Document:

Exhibit 10.(A)

 

THIRD AMENDMENT

TO

CREDIT AGREEMENT

 

THIS
THIRD AMENDMENT, dated as of February 17, 2005
(this “Third Amendment”), is by and among CANTEL MEDICAL CORP., a Delaware corporation (the “Borrower”),
the Lenders and Fleet National Bank, a Bank of America Company (“Fleet”),
as the Initial Issuing Bank, the Swing Line Bank and the Administrative Agent
for itself and the Lenders (in such capacity, together with its successors in
such capacity, the “Administrative Agent”).

 

PRELIMINARY STATEMENTS

 

(A)                              The
Borrower, the Lenders and Fleet, as the Initial Issuing Bank, the Swing Line
Bank, the Administrative Agent and PNC Bank, National Association, as
Documentation Agent, are parties to that certain Credit Agreement, dated as of September 7,
2001, as amended by the First Amendment thereto, dated as of August 1,
2003 and the Second Amendment thereto, dated as of June 1, 2004 (as so
amended and as it may hereafter be further amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”).

 

(B)                                The
Borrower has requested that the Lenders amend the Credit Agreement to (i) revise
the definition of “Applicable Margin,” (ii) increase the aggregate amount
of cash consideration payable and Debt assumed in respect to Permitted Acquisitions
during the term of the Credit Agreement, (iii) increase the size of the
Revolving Credit Facility at the Agent’s and Borrower’s mutual agreement by an
aggregate amount of up to $22,500,000, from $17,500,000 to $40,000,000, at any
time on or before the Revolving Credit Termination Date, from existing Lenders
and/or new Lenders mutually acceptable to Agent and Borrower, (iv) modify
the Financial Covenants relating to Capital Expenditures and Consolidated Debt
to EBITDA, and (v) eliminate Borrowing Base requirements.

 

(D)                               The
Administrative Agent and the Lenders are willing to make such amendments to the
Credit Agreement upon the terms and conditions set forth herein.

 

(E)                                 The
terms defined in the Credit Agreement and not otherwise defined herein shall have
the meanings ascribed to them in the Credit Agreement.

 

NOW,
THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:

 

ARTICLE 1. Amendments
to Credit Agreement.

 

This Third
Amendment shall be deemed to be an amendment to the Credit Agreement, and shall
not be construed in any way as a replacement therefor. All of the terms

 

 

and provisions
of this Third Amendment, including, without limitation, the representations and
warranties set forth herein, are hereby incorporated by reference into the
Credit Agreement as if such terms and provisions were set forth in full
therein. Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to them in the Credit Agreement. The Credit Agreement is
hereby amended in the following respects:

 

Section 1.1.                                Section 1.1,
Certain Defined Terms, of the Credit Agreement is amended as follows:

 

(a)                                  The
definition of “Applicable Margin” set forth in Section 1.1
of the Credit Agreement is hereby amended by deleting the existing Applicable
Margin for Advances grid in its entirety and replacing it with the following:

 

Applicable Margin for Advances

 

	
  Ratio
  of Consolidated

  Debt to EBITDA

  	
   

  	
  Eurodollar Rate

  Advances

  	
   

  	
  Prime Rate

  Advances

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than 2.0 to l.0

  	
   

  	
  1.75

  	
  %

  	
  0.50

  	
  %

  
	
  Greater than 1.50 to 1.0 but less than or
  equal to 2.00 to 1.0

  	
   

  	
  1.50

  	
  %

  	
  0.25

  	
  %

  
	
  Greater than 1.00 to 1.00 but less than or
  equal to 1.5 to 1.0

  	
   

  	
  1.25

  	
  %

  	
  0.00

  	
  %

  
	
  Equal to or less than 1.0 to 1.0

  	
   

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  

 

(b)                                 The
definition of “Note” set forth in Section 1.1 of the Credit
Agreement is hereby amended by inserting a coma (“,”) and inserting the words “Incremental
Revolving Credit Note” after “Revolving Credit Note”.

 

(c)                                  The
definition of “Permitted Acquisitions” set forth in Section 1.1
of the Credit Agreement is hereby amended by deleting the number “$5,000,000” in subsection (b)(ii) and
replacing it with the number “$25,000,000”.

 

(d)                                 The
following definition is amended and restated to read in its entirety as
follows:

 

“Revolving
Credit Availability” means, at any time, the aggregate amount of the
Revolving Credit Facility less the sum of (a) the aggregate principal
amount of all Revolving Credit Advances then outstanding (including the
outstanding balance of Letter of Credit Advances and the aggregate Available
Amount of all Letters of Credit), and (b) Swing Line Advances then
outstanding at such time.

 

(e)                                  The
following definitions are inserted in proper alphabetical order:

 

2

 

“Additional
Lender” has the meaning specified in Section 2.17(b).

 

“Incremental
Effective Date” has the meaning specified in Section 2.17(c).

 

“Incremental
Revolving Credit Advances” means advances made by an existing Lender or an
Additional Lender, as the case maybe, to the Borrower from time to time
incurred pursuant to the Incremental Revolving Credit Commitments.

 

“Incremental
Revolving Credit Commitment” has the meaning specified in Section 2.17(a).

 

“Incremental
Revolving Credit Note” has the meaning specified in Section 2.17(f).

 

“Third
Amendment” means the Third Amendment dated as of February 17, 2005, by
and among Borrower, the Lenders and Fleet.

 

“Third
Amendment Closing Date” shall mean the date on which all of the conditions
in Article 5 of the Third
Amendment have been meet.

 

(f)                                    The
following definitions are hereby deleted in their entirety from Section 1.1:
“Borrowing Base”, “Borrowing Base Certificate”, “Borrowing
Base Deficiency”, “Eligible Inventory”, “Eligible Receivables”
and “Unused Revolving Credit Availability”.

 

Section 1.2.                                Section 2.1,
The Advances, is hereby amended by the following:

 

(a)                                  Subsection 2.1(b),
The Revolving Credit Advances, is amended by deleting the word “Unused”
before the words “Revolving Credit Availability.”

 

(b)                                 Subsection 2.1(c),
The Swing Line Advances, is amended by deleting the word “Unused” before
the words “Revolving Credit Availability.”

 

(c)                                  Subsection 2.1(d),
Letters of Credit, is amended by deleting the word “Unused” before the
words “Revolving Credit Availability.”

 

Section 1.3.                                Section 2.8,
Fees, of
the Credit Agreement is hereby amended by deleting in its entirety the existing
Commitment Fee grid and replacing it with the following:

 

3

 

	
  Ratio
  of Consolidated

  Debt to EBITDA

  	
   

  	
  Commitment Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than 2.0 to 1.0

  	
   

  	
  0.35

  	
  %

  
	
  Greater than 1.50 to 1.0 but less than or
  equal to 2.00 to 1.0

  	
   

  	
  0.30

  	
  %

  
	
  Greater than 1.00 to 1.00 but less than or
  equal to 1.5 to 1.0

  	
   

  	
  0.25

  	
  %

  
	
  Equal to or less than 1.0 to 1.0

  	
   

  	
  0.20

  	
  %

  

 

Section 1.4.                                A
new Section 2.17, Incremental Revolving Credit Commitments, is
added at the conclusion of Article II to read in its entirety as follows:

 

“Section 2.17
Incremental Revolving Credit Commitments.

 

(a)                                  Provided
there exists no Default, upon notice to the Administrative Agent the Borrower
shall have the right to request, on one or more occasions prior to the
Revolving Credit Termination Date, an increase in the Revolving Credit Facility
in accordance with this Section 2.17 (the amount of any such
increase, the “Incremental Revolving Credit Commitment”). The aggregate
amount of all Incremental Revolving Credit Commitments shall not exceed
$22,500,000. Any request for an Incremental Revolving Credit Commitment shall
be in a minimum amount of $5,000,000.

 

(b)                                 The
Borrower may designate any Lender party to this Agreement (with the consent of such
Lender, which may be given or withheld in its sole discretion) or another
Person which qualifies as an Eligible Assignee (which may be, but need not be,
existing Lenders) which at the time agrees to (i) in the case of any such
designated Lender that is an existing Lender, increase its Pro Rata Share of its
Revolving Credit Commitments, and (ii) in the case of any other such
Person (an “Additional Lender”), become a party to this Agreement.

 

(c)                                  If
the Revolving Credit Facility is increased in accordance with this Section 2.17,
the Administrative Agent and the Borrower shall determine the effective date
(the “Incremental Effective Date”) and the final allocation of such
increase. The Administrative Agent shall promptly notify the Borrower and the
Lenders of the final allocation of such increase and the Incremental Effective
Date. Prior to any such increase, (i) the conditions set forth in Section 3.2
of the Credit Agreement, Conditions Precedent to Each Borrowing and Issuance,
shall have been satisfied, (ii) the Administrative Agent shall have
received from the Borrower updated financial projections and an officer’s
certificate, in each case in form and substance reasonably satisfactory to the
Administrative Agent, demonstrating that, after giving effect to any such
Incremental Revolving Credit Commitment, the Borrower will be in compliance
with the financial covenants set forth in Sections 8.1, 8.2, 8.3 and 8.4 of the
Credit Agreement, (iii) the Borrower shall deliver to the Administrative
Agent a certificate of each Loan Party dated as of the Incremental Effective
Date signed by a Responsible

 

4

 

Officer of
such Loan Party (a) certifying and attaching the resolutions adopted by
such Loan Party authorizing such increase, and stating that the Incremental
Revolving Credit Advances to be incurred pursuant to any Incremental Revolving
Credit Commitments shall be entitled to the benefits of the Security Agreement
and the Subsidiary Guaranty, and (b) in the case of the Borrower,
certifying that, before and after giving effect to such increase, (1) the
representations and warranties contained in Article IV and the
other Loan Documents are true and correct on and as of the Incremental
Effective Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Section 2.17,
the representations and warranties contained in subsections (a) and (b) of
Section 4.6 shall be deemed to refer to the most recent statements
furnished pursuant to Sections 7.2 and 7.3, and (2) no Default exists, and (iv) Borrower
shall deliver or cause to be delivered any legal opinions or other documents
reasonably requested by Administrative Agent in connection with any such
Incremental Revolving Credit Commitment. The Borrower shall also pay any costs
and expenses (including, without limitation attorney fees, title insurance
premiums and filing fees) incurred in connection with the increase of the
Revolving Credit Commitments pursuant to this Section 2.17.

 

(d)                                 The
terms and conditions of the Incremental Revolving Credit Advances made pursuant
to the Incremental Revolving Credit Commitments shall be identical to the
Revolving Credit Advances in all respects.

 

(e)                                  The
Incremental Revolving Credit Commitments shall be secured and guaranteed with
the other Debt under the Loan Documents and shall be secured and guaranteed
with the other Revolving Credit Commitments on a pari passu
basis and shall be entitled to the same rights, on a pro rata
basis, as the existing Revolving Credit Commitments.

 

(f)                                    Within
two Business Days of the Incremental Effective Date, the Borrower shall make
appropriate arrangements so that each Additional Lender receives a note, dated
the Incremental Effective Date, and substantially in the form of Exhibit A
attached hereto (each an “Incremental Revolving Credit Note” and,
collectively, the “Incremental Revolving Credit Notes”) to evidence such
Additional Lender’s Incremental Revolving Credit Commitment and each existing
Lender increasing its Revolving Credit Commitment pursuant to this Section 2.17,
shall receive a replacement Revolving Credit Note, dated the Incremental
Effective Date, to evidence in an aggregate amount such existing Lender’s
Revolving Credit Commitment plus such existing Lender’s Incremental
Revolving Credit Commitment. Each Incremental Revolving Credit Note shall
constitute a Loan Document under the Credit Agreement and shall (i) bear
interest as provided as provided in Section 2.7 of the Credit
Agreement, and (ii) be entitled to the benefits of the Credit Agreement
and the other Loan Documents.

 

5

 

(g)                                 Notwithstanding
anything to the contrary herein, in no event shall the interest rate payable on
any Incremental Revolving Credit Commitment exceed the interest rate from time
to time payable on the Revolving Credit Advances.

 

(h)                                 This
Section 2.17 shall supersede any provisions in Sections 2.13
or 11.1 to the contrary.”

 

(i)                                     No
commitment fee shall be payable on any Incremental Revolving Credit Commitment
until the Incremental Effective Date with respect to such Incremental Revolving
Credit Commitment.

 

Section 1.5.                                Section 3.2(b)(iii),
Conditions Precedent to Each Borrowing and Issuance, is amended and
restated in its entirety as follows:

 

“(iii)                         for each
Revolving Credit Advance, Swing Line Advance made by the Swing Line Bank or
issuance or renewal of any Letter of Credit, the outstanding amount of the
Revolving Credit Advances shall not be in excess of the remaining Revolving
Credit Availability after giving effect to any such Advance or issuance or renewal,
respectively.”

 

Section 1.6.                                Section 6.17,
Capital Expenditures, of the Credit Agreement is amended by amending and
restating the table contained therein to read in its entirety as follows:

 

	
  Period

  	
   

  	
  Maximum Capital Expenditures per Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  August 1, 2004 through July 31,
  2005

  	
   

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  August 1, 2005 through July 31,
  2006

  	
   

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
  August 1, 2006 through July 31,
  2007 and each period thereafter

  	
   

  	
   

  	
  $

  	
  7,500,000

  	
   

  

 

Section 1.7.                                Section 7.19,
Borrowing Base Certificate, of the Credit Agreement is hereby deleted in
its entirety.

 

Section 1.8.                                Section 7.22, Monthly
Accounts Receivable Aging Reports, etc., of the Credit Agreement is hereby
deleted in its entirety.

 

Section 1.9.                                Section 8.2,
Consolidated Debt to EBITDA Ratio, of the Credit Agreement is amended by
deleting the maximum Ratio of Consolidated Debt to EBITDA covenant levels for
the periods ending on January 31, 2005 and all periods thereafter and
replacing them with the following:

 

	
  Four
  Fiscal Quarters ending on:

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 31, 2005

  	
   

  	
  2.25

  	
   

  
	
  April 30, 2005

  	
   

  	
  2.25

  	
   

  
	
  July 31, 2005 and each fiscal quarter
  thereafter

  	
   

  	
  2.25

  	
   

  

 

6

 

Section 1.10.                         Section 9.12,
Borrowing Base Deficiency, of the Credit Agreement is hereby deleted in
its entirety.

 

ARTICLE 2.  Confirmations and References.

 

Section 2.1.                             Continuing
Effect.    The
Credit Agreement and the other Loan Documents delivered in connection therewith
are, and shall continue to be, in full force and effect, and are hereby
ratified and confirmed in all respects, except that, on and after the date
hereof, (a) all references in the Loan Documents (i) to the “Credit
Agreement,” “thereto,” “thereof,” “thereunder” or words of like import
referring to the Credit Agreement shall mean the Credit Agreement as amended
hereby and (ii) to the “Loan Documents” shall be deemed to include this
Third Amendment; and (b) all references in the Credit Agreement to “this
Agreement,” “hereto,” “hereof,” “hereunder” or words of like import referring
to the Credit Agreement shall mean the Credit Agreement as amended hereby.

 

Section 2.2.                                InterCreditor
Agreement.           The Intercreditor
Agreement shall remain in full force and effect, and is hereby ratified and
confirmed in all respects.

 

Section 2.3.                                Confirmation
of Liens.                          The Liens granted pursuant to
the Collateral Documents secure, without limitation, the Obligations of the
Borrower and its Subsidiaries to the Lenders and the Administrative Agent under
the Credit Agreement as amended by this Third Amendment. The term “Obligations”
as used in the Collateral Documents (or any other term used therein to refer to
the liabilities and obligations of the Borrower and its Subsidiaries to the
Lenders and the Administrative Agent), include, without limitation, Obligations
to the Lenders and the Administrative Agent under the Credit Agreement as
amended by this Third Amendment.

 

ARTICLE 3.  Representations and Warranties.

 

Each of the
Borrower and each other Loan Party hereby represents and warrants to the
Lenders and the Administrative Agent that:

 

Section 3.1.                                Existing
Representations. As of the date hereof and after giving effect to this
Third Amendment, each and every one of the representations and warranties set
forth in the Loan Documents shall be true, accurate and complete in all
respects and with the same effect as though made on the date hereof, and each
shall hereby be incorporated herein in full by reference as if restated herein
in its entirety, except for any representation or warranty limited by its terms
to a specific date and except for changes contemplated by this Third Amendment
or in the ordinary course of business which are not prohibited by the Credit
Agreement (as amended hereby) and which shall not, either singly or in the
aggregate, result in a Material Adverse Change.

 

7

 

Section 3.2.                                No
Default.  As of the date hereof, there exists no Default or Event
of Default under the Credit Agreement, as amended hereby, and no event which,
with the giving of notice or lapse of time, or both, would constitute a Default
or Event of Default.

 

Section 3.3.                                Power,
Authority, Consents.  The Borrower and each of its Subsidiaries
has the power to execute, deliver and perform the Credit Agreement, as amended
by this Third Amendment. The Borrower and each of its Subsidiaries has taken
all necessary action to authorize the execution, delivery and performance of
this Third Amendment. No consent or approval of any Person other than those
that have been obtained is required in connection with the execution, delivery
or performance by the Borrower or any of its Subsidiaries of this Third
Amendment or the consummation of any of the transactions consented to in Section 1
hereof.

 

Section 3.4.                                No
Violation of Law or Agreements.  The execution, delivery and
performance by the Borrower and each of its Subsidiaries of this Third
Amendment will not violate any provision of law presently in effect and will
not conflict with or result in a breach of any order, writ, injunction,
ordinance, resolution, decree, or other similar document or instrument
presently in effect of any court or governmental authority, bureau or agency,
domestic or foreign, or the certificate of incorporation or by-laws of the
Borrower or such Subsidiary, or create (with or without the giving of notice or
lapse of time, or both) a default under or breach of any agreement, bond, note
or indenture presently in effect to which the Borrower or any Subsidiary is a
party, or by which any of them is bound or any of their properties or assets is
affected, or result in the imposition of any Lien of any nature whatsoever upon
any of the properties or assets owned by or used in connection with the
business of the Borrower or any of its Subsidiaries, except for the Liens
created and granted pursuant to the Collateral Documents as acknowledged and
confirmed herein.

 

Section 3.5.                                Binding
Effect. This Third Amendment has been duly executed and delivered by
Borrower and constitutes the valid and legally binding obligation of Borrower,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, relating to or affecting the enforcement of creditors’ rights
generally, and except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.

 

ARTICLE 4.  Conditions to Amendment.

 

The
effectiveness of the amendments contained in Article 1 shall be subject to
the fulfillment of the following conditions precedent:

 

Section 4.1.                                Amendment.
Borrower and each of the Lenders shall have executed and delivered to the
Administrative Agent this Third Amendment.

 

Section 4.2.                                No
Default. There shall exist no Event of Default or Default under the Credit
Agreement.

 

8

 

Section 4.3.                                Representations
and Warranties. The representations and warranties contained in Article 4
hereof shall be true and correct in all material respects on the date hereof as
if made on the date hereof.

 

Section 4.4.                                Certificate.
The Borrower shall have delivered a certificate signed on behalf of the
Borrower, by a Responsible Officer and the Secretary or an Assistant Secretary
of the Borrower, dated the date hereof (the statements made in such certificate
shall be true on and as of the date hereof), certifying as to (1) the
truth of the representations and warranties contained in the Loan Documents as
though made on and as of the date hereof, except for any representation or
warranty limited by its terms to a specific date and except for changes in the
ordinary course of business that are not prohibited by the Credit Agreement, (2) the
absence of any event occurring and continuing, or resulting from the
transactions contemplated by this Third Amendment, that constitutes a Default
or an Event of Default and (3) the certification of the names and true
signatures of the officers of the Borrower authorized to sign this Third
Amendment and each other Loan Document to which they are or are to be parties
and the other documents to be delivered hereunder and thereunder.

 

Section 4.5.                                Amendment
Fees. The Borrower shall have paid an amendment fee to the Administrative
Agent, for the account of each Lender which has approved this Third Amendment,
as evidenced by such Lender’s timely execution and delivery of a counterpart
signature page to this Third Amendment, in an amount equal to 0.10% (i.e. 10 basis
points) of the aggregate of such approving Lenders’ Commitments immediately
after the effectiveness of this Third Amendment.

 

Section 4.6.                                Fees
and Expenses. The Borrower shall have paid all fees referred to in the Fee
Letter, dated as of the date hereof, from Fleet to Borrower, at such times and
in such manner as set forth therein and all accrued fees and expenses of the
Administrative Agent and the Lenders (including reasonable fees and expenses of
counsel for the Administrative Agent).

 

ARTICLE 5.  Miscellaneous.

 

Section 5.1.                                Continued
Effectiveness. Except as specifically amended herein, the Credit Agreement
and each of the other Loan Documents shall remain in full force and effect in
accordance with their respective terms.

 

Section 5.2.                                Governing
Law. THIS THIRD AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS RULES PERTAINING
TO CONFLICTS OF LAWS OTHER THAN GENERAL OBLIGATIONS LAW SECTION 5.1401.

 

Section 5.3.                                Severability.
The provisions of this Third Amendment are severable, and if any clause or
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision in this Third Amendment in any jurisdiction.

 

9

 

Section 5.4.                                Counterparts.
This Third Amendment may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Delivery of an executed counterpart of this Third Amendment by facsimile shall
be as effective as delivery of an originally executed counterpart.

 

Section 5.5.                                Binding
Effect; Assignment. This Third Amendment shall be binding upon and inure to
the benefit of the Borrower and its respective successors and to the benefit of
the Administrative Agent and the Lenders and their respective successors and
assigns. The rights and obligations of the Borrower under this Third Amendment
shall not be assigned or delegated without the prior written consent of the
Lenders, and any purported assignment or delegation without such consent shall
be void.

 

Section 5.6.                                Expenses.
The Borrower shall pay the Administrative Agent upon demand for all reasonable
expenses, including reasonable fees of counsel for the Administrative Agent,
incurred by the Administrative Agent in connection with the preparation,
negotiation and execution of this Third Amendment and any documents required to
be furnished herewith.

 

Section 5.7.                                USA
PATRIOT Act Notice. Each Lender and the Administrative Agent (for itself
and not on behalf of any Lender) hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it is required to obtain, verify
and record information that identifies the Borrower, which information includes
the name and address of the Borrower and other information that will allow such
Lender or the Administrative Agent, as applicable, to identify the Borrower in
accordance with the Act.

 

[Signature Pages Follow]

 

10

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

 

 

	
   

  	
  CANTEL MEDICAL CORP.,

  
	
   

  	
    as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig A.
  Sheldon

  	
   

  
	
   

  	
   

  	
  Name: Craig
  A. Sheldon

  
	
   

  	
   

  	
  Title:
  Senior Vice President & Chief Financial

  
	
   

  	
   

  	
  Officer

  

 

 

Third
Amendment to Credit Agreement

 

 

	
   

  	
  FLEET NATIONAL BANK,

  
	
   

  	
  a Bank of
  America Company,

  
	
   

  	
   

  	
  as Administrative Agent,

  
	
   

  	
   

  	
  as initial Issuing Bank,

  
	
   

  	
   

  	
  as Swing Line Bank and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard
  M. Williams

  	
   

  
	
   

  	
   

  	
  Name:
  Richard M. Williams

  
	
   

  	
   

  	
  Title: Credit Products
  Officer

  
					

 

 

	
   

  	
  PNC
  BANK, NATIONAL

  
	
   

  	
  ASSOCIATION,

  
	
   

  	
   

  	
  as Documentation Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey
  Blakemore

  	
   

  
	
   

  	
   

  	
  Name: Jeffrey Blakemore

  
	
   

  	
   

  	
  Title: Senior Vice
  President

  
					

 

 

	
   

  	
  WELLS FARGO BANK, NATIONAL

  
	
   

  	
  ASSOCIATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth
  E. LaChance

  	
   

  
	
   

  	
   

  	
  Name: Kenneth E. LaChance

  
	
   

  	
   

  	
  Title: Vice PresidentEXHIBIT 10.1

 

DEPARTMENT 56, INC. STOCK OPTION AGREEMENT

FOR OPTIONS UNDER THE 2004 STOCK INCENTIVE PLAN

 

	
   

  	
  Optionee:

  	
   

  	
   

  	
   

  	
  Grant
  Date: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Number of Shares subject
  to the Option:

  	
   

  	
   

  	
  Exercise
  Price per Share: 

  	
   

  
									

 

1.                                       General.

 

1.1                                 The Company hereby grants to the Optionee,
subject to the terms of this Agreement and the Company’s 2004 Stock Incentive
Plan (the “Plan”), the right and option (the “Option”) to purchase, at the
Exercise Price, the number of Shares set forth above.  The number of Shares and the Exercise Price
are subject to adjustment as provided in Section 10 of the Plan, which is
made a part of this Agreement.  Except as
otherwise defined herein, capitalized terms used in this Agreement shall have
the same definitions as set forth in the Plan. 
For purposes of this Agreement, (a) the term “person” shall mean an
individual, a corporation, a partnership, an association, a trust, a sole
proprietorship, a limited liability company, or any other entity or
organization, including a government or governmental agency, instrumentality,
authority, commission or court, (b) the term “Affiliate” of the Company shall
mean any person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company and (b) the term “control” shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any person, whether through the ownership of equity interests, by
contract or otherwise.

 

1.2                                 This Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code.

 

1.3                                 The Option shall be exercisable to the extent
and in the manner provided in this Agreement for a period of 10 years from the
date hereof (the “Exercise Term”); provided, however, that the
Option may be terminated earlier as provided in Section 4 or 5.

 

2.                                       Vesting and Exercisability of Options.

 

2.1                                 Vesting.  Subject to the provisions of
this Agreement and the Plan, the Option shall vest and become exercisable
immediately.

 

2.2                                 Timing of Exercise.  The
Optionee or the guardian, executor, administrator or other legal representative
(each a “Legal Representative”) of the Optionee may exercise the Option, in
whole or in part, at any time or from time to time.

 

3.                                       Manner of Exercise and Payment.

 

3.1                                 Subject to the terms and conditions of this
Agreement and the Plan, the Option may be exercised by delivery of written
notice, in person or by mail, to the Secretary of the Company, at the Company’s
principal executive office (or such other address as the Company may from time
to time notify the Optionee in writing). Such notice shall state that the
Optionee is electing to exercise the Option and the underlying number of Shares
being exercised and shall be signed by the Optionee

 

 

or,
where applicable, by his/her Legal Representative.  The Company may require proof satisfactory to
it as to the right of the Legal Representative to exercise the Option.

 

3.2                                 The notice of exercise described in Section 3.1
shall be accompanied by the full purchase price for the underlying Shares being
exercised, such purchase price to be paid by check.  No fewer than 10 Shares may be purchased at
any one time upon an exercise of the Option, unless the number of Shares so
purchased constitutes the total number of Shares then purchasable under the
Option.

 

3.3                                 The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any Shares
subject to the Option until the conditions in Section 11 of the Plan have been
satisfied.

 

4.                                       Certain Restrictions.

 

4.1                                 Non-transferability.  The
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and an Option may be exercised during the
lifetime of such Optionee only by the Optionee or his/her Legal
Representative.  The terms of such Option
shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee.

 

4.2                                 Employment Termination. 
(a)  Except as may be agreed between the Committee and the
Optionee, if the Optionee shall no longer be employed by the Company or any of
its Subsidiaries, for any reason whatsoever (including by reason of death,
permanent disability or adjudicated incompetency) (“Terminated” or a “Termination”),
irrespective of whether the Optionee receives, in connection with the
Termination, any severance or other payment from the Company or any of its
Subsidiaries under any employment agreement or otherwise, the Option shall
terminate and shall be of no further force or effect from and after the date of
such Termination (the “Termination Date”).

 

If any portion of the Option is exercisable pursuant to
Section 2.1 hereof on the Termination Date, the last day on which the
Terminated Optionee (or the Legal Representative) may exercise the Option shall
be as follows:

 

(1) In the event the Termination is the result of the Optionee’s
resignation (other than “Retirement” as defined below), the last day on which the
Option may be exercised (and after which day the Option shall terminate and be
of no further force or effect) shall be the ninetieth (90th) day
following the Termination Date; provided, however, that in the event the
Optionee dies during the period between the Termination Date and the last day
of Option exercisability as set forth in this clause 4.2(a)(1), then the Legal
Representative may exercise the Option at any time until and through (but not
after) the three-hundred-sixty-fifth (365th) day after the date of the Optionee’s
death.

 

(2) In the event the Termination is the result of the Optionee’s “Retirement”
(being the Optionee’s resignation from employment or the Company’s termination
of employment without Cause, in either case, at such time as the Optionee is
age sixty (60) or greater), the last day on which the Option may be exercised
(and after which day the Option shall terminate and be of no further force or
effect) shall be the tenth (10th) anniversary of the Grant Date of
the Option; provided, however, that in the event the Optionee dies
during the period between the Termination Date and the last day of Option
exercisability as set forth in this

 

 

clause
4.2(a)(2), then the Legal Representative may exercise the Option at any time
until and through (but not after) the three-hundred-sixty-fifth (365th) day
after the date of the Optionee’s death.

 

(3) In the event the Termination is the result of the Optionee’s death
while employed by the Company or one of its Affiliates, the Legal
Representative may exercise the Option at any time within
three-hundred-sixty-five (365) days after the date of the Optionee’s death (and
after such 365th day the Option shall terminate and be of no further force or
effect).

 

(4) In the event the Termination is the result of the Company’s
dismissal without Cause of the Optionee from employment (other than due to
Retirement), the last day on which the Option may be exercised (and after which
day the Option shall terminate and be of no further force or effect) shall be
the later (the “Later Day”) of (x) the last day in respect of which the
Optionee is paid severance following the Termination Date (e.g., the end of the
severance period) and (y) the ninetieth (90th) day following the
Termination Date; provided, however, that in the event the Optionee dies
during the period between the Termination Date and the last day of Option
exercisability as set forth in this clause 4.2(a)(4), then the Legal
Representative may exercise the Option at any time until and through (but not
after) the three-hundred-sixty-fifth (365th) day after the date of the Optionee’s
death.

 

(5) In the event the Termination is the result of the Company’s
dismissal with Cause of the Optionee from employment, the last day on which the
Option may be exercised (and after which day the Option shall terminate and be
of no further force or effect) shall be the Termination Date.

 

(b)          For purposes of this Section 4.2, the term “Cause” shall mean the
Company’s determination that the Optionee shall have committed one or more of
the following: fraud, material and deliberate injury or attempted injury to the
business or a fellow employee or customer in the line of work, breach of any
law or Company policy which presents the reasonable likelihood of a material
adverse impact to the Company’s business or its reputation, material
competition with the Company (including solicitation of its employees or
customers), willful breach of duty, habitual neglect, or habitual absenteeism,
or substantial dependence on or addiction to alcohol or any controlled
substance.

 

5.                                       Prohibition Against Certain Activities.

 

5.1                                 Restricted Activities. The Optionee understands that the Company
is granting to the Optionee an option to purchase Shares to reward the Optionee
for the Optionee’s future efforts and loyalty to the Company and its Affiliates
by giving the Optionee the opportunity to participate in the potential future
appreciation of the Company. 
Accordingly, the Optionee agrees that: (a) s/he will not at any time
during his/her employment with the Company or any Affiliate, or after any
Termination, directly or indirectly disclose or furnish to any other person or
use for his/her own or any other person’s account any confidential or
proprietary knowledge or any other information which is not a matter of public
knowledge obtained during the entire course of his/her employment with, or
other performance of services for, the Company or any Affiliate or any
predecessor of any of the foregoing, no matter from where or in what manner the
Optionee may have acquired such knowledge or information, and s/he shall retain
all such knowledge and information in trust for the benefit of the Company, its
Affiliates and the successors and assigns of any of them; (b) if s/he is

 

 

Terminated,
s/he will not for two years following the Termination directly or indirectly
solicit for employment, including without limitation recommending to any
subsequent employer the solicitation for employment of, any person who at the
time of the solicitation is employed by the Company or any Affiliate  (a “Dept. 56 Employee”) (it being understood
that, if the Optionee becomes affiliated with another person (the “Successor”)
and the Successor solicits for employment a Dept. 56 Employee, it shall not
constitute a solicitation hereunder if the Optionee does not solicit, recommend
to the Successor, or otherwise bring to the attention of the Successor, the
Dept. 56 Employee); and (c) s/he will not at any time during his/her employment
or after any Termination publish any statement or make any statement (under
circumstances reasonably likely to become public or that s/he might reasonably
expect to become public) critical of the Company or any Affiliate, or in any
way adversely affecting or otherwise maligning the business or reputation of the
Company or any of its Affiliates or any of their respective officers, directors
or employees (any activity described in clause (a), (b) or (c) of this sentence
being herein referred to as a “Prohibited Activity”).  In addition, accordingly, the Optionee agrees
that s/he will not at any time during his/her employment with the Company or
any Affiliate or the twelve (12) months thereafter (including any period
following Termination during or in respect of which s/he is receiving any
severance payment) engage in any Competitive Activity (as defined below)
anywhere in the world (including, without limitation, anywhere in the United
States of America, the United Kingdom, Hong Kong, China or Taiwan).

 

The term “Competitive
Activity” shall mean engaging in any of the following activities:  (a) directly or indirectly through one or
more intermediaries controlling any Competitor (as defined below) or owning any
equity or debt interests in any Competitor (other than equity or debt interests
which are publicly traded and do not exceed 2% of the particular class of
interests outstanding); (b) directly or indirectly soliciting, diverting,
taking away, appropriating or otherwise interfering with any of the employees
or customers of the Company or any Affiliate; or (c) employment by (including
serving as an officer or director of), or providing consulting or other
services to, any Competitor.  The term “Competitor”
means any person who derives significant revenues, income or reputational gain
from producing, selling, designing, dealing or otherwise conducting commercial
activity in, with or pertaining to, miniature decorative or collectible
buildings or coordinated “village” accessories, figurines or general decorative
giftware products.

 

[THE
REST OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

 

5.2                                 Right to Terminate Option; Disgorgement.  The
Optionee understands that the Company is granting to the Optionee an option to
purchase Shares to reward the Optionee for the Optionee’s future efforts and
loyalty to the Company and its Affiliates by giving the Optionee the
opportunity to participate in the potential future appreciation of the
Company.  Accordingly, if the Optionee:
(a) engages in any Prohibited Activity; (b) engages in any Competitive
Activity; or (c) is convicted of a crime against the Company or any Affiliate,
then, in addition to any other rights and remedies available to the Company,
the Company shall be entitled, in its sole discretion, to terminate the Option,
which shall then be of no further force or effect.

 

The Optionee further understands that if he/she is found to have
violated any provision of Section 5.1 after he/she exercises the Option, the
Company has the right to demand repayment of (and the Optionee shall be
obligated upon such written demand to repay) all of Optionee’s after-tax profit
realized from the exercise of the Option (including any net cash proceeds from
the sale of Shares acquired through exercise of the Option and any Shares held
by the Optionee acquired through exercise of the Option).

 

6.                                       Specific Performance.  The
parties hereto acknowledge that there will be no adequate remedy at law for a
violation of any of the provisions of this Agreement and that, in addition to
any other remedies which may be available, all of the provisions of this Agreement
shall be specifically enforceable in accordance with their respective terms.

 

7.                                       Withholding.  Prior to the issuance of any
Shares to the Optionee hereunder, the Optionee shall remit to the Company the
full amount of any applicable Withholding Taxes.  The Company shall have the right to deduct
from any distribution of cash to the Optionee any amount necessary in
satisfaction of any applicable Withholding Taxes.

 

8.                                       Entire Agreement.  This
Agreement and the Plan constitute the entire agreement, and supersede all prior
agreements and understandings, oral and written, between the parties hereto
with respect to the subject matter hereof.

 

9.                                       Choice of Law.  This Agreement shall be interpreted under the laws of the State of New
York (except with respect to matters of employment law, which shall be
interpreted under the laws of the State of Minnesota), entirely independent of
the forum in which the Agreement or any part of it may come up for
construction, interpretation or enforcement.

 

10.                                 Acknowledgment.  The
Optionee hereby acknowledges prior receipt of a copy of the Plan and agrees to
be bound by all the terms and provisions thereof as the same may be amended
from time to time.  The Optionee hereby
acknowledges that s/he has reviewed the Plan and this Agreement and understands
his/her rights and obligations thereunder and hereunder.  The Optionee also acknowledges that s/he has
been provided with such information concerning the Company, the Plan and this
Agreement as s/he and his/her advisors have requested.

 

 

DEPARTMENT 56, INC.

 

 

	
  By:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [Name]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00080-of-00352.parquet"}]]