of
March 31, 1999 between Melrose Products Limited, a company registered under the
laws of Guernsey, as licensor, and Borrower, as licensee (relating to patents
with respect to the design and flexible tubing in manufacturing) (it being
agreed that extensions of the terms of, or delivery of notices as contemplated
by, any of the foregoing agreements shall not be prohibited by this Section
3.19).

 

SECTION 4.

FINANCIAL COVENANTS/REPORTING

Borrower covenants and agrees that from and after the date hereof until the
Termination Date, Borrower shall perform and comply with, and shall cause each
of the other

 

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Credit Parties to perform and comply with, all covenants in this Section 4
applicable to such Person.

4.1

[Intentionally Omitted]

4.2       Financial Statements and Other Reports.Borrower will maintain, and
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices to permit
preparation of Financial Statements in conformity with GAAP (it being understood
that the quarterly Financial Statements are not required to have footnote
disclosures). Borrower will deliver each of the Financial Statements and other
reports described below to Agent (and each Lender in the case of the Financial
Statements and other reports described in Sections 4.2(a), (b), (d), (f), (g),
(h), and (k)).

(a)       Quarterly Financials. As soon as available and in any event within
forty-five (45) days after the end of each quarter (excluding the last quarter
of each Fiscal Year of Playtex US), Borrower will deliver or cause to be
delivered (1) the consolidated balance sheets of Borrower and its Subsidiaries,
as at the end of such quarter, and the related consolidated statements of income
for such quarter and for the period from the beginning of the then current
Fiscal Year of Borrower to the end of such quarter; (2) the consolidated balance
sheets of Playtex US and its Subsidiaries, as at the end of such quarter, and
the related consolidated statements of income, stockholders’ equity and cash
flow for such quarter and for the period from the beginning of the then current
Fiscal Year of Playtex US to the end of such quarter and (3) in respect of each
of clauses (1) and (2) above, a report setting forth in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year.

(b)       Year-End Financials. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year of Playtex US, Borrower will
cause to be delivered (1) the consolidated and consolidating balance sheets of
Playtex US and its Subsidiaries, as at the end of such year, and the related
consolidated and consolidating statements of income and the related consolidated
statements of stockholders’ equity and cash flow for such Fiscal Year and (2)  a
report with respect to the consolidated Financial Statements from a firm of
Certified Public Accountants selected by Playtex US and reasonably acceptable to
Agent, which report shall be prepared in accordance with Statement of Auditing
Standards No. 58 (the “Statement”) “Reports on Audited Financial Statements” and
such report shall be without a “going concern” or like qualification or
exception, or qualification arising out of the scope of the audit.

(c)       Accountants’ Reports. Promptly upon receipt thereof, Borrower will
deliver copies of all significant reports submitted by Playtex US’s firm of
certified public accountants in connection with each annual, interim or special
audit or review of any type of the Financial Statements or related internal
control systems of Playtex US or its Subsidiaries made by such accountants,
including any comment letter submitted by such accountants to management in
connection with their services.

(d)

Additional Deliveries.

(i)        To Agent, upon its request, and in any event no less frequently than
five (5) Business Days after the end of each Fiscal Month (together with a copy
of any of

 

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the following reports requested by Agent in writing after the Closing Date),
Borrower will deliver each of the following reports, each of which shall be
prepared by Borrower as of the last day of the immediately preceding Fiscal
Month or the date 2 days prior to the date of any such request:

(A)      a Borrowing Base Certificate with respect to Credit Parties,
accompanied by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion (in substantially the same form as Exhibit
4.2(d) (a “Borrowing Base Certificate”) as of the last day of such period (it
being understood and agreed that, at its option, Borrower may deliver the
Borrowing Base Certificate and such supporting detail and documentation more
frequently than on a monthly basis, but not more frequently than on a weekly
basis, it being further understood and agreed that, for any period during the
first 6 months following the Closing Date, Borrower shall have the option of
delivering an incomplete Borrowing Base Certificate, in which case, no
deliveries will be required under Sections 4.2(d)(i)(B), 4.2(d)(i)(C) and
4.2(d)(iii)(A) through 4.2(d)(iii)(E) and the amount of the Borrowing Base for
that period shall be deemed to be zero, provided that, once Borrower has
delivered a completed Borrowing Base certificate this option shall no longer be
available);

(B)       with respect to Credit Parties, a summary of Inventory by location and
type with a supporting perpetual Inventory report and a slow-moving Inventory
report, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion; and

(C)       with respect to Credit Parties, a monthly trial balance showing
Accounts outstanding aged from invoice date as follows: 1 to 30 days, 31 to 60
days, 61 to 90 days and 91 days or more, accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable discretion.

(ii)       To Agent, if requested by Agent in connection with or following the
delivery of a Borrowing Base Certificate, collateral reports with respect to
Credit Parties, including all additions and reductions (cash and non-cash) with
respect to Accounts of Credit Parties, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion each of which shall be prepared by the Borrower as of the
last day of the immediately preceding week or the date 2 days prior to the date
of any request;

(iii)      To Agent, no later than the tenth (10th) Business Day after the end
of each Fiscal Month and at the time of the delivery of each quarterly Financial
Statements pursuant to this Section 4.2, as the case may be:

(A)      (x) no later than the tenth (10th) Business Day after the end of each
Fiscal Month, a reconciliation of the most recent Borrowing Base, general ledger
and month-end Inventory reports of Credit Parties to Credit Parties’ general
ledger and (y) together with each delivery of the quarterly Financial
Statements, a reconciliation of the most recent Borrowing Base, general ledger
and month-end Inventory reports of Credit Parties to such quarterly Financial
Statements, in each case accompanied by such

 

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supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;

(B)       (x) no later than the tenth (10th) Business Day after the end of each
Fiscal Month, a reconciliation of the perpetual inventory by location to Credit
Parties’ most recent Borrowing Base Certificate and general ledger and
(y) together with each delivery of the quarterly Financial Statements, a
reconciliation of the perpetual inventory by location to such quarterly
Financial Statements, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;

(C)       (x) no later than the tenth (10th) Business Day after the end of each
Fiscal Month, an aging of accounts payable and a reconciliation of that accounts
payable aging to Credit Parties’ general ledger and (y) together with each
delivery of the quarterly Financial Statements, an aging of accounts payable and
a reconciliation of that accounts payable aging to such quarterly Financial
Statements, in each case accompanied by such supporting detail and documentation
as shall be requested by Agent in its reasonable discretion;

(D)      (x) no later than the tenth (10th) Business Day after the end of each
Fiscal Month, a reconciliation of the outstanding Loans as set forth in the
monthly Loan Account statement provided by Agent to Credit Parties’ general
ledger and (y) together with each delivery of the quarterly Financial
Statements, a reconciliation of the outstanding Loans as set forth in the
monthly Loan Account statement provided by Agent to such quarterly Financial
Statements, in each case accompanied by such supporting detail and documentation
as shall be requested by Agent in its reasonable discretion;

(E)       no later than the tenth (10th) Business Day after the end of each
Fiscal Month, supporting detail and documentation satisfactory to Agent in its
reasonable discretion relating to (i) the current and historical performance of
Eligible Remnant Inventory and (ii) credit memos issued with respect to the
Credit Memo Chargeback Accounts;

(F)       together with each delivery of the quarterly Financial Statements, a
summary of the outstanding balance of all intercompany loans owing by Borrower
and owing by each Guarantor as of the last day of the applicable Fiscal Quarter;

(G)      together with each delivery of the quarterly Financial Statements, a
summary of the license royalty payments owing by each Credit Party as of the
last day of the applicable Fiscal Quarter with respect to material contracts
listed in clauses (i), (ii), (iii) and (iv) of Section 3.19, and a certificate
that, to the Borrower’s knowledge, no default exists with respect to each such
contract; and

 

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(H)      together with each delivery of the quarterly Financial Statements, a
listing of each transaction with an Affiliate permitted pursuant to Section 3.8
hereto which involves payments or assets of greater than $1,000,000;

(iv)      on the Closing Date and together with each delivery of the annual
Financial Statements, and more frequently at any time there is a material
increase in any rent or any storage, processing, freight or shipping charge,
with respect to each leased, warehouse, processor or converter facility or other
location where Collateral of any Credit Party is stored or located (in each case
where Collateral of any Credit Party with a fair market value of greater than
$50,000 is stored or located) (w) a schedule of rents showing the monthly rent
due or other monthly charges due, (x) a schedule of accrued and unpaid storage
and/or processing charges for the storage and/or processing of goods, (y) a
schedule of accrued and unpaid charges of freight carrier or shipping company
charges for the transportation of goods and (z) a certificate that, to the
Borrower’s knowledge, no default exists with respect to each applicable
agreement with such landlord, processor, bailee or freight carrier or shipping
company;

(v)       To Agent, at the time of delivery of each of the annual Financial
Statements delivered pursuant to this Section 4.2, (i) a listing of government
contracts of each Credit Party subject to the Financial Administration Act
(Canada); and (ii) a list of any applications for the registration of any
Patent, Trademark or Copyright filed by any Credit Party with the Canadian
Patent and Trademark Office, the Canadian Copyright Office or any similar office
or agency in the prior Fiscal Year.

(e)

Field Audits; Appraisals; Inspections.

(i)        Any of Agent’s officers, employees or agents shall have the right, at
any time or times, in the name of Agent, any designee of Agent, or any Credit
Party (after, unless an Event of Default has occurred and is continuing,
providing Borrower with a reasonable opportunity to consult with Agent regarding
such verification process) to verify the validity, amount or any other matter
relating to Accounts or Inventory by mail, telephone, consultations, electronic
communication, personal inspection or otherwise and to conduct field audits of
the financial affairs and Collateral of the Credit Parties, which field audits,
absent the occurrence and continuation of an Event of Default, Agent shall
conduct no more frequently than twice each Fiscal Year and, following the
occurrence and during the continuation of an Event of Default, more frequently
if Agent requests. Credit Parties shall cooperate fully with Agent and its
agents in an effort to facilitate and promptly conclude any such verification
process and field audits, all of which shall be at the expense of Credit
Parties.

(ii)       At Credit Parties’ expense, at any time while and so long as an Event
of Default shall have occurred and be continuing, and in the absence of an Event
of Default not more than once during any twelve (12) month period commencing
with the Closing Date, Agent may obtain appraisal reports of Inventory in form
and substance and from appraisers reasonably satisfactory to Agent. Credit
Parties shall cooperate fully with such appraisers, Agent and its agents in an
effort to facilitate and promptly conclude any such appraisal.

(iii)      At Credit Parties’ expense, at any time while and so long as an Event
of Default shall have occurred and be continuing, and in the absence of an Event
of

 

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Default not more than once during any twelve (12) month period commencing with
the Closing Date, Agent may obtain appraisal reports in form and substance and
from appraisers satisfactory to Agent stating the then current fair market value
of all or any portion of the Real Estate owned by Credit Parties, provided,
that, in the absence of an Event of Default, such appraisals will not be
required hereunder as long as Real Estate owned by one or more Credit Parties
does not constitute an asset included in the Borrowing Base (it being understood
and agreed that whether to include any such Real Estate in the Borrowing Base,
and the terms and conditions thereof, shall be determined by Agent and Lenders
in their sole discretion). Credit Parties shall cooperate fully with such
appraisers, Agent and its agents in an effort to facilitate and promptly
conclude any such appraisal.

(iv)      Notwithstanding the foregoing to the contrary, from time to time, if
Agent reasonably determines that obtaining appraisals is necessary in order for
Agent or such Lender to comply with applicable laws or regulations, Agent will,
at Credit Parties’ expense, obtain appraisal reports in form and substance and
from appraisers reasonably satisfactory to Agent stating the then current fair
market values of all or any portion of the Real Estate owned by Credit Parties.

(f)        Projections. As soon as available and in any event no later than (1)
forty-five (45) days after each of Playtex US’s Fiscal Years, Borrower will
cause to be delivered Projections of Playtex US and its Subsidiaries for the
forthcoming three (3) fiscal years, year by year, and for the forthcoming fiscal
year, quarter by quarter and (2) forty-five (45) days after each of Borrower’s
Fiscal Years, Borrower will deliver Projections of Borrower and its Subsidiaries
for the forthcoming three (3) fiscal years, year by year, and for the
forthcoming fiscal year, quarter by quarter.

(g)       Securities Filings and Press Releases. Promptly upon their becoming
available, Borrower will deliver copies of (1) all Financial Statements,
reports, notices and proxy statements sent or made available by Playtex US,
Borrower or any of its Subsidiaries to their Stockholders, (2) all regular and
periodic reports and all registration statements and prospectuses, if any, filed
by Playtex US, Borrower or any of its Subsidiaries with any securities exchange
or with the Securities and Exchange Commission, any Governmental Authority or
any private regulatory authority, and (3) all press releases and other
statements made available by Playtex US or by Borrower or any of its
Subsidiaries to the public concerning developments in the business of any such
Person.

(h)       Events of Default, Etc. Promptly upon any Responsible Officer of any
Credit Party obtaining knowledge of any of the following events or conditions,
Borrower shall deliver copies of all notices given or received by Borrower or
any of its Subsidiaries with respect to any such event or condition and a
certificate of Borrower’s Responsible Officer specifying the nature and period
of existence of such event or condition and what action Borrower or any of its
Subsidiaries has taken, is taking and proposes to take with respect thereto:
(1) any condition or event that constitutes an Event of Default or Default;
(2) any notice that any Person has given to Borrower or any of its Subsidiaries
or any other action taken with respect to a claimed default or event or
condition of the type referred to in Section 6.1(b); (3) any event or condition
that could reasonably be expected to result in any Material Adverse Effect; or
(4) any default or event of

 

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default with respect to any Indebtedness of Borrower or any of its Subsidiaries
having a principal amount in excess of $500,000.

(i)        Litigation. Promptly upon Responsible Officer or general counsel of
any Credit Party obtaining knowledge of (1) the institution of any action,
charge, claim, demand, suit, proceeding, petition, governmental investigation,
tax audit or arbitration now pending or, to the best knowledge of such Credit
Party after due inquiry, threatened against or affecting Playtex US, any Credit
Party or any of its Subsidiaries or any property of Playtex US, any Credit Party
or any of its Subsidiaries (“Litigation”) not previously disclosed by Borrower
to Agent or (2) any material development in any action, suit, proceeding,
governmental investigation or arbitration at any time pending against or
affecting Playtex US, any Credit Party or any property of Playtex US or any
Credit Party which, in the case of clause (1) or clause (2) above, could
reasonably be expected to have a Material Adverse Effect, Borrower will promptly
give notice thereof to Agent and provide such other information as may be
reasonably available to them to enable Agent and its counsel to evaluate such
matter.

(j)        Notice of Corporate and other Changes. Borrower shall provide prompt
written notice of (1)  any change after the Closing Date in the authorized and
issued Stock of any Credit Party or any Subsidiary of any Credit Party or any
amendment to their articles or certificate of incorporation, by-laws,
partnership agreement or other organizational documents, (2) any Subsidiary
created or acquired by any Credit Party or any of its Subsidiaries after the
Closing Date, such notice, in each case, to identify the applicable
jurisdictions, capital structures or Subsidiaries, as applicable, and (3) any
other event that occurs after the Closing Date which would cause any of the
representations and warranties in Section 5 of this Agreement or in any other
Loan Document to be untrue or misleading in any material respect. The foregoing
notice requirement shall not be construed to constitute consent by any of the
Lenders to any transaction referred to above which is not expressly permitted by
the terms of this Agreement.

(k)       Compliance Certificate. Together with each delivery of (i) year-end
Financial Statements of Playtex US and its Subsidiaries pursuant to
Sections 4.2(b), Credit Parties will deliver a fully and properly completed
Compliance Certificate (in substantially the same form as Exhibit 4.2(k) (the
“Compliance, Certificate”) signed by each Credit Party’s chief executive
officer, chief financial officer, president, treasurer or controller and (ii)
Financial Statements of Playtex US and its Subsidiaries pursuant to Sections
4.2(a) and 4.2(b), Credit Parties will cause to be delivered a fully and
properly completed Pricing Certificate signed by Playtex US’s chief executive
officer, chief financial officer, president, treasurer or controller; it being
understood and agreed that Borrower, at its option, may cause to be delivered at
any time prior to the delivery of the audited year-end Financial Statements of
Playtex US and its Subsidiaries pursuant to Section 4.2(b) an additional Pricing
Certificate based on the unaudited year-end consolidated and consolidating
income statements, statements of cash flows and balance sheets of Playtex US and
its Subsidiaries together with such unaudited year-end consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Playtex US and its Subsidiaries (the “Interim Annual Pricing Certificate”).

(l)        Customer Concentration. Borrower shall provide prompt written notice
if the Accounts of any customer (other than Loblaws and Shopper’s Drugmart and
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Grade Account Debtors) exceed in the aggregate an amount equal to ten percent of
the aggregate of all Accounts of the Credit Parties at any time.

(m)      Other Information. With reasonable promptness, Borrower will deliver
such other information and data with respect to Playtex US, any Credit Party or
any Subsidiary of any Credit Party as from time to time may be reasonably
requested by Agent.

(n)       Taxes. Borrower shall provide prompt written notice of (i) the
execution or filing with any Governmental Authority of any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Charges by any Credit Party or any of its Subsidiaries
which could reasonably be expected to have a Material Adverse Effect and (ii)
any written agreement by any Credit Party or any of its Subsidiaries or request
directed to any Credit Party or any of its Subsidiaries to make any adjustment
by reason of a change in accounting method or otherwise, which could reasonably
be expected to have a Material Adverse Effect.

4.3       Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement. For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Agent pursuant to Section 4.2 or any other section (unless specifically
indicated otherwise) shall be prepared in accordance with GAAP as in effect at
the time of such preparation; provided, that no Accounting Change shall affect
financial covenants, standards or terms in this Agreement; provided, further,
that Borrower shall prepare footnotes to the Financial Statements required to be
delivered hereunder that show the differences between the Financial Statements
delivered (which reflect such Accounting Changes) and the basis for calculating
financial covenant compliance (without reflecting such Accounting Changes). All
such adjustments described in clause (c) of the definition of the term
Accounting Changes resulting from expenditures made subsequent to the Closing
Date (including capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the expenditures
are made.

SECTION 5.

REPRESENTATIONS AND WARRANTIES

To induce Agent and Lenders to enter into the Loan Documents, to make Loans and
to issue or cause to be issued Letters of Credit, Credit Parties, jointly and
severally, represent, warrant and covenant to Agent and each Lender that the
following statements are and, after giving effect to the Related Transactions,
will remain true, correct and complete until the Termination Date with respect
to all Credit Parties:

5.1       Disclosure. No representation or warranty of any Credit Party
(including, in the case of the Financial Statements, of Playtex US) contained in
this Agreement, the Financial Statements referred to in Section 5.5, the other
Related Transactions Documents or any other document, certificate or written
statement furnished to Agent or any Lender by or on behalf of any such Person
for use in connection with the Loan Documents or the Related Transactions
Documents contains any untrue statement of a material fact or omitted, omits or
will omit to state a material fact necessary in order to make the statements
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misleading in light of the circumstances in which the same were made. On the
Closing Date, after giving effect to the consummation of the Related
Transactions, no default or event of default under or with respect to any of the
Related Transactions Documents, any Senior Secured Note Documents or any Senior
Subordinated Note Documents has occurred and is continuing

5.2       No Material Adverse Effect. Since December 31, 2004 there have been no
events or changes in facts or circumstances affecting any Credit Party or any of
its Subsidiaries which individually or in the aggregate have had or could
reasonably be expected to have a Material Adverse Effect and that have not been
disclosed herein or in the attached Disclosure Schedules.

5.3       No Conflict. The consummation of the Related Transactions does not and
will not violate or conflict with any laws, rules, regulations or orders of any
Governmental Authority or violate, conflict with, result in a breach of, or
constitute a default (with due notice or lapse of time or both) under any
Contractual Obligation or organizational documents of Playtex US or of any
Credit Party or any of its Subsidiaries except if such violations, conflicts,
breaches or defaults could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.

5.4       Organization, Powers, Capitalization and Good Standing.

(a)       Organization and Powers. Each of the Credit Parties and each of their
Subsidiaries is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and qualified to do business in all
states where such qualification is required except where failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect. As
of the Closing Date, the jurisdiction of organization and all jurisdictions in
which each Credit Party is qualified to do business are set forth on Schedule
5.4(a). Each of the Credit Parties and each of their Subsidiaries has all
requisite organizational power and authority to own and operate its properties,
to carry on its business as now conducted and proposed to be conducted, to enter
into each Loan Document to which it is a party and to incur the Obligations,
grant liens and security interests in the Collateral and carry out the
transactions contemplated by the Loan Documents.

(b)       Capitalization. As of the Closing Date: (i) the authorized Stock of
each of the Credit Parties and each of their Subsidiaries is as set forth on
Schedule 5.4(b); (ii) all issued and outstanding Stock of each of the Credit
Parties and each of their Subsidiaries is duly authorized and validly issued,
fully paid, nonassessable, free and clear of all Liens other than those in
favour of Agent for the benefit of Agent and Lenders, and other than Prior
Claims, and such Stock was issued in compliance with all applicable state,
federal and foreign laws concerning the issuance of securities; (iii) the
identity of the holders of the Stock of each of the Credit Parties (other than
Borrower) and each of their Subsidiaries and the percentage of their
fully-diluted ownership of the Stock of each of the Credit Parties (other than
Borrower) and each of their Subsidiaries is set forth on Schedule 5.4(b); and
(iv) no Stock of any Credit Party or any of their Subsidiaries, other than those
described above, are issued and outstanding. Except as provided in Schedule
5.4(b), as of the Closing Date, there are no preemptive or other outstanding
rights, options, warrants, conversion rights or similar agreements or
understandings for the purchase or acquisition from any Credit Party or any of
their Subsidiaries of any Stock of any such entity.

 

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(c)       Binding Obligation. This Agreement is, and the other Related
Transactions Documents when executed and delivered will be, the legally valid
and binding obligations of the applicable parties thereto, each enforceable
against each of such parties, as applicable, in accordance with their respective
terms.

5.5       Financial Statements and Projections. All Financial Statements
concerning Playtex US, Credit Parties and their Subsidiaries which have been or
will hereafter be furnished to Agent pursuant to this Agreement have been or
will be prepared in accordance with GAAP consistently applied (except as
disclosed therein) and do or will present fairly the financial condition of the
entities covered thereby as at the dates thereof and the results of their
operations for the periods then ended, subject to, in the case of unaudited
Financial Statements, the absence of footnotes and normal year-end adjustments.

The Projections delivered on or prior to the Closing Date and the updated
Projections delivered pursuant to Section 4.2(h) represent and will represent as
of the date thereof the good faith reasonable estimate of Playtex US and Credit
Parties and their senior management based upon reasonable assumptions at the
time made concerning the course of their business (it being understood that the
Projections may not be realized).

5.6       Intellectual Property. Each of the Credit Parties and its Subsidiaries
owns, is licensed to use or otherwise has the right to use, all Intellectual
Property used in or necessary for the conduct of its business as currently
conducted that is material to the condition (financial or other), business or
operations of such Credit Party and its Subsidiaries and all Copyrights, Patents
and Trademarks existing in Canada, as of the Closing Date, are identified on
Schedule 5.6 and fully protected and/or duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such registrations,
filings or issuances. As of the Closing Date, except as disclosed in Schedule
5.6, the use of such Intellectual Property by the Credit Parties and their
Subsidiaries and the conduct of their businesses does not and has not been
alleged by any Person to infringe on the rights of any Person.

5.7       Investigations, Audits, Etc. As of the Closing Date, except as set
forth on Schedule 5.7, no Credit Party or any of their Subsidiaries is the
subject of any review or audit by any taxing authority or any investigation by
any Governmental Authority concerning the violation or possible violation of any
law.

5.8       Employee Matters. As of the Closing Date, except as set forth on
Schedule 5.8, (a) no Credit Party or Subsidiary of a Credit Party nor any of
their respective employees is subject to any collective bargaining agreement,
(b) no petition for certification or union election is pending with respect to
the employees of any Credit Party or any of their Subsidiaries and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Credit Party or any of their Subsidiaries,
(c) there are no strikes, slowdowns, work stoppages or controversies pending or,
to the best knowledge of any Credit Party after due inquiry, threatened between
any Credit Party or any of their Subsidiaries and its respective employees,
other than employee grievances arising in the ordinary course of business which
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect and (d) hours worked by and payment made to
employees of each Credit Party and each of their Subsidiaries comply with the
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extent applicable, and each other material federal, state, local or foreign law
applicable to such matters. As of the Closing Date, except as set forth on
Schedule 5.8, neither Borrower nor any of its Subsidiaries is party to an
employment contract.

5.9

Solvency. Each of the Credit Parties and its Subsidiaries is Solvent.

5.10     Litigation; Adverse Facts. As of the Closing Date, except as set forth
on Schedule 5.10, there are no judgments outstanding against any Credit Party or
any of its Subsidiaries or affecting any property of any Credit Party or any of
its Subsidiaries, nor is there any Litigation pending, or to the best knowledge
of any Credit Party threatened, against any Credit Party or any of its
Subsidiaries which could reasonably be expected to result in any Material
Adverse Effect.

5.11

Use of Proceeds.

Borrower shall utilize the proceeds of the Loans solely for the financing of
Borrower’s and its Subsidiaries’ ordinary working capital and general corporate
needs. Schedule 5.11 contains a description of Borrower’s sources and uses of
funds as of the Closing Date, including Loans and Letter of Credit Obligations
to be made or incurred on that date, and a funds flow memorandum detailing how
funds from each source are to be transferred for particular uses.

5.12     Ownership of Real Property; Liens. As of the Closing Date, the real
estate (“Real Estate”) listed in Schedule 5.12 constitutes all of the real
property owned, leased, subleased, or used by any Credit Party or any of its
Subsidiaries. As of the Closing Date, each of the Credit Parties and each of its
Subsidiaries owns good and marketable fee simple title to all of its material
owned Real Estate, and valid and marketable leasehold interests in all of its
leased Real Estate, all as described on Schedule 5.12, and copies of all such
leases or a summary of terms thereof as in effect on the Closing Date reasonably
satisfactory to Agent have been delivered to Agent. Schedule 5.12 further
describes any Real Estate with respect to which any Credit Party or any of its
Subsidiaries is a lessor, sublessor or assignor as of the Closing Date. Each of
the Credit Parties and each of its Subsidiaries also has good and marketable
title to, or valid leasehold interests in, all of its material personal property
and assets. As of the Closing Date, none of the material properties and assets
of any Credit Party or any of its Subsidiaries are subject to any Liens other
than Permitted Encumbrances, and there are no facts, circumstances or conditions
known to Borrower that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances against the properties or
assets of any Credit Party or any of its Subsidiaries. As of the Closing Date,
each of the Credit Parties and each of its Subsidiaries has received all deeds,
assignments, waivers, consents, nondisturbance and attornment or similar
agreements, bills of sale and other documents, and has duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect such Credit Party’s or Subsidiary’s right, title and interest in and to
all such material owned Real Estate and other material properties and assets.
Schedule 5.12 also describes any purchase options, rights of first refusal or
other similar contractual rights pertaining to any Real Estate as of the Closing
Date. As of the Closing Date, no portion of any Credit Party’s or any of its
Subsidiaries’ Real Estate has suffered any material damage by fire or other
casualty loss that has not heretofore been repaired and restored in all material
respects to its original condition or otherwise remedied. As of the Closing
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the Real Estate to be lawfully occupied and used for all of the purposes for
which it is currently occupied and used have been lawfully issued and are in
full force and effect.

5.13

Environmental Matters.

(a)       Except as set forth in Schedule 5.13, as of the Closing Date: (i) the
Real Estate is free of the presence of any Hazardous Material except for such
presence that could not reasonably be expected to adversely impact the value or
marketability assuming continued use as an industrial facility of such Real
Estate and that could not reasonably be expected to result in Environmental
Liabilities of the Credit Parties or their Subsidiaries in excess of $250,000 in
the aggregate; (ii) no Credit Party and no Subsidiary of a Credit Party has
caused or suffered to occur any Release of Hazardous Materials on, at, in,
under, above, to, from or about any of their Real Estate except for such
releases that could not reasonably be expected to result in Environmental
Liabilities of the Credit Parties or their Subsidiaries in excess of $250,000 in
the aggregate; (iii) the Credit Parties and their Subsidiaries are and have been
in compliance with all Environmental Laws, except for such noncompliance that
could not reasonably be expected to result in Environmental Liabilities of the
Credit Parties or their Subsidiaries in excess of $250,000 in the aggregate;
(iv) the Credit Parties and their Subsidiaries have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits could not reasonably be expected to result in
Environmental Liabilities of the Credit Parties or their Subsidiaries in excess
of $250,000 in the aggregate, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Credit Party and no Subsidiary of a
Credit Party is involved in operations or knows of any facts, circumstances or
conditions, including any Releases of Hazardous Materials, that are likely to
result in any Environmental Liabilities of such Credit Party or Subsidiary which
could reasonably be expected to be in excess of $250,000 in the aggregate, and
no Credit Party or Subsidiary of a Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(vi) there is no Litigation arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material that seeks damages, penalties,
fines, costs or expenses in excess of $250,000 in the aggregate or injunctive
relief against, or that alleges criminal misconduct by any Credit Party or any
Subsidiary of a Credit Party; (vii) no Credit Party has knowledge of, nor has
any Credit Party received notice of any actual, pending or threatened
investigations, claims, orders, suits, actions or proceedings regarding the
breach of any Environmental Laws or the provisions of any Environmental Permits,
or which may result in any Environmental Liability that could reasonably be
expected to exceed $250,000 in the aggregate; and (viii) the Credit Parties have
provided to Agent copies of all material environmental reports, reviews and
audits and all written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any of the Credit Parties or
their Subsidiaries and in their possession or under their control.

(b)       Each Credit Party hereby acknowledges and agrees that Agent (i) is not
now, and has not ever been, in control of any of the Real Estate or affairs of
such Credit Party or its Subsidiaries , and (ii) does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Credit Party’s or its Subsidiaries’ conduct with respect to the ownership,
operation or management of any of their Real Estate or compliance with
Environmental Laws or Environmental Permits.

 

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5.14

Canadian Pension and Benefits Plans.

As of the Closing Date, Schedule 5.14 lists all Canadian Benefit Plans and
Canadian Pension Plans currently maintained or contributed to by Borrower. The
Canadian Pension Plans are duly registered under the Income Tax Act (Canada) and
all other applicable laws which require registration. The Borrower has complied
with and performed all of its obligations in all material respects under and in
respect of the Canadian Pension Plans and Canadian Benefit Plans under the terms
thereof, any funding agreements and all applicable laws (including any
fiduciary, funding, investment and administration obligations). All employer and
employee payments, contributions or premiums to be remitted, paid to or in
respect of each Canadian Pension Plan or Canadian Benefit Plan have been paid in
a timely fashion in accordance with the terms thereof, any funding agreement and
all applicable laws. There have been no improper withdrawals or applications of
the assets of the Canadian Pension Plans or the Canadian Benefit Plans. Except
as set forth on Schedule 5.14 , there are no outstanding disputes concerning the
assets of the Canadian Pension Plans or the Canadian Benefit Plans. Except as
set forth on Schedule 5.14, each of the Canadian Pension Plans is fully funded
on a solvency basis (using actuarial methods and assumptions which are
consistent with the valuations last filed with the applicable Governmental
Authorities and which are consistent with generally accepted actuarial
principles).

5.15     Brokers. No broker or finder acting on behalf of any Credit Party or
Affiliate thereof brought about the obtaining, making or closing of the Loans,
and no Credit Party or Affiliate thereof has any obligation to any Person in
respect of any finder’s or brokerage fees in connection therewith.

5.16     Deposit and Disbursement Accounts. Schedule 5.16 lists all banks and
other financial institutions at which any Credit Party maintains deposit or
other accounts as of the Closing Date, including any Disbursement Accounts, and
such Schedule correctly identifies the name, address and telephone number of
each depository, the name in which the account is held, a description of the
purpose of the account, and the complete account number therefor.

5.17     Agreements and Other Documents. As of the Closing Date, each Credit
Party has provided to Agent or its counsel, on behalf of Lenders, accurate and
complete copies (or summaries) of all of the following agreements or documents
to which it is subject and each of which is listed in Schedule 5.17: supply
agreements and purchase agreements involving transactions in excess of $500,000
per annum; leases of Equipment having a remaining term of one year or longer and
requiring aggregate rental and other payments in excess of $250,000 per annum;
licenses and permits held by the Credit Parties, the absence of which could
reasonably be expected to have a Material Adverse Effect; instruments and
documents evidencing any Indebtedness or Guaranteed Indebtedness of such Credit
Party and any Lien granted by such Credit Party with respect thereto; and
instruments and agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such Credit Party.

5.18     Insurance. Schedule 5.18 lists all insurance policies of any nature
maintained, as of the Closing Date, for current occurrences by each Credit
Party, as well as a summary of the key business terms of each such policy such
as deductibles, coverage limits and term of policy.

 

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5.19

Senior Secured Note Documents and Senior Subordinated Note Documents.

(a)       The execution and delivery of the Related Transactions Documents by
any Credit Party and the incurrence of Indebtedness by any Credit Party pursuant
to Related Transactions Documents, including any future advances hereunder, will
not violate or result in a default under any of the Senior Subordinated Note
Documents.

(b)       The Obligations of Playtex US under its Guarantee constitute Senior
Indebtedness (as defined in the Senior Subordinated Note Indenture) under the
terms of the Senior Subordinated Note Documents.

(c)       Liens on the Collateral of Playtex US and Playtex International Corp.,
other than the Senior Secured Note Primary Collateral, granted to the Senior
Secured Notes Trustee pursuant to the Senior Secured Note Documents, are second
in priority to the Liens on the Collateral of Playtex US and Playtex
International Corp., other than the Senior Secured Note Primary Collateral,
granted to the Agent, on behalf of itself and Lenders, pursuant to the
Collateral Documents of Playtex US and Playtex International Corp.

(d)       Agent and Lenders are intended third party beneficiaries of the
provisions of Article 10 (“Intercreditor Provisions Relating to Credit
Agreement”) of the Senior Secured Note Indenture, with the right and ability to
enforce such provisions for their own benefit.

5.20     Compliance. Each Credit Party represents and warrants that it is in
compliance and each of its Subsidiaries is in compliance with the requirements
of all applicable laws, rules, regulations and orders of any Governmental
Authority and the obligations, covenants and conditions contained in all
Contractual Obligations other than instances of noncompliance with those laws,
rules, regulations, orders and provisions of such Contractual Obligations which
could not be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect.

SECTION 6.

DEFAULT, RIGHTS AND REMEDIES

6.1       Event of Default. “Event of Default” shall mean the occurrence or
existence of any one or more of the following:

(a)       Payment. (1) Failure to pay any payment of principal of any Loan when
due, or to repay Revolving Loans to reduce their balance to the maximum amount
of Revolving Loans then permitted to be outstanding or to reimburse any L/C
Issuer for any payment made by such L/C Issuer under or in respect of any Letter
of Credit when due or (2) failure to pay, within five (5) days after the due
date, any interest on any Loan or any other amount due under this Agreement or
any of the other Loan Documents; or

(b)       Default in Other Agreements. (1) Any Credit Party fails to pay when
due or within any applicable grace period any principal or interest on
Indebtedness (other than the Loans) or any Contingent Obligations, or (2) breach
or default of any Credit Party, or the occurrence of any condition or event,
with respect to any Indebtedness (other than the Loans) or

 

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any Contingent Obligations, if the effect of such breach, default or occurrence
is to cause or to permit the holder or holders then to cause, Indebtedness
and/or Contingent Obligations having an aggregate principal amount in excess of
$1,000,000 to become or be declared due prior to their stated maturity or (3)
any “Event of Default” (as defined therein) has occurred and is continuing under
the US Credit Facility; or

(c)       Breach of Certain Provisions; Breach of Warranty. Failure of any
Credit Party to perform or comply with any term or condition contained in (i)
Section 2.3 and the continuation of such failure for five days or (ii) that
portion of Section 2.2 relating to the Credit Parties’ obligation to maintain
insurance, Section 3 or Section 4; or

(d)       Borrowing Base Certificate; Breach of Warranty. Any information
contained in any Borrowing Base Certificate is untrue or incorrect in any
respect (other than (i) inadvertent, immaterial errors not exceeding $250,000 in
the aggregate in any Borrowing Base Certificate or (ii) errors occurring as long
as, had such errors not been made, Borrowing Availability would exceed $0), or
any representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate (other than a Borrowing
Base Certificate) made or delivered to Agent or any Lender by any Credit Party
is untrue or incorrect in any material respect (without duplication of
materiality qualifiers contained therein) as of the date when made or deemed
made; or

(e)       Other Defaults Under Loan Documents. Any Credit Party defaults in the
performance of or compliance with any term contained in this Agreement or the
other Loan Documents (other than occurrences described in other provisions of
this Section 6.1 for which a different grace or cure period is specified, or for
which no cure period is specified and which constitute immediate Events of
Default) and such default is not remedied or waived within thirty (30) days
after the earlier of (1) receipt by Borrower of notice from Agent or Requisite
Lenders of such default or (2) actual knowledge of any Responsible Officer of
such default; or

(f)        Involuntary Bankruptcy; Appointment of Receiver, Etc. Any involuntary
case or proceeding (including the filing of any notice of intention in respect
thereof) is commenced against any Credit Party under any Insolvency Law, any
incorporation law or other applicable law in any jurisdiction in respect of the:

(i)

bankruptcy, liquidation, winding-up, dissolution or suspension of general
operations,

(ii)

composition, rescheduling, reorganization, arrangement or readjustment of, or
other relief from, or stay of proceedings to enforce, some or all of the debts
or obligations,

(iii)

appointment of a trustee, interim receiver, receiver, receiver and manager,
liquidator, administrator, custodian, sequestrator, agent or other similar
official for Borrower, or for all or a substantial part of the assets of
Borrower,

 

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(iv)

possession, foreclosure, seizure or retention, sale or other disposition of, or
other proceedings to enforce security over, all or any substantial part of the
assets, of such Credit Party

and such case or proceeding shall remain undismissed or unstayed for 30 days or
more or such court shall enter a decree or order granting the relief sought in
such case or proceeding; or

(g)       Voluntary Bankruptcy; Appointment of Receiver, Etc. any Credit Party
(1) files a petition or application seeking relief under any Insolvency Law, (2)
commences or fails to contest in a timely and appropriate manner or consents to
the institution of any proceeding referred to in Section 6.1(f) above or to the
filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, interim receiver, receiver and manager, liquidator,
assignee, trustee or sequestrator (or similar official) of any Credit Party or
of all or any substantial part of any such Credit Party’s assets, or (3) makes
an assignment for the benefit of creditors or (4) takes action in furtherance of
any of the foregoing or of any of the proceedings referred to in Section 6.1(f);
or

(h)       Judgment and Attachments. Any money judgment, writ or warrant of
attachment, or similar process (other than those described elsewhere in this
Section 6.1) involving an amount in the aggregate at any time in excess of
$1,000,000 (in either case to the extent not adequately covered by insurance in
Agent’s sole discretion as to which the insurance company has acknowledged
coverage) is entered or filed against one or more of the Credit Parties or any
of their respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than five (5)
Business Days prior to the date of any proposed sale thereunder; or

(i)        Dissolution. Any order, judgment or decree is entered against any
Credit Party decreeing the dissolution or split up of such Credit Party and such
order remains undischarged or unstayed for a period in excess of fifteen (15)
days; or

(j)        Solvency. Any Credit Party ceases to be Solvent, fails to pay its
debts as they become due or admits in writing its present or prospective
inability to pay its debts as they become due; or

(k)       Invalidity of Loan Documents. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Credit Party denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or

(l)

Change of Control. A Change of Control occurs; or

(m)      Subordinated Indebtedness. The failure of any Credit Party or any
creditor of Borrower or any of its Subsidiaries to comply with the terms of any
subordination or intercreditor agreement or any subordination provisions of any
note or other document running to the benefit of Agent or Lenders, or if any
such document or provisions cease to be in full force and effect or become null
and void or any party denies further liability under any such document or
provides notice to that effect.

 

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6.2       Suspension or Termination of Commitments. Upon the occurrence of any
Event of Default, Agent may, and at the request of Requisite Revolving Lenders
Agent shall, without notice or demand, immediately suspend or terminate all or
any portion of Lenders’ obligations to make additional Loans or issue or cause
to be issued Letters of Credit under the Revolving Loan Commitment; provided,
that, in the case of an Event of Default, if the subject condition or event is
waived by Requisite Revolving Lenders or cured within any applicable grace or
cure period, the Revolving Loan Commitment shall be reinstated.

6.3       Acceleration and other Remedies. Upon the occurrence of any Event of
Default described in Sections 6.1(f) or 6.1(g), the Commitments shall be
immediately terminated and all of the Obligations, including the Revolving
Loans, shall automatically become immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
expressly waived by Borrower, and the Commitments shall thereupon terminate.
Upon the occurrence and during the continuance of any other Event of Default,
Agent may, and at the request of the Requisite Lenders, Agent shall, by written
notice to Borrower (a) reduce the aggregate amount of the Commitments from time
to time, (b) declare all or any portion of the Loans and all or any portion of
the other Obligations to be, and the same shall forthwith become, immediately
due and payable together with accrued interest thereon, (c) terminate all or any
portion of the obligations of Agent, L/C Issuers and Lenders to make Revolving
Credit Advances and issue Letters of Credit, (d) demand that Borrower
immediately deliver cash to Agent for the benefit of L/C Issuers (and Borrower
shall then immediately so deliver) in an amount equal to 105% of the aggregate
outstanding Letter of Credit Obligations and (e) exercise any other remedies
which may be available under the Loan Documents or applicable law. Borrower
hereby grants to Agent, for the benefit of L/C Issuers and each Lender with a
participation in any Letters of Credit then outstanding, a security interest in
such cash collateral to secure all of the Letter of Credit Obligations. Any such
cash collateral shall be made available by Agent to L/C Issuers to reimburse L/C
Issuers for payments of drafts drawn under such Letters of Credit and any Fees,
Charges and expenses of L/C Issuers with respect to such Letters of Credit and
the unused portion thereof, after all such Letters of Credit shall have expired
or been fully drawn upon, shall be applied to repay any other Obligations. After
all such Letters of Credit shall have expired or been fully drawn upon and all
Obligations shall have been satisfied and paid in full, the balance, if any, of
such cash collateral shall be returned to Borrower. Borrower shall from time to
time execute and deliver to Agent such further documents and instruments as
Agent may request with respect to such cash collateral.

6.4       Performance by Agent. If any Credit Party shall fail to perform any
covenant, duty or agreement contained in any of the Loan Documents, Agent may,
upon the occurrence and during the continuance of an Event of Default, perform
or attempt to perform such covenant, duty or agreement on behalf of such Credit
Party after the expiration of any cure or grace periods set forth herein. In
such event, such Credit Party shall, at the request of Agent, promptly pay any
amount reasonably expended by Agent in such performance or attempted performance
to Agent, together with interest thereon at the highest rate of interest in
effect upon the occurrence of an Event of Default as specified in Section 1.2(d)
from the date of such expenditure until paid. Notwithstanding the foregoing, it
is expressly agreed that Agent shall not have any liability or responsibility
for the performance of any obligation of any Credit Party under this Agreement
or any other Loan Document.

 

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6.5       Application of Proceeds. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance of
an Event of Default, (a) Borrower irrevocably waives the right to direct the
application of any and all payments at any time or times thereafter received by
Agent from or on behalf of Borrower, and Agent shall have the continuing and
exclusive right to apply and to reapply any and all payments received at any
time or times after the occurrence and during the continuance of an Event of
Default against the Obligations in such manner as Agent may deem advisable
notwithstanding any previous application by Agent and (b) in the absence of a
specific determination by Agent with respect thereto, the proceeds of any sale
of, or other realization upon, all or any part of the Collateral shall be
applied: first, to all Fees, costs and expenses incurred by or owing to Agent
and any Lender with respect to this Agreement, the other Loan Documents or the
Collateral; second, to accrued and unpaid interest on the Obligations (including
any interest which but for the provisions of Insolvency Law, would have accrued
on such amounts); third, to the principal amount of the Obligations outstanding;
and fourth to any other obligations of Borrower owing to Agent or any Lender
under the Loan Documents. Any balance remaining shall be delivered to Borrower
or to whomever may be lawfully entitled to receive such balance or as a court of
competent jurisdiction may direct.

SECTION 7.

CONDITIONS TO LOANS

The obligations of Lenders and L/C Issuers to make Loans and to issue or cause
to be issued Letters of Credit are subject to satisfaction of all of the
applicable conditions set forth below.

7.1       Conditions to Initial Loans. The obligations of Lenders and L/C
Issuers to make the initial Loans and to issue or cause to be issued Letters of
Credit on the Closing Date are, in addition to the conditions precedent
specified in Section 7.2, subject to the completion of all of the following
conditions in a manner, unless specifically set forth otherwise, reasonably
satisfactory to Agent in its sole discretion:

(a)       Closing Checklist. The Credit Parties shall have delivered all
documents and shall have satisfied all other conditions precedent listed on the
Closing Checklist attached hereto as Annex C and all actions set forth thereon
shall have been taken, all in form and substance, or in a manner, reasonably
satisfactory to Agent and Lenders.

(b)       Payment of Fees. Borrower shall have paid the Fees required to be paid
on the Closing Date in the respective amounts specified in Section 1.3
(including the Fees specified in the GE Finance Fee Letter), and shall have
reimbursed Agent for all reasonable and documented out-of-pocket fees, costs and
expenses of closing presented as of the Closing Date.

(c)       Consummation of the Related Transactions. The Agent shall have
received fully executed copies of final and complete copies of each of the other
Related Transactions Documents, each of which shall be in full force and effect
in form and substance reasonably satisfactory to Agent. The Related Transactions
shall, on the Closing Date, be consummated in accordance with the terms of the
Related Transactions Documents

 

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simultaneously with the making of the initial Loans and the issuance of the
Letters of Credit to be issued on the Closing Date.

(d)       Legal Due Diligence. The Agent shall have completed its legal due
diligence.

7.2       Conditions to All Loans. Except as otherwise expressly provided
herein, no Lender or L/C Issuer shall be obligated to fund any Advance or incur
any Letter of Credit Obligation, if, as of the date thereof (the “Funding
Date”):

(a)       any representation or warranty by any Credit Party contained herein or
in any other Loan Document is untrue or incorrect in any material respect
(without duplication of any materiality qualifier contained therein) as of such
date, except to the extent that such representation or warranty expressly
relates to an earlier date, and Agent or Requisite Revolving Lenders have
determined not to make such Advance or incur such Letter of Credit Obligation as
a result of the fact that such warranty or representation is untrue or incorrect
in any material respect;

(b)       any Default or Event of Default has occurred and is continuing or
would result after giving effect to any Advance (or the incurrence of any Letter
of Credit Obligation), and Agent or Requisite Revolving Lenders shall have
determined not to make any Advance or incur any Letter of Credit Obligation as a
result of that Default or Event of Default; or

(c)       (i) any Advance (or the incurrence of any Letter of Credit
Obligations) would exceed Borrowing Availability (except as provided in Section
1.1(a)(ii)) or (ii) the outstanding amount of the Revolving Loan would exceed
the Borrowing Base less the outstanding amount of the Swing Line Loan.

The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a BA Rate Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrower that the conditions
in this Section 7.2 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Agent’s Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.

SECTION 8.

ASSIGNMENT AND PARTICIPATION

8.1

Assignment and Participations.

(a)       Subject to the terms of this Section 8.1, any Lender may make an
assignment to a Qualified Assignee of, or sale of participations in, at any time
or times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender’s
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld, conditioned or delayed with respect to a Qualified
Assignee) and the execution of an assignment agreement (an “Assignment
Agreement” substantially in the

 

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form attached hereto as Exhibit 8.1 and otherwise in form and substance
reasonably satisfactory to, and acknowledged by, Agent); (ii) be conditioned on
such assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) after
giving effect to any such partial assignment, the assignee Lender shall have
Commitments in an amount at least equal to $2,500,000 and the assigning Lender
shall have retained Commitments in an amount at least equal to $2,500,000; (iv)
require a payment to Agent of an assignment fee of US$3,500 and (v) so long as
no Event of Default has occurred and is continuing, require the consent of
Borrower, which shall not be unreasonably withheld, conditioned or delayed and
shall be deemed granted if not objected to within three (3) Business Days
following notice thereof to Borrower; provided that no such consent shall be
required for an assignment to a Qualified Assignee. Notwithstanding the above,
Agent may in its sole and absolute discretion permit any assignment by a Lender
to a Person or Persons that are not Qualified Assignees; provided, that so long
as no Event of Default has occurred and is continuing, such assignment shall
also require Borrower’s consent, which consent shall not be unreasonably
withheld, conditioned or delayed. In the case of an assignment by a Lender under
this Section 8.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as all other Lenders hereunder. So long as
no Event of Default has occurred and is continuing, each Qualified Assignee or
other assignee shall comply with the representations and warranties in Section
1.12(c), as a Lender. The assigning Lender shall be relieved of its obligations
hereunder with respect to its Commitments or assigned portion thereof from and
after the date of such assignment. Borrower hereby acknowledges and agrees that
any assignment shall give rise to a direct obligation of Borrower to the
assignee and that the assignee shall be considered to be a “Lender.” In all
instances, each Lender’s liability to make Loans hereunder shall be several and
not joint and shall be limited to such Lender’s Pro Rata Share of the applicable
Commitment. In the event Agent or any Lender assigns or otherwise transfers all
or any part of the Obligations, Agent or any such Lender shall so notify
Borrower and Borrower shall, upon the request of Agent or such Lender, execute
new Notes in exchange for the Notes, if any, being assigned. Notwithstanding the
foregoing provisions of this Section 8.1(a), but subject to compliance with the
representations and warranties in Section 1.12(c), (a) any Lender that is an
investment fund may assign the Obligations held by it and such Lender’s rights
under this Agreement and the other Loan Documents to another investment fund
managed by the same investment advisor or pledge such Obligations and rights to
trustee for the benefit of its investors and (b) any Lender may assign the
Obligations to an Affiliate of such Lender or to a Person that is a Lender prior
to the date of such assignment.

(b)       Any participation by a Lender of all or any part of its Commitments
shall be made with the understanding that all amounts payable by Borrower
hereunder shall be determined as if that Lender had not sold such participation,
and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or Fees
payable with respect to, any Loan in which such holder participates, (ii) any
extension of the scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.11, 1.12, 8.3 and 9.1, Borrower
acknowledges and agrees that a participation shall give rise to a direct
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of Borrower to the participant and the participant shall be considered to be a
“Lender,” provided, that no participant (including a participant that is already
a Lender hereunder at the time of the sale of the participation) shall be
entitled to receive any greater amount pursuant to Section 1.12 with respect to
such participation than that to which the Lender would have been entitled to
receive with respect to such participation if the Lender had not sold such
participation. Each participant shall comply with Section 1.12(c) as a Lender.
Except as set forth in the preceding sentence neither Borrower nor any other
Credit Party shall have any obligation or duty to any participant. Neither Agent
nor any Lender (other than the Lender selling a participation) shall have any
duty to any participant and may continue to deal solely with the Lender selling
a participation as if no such sale had occurred.

(c)       Except as expressly provided in this Section 8.1, no Lender shall, as
between Borrower and that Lender, or Agent and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.

(d)       For a period of ninety (90) days following the Closing Date, each
Credit Party shall assist each Lender permitted to sell assignments or
participations under this Section 8.1 as required to enable the assigning or
selling Lender to effect any such assignment or participation, including the
execution and delivery of any and all agreements, notes and other documents and
instruments as shall be requested and the prompt preparation of informational
materials for, and the participation of management in meetings with, potential
assignees or participants, all on a timetable established by Agent in its sole
discretion. For a period of ninety (90) days following the Closing Date, each
Credit Party executing this Agreement shall certify the correctness,
completeness and accuracy of all descriptions of the Credit Parties and their
respective affairs contained in any selling materials provided by it and all
other information provided by it and included in such materials, except that any
Projections delivered by Borrower shall only be certified by Borrower as having
been prepared by Borrower in compliance with the representations contained in
Section 5.5. In addition, following the 90-day period referenced above, upon the
request of any Lender, each Credit Party shall use reasonable efforts to assist
the Lenders in effectuating assignments or participations permitted hereunder.
Agent shall maintain a “register” for recording the name, address, commitment
and Loans owing to each Lender. The entries in such register shall be
presumptive evidence of the amounts due and owing to each Lender in the absence
of manifest error. Borrower, Agent and each Lender may treat each Person whose
name is recorded in such register pursuant to the terms hereof as a Lender for
all purposes of this Agreement. Any assignment of any Loan, whether or not
evidenced by a Note, shall be effective only upon appropriate entries with
respect thereto being made in such register. Any assignment or transfer of all
or part of a Loan evidenced by a Note shall be registered on such register only
upon surrender for registration of assignment or transfer of the Note evidencing
such Loan, accompanied by a duly executed Assignment Agreement; thereupon one or
more new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked “canceled.” The register described herein shall be
available for inspection by Borrower and any Lender, at any reasonable time upon
reasonable prior notice.

(e)       A Lender may furnish any information concerning Credit Parties in the
possession of such Lender from time to time to assignees and participants
(including prospective

 

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assignees and participants); provided that such Lender shall obtain from
assignees or participants confidentiality covenants substantially equivalent to
those contained in Section 9.13.

(f)        So long as no Event of Default has occurred and is continuing, no
Lender shall assign or sell participations in any portion of its Loans or
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 1.11(a), increased
costs or an inability to fund BA Rate Loans under Section 1.11(b), or
withholding taxes in accordance with Section 1.12.

8.2

Agent.

(a)       Appointment. Each Lender hereby designates and appoints GE Finance as
its Agent under this Agreement and the other Loan Documents, and each Lender
hereby irrevocably authorizes Agent to execute and deliver the Collateral
Documents and to take such action or to refrain from taking such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers as are set forth herein or therein, together with such
other powers as are reasonably incidental thereto. Agent is authorized and
empowered to amend, modify, or waive any provisions of this Agreement or the
other Loan Documents on behalf of Lenders subject to the requirement that
certain of Lenders’ consent be obtained in certain instances as provided in this
Section 8.2 and Section 9.2. The provisions of this Section 8.2 are solely for
the benefit of Agent and Lenders and neither Borrower nor any other Credit Party
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, Agent shall
act solely as agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for Borrower or any other Credit Party. Agent may perform any of its duties
hereunder, or under the Loan Documents, by or through its agents or employees.

(b)       Agent, as holder of Liens securing Obligations, for the benefit of
itself and each present and future Lender, and each Lender hereby agree to be,
and are, bound by the provisions of Article 10 (“Intercreditor Provisions
Relating to Credit Agreement”) of the Senior Secured Note Indenture and agree
that such agreement is intended for the benefit of, and is enforceable as a
third-party beneficiary by, the Senior Secured Notes Trustee, as holder of Liens
securing Note Obligations (as defined in the Senior Secured Note Indenture) for
the benefit of each present and future holder of Note Obligations. Each Lender
hereby irrevocably authorizes Agent to execute and deliver to the Senior Secured
Notes Trustee a written confirmation of the agreements set forth in the
preceding sentence and a written agreement to observe and perform each and all
of the obligations of Agent under the provisions of Article 10 (“Intercreditor
Provisions Relating to Credit Agreement”) of the Senior Secured Note Indenture
and to take such action or to refrain from taking such action on its behalf
under the provisions of Article 10 (“Intercreditor Provisions Relating to Credit
Agreement”) of the Senior Secured Note Indenture and to exercise such powers as
are set forth herein or therein, together with such other powers as are
reasonably incidental thereto.

(c)       Nature of Duties. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement a
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relationship in respect of any Lender. Nothing in this Agreement or any of the
Loan Documents, express or implied, is intended to or shall be construed to
impose upon Agent any obligations in respect of this Agreement or any of the
Loan Documents except as expressly set forth herein or therein. Each Lender
shall make its own independent investigation of the financial condition and
affairs of each Credit Party in connection with the extension of credit
hereunder and shall make its own appraisal of the creditworthiness of each
Credit Party, and Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto (other than as expressly required herein). If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the Requisite
Lenders or Requisite Revolving Lenders have instructed Agent to act or refrain
from acting pursuant hereto.

(d)       Rights, Exculpation, Etc. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be liable to the
extent of its own gross negligence or willful misconduct as determined by a
final non-appealable order by a court of competent jurisdiction. Agent shall not
be liable for any apportionment or distribution of payments made by it in good
faith and if any such apportionment or distribution is subsequently determined
to have been made in error the sole recourse of any Lender to whom payment was
due but not made, shall be to recover from other Lenders any payment in excess
of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them). In no event shall Agent be liable for punitive, special,
consequential, incidental, exemplary or other similar damages. In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account, but neither Agent nor any of
its agents or representatives shall be responsible to any Lender for any
recitals, statements, representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility, or
sufficiency of this Agreement or any of the Loan Documents or the transactions
contemplated thereby, or for the financial condition of any Credit Party. Agent
shall not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or
any of the Loan Documents or the financial condition of any Credit Party, or the
existence or possible existence of any Default or Event of Default. Agent may at
any time request instructions from Requisite Lenders or Requisite Revolving
Lenders or all affected Lenders with respect to any actions or approvals which
by the terms of this Agreement or of any of the Loan Documents Agent is
permitted or required to take or to grant. If such instructions are promptly
requested, Agent shall be absolutely entitled to refrain from taking any action
or to withhold any approval and shall not be under any liability whatsoever to
any Person for refraining from any action or withholding any approval under any
of the Loan Documents until it shall have received such instructions from the
Requisite Lenders, Requisite Revolving Lenders or such other portion of the
Lenders as shall be prescribed by this Agreement. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining from acting under this Agreement or any
of the other Loan Documents in accordance with the instructions of Requisite
Lenders, Requisite Revolving Lenders or all affected Lenders, as applicable;
and, notwithstanding the instructions of Requisite Lenders, Requisite Revolving
Lenders or all affected Lenders, as applicable, Agent shall have no

 

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obligation to take any action if it believes, in good faith, that such action is
deemed to be illegal by Agent or exposes Agent to any liability for which it has
not received satisfactory indemnification in accordance with Section 8.2(f).

(e)       Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, fax or telegram) believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person, and with respect to all matters pertaining to this Agreement
or any of the Loan Documents and its duties hereunder or thereunder. Agent shall
be entitled to rely upon the advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.

(f)        Indemnification. Lenders will reimburse and indemnify Agent for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
attorneys’ fees and expenses), advances or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender’s Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrower; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements to the extent resulting from Agent’s gross
negligence or willful misconduct as determined by a final non-appealable order
by a court of competent jurisdiction. If any indemnity furnished to Agent for
any purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against even if so directed by the Requisite Lenders, Requisite
Revolving Lenders or such other portion of the Lenders as shall be prescribed by
this Agreement until such additional indemnity is furnished. The obligations of
Lenders under this Section 8.2(f) shall survive the payment in full of the
Obligations and the termination of this Agreement.

(g)       GE Finance Individually. With respect to its Commitments hereunder, GE
Finance shall have and may exercise the same rights and powers hereunder and is
subject to the same obligations and liabilities as and to the extent set forth
herein for any other Lender. The terms “Lenders”, “Requisite Lenders”,
“Requisite Revolving Lenders” or any similar terms shall, unless the context
clearly otherwise indicates, include GE Finance in its individual capacity as a
Lender or one of the Requisite Lenders or Requisite Revolving Lenders. GE
Finance, either directly or through strategic affiliations, may lend money to,
acquire equity or other ownership interests in, provide advisory services to and
generally engage in any kind of banking, trust or other business with any Credit
Party as if it were not acting as Agent pursuant hereto and without any duty to
account therefor to Lenders. GE Finance, either directly or through strategic
affiliations, may accept fees and other consideration from any Credit Party for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.

(h)

Successor Agent.

 

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(i)        Resignation. Agent may resign from the performance of all its agency
functions and duties hereunder at any time by giving at least thirty (30)
Business Days’ prior written notice to Borrower and Lenders. Such resignation
shall take effect upon the acceptance by a successor Agent of appointment
pursuant to clause (ii) below or as otherwise provided in clause (ii) below.

(ii)       Appointment of Successor. Upon any such notice of resignation
pursuant to clause (i) above, Requisite Lenders shall appoint a successor Agent
which, unless an Event of Default has occurred and is continuing, shall be
reasonably acceptable to Borrower. If a successor Agent shall not have been so
appointed within the thirty (30) Business Day period referred to in clause (i)
above, the retiring Agent, upon notice to Borrower, shall then appoint a
successor Agent who shall serve as Agent until such time, if any, as Requisite
Lenders appoint a successor Agent as provided above.

(iii)      Successor Agent. Upon the acceptance of any appointment as Agent
under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent’s resignation as Agent, the provisions of this Section 8.2 shall continue
to inure to its benefit as to any actions taken or omitted to be taken by it in
its capacity as Agent.

(i)

Collateral Matters.

(i)        Release of Collateral. Lenders hereby irrevocably authorize Agent, at
its option and in its discretion, to release any Lien granted to or held by
Agent upon any Collateral (x) upon termination of the Commitments and payment
and satisfaction of all Obligations (other than contingent indemnification
obligations to the extent no claims giving rise thereto have been asserted) or
(y) constituting property being sold or disposed of if Borrower certifies to
Agent that the sale or disposition is made in compliance with the provisions of
this Agreement (and Agent may rely in good faith conclusively on any such
certificate, without further inquiry).

(ii)       Confirmation of Authority; Execution of Releases. Without in any
manner limiting Agent’s authority to act without any specific or further
authorization or consent by Lenders (as set forth in Section 8.2(i)(i)), each
Lender agrees to confirm in writing, upon request by Agent or Borrower, the
authority to release any Collateral conferred upon Agent under clauses (x) and
(y) of Section 8.2(i)(i). Upon receipt by Agent of any required confirmation
from the Requisite Lenders of its authority to release any particular item or
types of Collateral, and upon at least five (5) Business Days’ prior written
request by Borrower, Agent shall (and is hereby irrevocably authorized by
Lenders to) execute such documents as may be necessary to evidence the release
of the Liens granted to Agent upon such Collateral; provided, however, that
(x) Agent shall not be required to execute any such document on terms which, in
Agent’s opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty, and (y) such release shall not in any manner discharge, affect or
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obligations of any Credit Party, in respect of), all interests retained by any
Credit Party, including the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.

 

(iii)      Absence of Duty. Agent shall have no obligation whatsoever to any
Lender or any other Person to assure that the property covered by the Collateral
Documents exists or is owned by Borrower or any other Credit Party or is cared
for, protected or insured or has been encumbered or that the Liens granted to
Agent have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this Section 8.2(i) or in any of the Loan
Documents, it being understood and agreed that in respect of the property
covered by the Collateral Documents or any act, omission or event related
thereto, Agent may act in any manner it may deem reasonably appropriate, in its
discretion, given Agent’s own interest in property covered by the Collateral
Documents as one of the Lenders and that Agent shall have no duty or liability
whatsoever to any of the other Lenders, provided, that Agent shall exercise the
same care which it would in dealing with loans for its own account.

(j)        Agency for Perfection. Agent and each Lender hereby appoint each
other Lender as agent for the purpose of perfecting Agent’s security interest in
assets which, in accordance with the PPSA and laws of similar effect in any
applicable jurisdiction, can be perfected by possession or control. Should any
Lender (other than Agent) obtain possession or control of any such assets, such
Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor,
shall deliver such assets to Agent or in accordance with Agent’s instructions or
transfer control to Agent in accordance with Agent’s instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Collateral Document or to realize upon any collateral security for
the Loans unless instructed to do so by Agent in writing, it being understood
and agreed that such rights and remedies may be exercised only by Agent.

For the purposes of holding any security granted by Borrower or any other Credit
Party pursuant to the laws of the Province of Quebec to secure payment of any
debenture issued by Borrower or any Credit Party, Agent is hereby appointed to
act as the person holding the power of attorney (fondé de pouvoir) pursuant to
article 2692 of the Civil Code of Quebec to act on behalf of each of the
debentureholders, initially namely GE Finance in its capacity as Agent for the
Secured Parties. Each Person who is or becomes a Lender and each assignee holder
of any debenture issued by Borrower or any Credit Party shall be deemed to
ratify the power of attorney (fondé de pouvoir) granted to Agent hereunder by
its execution of an Assignment Agreement. Agent agrees to act in such capacity.
Each party hereto agrees that, notwithstanding Section 32 of An Act respecting
the special powers of legal persons (Quebec), Agent, as fondé de pouvoir, shall
also be entitled to act as a debentureholder and to acquire and/or be the
pledgee of any debentures or other titles of indebtedness to be issued under any
deed of hypothec executed by or on behalf of Borrower or any other Credit Party.

(k)        Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default except with respect
to defaults in the payment of principal, interest and Fees required to be paid
to Agent for the account of Lenders, unless Agent shall have received written
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Agreement, describing such Default or Event of Default and stating that such
notice is a “notice of default”. Agent will use reasonable efforts to notify
each Lender of its receipt of any such notice, unless such notice is with
respect to defaults in the payment of principal, interest and fees, in which
case Agent will notify each Lender of its receipt of such notice. Agent shall
take such action with respect to such Default or Event of Default as may be
requested by Requisite Lenders in accordance with Section 6. Unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interests
of Lenders.

(l)        Lender Actions Against Collateral. Each Lender agrees that it will
not take any action, nor institute any actions or proceedings, with respect to
the Loans, against Borrower or any other Credit Party hereunder or under the
other Loan Documents or against any of the Real Estate encumbered by Mortgages
without the consent of the Requisite Lenders. With respect to any action by
Agent to enforce the rights and remedies of Agent and the Lenders under this
Agreement and the other Loan Documents, each Lender hereby consents to the
jurisdiction of the court in which such action is maintained, and agrees to
deliver its Notes to Agent to the extent necessary to enforce the rights and
remedies of Agent for the benefit of the Lenders under the Mortgages in
accordance with the provisions hereof.

8.3       Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrower at any time or from time to time, with reasonably prompt
subsequent notice to Borrower (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any and all
(A) balances held by such Lender at any of its offices for the account of
Borrower (regardless of whether such balances are then due to Borrower), and
(B) other property at any time held or owing by such Lender to or for the credit
or for the account of Borrower, against and on account of any of the
Obligations; except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender exercising a right to set off shall
purchase for cash (and the other Lenders shall sell) interests in each of such
other Lender’s Pro Rata Share of the Obligations as would be necessary to cause
all Lenders to share the amount so set off with each other Lender in accordance
with their respective Pro Rata Shares. Borrower agrees, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to amounts in excess of its Pro Rata Share of the Obligations and upon doing so
shall deliver such amount so set off to the Agent for the benefit of all Lenders
in accordance with their Pro Rata Shares.

8.4       Disbursement of Funds. Agent may, on behalf of Lenders, disburse funds
to Borrower for Loans requested. Each Lender shall reimburse Agent on demand for
all funds disbursed on its behalf by Agent, or if Agent so requests, each Lender
will remit to Agent its Pro Rata Share of any Loan before Agent disburses same
to Borrower. If Agent elects to require that each Lender make funds available to
Agent prior to a disbursement by Agent to Borrower, Agent shall advise each
Lender by telephone or fax of the amount of such Lender’s Pro Rata Share of the
Loan requested by Borrower no later than 1:00 p.m. (Toronto time) on the Funding
Date applicable thereto, and each such Lender shall pay Agent such Lender’s Pro
Rata Share of such requested Loan, in same day funds, by wire transfer to
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any Lender fails to pay the amount of its Pro Rata Share within one (1) Business
Day after Agent’s demand, Agent shall promptly notify Borrower, and Borrower
shall immediately repay such amount to Agent. Any repayment required pursuant to
this Section 8.4 shall be without premium or penalty. Nothing in this Section
8.4 or elsewhere in this Agreement or the other Loan Documents, including the
provisions of Section 8.5, shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights that Agent or Borrower may have
against any Lender as a result of any default by such Lender hereunder.

8.5

Disbursements of Advances; Payment.

 

(a)

Advances; Payments.

 

(i)        Revolving Lenders shall refund or participate in the Swing Line Loan
in accordance with clauses (iii) and (iv) of Section 1.1(c). If the Swing Line
Lender declines to make a Swing Line Loan or if Swing Line Availability is zero,
Agent shall notify Revolving Lenders, promptly after receipt of a Notice of
Revolving Credit Advance and in any event prior to 1:00 p.m. (Toronto time) on
the date such Notice of a Revolving Credit Advance is received, by fax,
telephone or other similar form of transmission. Each Revolving Lender shall
make the amount of such Lender’s Pro Rata Share of such Revolving Credit Advance
available to Agent in same day funds by wire transfer to Agent’s account as set
forth in Section 1.1(e) not later than 3:00 p.m. (Toronto time) on the requested
Funding Date in the case of an Index Rate Loans and not later than 11:00 a.m.
(Toronto time) on the requested Funding Date in the case of a BA Rate Loan.
After receipt of such wire transfers (or, in the Agent’s sole discretion, before
receipt of such wire transfers), subject to the terms hereof, Agent shall make
the requested Revolving Credit Advance to Borrower. All payments by each
Revolving Lender shall be made without setoff, counterclaim or deduction of any
kind.

(ii)       At least once each calendar week or more frequently at Agent’s
election (each, a “Settlement Date”), Agent shall advise each Lender by
telephone or fax of the amount of such Lender’s Pro Rata Share of principal,
interest and Fees paid for the benefit of Lenders with respect to each
applicable Loan. Provided that each Lender has funded all payments and Advances
required to be made by it and purchased all participations required to be
purchased by it under this Agreement and the other Loan Documents as of such
Settlement Date, Agent shall pay to each Lender such Lender’s Pro Rata Share of
principal, interest and Fees paid by Borrower since the previous Settlement Date
for the benefit of such Lender on the Loans held by it. Such payments shall be
made by wire transfer to such Lender’s account (as specified by such Lender in
Annex D or the applicable Assignment Agreement) not later than 2:00 p.m.
(Toronto time) on the next Business Day following each Settlement Date. To the
extent that any Lender (a “Non-Funding Lender”) has failed to fund all such
payments and Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding shortfall against that
Non-Funding Lender’s Pro Rata Share of all payments received from Borrower.

(b)        Availability of Lender’s Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each Funding Date. If such Pro Rata Share is not, in fact,
paid to Agent by such Revolving Lender when due, Agent will be entitled to
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such Revolving Lender without setoff, counterclaim or deduction of any kind. If
any Revolving Lender fails to pay the amount of its Pro Rata Share forthwith
upon Agent’s demand, Agent shall promptly notify Borrower and Borrower shall
immediately repay such amount to Agent. Nothing in this Section 8.5(b) or
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Revolving Lender or to relieve
any Revolving Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that Borrower may have against any Revolving Lender as a
result of any default by such Revolving Lender hereunder. To the extent that
Agent advances funds to Borrower on behalf of any Revolving Lender and is not
reimbursed therefor on the same Business Day as such Advance is made, Agent
shall be entitled to retain for its account all interest accrued on such Advance
until reimbursed by the applicable Revolving Lender.

(c)

Return of Payments.

(i)        If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.

(ii)       If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of this Agreement or any other Loan Document, Agent will not
be required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.

(d)       Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Revolving Credit Advance or any payment required by it hereunder, or to purchase
any participation in any Swing Line Loan to be made or purchased by it on the
date specified therefor shall not relieve any other Lender (each such other
Revolving Lender, an “Other Lender”) of its obligations to make such Advance or
purchase such participation on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make an
Advance, purchase a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a “Lender” or a “Revolving Lender” (or be included in the
calculation of “Requisite Lenders” or “Requisite Revolving Lenders” hereunder)
for any voting or consent rights under or with respect to any Loan Document.

(e)       Dissemination of Information. Agent shall use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent
from, or delivered by Agent to, any Credit Party, with notice of any Event of
Default of which Agent has actually become aware and with notice of any action
taken by Agent following any Event of Default; provided, that Agent shall not be
liable to any Lender for any failure to do so.

 

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(f)        Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent or Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of Agent or Requisite Lenders. Agent is authorized to issue all
notices to be issued by or on behalf of the Lenders with respect to any
Subordinated Debt.

SECTION 9.

MISCELLANEOUS

9.1       Indemnities. Borrower agrees to indemnify, pay, and hold Agent, each
Lender, each L/C Issuer and their respective officers, directors, employees,
agents, and attorneys (the “Indemnitees”) harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs and expenses (including all reasonable fees and expenses of
counsel to such Indemnitees) of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Indemnitee as a result of such
Indemnitees being a party to this Agreement or the transactions consummated
pursuant to this Agreement or otherwise relating to any of the Related
Transactions; provided, that Borrower shall have no obligation to an Indemnitee
hereunder with respect to liabilities to the extent resulting from the gross
negligence or willful misconduct of that Indemnitee as determined by a court of
competent jurisdiction. If and to the extent that the foregoing undertaking may
be unenforceable for any reason, Borrower agrees to make the maximum
contribution to the payment and satisfaction thereof which is permissible under
applicable law.

9.2

Amendments and Waivers.

(a)       Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Borrower, and by Requisite Lenders, Requisite Revolving
Lenders, or all affected Lenders, as applicable. Except as set forth in clauses
(b) and (c) below, all such amendments, modifications, terminations or waivers
requiring the consent of any Lenders shall require the written consent of
Requisite Lenders.

(b)       No amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement that increases the percentage advance
rates set forth in the definition of the Borrowing Base or that makes less
restrictive the nondiscretionary criteria for exclusion from Eligible Accounts,
Eligible Inventory, Eligible In-Transit Inventory, Eligible Processor Inventory,
Eligible Returned Inventory and Eligible Remnant Inventory set forth in Exhibit
4.2(d), shall be effective unless the same shall be in writing and signed by
Agent, Requisite Revolving Lenders and Borrower. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement that waives compliance with the conditions precedent set forth in
Section 7.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Requisite Revolving Lenders and Borrower. Notwithstanding anything

 

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contained in this Agreement to the contrary, no waiver or consent with respect
to any Default or any Event of Default shall be effective for purposes of the
conditions precedent to the making of Loans or the incurrence of Letter of
Credit Obligations set forth in Section 7.2 unless the same shall be in writing
and signed by Agent, Requisite Revolving Lenders and Borrower.

(c)       No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby:
(i) increase the principal amount of any Lender’s Commitment (which action shall
be deemed to directly affect only the applicable Lenders); (ii) reduce the
principal of, rate of interest on or Fees payable with respect to any Loan or
Letter of Credit Obligations of any affected Lender; (iii) extend the final
maturity date of the principal amount of any Loan of any affected Lender;
(iv) waive, forgive, defer, extend or postpone any payment of interest or Fees
as to any affected Lender (which action shall be deemed only to affect those
Lenders to whom such payments are made); (v) except as otherwise permitted by
the Loan Documents, release any Guarantee or, except as otherwise permitted in
Section 3.7, release Collateral with a book value exceeding 5% of the book value
of all assets in the aggregate in any one (1) year (which action shall be deemed
to directly affect all Lenders); (vi) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Loans that shall be required
for Lenders or any of them to take any action hereunder; and (vii) amend or
waive this Section 9.2 or the definitions of the terms “Requisite Lenders” or
“Requisite Revolving Lenders” insofar as such definitions affect the substance
of this Section 9.2. Furthermore, no amendment, modification, termination or
waiver affecting the rights or duties of Agent or L/C Issuers under this
Agreement or any other Loan Document shall be effective unless in writing and
signed by Agent or L/C Issuers, as the case may be, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 9.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.

9.3       Notices. Any notice or other communication required shall be in
writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or Canada Post
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by fax, on the date of transmission if transmitted
on a Business Day before 4:00 p.m. (Toronto Time); (c) if delivered by
electronic mail (with such electronic mail promptly confirmed by delivery of a
copy by personal delivery or Canada Post as otherwise provided in this Section
11.10), upon receipt, provided, that such notice, demand, request, consent,
approval, declaration or other communication shall be in “pdf” format and shall
include the actual signature of the party sending such communication if that
signature would be required or customary if the communication was delivered by
telecopier; (d) if delivered by overnight courier, one (1) Business Day after
delivery to the courier properly addressed; or (e) if delivered by Canada Post,
four (4) Business Days after deposit with postage prepaid and properly
addressed.

 

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Notices shall be addressed as follows:

If to Borrower:

Playtex Limited

6363 Northam Drive

Malton, ON

L4V 1N5

 

ATTN: Frank Fallico

Fax: 905-677-7965

 

With a copy to:

Playtex Products, Inc.

50 N. DuPont Hwy., PO Box 7016

Dover, DE 19903-156

 

ATTN: John McColgan

Fax: 302-678-6935

 

and

 

(any notices of default

FaskenMartineau DuMoulin LLP

 

or Events of Default only)

66 Wellington Street West

 

 

Box 20, Toronto-Dominion Centre

 

Toronto, Ontario

 

 

M5K 1N6

 

 

ATTN: Jon Holmstrom

Fax: (416) 364-7813

 

 

If to Agent or GE Finance:

GE Canada Finance Holding Company

11 King Street West

Suite 1500

Toronto, Ontario

M5H 4C7

 

ATTN: Jack Morrone, Account Manager

Fax: (416) 202-6226

 

 

 

 

With a copy to:

GENERAL ELECTRIC CAPITAL CORPORATION

GE Global Sponsor Finance

201 Merritt 7

6th Floor

Norwalk, CT 06856-5201

 

ATTN: Corporate Counsel

Commercial Finance – GE Global Sponsor Finance

Fax: (203) 956-4216

 

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and

 

GENERAL ELECTRIC CAPITAL

CORPORATION

500 West Monroe Street

Chicago, Illinois 60661

 

ATTN: Account Manager

Commercial Finance – GE Global Sponsor Finance

Fax: (312) 441-7211

 

and

 

McMILLAN BINCH MENDELSOHN LLP

BCE Place, Suite 4400

181 Bay Street

Toronto, Ontario

M5J 2T3

 

ATTN: Peter A. Willis

Fax: (416) 865-7048

 

If to a Lender:

To the address set forth on the signature page hereto or in the applicable
Assignment Agreement

 

9.4       Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of Agent or any Lender to exercise, nor any partial exercise
of, any power, right or privilege hereunder or under any other Loan Documents
shall impair such power, right, or privilege or be construed to be a waiver of
any Default or Event of Default. All rights and remedies existing hereunder or
under any other Loan Document are cumulative to and not exclusive of any rights
or remedies otherwise available.

9.5       Marshaling; Payments Set Aside. Neither Agent nor any Lender shall be
under any obligation to marshal any assets in payment of any or all of the
Obligations. To the extent that Borrower makes payment(s) or Agent enforces its
Liens or Agent or any Lender exercises its right of set-off, and such payment(s)
or the proceeds of such enforcement or set-off is subsequently invalidated,
declared to be fraudulent or preferential, set aside, or required to be repaid
by anyone, then to the extent of such recovery, the Obligations or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.

9.6       Severability. The invalidity, illegality, or unenforceability in any
jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents.

 

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9.7       Lenders’ Obligations Several; Independent Nature of Lenders’ Rights.
The obligation of each Lender hereunder is several and not joint and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.

9.8       Headings. Section and subsection headings are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.

9.9       Applicable Law. THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS
WHICH DOES NOT EXPRESSLY SET FORTH APPLICABLE LAW SHALL BE GOVERNED BY AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE PROVINCE
OF ONTARIO AND THE LAWS OF CANADA APPLICABLE THEREIN, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.

9.10     Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
except that Borrower may not assign its rights or obligations hereunder without
the written consent of all Lenders.

9.11     No Fiduciary Relationship; Limited Liability. No provision in the Loan
Documents and no course of dealing between the parties shall be deemed to create
any fiduciary duty owing to any Credit Party by Agent or any Lender. Credit
Parties agree that neither Agent nor any Lender shall have liability to any
Credit Party (whether sounding in tort, contract or otherwise) for losses
suffered by Credit Parties in connection with, arising out of, or in any way
related to the transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in connection therewith,
unless and to the extent that it is

9.12     Construction. Agent, each Lender, Borrower and each other Credit Party
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review the Loan Documents with
its legal counsel and that the Loan Documents shall be construed as if jointly
drafted by Agent, each Lender, Borrower and each other Credit Party.

9.13      Confidentiality. Agent and each Lender agree to exercise their best
efforts to keep confidential any non-public information delivered pursuant to
the Loan Documents and not

 

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determined that such losses resulted from the gross negligence or willful
misconduct of the party from which recovery is sought as determined by a final
non-appealable order by a court of competent jurisdiction. Neither Agent nor any
Lender shall have any liability with respect to, and each Credit Party hereby
waives, releases and agrees not to sue for, any special, indirect or
consequential damages suffered by such Credit Party in connection with, arising
out of, or in any way related to the Loan Documents or the transactions
contemplated thereby.

to disclose such information to Persons other than to potential assignees or
participants or to Persons employed by or engaged by Agent a Lender or a
Lender’s assignees or participants including attorneys, auditors, professional
consultants, rating agencies, insurance industry associations and portfolio
management services who agree to maintain the confidentiality of such
information in accordance with this Section 9.13. The confidentiality provisions
contained in this Section 9.13 shall not apply to disclosures (i) required to be
made by Agent or any Lender to any regulatory or governmental agency or pursuant
to legal process or (ii) consisting of general portfolio information that does
not identify Borrower. The obligations of Agent and Lenders under this Section
9.13 shall supersede and replace the obligations of Agent and Lenders under any
confidentiality agreement in respect of this financing executed and delivered by
Agent or any Lender prior to the date hereof.

9.14     CONSENT TO JURISDICTION. EACH CREDIT PARTY, AGENT AND LENDERS HEREBY
CONSENTS AND AGREES THAT THE COURTS OF THE PROVINCE OF ONTARIO SHALL HAVE
NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER.
EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER, CREDIT PARTIES, AGENT AND LENDERS HEREBY WAIVE PERSONAL SERVICE
OF ANY AND ALL PROCESS AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
UPON BORROWER, CREDIT PARTIES, AGENT AND LENDERS BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH PARTY, AT THE ADDRESS SET
FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS
AFTER THE SAME HAS BEEN POSTED.

9.15      WAIVER OF JURY TRIAL. BORROWER, CREDIT PARTIES, AGENT AND EACH LENDER
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER, CREDIT PARTIES, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS
RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. BORROWER, CREDIT PARTIES, AGENT AND EACH LENDER WARRANT AND
REPRESENT THAT EACH HAS HAD THE

 

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OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

9.16     Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Letters of
Credit and the execution and delivery of the Notes. Notwithstanding anything in
this Agreement or implied by law to the contrary, the agreements of Borrower set
forth in Sections 1.3(e), 1.11, 1.12, and 9.1 shall survive the repayment of the
Obligations and the termination of this Agreement.

9.17     Entire Agreement. This Agreement, the Notes and the other Loan
Documents embody the entire agreement among the parties hereto and supersede all
prior commitments, agreements, representations, and understandings, whether oral
or written, relating to the subject matter hereof, and may not be contradicted
or varied by evidence of prior, contemporaneous, or subsequent oral agreements
or discussions of the parties hereto. All Exhibits, Schedules and Annexes
referred to herein are incorporated in this Agreement by reference and
constitute a part of this Agreement.

9.18     Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one in the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.

9.19

Replacement of Lenders.

(a)       Within fifteen (15) days after receipt by Borrower of written notice
and demand from any Lender for payment pursuant to Section 1.11 or 1.12 or, as
provided in this Section 9.19(c), in the case of certain refusals by any Lender
to consent to certain proposed amendments, modifications, terminations or
waivers with respect to this Agreement that have been approved by Requisite
Lenders, Requisite Revolving Lenders or all affected Lenders, as applicable (any
such Lender demanding such payment or refusing to so consent being referred to
herein as an “Affected Lender”), Borrower may, at its option, notify Agent and
such Affected Lender of its intention to do one of the following:

(i)         Borrower may obtain, at Borrower’s expense, a replacement Lender
(“Replacement Lender”) for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Agent. In the event Borrower obtains a Replacement
Lender that will purchase all outstanding Obligations owed to such Affected
Lender and assume its Commitments hereunder within ninety (90) days following
notice of Borrower’s intention to do so, the Affected Lender shall sell and
assign all of its rights and delegate all of its obligations under this
Agreement to such Replacement Lender in accordance with the provisions of
Section 8.1, provided that Borrower has reimbursed such Affected Lender for any
administrative fee payable pursuant to Section 8.1 and, in any case where such
replacement occurs as the result of a demand for payment pursuant to Section
1.11 or 1.12, paid all amounts required to be paid to such

 

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Affected Lender pursuant to Section 1.11 or 1.12 through the date of such sale
and assignment; or

(ii)       Borrower may, with Agent’s consent, prepay in full all outstanding
Obligations owed to such Affected Lender and terminate such Affected Lender’s
Pro Rata Share of the Revolving Loan Commitment, in which case the Revolving
Loan Commitment will be reduced by the amount of such Pro Rata Share. Borrower
shall, within ninety (90) days following notice of its intention to do so,
prepay in full all outstanding Obligations owed to such Affected Lender
(including, in any case where such prepayment occurs as the result of a demand
for payment for increased costs, such Affected Lender’s increased costs for
which it is entitled to reimbursement under this Agreement through the date of
such prepayment), and terminate such Affected Lender’s obligations under the
Revolving Loan Commitment.

(b)       In the case of a Non-Funding Lender pursuant to Section 8.5(a), at
Borrower’s request, Agent, any Qualified Assignee or any Person acceptable to
Agent shall have the right with Agent’s consent (not to be unreasonably
withheld, conditioned or delayed) to purchase (but the Agent shall have no
obligation to make any such purchase and may or may not make any such purchase
in its sole discretion) from any Non-Funding Lender, and each Non-Funding Lender
agrees that it shall, at Agent’s request, sell and assign to Agent or such
Person, all of the Loans and Commitments of that Non-Funding Lender for an
amount equal to the principal balance of all Loans held by such Non-Funding
Lender and all accrued interest and Fees with respect thereto through the date
of sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement.

(c)       If, in connection with any proposed amendment, modification, waiver or
termination pursuant to Section 9.2 (a “Proposed Change”) requiring the consent
of all affected Lenders, the consent of Requisite Lenders is obtained, but the
consent of other Lenders whose consent is required is not obtained (any such
Lender whose consent is not obtained as described in this clause being referred
to as a “Non-Consenting Lender”), then, so long as Agent is not a Non-Consenting
Lender, at Borrower’s request, Agent, any Qualified Assignee or any Person
reasonably acceptable to Agent, shall have the right with Agent’s consent (not
to be unreasonably withheld, conditioned or delayed) to purchase (but the Agent
shall have no obligation to make any such purchase and may or may not make any
such purchase in its sole discretion) from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent’s request, sell and
assign to Agent or such Person, all of the Loans and Commitments of such
Non-Consenting Lenders for an amount equal to the principal balance of all Loans
held by the Non-Consenting Lenders and all accrued interest and Fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.

 

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9.20     Delivery of Termination Statements and Mortgage Releases. Upon payment
in full in cash and performance of all of the Obligations (other than
indemnification Obligations), termination of the Commitments and a release of
all claims against Agent and Lenders, and so long as no suits, actions
proceedings, or claims are pending or threatened against any Indemnitee
asserting any damages, losses or liabilities that are indemnified liabilities
hereunder, Agent shall deliver to Borrower termination statements, mortgage
releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.

9.21

Judgment Currency.

(a)       If, for the purpose of obtaining or enforcing judgment against any
Credit Party in any court in any jurisdiction, it becomes necessary to convert
into any other currency (such other currency being hereinafter in this Section
9.21 referred to as the “Judgment Currency”) an amount due under any Loan
Document in any currency (the “Obligation Currency”) other than the Judgment
Currency, the conversion shall be made at the rate of exchange prevailing on the
Business Day immediately preceding the date of actual payment of the amount due,
in the case of any proceeding in the courts of the Province of Ontario or in the
courts of any other jurisdiction that will give effect to such conversion being
made on such date, or the date on which the judgment is given, in the case of
any proceeding in the courts of any other jurisdiction (the applicable date as
of which such conversion is made pursuant to this Section 9.21 being hereinafter
in this Section 9.21 referred to as the “Judgment Conversion Date”).

(a)       If, in the case of any proceeding in the court of any jurisdiction
referred to in Section 9.21(a), there is a change in the rate of exchange
prevailing between the Judgment Conversion Date and the date of actual receipt
for value of the amount due, the applicable Credit Party or Parties shall pay
such additional amount (if any, but in any event not a lesser amount) as may be
necessary to ensure that the amount actually received in the Judgment Currency,
when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of the Judgment Currency stipulated in the judgment or judicial
order at the rate of exchange prevailing on the Judgment Conversion Date. Any
amount due from any Credit Party under this Section 9.21(b) shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
amounts due under or in respect of any of the Loan Documents.

(b)       The term “rate of exchange” in this Section 9.21 means the rate of
exchange at which Agent, on the relevant date at or about 12:00 noon (Toronto
time), would be prepared to sell, in accordance with Agent’s normal course
foreign currency exchange practices, the Obligation Currency against the
Judgment Currency. Documents.

(c)       Unless otherwise specified, all references to dollar amounts in this
Agreement shall mean Canadian Dollars.

 

[Signature Pages Follow]

 

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Exhibit 10(u)

 

 

Witness the due execution hereof by the respective duly authorized officers of
the undersigned as of the date first written above.

 

PLAYTEX LIMITED, as Borrower

 

By:

/s/ JOHN J. MCCOLGAN

Name:

John J. McColgan            

Title:

Vice-President                  

 

 

GE CANADA FINANCE HOLDING
COMPANY, as Agent and a Lender

 

By:

/s/ JACK MORRONE

Its Duly Authorized Signatory

 

 

Signature Page to Credit Agreement

 

 

--------------------------------------------------------------------------------

Exhibit 10(u)

 

 

ANNEX A

to

CREDIT AGREEMENT

DEFINITIONS

Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings and
all references to Sections, Exhibits, Schedules or Annexes in the following
definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:

“Account Debtor” means any Person who may become obligated to any Credit Party
under, with respect to, or on account of an Account.

“Accounting Changes” means: (a) changes in accounting principles required by
GAAP and implemented by Borrower; (b) changes in accounting principles
recommended by Borrower’s certified public accountants and implemented by
Borrower; and (c) changes in carrying value of Borrower’s or any of its
Subsidiaries’ assets, liabilities or equity accounts resulting from (i) the
application of purchase accounting principles (A.P.B. 16 and/or 17 and EITF
88-16 and FASB 109) to the Related Transactions or (ii) as the result of any
other adjustments that, in each case, were applicable to, but not included in,
the Pro Forma.

“Accounts” means each and every “account,” as such term is defined in the PPSA
and all “claims” for purpose of the Civil Code of Quebec, now owned or hereafter
acquired by any Credit Party, including (a) all accounts receivable, other
receivables, book debts, claims and other forms of obligations (other than
obligations evidenced by chattel paper, securities or Instruments) now owned or
hereafter received or acquired by or belonging or owing to Borrower, whether
arising out of goods sold or services rendered by it or from any other
transaction (including any such obligations which may be characterized as an
account or contract right under the PPSA), (b) all of each Credit Party’s rights
in, to and under all purchase orders or receipts now owned or hereafter acquired
by it for goods or services, (c) all of each Credit Party’s rights to any goods
represented by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all rights to payment due or to
become due to any Credit Party for property sold, leased, licensed, assigned or
otherwise disposed of, for a policy of insurance issued or to be issued, for a
secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), and (e) all collateral security and guarantees of any kind, now or
hereafter in existence, given by any Account Debtor or other Person with respect
to any of the foregoing.

“Advances” means any Revolving Credit Advance or Swing Line Advance, as the
context may require.

“Affected Lender” has the meaning ascribed to it in Section 9.19(a).

 

 

 

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“Affiliate” means, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or
other fiduciary, 10% or more of the Stock having ordinary voting power in the
election of directors of such Person, (b) each Person that controls, is
controlled by or is under common control with such Person, (c) each of such
Person’s officers, directors, joint venturers, partners and trustees and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, “control” of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term “Affiliate” shall specifically
exclude Agent and each Lender.

“Agent” means GE Finance in its capacity as Agent for Lenders or its successor
appointed pursuant to Section 8.2.

“Agreement” means this Credit Agreement (including all schedules, subschedules,
annexes and exhibits hereto), as the same may be amended, supplemented, restated
or otherwise modified from time to time.

“Applicable Margins” means collectively the Applicable Revolver Index Margin and
the Applicable Revolver BA Rate Margin.

“Applicable Revolver BA Margin” means the per annum interest rate from time to
time in effect and payable in addition to the BA Rate applicable to the
Revolving Loan, as determined by reference to Section 1.2(a).

“Applicable Revolver Index Margin” means the per annum interest rate margin from
time to time in effect and payable in addition to the Index Rate applicable to
the Revolving Loan, as determined by reference to Section 1.2(a).

“Asset Disposition” means the disposition whether by sale, lease, transfer or
other voluntary disposition of any of the following: (a) any of the Stock or
other equity or ownership interest of any of Borrower’s Subsidiaries or (b) any
or all of the assets of Borrower or any of its Subsidiaries other than sales of
Inventory in the ordinary course of business.

“Assignment Agreement” has the meaning ascribed to it in Section 8.1(a).

“BA Breakage Cost” means an amount equal to the amount of any losses, expenses,
liabilities (other than any loss of margin over funding costs or anticipated
profit) that any Lender may sustain as a result of (i) any default by Borrower
in making any borrowing of, conversion into or continuation of any BA Rate Loan
following Borrower’s delivery to Agent of any BA Rate Loan request in respect
thereof or (ii) any payment of a BA Rate Loan on any day that is not the last
day of the BA Period applicable thereto (regardless of the source of such
prepayment and whether voluntary, by acceleration or otherwise). In any such
event, such loss shall equal the excess, if any, of such Lender’s cost of
obtaining funds for such BA Rate Loan for the period from such event until the
end of such Interest Period over the amount of interest likely to be realized in
redeploying the funds released or not utilized as a result of such event for
such period. For purposes of calculating amounts payable to a Lender under
Section 1.3(d), each

 

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Lender shall be deemed to have actually funded its relevant BA Rate Loan through
the purchase of a deposit bearing interest at BA in an amount equal to the
amount of that BA Rate Loan and having a maturity and repricing characteristics
comparable to the relevant BA Period; provided, however, that each Lender may
fund each of its BA Rate Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
Section 1.3(d).

“BA Period” means, with respect to any BA Rate Loan bearing interest at a rate
based on the BA Rate, each period commencing on a Business Day selected by
Borrower pursuant to the Agreement and ending one, two or three months
thereafter as selected by Borrower’s irrevocable notice to Agent as set forth in
Section 1.2(e); provided, that the foregoing provision relating to BA Periods is
subject to the following:

(a)       any BA Period that would otherwise extend beyond the Commitment
Termination Date shall end on the Business Day immediately preceding such
Commitment Termination Date;

(b)       Borrower shall select BA Periods so as not to require a payment or
prepayment of any BA Rate Loan during a BA Period for such Revolving Loan; and

(c)       Borrower shall select BA Periods so there shall be no more than five
separate BA Rate Loans in existence at any one time.

“BA Rate Loans” means a Loan or any portion thereof bearing interest by
reference to the BA Rate.

“BA Rate” means for each BA Period applicable to a BA Rate Loan, the rate per
annum determined by Agent by reference to the average rate quoted on the Reuters
Monitor Screen (Page CDOR, or such other Page as may replace such Page on such
Screen on the purpose of displaying Canadian interbank bid rates for Canadian
Dollar bankers’ acceptances) applicable to Canadian Dollars bankers’ acceptances
with a term comparable to such BA Period as of 10:00 a.m. (Toronto time) two (2)
Business Days before the first day of such BA Period. If for any reason the
Reuters Monitor Screen rates are unavailable, BA Rate means the rate of interest
determined by Administrative Agent that is equal to the arithmetic mean (rounded
upwards to the nearest basis point) of the rates quoted by The Bank of Nova
Scotia, Royal Bank of Canada and Canadian Imperial Bank of Commerce in respect
of Canadian Dollar bankers’ acceptances with a term comparable to such BA
Period. No adjustment shall be made to account for the difference between the
number of days in a year on which the rates referred to in this definition are
based and the number of days in a year on the basis of which interest is
calculated in the Agreement.

“Bank Rate” means, at any date, the annual rate of interest at which the Bank of
Canada is prepared to make advances, as effective on such date, and as made
public in accordance with Section 21 of the Bank of Canada Act (Canada).

“Borrower” has the meanings ascribed to it in the preamble to the Agreement.

 

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“Borrowing Availability” means as of any date of determination the lesser of
(i) the Maximum Amount and (ii) the sum of (A) the Borrowing Base and (B) the
Borrowing Base (as defined in the US Credit Facility) at such time less the sum
of (i) the Revolving Loan (as defined in the US Credit Facility) outstanding at
such time under the US Credit Facility and (ii) Reserves (as defined in the US
Credit Facility) under the US Credit Facility, in each case, less the sum of
(a) the Revolving Loan then outstanding (including, without duplication, the
outstanding balance of Letter of Credit Obligations and the Swing Line Loan then
outstanding), (b) the Swing Line Loan then outstanding and (c) Reserves required
by Agent in its reasonable credit judgment in accordance with this Agreement.

“Borrowing Base Certificate” has the meaning ascribed to it in Section 4.2(d).

“Borrowing Base” means, as of any date of determination by Agent, from time to
time, an amount equal to the sum at such time of:

(a)

85% of the book value of Eligible Accounts at such time; and

(b)

65% of the book value of Eligible Inventory valued at the lower of cost
(determined on a first-in, first-out basis) or market; and

(c)

50% of the book value of Eligible In-Transit Inventory valued at the lower of
cost (determined on a first-in, first-out basis) or market; and

(d)

50% of the book value of Eligible Returned Inventory valued at the lower of cost
(determined on a first-in, first-out basis) or market; and

(e)

50% of the book value of Eligible Processor Inventory valued at the lower of
cost (determined on a first-in, first-out basis) or market; and

(f)

35% of the book value of Eligible Remnant Inventory valued at the lower of cost
(determined on a first-in, first-out basis) or market;

in each case, less any Reserves established by Agent at such time in accordance
with this Agreement.

“Business Day” means any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in the Province of Ontario and in
the State of New York.

“Canadian Benefit Plans” means any plan, fund, program, or policy, whether oral
or written, formal or informal, funded or unfunded, insured or uninsured,
providing employee benefits, including medical, hospital care, dental, sickness,
accident, disability, life insurance, pension, retirement or savings benefits,
under which the Borrower has any liability with respect to any employee or
former employee, but excluding any Canadian Pension Plans.

“Canadian Dollars” “Dollars”, “Cdn$” or $ shall mean the lawful currency of
Canada.

 

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“Canadian Pension Plans” means each pension plan required to be registered under
Canadian federal or provincial law that is maintained or contributed to by a
Credit Party for its employees or former employees, but does not include the
Canada Pension Plan or the Quebec Pension Plan as maintained by the Government
of Canada or the Province of Quebec, respectively.

“Capital Lease Obligation” means, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.

“Capital Lease” means, with respect to any Person, any lease of any property
(whether real, personal or mixed) by such Person as lessee that, in accordance
with GAAP, would be required to be classified and accounted for as a capital
lease on a balance sheet of such Person.

“Cash Equivalents” means: (i) marketable securities (A) issued or directly and
unconditionally guaranteed as to interest and principal by the Canadian
government or the United States government or (B) issued by any agency of the
Canadian government or the United States government the obligations of which are
backed by the full faith and credit of Canada or the United States,
respectively, in each case maturing within one (1) year after acquisition
thereof; (ii) marketable direct obligations issued by any province of Canada or
any state of the United States of America or any political subdivision of any
such province or state or any public instrumentality thereof, in each case
maturing within one year after acquisition thereof and having, at the time of
acquisition, a rating of at least A-1 from S&P or at least P-1 from Moody’s;
(iii) commercial paper maturing no more than one year from the date of
acquisition and, at the time of acquisition, having a rating of at least A-1
from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’
acceptances issued or accepted by any Lender or by any commercial bank organized
under the laws of Canada or any province thereof or of the United States of
America or any state thereof or the District of Columbia that is at least
(A) ”adequately capitalized” (as defined in the regulations of its primary
federal banking regulator) and (B) has combined capital, surplus and undivided
profits of not less than US$250,000,000, in each case maturing within one year
after issuance or acceptance thereof; and (v) shares of any money market mutual
or similar funds that (A) has substantially all of its assets invested
continuously in the types of investments referred to in clauses (i) through (iv)
above, (B) has net assets of not less than US$500,000,000 and (C) has the
highest rating obtainable from either S&P or Moody’s.

“Change of Control” means any event, transaction or occurrence as a result of
which Playtex US ceases to directly or indirectly own and control all of the
economic and voting rights associated with all of the outstanding capital Stock
of Borrower or (c) Borrower ceases to own and control all of the economic and
voting rights associated with all of the outstanding capital Stock of any of its
Subsidiaries.

“Chargeback Account” means any Account that represents the unpaid portion of a
previously issued invoice which is not paid in full due to adjustments and
offsets arising in the normal course of business and which is carried as an open
Account until verification and

 

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issuance of a credit honoring the adjustment is issued and the amount of such
credit is offset against such Account or until such Account is paid in full by
the applicable Account Debtor.

“Charges” means all Taxes assessed, levied or imposed against a Credit Party or
upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees,
payroll, income or gross receipts of any Credit Party, (d) any Credit Party’s
ownership or use of any properties or other assets, or (e) any other aspect of
any Credit Party’s business.

“Chattel Paper” means any “chattel paper,” as such term is defined in the PPSA,
including electronic chattel paper, now owned or hereafter acquired by any
Credit Party, wherever located.

“Closing Checklist” means the schedule, including all appendices, exhibits or
schedules thereto, listing certain documents and information to be delivered in
connection with the Agreement, the other Loan Documents and the transactions
contemplated thereunder, substantially in the form attached hereto as Annex C.

“Closing Date” means (, 2005.

“Code” means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided, further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Agent’s or any Lender’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies
and for purposes of definitions related to such provisions.

“Collateral” means the property covered by the Security Agreement, the Mortgages
and the other Collateral Documents and any other property, real or personal,
tangible or intangible, movable or immovable, of the Borrower or any other
Credit Party or any Guarantor, now existing or hereafter acquired, that may at
any time be or become subject to a security interest or Lien in favour of Agent,
on behalf of itself and Lenders, to secure the Obligations or any portion
thereof.

“Collateral Documents” means the Security Agreement, the Pledge Agreement, the
Guarantees, the Mortgages, the US Security Agreement, the Patent Security
Agreement, the Trademark Security Agreement, the Copyright Security Agreement
and all similar agreements entered into guaranteeing payment of, or granting a
Lien upon property as security for payment of, the Obligations or any portion
thereof.

“Commitment Termination Date” means the earliest of (a) February 19, 2009, (b)
termination of the US Credit Facility, (c) the date of termination of Lenders’
obligations to make Advances and to incur Letter of Credit Obligations or permit
existing Loans to remain outstanding pursuant to Section 6.3, and (d) the date
of (i) indefeasible prepayment in full in cash

 

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by Borrower of the Loans, (ii) the cancellation and return (or stand-by
guarantee) of all Letters of Credit or the cash collateralization of all Letter
of Credit Obligations pursuant to Section 1.5(f), and (iii) the permanent
reduction of the Commitments to zero dollars ($0).

“Commitments” means (a) as to any Lender, such Lender’s Revolving Loan
Commitment as set forth on Annex B to the Agreement or in the most recent
Assignment Agreement executed by such Lender and (b) as to all Lenders, the
aggregate of all Lenders’ Revolving Loan Commitments, which aggregate commitment
shall be Twenty Million Dollars ($20,000,000) on the Closing Date, as such
Commitments may be reduced, amortized or adjusted from time to time in
accordance with the Agreement.

“Compliance Certificate” has the meaning ascribed to it in Section 4.2(k).

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability of that Person: (i) with respect to Guaranteed Indebtedness and with
respect to any Indebtedness, lease, dividend or other obligation of another
Person if the purpose or intent of the Person incurring such liability, or the
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (ii) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; (iii) under
any foreign exchange contract, currency swap agreement, interest rate swap
agreement or other similar agreement or arrangement designed to alter the risks
of that Person arising from fluctuations in currency values or interest rates,
(iv) any agreement, contract or transaction involving commodity options or
future contracts, (v) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement, or
(vi) pursuant to any agreement to purchase, repurchase or otherwise acquire any
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.

“Contractual Obligations” means, as applied to any Person, any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its material
properties is bound or to which it or any of its material properties is subject
including the Related Transactions Documents.

“Copyright License” means any and all rights now owned or hereafter acquired by
any Credit Party or Guarantor under any written agreement granting any right to
use any Copyright or Copyright registration.

“Copyright Security Agreement” means the Copyright Security Agreement made in
favor of Agent, on behalf of itself and Lenders, by Playtex US.

“Copyrights” means all of the following now owned or hereafter adopted or
acquired by any Credit Party or Guarantor: (a) all copyrights and intangibles of
like nature

 

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(whether registered or unregistered) now owned or existing or hereafter adopted
or acquired, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the Canadian Copyright Office or in any similar office or agency in any other
country or any political subdivision thereof; and (b) all reissues, extensions
or renewals thereof.

“Credit Parties” means Borrower and each of its Subsidiaries.

“Dating Account” means an Account arising from the sale of “Sun Care” products
with payment terms consistent with practices thereof as in effect on the Closing
Date.

“DBRS” means Dominion Bond Rating Service Limited, or any successor.

“Default” means any event that, with the passage of time or notice or both,
would, unless cured or waived, become an Event of Default.

“Default Rate” has the meaning ascribed to it in Section 1.2(d).

“Designs” means all of the following now owned or hereafter acquired by any
Credit Party: (a) all industrial designs and intangibles of like nature (whether
registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the Canadian Industrial Design Office or in any similar office or agency in
any other country or any political subdivision thereof, and (b) all reissues,
extensions or renewals thereof.

“Design License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party granting any right to use any Design.

“Disbursement Account” has the meaning ascribed to it in Section 1.1(e).

“Disclosure Schedules” means the Schedules prepared by Borrower and denominated
as Schedules 2.7 through 5.18 in the index to the Agreement.

“Domestic” means, as to any Person, a Person which is created or organized under
the laws of Canada or any of its provinces.

“Eligible Accounts” has the meaning ascribed to it in Section 1.7 of the
Agreement (as calculated in accordance with Schedule 1 to Exhibit 4.2(d)).

“Eligible In-Transit Inventory” means all Inventory consisting of raw materials
and finished goods owned by Credit Parties and not covered by Letters of Credit,
and which raw materials and finished goods Inventory is in transit between
domestic locations of Credit Parties and which raw materials and finished goods
Inventory (a) is owned by a Credit Party, (b) is fully insured, (c) is subject
to a first priority security interest in and Lien upon such goods in favour of
Agent (except for any possessor lien upon such goods in the possession of a
freight carrier or shipping company securing only the freight charges for the
transportation of such goods to Borrower and except for Prior Claims), (d) is
evidenced or deliverable pursuant to documents of

 

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title, notices, instruments, statements and bills of lading that have been
delivered to Agent or an agent acting on its behalf, and (e) would constitute
and be deemed to be “Eligible Inventory” in accordance with Section 1.8 of the
Agreement if the criteria excluding Inventory from eligibility set forth in
clauses (a), (c) and (i) thereof did not apply.

“Eligible Inventory” has the meaning ascribed to it in Section 1.8 of the
Agreement (as calculated in accordance with Schedule 1 to Exhibit 4.2(d)).

“Eligible Processor Inventory” means all Inventory consisting of raw materials,
work-in-process and finished goods owned by the Credit Parties which is located
at a third-party contractor or processor and which (a) is owned by a Credit
Party, (b) is fully insured, (c) is subject to a first priority security
interest in and Lien upon such goods in favour of Agent, subject to Prior
Claims, (d) is subject to a duly executed processor letter from such third-party
contractor or processor that is delivered to Agent, which letter shall contain a
waiver or subordination of all Liens or claims that the processor may assert
against the Collateral at that location and which letter shall otherwise be
reasonably satisfactory in form and substance to Agent and (e) would constitute
and be deemed to be “Eligible Inventory” in accordance with Section 1.8 of the
Agreement if the criteria excluding Inventory from eligibility set forth in
clause (a), clause (b) and clause (i) thereof did not apply.

“Eligible Remnant Inventory” means all Inventory consisting of finished goods
owned by Credit Parties which is saleable quality, finished goods Inventory
designated for sale to remnant or close-out Account Debtors through previously
established channels and which (a) is owned by a Credit Party, (b) is fully
insured, (c) is subject to a first priority security interest in and Lien upon
such goods in favour of Agent, subject to Prior Claims, and (d) would constitute
and be deemed to be “Eligible Inventory” in accordance with Section 1.8 of the
Agreement if the criteria excluding Inventory from eligibility set forth in
clause (e) (but only to the extent excluded by reason of clause (e) applying to
Inventory being excess, shopworn, seconds or damaged), clause (g) and clause (h)
thereof did not apply.

“Eligible Returned Inventory” means all Inventory consisting of finished goods
owned by Credit Parties and which is “Sun Care” finished goods Inventory that
has been returned during the seasonal returns process (consistent with the
ordinary course of business operations) and has been scanned and designated as
of acceptable, saleable quality and is located at the Borrower’s third-party
reclamation centre and which (a) is owned by a Credit Party, (b) is fully
insured, (c) is subject to a first priority security interest in and Lien upon
such goods in favour of Agent, subject to Prior Claims and (d) would constitute
and be deemed to be “Eligible Inventory” in accordance with Section 1.8 of the
Agreement if the criteria excluding Inventory from eligibility set forth in
clause (g) and clause (h) thereof did not apply.

“Environmental Laws” means all applicable federal, provincial, territorial,
municipal, local and foreign laws, statutes, ordinances, codes, rules,
guidelines, policies, procedures, standards, orders-in-council, and regulations,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent
decree, order or judgment, imposing liability or standards of conduct for or
relating to the regulation and protection of human, plant or animal health or
safety, the environment or

 

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natural resources (including air, surface water, groundwater, wetlands, land,
soil, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include the Canadian Environmental Protection
Act, 1999, Fisheries Act, Transportation of Dangerous Goods Act, 1992, the
Migratory Birds Protection Act, 1994, the Species At Risk Act, the Hazardous
Products Act, the Canada Shipping Act and the Canada Wildlife Act.

“Environmental Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, costs (including any response, remedial and
removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs), losses, damages (including any punitive
damages, property damages, natural resource damages, consequential damages,
treble damages) and expenses (including all reasonable fees, disbursements and
expenses of legal counsel, experts and consultants), fines, penalties, sanctions
and interest incurred as a result of or related to any claim, suit, action,
administrative order, investigation order (including judicial and administrative
orders), proceeding or demand by any Person, whether based in contract, tort,
implied or express warranty, strict liability, statute, regulation, equity or
common law arising under or related to any Environmental Laws, Environmental
Permits, or in connection with any Release or threatened Release or presence of
a Hazardous Material whether on, at, in, under, from or about or in the vicinity
of any real or personal property.

“Environmental Permits” means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.

“Equipment” means all “equipment,” as such term is defined in the PPSA, now
owned or hereafter acquired by any Credit Party, wherever located and, in any
event, including all such Credit Party’s machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.

“Event of Default” has the meaning ascribed to it in Section 6.1.

“Fees” means any and all fees payable to Agent or any Lender pursuant to the
Agreement or any of the other Loan Documents.

“Financial Statements” means (1) the consolidated and consolidating income
statements and balance sheets of (1) Borrower and its Subsidiaries delivered in
accordance with Section 4.2(a) and (2) the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Playtex US and its
Subsidiaries delivered in accordance with

 

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Sections 4.2(a) and (b) or delivered together with the Interim Annual Pricing
Certificate in accordance with Section 4.2(k)(ii).

“Fiscal Month” means any of the monthly accounting periods of Borrower.

“Fiscal Quarter” means any of the quarterly accounting periods of Playtex US as
reported in Playtex US’s Quarterly Report on Form 10-Q.

“Fiscal Year” means, with respect to Playtex US, any of the annual accounting
periods of Playtex US as reported in Playtex US’s Annual Report on Form 10-K
and, with respect to Borrower, any of the annual accounting periods of Borrower
ending on the same date on which the corresponding account period of Playtex US
ends.

“Fixtures” means all “fixtures” (including trade fixtures), facilities and
equipment, howsoever affixed or attached to real property or buildings or other
structures on real property, now owned or hereafter acquired by any Credit
Party.

“Foreign Lender” has the meaning ascribed to it in Section 1.12(c).

“Foreign” means, as to any Person, a Person which is not created or organized
under the laws of Canada or any of its provinces.

“Funding Date” has the meaning ascribed to it in Section 7.2.

“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied.

“GE Finance Fee Letter” has the meaning ascribed to it in Section 1.3(a).

“GE Finance” has the meaning ascribed to it in the Preamble.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

“Guaranteed Indebtedness” means, as to any Person, any obligation of such Person
guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease,
dividend, or other obligation (“primary obligation”) of any other Person (the
“primary obligor”) in any manner, including any obligation or arrangement of
such Person to (a) purchase or repurchase any such primary obligation,
(b) advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (d) protect the beneficiary of such arrangement from loss (other
than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser

 

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at such time of (x) the stated or determinable amount of the primary obligation
in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum
amount for which such Person may be liable pursuant to the terms of the
instrument embodying such Guaranteed Indebtedness, or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.

“Guarantees” means, collectively, the guarantee of even date herewith executed
by Playtex Products, Inc. and any other guarantee executed by any Guarantor in
favour of Agent and Lenders in respect of the Obligations.

“Guarantors” means Playtex Products, Inc. and each direct or indirect Subsidiary
of Borrower, if any, existing on the Closing Date and each other Subsidiary, if
any, that executes a guarantee or other similar agreement in favour of Agent,
for itself and the ratable benefit of Lenders, in connection with the
transactions contemplated by the Agreement and the other Loan Documents.

“Hazardous Material” means any substance, material or waste that is regulated
by, or forms the basis of liability now or hereafter under, any applicable
Environmental Laws, including any material or substance that is (a) defined as a
“solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,”
“dangerous goods”, “extremely hazardous waste,” “restricted hazardous waste,”
“pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic
substance” or other similar term or phrase under any applicable Environmental
Laws, or (b) petroleum or any fraction or by-product thereof, asbestos,
polychlorinated biphenyls (PCB’s), or any radioactive substance.

“Indebtedness” means, with respect to any Person, without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than six (6) months unless
being contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers’ acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all net
obligations of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
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payment of such Indebtedness, (i) “earnouts” and similar payment obligations,
and (j) the Obligations.

“Indemnitees” has the meaning ascribed to it in Section 9.1.

“Index Rate Loan” means a Loan or portion thereof bearing interest by reference
to the Index Rate.

“Index Rate” means, for any day, a floating rate equal to the higher of (i) the
rate publicly announced from time to time by Royal Bank of Canada as its prime
rate in effect for Canadian dollar denominated commercial loans in Canada, and
(ii) the BA Rate existing on such day in respect of the BA Period of 1 month
plus 1% per annum. Each change in any interest rate provided for in the
Agreement based upon the Index Rate shall take effect at the time of such change
in the Index Rate.

“Insolvency Laws” shall mean any of the Bankruptcy and Insolvency Act (Canada),
the Companies’ Creditors Arrangement Act (Canada), and the Winding-Up and
Restructuring Act (Canada), each as now and hereafter in effect, any successors
to such statutes and any other applicable insolvency or other similar law of any
jurisdiction, including any law of any jurisdiction permitting a debtor to
obtain a stay or a compromise of the claims of its creditors against it.

“Instruments” means all “instruments,” as such term is defined in the PPSA, now
owned or hereafter acquired by any Credit Party, wherever located, and, in any
event, including all certificates of deposit, and all promissory notes and other
evidences of indebtedness, other than instruments that constitute, or are a part
of a group of writings that constitute, Chattel Paper.

“Intellectual Property” means any and all Licenses, Patents, Designs,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.

“Intercompany Notes” has the meaning ascribed to it in Section 3.1.

“Interest Payment Date” means (a) as to any Index Rate Loan, the first Business
Day of each month to occur while such Loan is outstanding, and (b) as to any BA
Rate Loan, the last day of the applicable BA Period; provided, that in the case
of any BA Period greater than three months in duration, interest shall be
payable at three month intervals and on the last day of such BA Period; and
provided, further, that, in addition to the foregoing, each of (x) the date upon
which all of the Commitments have been terminated and the Loans have been paid
in full and (y) the Commitment Termination Date shall be deemed to be an
“Interest Payment Date” with respect to any interest that has then accrued under
the Agreement.

“Interim Annual Pricing Certificate” has the meaning ascribed to it in
Section 4.2(k).

“Inventory” means any “inventory,” as such term is defined in the PPSA, now
owned or hereafter acquired by any Credit Party, wherever located, including
inventory, merchandise, goods and other personal property that are held by or on
behalf of any Credit Party for sale or lease or are furnished or are to be
furnished under a contract of service, or that

 

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constitute raw materials, work in process, finished goods, returned goods,
supplies or materials of any kind, nature or description used or consumed or to
be used or consumed in such Credit Party’s business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
all supplies and embedded software.

“Investment Grade Account Debtor” means an Account Debtor whose unsecured long
term debt is rated “BBB(low)” or better by DBRS and “BBB-“ or better by S&P and
“Baa3” or better by Moody’s, provided, that ratings from any two of such rating
agencies are sufficient, but, if all three rating agencies rate the unsecured
long term debt of such Account Debtor, then all three rating requirements must
be met.

“Investment” means (i) any direct or indirect purchase or other acquisition by
Borrower or any other Credit Party of any Stock of, or other ownership interest
in, any other Person, and (ii) any direct or indirect loan, advance or capital
contribution by Borrower or any other Credit Party to any other Person,
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business.

“L/C Guarantor” means Agent or one of its Affiliates, including General Electric
Capital Canada Inc.

“L/C Issuer” means a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion, in such Person’s capacity as an
issuer of Letters of Credit hereunder.

“L/C Sublimit” has the meaning ascribed to it in Section 1.1(c).

“Lenders” means GE Finance, the other Lenders named on the signature pages of
the Agreement, and, if any such Lender shall decide to assign all or any portion
of the Obligations, such term shall include any assignee of such Lender.

“Letter of Credit Fee” has the meaning ascribed to it in Section 1.3(c).

“Letter of Credit Obligations” means all outstanding obligations incurred by
Agent and Lenders at the request of Borrower, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the issuance of
Letters of Credit by L/C Issuers or the purchase of a participation as set forth
in Section 1.1(d) with respect to any Letter of Credit. The amount of such
Letter of Credit Obligations shall equal the maximum amount that may be payable
by Agent and Lenders thereupon or pursuant thereto.

“Letters of Credit” means standby letters of credit issued for the account of
Borrower or any other Credit Party by L/C Issuers.

“License” means any Copyright License, Design License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.

 

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“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the PPSA, the Code or
comparable law of any jurisdiction).

“Litigation” has the meaning ascribed to it in Section 4.2(i).

“Loan Account” has the meaning ascribed to it in Section 1.10.

“Loan Documents” means the Agreement, the Notes, the Collateral Documents, the
GE Finance Fee Letter and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to, or
in favour of, Agent or any Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, and all other written
matter whether heretofore, now or hereafter executed by or on behalf of any
Credit Party, or any employee of any Credit Party, and delivered to Agent or any
Lender in connection with the Agreement or the transactions contemplated
thereby. Any reference in the Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and shall
refer to the Agreement or such Loan Document as the same may be in effect at any
and all times such reference becomes operative.

“Loans” means the Revolving Loan and the Swing Line Loan.

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, prospects or financial or other condition of Playtex US and
the Credit Parties, taken as a whole (b) Borrower’s ability to pay any of the
Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) Guarantor’s ability to honour its Guarantee Obligations in
accordance with the terms of the Agreement (d) the Collateral or Agent’s Liens,
on behalf of itself and Lenders, on the Collateral or the priority of such
Liens, or (e) Agent’s or any Lender’s rights and remedies under the Agreement
and the other Loan Documents.

“Maximum Amount” means, as of any date of determination, an amount equal to the
Revolving Loan Commitment of all Lenders as of that date.

“Moody’s” means Moody’s Investor’s Services, Inc or any successor.

“Mortgages” means each of the mortgages, debentures, deeds of trust, deeds of
hypothec, leasehold mortgages, leasehold deeds of trust, collateral assignments
of leases or other real estate security documents delivered by any Credit Party
to Agent on behalf of itself and Lenders with respect to the Real Estate.

“Net Proceeds” means cash proceeds received by Borrower or any other Credit
Party from any Asset Disposition (including payments under notes or other debt
securities received in connection with any Asset Disposition), net of (a) the
costs of such Asset Disposition

 

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(including taxes attributable to such sale, lease or transfer) and (b) amounts
applied to repayment of Indebtedness (other than the Obligations) secured by a
Lien on the asset or property disposed.

“Non-Consenting Lender” has the meaning ascribed to it in Section 9.19(c).

“Non-Funding Lender” has the meaning ascribed to it in Section 8.5(a).

“Notes” means, collectively, the Revolving Notes and the Swing Line Note.

“Notice of Conversion/Continuation” has the meaning ascribed to it in Section
1.2(e).

“Notice of Revolving Credit Advance” has the meaning ascribed to it in Section
1.1(a).

“Notice of Swing Line Advance” has the meaning ascribed to it in Section 1.1(c).

“Obligations” means all loans, advances, debts, liabilities and obligations, for
the performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or such amounts
are liquidated or determinable), including obligations pursuant to Letter of
Credit Obligations, owing by any Credit Party or any Guarantor to Agent or any
Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under the Agreement or any of the other Loan
Documents. This term includes all principal, interest (including all interest
that accrues after the commencement of any bankruptcy or insolvency proceeding
upon or after the insolvency of a Credit Party or Guarantor, whether or not
allowed in such case or proceeding), Fees, Charges, expenses, legal fees and any
other sum chargeable to any Credit Party or Guarantor under the Agreement or any
of the other Loan Documents.

“Other Lender” has the meaning ascribed to it in Section 8.5(d).

“Overadvance” has the meaning ascribed to it in Section 1.1(a).

“Patent License” means rights under any written agreement now owned or hereafter
acquired by any Credit Party or Guarantor granting any right with respect to any
invention on which a Patent is in existence.

“Patent Security Agreement” means the Patent Security Agreement made in favor of
Agent, on behalf of itself and Lenders, by Playtex US.

“Patents” means all of the following in which any Credit Party or Guarantor now
holds or hereafter acquires any interest: (a) all letters patent of invention
and all applications for letters patent, all design patents and all
registrations and recordings thereof, including registrations, recordings and
applications in the Canadian Patent and Trademark Office or in any similar
office or agency in any other country or political subdivision thereof, and (b)
all reissues, continuations, continuations-in-part or extensions thereof.

 

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“Permitted Encumbrances” means the following encumbrances: (a) Liens for taxes
or assessments or other governmental Charges not yet due and payable;
(b) pledges or deposits of money securing statutory obligations under workmen’s
compensation, employment insurance, social security or public liability laws or
similar legislation; (c) pledges or deposits of money securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business;
(d) inchoate and unperfected workers’, mechanics’ or similar liens arising in
the ordinary course of business, so long as such Liens attach only to Equipment,
Fixtures and/or Real Estate; (e) carriers’, warehousemen’s, suppliers’,
landlords’ or other similar possessory liens arising in the ordinary course of
business so long as such Liens attach only to Inventory; (f) deposits securing,
or in lieu of, surety, appeal or customs bonds in proceedings to which any
Credit Party is a party; (g) any attachment or judgment lien not constituting an
Event of Default under Section 6.1; (h) zoning restrictions, easements,
licenses, or other restrictions on the use of any Real Estate or other minor
irregularities in title (including leasehold title) thereto, so long as the same
do not materially impair the use, value, or marketability of such Real Estate;
(i) presently existing or hereafter created Liens in favour of Agent, on behalf
of Lenders; (j) Liens existing on the date hereof and renewal, and extensions
thereof which Liens are set forth on Schedule 3.2; (k) Liens securing
Indebtedness permitted by Section 3.1(f), provided, that the Liens attach only
to the assets financed by such Indebtedness; (l) Liens securing the Senior
Secured Notes granted in favor of the Senior Secured Notes Trustee pursuant to
the Senior Secured Note Documents on Collateral (other than the Senior Secured
Note Primary Collateral) as long as such Liens are, pursuant to the provisions
of Article 10 (“Intercreditor Provisions Relating to Credit Agreement”) of the
Senior Secured Note Indenture, subordinated to the Liens securing the
Obligations granted in favor of Agent, on behalf of itself and Lenders, pursuant
to the Loan Documents; (m) Liens securing the Senior Secured Notes granted in
favor of the Senior Secured Notes Trustee pursuant to the Senior Secured Note
Documents on the Senior Secured Note Primary Collateral) (n) Liens arising out
of judgments or awards not resulting in an Event of Default and in respect of
which the applicable Credit Party or Credit Parties are in good faith
prosecuting an appeal or proceedings for review in respect of which there shall
be secured a subsisting stay of execution pending such appeal or proceedings;
(o) Liens arising under licensing agreements entered into by the Borrower or any
Subsidiary in the ordinary course of business for the use of Intellectual
Property or other intangible assets of the Borrower or such Subsidiary and
settlements, permissions, consents to use, and other similar agreements
concerning Intellectual Property or judgments adjudicating rights in
Intellectual Property, (p) Prior Claims and (q) presently existing or hereafter
created Liens in favour of General Electric Capital Corporation as agent, on
behalf of lenders under the US Credit Facility.

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, provincial, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).

“Pledge Agreement” means the Pledge Agreement of even date herewith executed by
Playtex US and Playtex International Corp. in favour of Agent, on behalf of
itself and Lenders, pledging, among other things, all of the Stock of Borrower
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Notes owing to or held by Playtex US and Playtex International Corp. and any
other pledge agreement entered into after the Closing Date by any Credit Party.

“PPSA” shall mean the Personal Property Security Act (Ontario) and the
Regulations thereunder, as from time to time in effect, provided, however, if
attachment, perfection or priority of Agent’s security interests in any
Collateral are governed by the personal property security laws of any
jurisdiction other than Ontario, PPSA shall mean those personal property
security laws in such other jurisdiction for the purposes of the provisions
hereof relating to such attachment, perfection or priority and for the
definitions related to such provisions.

“Pricing Certificate” means the “Pricing Certificate” of Playtex US as defined
under the US Credit Facility.

“Prior Claims” means (i) claims for vacation pay, worker’s compensation,
unemployment insurance, pension plan contributions, employee or non-resident
withholding tax source deductions, unremitted goods and services taxes, realty
taxes (including business taxes and utility charges which are collectible like
realty taxes), customs duties or similar statutory obligations secured by a Lien
on Collateral, in each case, that are unregistered and that secure amounts not
yet delinquent or past due and (ii) Permitted Encumbrances described in clause
(a) and clause (l) of the definition of the term “Permitted Encumbrances”.

“Pro Rata Share” means with respect to all matters relating to any Lender
(a) with respect to the Revolving Loan, the percentage obtained by dividing
(i) the Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving
Loan Commitments of all Lenders, (b) with respect to all Loans, the percentage
obtained by dividing (i) the aggregate Commitments of that Lender by (ii) the
aggregate Commitments of all Lenders, and (d) with respect to all Loans on and
after the Commitment Termination Date, the percentage obtained by dividing
(i) the aggregate outstanding principal balance of the Loans held by that
Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders, as such percentages may be adjusted by assignments pursuant to Section
8.1.

“Projections” means, (1) with respect to Playtex US, Playtex US’s forecasted
consolidated: (a) balance sheets; (b) profit and loss statements; and (c) cash
flow statements; consistent with the historical Financial Statements of Playtex
US, together with appropriate supporting details and a statement of underlying
assumptions and, (2) with respect to Borrower, Borrower’s forecasted
consolidated: (a) balance sheets and (b) profit and loss statements; consistent
with the historical Financial Statements of Borrower, together with appropriate
supporting details and a statement of underlying assumptions.

“Proposed Change” has the meaning ascribed to it in Section 9.19(c).

“Qualified Assignee” means (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor, and (b) any “accredited investor” (as
defined under Ontario Securities Commission Rule 45-501, as amended,
supplemented, replaced and otherwise modified from time to time) which extends

 

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credit or buys loans as one of its businesses, including a mutual fund, lease
financing company and commercial finance company, in each case, which has a
rating of “BBB” or higher from S&P and a rating of “Baa2” or higher from Moody’s
at the date that it becomes a Lender and which, through its applicable lending
office, is capable of lending to Borrower without the imposition of any
withholding or similar taxes; provided that no Person determined by Agent to be
acting in the capacity of a vulture fund or distressed debt purchaser shall be a
Qualified Assignee and no Person or Affiliate of such Person (other than a
Person that is already a Lender) holding Subordinated Debt or Stock issued by
any Credit Party shall be a Qualified Assignee.

“Real Estate” has the meaning ascribed to it in Section 5.12.

“Refunded Swing Line Loan” has the meaning ascribed to it in Section
1.1(c)(iii).

“Related Transactions Documents” means the Loan Document and all other
agreements or instruments executed in connection with the Related Transactions.

“Related Transactions” means the initial borrowing under the Revolving Loan on
the Closing Date, the payment of all Fees, costs and expenses associated with
all of the foregoing and the execution and delivery of all of the Related
Transactions Documents.

“Release” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.

“Replacement Lender” has the meaning ascribed to it in Section 9.19(a).

“Requisite Lenders” means Lenders having (a) more than 50% of the Commitments of
all Lenders, or (b) if the Commitments have been terminated, more than 50% of
the aggregate outstanding amount of the Loans.

“Requisite Revolving Lenders” means Lenders having (a) more than 50% of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, more than 50% of the aggregate outstanding
amount of the Revolving Loan (with the Swing Line Loan being attributed to the
Lender making such Loan).

“Reserves” means, with respect to the Borrowing Base (a) reserves established by
Agent from time to time against Eligible Accounts, Eligible Inventory, Eligible
In-Transit Inventory, Eligible Processor Inventory, Eligible Returned Inventory
and Eligible Remnant Inventory pursuant to Exhibit 4.2(d) and (b) such other
reserves against Eligible Accounts, Eligible Inventory, Eligible In-Transit
Inventory, Eligible Processor Inventory, Eligible Returned Inventory, Eligible
Remnant Inventory or Borrowing Availability that Agent may, in its good faith
credit judgment based upon its analysis of facts and events, establish from time
to time. Without limiting the generality of the foregoing, Reserves established
to ensure the payment of accrued Interest Expenses or Indebtedness and with
respect to dilution on product returns,

 

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seasonal returns, rent reserve, third-party distribution centre and licensors
shall be deemed to be a reasonable exercise of Agent’s credit judgment.

“Responsible Officer” means the chief executive officer, the president, the
corporate counsel, the chief financial officer, the treasurer or the controller
of a Credit Party, or any other officer or manager having substantially the same
authority and responsibility.

“Restricted Payment” means, with respect to any Credit Party (a) the declaration
or payment of any dividend or the incurrence of any liability to make any other
payment or distribution of cash or other property or assets in respect of Stock
(other than those payable in additional Stock of such Credit Party); (b) any
payment on account of the purchase, redemption, defeasance, sinking fund or
other retirement of such Credit Party’s Stock or any other payment or
distribution made in respect thereof, either directly or indirectly (other than
those payable in additional Stock of such Credit Party); (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Credit Party now or hereafter outstanding;
(e) any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such Credit
Party’s Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Credit Party other than payment of compensation in the
ordinary course of business to Stockholders who are employees of such Credit
Party; and (g) any payment of management fees (or other fees of a similar
nature) or out-of-pocket expenses in connection therewith by such Credit Party
to any of its Affiliates.

“Revolving Credit Advance” has the meaning ascribed to it in Section 1.1(a).

“Revolving Lenders” means those Lenders having a Revolving Loan Commitment.

“Revolving Loan Commitment” means (a) as to any Lender, the commitment of such
Lender to make its Pro Rata Share of Revolving Credit Advances or incur its Pro
Rata Share of Letter of Credit Obligations (including, in the case of the Swing
Line Lender, its commitment to make Swing Line Advances as a portion of its
Revolving Loan Commitment) as set forth on Annex B or in the most recent
Assignment Agreement, if any, executed by such Lender and (b) as to all Lenders,
the aggregate commitment of all Lenders to make the Revolving Credit Advances
(including, in the case of the Swing Line Lender, Swing Line Advances) or incur
Letter of Credit Obligations, which aggregate commitment shall be Twenty Million
Dollars ($20,000,000) on the Closing Date, as such amount may be adjusted, if at
all, from time to time in accordance with the Agreement.

“Revolving Loan(s)” means, at any time, the sum of (i) the aggregate amount of
Revolving Credit Advances outstanding to Borrower (including Swing Line
Advances) plus (ii) the aggregate Letter of Credit Obligations incurred on
behalf of Borrower. Unless the context

 

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otherwise requires, references to the outstanding principal balance of the
Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.

“Revolving Notes” has the meaning ascribed to it in Section 1.1(a).

“S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill
Companies, Inc.

“Security Agreement” means the Security Agreement of even date herewith entered
into by and among Agent, on behalf of itself and Lenders, and each Credit Party
that is a signatory thereto.

“Senior Secured Note Documents” means the Senior Secured Note Indenture, the
Senior Secured Notes and any other instrument, document or agreement delivered
pursuant thereto or in connection therewith.

“Senior Secured Note Indenture” means that certain Indenture, dated as of the
Closing Date, between Playtex US, as issuer, and Wells Fargo Corporate Trust
Services, as trustee (the “Senior Secured Notes Trustee”), governing the terms
and issuance of the Senior Secured Notes as amended, modified or otherwise
supplemented from time to time in accordance with the terms of the US Credit
Facility.

“Senior Secured Note Primary Collateral” means the Asset Sales Proceeds Account
(as defined in the Senior Secured Note Indenture) and all registered and
unregistered United States and foreign Patents, Trademarks, Copyrights,
applications therefor and Licenses with respect thereto and tradenames, trade
secrets, servicemarks and know-how, manufacturing processes and formulas that
may at any time be or become subject to a security interest or Lien in favor of
the Senior Secured Note Trustee to secure the obligations or any portion thereof
under the Senior Secured Note Documents.

“Senior Secured Notes” means those certain 8% Senior Secured Notes due 2011
issued by Playtex US in an aggregate original principal amount of $460,000,000
pursuant to the Senior Secured Note Indenture.

“Senior Secured Notes Trustee” has the meaning ascribed to it in the definition
of the term “Senior Secured Note Indenture.”

“Senior Subordinated Note Documents” means the Senior Subordinated Note
Indenture, the Senior Subordinated Notes and any other instrument, document or
agreement delivered pursuant thereto or in connection therewith.

“Senior Subordinated Note Indenture” means that certain Indenture dated as of
May 22, 2001 between Playtex US, as issuer, and The Bank of New York, as
trustee, governing the terms and issuance of the Senior Subordinated Notes as
amended, modified or otherwise supplemented from time to time in accordance with
the terms of the US Credit Facility.

 

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“Senior Subordinated Notes” means those certain unsecured 9.375% Senior
Subordinated Notes due 2011 issued by Borrower in an aggregate original
principal amount of $350,000,000 pursuant to the Senior Subordinated Note
Indenture.

“Settlement Date” has the meaning ascribed to it in Section 8.5(a)(ii).

“Software” means all “software” as such term is defined in the PPSA, now owned
or hereafter acquired by any Credit Party, other than software embedded in any
category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.

“Solvent” means, with respect to any Person on a particular date, that on such
date (i) the property of such Person is sufficient, if disposed of at a fairly
conducted sale under legal process, to enable payment of all its obligations,
due and accruing due, (ii) the property of such Person is, at a fair valuation,
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (iii) such Person has not ceased paying its current obligations
in the ordinary course of business as they generally become due; and (iv) such
Person is not for any reason unable to meet its obligations as they generally
become due. The amount of contingent liabilities (such as litigation, guarantees
and pension plan liabilities) at any time shall be computed as the amount that,
in light of all the facts and circumstances existing at the time, represents the
amount that can be reasonably be expected to become an actual or matured
liability.

“Statement” has the meaning ascribed to it in Section 4.2(b).

“Stock” means all shares, options, warrants, general or limited partnership
interests, membership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company or
equivalent entity whether voting or nonvoting, participating or
non-participating, including common stock, preferred stock or any other equity
security.

“Stockholder” means, with respect to any Person, each holder of Stock of such
Person.

“Subordinated Debt” means the Indebtedness of any Credit Party subordinated to
the Obligations in a manner and form satisfactory to Agent and Requisite Lenders
in their sole discretion, as to right and time of payment and as to any other
rights and remedies thereunder.

“Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting power
to elect a majority of the board of directors of such corporation (irrespective
of whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the vote of
more than 50% of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution)

 

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of more than 50% or of which any such Person is a general partner or may
exercise the powers of a general partner. Unless the context otherwise requires,
each reference to a Subsidiary shall be a reference to a Subsidiary of the
Borrower.

“Swing Line Advance” has the meaning ascribed to it in Section 1.1(c).

“Swing Line Availability” has the meaning ascribed to it in Section 1.1(c).

“Swing Line Commitment” means the commitment of the Swing Line Lender to make
Swing Line Advances as set forth on Annex B to the Agreement, which commitment
constitutes a subfacility of the Revolving Loan Commitment of the Swing Line
Lender.

“Swing Line Lender” means GE Finance.

“Swing Line Loan” means at any time, the aggregate amount of Swing Line Advances
outstanding to Borrower.

“Swing Line Note” has the meaning ascribed to it in Section 1.1(c).

“Tax” and “Taxes” includes all present and future taxes, surtaxes, duties,
levies, imposts, rates, fees, assessments, withholdings and other charges of any
nature (including income, corporate, capital (including large corporations), net
worth, sales, consumption, use, transfer, goods and services, value-added,
stamp, registration, franchise, withholding, payroll, employment, health,
education, employment insurance, pension, excise, business, school, property,
occupation, customs, anti-dumping and countervail taxes, surtaxes, duties,
levies, imposts, rates, fees, assessments, withholdings and other charges)
imposed by any Governmental Authority, together with any fines, interest,
penalties or other additions on, to, in lieu of, for non-collection of or in
respect of those taxes, surtaxes, duties, levies, imposts, rates, fees,
assessments, withholdings and other charges.

“Termination Date” means the date on which (a) the Loans have been indefeasibly
repaid in cash in full, (b) all other Obligations under the Agreement and the
other Loan Documents (other than contingent obligations) have been completely
discharged, (c) all Letter of Credit Obligations have been cash collateralized
in the amount set forth in Section 1.5(g), cancelled or backed by standby
letters of credit acceptable to Agent and (d) Borrower shall not have any
further right to borrow any monies under the Agreement.

“Trademark License” means rights under any written agreement now owned or
hereafter acquired by any Credit Party or Guarantor granting any right to use
any Trademark.

“Trademark Security Agreement” means the Trademark Security Agreement made in
favour of Agent, on behalf of itself and Lenders, by Playtex US.

“Trademarks” means all of the following now owned or hereafter adopted or
acquired by any Credit Party or Guarantor: (a) all United States trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, internet domain names, other source or business identifiers, prints and
labels on which any of the foregoing have appeared or appear, designs and
intangibles of like nature (whether registered or unregistered),

 

A-23

 

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all registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the Canadian
Patent and Trademark Office or in any similar office or agency in any other
country or any political subdivision thereof; (b) all reissues, extensions or
renewals thereof; and (c) all goodwill associated with or symbolized by any of
the foregoing.

“US Credit Facility” means the credit facilities provided under a credit
agreement dated as of February 19, 2004 between Playtex US, as borrower, the
other Persons party thereto as credit parties, General Electric Capital
Corporation, as agent, l/c issuer and lender and the other financial
institutions party thereto as lenders.

“US Dollars” or “US$” means the lawful currency of the United States.

“US Security Agreement” means the Security Agreement of even date herewith
entered into by and among Agent, on behalf of itself and Lenders, and Playtex
US.

 

Rules of construction with respect to accounting terms used in the Agreement or
the other Loan Documents shall be as set forth or referred to in this Annex A.
Unless otherwise specified, references in the Agreement or any of the Appendices
to a Section, subsection or clause refer to such Section, subsection or clause
as contained in the Agreement. The words “herein,” “hereof” and “hereunder” and
other words of similar import refer to the Agreement as a whole, including all
Annexes, Exhibits and Schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such Annex, Exhibit or
Schedule.

Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter genders. The words “including”, “includes” and “include”
shall be deemed to be followed by the words “without limitation” the word “or”
is not exclusive; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Whenever any provision in any Loan Document refers to the
knowledge (or an analogous phrase) of any Credit Party, such words are intended
to signify that such Credit Party has actual knowledge or awareness of a
particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.

 

A-24

 

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Exhibit 10(u)

 

 

ANNEX B (from Annex A - Commitments definition)

to

CREDIT AGREEMENT

 

PRO RATA SHARES AND COMMITMENT AMOUNTS

 

Lender(s)

Revolving Loan Commitment

(including a Swing Line Commitment

of $2,000,000)

$20,000,000

GE Canada Finance

Holding Company Corporation

 

 

B-1

 

 

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EXECUTION COPY

 

 

SCHEDULE 2.7

to

CREDIT AGREEMENT

 

CONDUCT OF BUSINESS

Playtex Limited

 

Playtex Limited does not own any trade names. They utilize trade names owned by
Playtex US and its subsidiaries including “Playtex”, “Banana Boat”, “Wet Ones”,
“Mr. Bubble” and “Binaca”.

 

 

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SCHEDULE 3.1

to

CREDIT AGREEMENT

 

INDEBTEDNESS

Letter of Credit - $308,000 issued by Toronto Dominion for the benefit of Royal
Trust (supplemental pension trustee). Expires March 31, 2006.

 

 

 

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SCHEDULE 3.2

to

CREDIT AGREEMENT

 

LIENS AND RELATED MATTERS

 

a.

*Xerox Canada Ltd with respect to reference file numbers:

 

(i)

884841858

(ii)

879035445

(iii)

852704721

 

b.

IBM Canada Limited with respect to reference file number 879872454

 

c.             GE Capital Vehicle And Equipment Leasing Inc. with respect to
reference file number
                858318498

 

*Subject to receipt of an acknowledgement and confirmation satisfactory to the
Agent.

 

 

 

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SCHEDULE 3.3

to

CREDIT AGREEMENT

 

INVESTMENTS

None

 

 

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EXECUTION COPY

 

 

SCHEDULE 3.4

to

CREDIT AGREEMENT

 

CONTINGENT OBLIGATIONS

Letter of Credit - $308,000 issued by Toronto Dominion for the benefit of Royal
Trust (supplemental pension trustee). Expires March 31, 2006.

 

 

 

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SCHEDULE 3.8

to

CREDIT AGREEMENT

 

TRANSACTIONS WITH AFFILIATES

Purchase of and payment for inventory from Playtex US

 

Contracting with and paying for services in the normal course of business with
Playtex US including IT / Sales / Marketing / Consumer Affairs services and
parent technical assistance and other services in the normal course of business.

 

Potential loan from Playtex Limited to Personal Care Group Pty. Ltd (“PCG
Australia”) for up to $5 million.

 

 

 

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SCHEDULE 3.9

to

CREDIT AGREEMENT

 

CONDUCT OF BUSINESS

The manufacture, assembly, acquisition, sale and distribution of
consumer-packaged goods under various trade names including Playtex, Banana
Boat, and Wet Ones, amongst others.

 

The sales and distribution of the products are made to Playtex Limited
customers, which are primarily Canadian retailers and distributors of consumer
packaged goods.

 

 

 

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SCHEDULE 5.4(a)

to

CREDIT AGREEMENT

 

ORGANIZATION POWERS, CAPITALIZATION AND GOOD STANDING

Jurisdiction of Playtex Limited – organized under the laws of Nova Scotia,
Canada

Playtex Limited is Qualified to do business in the Provinces of: British
Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and
Prince Edward Island

 

 

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SCHEDULE 5.4(b)

to

CREDIT AGREEMENT

 

CAPITIALIZATION

Playtex Limited Common Stock – 86 shares owned by Playtex International Corp, a
wholly owned subsidiary of Playtex Products, Inc.

55 Shares of Playtex Limited is included in the Pledge Agreement for the US
Credit Agreement.

 

 

 

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SCHEDULE 5.6

to

CREDIT AGREEMENT

 

INTELLECTUAL PROPERTY

None owned by Playtex Limited

 

 

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EXECUTION COPY

 

 

SCHEDULE 5.7

to

CREDIT AGREEMENT

 

INVESTIGATIONS, AUDITS, ETC

None

 

 

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EXECUTION COPY

 

 

SCHEDULE 5.8

to

CREDIT AGREEMENT

 

EMPLOYEE MATTERS

Contracts of employment between the Borrower and its employees.

 

 

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EXECUTION COPY

 

 

SCHEDULE 5.10

to

CREDIT AGREEMENT

 

LITIGATION

None

 

 

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EXECUTION COPY

 

 

SCHEDULE 5.11

to

CREDIT AGREEMENT

 

USE OF PROCEEDS

No funding at closing.

The Agreement does allow for a potential loan of up to $5 million from Playtex
Limited to PCG Australia, which will likely occur post-closing.

 

 

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SCHEDULE 5.12

to

CREDIT AGREEMENT

 

REAL PROPERTY

Owned: 124 Fourth Avenue, Arnprior, Ontario Canada

Leased: 6363 Northam Drive, Mississauga Ontario Canada – Indenture, dated March
1, 1993, as amended between North American Life Insurance Company, as Lessor,
and Playtex Limited, as Lessee, subsequently assigned to Afra Holdings Ltd.

 

 

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SCHEDULE 5.13

to

CREDIT AGREEMENT

 

ENVIRONMENTAL MATTERS

None Known

 

 

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EXECUTION COPY

 

 

SCHEDULE 5.14

to

CREDIT AGREEMENT

 

CANADIAN PENSION AND BENEFIT PLANS

Retirement Pension Plan for the Employees of Playtex Ltd.

Supplementary Pension Plan for the Designated Employees of Playtex Ltd.

Playtex Products, Inc. Incentive Bonus Plan – certain Canada employees included

Health and Welfare plan – provides medical, disability and other typical
benefits to the Canadian employees.

Retirement Pension Plan deficit of $3,508,500 as of January 1, 2005 valuation

Supplementary Pension Plan for Designated Employees of Playtex Ltd. – unfunded.
Letter of Credit to the benefit of Royal Trust Corporation. See Schedule 3.1
Indebtedness

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SCHEDULE 5.16

to

CREDIT AGREEMENT

 

DEPOSIT AND DISBURSEMENT ACCOUNTS

Toronto Dominion Bank account #1552-0566-0311836 – Canadian dollar account

Toronto Dominion Bank account #1552-0566-7304474 – US dollar account

Toronto Dominion Bank account #1552-0566-5226401 – Money Market account

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SCHEDULE 5.17

to

CREDIT AGREEMENT

 

AGREEMENTS AND OTHER DOCUMENTS

Supply / Purchase Agreements - None

Equipment Leases – None

Permits / Licenses(previously provided): Medical Device Establishment License
#1340 – Tampon import and distribution

HEALTH Canada Establishment License #100167-A – Pharmaceuticals Testing for
Banana Boat

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SCHEDULE 5.18

to

CREDIT AGREEMENT

 

INSURANCE POLICIES

See attached.