Rayovac 2010 Annual Report Download - page 87

liens on assets, merger or consolidation with another company, transfer or sale of all or substantially all assets,
and transactions with affiliates.
In addition, the 2019 Indenture provides for customary events of default, including failure to make required
payments, failure to comply with certain agreements or covenants, failure to make payments on or acceleration of
certain other indebtedness, and certain events of bankruptcy and insolvency. Events of default under the
indenture arising from certain events of bankruptcy or insolvency will automatically cause the acceleration of the
amounts due under the 12% Notes. If any other event of default under the 2019 Indenture occurs and is
continuing, the trustee for the indenture or the registered holders of at least 25% in the then aggregate
outstanding principal amount of the 12% Notes may declare the acceleration of the amounts due under those
notes.
At September 30, 2010, we were in compliance with all covenants under the 12% Notes. We, however, are
subject to certain limitations as a result of our Fixed Charge Coverage Ratio under the 2019 Indenture being
below 2:1. Until the test is satisfied, we and certain of our subsidiaries are limited in our ability to make
significant acquisitions or incur significant additional senior credit facility debt beyond the Senior Credit
Facilities. We do not expect our inability to satisfy the Fixed Charge Coverage Ratio test to impair our ability to
provide adequate liquidity to meet the short-term and long-term liquidity requirements of our existing businesses,
although no assurance can be given in this regard.
In connection with the Merger, we obtained the consent of the note holders to certain amendments to the
2019 Indenture (collectively, the “Supplemental Indenture”). The Supplemental Indenture became effective upon
the closing of the Merger. Among other things, the Supplemental Indenture amended the definition of change in
control to exclude Harbinger Master Fund and Harbinger Capital Partners Special Situations Fund, L.P.
(“Harbinger Special Fund”) and, together with Harbinger Master Fund, the “HCP Funds”) and Global
Opportunities Breakaway Ltd. (together with the HCP Funds, the “Harbinger Parties”), and their affiliates,
including Harbinger Group Inc., and increased the Company’s ability to incur indebtedness up to $1,850 million.
During Fiscal 2010 we recorded $3 million of fees in connection with the consent. The fees are classified as
Debt issuance costs and will be amortized as an adjustment to interest expense over the remaining life of the 12%
Notes effective with the closing of the Merger.
ABL Revolving Credit Facility
The ABL Revolving Credit Facility is governed by a credit agreement (the “ABL Credit Agreement”) with
Bank of America as administrative agent (the “Agent”). The ABL Revolving Credit Facility consists of revolving
loans (the “Revolving Loans”), with a portion available for letters of credit and a portion available as swing line
loans, in each case subject to the terms and limits described therein.
The Revolving Loans may be drawn, repaid and reborrowed without premium or penalty. The proceeds of
borrowings under the ABL Revolving Credit Facility are to be used for costs, expenses and fees in connection
with the ABL Revolving Credit Facility, for working capital requirements of us and our subsidiaries’,
restructuring costs, and other general corporate purposes.
The ABL Revolving Credit Facility carries an interest rate, at our option, which is subject to change based
on availability under the facility, of either: (a) the base rate plus currently 2.75% per annum or (b) the reserve-
adjusted LIBOR rate (the “Eurodollar Rate”) plus currently 3.75% per annum. No amortization will be required
with respect to the ABL Revolving Credit Facility. The ABL Revolving Credit Facility will mature on June 16,
2014.
The ABL Credit Agreement contains various representations and warranties and covenants, including,
without limitation, enhanced collateral reporting, and a maximum fixed charge coverage ratio. The ABL Credit
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