EXHIBIT (b)(1)
LOAN AND SECURITY AGREEMENT
By and Among
U.S. VISION, INC.,
STYL-RITE OPTICAL MFG. CO., INC.,
USV OPTICAL, INC.,
U.S. VISION HOLDINGS, INC.,
9072-8411 QUEBEC, INC.,
d/b/a, Optik Pro Baie 2000, and
HEALTH EYE CARE STATISTICS, INC.
as Obligors
and
COMMERCE BANK, N.A., Lender
as of October 30, 2002
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of
October 30, 2002, by and among COMMERCE BANK, N.A. (the "Lender") and U.S.
VISION, INC., a Delaware corporation ("U.S. Vision"), STYL-RITE OPTICAL MFG.
CO., INC., a Florida corporation ("Styl"), USV OPTICAL, INC., a Texas
corporation ("USV"), and U.S. VISION HOLDINGS, INC., a Delaware corporation
("Holdings"; U.S. Vision, Styl, USV, and Holdings, individually, a "Borrower"
and, collectively, the "Borrowers"), and 9072-8411 QUEBEC, INC. "Optik Pro Baie
2000" ("Optik Pro"), and HEALTH EYE CARE STATISTICS, INC. ("Health"; and
together with Optik Pro, individually, a "Guarantor" and, collectively, the
"Guarantors"; each Borrower and Guarantor, individually, an "Obligor" and,
collectively, the "Obligors").
BACKGROUND
Simultaneously with the execution hereof, U.S. Vision and Kayak
Acquisition Corp., a Delaware corporation ("Kayak"), will consummate the
transactions contemplated by the Agreement and Plan of Merger by and between
Kayak and U.S. Vision dated May 14, 2002 (the "Agreement and Plan of Merger")
pursuant to which, inter alia, Kayak will merge with and into U.S. Vision and
the separate corporate existence of Kayak will cease and U.S. Vision will be the
surviving company (the "Merger").
In connection with the Merger, the Lender has agreed to make available
to Borrowers, subject to the terms and provisions hereof, certain Loans, as more
fully hereinafter described.
NOW, THEREFORE, in consideration of the mutual covenants and premises
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby mutually acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. DEFINITIONS, CERTAIN RULES OF CONSTRUCTION
1.1 Defined Terms. Each initially capitalized term used herein
shall have the meaning set forth in the recitals hereto, in EXHIBIT A attached
hereto and made a part hereof, or as otherwise set forth in the Agreement, for
the purposes hereof and for each of the Loan Documents. All initially
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Uniform Commercial Code as enacted in the State of New Jersey.
1.2 Accounting Reports and Principles. The character or amount
of any asset, liability, account or reserve and of any item of income or expense
to be determined, and any consolidation or other accounting computation to be
made, and the construction of any definition containing a financial term,
including, but not limited to, capitalized terms not otherwise defined herein,
pursuant to this Agreement or any other Loan Document, shall be construed,
determined or made, as the case may be, in accordance with GAAP, consistently
applied, unless such principles are inconsistent with any express provision of
this Agreement.
1.3 Business Day. Whenever any payment or other Obligation
hereunder, under the Notes or any other Loan Document, is due on a day other
than a Business Day, such
shall be paid or performed on the Business Day next following the prescribed due
date, except as otherwise specifically provided for herein to the contrary, and
such extension of time shall be included in the computation of interest and
charges. Any reference made herein or in any other Loan Document to an hour of
day shall refer to the then-prevailing time in Cherry Hill, New Jersey unless
specifically provided herein to the contrary.
1.4 Obligors' Authorization to Charge Accounts. Whenever
Obligors are obligated hereunder, under the Notes or any other Loan Document, to
make payments of any nature to Lender, including payments of principal, interest
and Lender's Costs, Lender, on Lender's behalf, shall be entitled, and Obligors
hereby authorize Lender, on Lender's behalf, to debit from any Deposit Account
of any Obligor maintained with Lender or any Affiliate of Lender, the amount of
such payment due; provided, however, that in the event there are insufficient
funds in such accounts to pay all currently due payments to Lender, Obligors
shall pay to Lender the difference when such payment is due.
1.5 Lender's Costs. Borrowers shall, within 15 days of
Lender's request, pay Lender all Lender's Costs incurred by Lender through the
date of such request. Until paid, all past due and owing interest payments, fees
and Lender's Costs shall be deemed to be part of the principal balance of the
Line of Credit, bear interest at either the Term Interest Rate or the Line
Interest Rate, whichever is higher, and be secured by the Borrowers' Collateral
and guaranteed by the Guarantors pursuant to the Guarantors' respective Guaranty
and Surety Agreements which shall be secured by the Movable Hypothec and the
General Security Agreement. The Obligations of Borrowers under this Section
shall survive the termination of this Agreement and the payment of the Notes.
2. THE LOAN
2.1 Line of Credit.
2.1.1 Line Established. Provided that no Event of
Default or Potential Default has occurred and is continuing, and subject to the
terms and conditions set forth herein, commencing on the Closing Date and
expiring on the day next preceding the Line Termination Date, unless Borrowers
shall have terminated this Agreement, upon Borrowers' request from time-to-time,
Lender hereby commits to extend one or more Advances to Borrowers, the aggregate
of which outstanding at any one time shall not exceed Seventeen Million Five
Hundred Thousand Dollars ($17,500,000) to be used exclusively for general
working capital purposes of Borrowers. Prior to the Line Termination Date and,
subject to the provisions of this Agreement, Borrowers may borrow, repay and
reborrow under the Line.
2.1.2 Line of Credit Note. On the date hereof and to
evidence the Indebtedness under the Line, Borrowers shall execute and deliver to
Lender the Line of Credit Note.
2.1.3 Advances. Provided that no Event of Default or
Potential Default has occurred and is continuing, and subject to the terms and
conditions set forth herein, Borrowers may request Advances under the Line in
accordance with the following provisions. Borrowers shall give the Lender notice
in the form of EXHIBIT B hereto (a "Notice of
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Borrowing") not later than (i) 2:00 p.m. on the Closing Date with respect to the
initial Advance, and (ii) not later than 12:00 noon on the same Business Day, of
each Prime Rate Advance and each LIBOR Rate Advance after the Closing Date, of
Borrowers' intention to borrow, specifying (a) the date of such Advance, which
shall be a Business Day, (b) the amount of such Advance, which shall be in a
principal amount of not less than One Hundred Thousand Dollars ($100,000), and
(c) whether the Advance is to be a LIBOR Rate Advance or Prime Rate Advance or a
combination thereof. Notices of Borrowing received after 12:00 noon, other than
Notices of Borrowing received prior to 2:00 p.m. on the Closing Date, shall be
deemed received on the next Business Day.
2.1.4 Interest Rate Options. Subject to the
provisions of this Paragraph, at the election of the Borrowers, the principal
balance of each Advance shall bear interest at Prime plus One Hundred Fifty
(150) basis points (the "Prime Rate") or at LIBOR, as determined in accordance
with Paragraph 2.1.5 below, plus Three Hundred Seventy Five (375) basis points
(the "LIBOR Rate"); provided, however, that in no event shall the applicable
interest rate be less than Five and One Half Percent (5.5%) per annum. The
Borrowers shall select whether an Advance will accrue interest at the Prime Rate
(a "Prime Rate Advance") or at the LIBOR Rate (a "LIBOR Rate Advance") at the
time a Notice of Borrowing is given pursuant to Paragraph 2.1.3. Any Advance or
any portion thereof as to which the Borrowers shall not have duly specified an
interest rate as provided herein shall conclusively be deemed to be a Prime Rate
Advance. All interest on the Line shall be calculated on the basis of a 360 day
year for the actual number of days elapsed in each period.
2.1.5 LIBOR Rate Interest Period. Other than with
respect to Advances extended at Closing, in connection with each LIBOR Rate
Advance, no later than 12:00 p.m. (New Jersey time) two Business Days prior to
the end of each calendar month, the Borrowers shall select monthly the interest
rate applicable to the current 30-day LIBOR period which shall then constitute
LIBOR for the succeeding calendar month to be applicable to the LIBOR Rate and
all LIBOR Rate Advances outstanding and which may become outstanding during the
succeeding calendar month. The Borrowers shall give the Lender notice of
Borrowers' selection under this Paragraph in the Form of the Notice of
Borrowing. If Borrowers fail to make an election hereunder for any month, the
previous election made under this Paragraph shall apply for that month.
2.1.6 Facility Fee. As long as there is any
outstanding Obligation under the Line of Credit, commencing on November 30,
2002, for the period between the Closing Date and November 30, 2002, and on each
December 31, March 31, June 30 and September 30 thereafter, Borrowers shall
jointly and severally pay to Lender, within three (3) days after the close of
each such period, a fee in an amount equal to one quarter of one percent (0.25%)
per annum calculated on the basis of a 360 day year for the actual number of
days elapsed in each period of the average daily unused portion of the Line of
Credit. Any permanent reductions of the Maximum Available Credit will be taken
into account in the calculation of the Facility Fee.
2.1.7 Line Closing Fee. Simultaneously with the
execution of this Agreement, Borrowers shall pay to Lender a Line Closing Fee in
the amount of One Hundred Seventy Five Thousand Dollars ($175,000). Borrowers
acknowledge and agree that such Line Closing Fee is deemed fully earned upon the
payment thereof and is non-refundable in all events.
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2.1.8 Principal and Interest Payments. Until the
Indebtedness associated with the Line of Credit is paid in full, interest alone
shall be paid monthly in arrears at the applicable Line Interest Rate on the
first day of the month following the month in which the first Advance is made
and thereafter on the first day of each consecutive month. Anything to the
contrary herein notwithstanding all unpaid principal of the Line and all
interest accrued thereon shall be paid in full by the Borrowers not later than
the Line Termination Date.
2.1.9 Maximum Available Credit. The outstanding
principal balance of the Line of Credit shall not exceed, at any time, Seventeen
Million Five Hundred Thousand Dollars ($17,500,000) (the "Maximum Available
Credit"). Borrowers jointly and severally covenant and agree to immediately
repay, without notice or demand, any principal balance of the Line of Credit in
excess of the Maximum Available Credit. Borrowers may from time to time, at
their option, permanently reduce the Maximum Available Credit on 5 Business
Days' prior written notice to Lender. All such reductions shall be in minimum
amounts of $1,000,000 and integral multiples thereof and such reductions may not
reduce the Maximum Available Credit below the amount of the Advances then
outstanding.
2.1.10 Extension of Line Termination Date. No earlier
than 90 days prior to each annual anniversary date of the date hereof Borrowers
may request in writing that the Lender extend the Line Termination Date for a
period of one year beyond the then current Line Termination Date; whereupon, in
its sole and absolute discretion, Lender may decide to extend the Line
Termination Date for such period. Lender shall provide notice to Borrowers of
Lender's decision with respect to Borrowers' request to extend the Line
Termination Date no later than forty-five (45) days after receipt of Borrowers'
written request therefore; provided, however, that if Lender fails to respond to
Borrowers' extension request within such forty-five (45) day period, Borrowers'
request shall be deemed conclusively denied and the then current Line
Termination Date shall not be extended.
2.2 Term Loan.
2.2.1 Term Loan Established. On the date hereof, the
Lender shall advance to Borrowers the sum of Fifteen Million Dollars
($15,000,000) as the Term Loan. The proceeds of the Term Loan shall be used by
Borrowers exclusively to finance the Cash-Out.
2.2.2 Term Note. On the date hereof and to evidence
the Indebtedness under the Term Loan, Borrowers shall execute and deliver to
Lender the Term Note.
2.2.3 Term Interest Rate. The aggregate outstanding
principal balance of the Term Loan shall bear interest at a fixed rate of
interest of Nine Percent (9%) per annum. All interest on the Term Loan shall be
calculated on the basis of a 360 day year for the actual number of days elapsed
in each period.
2.2.4 Term Loan Closing Fee. Simultaneously with the
execution of this Agreement, Borrowers shall pay to Lender with regard to the
Term Loan, a Term Loan Closing Fee in the amount of One Hundred Fifty Thousand
Dollars ($150,000). Borrowers acknowledge and agree that such Term Loan Closing
Fee is deemed fully earned upon the payment thereof and is non-refundable in all
events.
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2.2.5 Principal and Interest Payments. Interest at
the Term Interest Rate on the outstanding principal balance of the Term Loan
shall be payable on the first day of each month from and after the Closing Date
until such principal balance is paid in full. Principal under the Term Loan
shall be paid in the following installments:
Principal payments in the amount of Four Hundred Thousand Dollars
($400,000) shall be due and payable on each of January 31, 2003,
April 30, 2003, July 31, 2003 and October 31, 2003;
Principal payments in the amount of Six Hundred Seventy-Five
Thousand Dollars ($675,000) shall be due and payable on each of
January 31, 2004, April 30, 2004, July 31, 2004 and October 31,
2004;
Principal payments in the amount of Eight Hundred Twenty-Five
Thousand Dollars ($825,000) shall be due and payable on each of
January 31, 2005, April 30, 2005, July 31, 2005 and October 31,
2005;
Principal payments in the amount of Nine Hundred Twenty-Five
Thousand Dollars ($925,000) shall be due and payable on each of
January 31, 2006, April 30, 2006, July 31, 2006, October 31,
2006, January 31, 2007, April 30, 2007, July 31, 2007, and
October 31, 2007.
2.2.6 Prepayment under the Term Loan. The Term Loan
may be prepaid in whole or in part and from time to time without premium or
penalty, provided, however, that any prepayment of the Term Loan must be
accompanied by the payment of interest on the amount prepaid accrued through the
date of prepayment. Any prepayment will reduce the aggregate principal amount of
the Term Loan and will have no effect on the next scheduled payment due in
accordance with the terms of this Agreement and the Term Note; provided,
however, that if the next scheduled payment due is greater than the unpaid
aggregate principal amount of the Term Loan (the "Unpaid Balance"), such payment
shall be equal to the Unpaid Balance.
2.2.7 Payments Under the ▇▇▇▇ Documents. Upon the
exercise of the Option (each as defined therein) under the ▇▇▇▇ Note or the ROFR
(each as defined therein) under the ▇▇▇▇ Agreement, and subject to the limited
right of setoff as respectively provided therein, all net proceeds otherwise
respectively payable to the Borrowers thereunder (the "Net ▇▇▇▇ Proceeds") shall
be payable by ▇▇▇▇ National directly to the Lender and shall be credited by the
Lender with the following order of priority: (i) against any Lender's Costs then
outstanding; (ii) against accrued but unpaid interest under the Term Loan; and
(iii) against unpaid principal under the Term Loan; provided, however, that if
at the time of the payment of the Net ▇▇▇▇ Proceeds an Event of Default or a
Potential Event of Default has occurred and is continuing, then and in such
event, Lender may apply the Net ▇▇▇▇ Proceeds to such of the Obligations and in
such order as Lender may elect. Subject to the foregoing, and provided, no Event
of Default or a Potential Event of Default has occurred and is continuing, in
the event that the Lender applies the Net ▇▇▇▇ Proceeds to the outstanding
principal balance due under the Term Loan, notwithstanding the amortization
thereof as set forth in Paragraph 2.2.5 hereof, the remaining principal balance
shall be amortized in equal quarterly installments over the number of full
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calendar quarters between (a) the date of the application of the Net ▇▇▇▇
Proceeds to the outstanding principal balance due under the Term Loan and (b)
the Term Loan Termination Date. Interest at the Term Loan Interest Rate shall
continue to be paid on the outstanding principal balance of the Term Loan on the
first day of each month. Borrowers covenant and agree to execute and deliver to
Lender an Amended and Restated Term Loan Note consistent with the forgoing and
to pay to Lender all Lender's costs associated with all of the foregoing.
2.3 General Provisions Applicable to the Loans.
2.3.1 Payments. All payments hereunder shall be made
by Obligors in Dollars to Lender without defense, setoff or counterclaim in
immediately available funds and delivered to Lender not later than 2:00 p.m. on
the date due, at Lender's address set forth in Section 9.1 hereof, or such other
place as shall be designated in writing by Lender. Funds received by Lender
after that time shall be deemed to have been paid by Obligors on the next
succeeding Business Day.
2.3.2 Late Charge; Default Rate of Interest. Obligors
shall pay to Lender a late charge of five (5%) percent of any payment of
principal, interest, fees, charges or Lender's Costs which is more than fifteen
(15) days past due. In addition, any principal payment on the Loans not paid
when due, and to the extent permitted by applicable law, any interest payment on
the Loans not paid when due, and any other amount due to Lender under this
Agreement or any other Loan Document not paid when due (including Lender's
Costs), in any case whether at stated maturity, acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate per annum which is three
(3%) percent plus the highest applicable Interest Rate, if any. Such default
rate of interest shall continue only for so long as the monetary default
applicable thereto continues.
2.3.3 Maximum Rate of Interest. Notwithstanding
anything to the contrary herein or in any other Loan Document, no effective rate
of interest hereunder shall exceed the maximum effective rate of interest
permitted by applicable law or Rule. Obligors hereby agree to give Lender
written notice in the event that any Obligor has actual knowledge that any
interest payment made to Lender hereunder or under any other Loan Document will
cause the total interest payments collected in any one year to be usurious under
applicable law or Rule, and Lender hereby agrees not to knowingly collect any
interest from Obligors in the form of fees or otherwise which would render
either of the Loans usurious. In the event that interest hereunder or under any
other Loan Document would be usurious in the opinion of Lender, Lender reserves
the right to reduce the interest payable by Obligors. This Paragraph shall
survive the repayment of the Loans.
2.3.4 Obligations Absolute. The Obligations of
Borrowers and Obligors, as the case may be, under this Agreement and each of the
other Loan Documents shall be joint, several, absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms
hereof, as amended according to clause (ii) of this Paragraph, under all
circumstances whatsoever, including without limitation the following
circumstances: (i) any lack of validity or enforceability of the Loan Documents
or any other agreement or document relating thereto; (ii) any amendment or
waiver of or any consent to or departure from the Loan Documents or any document
relating thereto if Borrowers or Obligors, as the case may be, have
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consented to any such amendment; and (iii) the existence of any claim other than
claims arising solely from Lender's gross negligence or willful misconduct,
defense or other right which Obligors may have at any time against Lender or any
other person or entity, whether in connection with this Agreement, the
transactions described herein or any unrelated transaction. Obligors understand
and agree that no payment by Obligors under any other agreement (whether
voluntary or otherwise) shall constitute a defense to their Obligations
hereunder.
2.3.5 Assessment. If Lender shall reasonably
determine that (i) any current law or Rule, the adoption or imposition of any
law or Rule, any change in any law or Rule, or the adoption, imposition or
change in the interpretation or administration thereof by a governmental
authority, central bank or comparable agency charged with the interpretation and
administration thereof, or (ii) compliance with any guideline or directive
generally applicable to national banks whether or not having the force of law,
including without limitation with respect to special deposits, capital adequacy,
risk based capital, capital or reserve maintenance, capital ratio, or similar
requirements, or any deposits or other liabilities taken or entered into by
Lender (including the capital adequacy guidelines promulgated by the Board of
Governors of the Federal Reserve System) may result in (A) an increase to Lender
of the cost of making or maintaining the Loans, or to impose upon Lender or
increase any capital requirement applicable as a result of the making or
maintenance of the Loans, or (B) a reduction of the rate of return or amounts
receivable hereunder as a consequence of its obligations pursuant to this
Agreement to a level below that which Lender could have achieved but for such
adoption, imposition, change or compliance, taking into consideration Lender's
policies with respect to capital adequacy (which adoption, imposition, change,
or increase in capital requirements or reduction in amounts receivable may be
determined by Lender's reasonable allocation of the aggregate of such cost
increase, capital increase or imposition of reductions in amounts receivable
resulting from such events), or (C) subjecting the Lender to any tax, duty,
charge or withholding on or from payments due from Obligors (excluding federal
taxation of the overall net income of Lender), or changes in the basis of
taxation of payments to Lender in respect of the Loans or other amounts due to
Lender hereunder, then, from time to time, Obligors shall pay to Lender, within
ten (10) Business Days of demand by Lender, such additional amounts as will be
necessary to restore the rate of return to Lender from the date of such change,
together with interest on such amount from the 10th Business Day after demand
until payment thereof in full at the Interest Rate. Lender shall be entitled to
compensation pursuant to this Paragraph by submitting a certificate claiming
compensation and setting forth (accompanied by calculations in reasonable
detail) the increased cost, reduction in amounts receivable or additional amount
or amounts necessary to compensate Lender hereunder for any reduction in return
on capital, which certificate shall be conclusive absent manifest error. Failure
on the part of Lender to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of Lender's right to
demand compensation with respect to such period or any other period. The
protection of this Paragraph shall be available to Lender regardless of any
possible contention of the invalidity or inapplicability of any law or Rule or
other change or condition which shall have occurred or been imposed.
2.3.6 Conditional Payment. All funds received by
Lender from Obligors will be subject to Lender's standard clearing procedures
and clearing periods for uncollected funds as such procedures and clearing
periods may change from time-to-time. Obligors waive any rights they may have to
direct the application of any and all payments at any time or times
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hereafter received by Lender on account of the Indebtedness. Obligors agree that
Lender shall have the continuing exclusive right to apply and reapply such
payments in any manner, as Lender may deem advisable, notwithstanding any entry
by Lender upon its books; provided, however, that so long as no Lenders' Costs,
interest, principal or any other amount owing under this Agreement and the other
Loan Documents is due and no Potential Default or Event of Default has occurred
and is continuing, Obligors may direct the prepayment of the Term Loan in accord
with Paragraph 2.2.6 hereof.
2.3.7 Action by Obligors. Obligors agree and hereby
confirm that (i) other than U.S. Vision, all of the Obligors are wholly owned
either directly or indirectly by U.S. Vision, and all Obligors have shared
management and financial support; and (ii) any request made or other function
made or performed by U.S. Vision in connection with this Agreement or the other
Loan Documents shall be deemed made or performed by and on behalf of all
Obligors.
2.3.8 Participations. Obligors agree that Lender may
sell participations in the Obligations to financial institutions and other
Persons who lend money in the ordinary course of their business, and therefore:
(i) Lender may from time to time provide financial and other information
concerning the Obligors to any participant or prospective participant; and (ii)
should any participant default under its obligations to fund any portion of its
interest in the Term Loan, Lender will have no obligation to fund the Term Loan
to the extent of such participant's share thereof.
2.3.9 Canadian Interest Act Conversion.
Notwithstanding any other provision of this Agreement, for the purposes of the
Canadian Interest Act and disclosure thereunder, wherever interest to be paid by
any under this Agreement is to be calculated on the basis of a year of a 360 day
year or any other period of time that is less than a calendar year, the yearly
rate of interest to which the rate determined pursuant to such calculation is
equivalent is the rate so determined multiplied by the actual number of days
elapsed in the calendar year in which the same is to be ascertained and divided
by either 360 or such other period of time, as the case may be.
2.3.10 Termination of Facility. The Borrowers may
terminate this Agreement at any time prior to the Line Termination Date or the
Term Loan Termination Date upon at least 10 Business Days' notice to the Lender
without premium or penalty after (i) the payment in full of all outstanding
Advances under the Line of Credit, together with accrued interest thereon, (ii)
the payment of the Term Loan, together with accrued interest thereon, and (iii)
the satisfaction of all other Obligations, including, without limitation, the
payment in full in cash or cash equivalent of all Indebtedness, Lender's Costs
and all other costs under this Agreement or the Loan Documents.
3. SECURITY
3.1 Collateral Generally.
3.1.1 Security Interest in All Assets. As security
for the prompt payment and discharge of all of the Indebtedness and the
performance of all of the Obligations, Borrowers hereby grant to Lender a
security interest in, and first Lien on, All Assets of Borrowers, now
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owned or hereafter acquired, whether or not earned by performance, all books and
records pertaining thereto (including without limitation all manual and computer
records, runs, printouts, disks, software and other computer-prepared
information of every kind) and all insurance proceeds in connection therewith,
together with all cash and non-cash proceeds and products thereof, wherever
located, whether now owned or hereafter acquired or arising (the "Borrowers'
Collateral").
3.1.2 Security Interest in All Assets of Guarantors.
As security for the performance of all of the Guarantors' Obligations and
pursuant to the General Security Agreement of the Health and the Movable
Hypothec, Guarantors have granted to Lender a security interest in, and first
Lien on, All Assets of Guarantors, now owned or hereafter acquired, whether or
not earned by performance, all books and records pertaining thereto (including,
without limitation, all manual and computer records, runs, printouts, disks,
software and other computer-prepared information of every kind) and all
insurance proceeds in connection therewith, together with all cash and non-cash
proceeds and products thereof, wherever located, whether now owned or hereafter
acquired or arising (the "Guarantors' Collateral").
3.1.3 Priority of Liens. Except for Permitted Liens
set forth on Schedule 3.1.3, all Liens in favor of Lender in the Collateral
shall be first perfected priority Liens. Obligors shall pay and discharge when
due all taxes, levies, and other charges upon said Collateral and upon the goods
evidenced by any documents constituting Collateral and shall indemnify and
defend Lender against, and save Lender harmless from, all claims of any Person
with respect to the Collateral. This indemnity shall include reasonable
attorneys' fees and expenses as well as costs of investigation.
3.1.4 Financing Statements and Other Documents.
Obligors hereby authorize Lender or its agent to file any and all Financing
Statements. Further, Obligors agree to execute and deliver any other documents,
instruments, or agreements reasonably requested by Lender, to create, perfect or
keep perfected any security interest under the Uniform Commercial Code as
adopted in any state or province having jurisdiction over the Collateral,
including, without limitation, any Financing Statements, continuation statements
or termination statements and any other security instruments or agreements as
Lender may reasonably require in connection with this Agreement and the other
Loan Documents, including, without limitation, the Movable Hypothec. Borrowers
hereby appoint Lender as Borrowers' attorneys-in-fact to execute and file in
Borrowers' name all documents and instruments which Lender may deem necessary or
appropriate to perfect and continue perfected the security interest in the
Collateral created by this Agreement or any of the other Loan Documents.
3.2 Lockboxes. Each of the Obligors shall establish and
maintain lockboxes (each a Lockbox and collectively, the "Lockboxes") and
non-interest bearing depository accounts (each a "Cash Collateral Account" and
collectively the "Cash Collateral Accounts") with Lender subject to the
provisions of this subparagraph and the respective Lockbox Agreement. Unless
otherwise prohibited by applicable law, all collections of Accounts shall be
paid directly by Account Debtors into the respective Lockboxes and then
deposited into Lender's respective Cash Collateral Accounts for such Obligor.
Provided no Potential Default or Event of Default has occurred and is
continuing, on a daily basis and at the election of the Obligors, cleared funds
in the Cash Collateral Accounts shall be transferred to Obligors' concentration
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operating account at Lender or applied to reduce the outstanding Indebtedness
under the Notes. Upon the occurrence and continuance of an Event of Default or
Potential Default, Lender may retain all funds in the Cash Collateral Accounts
and shall have the right to use such funds in accordance with Section 8.3
hereof. In the event that collections of Accounts and proceeds of other
Collateral are received at any time by any of the Obligors, such collections
shall be held in trust for the benefit of Lender and shall be remitted, in the
form received, to Lender for deposit into such Obligor's Cash Collateral Account
immediately upon receipt by Obligors.
3.3 Maintenance of Collateral. Obligors shall maintain,
preserve, protect and keep in good order and condition, ordinary wear and tear
excepted, all Collateral, and from time to time, make all necessary or
appropriate repairs, replacements and improvements thereto. If Obligors shall
hereafter acquire Collateral which, under applicable law, is required to be
registered or certified, Obligors shall cause such Collateral to be registered
or certified properly in the name of Obligors, as the case may be, and cause all
motor vehicles or other equipment the ownership of which, under applicable law,
is evidenced by a certificate of title to be properly titled in Obligors' name,
and to have Lender's Lien on such motor vehicles and other equipment properly
noted on the certificate of title with respect thereto and deliver such
certificates of title to Lender. On behalf of Obligors, Lender may, but shall
not be obligated to pay and discharge taxes and/or Liens pertaining to the
Collateral and pay for the repair of any such Collateral, the maintenance and
preservation thereof and for insurance thereon if Obligors shall fail to do so,
unless an Event of Default shall have occurred in which case Lender need not
request Obligors to do so. Obligors agree to reimburse Lender, within three (3)
Business Days after notice thereof from Lender to Obligors, for any payment so
made.
3.4 Searches. Lender will have received prior to or at
Closing, and thereafter from time to time, UCC, judgment, federal and state tax
and real estate, pending litigation and bankruptcy Lien searches, or their
Canadian equivalent, against each Obligor, the cost of which shall constitute
Lenders' Costs, showing that Lender's security interests in and Liens on the
Collateral, as granted in this Agreement, the Movable Hypothec and the General
Security Agreement, shall be, upon perfection, security interests in and Liens
thereon with the priority rights agreed to in this Agreement, the Movable
Hypothec and the General Security Agreement, and the Collateral is not subject
to any Liens, claims and encumbrances except for Permitted Liens.
3.5 Inspection, Appraisal and Audit of Collateral. So long as
any portion of the Indebtedness remains outstanding and unpaid or any of the
Obligations remain unperformed, Lender shall have the right at any time and from
time-to-time, as Lender deems necessary in its sole discretion to inspect,
conduct audits, valuations and other tests and to obtain appraisals of the
Collateral. Such inspections, audits, valuations and appraisals shall occur no
more than twice annually, unless an Event of Default or Potential Default shall
have occurred, after which any such inspection, audit, valuation or appraisal
may be performed as frequently as reasonably determined by Lender. In each case,
such inspection, audits, valuations and appraisals shall be performed by persons
selected by Lender at reasonable cost, shall constitute a portion of Lender's
Costs, and shall be made at any reasonable time, during normal business hours,
twenty-four (24) hours subsequent to the provision of notice to Obligors.
10
4. CONDITIONS PRECEDENT
The performance by Lender of any of its obligations hereunder is
subject to the following conditions precedent:
4.1 Closing Deliveries. At or prior to Closing, Obligors shall
deliver or cause to be delivered to Lender, executed where applicable and in
form and substance satisfactory to Lender and its counsel, in addition to this
Agreement, the following documents, instruments and agreements and the following
conditions shall have been satisfied:
4.1.1 The Line of Credit Note;
4.1.2 The Term Note;
4.1.3 The Post-Closing Agreement;
4.1.4 Insurance certificates meeting the criteria set
forth in Paragraph 6.1.3 hereof;
4.1.5 Financing Statements identifying Obligors as
debtors, and Lender as secured party to be filed in all jurisdictions required
to perfect Lender's security interest in the Collateral in which perfection can
be achieved by the filing of a financing statement;
4.1.6 UCC, judgment, federal and state tax, real
estate, pending litigation and bankruptcy lien searches against each Obligor
performed by a company designated by Lender, the cost of which shall constitute
Lenders' Costs;
4.1.7 Copies of the Penney's Agreement, the Sears
Agreement and the Vision One Agreement, certified by a Specified Officer to be
true and correct copies of the originals thereof (other than with respect to the
Sears Agreement as specified therein) and to be in full force and effect on the
date hereof;
4.1.8 Each of the Transactional Documents with any
amendments thereto, certified by a Specified Officer to be true and correct
copies of the originals thereof, and to be in full force and effect on the date
hereof, and evidence in form and substance satisfactory to Lender that the
respective transactions contemplated thereby have been consummated and fully
funded, other than to the extent funding is required hereunder;
4.1.9 A certificate of the Secretary of each Obligor,
certifying to and attaching true, correct and complete copies of (i) resolutions
of such Obligor's Board of Directors authorizing the borrowing hereunder,
granting the security interests herein, and the execution and delivery of the
Loan Documents, (ii) authorizing resolutions as to the Merger, (iii) Certificate
of Incorporation for such Obligor, (iv) such Obligor's Bylaws, (v) incumbency
and signatures of the officers of such Obligor authorized to execute and deliver
the Loan Documents, (vi) a currently issued good standing, subsistence or
existence certificate from each state in which such Obligor is organized and
where such Obligor conducts business where the failure to be so qualified could
constitute a Material Adverse Effect;
4.1.10 An opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP and an opinion of ▇▇▇▇▇▇, Lidji & Werbner addressed to Lender,
each with respect to the Line of Credit,
11
Term Loan and the Transactional Documents, in form and substance satisfactory to
Lender in its sole and absolute discretion;
4.1.11 Payment of the Line Closing Fee and the Term
Loan Closing Fee;
4.1.12 Payment of all Lender's Costs incurred in
connection with the extension of the credit facilities and the transactions
contemplated hereby;
4.1.13 All documents, agreements and arrangements
required by Lender with respect to the Collateral;
4.1.14 Copy of the Agreement and Plan of Merger with
any amendments thereto, certified by a Specified Officer to be true and correct
copies of the originals thereof and to be in full force and effect on the date
hereof;
4.1.15 Evidence satisfactory to the Lender that all
of the conditions to the effectiveness of the Merger set forth in Article VI of
the Agreement and Plan of Merger have been met;
4.1.16 The Lockbox Agreement;
4.1.17 Each of the Canadian Collateral Documents; and
4.1.18 Such additional documents or instruments as
the Lender may require.
4.2 Advances After the Date Hereof. Lender shall not be
required to make any requested Advance unless on each Funding Date (i) Obligors
deliver or cause to be delivered to Lender, executed where applicable, and in
form and substance satisfactory to Lender and its counsel, the following
documents and instruments, and (ii) the following conditions shall have been
satisfied:
4.2.1 The representations and warranties set forth in
Article 5 of this Agreement shall be true and correct in all material respects
on and as of such date with the same effect as though made on and as of such
date, and each Notice of Borrowing shall be deemed a reaffirmation thereof;
4.2.2 No Event of Default or Potential Default shall
have occurred and be continuing hereunder or under any other Loan Document;
4.2.3 No Material Adverse Change shall have occurred
and then be in existence;
4.2.4 All Lender's Costs then due shall have been
paid by Obligors. Obligors authorize Lender to deduct such Lender's Costs from
the Advance and agree to indemnify and hold Lender harmless from and against any
and all claims, other than claims arising from Lender's willful misconduct or
gross negligence, for any such Lender's Costs; and
12
4.2.5 Obligors will have delivered to Lender such
additional documents or instruments as Lender may reasonably require.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Obligors represent and warrant to Lender as follows:
5.1.1 Incorporation, Good Standing, Due
Qualification. Each Obligor is a corporation duly organized, validly existing,
subsisting or in good standing under the laws of each respective Obligor's state
or province of incorporation as shown on Schedule 5.1.1 hereto; has all power
and authority necessary to own and operate its properties and to carry on its
business as it is now engaged and where and as contemplated; and is duly
qualified as a foreign corporation to do business in, and is in good standing
in, every jurisdiction where the nature of Obligors' business requires such
qualification;
5.1.2 Power and Authority. The making, execution,
issuance and performance by each Obligor of this Agreement, the Notes and each
of the other Loan Documents to which such Obligor is a party is within the
corporate powers of such Obligor, and have been duly authorized by all necessary
corporate action by such Obligor;
5.1.3 Legally Enforceable Agreement. This Agreement
and each of the other Loan Documents to which Obligors are, individually or in
the aggregate, a party, constitute the legal, valid and binding Obligations of
Obligors, enforceable against Obligors in accordance with their respective
terms;
5.1.4 Priority of Liens; Condition of Collateral.
With the exception of Permitted Liens, Obligors own the Collateral free and
clear of all Liens and upon perfection of Lender's security interest in such
Collateral, Lender will have a security interest and Movable Hypothec in, and
first priority Lien on, all of the Collateral subject only to Permitted Liens,
if any. With respect to each Obligor (i) its chief executive office (or in the
Province of Quebec, its head office) is located in the state or province
identified in Schedule 5.1.4(i) hereto, (ii) its exact legal name as set forth
in such Obligor's organizational documents as filed in the state or province of
such Obligor's formation is as set forth in the first Paragraph of this
Agreement and any names, other than such name, trade styles or designation under
which each Obligor does business as such or has done business within the five
(5) years immediately preceding the date hereof, is also as identified in as
such in Schedule 5.1.4(ii) hereto, and (iii) its tax identification number (or
Canadian equivalent) is as identified on Schedule 5.1.4(iii) hereto. Obligors
have registered all fictitious names listed on Schedule 5.1.4(ii);
5.1.5 Leases. Schedule 5.1.5 hereto accurately sets
forth all locations occupied or utilized by each Obligor as lessee, together
with the name and address of the lessor and, if other than the lessor, the
record owner thereof, and the date of the applicable lease; all such leases are
in full force and effect and each Obligor is in material compliance with the
terms of each lease;
5.1.6 Store Count and Sales Volume. Schedule 5.1.6
hereto accurately sets forth by Obligor all of such Obligor's store locations
and the volume of sales for each location;
13
5.1.7 Real Property. Schedule 5.1.7 hereto accurately
sets forth all Real Property;
5.1.8 No Violation. The execution, delivery and
performance by Obligors of the Loan Documents does not, and will not by the
passage of time, the giving of notice or otherwise, to Obligors' knowledge (i)
violate any provision of any law or regulation, (ii) violate the Certificate or
Articles of Incorporation or Bylaws of any Obligor, (iii) violate any judgment,
order, decree, agreement, trust or other indenture or instrument to which any
Obligor is a party or by which any of its property is bound, or (iv) result in
or require the creation or imposition of any Lien with respect to any property
now owned or hereafter acquired, other than Liens arising under the Loan
Documents. Obligors are not in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any governmental authority;
5.1.9 Penney's Agreement; Sears Agreement; Vision One
Agreement. True, correct and complete copies of each of the Penney's Agreement,
the Sears Agreement, and the Vision One Agreement have been delivered to Lender
pursuant to Article 4 hereof, are each in full force and effect in the
respective forms thereof as certified and delivered to the Lender on the date
hereof and have not been terminated or amended nor to the knowledge of any of
the Obligors are any such actions pending or threatened;
5.1.10 Financial Condition. The financial statements
of Obligors heretofore furnished to Lender are true, complete and correct in all
material respects, have been prepared in accordance with GAAP, consistently
applied, and present fairly the financial condition of Obligors as of the dates
thereof, and the results of Obligors' operations for the periods therein ended.
Since the date of the most recent financial statements provided by Obligors to
Lender, there has been no Material Adverse Change, individually or in the
aggregate, in the financial condition of Obligors;
5.1.11 No Litigation. There are no actions, suits or
proceedings pending, or, to the knowledge of any Obligor, threatened against or
affecting any Obligor or any of its assets, and no Obligor is in default in the
performance of any agreement to which any Obligor is a party or by which any
Obligor is bound specifically including, but not limited to, the Penney's
Agreement, the Sears Agreement and the Vision One Agreement, and there is no
order, writ, injunction, or any decree of any court, or any federal, state,
municipal or other government agency or instrumentality, domestic or foreign,
which if adversely determined with respect to any of the foregoing suits,
proceedings, defaults, orders, writings, injunctions or decrees would have a
Material Adverse Effect on Obligors, individually or in the aggregate;
5.1.12 Compliance. Obligors have all authorizations,
consents, approvals, licenses, and exceptions from, and have made all
registrations and filings with, and all reports to, all Governmental Agencies
(collectively, the "Governmental Approvals") necessary for the conduct of their
respective businesses, and the conduct of their respective business is not and
has not been in violation of any such Governmental Approvals or any applicable
federal or state law, Rule or regulation, including ERISA, the failure of which
to obtain or to comply with would, in any such case, have a Material Adverse
Effect on Obligors, individually or in the aggregate.
14
Obligors do not require any Governmental Approvals to enter into, or perform
under, this Agreement, the Notes, or any other Loan Document to which such
Obligor is a party. There are no actions or investigations pending or, to the
knowledge of the Obligors, threatened against or affecting any Obligor before
any Governmental Agency, which could result in a Material Adverse Change in such
Obligor's business, prospects or the ability of Obligors to conduct their
respective businesses in a manner consistent with past operations and financial
results;
5.1.13 Compliance with Regulations O, T, U and X. No
Obligor is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meanings of Regulations O, T, U and X of the Board of
Governors of the Federal Reserve System);
5.1.14 Taxes. Each Obligor has paid, when due, all
taxes, governmental charges and assessments levied against any Obligor or any of
its assets, except for taxes, charges or assessments which are not overdue or
which are being contested in good faith and by appropriate proceedings with
adequate reserves therefor being available or having been set aside;
5.1.15 Environmental Matters.
5.1.15.1 To the best of Obligors' knowledge
and after reasonable investigation, the Real Property owned, leased or operated
by the Obligors now, or in the past, does not contain, and has not previously
contained, any Hazardous Materials in amounts or concentrations which (i)
constitute or constituted a violation of applicable Environmental Laws, or (ii)
could give rise to liability under applicable Environmental Laws;
5.1.15.2 The Obligors and Real Property and
all operations conducted in connection therewith are in compliance, and have
been in compliance, with all applicable Environmental Laws, and, to the best of
Obligors' knowledge and after reasonable investigation, there is no
contamination at, under or about such properties or such operations which could
interfere with the continued operation of such properties or materially impair
the fair saleable value thereof;
5.1.15.3 The Obligors have not received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters, Hazardous Materials, or compliance
with Environmental Laws, nor do the Obligors have knowledge or reason to believe
that any such notice will be received or is being threatened;
5.1.15.4 To the best of Obligors' knowledge
and after reasonable investigation, Hazardous Materials have not been
transported or disposed of to or from the Real Property, leased or operated by
the Obligors in violation of, or in a manner or to a location which could give
rise to liability under, Environmental Laws, nor have any Hazardous Materials
been generated, treated, stored or disposed of at, on or under any of such
properties in violation of, or in a manner that could give rise to liability
under, any applicable Environmental Laws;
5.1.15.5 No judicial proceedings or
governmental or administrative action is pending, or, to the knowledge of the
Obligors threatened, under any
15
Environmental Law to which any Obligor is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to any Obligor, its
operation or the Real Property; and
5.1.15.6 There has been no release, or to
the best of the Obligor's knowledge, threat of release, of Hazardous Materials
at or from properties owned, leased or operated by the Obligors, now or in the
past, in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
5.1.16 Debt and Guaranties. Except as set forth on
Schedule 5.1.16 hereto, Obligors have no Debt, nor has any Obligor guaranteed
the payment or performance of any debts or obligations of any other Person
except for the guarantee of checks or other negotiable instruments for
collection in the ordinary course of such Obligor's business;
5.1.17 Stock Ownership. The outstanding capital stock
of Obligors is owned beneficially and of record as set forth in Schedule 5.1.17.
All of the outstanding shares of capital stock of Obligors have been duly
authorized and are validly issued, fully paid and non-assessable and are not
subject to any right or claim of rescission, and have been offered, sold and
issued by each respective Obligor in compliance with all applicable federal and
state securities laws;
5.1.18 Transactional Documents.
5.1.18.1 True, correct and complete copies
of each of the Transactional Documents have been delivered to Lender pursuant to
Article 4 hereof, are each in full force and effect in the respective forms
thereof as certified and delivered to the Lender on the date hereof and have not
been terminated or amended nor to the knowledge of any of the Obligors are any
such actions pending or threatened;
5.1.18.2 Obligors have the full corporate
power and authority to execute and deliver each of the Transactional Documents
and to consummate all of the Transactions. The execution and delivery by
Obligors of the Transactional Documents and performance by Obligors of the
Transactions have been duly authorized by the Board of Directors of each of the
Obligors and no other corporate action on the part of any Obligor is necessary
to authorize such execution, delivery and performance. Each Transactional
Document is a legal, valid and binding obligation of the Obligors which are
parties thereto, enforceable against each such Obligor in accordance with its
respective terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditor's rights generally and by the effect of general
principles of equity (regardless of whether enforcement is considered in
proceeding at law or in equity; and
5.1.18.3 No Obligor has any knowledge of any
existing facts or circumstances that may cause Obligors to be unable to
consummate the Transactions;
16
5.1.19 Solvency.
5.1.19.1 The present fair saleable value of
the assets of each Obligor after giving effect to the funding of the Loans
hereunder exceeds the amount that will be required to be paid on or in respect
of the Debts and other liabilities (including contingent liabilities) of
Obligors as they mature,
5.1.19.2 The assets of Obligors do not
constitute unreasonably small capital for Obligors to conduct their business as
now conducted and as proposed to be conducted, including the capital needs of
Obligors,
5.1.19.3 Obligors do not intend to, nor do
Obligors believe that they will, incur Debts beyond their ability to pay such
Debts as they mature (taking into account the timing and amounts of cash to be
received by Obligors and of amounts to be payable on or in respect of Debt of
Obligors). The cash available to Obligors, after taking into account all other
anticipated uses of the cash of Obligors, is anticipated to be sufficient to pay
all amounts on or in respect of the Indebtedness when the Indebtedness or any
part thereof is required to be paid, and
5.1.19.4 The aggregate fair value of
Obligors' assets exceeds the aggregate of all their liabilities;
5.1.20 Labor Matters. Except to the extent set forth
on Schedule 5.1.20 hereto, (i) Obligors individually or in the aggregate are not
a party to any collective bargaining agreements, (ii) Obligors have not
experienced any strike, labor dispute, slowdown or work stoppage as a result of
labor disagreements which would have a Material Adverse Effect on the value of
the Collateral, or on the enforceability of such Borrower's Obligations or
Guarantors' Obligations or the Indebtedness (including realizing on such
Collateral and Obligations), (iii) to the best knowledge of each Obligor, after
due inquiry, there is no such strike, dispute, slowdown or work stoppage pending
or threatened against any Obligor which would have a Material Adverse Effect on
any Obligor or the value of the Collateral or the enforceability of the
Indebtedness (including realizing on such Collateral), (iv) no labor petitions
have been filed or union organizing activity conducted during the past six
months pertaining to any Obligor; and (v) each Obligor's relations with such
Obligor's respective employees are satisfactory.
5.1.21 Investment Company Act. No Obligor is an
Investment Company within the meaning of the Investment Company Act of 1940;
5.1.22 Public Utility Holding Company Act. No Obligor
is a Public Utility Holding Company within the meaning of the Public Utility
Holding Company Act;
5.1.23 RICO. No Obligor has engaged in any conduct or
taken or omitted to take any action which violates RICO;
5.1.24 Acts of God. The business and properties of
each Obligor have not been effected by any fire, explosion, accident, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy, or other
casualty (whether or not covered by insurance) that may have a Material Adverse
Effect;
17
5.1.25 Other Agreements. No Obligor is in default in
any respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any material contract,
agreement or instrument to which it is a party or by which it is bound which may
have a Material Adverse Effect;
5.1.26 Subsidiaries. U.S. Vision owns, directly or
indirectly through the ownership of another Obligor, all of the issued and
outstanding shares of the capital stock of all other Obligors. All Subsidiaries
of Obligors are parties under this Agreement and Obligors have no Affiliates
other than as set forth on Schedule 5.1.26;
5.1.27 ERISA. Each Obligor is in compliance in all
material respects with all applicable provisions of ERISA. Neither a Reportable
Event nor a Prohibited Transaction has occurred and is continuing with respect
to any Plan; no notice of intent to terminate a Plan has been filed, nor has any
Plan been terminated; no circumstances exist that constitute grounds under
Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate,
or appoint a trustee to administrate, a Plan, nor has the PBGC instituted any
such proceedings; no Obligor nor any ERISA Affiliate has completely or partially
withdrawn under Section 4201 or 4204 of ERISA from a Multi-Employer Plan;
Obligors and each ERISA Affiliate have met their minimum funding requirements
under ERISA with respect to all of their Plans and the present fair market value
of all Plan assets exceeds the present value of all vested benefits under each
Plan, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA and the regulations thereunder for
calculating the potential liability of each Obligor or any ERISA Affiliate to
the PBGC or the Plan under Title IV of ERISA; and no Obligor or any ERISA
Affiliate has incurred any liability to the PBGC under ERISA;
5.1.28 Operation of Business. Each of the Obligors
possesses all material licenses, permits, franchises, intellectual property, and
trade names, or rights thereto, to conduct its business substantially as now
conducted and as presently proposed to be conducted, and none of the Obligors is
in violation of any rights of others with respect to any of the foregoing.
Nothing has come to the attention of any Obligor to the effect that (i) any
product, process, method, substance, part or other material presently
contemplated to be sold by or employed by it in connection with such business
may infringe any patent, trademark, service ▇▇▇▇, trade name, copyright, license
or other right owned by any other Person or (ii) there is pending or, to such
Obligor's knowledge, threatened any claim or litigation against or affecting it
contesting its right to sell or use any such product, process, method,
substance, part or other material, which infringement, claim or litigation may,
in any one case, or would in the aggregate, have a Material Adverse Effect on
the business, properties, assets, operations or conditions, financial or
otherwise, of such Obligor;
5.1.29 Fiscal Year. The Fiscal Year of Obligors for
financial accounting purposes ends on January 31 of each year;
5.1.30 Accounts. Each Account of each Obligor arises
out of a completed, bona fide sale and delivery of goods or rendition of
services by such Obligor in the ordinary course of business;
18
5.1.31 Legal Compliance.
5.1.31.1 Each Obligor has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof, including, without
limitation, the SEC, the National Stock Market ("Nasdaq") and all applicable
state securities regulatory agencies (each a "Blue Sky Agency"), and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand,
audit, or notice has been filed or commenced against any Obligor alleging any
failure so to comply. No disciplinary proceeding with respect to any Obligor or
any Obligor's respective officers is pending before the SEC, the Nasdaq or any
Blue Sky Agency;
5.1.31.2 A definitive proxy statement (the
"Proxy Statement") in connection with the merger has been filed by U.S. Vision
and Holdings, with the SEC and a Schedule 13E-3 ("Schedule 13E-3") has been
filed by U.S. Vision, Kayak, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Indiana Pacific Capital Trust,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ with the SEC and no
order preventing or suspending the use of the Proxy Statement and Schedule 13E-3
has been issued by the SEC, and the Proxy Statement and Schedule 13E-3, at the
time of filing thereof, conformed in all material respects to the requirements
of the Securities Exchange Act of 1934 (the "1934 Act") and the rules and
regulations of the SEC thereunder, and does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. There is no action, suit, proceeding,
inquiry or investigation before any court, public board, government agency,
self-regulatory organization or body including, without limitation, the SEC, the
Nasdaq, and any Blue Sky Agency, pending or, to the knowledge of any of the
Obligors, threatened against or affecting any of the Obligors, or any of their
respective directors or officers in their capacities as such. There are no facts
which, if known by a potential claimant or Governmental Authority, could give
rise to a claim or proceeding which, if asserted or conducted, the results would
be unfavorable to any of the Obligors; and
5.1.32 Accuracy of Representations; No Default. The
information set forth herein and on each of the Schedules hereto, and in each of
the other Loan Documents is complete and accurate in all material respects and
contains full and complete disclosure of all pertinent information in connection
with Obligors. None of such information contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
information contained herein or therein not misleading or not incomplete. No
Event of Default or Potential Default hereunder, or under any other Loan
Document, has occurred.
6. AFFIRMATIVE COVENANTS
6.1 Obligors' Covenants. So long as any portion of the
Indebtedness remains outstanding and unpaid and any Obligation remains
unperformed, or Lender has any obligation to extend Advances hereunder, Obligors
jointly and severally covenant and agree to do each and all of the following:
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6.1.1 Financial Statements. To furnish, cause to be
furnished, or make available for inspection and review by Lender and in form and
substance satisfactory to Lender:
6.1.1.1 Not later than One Hundred Twenty
(120) Days following the close of each Fiscal Year, a statement of income and
expense, a statement of cash flows, and a balance sheet and notes of Obligors as
at the end of such Fiscal Year (and setting forth comparative figures for the
previous Fiscal Year, if any), each prepared in accordance with GAAP and
accompanied by an audit report, without qualification, of an independent
certified public accountant, satisfactory to Lender, in its sole and absolute
discretion. Obligors shall cause to be delivered by its then regularly-engaged
independent certified public accounting firm, together with the year end
financial statements of Obligors, a statement from such accountant to the effect
that in performing its audit of Obligors' financial statements, such accounting
firm has not become aware of any Event of Default or Potential Default;
6.1.1.2 not later than Forty-Five (45) Days
after the end of each Fiscal Quarter, management prepared statements of income
and expense, a statement of cash flows, and a balance sheet as at the end of
such Fiscal Quarter (and cumulatively for the Fiscal Year with comparative
figures for the periods in the prior Fiscal Year, if any) each prepared in
accordance with GAAP, subject to normal year-end accruals, except that notes to
such financial statements need not be prepared;
6.1.1.3 not later than Thirty (30) Days
after the end of each month, management prepared statements of income and
expense and a balance sheet as at the end of each such month (and cumulatively
for the Fiscal Year, with comparative figures for the periods in the prior
Fiscal Year, if any) each prepared in accordance with past practices;
6.1.1.4 not later than Thirty (30) Days
after the end of each Fiscal Year of Obligors, Projections of Obligors for the
forthcoming four Fiscal Years, year-by-year, and for the forthcoming Fiscal
Year, month-by-month;
6.1.1.5 promptly upon it becoming available,
one copy of each financial statement, report, notice or statement sent by U.S.
Vision to the SEC or its stockholders generally; and
6.1.1.6 such data, reports, statements and
information, financial or otherwise, as Lender may request, including without
limitation, monthly consolidated accounts analysis.
All financial information provided by
Obligors, pursuant to this Paragraph shall be accompanied by a written statement
signed by the President or Chief Financial Officer of each Obligor, stating that
all information is true, correct and complete in all material respects and that
(as to a statement by Obligors) Obligors have not committed nor does there exist
an Event of Default or Potential Default under this Agreement or any other Loan
Document;
6.1.2 Additional Financial Data. With reasonable
promptness furnish such additional information and data concerning the business
and financial condition of Obligors, as may be reasonably requested by Lender;
upon reasonable prior notice afford Lender or its agents reasonable access to
the financial books and records, computer records and
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properties of Obligors at all reasonable times and permit Lender or its agents
to make copies and abstracts of same and to remove such copies and abstracts
from Obligors' premises and permit Lender or its agents the right to converse
directly with the independent accounting firm then engaged by Obligors to
prepare their financial statements. Obligors shall maintain their financial
books and other records in accordance with GAAP;
6.1.3 Insurance. Maintain, or cause to be maintained
at all times, in full force and effect: (i) worker's compensation insurance, in
amounts required under applicable law; (ii) general liability insurance; (iii)
automobile liability insurance; (iv) business interruption insurance; (v)
employee relations insurance; (vi) broad form fire, theft and extended coverage
covering all of Obligors' real and personal property on a replacement basis in
amounts not less than the amounts sufficient to prevent the imputation of any
co-insurance provisions; and (vii) such other insurance as Lender may from time
to time reasonably require. Each policy of insurance hereunder shall be in
amounts satisfactory to Lender in the exercise of its reasonable credit judgment
and shall be issued by a company or companies reasonably satisfactory to Lender
in the exercise of its reasonable credit judgment, and Obligors shall furnish
Lender with copies of each such policy. Evidence of all such policies shall be
on an ▇▇▇▇▇ 25 and ▇▇▇▇▇ 27 certificates in form satisfactory to Lender in the
exercise of its reasonable credit judgment, shall name Lender as a loss payee
and additional insured, as applicable, shall have premiums prepaid for twelve
(12) months, and shall contain a provision that such policies shall not be
cancelled or materially amended without at least thirty (30) days' prior written
notice to Lender for any and all cancellations and/or amendments, whether
monetary or non-monetary. If the insurance, or any part thereof, shall expire,
or be withdrawn, or become void by reason of Obligors' breach of any condition
thereof, or become void by reason of the value or impairment of the capital of
any company by which the insurance may then be carried, or if for any reason
whatever the insurance shall be unsatisfactory to Lender in the exercise of its
reasonable credit judgment, Obligors shall, at their own expense, place new or
additional insurance satisfactory to Lender in the exercise of its reasonable
credit judgment;
6.1.4 Taxes. Cause the prompt payment and discharge
of all taxes, governmental charges and assessments levied and assessed or
imposed upon any Obligor, or any of its assets, except as may be contested in
good faith with adequate reserves satisfactory to Lender having been set aside
therefor;
6.1.5 Litigation. Promptly defend all actions,
proceedings or claims which could result in a Material Adverse Effect on
Obligors' business, and promptly notify Lender of the institution of, or any
change in, any such action, proceeding or claim if the same is in excess of One
Hundred Fifty Thousand Dollars ($150,000) for any single action, proceeding or
claim and One Hundred Fifty Thousand Dollars ($150,000) in the aggregate (other
than claims fully covered by insurance). In the event any order, judgment or
Lien in an amount exceeding One Hundred Fifty Thousand Dollars ($150,000) is
entered or filed, while any portion of the Indebtedness remains outstanding and
unpaid, that has not been vacated or the execution of which has not been stayed
within thirty (30) days (or immediately if a writ of execution is filed)
following the entry thereof, or that is not fully covered by insurance
satisfactory to Lender, Obligors shall furnish to Lender (i) a bond,
satisfactory to Lender, from an independent, financially responsible corporate
surety company, naming Obligors and Lender as co-payees, or (ii) establish an
escrow account with Lender, in either event in an amount equal to or greater
than the amount of such order, judgment or Lien, plus costs;
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6.1.6 Maintenance of Records. Keep adequate records
and books of account, in which complete entries will be made in accordance with
GAAP consistently applied, affecting all of its financial transactions;
6.1.7 Maintenance of Properties. Maintain, keep and
preserve all of their properties necessary or useful in the proper conduct of
their business in good working order and condition, ordinary wear and tear and
casualty excepted;
6.1.8 Notice of Events. Promptly after Obligors
become aware, give written notice to Lender of the occurrence or imminent
occurrence of any event or occurrence which causes or would imminently cause:
(i) any representation or warranty made in Article 5 hereof to be untrue,
incomplete or misleading in any material respect; (ii) an the occurrence of an
Event of Default or Potential Default hereunder or under any other Loan
Document; (iii) any Material Adverse Change, (iv) any casualty to any material
property of Obligors; (v) the institution of, or the issuance of any order,
judgment, decree or other process in, any litigation, investigation,
prosecution, proceeding or other action by any Governmental Agency or other
Person against any Obligor, that does, or could, cause a Material Adverse
Change; (vi) any change in shareholders, directors or officers of Obligors,
except as permitted by Paragraph 7.1.6; and (vii) the termination or amendment
of the Penney's Agreement, the Sears Agreement or the Vision One Agreement;
6.1.9 Fiscal Year; Principal Executive Office;
Existence. Promptly notify Lender in writing of a change in the Fiscal Year of
any Obligor; notify Lender at least sixty (60) days prior to a change in the
location of any material portion of the Collateral or the principal executive
office of any Obligor; notify Lender at least thirty (30) days prior to any
corporate or entity name change of any Obligor; and maintain in good standing
the corporate existence of each Obligor and all necessary foreign
qualifications, where the failure to do so could constitute a Material Adverse
Effect;
6.1.10 Compliance with Covenants under Transactional
Documents. Comply in all material respects with all covenants and agreements set
forth in each of the Transactional Documents.
6.1.11 Business. (i) Maintain all licenses in full
force and effect where the failure to do so could constitute a Material Adverse
Effect, (ii) maintain the general character of Obligors' business in the areas
in which it is currently engaged, and not engage in any business unrelated to
the business in which Obligors are currently engaged, (iii) continually operate
that business, and (iv) maintain and comply in all material respects with all
contracts and agreement with third parties, whether written or oral, promptly
notifying Lender in writing of any breach, termination, rescission or
modification thereof by any party thereto;
6.1.12 Maintain Accounts with Lender. Maintain Lender
as Obligors' primary depository for all deposit, checking or similar accounts;
6.1.13 Additional Security Documents. Provide Lender,
at any time and from time to time on request, with such assignments,
certificates of title, or Financing
22
Statements, and such additional instruments or documents as Lender may, in
Lender's sole and absolute discretion, deem necessary in order to perfect,
protect and maintain the security interest in the Collateral granted to Lender
pursuant to the terms hereof;
6.1.14 Operation of Business; Collection of Accounts.
Diligently operate the Obligors' business and take all reasonable commercial
action to collect all Accounts in connection therewith;
6.1.15 Performance of Obligation. Perform, as and
when due, and pay and discharge, at or before maturity, all obligations and
liabilities, except where the same may be contested in good faith by appropriate
proceedings, and appropriate reserves for the accrual of any of the same shall
have been established to the satisfaction of Lender;
6.1.16 Collateral Audits; Inspection. Permit Lender
from time to time to conduct valuations, inspections, audits and appraisals of
the Collateral and, as provided in Section 3.5 hereof, pay all Lender's Costs in
connection therewith.
6.1.17 Collateral. (i) Preserve the Collateral in
good condition and order and not permit it to be abused or misused; (ii) not
allow any of the Collateral to be affixed to real estate unless such real estate
is subject to a Lien in favor of the Lender; (iii) upon the request of Lender,
deliver all proceeds of the Collateral to Lender immediately upon receipt in
identical form received without commingling with other property; (iv) take all
necessary steps to preserve the liability of Account Debtors, obligors and
secondary parties whose liabilities are part of the Collateral; and (v) defend
the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein and, in the event that Lender's
security interest in Obligors' Collateral or any part thereof would be impaired
by an adverse decision, allow Lender to contest or defend any such claim or
demand in Obligors' name;
6.1.18 Payments. Pay when due (or within applicable
grace periods) all Indebtedness, rental payments and other liabilities and
obligations to third Persons, except when the amount thereof is being contested
in good faith, by appropriate proceedings and with adequate reserves therefore
being set aside on its books. If any Obligor defaults in the payment of any
principal or rental (or installment thereof) of, or interest on, any Debt for
money borrowed in excess of One Hundred Fifty Thousand Dollars ($150,000) in the
aggregate or rental or other obligations in excess of One Hundred Fifty Thousand
Dollars ($150,000) in the aggregate, Lender shall have the right, in its sole
discretion, to pay such interest, principal, rental or obligation for the
account of Obligors and shall be reimbursed therefore on demand by Obligors,
with interest at the Default Rate until paid;
6.1.19 Notice of Events with Respect to the
Transactional Documents. Notify Lender promptly upon becoming aware of (i) the
occurrence of an event of default or an event which would become a default but
for the giving of notice or the passage of time or both, under any of the
Transactional Documents, (ii) any fact, condition or event that, with the giving
of notice or passage of time, or both, could become an event of default or
potential default under any of the Transactional Documents as those terms are
defined therein, (iii) the failure of any Obligor to observe any of its
undertakings under any of the Transactional Documents and (iv) any
representation or warranty made in any of the Transactional Documents to be
untrue,
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incomplete or misleading in any material respect. Obligors agree that
immediately upon becoming aware of any development or other information outside
the ordinary course of business and excluding matters of a general economic,
financial or political nature which may materially and adversely affect their
respective ability to perform under any of the Transactional Documents, they
shall give to Lender notice specifying the nature of such development or
information and such anticipated effect;
6.1.20 Assignment of Accounts. Upon the occurrence
and continuance of an Event of Default, execute and deliver to Lender formal
written assignments of all of their Accounts weekly, which shall include all
Accounts that have been created since the date of the last assignment, together
with copies of invoices, invoice registers or other evidence of the sale related
thereto. Obligors shall keep accurate and complete records of their Accounts and
all payments and collections thereon and shall submit to Lender on a monthly
basis a sales and collections report from the preceding month, in form
satisfactory to Lender. On or before the last day of each month from and after
the date hereof, Obligors shall deliver to Lender, in form acceptable to Lender,
a detailed aged trial balance of all Accounts existing as of the last day of the
preceding month, specifying the names, addresses, face value, dates of invoices
and due dates for each Account Debtor obligated on an Account so listed
("Schedule of Accounts"), and, upon Lender's request therefore, make available
to Lender copies of proof of delivery and the original copy of all documents,
including, without limitation, repayment histories and present status reports
relating to the Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as Lender shall request;
6.1.21 Discounts, Allowances and Credits. Upon the
granting of any discounts, allowances or credits by Obligors, or any of them,
that are not shown on the face of the invoice for the Account involved, promptly
report such discounts, allowances or credits, as the case may be, to Lender and
in no event later than the time of its submission to Lender of the next Schedule
of Accounts as provided in Paragraph 6.1.2. Upon the occurrence and during the
continuance of an Event of Default, Lender shall have the right, but not the
obligation, to settle or adjust all disputes and claims directly with the
Account Debtor and to compromise the amount or extend the time for payment of
the Accounts upon such terms and conditions as Lender may deem advisable, and to
charge the deficiencies, costs and expenses thereof, including attorneys' fees,
to Obligors. If an Account includes a charge for any tax payable to any
Governmental Agency, Lender is authorized, in its sole discretion, to pay the
amount thereof to the proper Governmental Agency for the account of Obligors and
to charge Obligors hereunder therefor. Obligors shall notify Lender if any
Account includes any tax due to any Governmental Agency and, in the absence of
such notice, Lender shall have the right to retain the full proceeds of the
Account and shall not be liable for any taxes to any Governmental Agency that
may be due by Obligors, or any of them, by reason of the sale and delivery
creating the Account. Whether or not a Potential Default or an Event of Default
has occurred, any of Lender's officers, employees or agents shall have the
right, at any time or times hereafter, in the name of Lender, any designee of
Lender or Obligors, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, telegraph or otherwise. Obligors shall
cooperate fully with Lender in an effort to facilitate and promptly conclude any
such verification process;
6.1.22 Collection of Accounts. In order to expedite
collection, Obligors shall (subject to the provisions below) endeavor in the
first instance to make collection of its
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Accounts for Lender. All remittances received by any Obligor on account of
Accounts (and proceeds of all other Collateral) shall be held as Lender's
property by such Obligor as trustee of an express trust for Lender's benefit
(and in the Province of Quebec, as agent for the Lender) and such Obligor shall
immediately deposit same, in kind, in the Lockbox or the Cash Collateral
Account. Lender retains the right following the occurrence of an Event of
Default, to notify Account Debtors that Accounts have been assigned to Lender
and to collect Accounts directly in its own name and to charge the collection
costs and expenses, including attorneys' fees to Obligors. Lender has no duty to
protect, insure, collect or realize upon the Accounts or preserve rights in the
Accounts;
6.1.23 Amount in Dispute. Other than accounts
receivable due from Penney's, Sears and Vision One, in the event any amounts due
and owing in excess of Twenty Five Thousand Dollars ($25,000) are in dispute
between an Obligor and any Account Debtor, and with respect to accounts due and
payable from Penney's, Sears or Vision One any amounts due and owing in excess
of One Hundred Thousand Dollars ($100,000), provide Lender with written notice
thereof at the time of submission of the next Schedule of Accounts, explaining
in detail the reason for the dispute, all claims related thereto and the amount
in controversy;
6.1.24 Inventory Reports. Furnish Lender with
Inventory reports for all Inventory at such times as Lender may request, but at
least once each Fiscal Quarter no later than thirty (30) days following the
close of such Fiscal Quarter. Such reports shall be in form and detail
satisfactory to Lender;
6.1.25 Financial Covenants. Comply with the following
Financial Covenants:
6.1.25.1 Minimum Tangible Net Worth.
Maintain a minimum Tangible Net Worth, measured as of the last day of each
month, of not less than (i) Seventeen Million Five Hundred Thousand Dollars
($17,500,000) for the period beginning on the Closing Date and ending on January
30, 2004; (ii) Twenty Million Five Hundred Thousand Dollars ($20,500,000) for
the period beginning on January 31, 2004 and ending on January 30, 2005; (iii)
Twenty-Three Million Five Hundred Thousand Dollars ($23,500,000) for the period
beginning on January 31, 2005 and ending on January 30, 2006; (iv) Twenty-Six
Million Five Hundred Thousand Dollars ($26,500,000) for the period beginning on
January 31, 2006 and ending on January 30, 2007; and (v) Twenty-Nine Million
Five Hundred Thousand Dollars ($33,000,000) for the period beginning on January
31, 2007 and thereafter;
6.1.25.2 Minimum Current Ratio. Maintain a
minimum Current Ratio, measured as of the last day of each month, of not less
than (i) 1.50 to 1.00 for the period beginning on January 31, 2003 and ending on
January 30, 2004; and (ii) 1.75 to 1.00 for the period beginning on January 31,
2004 and thereafter;
6.1.25.3 Minimum Debt Coverage Ratio.
Maintain a minimum Debt Coverage Ratio, measured on a rolling twelve-month basis
as of the last day of each month, of not less than 1.25 to 1.00 for the period
beginning on January 31, 2004 and thereafter;
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6.1.25.4 Minimum Fixed Charge Coverage
Ratio. Maintain a minimum Fixed Charge Coverage Ratio, measured on a rolling
twelve-month basis as of the last day of each month, of not less than 1.00 to
1.00 for the period beginning on January 31, 2004 and thereafter;
6.1.25.5 Maximum Leverage Ratio. Maintain a
Maximum Leverage Ratio, measured as of the last day of each month, of not
greater than (i) 2.40 to 1.00 for the period beginning on the Closing Date and
ending on January 30, 2004; (ii) 2.20 to 1.00 for the period beginning on
January 31, 2004 and ending on January 30, 2005; (iii) 2.00 to 1.00 for the
period beginning on January 31, 2005 and ending on January 30, 2006; (iv) 1.80
to 1.00 for the period beginning on January 31, 2006 and ending on January 31,
2007; and (v) 1.60 to 1.00 for the period beginning on January 31, 2007 and
thereafter;
If, however, there shall occur any changes
in any applicable laws, rules, regulations or GAAP that would affect how the
Obligors calculate any of the foregoing financial covenants, the Lender shall,
in its reasonable discretion, agree to adjust the financial covenants
accordingly to take into account any such change in any applicable laws, rules,
regulations or GAAP that would affect how the Obligors calculate any of the
foregoing financial covenants.
6.1.26 Legal Compliance. Each Obligor shall comply
with all applicable laws, statutes, rules regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges of federal, state,
local, and foreign governments (and all agencies thereof, including, without
limitation, the SEC, Nasdaq, ERISA and CERCLA / RCRA) and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, audit, or
notice has been filed or commenced against any of them alleging any failure so
to comply. No disciplinary proceeding with respect to any Obligor or any
Obligor's respective officers is pending before the SEC, the Nasdaq or any Blue
Sky Agency.
6.2 Indemnification.
6.2.1 In General. Obligors hereby agree to indemnify
and to protect, defend, and hold harmless Lender and its Affiliates and
participants and its or their directors, officers, employees, agents, attorneys
and shareholders, from and against any and all losses, damages, expenses or
liabilities of any kind or nature and from any suits, claims, or demands,
including all reasonable counsel fees incurred in investigating, evaluating or
defending such claim but not including any claim, loss, damage, expense or
liability arising solely from Lender's gross negligence or willful misconduct,
suffered by any Obligor and caused by, relating to, arising out of, resulting
from, or in any way connected with this Agreement, the Notes, or the other Loan
Documents and any transaction contemplated herein or therein or arising out of
Obligors' businesses, including, but not limited to, claims based upon any act
or failure to act by Lender in connection with this Agreement, or the other Loan
Documents and any transaction contemplated herein or therein, except to the
extent arising solely out of the gross negligence or willful misconduct of
Lender. If Obligors shall have knowledge of any claim or liability hereby
indemnified against, they shall promptly give written notice thereof to Lender.
THIS COVENANT SHALL SURVIVE PAYMENT OF THE INDEBTEDNESS AND THE TERMINATION OR
SATISFACTION OF THIS AGREEMENT.
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6.2.2 Defense of Claim. Lender shall promptly give
Obligors written notice of all suits or actions instituted against Lender with
respect to which Obligors have indemnified Lender, and Obligors shall timely
proceed to defend any such suit or action. Lender shall also have the right, at
the reasonable expense of Obligors, to participate in or, at Lender's election
and at Obligors' expense, assume the defense or prosecution of such suit,
action, or proceeding, and in the latter event, Obligors may employ counsel and
participate therein. Lender shall have the right to adjust, settle, or
compromise any claim, suit, or judgment after notice to Obligors, unless
Obligors desire to litigate such claim, defend such suit, or appeal such
judgment and simultaneously therewith deposit with Lender additional collateral
security sufficient to pay any judgment rendered, with interest, costs, legal
fees and expenses; and the right of Lender to indemnification under this
Agreement shall extend to any money paid by Lender in settlement or compromise
of any such claims, suits, and judgments in good faith, after notice to
Obligors.
6.2.3 Several Actions. If any suit, action, or other
proceeding is brought by Lender against Obligors for breach of Obligors'
covenant of indemnity herein contained, separate suits may be brought as causes
of action accrue, without prejudice or bar to the bringing of subsequent suits
on any other cause or causes of action, whether theretofore or thereafter
accruing.
6.3 Post-Closing Compliance. Obligors agree to execute,
re-execute, and to use reasonable efforts to cause any applicable third party to
execute and re-execute, and to deliver to Lender any document or instrument
signed in connection herewith or with any other Loan Document which was
incorrectly drafted and/or signed, as well as any document or instrument which
should have been signed at or prior to Closing but which was not so signed.
Obligors agree to comply with any written request of Lender to cause the
foregoing to be done not later than ten days after Obligors' receipt thereof,
and failure by Obligors to so comply shall, at the option of Lender, constitute
an Event of Default hereunder.
7. NEGATIVE COVENANTS
7.1 Negative Covenants. As long as any portion of the
Indebtedness shall remain outstanding and unpaid and any of the Obligations
remains unperformed, or Lender has any obligation to make Advances to Borrowers
hereunder, Obligors jointly and severally covenant and agree that, in the
absence of prior written consent of Lender, they will not do, or permit to be
done, any of the following:
7.1.1 Debt, Liens and Encumbrances. Incur any Debt or
Capital Lease Obligations except for Permitted Debt or create, incur, assume or
permit to exist, any mortgage, Lien, pledge, charge, security interest or other
encumbrance upon the Collateral, or any of their properties or assets,
including, but not limited to, any real property, whether now owned or hereafter
acquired, except for Permitted Liens;
7.1.2 Transfer of Collateral. Other than the creation
of Permitted Liens, any transfer of the Sears Agreement or the interest thereon
pursuant to the ▇▇▇▇ Documents, and sales of assets in the ordinary course of
business, or as a consequence of deterioration or obsolescence, sell, enter into
an agreement of sale for, convey, lease, assign, transfer, pledge, grant a
security interest, mortgage or Lien in, or otherwise dispose of any Collateral;
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7.1.3 Combination; Merger. Other than as anticipated
by the transaction Documents, enter into proceedings in total or partial
liquidation; merge, combine or consolidate with or into any unaffiliated entity,
or acquire all or substantially all of the assets or securities of any other
Person or otherwise take any action or omit to take any action which would have
a Material Adverse Effect, individually or in the aggregate, on Obligors or
their business;
7.1.4 Subsidiaries. Create or acquire any Subsidiary
(except for a newly formed Subsidiary not for the purpose of acquiring an
existing business and provided that the Subsidiary executes all instruments and
documents in form and substance satisfactory to Lender joining in this
Agreement, the Notes, and all other Loan Documents designated by Lender, after
which such Subsidiary will be a "Borrower" hereunder);
7.1.5 Nature of Operations. Substantially change the
nature or operations of their business as conducted on the date hereof;
7.1.6 Ownership/Management. Make any material change
in the executive management of Obligors or materially change Obligors' corporate
structure, or beneficial or legal ownership of the Obligors, including, but not
limited to, any change in the shareholders, or their respective interests,
except any transfers by any shareholder of any Obligor as of the date hereof to
(a) any Person that has an equity or other ownership interest in any shareholder
of any Obligor as of the date hereof; (b) any dependent of any shareholder of
any Obligor as of the date hereof or a trust formed for the benefit of any such
dependent of any shareholder of any Obligor as of the date hereof of, in any of
the Obligors;
7.1.7 Penney's Agreement; Sears Agreement; Vision One
Agreement. Amend or terminate the Penney's Agreement, the Sears Agreement
(except in accordance with the provisions of the ▇▇▇▇ Documents) or the Vision
One Agreement without the consent of Lender, which consent will not be
unreasonably withheld; provided, however, that the Penney's Agreement, the Sears
Agreement or the Vision One Agreement may be terminated if the Obligors replace
the customer party to such agreement with another customer satisfactory to
Lender, in Lender's sole and absolute discretion, on terms satisfactory to
Lender, in Lender's sole and absolute discretion;
7.1.8 Transactional Documents. Amend in any material
respect or terminate any of the Transactional Documents;
7.1.9 Margin Stock. Use any part of the proceeds of
the Loan to purchase or carry, or to reduce, retire or refinance any credit
incurred to purchase or carry, any margin stock (within the meaning of
Regulations O, T, U and X of the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying
any margin stock. If requested by Lender, Obligors will furnish Lender
statements in conformity with the requirements of Federal Reserve Form U-1
referred to in said regulation;
7.1.10 Transactions with Affiliates. Enter into any
transaction or transactions with any Affiliate for less than full value or on
terms or conditions less favorable than could be obtained in an arm's length
transaction with a third party or make any loan or advance to, or guaranty any
obligation of Debt of, any Affiliate; provided, however, that,
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notwithstanding the foregoing: (i) Borrowers may not make loans to (a) Optik Pro
in an aggregate amount at any time outstanding in excess of One Million Five
Hundred Thousand Dollars ($1,500,000); or (b) Health in an aggregate amount at
any time outstanding in excess of Three Hundred Thousand Dollars ($300,000);
(ii) any loan by Borrowers to either Optik Pro or Health shall be evidenced by a
Guarantor's Note payable to Borrowers; and (iii) each such Guarantor's Note
shall be endorsed to Lender and delivered to Lender.
7.1.11 Environmental Matters. Use, generate, treat,
transport, store, dispose of, or otherwise introduce any Hazardous Material into
or on any real property owned, leased or occupied by any Obligor, or cause,
suffer, allow, or permit anyone else to do so, in violation of any applicable
statute, law, ordinance rule or regulation;
7.1.12 Dividends; Distribution. Declare, or make
payment of, any dividend or any distribution to any shareholder of any Obligor
in respect of any capital stock of any Obligor; provided, however, that
notwithstanding the foregoing, Obligors may make interest distributions, if any,
payable in connection with the Obligor's preferred stock so long as (i) no Event
of Default has occurred hereunder, and (ii) the payment thereof would not cause
a violation of any of the Financial Covenants;
7.1.13 Change in Location of Collateral. Change any
location of any Collateral, other than in the ordinary course of business,
without giving the Lender prior written notice;
7.1.14 Conduct of Business. Conduct any business
under any other name or entity, other than those listed on Schedule 5.1.4(ii)
hereto;
7.1.15 Leases. Other than leases for Obligors' retail
store facilities, create, incur, assume or suffer to exist any obligation as
lessee for the rental or hire of any real or personal property where the annual
monetary obligations per such lease would exceed the lesser of Two Hundred Fifty
Thousand Dollars ($250,000);
7.1.16 Sale and Lease Back. Sell, transfer or
otherwise dispose of any material real or personal property to any Person and
thereafter directly or indirectly lease back the same or similar property;
7.1.17 Investments. Make any loan or advance to any
Person or purchase or otherwise acquire any capital stock, obligations or other
securities of, make any capital contribution to, or otherwise invest in or
acquire any interest in any Person in an aggregate amount in excess of One
Hundred Thousand Dollars ($100,000) annually;
7.1.18 Guaranties. Other than the Guaranty and Surety
Agreements of Guarantors, assume, guarantee, endorse or otherwise be or become
directly or contingently liable for obligations of any Person, other than
Guaranties for the benefit of operating Affiliates of Obligors, provided that
(i) the extension of such Guaranties would not cause Obligors to violate any of
the Financial Covenants; (ii) such Guaranties are unsecured and the obligations
thereunder are subordinated to the Obligations of the Borrower to Lender
hereunder and under the other Loan Documents; and (iii) such Guaranties do not
exceed an aggregate amount greater than Twenty-Five Thousand Dollars ($25,000)
annually;
29
7.1.19 Fiscal Year. Change their Fiscal Year;
7.1.20 Accounting Methods. Unless required by
applicable law or GAAP and upon prior written notice thereof to Lender, make or
consent to a material change in the manner in which the business of Obligors is
conducted or in Obligors' method of accounting, as applicable;
7.1.21 Capital Expenditures. Incur any capital
expenditures in any Fiscal Year in excess of the lesser of Seven Million Dollars
($7,000,000) in the aggregate; and
7.1.22 Stock. Sell, encumber or otherwise dispose of
any shares of capital stock of any Subsidiary.
8. DEFAULT
8.1 Events of Default. The occurrence of any one or more of
the following events, conditions or states of affairs, shall constitute an
"Event of Default" hereunder, under the Notes and under each of the other Loan
Documents:
8.1.1 Failure by Obligors to pay any of the
Indebtedness, or any portion thereof when the same becomes due;
8.1.2 Failure by any Obligor to pay any Lender's
Costs when the same shall be due, and such failure continues within ten days
following written demand therefor;
8.1.3 Failure by Obligors to be in compliance with
any Financial Covenant.
8.1.4 Other than as contemplated by Paragraphs 8.1.1,
8.1.2 and 8.1.3 above, the failure by any Obligor to observe or perform any
other agreement, condition, undertaking or covenant in (i) this Agreement, the
Notes, or any other Loan Document, or in any other agreement by and between any
Obligor and Lender, provided the Obligors have not cured the same within twenty
(20) days following written notice thereof from Lender, or (ii) any other
material agreement, lease, mortgage, note or other obligation to which Obligors
are a party or by which Obligors are bound, the failure of which, taken as a
whole, causes a default thereunder and could have a Material Adverse Effect on
Obligors;
8.1.5 Any material representation or warranty of
Obligors made in this Agreement or any other Loan Document or any statement or
information in any report, certificate, financial statement or other instrument
made by Obligors in connection with making this Agreement, the establishment of
the Loans or in compliance with the provisions hereof or any other Loan Document
shall have been false or misleading in any material respect when so made, deemed
made or furnished;
8.1.6 The occurrence of any Material Adverse Effect;
8.1.7 Any Obligor discontinues its business
operations or materially changes the nature of its business;
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8.1.8 (i) Any Reportable Event which Lender
determines to constitute grounds for the termination of any Plan by the PBGC or
for the appointment by any United States District Court of a trustee to
administer or liquidate any Plan; (ii) the termination of any Plan described in
either Section 414(j) or Section 414(k) of the Internal Revenue Code, the
present value of whose benefits that may be guarantied under Title IV of ERISA
exceeds by more than One Hundred Thousand Dollars ($100,000) the amount of Plan
assets allocable to such benefits; (iii) the appointment by any United States
District Court of a trustee to administer any Plan; (iv) the institution by the
PBGC of proceedings to terminate any Plan; (v) the failure by any Obligor or any
member of any Controlled Group to meet the minimum funding standards established
in Section 302 of ERISA; or (vi) the assertion of any claim of, or demand for,
withdrawal liability in excess of One Hundred Thousand Dollars ($100,000) under
ERISA by any multi-employer pension plan to which any Obligor or any member of
its Controlled Group heretofore contributed or currently contributes;
8.1.9 The Penney's Agreement, the Sears Agreement or
the Vision One Agreement shall terminate for any reason or, material adverse
change in the relationship between Obligors and Penney's, Obligors and Sears, or
Obligors and Vision One shall have occurred, other than pursuant to the exercise
by ▇▇▇▇ National or ▇▇▇▇ Vision of any rights under the ▇▇▇▇ Documents;
8.1.10 The occurrence of any event of default under
any of the Transactional Documents.
8.1.11 Any Obligor shall become insolvent or unable
to pay its debts as they mature, or file a voluntary petition or proceeding
seeking liquidation, reorganization or other relief with respect to itself under
any provision of the Bankruptcy Code or any state bankruptcy or insolvency
statute, or make an assignment or any other transfer of assets for the benefit
of its creditors, or apply for or consent to the appointment of a receiver for
its assets, or suffer the filing against its property of any attachment or
garnishment or take any action to authorize any of the foregoing, or an
involuntary case or other proceeding shall be commenced against any Obligor
seeking liquidation, reorganization or other relief with respect to its debts
under the Bankruptcy Code or any other bankruptcy, insolvency or similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of its or any substantial part
of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days (it being understood
that no delay period applies with respect to any default arising under this
Section by reason of the filing of a voluntary petition by any Obligor under the
Bankruptcy Code or any state bankruptcy or insolvency statute or the making of
an assignment or other transfer of assets for the benefit of Obligors' creditors
or by reason of any Obligor applying for or consenting to the appointment of a
receiver for any Obligor's assets); or an order for relief shall be entered
against any Obligor under any provision of the Bankruptcy Code or any state
bankruptcy or insolvency statute as now or hereafter in effect;
8.1.12 Entry of a final judgment or judgments against
any Obligor by a court of law not fully covered by insurance in an amount
exceeding One Hundred Fifty Thousand Dollars ($150,000) in any single instance
or an aggregate of Three Hundred Thousand Dollars ($300,000) outstanding at any
one time, enforcement of which judgment or judgments
31
has not been stayed, bonded or dismissed within forty-five days after entry (so
long as no execution with respect to such judgment has been commenced);
8.1.13 Except for Permitted Liens, imposition of any
Lien or series of Liens against any Obligor or any of the Collateral whether by
operation of law or by consent;
8.1.14 Other than Permitted Liens, Lender's Lien in
any of the Collateral shall cease to constitute a first Lien on the Collateral
or otherwise cause to be in full force and effect, or the validity or
enforceability thereof shall be contested by any Obligor, or any Obligor shall
deny that it has any further Liability or Obligation under any of the Loan
Documents, and the foregoing has or would have a Material Adverse Effect on any
Obligor; and
8.1.15 Lender believes, in good faith, subject only
to its own business judgment, that the prospect of any payment or performance of
any obligation hereunder is, or shall be impaired.
8.2 Remedies upon an Event of Default. Upon the occurrence and
continuation of an Event of Default, the Lender may by notice to the Obligors:
8.2.1 Forthwith suspend all future Advances and
declare all Indebtedness to be immediately due and payable, without protest,
demand or other notice (which are hereby expressly waived by Obligors) and, in
addition to the rights specifically granted hereunder or now or hereafter
existing in equity, at law, by virtue of statute or otherwise (each of which
rights may be exercised at any time and from time to time), Lender may exercise
the rights and remedies available to Lender at law or in equity or under this
Agreement, the Notes, and any of the other Loan Documents or any other agreement
by and between any Obligor and Lender in accordance with the respective
provisions thereof;
8.2.2 Have all the rights of a secured creditor under
the Uniform Commercial Code as enacted in the State of New Jersey in any other
jurisdiction in which any Collateral is located and in any other jurisdiction in
which any Obligor was organized;
8.2.3 Receive payment from Obligors, as part of the
Indebtedness and Obligations hereby secured, all of the Lender's Costs, with per
annum interest on all of the same at highest Line Interest Rate plus three
percent (3%), from and after demand for the payment thereof until paid;
8.2.4 (i) receive, open and dispose of all mail
addressed to such Obligor, to notify the post office authorities to change the
address for delivery of mail addressed to such Obligor to such address as Lender
may designate; (ii) endorse the name of Obligors on any notes, acceptances,
checks, drafts, money orders or other evidences of payment or proceeds of the
Collateral that may come into Lender's possession; (iii) sign the name of
Obligors on any invoices, documents, drafts against and notices to Account
Debtors of Obligors, assignments and request for verification of accounts; (iv)
execute proofs of claim and loss; (v) execute any endorsements, assignments or
other instruments of conveyance or transfer; (vi) adjust and compromise any
claims under insurance policies; (vii) execute releases; (viii) collect the
Accounts; (ix) notify Account Debtors to make payments directly to Lender; and
(x) do all other acts and things necessary and advisable in the sole discretion
of Lender to carry out and enforce
32
this Agreement. All acts of said attorney or designee are hereby ratified and
approved and said attorney or designee shall not be liable for any acts of
commission or omission, nor for any error of judgment or mistake of fact or law.
Each of these powers of attorney being coupled with an interest is irrevocable
while any of the Indebtedness shall remain unpaid or Lender has any obligations
to make Advances hereunder; and
8.2.5 (i) require Obligors at Obligors' expense, to
assemble the Collateral and make it available to Lender at the place or places
to be designated by Lender; (ii) have the right to sell such Collateral at one
or more public or private sales (the requirement of reasonable notice of the
time and place of disposition of such Collateral by Lender shall be conclusively
met if such notice is personally delivered, delivered by overnight courier,
facsimilied or mailed to Obligors' address as specified in this Agreement at
least ten days before the time of the sale or disposition); (iii) bid upon and
purchase any or all of such Collateral at any public sale thereof; and
(iv) dispose of all or any part of such Collateral from time to time, and upon
such terms and conditions, including a credit sale, as it determines in its sole
discretion.
8.3 Application of Proceeds. Any cash proceeds of sale, lease
or other disposition of the Collateral upon an Event of Default shall be applied
in the following order:
8.3.1 At Lender's sole discretion, to pay part, any
or all of any Obligations including, but not limited to, Lender's Costs,
interest, and/or principal; and
8.3.2 Any surplus then remaining to Obligors or
whomever may be lawfully entitled thereto.
8.4 Set-Off Rights Upon Default. In addition to all Liens and
rights of set-off against Obligors' money, securities or other property given to
Lender by law, Obligors acknowledge and agree that Lender, in addition to any
remedies set forth above, shall have the right at any time and from time to time
upon the occurrence and during the continuation of an Event of Default, without
notice to Obligors, to the extent permitted by law (any such notice being
expressly waived by Obligors) and to the fullest extent permitted by applicable
Rules, to set off, to exercise any banker's lien or any right of attachment or
garnishment and apply any and all balances, credits, deposits (general or
special, time or demand, provisional or final), accounts or monies at any time
held by Lender and other indebtedness at any time owing by Lender to or for the
account of Obligors against any and all Indebtedness or other Obligations of
Obligors, now or hereafter existing under this Agreement, the Notes or any other
Loan Document, regardless of whether Lender shall have made any demand hereunder
or thereunder. Every such right of set-off shall be deemed to have been
exercised immediately upon the occurrence of an Event of Default without any
action by Lender, although Lender may enter such set-off on its books and
records at a later time.
8.5 Singular or Multiple Exercise; Non-Waiver. The remedies
provided herein and in the other Loan Documents or otherwise available to Lender
at law or in equity and any powers of attorney therein contained shall be
cumulative and concurrent, and may be pursued singly, successively or together
at the sole discretion of Lender, and may be exercised as often as occasion
therefor shall occur; and the failure to exercise any such right or remedy shall
in no event be construed as a waiver or release of the same.
33
8.6 Discontinuance of Remedies. In the event that Lender shall
have proceeded to enforce any right under this Agreement and such proceedings
shall have been discontinued or abandoned for any reason, then and in every such
case, the rights, remedies and obligations of the parties hereto shall remain in
full force and effect.
8.7 Cumulative Remedies. No delay or omission of Lender to
exercise any right or power arising under this Agreement, the Notes, any Loan
Documents or from any Event of Default or Potential Default shall exhaust or
impair any such right or power or prevent its exercise during the continuance of
any other Event of Default or Potential Default. No waiver by Lender of any
Event of Default, whether such waiver be full or partial, shall extend to or be
taken to effect any subsequent Event of Default, or to impair the rights
resulting therefrom except as may otherwise be provided herein. The remedies
provided in the Loan Documents are cumulative and are not exclusive of any
remedies provided by law.
8.8 Judgments. Obligors agree that, with respect to any
judgments which may be entered against any Obligor by or on behalf of Lender:
(i) if for the purpose of obtaining judgment in any court it is necessary to
convert all or any part of a sum due hereunder in Dollars into Canadian Dollars,
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which, in accordance with normal
banking procedures, the Lender could purchase Dollars with Canadian Dollars on
the Business Day immediately preceding the day on which any such judgment, or
any relevant part thereof, is paid or otherwise satisfied; and (ii) the
obligation of the Obligors in respect to any sum due hereunder in Dollars shall,
notwithstanding any judgment in Canadian Dollars, be discharged only to the
extent that on the Business Day following receipt by Lender of any sum adjudged
to be so due in Canadian Dollars, the Lender may, in accordance with normal
banking procedures, purchase Dollars with Canadian Dollars. If the amount of
Dollars so purchased is less than the sum originally due to the Lender in
Dollars, the Obligors shall, as a separate obligation and notwithstanding any
such judgment, indemnify the Lender against such loss, and if the amount of
Dollars so purchased exceeds the sum originally due to the Lender, the Lender
shall remit such excess to the Obligors so long as no other Indebtedness or
Lenders' Costs are outstanding hereunder.
9. MISCELLANEOUS
9.1 Notices. Any notice or other communication hereunder or
under any of the Loan Documents by one party to another shall be in writing and
shall be deemed to have been validly given upon receipt if by hand delivery,
overnight delivery or facsimile with evidence of transmission receipt, to the
addresses as follows:
34
If to any Obligor: With a copy to:
U.S. Vision, Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
Chief Executive Officer ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
1 ▇▇▇▇▇▇ Drive Philadelphia, PA 19103
▇▇▇▇ Oaks Industrial Park E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇@▇▇▇▇▇▇▇▇.▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ and
▇▇▇▇▇▇, Lidji & Werbner
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
4400 Renaissance Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
E-mail: ▇▇▇▇▇▇@▇▇▇.▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Bank: With a copy to:
Commerce Bank, ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Vice President ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ E-mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.2 Integration. This Agreement and the other Loan Documents
shall be construed as one agreement; in the event of any inconsistency, this
Agreement shall control over any other Loan Document.
9.3 Amendment; Modification. Modifications or amendments of or
to the provisions of this Agreement or any other Loan Document shall be
effective only if set forth in a written instrument signed by Lender and any
other party sought to be bound thereby.
9.4 Survival. The terms of this Agreement and all agreements,
representations, warranties and covenants made by Obligors in any other Loan
Document shall survive the issuance and payment of the Notes and all sums due
hereunder and shall continue so long as any portion of the Indebtedness shall
remain outstanding and unpaid; provided, however, that the covenants set forth
in Sections 6.2 (with respect to indemnification), 9.7, 9.10 and 9.11 (with
respect to damages, jurisdiction, venue and jury trial) hereof shall survive the
payment of the Indebtedness and the termination of this Agreement. Obligors
hereby acknowledge that Lender has relied upon the foregoing in making available
the Loan.
35
9.5 Closing. Closing hereunder shall occur on October 30, 2002
at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other time and place as the
parties hereto may determine.
9.6 Successors and Assigns; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and the
respective successors and assigns of the parties hereto; provided, however that
Obligors may not assign this Agreement, or any rights or duties arising
hereunder, without the express prior written consent of Lender, which may be
withheld by Lender in its sole and absolute discretion, and Lender may assign
all or any part of its rights or duties hereunder without the consent of
Obligors.
9.7 Joint and Several Obligations. Each Borrower is jointly
and severally obligated under this Agreement, the Notes and each of the other
Loan Documents.
9.8 CERTAIN WAIVERS. NEITHER LENDER NOR ANY ATTORNEY OF LENDER
SHALL BE LIABLE TO OBLIGORS OR ANY AFFILIATE FOR CONSEQUENTIAL DAMAGES ARISING
FROM ANY BREACH OF CONTRACT, TORT OR OTHER WRONG RELATING TO THE ESTABLISHMENT,
ADMINISTRATION OR COLLECTION OF THE OBLIGATIONS RELATING IN ANY WAY TO THIS
AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS OR THE ACTION OR
INACTION OF ANY SUCH PERSONS UNDER ANY ONE OR MORE PROVISIONS HEREOF OR THEREOF.
IN THE EVENT LENDER SEEKS TO TAKE POSSESSION OF ANY OR ALL OF THE COLLATERAL BY
COURT PROCESS OR OTHER METHOD AVAILABLE UNDER THE LAW, OBLIGORS IRREVOCABLY
WAIVE ANY BOND OR ANY SURETY OR SECURITY RELATING THERETO REQUIRED BY ANY
STATUTE, COURT RULE OR OTHERWISE AS AN INCIDENT TO SUCH POSSESSION AND WAIVES
ANY DEMAND FOR POSSESSION PRIOR TO THE COMMENCEMENT OF ANY SUIT OR ACTION TO
RECOVER WITH RESPECT THERETO. OBLIGORS FURTHER WAIVE THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTIONS LAWS.
9.9 Releases. Each Obligor acknowledge that it has been
represented by competent counsel in connection with the transactions
contemplated hereby and has been fully advised by such counsel of the full range
of rights and Obligations possessed by Obligors and undertaken and received
pursuant to the terms of this Agreement and the other Loan Documents and,
specifically, the provisions of this Agreement and the other Loan Documents.
Obligors hereby knowingly and, after consultation with counsel, freely
acknowledge and agree that they do not now have nor do they know of any basis
for any claim in tort, contract or otherwise against Lender for breach of any of
the terms of any of the Loan Documents. Obligors acknowledge and agree that this
Agreement and the other Loan Documents were negotiated, executed and delivered
freely and with full and informed knowledge of the consequences of this
Agreement and the other Loan Documents and that they have executed this
Agreement and the other Loan Documents without duress, and that Lender has
proceeded in a commercially reasonable manner in light of all of the facts and
circumstances surrounding the transactions that are the subject of this
Agreement and the other Loan Documents.
36
9.10 Governing Law. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of
New Jersey with
respect to contracts to be entered into and performed within the State of
New
Jersey.
9.11 CONSENT TO JURISDICTION AND VENUE. IN ANY LEGAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE RELATIONSHIP EVIDENCED HEREBY, EACH OF THE
OBLIGORS HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY
STATE COURT LOCATED IN THE STATE OF
NEW JERSEY, IN ANY COUNTY IN WHICH LENDER
HAS AN OFFICE OR BRANCH, AND ANY UNITED STATES COURT, AND AGREES NOT TO RAISE
ANY OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE
OF ANY SUCH PROCEEDING. EACH OF THE OBLIGORS AGREES THAT SERVICE OF PROCESS IN
ANY SUCH PROCEEDING MAY BE DULY EFFECTED UPON SUCH OBLIGOR BY MAILING A COPY
THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID OR BY HAND DELIVERY OR A NATIONALLY
RECOGNIZED OVERNIGHT DELIVERY SERVICE, TO EACH PARTY THERETO.
9.12 WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS AND LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
THE RELATIONSHIP EVIDENCED HEREBY OR THEREBY. EACH OF THE OBLIGORS ACKNOWLEDGES
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO, ACCEPT
AND RELY UPON THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
9.13 Gender. All references to any gender, including the
neuter gender, shall be deemed to incorporate all other genders.
9.14 Public Announcement. Lender may announce and publicize
the existence of this Agreement and the extension of credit by Lender to
Obligors, in such media as Lender may, in its sole discretion, from time to time
determine.
9.15 Relationship of Parties. The relationship of Lender and
Obligors will at all times be that of creditor and obligor. Nothing herein shall
be deemed or construed to confer upon the parties any other relationship
including, but not limited to, any relationship of a partnership or joint
venture.
9.16 Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto) and the other Loan Documents constitute the entire
agreement and understanding between the parties hereto relating to the subject
matter hereof and supersede all prior oral or written understandings.
9.17 Severability. The invalidity, illegality or
unenforceability in any jurisdiction of any provision in or obligation under
this Agreement, the Notes or the other Loan
37
Documents shall not affect or impair the validity, legality or enforceability of
the remaining provisions or obligations thereunder in any other jurisdiction.
9.18 Excess Payments. If Obligors shall pay any interest under
the terms of the Notes at a rate higher than the maximum rate allowed by
applicable law, then such excess payment shall be credited as a payment of
principal first to Lender's Costs, then to the Line of Credit, unless Obligors
notify Lender in writing to return the excess payment to Obligors.
9.19 Partial Invalidity. If any provision of this Agreement
shall for any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
9.20 Compliance with Rules. Lender shall not be required by
operation or effect of any provision of this Agreement to violate any statute or
regulation under state or federal law, including all Rules.
9.21 Headings. The heading of any Article, Section, Paragraph
or Clause contained in this Agreement is for convenience of reference only and
shall not be deemed to amplify, limit, modify or give full notice of the
provisions thereof.
9.22 Counterparts. This Agreement may be signed in
counterparts each of which shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
9.23 Retention of Documents. Unless otherwise provided herein,
any documents, schedules, invoices or other papers delivered to Lender may be
destroyed or otherwise disposed of by Lender six months after they are delivered
to or received by Lender, unless Obligors request the return of such documents,
schedules, invoices or other papers and makes arrangements, at Obligors'
expense, for their return.
9.24 Limitations of Obligations of the Obligors.
Notwithstanding the definition of "Obligations" herein, to the extent required
to make the Obligations of a Borrower fully enforceable, the liability of such
Borrower shall be limited to an amount equal to: (i) the lowest amount that
would not render all or a portion of such Borrower's joint and several
liabilities, if any, with respect to such Obligations void, voidable or
unenforceable against such Borrower's creditors or creditor's representatives
under any applicable fraudulent conveyance, fraudulent transfer or similar act
or under Section 544 or 548 of the Bankruptcy Code of 1978, as amended, minus
(ii) One ($1.00) Dollar.
9.25 ▇▇▇▇ Documents. Lender acknowledges receipt of a copy of
each of the ▇▇▇▇ Documents, and understands that ▇▇▇▇ National, ▇▇▇▇ Vision, or
one or more Affiliates of either of the foregoing may exercise certain rights to
purchase certain leases or assets constituting the Sears Agreement. The Lender
hereby covenants and agrees that, provided Lender has been given reasonable
assurances that all proceeds payable in connection with the exercise of the
option thereunder (other than amounts permitted to be set-off under the ▇▇▇▇
Note) will be paid directly to Lender as contemplated by Paragraph 2.2.7 hereof,
upon receipt of written notification from ▇▇▇▇ National that it or one or more
Affiliates of ▇▇▇▇ National is
38
exercising all or any rights under the ▇▇▇▇ Documents with respect to the Sears
Assets or Sears Leases (as defined in the ▇▇▇▇ Documents), the Lender will
release its security interest in the Sears Assets or Sears Leases and will
execute and deliver to ▇▇▇▇ National a proper instrument or instruments and will
duly assign, transfer and deliver to ▇▇▇▇ National such part of the Collateral
as may be in the possession of the Lender.
9.26 Agreement in English. Optik Pro hereby declares having
expressly required that this Agreement, the Movable Hypothec, the Guaranty and
Surety Agreement of Optik Pro and all other documents, agreements and notices
related thereto be drafted in the English language. Optik Pro declare et
reconnait avoir expressement requis que ce contrat de pret et tous les autres
documents, conventions ou avis qui sont afferent soient rediges en langue
anglaise.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
39
IN WITNESS WHEREOF, intending to be legally bound hereby, Obligors and
Lender have executed this Agreement under seal, intending to be legally bound
hereby, the day and year first above written.
BORROWERS / OBLIGORS: GUARANTORS / OBLIGORS:
U.S. VISION, INC. 9072-8411 QUEBEC, INC.
d/b/a "Optik Pro Baie 2000"
By: /s/ By: /s/
------------------------------- --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ III, ▇▇▇▇▇▇ ▇. ▇▇▇▇ III,
Senior Vice President and Senior Vice President and
Chief Financial Officer Chief Financial Officer
STYL-RITE OPTICAL MFG. CO., INC. HEALTH EYE CARE STATISTICS, INC.
By: /s/ By: /s/
------------------------------- --------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
President President
USV OPTICAL, INC. COMMERCE BANK, N.A.
By: /s/ By: /s/
------------------------------- --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ III, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Senior Vice President and Vice President
Chief Financial Officer
U.S. VISION HOLDINGS, INC.
By: /s/
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ III,
Chief Financial Officer
40
EXHIBIT A
DEFINITIONS
"Accounts" means all rights of a Person to receive payment for
the sale, lease, or provision of goods and services, Health-Care-Insurance
Receivables and all other rights to receive the payment of money, whether or not
earned by performance, shown on the financial reports of such Person as gross
accounts receivable, or otherwise, all as determined in accordance with such
Person's financial policies consistently applied and in conformity with GAAP.
"Account Debtor" means the Person or Persons obligated under
or on account of an Account.
"Acquisition Documents" means the Agreement and Plan of
Merger, the Proxy Statement and the Schedule 13E-3.
"Advance" means any advance of funds under the Line by Lender
to Borrowers.
"Affiliate" means and refers to, as applied to any Person, any
other Person directly or indirectly controlling, or through one or more Persons
controlled by, or in common control with, that Person. "Control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and/or policies of that Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this
Loan and Security Agreement, as it may
be amended, restated or otherwise modified and in effect from time to time.
"Agreement and Plan of Merger" has the same meaning ascribed
thereto in the preamble to this Agreement.
"All Assets" means, for any Person, all Accounts; all of such
Person's deposit accounts with Lender; all contents of the Lockboxes (as defined
below); Cash Collateral Accounts; As-Extracted Collateral; Chattel Paper;
Commercial Tort Claims; Consignments; Contracts; Documents; Encumbrance(s);
Equipment; Inventory (including, but not limited to, all returned or rejected
merchandise); Fixtures; Instruments; Leases, Investment Property, General
Intangibles, including, without limitation, all intellectual property of every
kind and nature; Letter-of-Credit Rights; and all Supporting Obligations. Any
capitalized term used in this paragraph without definition herein shall have the
meaning ascribed thereto in Article 9 of the UCC.
"Applicable Law" means all applicable provisions of
constitutions, laws, statutes, ordinances, rules, treaties, regulations,
permits, licenses, approvals, interpretations and orders of courts or
Governmental Agencies and all orders and decrees of all courts and arbitrators.
"Bankruptcy Code" means Title 11 of the United States Code as
now or hereafter in effect, or any successor statute.
"Borrowers' Collateral" shall have the meaning ascribed
thereto in Paragraph 3.1.1.
"Business Day" means any day other than a Saturday, Sunday or
day on which banking institutions in
New Jersey are required by law or
regulation to close.
"Canadian Collateral Documents" means the following: (i) the
Guaranty and Surety Agreements of the respective Guarantors; (ii) the General
Security Agreement; (iii) the Movable Hypothec; and (iv) the Guarantor's Note.
"Canadian Dollars" means the lawful money of Canada.
"Capital Expenditures" means expenditures made, or liabilities
incurred, for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year and otherwise confirm with the provisions of GAAP, including the direct or
indirect acquisition of such assets by way of increased product or service
charges, offset items or otherwise, and all Capital Lease Obligations.
"Capital Lease" means any lease of property (real, personal or
mixed) which, in conformity with GAAP, is or should be accounted for as a
capital lease on the balance sheet of a Person.
"Capital Lease Obligations" means the aggregate amount of a
Person's obligations under all of such Person's Capital Leases.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Collateral Account" has the meaning ascribed thereto in
Section 3.2.
"Cash-Out" means the consideration that each current
shareholder and option holder of U.S. Vision stock will be entitled to receive
pursuant to Section 2.2 of the Agreement and Plan of Merger.
"CERCLA / RCRA" means the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and the Resource
Conservation Recovery Act of 1976, as amended.
"Closing" and "Closing Date" mean the date hereof.
"▇▇▇▇ Agreement" means that certain agreement as of even date
herewith among ▇▇▇▇ National, ▇▇▇▇ Vision and U.S. Vision.
"▇▇▇▇ Documents" means each of: (i) the ▇▇▇▇ Note; (ii) the
▇▇▇▇ Agreement; (iii) the Vision One Agreement; and (iv) the ▇▇▇▇ Subordination
Agreement.
"▇▇▇▇ National" means ▇▇▇▇ National Corporation, a Delaware
corporation.
"▇▇▇▇ Note" means that certain Promissory Note of even date
herewith of Borrowers in favor of ▇▇▇▇ National in the original principal amount
of Four Million Dollars ($4,000,000).
"▇▇▇▇ Subordination Agreement" means that certain
Subordination Agreement of even date herewith by and between Lender and ▇▇▇▇.
"▇▇▇▇ Vision" means ▇▇▇▇ Vision Corporation, a Delaware
corporation.
"Collateral" means Borrowers' Collateral and Guarantors'
Collateral.
"Collections" shall mean, with respect to any Account, all
cash collections and other cash proceeds of such Account including, without
limitation, all payments by the Account Debtor in respect of such Account and
all cash proceeds of any related security with respect to such Account.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Controlled Group" has the meaning given to such term in
ERISA.
"Current Assets" has the meaning ascribed thereto by GAAP.
"Current Liabilities" has the meaning ascribed thereto by
GAAP.
"Current Ratio" means, as of any date, the ratio of: (i) the
aggregate Current Assets of Obligors to (ii) the aggregate Current Liabilities
of Obligors, all as determined in accordance with GAAP.
"Debt" has the meaning ascribed thereto by GAAP.
"Debt Coverage Ratio" means, as of any date, the ratio of: (i)
Obligors' consolidated EBITDA for the Twelve Month Period ending on such date to
(ii) the sum of consolidated Debt Service and Tax Expense of the Obligors for
such Twelve Month Period.
"Debt Service" means for any Twelve Month Period the sum of
(i) principal payments maturing during such Twelve Month Period on Debt, and
(ii) interest expense on Debt (gross, not net of interest income) paid, payable
or otherwise accrued during such Twelve Month Period.
"Deposit Account" means a demand, time, savings, passbook or
like account with a federally insured bank or savings and loan association,
other than an account evidenced by a negotiable certificate of deposit.
"Designated Officer" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President, or
any other person designated in writing by Lender as its representative for the
purpose of receiving notice under this Agreement.
"Dollars" and the symbol "$" mean the lawful money of the
United States of America.
"EBITDA" means the sum of gross revenues and other proper
income credits, less all proper charges against income other than (i) interest
expense on Debt, (ii) taxes on income, and (iii) depreciation and amortization
expense, all determined in accordance with GAAP; provided that there shall not
be included in such revenues or charges (i) any gains resulting from the
write-up of assets; (ii) any proceeds of any life insurance policy, (iii) any
gain or loss which is classified as "extraordinary" in accordance with GAAP,
(iv) any non-cash expenses and charges, (v) non-cash provisions for reserves for
discontinued operations, and (vi) any gain or loss associated with the sale or
write-down of assets. EBITDA can be less than zero for all purposes of this
Agreement.
"Environmental Laws" means any and all federal, state and
local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Agencies,
relating to the protection of human health or the environment, including, but
not limited to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means each trade or business (whether or not
incorporated and whether or not foreign) which is or may hereafter become a
member of a group of which an Obligor is a member and which is treated as a
single employer under ERISA Section 4001(b)(1), or Internal Revenue Code Section
414.
"Event of Default" means any event as set forth in Section 8.1
hereof.
"Facility Fee" has the meaning ascribed thereto in Paragraph
2.1.6 of this Agreement.
"Financial Covenant" individually and "Financial Covenants"
collectively mean the financial covenants set forth in Clauses 6.1.25.1,
6.1.25.2, 6.1.25.3, 6.1.25.4 and 6.1.25.5 hereof.
"Financing Statements" means any and all financing statements
and amendments required or appropriate to perfect and keep perfected any
security interest created under any of the Loan Documents pursuant to (i) the
Uniform Commercial Code as adopted in any state in which any of the Obligors
were organized or in any other jurisdiction having jurisdiction over the
Collateral, and (ii) the laws of Canada.
"Fiscal Quarter" shall mean the fiscal quarter of Obligors
ending on April 30, July 31, and October 31 of each year and January 31 of the
following year.
"Fiscal Year" shall mean the fiscal year of Obligors ending on
January 31 of each year. For purposes of this Agreement (including, but not
limited to, the Financial Covenants set forth herein), each Fiscal Year will be
identified by the calendar year in which eleven of the twelve calendar months
occur during such Fiscal Year fall (e.g., the 2001 Fiscal Year will be the
fiscal year ending on January 31, 2002).
"Fixed Charges" means the sum of (i) principal payments on
Debt maturing during the applicable Twelve Month Period, other than Debt
incurred under the Line of Credit; (ii) interest expense (gross, not net of
interest income) during such Twelve Month Period; (iii) Tax Expense (but not
below zero) for such Twelve Month Period; and (iv) Unfunded Capital Expenditures
during such Twelve Month Period.
"Fixed Charge Coverage Ratio" means, as of any date, the ratio
of (i) Obligors' consolidated EBITDA for the Twelve Month Period ending on such
date to (ii) the Fixed Charges of Obligors for such Twelve Month Period.
"Funding Date" means a Business Day on which an Advance is
funded.
"GAAP" means generally accepted accounting principles as set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board as each may from time
to time be in effect, or as set forth in such other statements by such other
Person as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination and
which are applied on a consistent basis.
"General Security Agreement" means that certain General
Security Agreement of even date herewith substantially in the form attached
hereto as EXHIBIT C required by Lender as collateral security for the repayment
and performance of Health's obligations under this Agreement, the Guaranty and
Surety Agreement of Health, and all other Loan Documents.
"Governmental Agency" means any national government, any state
or political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory, supervisory or administrative functions of or
pertaining to government.
"Guarantor" means individually and "Guarantors" means together
9072-8411 Quebec, Inc. "Optik Pro Baie ▇▇▇▇", ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ corporation, and
Health Eye Care Statistics, Inc., an Ontario, Canada corporation.
"Guarantors' Collateral" shall have the meaning ascribed
thereto in Paragraph 3.1.2.
"Guarantors' Obligations" means the obligations of Guarantors
under their respective Guaranty and Surety Agreements, the General Security
Agreement, the Movable Hypothec and the other Loan Documents.
"Guarantor's Note" means a note in the form of EXHIBIT D,
attached hereto and made a part hereof, evidencing the indebtedness of a
Guarantor in favor of a Borrower pursuant to Paragraph 7.1.10.
"Guaranty" means any guarantee of the payment or performance
of any indebtedness or other obligation and any other arrangement whereby credit
is extended to one obligor on the basis of any promise of another Person,
whether that promise is expressed in terms
of an obligation to pay the indebtedness of such obligor, or the purchase of an
obligation owed by such obligor, or to purchase goods and services from such
obligor pursuant to a take-or-pay contract, or to maintain the capital, working
capital, solvency or general financial condition of such obligor, whether or not
any such arrangement is listed on the balance sheet of such other Person, or
referred to in a footnote thereto, but shall not include endorsements of items
for collection in the ordinary course of business.
"Guaranty and Surety Agreements" means the Guaranty and Surety
Agreements of even date herewith of each Guarantor, substantially in the form
attached hereto as EXHIBIT E, secured by All Assets of each Guarantor.
"Guaranty Obligations" means as to any Person (the
"guaranteeing person") any obligation of the guaranteeing person in respect of
any obligation of another Person (including, without limitation, any bank under
any letter of credit), the creation of which was induced by a reimbursement
agreement, counter indemnity or similar obligation issued by the guaranteeing
person, in either case guaranteeing or in effect guaranteeing any debt, leases,
dividends or other obligations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation of any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (C) to
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 or (iii) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term "Guaranty Obligation" shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guaranty Obligation of any guaranteeing
person shall be deemed to be the lower of (i) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guaranty
Obligation is made and (ii) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument embodying such
Guaranty Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guaranty Obligation shall be such guaranteeing
person's maximum reasonably anticipated liability in respect thereof as
determined by Obligors in good faith.
"Hazardous Materials" means any substances or materials: (i)
which are or become defined as hazardous wastes, hazardous substances,
pollutants, contaminants, chemical substances or mixtures or toxic substances or
materials under any Applicable Law; (ii) which are toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful
to human health or the environment and are or become regulated by any
Governmental Agency; (iii) the presence of which require investigation or
remediation under any Applicable Law; (iv) the discharge or emission or release
of which requires a permit or license under any Applicable Law or other
governmental approval; (v) which are deemed to constitute a nuisance, a trespass
or pose a health or safety hazard to persons or neighboring properties; (vi)
which consist of underground or aboveground storage tanks, whether empty, filled
or partially filled with any substance; or (vii) which contain, without
limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.
"Indebtedness" means all amounts due from Obligors to the
Lender, including Lender's Costs, pursuant to this Agreement or otherwise
arising out of or in connection with any other Loan Document.
"Interest Rate" or "Interest Rates" means collectively, the
Line Interest Rate and the Term Interest Rate.
"Kayak" has the same meaning ascribed thereto in the preamble
to this Agreement.
"Lender's Costs" means all costs and expenses of any kind paid
or incurred by Lender in connection with the preparation, execution, delivery,
amendment, modification, restatement, administration or termination of this
Agreement, the Notes or any other Loan Document, any amendments hereto or
thereto, any transaction contemplated herein or in any existing or future
related agreements and the preservation, enforcement, defense and protection of
Lender's rights, remedies, obligations and liabilities in any manner concerning
this Agreement, the Notes or any other Loan Document, any transaction
contemplated herein or any existing or future related agreements, including but
not limited to: (i) expenditures of every nature and kind of Obligors, paid or
incurred by Lender pursuant to the provisions of this Agreement, the Notes and
the other Loan Documents; (ii) filing, recording, publication, appraisal,
monitoring, collateral field examinations and search costs specifically
permitted hereunder related to the Collateral, including, but not limited to,
costs paid to perfect, maintain perfected and preserve the existence and
priority of Liens on the Collateral; (iii) after the occurrence of an Event of
Default, all Lender's internal and external administrative costs and costs
incurred in collecting and gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale and advertising to
sell the Collateral, including but not limited to taxes, levies and insurance;
(iv) reasonable attorneys' fees and other reasonable fees and expenses paid or
incurred by Lender (A) in preparing, reviewing and consummating this Agreement
and the other Loan Documents and the transactions contemplated hereby and
thereby, (B) after the date hereof in amending, restating, restructuring,
extending, terminating, preserving, enforcing or determining Lender's rights and
remedies under this Agreement or any other Loan Document, and (C) after the
occurrence of an Event of Default, in enforcing, defending or protecting
Lender's rights, remedies, obligations or liabilities in any manner concerning
this Agreement or any of the other Loan Documents, any transaction contemplated
herein or any existing or future related agreements; (v) any reasonable
attorneys' fees and other reasonable fees and expenses incurred by Lender in
connection with any bankruptcy or insolvency proceeding filed by or against any
Obligor whether such attorneys' fees, other fees or expenses, incurred in the
sole discretion of Lender, are related to the review, determination, protection,
monitoring (including attendance at meetings or hearings) or enforcement by
Lender of the Obligations, including, but not limited to, the preparation and
filing of any proof of claim and without regard to whether Lender files,
responds, or is a party to any application, motion, or other proceeding; and,
(vi) wire transfer charges in such amounts as Lender may from time to time
establish for such service.
"Liabilities" means all indebtedness that, in accordance with
GAAP, consistently applied, should be classified as liabilities on a balance
sheet of Obligors.
"LIBOR" means the rate of interest (rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point) for U.S. dollar
deposits of 30, 60 or 90 day maturity as reported on Telerate page 3750 or the
equivalent reporting service as of 11:00 a.m., London time, on the second London
Business Day prior to the date hereof and on each Business Day thereafter (or if
not so reported on any Business Day, then as determined by the Lender from
another recognized source or interbank quotation, or if none is available, as
determined by the Lender).
"LIBOR Rate" has the same meaning ascribed thereto in
Paragraph 2.1.4 of this Agreement. For purposes of this Agreement, LIBOR Rate is
used as a reference rate, determined on a monthly basis, in connection with
LIBOR Rate Advances.
"LIBOR Rate Advance" means any Advance bearing interest at a
rate based upon the LIBOR Rate as provided in Paragraph 2.1.4 hereof.
"Lien" means any charge against or interest in property
securing payment of a debt or performance of an obligation owed to any Person,
whether created by agreement, statute, common law or judicial or governmental
authority, legal action or equitable process, or proceeding, including, but not
limited to, any security interest, hypothec, lien, encumbrance, mortgage,
assignment, pledge, conditional sale, lease, consignment or bailment.
"Line Closing Fee" means the Line closing fee provided for in
Paragraph 2.1.7 hereof.
"Line Interest Rate" means the per annum rate of interest
described and set forth in Paragraph 2.1.4 hereof.
"Line" or "Line of Credit" means the credit facility extended
by Lender to Borrowers, pursuant to Article 2 of this Agreement, as the same may
hereafter be modified or amended.
"Line of Credit Note" means that certain revolving line of
credit note in the form of EXHIBIT F hereto executed by Borrowers in favor of
Lender evidencing Borrowers' obligation to repay Advances on the Line, and any
amendments or restatements thereof or allonges thereto.
"Line Termination Date" means (i) October 31, 2004, or as
extended pursuant to Paragraph 2.1.10 above, or (ii) such earlier date as
Borrowers shall determine by notice to Lender, or (iii) such other date as
Lender and Borrowers may, from time to time, mutually determine.
"Loans" means the collective reference to the Line of Credit
and Term Loan extended by Lender in favor of Borrowers.
"Loan Documents" means this Agreement, the Notes, the Lockbox
Agreement, the Subordination Agreements, the Guaranty and Surety Agreements, the
General Security Agreement, the Movable Hypothec, all Financing Statements, and
any other instrument or document delivered by the Obligors in connection
herewith or therewith, each as amended, restated or otherwise modified and in
effect from time to time.
"Lockbox Agreement" means the agreement between Obligors and
Lender in the form of EXHIBIT G hereto regarding the creation and maintenance of
lockboxes for the collection of Obligors' Accounts.
"Lockboxes" means those certain Lockboxes described in Section
3.2 hereof.
"Material Adverse Change or Effect" means, with respect to
each Obligor, a material adverse change or effect upon Obligor's business,
assets, liabilities, financial condition, results of operations or prospects or
Obligor's ability to perform Obligor's obligations under the Loan Documents in
accordance with their respective terms, as determined by Lender in the exercise
of its reasonable credit judgment.
"Maximum Available Credit" shall have the meaning ascribed to
such term in Paragraph 2.1.9 hereof.
"Maximum Leverage Ratio" means, as of any date, the ratio of
(i) all liabilities (other than Subordinated Debt) of the Obligors as of such
date to (ii) the Tangible Net Worth of the Obligors on such date.
"Movable Hypothec" means the movable hypothec over All Assets
located or deemed by law to be located in the Province of Quebec and an
application for the registration thereof at the Quebec Register of Personal and
Movable Real Rights, substantially in the form of EXHIBIT H attached hereto.
"Multi-Employer Plan" means a plan as defined in Section
4001(a)(3) of ERISA to which Obligors or any Affiliate is making or accruing an
obligation to make contributions or has within any of the preceding five years
made or accrued an obligation to make contributions.
"Nasdaq" has the meaning ascribed thereto in Clause 5.1.31.1
of this Agreement.
"Net ▇▇▇▇ Proceeds" has the meaning ascribed thereto in
Paragraph 2.2.7.
"NOROB Investor Documents" means the NOROB Investor Notes and
the NOROB Investor Subordination Agreements.
"NOROB Investor", individually, and "NOROB Investors",
collectively, mean those Persons identified on Schedule 1, attached hereto.
"NOROB Investor Notes" means the promissory notes of even date
herewith by the NOROB Investors in favor of Borrowers, more fully described on
Schedule 1.
"NOROB Investor Subordination Agreements" means those certain
Subordination Agreements of even date herewith between each NOROB Investor and
Lender.
"Notes" means the Line of Credit Note together with the Term
Note.
"Obligation" individually and "Obligations" collectively mean
the Indebtedness and all covenants and agreements of Obligors contained in, or
arising out of or in connection with, this Agreement or the other Loan
Documents.
"Obligor" and "Obligors" shall have the meanings set forth
hereto in the first paragraph of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Penney's" means ▇.▇. ▇▇▇▇▇▇ Company, Inc.
"Penney's Agreement" means the License Agreement dated
February 1, 1995 as amended from time-to-time by and between Penney's and U.S.
Vision.
"Permitted Debt" means: (i) the Indebtedness; (ii) trade
payables incurred in the ordinary course of Obligors' business; (iii) purchase
money Debt (including Capital Leases) hereafter incurred by Obligors to finance
the purchase of fixed assets, provided that: (A) the total of all such Debt for
all Obligors taken together shall not exceed an aggregate principal amount of
Twelve Million Dollars ($12,000,000), (B) such Debt when incurred shall not
exceed the purchase price of the asset(s) financed, and (C) no such Debt shall
be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing; (iv) existing Indebtedness
described on Schedule 5.1.16 attached hereto and any refinancings of such Debt;
(v) notes issued to U.S. Vision shareholders in connection with the Cash-Out;
and (vi) Debt subordinated to Lender pursuant to the Subordination Agreements.
Notwithstanding any other provision of this definition, "Permitted Debt" shall
not include any Debt which, when incurred, would cause the violation of any
Financial Covenant.
"Permitted Liens" means: (i) Liens for taxes, assessments or
governmental charges or claims which are not overdue or which are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, if a reserve or other appropriate provision, if any, as
shall be reasonably required by Lender, shall have been made therefor; (ii)
Liens of brokers, carriers, warehousemen, mechanics, materialmen, repairmen,
suppliers and other like Liens incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, if a reserve or other
appropriate provision, if any, as shall be reasonably required by Lender, shall
have been made therefor; (iii) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business in connection with
workers' compensation or unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) the rights of tenants under
leases or subleases not interfering with the ordinary conduct of the business of
a Person; (vi) easements, rights-of-way, encroachments, zoning provisions,
covenants, conditions, restrictions and other similar charges, encumbrances and
governmental restrictions not interfering with the ordinary conduct of the
business of a Person; (vii) Liens in favor of Lender pursuant to this Agreement,
the Notes or any Loan Document; (viii) Liens of the Delaware River Port
Authority on the Real Property existing on the date hereof; (ix) liens securing
purchase money Debt for fixed assets and Capital Leases; and (x) those existing
Liens set forth on Schedule 3.1.3 attached hereto.
"Person" means an individual, corporation, partnership, joint
venture, trust or unincorporated organization, or a government or any political
subdivision thereof.
"Plan" means any plan described in ERISA Section 3(2)
maintained for employees of an Obligor or any ERISA Affiliate, other than a
Multi-employer Plan.
"Potential Default" means an event, occurrence or condition
which, with the giving of notice, the lapse of time, or both, constitutes an
Event of Default.
"Prime" means, as to any day on which a Loan is outstanding,
the fluctuating rate of interest per annum published in the "Money Rates"
Section of the Wall Street Journal on the applicable date or the highest Prime
rate if more than one is published, as such rate may change from day-to-day,
such changes to be effective on the dates of announcement thereof. If the Wall
Street Journal ceases to be published for any reason on any day, or if it ceases
to publish a Prime rate, then the Lender may use any similar published prime or
base rate to determine the interest rate, in its sole discretion. Prime may not
necessarily be the lowest or best rate of interest charged by the Lender.
"Prime Rate" has the same meaning ascribed thereto in
Paragraph 2.1.4 of this Agreement.
"Prime Rate Advance" means any Advance bearing interest at a
rate based upon the Prime Rate as provided in Paragraph 2.1.4 hereof.
"Prohibited Transaction" means any transaction described in
Section 406 of ERISA which is not exempt by reason of Section 408 of ERISA, and
any transaction described in Section 4975(c) of the Internal Revenue Code which
is not exempt by reason of Section 4975(c)(2) of the Internal Revenue Code.
"Projections" means Obligors' forecasted (i) balance sheets,
(ii) profit and loss statements, (iii) cash flow statements, (iv) Purchase Money
Debt, and (v) Capital Expenditures, all prepared on a consistent basis with
Obligors' historical financial statements, together with appropriate supporting
details and a statement underlying assumptions.
"Property" means any interest of any Obligor in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible.
"Purchase Money Debt" means purchase money Debt (including
Capitalized Lease Obligations) incurred solely for the purchase of fixed assets.
"Real Property" means all of the real property owned by
Obligors, including, without limitation, all real estate, buildings,
improvements, rents, profits, insurance and condemnation proceeds, and any other
property rights and claims related thereto, as described on Schedule 5.1.7.
"Reportable Event" means a reportable event described in
Section 4043 of ERISA or the regulations thereunder, a withdrawal from a Plan
described in Section 4063 of ERISA, or a cessation of operations described in
Section 4068(f) of ERISA.
"Requirement of Law" means, as to any Person, the certificate
of incorporation and bylaws, the partnership agreement or other organizational
or governing documents of such Person and any law, treaty, rule or regulation or
determination of any arbitration or a court or other governmental authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RICO" means the Racketeer Influenced and Corrupt
Organizations Act, as amended by the Comprehensive Crime Control Act of 1984, 18
U.S.C. Sections 1961-68.
"Rule" means and includes any law, rule or regulation binding
upon, or applicable to, Lender as well as any guideline or similar directive
issued by a Governmental Agency having regulatory jurisdiction over Lender which
Lender observes or with which the Lender complies, whether or not such guideline
or directive technically has the force of law.
"▇▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
"▇▇▇▇▇▇▇▇ Documents" means the ▇▇▇▇▇▇▇▇ Employment Agreement,
the ▇▇▇▇▇▇▇▇ Incentive Stock Option Agreement, and the ▇▇▇▇▇▇▇▇ Subordination
Agreement.
"▇▇▇▇▇▇▇▇ Employment Agreement" means that certain Employment
Agreement dated April 2, 1998 between U.S. Vision and ▇▇▇▇▇▇▇▇, as amended by
that certain First Amendment to Employment Agreement dated September 23, 2002.
"▇▇▇▇▇▇▇▇ Incentive Stock Option Agreement" means that certain
Incentive Stock Option Agreement dated June 1, 2000 between U.S. Vision and
▇▇▇▇▇▇▇▇, as amended by that certain First Amendment to Incentive Stock Option
Agreement dated September 23, 2002.
"▇▇▇▇▇▇▇▇ Subordination Agreement" means that certain
Subordination Agreement of even date herewith by and between Lender and
▇▇▇▇▇▇▇▇.
"Sears" means Sears, ▇▇▇▇▇▇▇ and Co.
"Sears Agreement" means each of the license agreements,
substantially in the form attached hereto as EXHIBIT I, by and between Sears and
U.S. Vision with respect to separate Sears stores.
"SEC" means the Securities and Exchange Commission.
"SOLA" means SOLA International, Inc., a Delaware corporation.
"SOLA Documents" means the SOLA Subordination Agreement and
the SOLA Supply Agreement.
"SOLA Subordination Agreement" means that certain
Subordination Agreement of even date herewith by and between Lender and SOLA.
"SOLA Supply Agreement" means that certain Marketing Agreement
dated October 2, 2002 by and between SOLA and U.S. Vision, as amended by that
certain First Amendment to Marketing Agreement of even date herewith, pursuant
to which SOLA will credit Three Million Dollars ($3,000,000) of new money to the
account of U.S. Vision which shall be added to the amount of U.S. Vision's
entire account payable due to SOLA.
"Solvent" means, as to any Person, that such Person (i) has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage; (ii) is able to pay its debts
as they mature; or (iii) owns property whose fair saleable value is greater than
the amount required to pay its debts.
"Specified Officer" means such officer of U.S. Vision as U.S.
Vision may specify to Lender in writing. Each Obligor agrees that any request
made or other function specified herein to be made or performed by a Specified
Officer shall be deemed made or performed by and on behalf of all Obligors.
"Subordinated Debt" means any Debt of the Obligors
subordinated in right and time of payment and performance of the Obligations on
terms satisfactory to the Lender including, without limitation, the Debt
evidenced by the ▇▇▇▇ Note, the ▇▇▇▇▇▇▇▇ Employment Agreement, the ▇▇▇▇▇▇▇▇
Incentive Stock Option Agreement, the NOROB Investor Notes and the SOLA Supply
Agreement.
"Subordination Agreements" means, collectively, the ▇▇▇▇
Subordination Agreement, the NOROB Investor Subordination Agreements, the
▇▇▇▇▇▇▇▇ Subordination Agreement and the SOLA Subordination Agreement.
"Subsidiaries" means any Person of which each Obligor directly
or indirectly through one or more intermediaries (i) owns ownership interests or
stock having ordinary voting power to elect a majority of the Board of Directors
or equivalent managing body of such Person or (ii) owns more than Fifty Percent
(50%) of any other equity or ownership interest in such Person.
"Tax Expense" means Liabilities of Obligors for local, state,
and federal income taxes.
"Tangible Net Worth" means the excess of assets over
Liabilities plus Subordinated Debt as would be shown on a combined balance sheet
of Obligors, prepared in accordance with GAAP, consistently applied, provided,
however, such amounts are to be net of amounts carried on the books of Obligors
for any of the following: (A) unamortized debt discount and expense, (B)
goodwill (including any excess cost over net assets of business acquired),
experimental or organization expenses and other like reserves and intangible
assets.
"Term Loan Closing Fee" means the Term Loan Closing Fee
provided for in Paragraph 2.2.4 hereof.
"Term Interest Rate" means Nine Percent (9%) per annum.
"Term Loan" means the loan extended by Lender to Borrowers
pursuant to Paragraph 2.2.1 of this Agreement, as the same may hereafter be
modified or amended.
"Term Loan Termination Date" means October 31, 2007 or such
other date as Lender and Borrowers may, from time to time, mutually determine.
"Term Note" means that certain promissory note in the form of
EXHIBIT J hereto executed by Borrowers in favor of Lender evidencing Borrowers'
obligation to repay the Term Loan, and any amendments or restatements thereof or
allonges thereto.
"Transactions" means all of the transactions contemplated by
the Transactional Documents.
"Transactional Document" individually and "Transactional
Documents" mean collectively, the ▇▇▇▇ Documents, the NOROB Investor Documents,
the ▇▇▇▇▇▇▇▇ Documents, the SOLA Documents and the Acquisition Documents,
together with all documents, instruments and agreements executed or delivered in
connection therewith and related thereto.
"Twelve Month Period" means, as of any date, the twelve-month
period ending on such date.
"UCC" means the Uniform Commercial Code as enacted in the
State of
New Jersey and in effect from time to time.
"Unfunded Capital Expenditures" mean Capital Expenditures
which are not fully funded through Obligors' incurring additional Debt.
"Vision One" means Vision One, a national vision care program
owned by ▇▇▇▇ Vision Corporation.
"Vision One Agreement" means that certain Participating
Provider Agreement dated as of June 1, 1997 between U.S. Vision and ▇▇▇▇ Vision
Corporation, a Delaware corporation, as amended by that certain amendment of
even date herewith.
EXHIBIT B
FORM OF NOTICE OF BORROWING
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
Commerce Bank, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
To ▇▇. ▇▇▇▇▇:
This irrevocable Notice of Borrowing is delivered to you under
Paragraph 2.1.3 of the
Loan and Security Agreement dated as of October 30, 2002
(as amended, restated or otherwise modified, the "Loan Agreement"), by and among
COMMERCE BANK, N.A. (the "Lender") and U.S. VISION, INC. ("U.S. Vision"),
STYL-RITE OPTICAL MFG. CO., INC. ("Styl"), USV OPTICAL, INC. ("USV"), and U.S.
VISION HOLDINGS, INC. ("Holdings") (individually "Borrower" and collectively
"Borrowers"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Loan Agreement.
1. The Borrowers hereby request that the Lender make the following Line
of Credit Advances(s) to the Borrowers:
Interest Date of
Type of Advance (check one) Period Amount Advance(1)
--------------------------- -------- ------ ----------
Prime Rate Advance N/A
--- ------------ ----------------
LIBOR Rate Advance
--- ------------ ------------ ----------------
2. The principal amount of all Line of Credit Advances outstanding as
of the date hereof (including the requested Line of Credit Advance) does not
exceed the maximum amount permitted to be outstanding pursuant to the terms of
the Loan Agreement.
3. All of the conditions applicable to the Line of Credit Advance
requested herein as set forth in the Loan Agreement have been satisfied or
waived as of the date hereof and will remain satisfied to the date of such Line
of Credit Advance.
4. Borrowers and Guarantors hereby reaffirm as true and correct, on and
as of the date hereof, all representations, warranties and covenants made by it
under the Loan Documents.
5. Borrowers and Guarantors hereby certify that no Event of Default or
Potential Default under the Loan Documents has occurred and is continuing.
----------
(1) Borrowings must be made on a Business Day.
BORROWERS / OBLIGORS: GUARANTORS / OBLIGORS:
U.S. VISION, INC. 9072-8411 QUEBEC, INC.
d/b/a "Optik Pro Baie 2000"
By: /s/ By: /s/
------------------------------- --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ III, ▇▇▇▇▇▇ ▇. ▇▇▇▇ III,
Senior Vice President and Senior Vice President and
Chief Financial Officer Chief Financial Officer
STYL-RITE OPTICAL MFG. CO., INC. HEALTH EYE CARE STATISTICS, INC.
By: /s/ By: /s/
------------------------------- --------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
President President
USV OPTICAL, INC.
By: /s/
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ III,
Senior Vice President and
Chief Financial Officer
U.S. VISION HOLDINGS, INC.
By: /s/
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ III,
Chief Financial Officer
SCHEDULE LIST
Schedule 3.1.3 Priority of Liens
Schedule 5.1.1 Incorporation, Good Standing, Due Qualification
Schedule 5.1.4 Priority of Liens; Condition of Collateral
Schedule 5.1.5 Leases
Schedule 5.1.6 Store Count and Sales Volumes
Schedule 5.1.7 Real Property
Schedule 5.1.16 Debt and Guaranties
Schedule 5.1.17 Stock Ownership
Schedule 5.1.20 Labor Matters
Schedule 5.1.26 Subsidiaries
EXHIBIT LIST
Exhibit A: Definitions
Exhibit B: Form of Notice of Borrowing
Exhibit C: General Security Agreement
Exhibit D: Guarantors' Note
Exhibit E: Guaranty and Surety Agreement
Exhibit F: Form of Line of Credit Note
Exhibit G: Form of Lockbox Agreement
Exhibit H: Movable Hypothec
Exhibit I: Form of Sears Agreement
Exhibit J: Form of Term Note