AMENDED AND RESTATED CREDIT AGREEMENT
by and between
VISTA EYECARE, INC.
(f/k/a National Vision Associates, Ltd.)
and
FOOTHILL CAPITAL CORPORATION
Dated as of November 12, 1999
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TABLE OF CONTENTS
Page(s)
SCHEDULES AND EXHIBITS
Schedule C-1 Existing Collateral Access Agreements
Schedule E-1 Eligible Inventory Locations
Schedule S-1 Sub-Concentration Accounts
Schedule 3.1 Uniform Commercial Code Filings and Assignments
Schedule 5.5 Litigation
Schedule 5.10 Taxes
Schedule 5.11 Financial Condition
Schedule 5.12 Environmental Matters
Schedule 5.17 Subsidiaries
Schedule 5.18 Insurance
Schedule 5.25 Material Contracts
Schedule 6.14 Bank Accounts
Schedule 7.1 Permitted Liens
Schedule 7.5 Permitted Indebtedness
Schedule 7.8 Contingent Obligations
Schedule 7.14 Financial Covenants
Exhibit A Form of Compliance Certificate
Exhibit B Form of Credit Card Agreement
Exhibit C Form of Wal-Mart Lease
Exhibit D Form of Sam's Club Lease
Exhibit E Form of ▇▇▇▇ ▇▇▇▇▇, Inc. Lease
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), is
entered into as of November 12, 1999, between FOOTHILL CAPITAL CORPORATION, a
California corporation, as lender and as agent for itself and each Person that
purchases any portion of Foothill Capital Corporation's rights and obligations
under this Agreement pursuant to Section 15.2 (collectively, "Lender"), with a
place of business located at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and VISTA EYECARE, INC. (f/k/a
National Vision Associates, Ltd.), a Georgia corporation ("Borrower"), with its
chief executive office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
RECITALS
WHEREAS, Borrower, Bank of America, N.A. (f/k/a Bank of America, FSB)
("Bank of America"), and First Union National Bank ("First Union") are parties
to that certain Credit Agreement dated as of October 8, 1998, as modified and
amended by that certain Waiver and Amendment dated as of December 4, 1998, as
further modified and amended by that certain Waiver and Amendment dated as of
December 21, 1998, as further modified and amended by that certain Waiver and
Amendment dated as of February 2, 1999, as further modified and amended by that
certain Amendment dated as of March 31, 1999, as further modified and amended by
that certain Waiver and Consent dated as of September 21, 1999, as further
modified and amended by that certain Forbearance Agreement dated as of October
26, 1999, and as further modified and amended by the Assignment Agreement (as
defined below) (as heretofore further modified and amended, the "Prior Credit
Agreement"); and
WHEREAS, Lender, Borrower, Bank of America and First Union entered into
that certain Assignment and Acceptance of even date herewith (the "Assignment
Agreement") pursuant to which Lender (a) purchased all of the Loans (as defined
in the Prior Credit Agreement) and assumed all of the Commitments (as defined in
the Prior Credit Agreement) of Bank of America and First Union, (b) replaced
Bank of America as Documentation Agent (as defined in the Prior Credit
Agreement), and (c) replaced First Union as Issuing Bank (as defined in the
Prior Credit Agreement) and the Administrative Agent (as defined in the Prior
Credit Agreement); and
WHEREAS, Borrower and Lender, in its capacity as the Documentation
Agent, the Issuing Bank, the Administrative Agent and the sole Bank (as defined
in the Prior Credit Agreement) under the Prior Credit Agreement, desire to amend
and restate the Prior Credit Agreement in its entirety as set forth herein; and
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WHEREAS, each of Borrower and Lender acknowledges and agrees that
Lender shall, for all purposes under this Agreement and the other Loan Documents
(as defined herein), act on its own behalf and as agent for itself and each
Person that purchases any portion of Foothill Capital Corporation's rights and
obligations under this Agreement pursuant to Section 15.2, and as such,
continued reference to the roles of the Bank, the Documentation Agent, the
Issuing Bank and the Administrative Agent is no longer necessary or desirable;
and
WHEREAS, Borrower acknowledges and agrees that the security interest
granted to Lender in its capacity as the Administrative Agent, on behalf of the
Issuing Bank, the Documentation Agent and the Banks, pursuant to the Prior
Credit Agreement and the other Loan Documents (as defined in the Prior Credit
Agreement), shall remain outstanding and in full force and effect in accordance
with the Prior Credit Agreement and shall continue to secure the Obligations (as
defined herein); and
WHEREAS, each of Borrower and Lender acknowledges and agrees that, in
view of the consolidation of the roles of the Bank, the Issuing Bank, the
Documentation Agent and the Administrative Agent, the security interest granted
to Lender in its capacity as the Administrative Agent shall hereinafter be
considered a security interest granted to Lender acting on its own behalf and as
agent for itself and each Person that purchases any portion of Foothill Capital
Corporation's rights and obligations under this Agreement pursuant to Section
15.2; and
WHEREAS, each of Borrower and Lender acknowledges and confirms that (i)
the Obligations (as defined herein) represent, among other things, the
amendment, restatement, renewal, extension, consolidation and modification of
the Obligations (as defined in the Prior Credit Agreement) arising in connection
with the Prior Credit Agreement and other Loan Documents (as defined in the
Prior Credit Agreement) executed in connection therewith; (ii) the Prior Credit
Agreement and the other Loan Documents (as defined in the Prior Credit
Agreement) executed in connection therewith and the collateral pledged
thereunder shall secure, without interruption or impairment of any kind, all
existing Indebtedness (as defined in the Prior Credit Agreement) under the Prior
Credit Agreement and the other Loan Documents (as defined in the Prior Credit
Agreement) executed in connection therewith as amended, restated, renewed,
extended, consolidated and modified hereunder, together with all other
obligations hereunder; (iii) all Liens (as defined in the Prior Credit
Agreement) evidenced by the Prior Credit Agreement and the other Loan Documents
(as defined in the Prior Credit Agreement) executed in connection therewith are
hereby ratified, confirmed and continued; and (iv) the Loan Documents (as
defined herein) are intended to restate, renew, extend, consolidate, amend and
modify the Prior Credit Agreement and the other Loan Documents (as defined in
the Prior Credit Agreement) executed in connection therewith; and
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WHEREAS, each of Borrower and Lender intends that (i) the provisions of
the Prior Credit Agreement and the other Loan Documents (as defined in the Prior
Credit Agreement) executed in connection therewith, to the extent restated,
renewed, extended, consolidated, amended and modified hereby, be hereby
superseded and replaced by the provisions hereof and of the other Loan Documents
(as defined herein); and (ii) by entering into and performing their respective
obligations hereunder, this transaction shall not constitute a novation;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties hereby amend and restate the Prior
Credit Agreement in its entirety and hereby further agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following
terms shall have the following definitions:
"Account Debtor" means any Person who is or who may
become obligated under, with respect to, or on account of, an Account.
"Accounts" means all currently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
Borrower or any Restricted Subsidiary arising out of the sale or lease of goods
or the rendition of services by Borrower or such Restricted Subsidiary,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.
"Acquisition" means, with respect to any Person, any
transaction or series of related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all of
the assets of any other Person, or of any business or division of any other
Person, (b) the acquisition of more than fifty percent (50%) of the capital
stock, partnership interests, membership interests or equity of any other
Person, or otherwise causing any other Person to become a Subsidiary of such
Person, or (c) a merger or consolidation or any other combination with any other
Person (other than a Person that is an existing Subsidiary of such Person)
provided that such Person or a Subsidiary of such Person is the surviving
entity. The term "Acquisition" shall not include the formation by Borrower of a
new Subsidiary provided that its Investment therein does not violate Section 7.4
hereof.
"Adjusted Eurodollar Rate" means, with respect to
each Interest Period for any Eurodollar Rate Advance, the rate per annum
(rounded upwards, if necessary, to the next 1/16%) determined by dividing (a)
Eurodollar Rate for such Interest Period by (b) a percentage equal to (i) one
hundred percent (100%) minus (ii) the Reserve Percentage. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
"Adjusted Net Worth" means, as of any date of
determination, the sum of (a) net worth of Borrower and i ts Subsidiaries on a
consolidated basis determined in accordance with GAAP, plus (b) non-cash charges
reasonably acceptable to Lender taken after the Amendment Closing Date.
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"Adjustment Date" has the meaning set forth in
Section 2.3(a).
"Administrative Agent" has the meaning set forth in
the Prior Credit Agreement.
"Advances" has the meaning set forth in Section
2.1(a).
"Affiliate" means, as applied to any Person, any
other Person who directly or indirectly controls, is controlled by, is under
common control with or is a director or officer of such Person. For purposes of
this definition, "control" means the possession, directly or indirectly, of the
power to vote five percent (5%) or more of the securities having ordinary voting
power for the election of directors or the direct or indirect power to direct
the management and policies of a Person.
"Agreement" has the meaning set forth in the preamble
hereto.
"Amendment Closing Date" means the date of the first
to occur of the making of the initial Advance, the issuance of the initial
Letter of Credit or the funding of the Term Loans under this Agreement.
"Assignment Agreement" has the meaning set forth in
the recitals to this Agreement.
"Assignment of LLC Interests" means that certain
Amended and Restated Assignment of Limited Liability Company Interests of even
date herewith among New West Eyeworks, Inc., as ▇▇▇▇▇▇▇, the Administrative
Agent and Lender, in form and substance satisfactory to Lender.
"Assignment of Notes" means that certain Amended and
Restated Assignment of Notes of even date herewith among Borrower, the
Administrative Agent and Lender, and acknowledged by Mexican Vision Associate
Operadora S. de ▇.▇. de C.V., in form and substance satisfactory to Lender.
"Authorized Person" means any officer or other
employee of Borrower.
"Availability" means, as of the date of determination,
the result (so long as such result is a positive number) of (a) the lesser of
the Borrowing Base or the Maximum Revolving Amount, less (b) the Revolving
Facility Usage.
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"Average Unused Portion of Maximum Revolving Amount"
means, as of any date of determination, (a) the lesser of the Borrowing Base or
the Maximum Revolving Amount, less (b) the sum of (i) the average Daily Balance
of Advances that were outstanding during the immediately preceding month, plus
(ii) the average Daily Balance of the undrawn Letters of Credit that were
outstanding during the immediately preceding month.
"Bank of America" has the meaning set forth in the
recitals to this Agreement.
"Bankruptcy Code" means the United States Bankruptcy
Code (11 ▇.▇.▇.▇▇. 101 et seq.), as amended, and any successor statute.
"Blocked Account Agreements" means those certain
Blocked Account Agreements, in form and substance reasonably satisfactory to
Lender, each of which is among Borrower, Lender and a bank at which a Retail
Store Account is located.
"Borrower" has the meaning set forth in the preamble
to this Agreement.
"Books and Records" means all books and records of
Borrower and each of its Restricted Subsidiaries including: ledgers; records
indicating, summarizing, or evidencing Borrower's or such Restricted
Subsidiary's properties or assets (including the Collateral) or liabilities; all
information relating to Borrower's or such Restricted Subsidiary's business
operations or financial condition; and all computer programs, disk or tape
files, printouts, runs, or other computer prepared information.
"Borrowing Base" has the meaning set forth in Section
2.1(a).
"Business Day" means any day that is not a Saturday,
Sunday, or other day on which national banks located in Atlanta, Georgia, New
York, New York or Los Angeles, California are authorized or required to close.
"Capitalized Lease Obligations" shall mean, with
respect to any Person, the obligations of such Person under a lease that are
required to be classified and accounted for as capital lease obligations under
GAAP, and for purposes of this definition, the amount of such obligations at any
date shall be the capitalized amount of such obligations at such date as
determined in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980.
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"Change of Control" means (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than thirty-five percent (35%) of the total
voting power of all classes of stock then outstanding of Borrower entitled to
vote in the election of directors or (b) during any period of twenty-four (24)
consecutive months, individuals who at the beginning of such period constituted
the Board of Directors of Borrower (together with any new directors whose
election by such Board or whose nomination for election by the stockholders of
Borrower was approved by a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of such Board of Directors then in office.
"Code" means the Uniform Commercial Code, as in
effect in the State of Georgia from time to time.
"Collateral" means all property and interests in
property and proceeds thereof now owned or hereafter acquired by Borrower or any
Restricted Subsidiary in or upon which a Lien to secure any or all of the
Obligations now or hereafter exists in favor of Lender, pursuant to the
Collateral Documents.
"Collateral Documents" means, collectively, (i)
the Security Agreement, the Pledge Agreement, the Assignment of Notes, the
Subsidiary Guaranty, the Subsidiary Security Agreement, the Assignment of LLC
Interests, the Collateral Assignment of Deed of Trust, the Blocked Account
Agreements, the Concentration Account Agreements, the Lockbox Agreements, the
Credit Card Agreements, and all other security agreements, mortgages, deeds of
trust, patent and trademark assignments, lease assignments, guarantees,
assignments and other similar agreements between Borrower or any Restricted
Subsidiary and Lender now or hereafter delivered to Lender pursuant to or in
connection with the transactions contemplated hereby, and all financing
statements (or comparable documents now or hereafter filed in accordance with
the Uniform Commercial Code or comparable law) against Borrower or any
Restricted Subsidiary as debtor in favor of Lender as secured party, and (ii)
any amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Collateral Access Agreement" means a landlord
waiver, mortgagee waiver, bailee letter, or acknowledgment agreement of any
warehouseman, processor, lessor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Equipment or Inventory,
in each case, in form and substance satisfactory to Lender, including, without
limitation, the landlord waiver agreements set forth on Schedule C-1 attached
hereto.
"Collateral Assignment of Deed of Trust" means that
certain Collateral Assignment of Beneficial Interest under Deed of Trust dated
September 3, 1999, between Alexis Holdings, Inc. and the Administrative Agent,
with respect to certain real property in Tempe, Arizona.
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"Collections" means all cash, checks, notes,
instruments, and other items of payment (including, insurance proceeds, proceeds
of cash sales, rental proceeds, and tax refunds).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit A and delivered by the chief accounting
officer of Borrower to Lender.
"Concentration Accounts" means, collectively, the
Sub-Concentration Accounts and the Master Concentration Account, and each such
Concentration Account shall be referred to herein as a "Concentration Account".
"Concentration Account Agreement" means a Blocked
Account Agreement among Borrower, the Concentration Account Bank and Lender, in
form and substance satisfactory to Lender, applicable to one or more of the
Concentration Accounts.
"Concentration Account Bank" means First Union, or
such other Person or Persons as Lender and Borrower may designate from time to
time.
"Contingent Obligation" means, with respect to any
Person, any direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to any Indebtedness,
lease, dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any security therefor, (ii) to advance or provide funds
for the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor, (iii) 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 (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety Instrument (other than
any Letter of Credit) issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments; or (c) to
purchase any materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other related document
or obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered.
"Contractual Obligation" means, with respect to any
Person, any provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument,
9
document or agreement to which such Person is a party or by which it or any of
its property is bound.
"Cost" means, with respect to any Eligible Inventory
of Borrower or any of its Restricted Subsidiaries, the lower of cost or market
value of such Eligible Inventory as determined on a basis consistent with
Borrower's or such Restricted Subsidiary's current and historical accounting
practices.
"Credit Card Agreement" means each letter agreement
between Borrower and a credit card processor, substantially in the form of
Exhibit B.
"Daily Balance" means the amount of an Obligation
owed at the end of a given day.
"Default" means an event, condition, or default that,
with the giving of notice, the passage of time, or both, would be an Event of
Default.
"Deficiency" has the meaning set forth in Section
7.16.
"Designated Account" means account number
2090003164485 of Borrower maintained with Borrower's Designated Account Bank, or
such other deposit account of Borrower (located within the United States) which
has been designated, in writing and from time to time, by Borrower to Lender.
"Designated Account Bank" means First Union, whose
office is located at Charlotte, North Carolina, and whose ABA number is
▇▇▇▇▇▇▇▇▇ or such other bank as may be determined by Lender and Borrower from
time to time.
"Dilution" means, in each case based upon the
experience of the immediately prior three (3) month, the result of dividing the
Dollar amount of (a) bad debt write-downs, discounts, advertising, returns,
promotions, credits, or other dilution with respect to the Accounts during such
period, by (b) Collections (excluding extraordinary items) of Borrower and its
Restricted Subsidiaries plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of
determination, an amount sufficient to reduce Lender's advance rate against
Eligible Accounts by one percentage point for each percentage point by which
Dilution is in excess of five percent (5%).
"Disbursement Letter" means an instructional letter
executed and delivered by Borrower to Lender regarding the extensions of credit
to be made on the Amendment Closing Date, the form and substance of which shall
be satisfactory to Lender.
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"Disposition" means (i) the sale, lease, conveyance
or other disposition of property (other than sales or other dispositions
expressly permitted under Section 7.2(a) or Section 7.2(b), operating leases or
subleases entered into in the ordinary course of business or Investments
permitted under Section 7.4 or Liens permitted under Section 7.1), and (ii) the
sale or transfer to any Person (other than Borrower or any Restricted
Subsidiary) by Borrower or any Subsidiary of Borrower of any equity securities
issued by any Subsidiary of Borrower and held by such transferor Person.
"Dollars or $" means United States dollars.
"Early Termination Premium" has the meaning set forth
in Section 3.6.
"EBITDA" means, with respect to Borrower on a
consolidated basis with its Subsidiaries for any period, the Net Income of
Borrower for such period, (a) plus, without duplication and to the extent
deducted in computing Net Income for such period, the sum of (i) income taxes,
(ii) Interest Expense, (iii) depreciation and amortization expense, and (iv)
other non-cash charges reasonably acceptable to Lender, (b) minus, to the extent
included in Net Income for such period, extraordinary gains; provided, however,
that the EBITDA with respect to any Person or substantially all of the assets of
a Person that became a Subsidiary of, or was merged with or consolidated into,
Borrower or any Subsidiary of Borrower during such period shall include the
EBITDA of such Person or the EBITDA attributable to such assets for such period.
"Eligible Accounts" means those Accounts created by
Borrower or any Restricted Subsidiary in the ordinary course of business, that
arise out of Borrower's or such Restricted Subsidiary's sale of goods or
rendition of services, that strictly comply with each and all of the
representations and warranties respecting Accounts made by Borrower or such
Restricted Subsidiary to Lender in the Loan Documents, and that are and at all
times continue to be acceptable to Lender in its reasonable credit judgment in
all respects; provided, however, that standards of eligibility may be fixed and
revised from time to time by Lender in Lender's reasonable credit judgment.
Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed
to pay within ninety (90) days of invoice date or one hundred twenty (120) days
of date of service;
(b) Retail customer Accounts;
(c) Accounts owed by an Account Debtor or its
Affiliates where fifty percent (50%) or more of all Accounts owed by that
Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above;
(d) Accounts with respect to which the Account Debtor
is an employee, Affiliate, or agent of Borrower or any Subsidiary of Borrower;
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(e) Accounts with respect to which goods are placed
on consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇ and
hold, or other terms by reason of which the payment by the Account Debtor may be
conditional;
(f) Accounts that are not payable in Dollars or
with respect to which the Account Debtor: (i) does not maintain its chief
executive office in the United States, or (ii) is not organized under the laws
of the United States or any State thereof, or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Lender (as to form,
substance, and issuer or domestic confirming bank) that has been delivered to
Lender and is directly drawable by Lender, or (z) the Account is covered by
credit insurance in form and amount, and by an insurer, satisfactory to Lender;
(g) Accounts with respect to which the Account Debtor
is either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which
Borrower or the applicable Restricted Subsidiary has complied, to the
satisfaction of Lender, with the Assignment of Claims Act, 31 U.S.C. ss. 3727),
or (ii) any State of the United States (exclusive, however, of Accounts owed by
any State that does not have a statutory counterpart to the Assignment of Claims
Act);
(h) Accounts with respect to which the Account Debtor
is a creditor of Borrower or any Subsidiary of Borrower, has or has asserted a
right of setoff, has disputed its liability, or has made any claim with respect
to the Account (but only to the extent of such setoff, dispute or claim);
(i) Accounts with respect to an Account Debtor whose
total obligations owing to Borrower and its Restricted Subsidiaries, taken as a
whole, exceed ten percent (10%) of all Eligible Accounts, to the extent of the
obligations owing by such Account Debtor in excess of such percentage;
(j) Accounts with respect to which the Account Debtor
is subject to any Insolvency Proceeding, or becomes insolvent, or goes out of
business;
(k) Accounts the collection of which Lender,
in its reasonable credit judgment, believes to be doubtful by reason of the
Account Debtor's financial condition;
(l) Accounts with respect to which the goods
giving rise to such Account have not been shipped and billed to the Account
Debtor, the services giving rise to such Account have not been performed and
accepted by the Account Debtor, or the Account otherwise does not represent a
final sale;
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(m) Accounts with respect to which the Account
Debtor is located in the states of New Jersey, Minnesota or West Virginia (or
any other state that requires a creditor to file a Business Activity Report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process of
such state), unless Borrower or the applicable Restricted Subsidiary has
qualified to do business in New Jersey, Minnesota, West Virginia, or such other
states, or has filed a Notice of Business Activities Report with the applicable
division of taxation, the department of revenue, or with such other state
offices, as appropriate, for the then-current year, or is exempt from such
filing requirement;
(n) Accounts that represent progress payments or
other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of performance by
Borrower or the applicable Restricted Subsidiary of the subject contract for
goods or services;
(o) Accounts arising other than from the sale of
goods or rendition of services in the ordinary course of Borrower's or the
applicable Restricted Subsidiary's business;
(p) Accounts representing lease payments due from
doctors or optometrists;
(q) Accounts with respect to which Lender does not
have a valid and perfected first priority security interest; and
(r) To the extent determined appropriate by Lender
in its reasonable credit judgment, Accounts subject to collection by an outside
claims processor where such Account has not yet been billed by such processor,
and credit card Accounts.
"Eligible Inventory" means Inventory owned by
Borrower or any Restricted Subsidiary consisting of first quality finished goods
(including eyeglass frames, eyeglass lenses, contact lenses, sunglasses and
related accessories) held for sale in the ordinary course of Borrower's or such
Restricted Subsidiary's business and raw materials for such finished goods, that
are located at or in-transit between Borrower's or such Restricted Subsidiary's
premises identified on Schedule E-1 (as supplemented from time to time upon at
least ten (10) days' prior written notice to Lender), that strictly comply with
each and all of the representations and warranties respecting Inventory made by
Borrower or such Restricted Subsidiary to Lender in the Loan Documents, and that
are and at all times continue to be acceptable to Lender in its reasonable
credit judgment in all respects; provided, however, that standards of
eligibility may be fixed and revised from time to time by Lender in Lender's
reasonable credit judgment. An item of Inventory shall not be included in
Eligible Inventory if:
(a) it is not owned solely by Borrower or a
Restricted Subsidiary, or Borrower or a Restricted Subsidiary does not have
good, valid, and marketable title thereto;
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(b) it is not located in the United States at
one of the locations set forth on Schedule E-1 (as supplemented from time to
time upon at least ten (10) days' prior written notice to Lender);
(c) it is Inventory located within a Sam's Club,
a Meijers store or another leased department within a retail store (i.e., not a
"free-standing" store) which is not subject to a Collateral Access Agreement in
form and substance satisfactory to Lender;
(d) it is not subject to a valid and perfected first
priority security interest in favor of Lender;
(e) it consists of goods returned or rejected by
customers of Borrower or the applicable Restricted Subsidiary, or goods in
transit;
(f) it is used, obsolete or slow moving, a
restrictive or custom item, work-in-process, packaging and shipping materials,
supplies used or consumed in Borrower's or a Restricted Subsidiary's business,
Inventory subject to a Lien in favor of any third Person, ▇▇▇▇ and hold goods,
defective goods, "seconds," or Inventory acquired on consignment;
(g) it is located on property within a United States
military base or on property leased by Borrower or any Restricted Subsidiary
from the United States government;
(h) to the extent determined appropriate by
Lender in its reasonable credit judgment, (i) it is Inventory classified by
Borrower or a Restricted Subsidiary, as applicable, on its general ledger,
prepared in a manner consistent with Borrower's and the Restricted Subsidiaries'
general ledgers disclosed to Lender prior to the Amendment Closing Date, as
either "close out" or "discontinued" Inventory and which "close out" or
"discontinued" Inventory has been owned by Borrower or a Restricted Subsidiary
for an aggregate of more than six (6) months after being so classified, (ii) it
is Inventory constituting non-retail supplies, or (iii) it is not located on
property owned or leased by Borrower or a Restricted Subsidiary or in a contract
warehouse, in each case, subject to a Collateral Access Agreement executed by
the mortgagee, lessor, the warehouseman, or other third party, as the case may
be, and segregated or otherwise separately identifiable from goods of others, if
any, stored on the premises; or
(i) it is Inventory bearing a servicemark, trademark
or name of any Person other than Borrower or a Restricted Subsidiary, unless it
is Inventory which is sold to Borrower or a Restricted Subsidiary in the
ordinary course of Borrower's or a Restricted Subsidiary's, as the case may be,
business for distribution and is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreement between Borrower or a Restricted
Subsidiary, as the case may be, and any other Person which prohibits or
restricts Lender's sale or other disposition of such Inventory pursuant to Loan
Documents.
14
"Environmental Claims" means all claims, however
asserted, by any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Law, or for
release or injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages (punitive
or otherwise), cleanup, removal, remedial or response costs, restitution, civil
or criminal penalties, injunctive relief, or other type of relief, resulting
from or based upon the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental, placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by Borrower or any Subsidiary.
"Environmental Laws" means all federal, state or
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters; including CERCLA, the Clean Air Act, the Federal Water Pollution
Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency
Planning and Community Right-to-Know Act, the California Hazardous Waste Control
Law, the California Solid Waste Management, Resource, Recovery and Recycling
Act, the California Water Code and the California Health and Safety Code.
"Environmental Permits" has the meaning set forth in
Section 5.12(b).
"Equipment" means all present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts and goods (other
than consumer goods, farm products, or Inventory), of Borrower or any of its
Restricted Subsidiaries, wherever located, including, (a) any interest of
Borrower or any of its Restricted Subsidiaries in any of the foregoing and (b)
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security
Act of 1974, and regulations promulgated thereunder.
15
"ERISA Affiliate" means any trade or business
(whether or not incorporated) under common control with Borrower within the
meaning of Section 414(b) or (c) of the IRC (and Sections 414(m) and (o) of the
IRC for purposes of provisions relating to Section 412 of the IRC).
"ERISA Event" means (a) a Reportable Event with
respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon Borrower or any ERISA Affiliate.
"Eurodollar Rate" means, with respect to the Interest
Period for a Eurodollar Rate Advance, the interest rate per annum at which
United States dollar deposits are offered to ▇▇▇▇▇ Fargo Bank, National
Association, by major banks in the London interbank market (or other Eurodollar
Rate market selected by Lender) on or about 11:00 a.m. (Eastern time) two (2)
Business Days prior to the commencement of such Interest Period in amounts
comparable to the amount of the Eurodollar Rate Advances requested by and
available to Borrower in accordance with this Agreement, with a maturity of
comparable duration to the Interest Period selected by Borrower.
"Eurodollar Rate Advances" means any Advance (or any
portion thereof) made or outstanding hereunder during any period when interest
on such Advance (or portion thereof) is payable based on the Adjusted Eurodollar
Rate.
"Event of Default" has the meaning set forth in
Article 8.
"Excess Availability" means, as of any date of
determination, the result (so long as such result is a positive number) of (a)
Availability, less (b) the accounts payable of Borrower and its Restricted
Subsidiaries over sixty (60) days past due.
"Exchange Act" means the Securities Exchange Act of
1934, and regulations promulgated thereunder.
"Existing Defaults" means, collectively, (i) all
defaults or events of default (other than any payment defaults) existing as of
the Amendment Closing Date under the Lease Agreement dated April 6, 1997,
between Frame-N-Lens Optical, Inc. and Banc One Leasing Corporation, and (ii)
the interest payment default existing as of the Amendment Closing Date with
respect to the Senior Notes.
16
"Fee Letter" means that certain agreement dated
as of the Amendment Closing Date setting forth the applicable fees for Lender
relating to this Agreement and the Loans.
"FEIN" means Federal Employer Identification Number.
"First Union" has the meaning set forth in the
recitals to this Agreement.
"Foreign Subsidiary" means any Subsidiary of Borrower
which is organized or incorporated under the laws of a jurisdiction other than
the United States or any state or territory thereof.
"GAAP" means generally accepted accounting principles
as in effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's and
each Restricted Subsidiary's present and future general intangibles and other
personal property (including contract rights, rights arising under common law,
statutes, or regulations, choses or things in action, goodwill, patents, trade
names, trademarks, servicemarks, trade secrets, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, infringement claims, computer programs, information
contained on computer disks or tapes, literature, reports, catalogs, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), other
than goods, Accounts, and Negotiable Collateral.
"GOB Rate" means the percentages determined, from
time to time, by an appraiser acceptable to Foothill and using a methodology
acceptable to Foothill in its reasonable credit judgment as the percentage of
Cost of Inventory recoverable on a going-out of business basis, multiplied by
eighty-five percent (85%).
"Governing Documents" means the certificate or
articles of incorporation, by-laws, or other organizational or governing
documents of any Person.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guaranty Obligation" has the meaning set forth in
the definition of "Contingent Obligation."
17
"Hazardous Materials" means all those substances
that are regulated by, or which may form the basis of liability under, any
Environmental Law, including any substance identified under any Environmental
Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or petroleum
or petroleum derived substance or waste.
"Indebtedness" means, with respect to any Person,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations of such Person in respect of letters
of credit, bankers acceptances, interest rate swaps, or other financial
products, (c) all obligations of such Person under capital leases, (d) all
obligations or liabilities of others secured by a Lien on any property or asset
of such Person, irrespective of whether such obligation or liability is assumed,
and (e) any obligation of such Person guaranteeing or intended to guarantee
(whether guaranteed, endorsed, co-made, discounted, or sold with recourse to
such Person) any indebtedness, lease, dividend, letter of credit, or other
obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth
in Section 11.3.
"Indemnified Person" has the meaning set forth in
Section 11.3.
"Indenture" means that certain Indenture dated
as of October 8, 1998 among Borrower, as issuer, the guarantors named therein
and State Street Bank and Trust company, as trustee.
"Independent Auditor" has the meaning set forth in
Section 6.1(a).
"Insolvency proceeding" means any proceeding
commenced by or against any Person under any provision of the Bankruptcy Code or
under any other bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any
Person, that portion of the book value of all of such Person's assets that would
be treated as intangibles under GAAP.
"Interest Expense" means, with respect to any Person
on a consolidated basis for any period, interest expense and loan fees
determined in accordance with GAAP, and including capitalized and
non-capitalized interest and the interest component of Capitalized Lease
Obligations. Unless the context clearly provides otherwise, any reference to
Interest Expense in this Agreement shall be to the Interest Expense of Borrower
and its Subsidiaries on a consolidated basis.
18
"Interest Payment Date" means any date for the
scheduled payment of interest on the Senior Notes under the Indenture as in
effect on the date hereof.
"Interest Period" means, for any Eurodollar Rate
Advance, the period commencing on the Business Day such Eurodollar Rate Advance
is disbursed or continued, or on the Business Day on which a Reference Rate
Advance is converted to such Eurodollar Rate Advance, and ending on the date
ninety (90) days thereafter.
"Inventory" means all present and future inventory
in which Borrower or a Restricted Subsidiary has any interest, including goods
held for sale or lease or to be furnished under a contract of service and all of
Borrower's and each Restricted Subsidiary's present and future raw materials,
work in process, finished goods, and packing and shipping materials, wherever
located.
"Inventory Reserves" means reserves (determined from
time to time by Lender in its discretion) for the estimated reclamation claims
of unpaid sellers of Inventory sold to Borrower or any Restricted Subsidiary.
"Investments" has the meaning specified in
Section 7.4.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal functions under the
IRC.
"Joint Venture" means a single-purpose corporation,
partnership, limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate legal
entity) now or hereafter formed by Borrower or any of its Subsidiaries with
another Person (other than Borrower or one of its Restricted Subsidiaries) in
order to conduct a common venture or enterprise with such Person.
"L/C" has the meaning set forth in Section 2.2(a).
"L/C Guaranty" has the meaning set forth in
Section 2.2(a).
"Lender" has the meaning set forth in the preamble to
this Agreement.
"Lender Account" has the meaning set forth in
Section 2.7.
19
"Lender Expenses" means all: costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrower or any
Subsidiary of Borrower under any of the Loan Documents that are paid or incurred
by Lender; fees or charges paid or incurred by Lender in connection with
Lender's transactions with Borrower and its Subsidiaries, including, fees or
charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
UCC searches and including searches with the patent and trademark office, the
copyright office, or the department of motor vehicles), filing, recording,
publication, and appraisal (including periodic Collateral appraisals); costs and
expenses incurred by Lender in the disbursement of funds to Borrower (by wire
transfer or otherwise); charges paid or incurred by Lender resulting from the
dishonor of checks; costs and expenses paid or incurred by Lender to correct any
default or enforce any provision of the Loan Documents, or in gaining possession
of, maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated; costs and expenses paid or
incurred by Lender in examining the Books and Records; costs and expenses of
third party claims or any other suit paid or incurred by Lender in enforcing or
defending the Loan Documents or in connection with the transactions contemplated
by the Loan Documents or Lender's relationship with Borrower or any guarantor;
and Lender's reasonable attorneys' fees and expenses, actually incurred in
advising, structuring, drafting, reviewing, administering, amending,
terminating, enforcing (including, without limitation, reasonable attorneys'
fees and expenses actually incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning Borrower or any
guarantor of the Obligations), defending, or concerning the Loan Documents,
irrespective of whether suit is brought.
"Letter of Credit" means an L/C or an L/C Guaranty,
as the context requires.
"Lien" means any interest in property securing an
obligation owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common law, statute, or
contract, whether such interest shall be recorded or perfected, and whether such
interest shall be contingent upon the occurrence of some future event or events
or the existence of some future circumstance or circumstances, including the
lien or security interest arising from a mortgage, deed of trust, encumbrance,
pledge, hypothecation, assignment, deposit arrangement, security agreement,
adverse claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.
"Loan Account" has the meaning set forth in
Section 2.10.
20
"Loan Documents" means this Agreement, the
Disbursement Letter, the Letters of Credit, the Collateral Documents, any note
or notes executed by Borrower and payable to Lender, and any other agreement
entered into, now or in the future, in connection with this Agreement.
"Loans" means, collectively, the Advances and the
Term Loans.
"Lockbox Account" shall mean a depositary account
established pursuant to one of the Lockbox Agreements.
"Lockbox Agreements" means those certain Lockbox
Operating Procedural Agreements and those certain Depository Account Agreements,
in form and substance satisfactory to Lender, each of which is among Borrower,
Lender and one of the Lockbox Banks.
"Lockbox Banks" means First Union, or such other
Person or Persons as Lender and Borrower may designate from time to time.
"Lockboxes" has the meaning set forth in Section 2.7.
"Managed Care Subsidiary" shall mean (a NVAL
VisionCare Systems of California, Inc., ProCare Eye Exam, Inc. and NVAL
VisionCare Systems of North Carolina, Inc. and (b) any other Subsidiary of
Borrower formed or acquired after the Amendment Closing Date whose financial
condition or activities are regulated under the laws of any state in connection
with its provision of health or vision care products or services (or related
administrative services) and shall include, and without limitation, a health
maintenance organization (whether single or multi service), third party
administrator or any entity similar to any of the foregoing.
"Margin Stock" means "margin stock" as such term is
defined in Regulation U or X of the Board of Governors
of the Federal Reserve System.
"Master Concentration Account" means account number
2080000695022 of Borrower maintained at the Concentration Account Bank, or such
other deposit account of Borrower (located in the United States), into which
cash received in the Lockbox, the other Concentration Accounts and certain
Retail Store Accounts is wire transferred as provided in Section 2.7.
"Material Adverse Effect" means (a) a material
adverse change in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of Borrower or of
Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of Borrower or any Restricted Subsidiary to perform under any Loan
Document; or (c) a material adverse effect upon (i) the legality, validity,
binding effect or enforceability against Borrower or any Restricted Subsidiary
of any Loan Document, or (ii) the perfection or priority of any Lien granted
under any of the Collateral Documents.
21
"Material Contracts" has the meaning set forth in
Section 5.25.
"Maturity Date" has the meaning set forth in
Section 3.4.
"Maximum Amount" means $25,000,000.
"Maximum Revolving Amount" means, as of any date of
determination, the result of (a) the Maximum Amount, minus (b) the then
outstanding aggregate principal balance of the Term Loans.
"Meijer" means Meijer, Inc.
"Multiemployer Plan" means a "multiemployer plan",
within the meaning of Section 4001(a)(3) of ERISA, to which Borrower or any
ERISA Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to make,
contributions.
"Negotiable Collateral" means all of Borrower's and
each Restricted Subsidiary's present and future letters of credit, notes,
drafts, instruments, investment property, security entitlements, securities
(including the shares of stock of Subsidiaries of Borrower or any Restricted
Subsidiary), documents, personal property leases (wherein Borrower or any
Restricted Subsidiary is the lessor), chattel paper, and Books and Records
relating to any of the foregoing.
"Net Income" means, with respect to any Person on a
consolidated basis for any period, its net income (or deficit) determined in
accordance with GAAP. Unless the context clearly provides otherwise, any
reference to Net Income in this Agreement shall be to the Net Income of Borrower
and its Subsidiaries on a consolidated basis.
"Net Proceeds" means, as to any Disposition by a
Person, proceeds in cash, checks or other cash equivalent financial instruments
as and when received by such Person, net of: (a) the direct costs relating to
such Disposition excluding amounts payable to such Person or any Affiliate of
such Person, (b) income, sale, use or other transaction taxes paid or payable by
such Person as a direct result thereof, and (c) amounts required to be applied
to repay principal, interest and prepayment premiums and penalties on
Indebtedness secured by a Lien on the asset which is the subject of such
Disposition and (d) appropriate amounts to be set aside by such Person as a
reserve, in accordance with GAAP, against any liabilities associated with such
Disposition and retained by such Person after such Disposition, including
without limitation pension and other post-employment benefit liabilities,
liabilities related to environment matters and liabilities under any
indemnification obligations associated with such Disposition.
22
"Obligations" means all Loans, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations under any
outstanding Letters of Credit, premiums (including Early Termination Premiums),
liabilities (including all amounts charged to Borrower's Loan Account pursuant
hereto), obligations, fees, charges, costs, or Lender Expenses (including any
fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties owing by Borrower to
Lender of any kind and description (whether pursuant to or evidenced by the Loan
Documents or pursuant to any other agreement between Lender and Borrower, and
irrespective of whether for the payment of money), whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including any debt, liability, or obligation owing from Borrower to others
that Lender may have obtained by assignment or otherwise, and further including
all interest not paid when due and all Lender Expenses that Borrower is required
to pay or reimburse by the Loan Documents, by law, or otherwise.
"Overadvance" has the meaning set forth in
Section 2.5.
"Participant" means any Person to which Lender has
sold a participation interest in its rights under the Loan Documents.
"PBGC" means the Pension Benefit Guaranty
Corporation, or any Governmental Authority succeeding to any of its principal
functions under ERISA.
"Pension Plan" means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which Borrower sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Liens" has the meaning set forth in
Section 7.1.
"Permitted Protest" means the right of Borrower or
any Restricted Subsidiary to protest any Lien other than any such Lien that
secures the Obligations, provided that (a) a reserve with respect to such
obligation is established on the books of Borrower or such Restricted Subsidiary
in an amount that is reasonably satisfactory to Lender in its reasonable credit
judgment, (b) any such protest is instituted and diligently prosecuted by
Borrower or such Restricted Subsidiary in good faith, and (c) Lender is
satisfied that, while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the Liens of Lender in
and to the Collateral.
23
"Person means and includes natural persons,
corporations, limited liability companies, limited partnerships, general
partnerships, limited liability partnerships, joint ventures, trusts, land
trusts, business trusts, or other organizations, irrespective of whether they
are legal entities, and governments and agencies and political subdivisions
thereof.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which Borrower sponsors or maintains or to which Borrower
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"Pledge Agreement" means that certain Amended and
Restated Pledge Agreement of even date herewith among Borrower, the
Administrative Agent and Lender, in form and substance satisfactory to Lender,
together with any supplement thereto executed and delivered after the date
hereof between Borrower and Lender.
"Pledged Collateral" has the meaning specified in the
Pledge Agreement.
"Prior Credit Agreement" has the meaning set forth in
the recitals to this Agreement.
"Purchase Money Indebtedness " means any Indebtedness
of Borrower or its Restricted Subsidiaries incurred for the purpose of financing
all or any part of the purchase price or the cost of installation, construction
or improvement of any property.
"Qualified Proceeds " means any of the following or
any combination of the following: (i) cash, (ii) cash equivalents, (iii) assets
that are used or usable in the business of Borrower and its Restricted
Subsidiaries as existing on the Amendment Closing Date or a business reasonably
related or complimentary thereto and (iv) capital stock of any Person engaged
primarily in the business of Borrower and its Restricted Subsidiaries as
existing on the Amendment Closing Date or a business reasonably related or
complimentary thereto so long as, in connection with the receipt by Borrower or
any Restricted Subsidiary of Borrower of such capital stock, (A) such Person
becomes a Restricted Subsidiary or (B) such Person is merged with or into or
transfers or conveys substantially all or all of its assets to, or is liquidated
into, Borrower or any Restricted Subsidiary.
"Reference Rate" means the variable rate of interest, per annum, most recently
announced by ▇▇▇▇▇ Fargo Bank, National Association, or any successor thereto,
as its "base rate," irrespective of whether such announced rate is the best rate
available from such financial institution.
24
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
"Reserve Percentage" means and refers to, as of the
date of determination thereof; the maximum percentage (rounded upward, if
necessary to the nearest 1/100th of one percent (1%)), as determined by Lender
(or its Affiliates) in accordance with its (or their ) usual procedures (which
determination shall be conclusive in the absence of manifest error), that is in
effect on such date as prescribed by the Federal Reserve Board for determining
the reserve requirements (including supplemental, marginal, and emergency
reserve requirements) with respect to eurocurrency funding (currently referred
to as "eurocurrency liabilities") by Lender or its Affiliates.
"Responsible Officer" means the chief executive
officer, the chief financial officer or the president of Borrower, or any other
officer having substantially the same authority and responsibility; or, with
respect to compliance with financial covenants, the chief financial officer, the
controller or the treasurer of Borrower, or any other officer having
substantially the same authority and responsibility.
"Restricted Payments" has the meaning set forth in
Section 7.10.
"Restricted Subsidiary" means any direct or indirect
Subsidiary of Borrower other than an Unrestricted Subsidiary.
"Retail Store Accounts" means those bank accounts set
forth on Schedule 6.14 other than the Lockbox Account or the Concentration
Accounts.
"Revolving Facility Usage" means, as of any date of
determination, the aggregate amount of Advances and undrawn or unreimbursed
Letters of Credit outstanding.
"Sam's Club" means Sam's Club a division of Wal-Mart.
"SEC" means the Securities and Exchange Commission,
or any Governmental Authority succeeding to any of its principal functions.
"Security Agreement" means that certain Amended and
Restated Security Agreement of even date herewith among Borrower, the
Administrative Agent and Lender, in form and substance satisfactory to Lender.
"Senior Notes" means those certain senior unsecured
notes due 2005 issued by Borrower pursuant to the Indenture.
25
"Solvent" means, as to any Person at any time, that
(a) the fair value of the property of such Person is greater than the amount of
such Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for purposes
of Section 101(31) of the Bankruptcy Code; (b) the present fair saleable value
of the property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured; (c) such Person is able to realize upon its property and
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business; (d)
such Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Sub-Concentration Accounts" means those bank
accounts of Borrower at the Concentration Account Bank set forth on Schedule
S-1.
"Subsidiary" of a Person means any corporation,
association, partnership, limited liability company, joint venture or other
business entity of which more than fifty percent (50%) of the voting stock,
membership interests or other equity interests (in the case of Persons other
than corporations), is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of Borrower.
"Subsidiary Guaranty" eans that certain Amended and
Restated Subsidiary Guaranty of even date herewith among the Restricted
Subsidiaries, the Administrative Agent and Lender, in form and substance
satisfactory to Lender, together with any supplement thereto.
"Subsidiary Pledge Agreement" means that certain
Amended and Restated Subsidiary Pledge Agreement of even date herewith among the
Restricted Subsidiaries, the Administrative Agent and Lender, in form and
substance satisfactory to Lender, together with any supplement thereto.
"Subsidiary Security Agreement" means that certain
Amended and Restated Subsidiary Security Agreement of even date herewith among
the Restricted Subsidiaries, the Administrative Agent and Lender, in form and
substance satisfactory to Lender, together with any supplement thereto.
"Surety Instruments" means all letters of credit
(including standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
26
"Term A Monthly Interest Rate Adjustment" has the
meaning set forth in Section 2.6(a)(iii).
"Term A Option Fee" has the meaning set forth in
Section 2.3(a).
"Term A Rate" has the meaning set forth in
Section 2.6(a)(iii).
"Term B Monthly Interest Rate Adjustment" has the
meaning set forth in Section 2.6(a)(iv).
"Term B Option Fee" has the meaning set forth in
Section 2.3(b).
"Term B Rate" has the meaning set forth in
Section 2.6(a)(iv).
"Term Loan A" has the meaning set forth in
Section 2.3(a).
"Term Loan B" has the meaning set forth in
Section 2.3(b).
"Term Loans" means, collectively, Term Loan A and
Term Loan B.
"Unfunded Pension Liability" means the excess of a
Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the assumptions used
for funding the Pension Plan pursuant to Section 412 of the IRC for the
applicable plan year.
"Unrestricted Subsidiaries" means the Foreign
Subsidiaries, the Managed Care Subsidiaries and each other direct or indirect
Subsidiary of Borrower designated as an "Unrestricted Subsidiary" by Borrower
and such designation is consented to by Lender; provided, however, that each
Managed Care Subsidiary existing on the Amendment Closing Date shall use its
reasonable efforts to obtain the approval of the requisite regulatory entity for
it to become a Restricted Subsidiary as promptly as practicable after the
Amendment Closing Date and each Person which becomes a Managed Care Subsidiary
after the Amendment Closing Date shall use its reasonable efforts to obtain the
requisite regulatory approval for it to become a Restricted Subsidiary as
promptly as practicable after it becomes a Managed Care Subsidiary; provided
further that with regard to any domestic Subsidiary of Borrower formed after the
Amendment Closing Date which is or seeks to become a Managed Care Subsidiary
such Subsidiary's obligations as a Restricted Subsidiary under a Subsidiary
Guaranty, Subsidiary Security Agreement and Subsidiary Pledge Agreement (if
27
applicable) to be issued pursuant to Section 6.16 of this Agreement shall only
become effective if (a) the approval of the requisite regulatory entity is
obtained (if such approval is required) and (b) the granting of the Subsidiary
Guaranty, Subsidiary Security Agreement and Subsidiary Pledge Agreement (if
applicable) by such Subsidiary shall not have a material adverse effect upon the
business, operations, assets, condition (financial or otherwise) or prospects of
such Subsidiary (a "material adverse effect"); provided that if a Subsidiary
Guaranty, Subsidiary Security Agreement and Subsidiary Pledge Agreement (if
applicable) is not issued by such Subsidiary in reliance on the provisions of
this clause (b), Borrower shall deliver an officers' certificate to Lender
stating that the granting of such Subsidiary Guaranty, Subsidiary Security
Agreement and Subsidiary Pledge Agreement (if applicable) would have a material
adverse effect, and provided, further that such obligation under the Subsidiary
Guaranty shall be limited to the maximum amount which such Subsidiary would be
permitted to declare or pay as a dividend in compliance with the applicable
rules or regulations of, or undertakings made to, any regulatory entity having
jurisdiction and authority over such Subsidiary. No Subsidiary of Borrower may
be designated as an Unrestricted Subsidiary hereunder if it is a "Guarantor" as
defined in the Indenture as in effect on the Amendment Closing Date.
"Voidable Transfer" has the meaning set forth in
Section 15.8.
"Wachovia Swap Obligations" has the meaning set forth
in Section 7.5(e).
"Wal-Mart means Wal-Mart Stores, Inc., a Delaware
corporation.
"Wal-Mart Master Lease Agreement" means that certain
Vision Center Master License Agreement dated as of June 16, 1994, by and between
Wal-Mart and Borrower, and all Addenda and Attachments thereto.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrower" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrower on a consolidated
basis with its Subsidiaries unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
1.4 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
28
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. An Event of Default
shall "exist", "continue" or be "continuing" until such Event of Default has
been waived in writing by Lender. Section, subsection, clause, schedule, and
exhibit references are to this Agreement unless otherwise specified. Any
reference in this Agreement or in the Loan Documents to this Agreement or any of
the Loan Documents shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, and
supplements, thereto and thereof, as applicable.
1.5 Schedules and Exhibits. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
20 LOAN AND TERMS OF PAYMENT.
2.1 Revolving Advances.
(a) Subject to the terms and conditions of this
Agreement, Lender agrees to make advances ("Advances") to Borrower in an
aggregate amount outstanding not to exceed at any one time the lesser of (i) the
Maximum Revolving Amount less the aggregate outstanding balance of all undrawn
or unreimbursed Letters of Credit, or (ii) the Borrowing Base less the aggregate
outstanding balance of all undrawn or unreimbursed Letters of Credit. For
purposes of this Agreement, "Borrowing Base", as of any date of determination,
shall mean the result of:
(I) the lowest of:
(v) seventy-five percent (75%) of EBITDA for
the most recent twelve (12) month period for which financial
statements have been provided to Lender pursuant to Section
6.1(c);
(w) one hundred fifty percent (150%) of
EBITDA for the most recent twelve (12) month period for which
financial statements have been provided to Lender pursuant to
Section 6.1(c), less the aggregate principal amount of the
Term Loans then outstanding; and
(x) the sum of:
(A) the lowest of (i)
$7,500,000, (ii) eighty-five percent (85%) of Eligible
accounts, less the amount, if any, of the Dilution
Reserve, and (iii) an amount equal to one-sixth (1/6)
of Collections of Borrower and its Restricted
Subsidiaries with respect to Accounts for the
immediately preceding sixty (60) day period, plus
29
(B) the lowest of (i)
$12,000,000, (ii) thirty percent (30%) of the Cost of
Eligible Inventory, less the aggregate amount of the
Inventory Reserves, and (iii) the GOB Rate of the Cost
of Eligible Inventory as determined based on the most
recent appraisals thereof less the aggregate amount of
the Inventory Reserves; and
(y) an amount equal to one-third (1/3) of
Collections of Borrower and its Restricted Subsidiaries with
respect to Accounts for the immediately preceding sixty (60)
day period; and
(z) an amount equal to two-thirds (2/3) of
Collections of Borrower and its Restricted Subsidiaries with
respect to Accounts for the immediately preceding sixty (60)
day period, less the aggregate principal amount of the Term
Loans then outstanding,
minus,
(II) (without duplication) the aggregate amount of
reserves, if any, established by Lender under Section 2.1(b),
Section 2.1(c) and Article 10 hereof.
(b) Anything to the contrary in this Section
notwithstanding, Lender shall have the right to establish reserves against the
Borrowing Base or adjust the standards of eligibility in such amounts as Lender,
in its reasonable judgment (from the perspective of an asset-based lender) shall
deem necessary or appropriate, including (x) reserves on account of (i) sums
that Borrower is required to pay (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay under any Section of this Agreement or any
other Loan Document, (ii) without duplication of the foregoing, amounts owing by
Borrower to any Person to the extent secured by a Lien on, or trust over, any of
the Collateral, which Lien or trust, in the reasonable determination of Lender
(from the perspective of an asset-based lender), would be likely to have a
priority superior to the Liens of Lender (such as landlord liens, ad valorem
taxes, or sales taxes where given priority under applicable law) in and to such
item of Collateral, and (y) reserves to the extent that the final audit and
appraisal referenced in Section 3.3(c) received by Foothill after the Amendment
Closing Date reveal any material negative variances from the preliminary results
of such reports delivered to Lender prior to the Amendment Closing Date.
(c) Lender shall have the right to establish a
reserve against the Borrowing Base, commencing on December 1, 1999, in the
amount of $1,000,000, which reserve shall increase by an additional $1,000,000
as of the first day of each month thereafter, provided that such reserve shall
30
reduce to zero on that date which is two (2) Business Days prior to any Interest
Payment Date and increased by an additional $1,000,000 as of the first day of
the immediately succeeding month and each month thereafter.
(d) Lender shall have no obligation to make Advances
hereunder to the extent they would cause the outstanding Obligations to exceed
the Maximum Revolving Amount.
(e) Amounts borrowed pursuant to this Section
2.1 may be repaid and, subject to the terms and conditions of this Agreement,
reborrowed at any time during the term of this Agreement.
2.2 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, Lender agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to issue guarantees of payment (each such guaranty, an "L/C
Guaranty") with respect to letters of credit issued by an issuing bank for the
account of Borrower. Lender shall have no obligation to issue a Letter of Credit
if any of the following would result:
(i) The aggregate amount of all types of
undrawn and unreimbursed Letters of Credit would exceed the
Borrowing Base less the amount of outstanding Advances less
the aggregate amount of Inventory Reserves and reserves
established under Section 2.1(b) and Section 2.1(c); or
(ii) the aggregate amount of all undrawn or
unreimbursed Letters of Credit would exceed the lower of: (x)
the Maximum Revolving Amount less the amount of outstanding
Advances less the aggregate amount of Inventory Reserves and
reserves established under Section 2.1(b), Section 2.1(c) and
Article 10 hereof; or (y) $3,000,000; or
(iii) the outstanding Obligations would
exceed the Maximum Amount.
Borrower expressly understands and agrees that Lender shall have no obligation
to arrange for the issuance by issuing banks of the letters of credit that are
to be the subject of L/C Guaranties. Borrower and Lender acknowledge and agree
that certain of the letters of credit that are to be the subject of L/C
Guaranties may be outstanding on the Amendment Closing Date. Each Letter of
Credit shall have an expiry date no later than sixty (60) days prior to the date
on which this Agreement is scheduled to terminate under Section 3.4 (without
regard to any potential renewal term) and all such Letters of Credit shall be in
form and substance acceptable to Lender in its sole discretion. If Lender is
obligated to advance funds under a Letter of Credit, Borrower immediately shall
reimburse such amount to Lender and, in the absence of such reimbursement, the
amount so advanced immediately and automatically shall be deemed to be an
Advance hereunder and, thereafter, shall bear interest at the rate then
applicable to Advances under Section 2.6.
31
(b) Borrower hereby agrees to indemnify, save,
defend, and hold Lender harmless from any loss, cost, expense, or liability,
including payments made by Lender, expenses, and actual and reasonable
attorneys' fees incurred by Lender arising out of or in connection with any
Letter of Credit, except to the extent arising from Lender's own gross
negligence or wilful misconduct. Borrower agrees to be bound by the issuing
bank's regulations and interpretations of any Letters of Credit guaranteed by
Lender and opened to or for Borrower's account or by Lender's interpretations of
any L/C issued by Lender to or for Borrower's account, even though this
interpretation may be different from Borrower's own, and Borrower understands
and agrees that Lender shall not be liable for any error, negligence, or
mistake, whether of omission or commission, in following Borrower's instructions
or those contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that the L/C Guaranties may require
Lender to indemnify the issuing bank for certain costs or liabilities arising
out of claims by Borrower against such issuing bank. Borrower hereby agrees to
indemnify, save, defend, and hold Lender harmless with respect to any loss,
cost, expense (including, without limitation, actual and reasonable attorneys'
fees), or liability incurred by Lender under any L/C Guaranty as a result of
Lender's indemnification of any such issuing bank, except to the extent arising
from Lender's own gross negligence or wilful misconduct.
(c) Borrower hereby authorizes and directs any bank
that issues a letter of credit guaranteed by Lender to deliver to Lender all
instruments, documents, and other writings and property received by the issuing
bank pursuant to such letter of credit, and to accept and rely upon Lender's
instructions and agreements with respect to all matters arising in connection
with such letter of credit and the related application. Borrower may or may not
be the "applicant" or "account party" with respect to such letter of credit.
(d) Any and all charges, commissions, fees, and costs
incurred by Lender relating to the letters of credit guaranteed by Lender shall
be considered Lender Expenses for purposes of this Agreement and shall be
reimbursable by Borrower to Lender on demand.
(e) Immediately upon the termination of this
Agreement, Borrower agrees to either (i) provide cash collateral to be held by
Lender in an amount equal to one hundred five percent (105%) of the maximum
amount of Lender's obligations under outstanding Letters of Credit, or (ii)
cause to be delivered to Lender releases of all of Lender's obligations under
outstanding Letters of Credit. Such cash collateral shall be returned to
Borrower when there are no longer any Letters of Credit outstanding, all
Obligations have been paid in full in cash and this Agreement has been
terminated. At Lender's discretion, any proceeds of Collateral received by
Lender after the occurrence and during the continuation of an Event of Default
may be held as the cash collateral required by this Section 2.2(e).
32
(f) If by reason of (i) any change in any applicable
law, treaty, rule, or regulation or any change in the interpretation or
application by any governmental authority of any such applicable law, treaty,
rule, or regulation, or (ii) compliance by the issuing bank or Lender with any
direction, request, or requirement (irrespective of whether having the force of
law) of any governmental authority or monetary authority including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve System
as from time to time in effect (and any successor thereto):
(A) any reserve, deposit, or similar
requirement is or shall be imposed or modified in respect of any Letters of
Credit issued hereunder, or
(B) there shall be imposed on the
issuing bank or Lender any other condition regarding any letter of credit, or
Letter of Credit, as applicable, issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the issuing bank or Lender of issuing, making, guaranteeing, or maintaining
any letter of credit, or Letter of Credit, as applicable, or to reduce the
amount receivable in respect thereof by such issuing bank or Lender, then, and
in any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as the issuing bank or Lender may
specify to be necessary to compensate the issuing bank or Lender for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate set forth in
Section 2.6(a)(i) or (c)(i), as applicable. The determination by the issuing
bank or Lender, as the case may be, of any amount due pursuant to this Section
2.2(f), as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.3 Term Loan. (a) Term Loan A. Subject to the terms and
conditions of this Agreement, Lender has agreed to make a term loan on the
Amendment Closing Date (the "Term Loan A") to Borrower in the original principal
amount of $2,500,000. The outstanding unpaid principal balance and all accrued
and unpaid interest under the Term Loan A shall be due and payable on the
earlier of (x) the Maturity Date and (y) the termination of this Agreement,
whether by its terms, by prepayment, by acceleration, or otherwise. In the event
that Borrower shall not have prepaid the Term Loan A in full by December 15,
2000 (the "Adjustment Date"), Borrower shall, at its option, pay to Lender on
the Adjustment Date in immediately available funds a fee (the "Term A Option
Fee") in an amount equal to one percent (1.00%) of the principal balance of the
Term Loan A then outstanding. If Borrower fails to pay the Term A Option Fee on
the Adjustment Date, the interest rate payable on the Term Loan A shall be
increased by the Term A Monthly Interest Rate Adjustment set forth in Section
2.6(a)(iii) from the Adjustment Date through the Maturity Date. All amounts
outstanding under the Term Loan A shall constitute Obligations.
33
(b) Term Loan B. Subject to the terms and
conditions of this Agreement, Lender has agreed to make a term loan on the
Amendment Closing Date (the "Term Loan B") to Borrower in the original principal
amount of $10,000,000. The outstanding unpaid principal balance and all accrued
and unpaid interest under the Term Loan B shall be due and payable on the
earlier of (x) the Maturity Date and (y) the termination of this Agreement,
whether by its terms, by prepayment, by acceleration, or otherwise. In the event
that Borrower shall not have prepaid the Term Loan B in full by the Adjustment
Date, Borrower shall, at its option, pay to Lender on each of the Adjustment
Date and on January 15, 2001 in immediately available funds a fee (the "Term B
Option Fee") in an amount equal to two percent (2.00%) of the principal balance
of the Term Loan B then outstanding. If Borrower fails to pay the Term B Option
Fee on the Adjustment Date, the interest rate payable on the Term Loan B shall
be increased by the Term B Monthly Interest Rate Adjustment set forth in Section
2.6(a)(iv) from the Adjustment Date through the Maturity Date. All amounts
outstanding under the Term Loan B shall constitute Obligations.
(c) Prepayments. The unpaid principal balance of the
Term Loans may be voluntarily prepaid by Borrower in whole or in part without
penalty or premium at any time during the term of this Agreement so long as (i)
at the time of such prepayment no Default or Event of Default then exists or
would be caused thereby, and (ii) immediately before and after giving effect to
such prepayment, Availability (less a reasonable reserve for past due accounts
payable) shall be not less than $3,000,000. All prepayments of the Term Loans
shall be in an amount not less than $1,000,000. Notwithstanding anything to the
contrary contained herein, so long as no Default or Event of Default then
exists, all prepayments of the Term Loans shall be applied pro rata between the
Term Loan A and the Term Loan B.
2.4 [Intentionally Omitted].
2.5 Overadvances. If, at any time or for any reason, the
amount of Obligations owed by Borrower to Lender pursuant to Sections 2.1 and
2.2 is greater than the applicable Dollar or percentage limitations set forth in
Sections 2.1 or 2.2 (an "Overadvance"), Borrower immediately shall pay to
Lender, in cash, the amount of such excess to be used by Lender first, to repay
Advances outstanding under Section 2.1 and, thereafter, to be held by Lender as
cash collateral to secure Borrower's obligation to repay Lender for all amounts
paid pursuant to Letters of Credit.
2.6 Interest and Letter of Credit Fees: Rates, Payments,
and Calculations; Promise to Pay.
(a) Interest Rate. Except as provided in clause
(b) below, (i) all Advances which are Eurodollar Rate Advances shall bear
interest on the Daily Balance thereof at a per annum rate of three and
one-quarter percentage points (3.25%) above the Adjusted Eurodollar Rate, (ii)
all Advances which are Reference Rate Advances shall bear interest on the Daily
34
Balance thereof at a per annum rate of two percent (2.00%) above the Reference
Rate, (iii) the Term Loan A shall bear interest on the Daily Balance thereof at
a per annum rate of fifteen percent (15.00%); provided, however, that, in the
event Borrower fails to pay the Term A Option Fee on the Adjustment Date, the
interest rate on the Term Loan A shall increase each month commencing on the
Adjustment Date through the Maturity Date (such monthly increase in the interest
rate is referred to herein as the "Term A Monthly Interest Rate Adjustment" and
the interest rate on the Term Loan A as so increased is referred to herein as
the "Term A Rate") by an additional one-eighth of one percent (0.125%) , and
(iv) the Term Loan B shall bear interest on the Daily Balance thereof at a per
annum rate of fifteen percent (15.00%); provided, however, that, in the event
Borrower fails to pay the Term B Option Fee on the Adjustment Date, the interest
rate on the Term Loan B shall increase each month commencing on the Adjustment
Date through the Maturity Date (such monthly increase in the interest rate is
referred to herein as the "Term B Monthly Interest Rate Adjustment" and the
interest rate on the Term Loan B as so increased is referred to herein as the
"Term B Rate") by an additional three-eighths of one percent (0.375%).
(b) Letter of Credit Fee. Borrower shall pay
Lender a fee (in addition to the charges, commissions, fees, and costs set forth
in Section 2.2(d)) equal to one and one-half percent (1.50%) per annum times the
aggregate undrawn amount of all Letters of Credit that were outstanding during
the immediately preceding month.
(c) Default Rate. Upon the occurrence and
during the continuation of an Event of Default, (i) all Obligations (except for
undrawn Letters of Credit and the Term Loan) shall bear interest on the Daily
Balance thereof at a per annum rate equal to four percentage points (4.00%)
percentage points above the Reference Rate, (ii) the Term Loan A shall bear
interest on the Daily Balance thereof at a per annum rate equal to two
percentage points (2.00%) above the Term A Rate, (iii) the Term Loan B shall
bear interest on the Daily Balance thereof at a per annum rate equal to two
percentage points (2.00%) above the Term B Rate, and (iv) the Letter of Credit
fee provided in Section 2.6(b) shall be increased to three and one-half percent
(3.50%) per annum times the amount of the undrawn Letters of Credit that were
outstanding during the immediately preceding month.
(d) [Intentionally Omitted].
(e) Payments. Interest and Letter of Credit fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month during the term hereof. Borrower hereby authorizes Lender, at its option,
without prior notice to Borrower, to charge such interest and Letter of Credit
fees, all Lender Expenses (as and when incurred), the charges, commissions,
fees, and costs provided for in Section 2.2(d) (as and when accrued or
incurred), the fees and charges provided for in Section 2.11 (as and when
accrued or incurred), and all installments or other payments due under the Term
Loans or any Loan Document to Borrower's Loan Account, which amounts thereafter
shall accrue interest at the rate then applicable to Advances hereunder.
35
(f) Computation. The Reference Rate as of the date
of this Agreement is eight and one-quarter percent (8.25%) per annum. In the
event the Reference Rate is changed from time to time hereafter, the applicable
rate of interest hereunder automatically and immediately shall be increased or
decreased by an amount equal to such change in the Reference Rate. All interest
and fees chargeable under the Loan Documents shall be computed on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate.
Borrower and Lender hereby agree and stipulate that the only charges imposed
upon Borrower for the use of money in connection with this Agreement are and
shall be the specific interest and fees described in this Article 2 and in any
other Loan Document. Notwithstanding the foregoing, Borrower and Lender further
agree and stipulate that all agency fees, syndication fees, facility fees,
underwriting fees, default charges, late charges, funding or "breakage" charges,
increased cost charges, the Early Termination Premium, "float" or "clearance"
charges, attorneys' fees and reimbursement for costs and expenses paid by Lender
to third parties or for damages incurred by Lender are charges to compensate
Lender for underwriting and administrative services and costs or losses
performed or incurred, and to be performed and incurred, by Lender in connection
with this Agreement and the other Loan Documents and shall under no
circumstances be deemed to be charges for the use of money pursuant to Official
Code of Georgia Annotated Sections 7-4-2 and 7-4-18. In no event shall the
amount of interest and other charges for the use of money payable under this
Agreement exceed the maximum amounts permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.
Borrower and Lender, in executing and delivering this Agreement, intend legally
to agree upon the rate or rates of interest and other charges for the use of
money and manner of payment stated within it; provided, however, that, anything
contained herein to the contrary notwithstanding, if the amount of such interest
and other charges for the use of money or manner of payment exceeds the maximum
amount allowable under applicable law, then, ipso facto as of the date of this
Agreement, Borrower is and shall be liable only for the payment of such maximum
as allowed by law, and payment received from Borrower in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
the Obligations to the extent of such excess.
(h) Promise to Pay. Borrower hereby promises to pay
in full to Lender the amount of all Obligations, including the principal amount
of all Advances, together with accrued interest, fees and other amounts due
thereon, all in accordance with the terms of this Agreement.
36
2.7 Collection of Accounts.
(a) Collections. Borrower shall, promptly (but in
no event later than December 15, 1999) after the Amendment Closing Date,
instruct all Account Debtors (other than retail customers and optometrists) with
respect to the Accounts, General Intangibles and Negotiable Collateral of
Borrower and the Restricted Subsidiaries to remit, on each Business Day, all
Collections in respect thereof directly to the Lockbox or to a Concentration
Account via electronic funds transfer (including, but not limited to ACH
transfers). From and after the Amendment Closing Date, Borrower shall cause all
Collections and other amounts received by Borrower or any Restricted Subsidiary
at any retail store location to be deposited on a daily basis into a Retail
Store Account or a Concentration Account. In addition, Borrower agrees that all
other Collections and other amounts received directly by Borrower or any
Restricted Subsidiary from any Account Debtor or any other source immediately
upon receipt shall be deposited into a Concentration Account. Borrower shall
cause all funds in excess of $500 on deposit in each Retail Store Account to be
sent by electronic funds transfer (including, but not limited to, ACH transfers)
on each Business Day to a Concentration Account.
(b) Lockbox and Concentration Accounts. With
respect to each Lockbox, Borrower, Lender and the applicable Lockbox Bank shall
have entered into a Lockbox Agreement, which among other things shall provide
(i) for the opening or maintenance of a Lockbox Account at such Lockbox Bank
into which all Collections received in such Lockbox shall be deposited on a
daily basis and (ii) that all cash deposited into such Lockbox Account shall be
sent by electronic funds transfer (including, but not limited to ACH transfers)
on each Business Day to the Master Concentration Account. With respect to the
Sub-Concentration Accounts, Borrower, Lender and First Union shall have entered
into a Concentration Account Agreement, which among other things shall provide
that all cash deposited into each Sub-Concentration Account shall be sent by
electronic funds transfer (including, but not limited to ACH transfers) on each
Business Day to the Master Concentration Account. Upon the terms and subject to
the conditions set forth in the Concentration Account Agreement with respect to
the Master Concentration Account, all amounts received in the Master
Concentration Account shall be wired each Business Day into an account (the
"Lender Account") maintained by Lender at a depository selected by Lender.
(c) Retail Store Accounts. Promptly (but in no event
later than thirty (30) days) after the Amendment Closing Date, Borrower shall,
with respect to each Retail Store Account, deliver to Lender either (i) a
Blocked Account Agreement with respect to such Retail Store Account or (ii)
evidence that Borrower has provided to the bank at which such Retail Store
Account is located notice in writing of Lender's security interest in such
Retail Store Account and irrevocable directions in writing, in form and
substance satisfactory to Lender, to send by electronic funds transfer
(including, but not limited to, ACH transfers) on each Business Day to a
Concentration Account all funds in excess of $500 on deposit in such Retail
37
Store Account and that each bank has agreed to do so. Notwithstanding the
foregoing, promptly upon the request of Lender, Borrower shall deliver a Blocked
Account Agreement to Lender with respect to any Retail Store Account identified
by Lender (which shall include, without limitation, each Retail Store Account
with ▇▇▇▇▇ Fargo Bank, National Association). Each Blocked Account Agreement
shall provide, among other things, that all cash in excess of $500 deposited
into the Retail Store Accounts covered thereby shall be sent by electronic funds
transfer (including, but not limited to ACH transfers) on each Business Day to a
Concentration Account.
(d) Miscellaneous. No Lockbox Agreement,
Concentration Account Agreement, Blocked Account Agreement or other arrangement
contemplated in this Section 2.7 shall be modified by Borrower without the prior
written consent of Lender.
2.8 Crediting Payments; Application of Collections. The
receipt of any Collections by Lender (whether from transfers to Lender by the
Concentration Account Bank pursuant to the Concentration Account Agreement or
otherwise) immediately shall be applied provisionally to reduce the Obligations
in the order as determined by Lender, in its sole discretion, but shall not be
considered a payment on account unless such Collection item is a wire transfer
of immediately available federal funds and is made to the Lender Account or
unless and until such Collection item is honored when presented for payment.
From and after the Amendment Closing Date, Lender shall be entitled to charge
Borrower for two (2) Business Days of `clearance' or `float' at the rate set
forth in Section 2.6(a)(i), Section 2.6(a)(ii) or Section 2.6(c)(i), as
applicable, on all Collections that are received by Lender (regardless of
whether forwarded by the Concentration Account Bank to Lender, whether
provisionally applied to reduce the Obligations under Section 2.1, or
otherwise). This across-the-board two (2) Business Day clearance or float charge
on all Collections is acknowledged by the parties to constitute an integral
aspect of the pricing of Lender's financing of Borrower, and shall apply
irrespective of the characterization of whether receipts are owned by Borrower
or Lender, and whether or not there are any outstanding Advances, the effect of
such clearance or float charge being the equivalent of charging two (2) Business
Days of interest on such Collections. Should any Collection item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment, and interest shall be recalculated accordingly. Anything to the
contrary contained herein notwithstanding, any Collection item shall be deemed
received by Lender only if it is received into the Lender Account on a Business
Day on or before 2:00 p.m. (Eastern time). If any Collection item is received
into the Lender Account on a non-Business Day or after 2:00 p.m. (Eastern time)
on a Business Day, it shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day. Notwithstanding
the foregoing, (i) any Collections or other amounts received by Lender prior to
the occurrence of an Event of Default that are not directed to be applied to the
Loans in any particular order by Borrower or elsewhere in this Agreement shall
be applied to the Obligations as Lender, in its sole discretion, shall
38
determine, and (ii) any Collections or other amounts received by Lender after
the occurrence of an Event of Default shall be applied to the Obligations as
Lender, in its sole discretion, shall determine.
2.9 Designated Account. Lender is authorized to make the
Advances, the Letters of Credit and the Term Loans under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Person, or without instructions if pursuant to Section 2.6(e).
Borrower agrees to establish and maintain the Designated Account with the
Designated Account Bank for the purpose of receiving the proceeds of the
Advances requested by Borrower and made by Lender hereunder. Unless otherwise
agreed by Lender and Borrower, any Advance requested by Borrower and made by
Lender hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations.
Lender shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with all Advances and the Term Loans
made by Lender to Borrower or for Borrower's account, including, accrued
interest, Lender Expenses, and any other payment Obligations of Borrower. In
accordance with Section 2.8, the Loan Account will be credited with all payments
received by Lender from Borrower or for Borrower's account, including all
amounts received in the Lender Account from the Concentration Account Bank.
Lender shall render statements regarding the Loan Account to Borrower, including
principal, interest, fees, and including an itemization of all charges and
expenses constituting Lender Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and Lender unless, within forty-five (45) days after
receipt thereof by Borrower, Borrower shall deliver to Lender written objection
thereto describing the error or errors contained in any such statements.
2.11 Fees.
(a) Fee Letter. Borrower shall pay to Lender the
fees set forth in the Fee Letter.
(b) Unused Line Fee. On the first day of each month
during the term of this Agreement, Borrower shall pay to Lender, in arrears, an
unused line fee in an amount equal to one-half of one percent (0.50%) per annum
times the Average Unused Portion of the Maximum Revolving Amount.
(f) Miscellaneous. The fees set forth above
shall be fully earned when due and non-refundable when paid and, if applicable,
computed on the basis of a three hundred sixty (360) day year for the actual
number of days elapsed.
2.12 Eurodollar Rate Advances. Any other provisions herein
to the contrary notwithstanding, the following provisions shall govern with
respect to Eurodollar Rate Advances as to the matters covered:
39
(a) Borrowing; Conversion; Continuation. Borrower
may from time to time, on or after the Amendment Closing Date, request in
written or telephonic communication with Lender: (i) Advances to constitute
Eurodollar Rate Advances; (ii) that Reference Rate Advances be converted into
Eurodollar Rate Advances; or (iii) that existing Eurodollar Rate Advances
continue for an additional Interest Period. Any such request shall specify the
aggregate amount of the requested Eurodollar Rate Advances, the proposed funding
date therefor (which shall be a Business Day, and with respect to continued
Eurodollar Rate Advances shall be the last day of the Interest Period of the
existing Eurodollar Rate Advances being continued), and the proposed Interest
Period, in each case subject to the limitations set forth below. Eurodollar Rate
Advances may only be made, continued, or extended if, as of the proposed funding
date therefor each of the following conditions is satisfied:
(v) no Event of Default exists;
(w) no more than five (5) Eurodollar Rate
Advances may be in effect at any one time;
(x) the amount of each Eurodollar Rate
Advance borrowed, converted, or continued must be in an amount not less than
$1,000,000 and integral multiples of $500,000 in excess thereof;
(y) Lender shall have determined that the
Adjusted Eurodollar Rate is available to Lender and can be readily determined as
of the date of the request for such Eurodollar Rate Advance by Borrower; and
(z) Lender shall have received such request
at least three (3) Business Days prior to the proposed funding date therefor.
Any request by Borrower to borrow Eurodollar Rate Advances, to convert Reference
Rate Advances to Eurodollar Rate Advances, or to continue any existing
Eurodollar Rate Advances shall be irrevocable, except to the extent that Lender
shall determine under Sections 2.12(a), 2.13 or 2.14 that such Eurodollar Rate
Advances cannot be made or continued.
(b) Determination of Interest Period. Eurodollar Rate Advances
shall only be available for Interest Periods of ninety (90) days. The
determination of Interest Periods shall be subject to the following provisions:
(i) in the case of immediately successive Interest
Periods, each successive Interest Period shall commence on the day on which the
next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire
on a day which is not a Business Day, the Interest Period shall be extended to
expire on the next succeeding Business Day; provided, however, that if the next
succeeding Business Day occurs in the following calendar month, then such
40
Interest Period shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(iii) if any Interest Period begins on the last
Business Day of a month or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period, then
the Interest Period shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
(iv) Borrower may not request a Eurodollar Rate
Advance with an Interest Period which expires later than the applicable Renewal
Date.
(c) Automatic Conversion; Optional Conversion by Lender. Any
Eurodollar Rate Advance shall automatically convert to a Reference Rate Advance
upon (x) the occurrence of any Event of Default, or (y) the last day of the
applicable Interest Period, unless Lender has received a request to continue
such Eurodollar Rate Advance at least three (3) Business Days prior to the end
of such Interest Period in accordance with the terms of Section 2.12 (a) . Any
Eurodollar Rate Advance shall, at Lender's option, upon notice to Borrower,
convert to a Reference Rate Advance in the event that (i) an Event of Default
shall have occurred and be continuing as of the last day of the Interest Period
for such Eurodollar Rate Advance, or (ii) this Agreement shall terminate, and
Borrower shall pay to Lender any amounts required by Section 2.15 as a result
thereof.
2.13 Illegality. Any other provision herein to the contrary
notwithstanding, if the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof shall make it unlawful for Lender
to make or maintain Eurodollar Rate Advances as contemplated by this Agreement,
(a) the obligation of Lender hereunder to make Eurodollar Rate Advances,
continue Eurodollar Rate Advances as such, and convert Reference Rate Advances
to Eurodollar Rate Advances shall forthwith be suspended and (b) Lender's then
outstanding Eurodollar Rate Advances, if any, shall be converted automatically
to Reference Rate Advances on the respective last days of the then current
Interest Periods with respect thereto or within such earlier period as required
by law; provided, however, that before making any such demand, Lender agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, in its reasonable discretion, in any legal, economic, or regulatory
manner) to designate a different lending office if the making of such a
designation would allow Lender or its lending office to continue to perform its
obligations to make Eurodollar Rate Advances. If any such conversion of a
Eurodollar Rate Advance occurs on a day which is not the last day of the then
current Interest Period with respect thereto, Borrower shall pay to Lender such
amounts, if any, as may be required pursuant to Section 2.15. If circumstances
subsequently change so that Lender shall determine that it is no longer so
affected, Lender will promptly notify Borrower, and upon receipt of such notice,
the obligations of Lender to make or continue Eurodollar Rate Advances or to
convert Reference Rate Advances into Eurodollar Rate Advances shall be
reinstated.
41
2.14 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by Lender with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject Lender to any tax, levy, charge, fee,
reduction, or withholding of any kind whatsoever with respect to this
Agreement or any Advance, or change the basis of taxation of payments
to Lender in respect thereof (except for the establishment of a tax
based on the net income of Lender or changes in the rate of tax on the
net income of Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan, or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
Eurodollar Rate Advances or other extensions of credit by, or any other
acquisition of funds by, any office of Lender; or
(iii) shall impose on Lender any other condition with respect
to this Agreement or any Eurodollar Rate Advance;
and the result of any of the foregoing is to increase the cost to Lender of
making, converting into, continuing, or maintaining Eurodollar Rate Advances or
to reduce any amount receivable hereunder in respect of such Advances, or to
forego any other sum payable thereunder or make any payment on account thereof,
then, in any such case, Borrower shall promptly pay Lender, upon its demand, any
additional amounts necessary to compensate Lender for such increased cost or
reduced amount receivable; provided, however, that before making any such
demand, Lender agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, in its reasonable discretion, in any legal,
economic, or regulatory manner) to designate a different Eurodollar lending
office if the making of such designation would allow Lender or its Eurodollar
lending office to continue to perform its obligations to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances and avoid
the need for, or materially reduce the amount of, such increased cost. If Lender
becomes entitled to claim any additional amounts pursuant to this Section 2.14,
Lender shall notify Borrower of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
Section 2.14 submitted by Lender to Borrower shall be conclusive in the absence
of manifest error. If Borrower so notifies Lender within five (5) Business Days
after Lender notifies Borrower of any increased cost pursuant to the foregoing
provisions of this Section 2.14 and reimburses Lender for any cost in accordance
with Section 2.15., Borrower may convert all Eurodollar Rate Advances then
outstanding into Reference Rate Advances in accordance with Section 2.12. This
covenant shall survive the termination of this Agreement and the payment of the
Obligations.
42
(b) If Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by Lender or any Person
controlling Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof does or shall have the effect of increasing the
amount of capital required to be maintained or reducing the rate of return on
Lender's or such Person's capital as a consequence of its obligations hereunder
to a level below that which such Lender or such Person could have achieved but
for such change or compliance (taking into consideration Lender's or such
Person's policies with respect to capital adequacy) by an amount deemed by
Lender to be material, then from time to time, after submission by Lender to
Borrower of a prompt written request therefor, Borrower shall pay to Lender such
additional amount or amounts as will compensate Lender or such Person for such
reduction. This covenant shall survive the termination of this Agreement and the
payment of the Obligations.
2.15 Indemnity. Borrower agrees to indemnify Lender and to
hold Lender harmless from any loss or expense which Lender may sustain or incur
as a consequence of (a) a default by Borrower in payment when due of the
principal amount of or interest on any Eurodollar Rate Advance, (b) a default by
Borrower in making a borrowing of, conversion into, or continuation of
Eurodollar Rate Advances after Borrower has given a notice requesting the same
in accordance with the provisions of this Agreement, (c) a default by Borrower
in making any prepayment of any Eurodollar Rate Advance after Borrower has given
a notice thereof in accordance with the provisions of this Agreement, or (d) the
making of a prepayment of Eurodollar Rate Advances on a day which is not the
last day of an Interest Period with respect thereto (whether due to the
termination of this Agreement upon an Event of Default or otherwise), including,
in each case, any such loss or expenses arising from the reemployment of funds
obtained by it or from fees payable to terminate the deposits from which such
funds were obtained. Calculation of all amounts payable to Lender under this
Section 2.15 shall be made as though Lender had actually funded the relevant
Eurodollar Rate Advance through the purchase of a deposit bearing interest at
the Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate
Advance and having a maturity comparable to the relevant Interest Period;
provided, however, that Lender may fund each of the Eurodollar Rate Advances in
a manner it sees fit, and the foregoing assumption shall be utilized only for
the calculation of amounts payable under this Section 2.15. This covenant shall
survive the termination of this Agreement and the payment of the Obligations.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance, Letter of
Credit and the Term Loans. The obligation of Lender to make the initial Advance,
to issue the initial Letter of Credit or to make the Term Loans is subject to
the fulfillment, to the satisfaction of Lender and its counsel, of each of the
following conditions on or before the Amendment Closing Date:
43
(a) the Amendment Closing Date shall occur on or
before November 30, 1999;
(b) Lender shall have received searches
reflecting the filing of Uniform Commercial Code assignments with respect to the
financing statements and fixture filings set forth on Schedule 3.1;
(c) Lender shall have received each of the
following documents, duly executed, and each such document shall be in full
force and effect:
a. the Lockbox Agreements;
b. the Concentration Account Agreements;
c. the Disbursement Letter;
d. the Security Agreement;
e. the Pledge Agreement;
f. the Assignment of Notes;
g. the Subsidiary Guaranty;
h. the Subsidiary Security Agreement;
i. the Subsidiary Pledge Agreement; and
j. the Assignment of LLC Interests;
(d) Lender shall have received a certificate
from the Secretary of Borrower and each Restricted Subsidiary attesting to the
resolutions of the Board of Directors of Borrower or such Restricted Subsidiary,
as the case may be, authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which Borrower or such Restricted
Subsidiary, as applicable, is a party and authorizing specific officers of
Borrower to execute the same;
(e) Lender shal have received copies of the
Governing Documents of Borrower and each Restricted Subsidiary, as amended,
modified, or supplemented to the Amendment Closing Date, certified by the
Secretary of Borrower or such Restricted Subsidiary, as applicable;
(f) Lender shall have received a certificate
of status with respect to Borrower and each Restricted Subsidiary, dated within
twenty (20) days of the Amendment Closing Date, such certificate to be issued by
the appropriate officer of the jurisdiction of organization of Borrower or such
Restricted Subsidiary, as applicable, which certificate shall indicate that
Borrower or such Restricted Subsidiary, as applicable, is in good standing in
such jurisdiction;
44
(g) Lender shall have received certificates
of status with respect to Borrower and each Restricted Subsidiary, each dated
within twenty (20) days of the Amendment Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions in which Borrower or such
Restricted Subsidiary, as applicable, is required to be qualified to do business
as a foreign corporation (except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect), which certificates
shall indicate that Borrower or such Restricted Subsidiary, as applicable, is in
good standing in such jurisdictions;
(h) Lender shall have received a certificate of
insurance, together with the endorsements thereto, as are required by Section
6.6, the form and substance of which shall be satisfactory to Lender and its
counsel;
(i) Lender shall have received duly executed
certificates of title with respect to that portion of the Collateral that is
subject to certificates of title;
(j) Lender shall have received evidence
satisfactory to it that, immediately after the funding of the initial loans
under this Agreement, the interest payment default with respect to the Senior
Notes shall be cured;
(k) Lender shall have received an opinion of
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to Borrower and its Restricted Subsidiary, in
form and substance satisfactory to Lender in its sole discretion;
(l) Lender shall have received satisfactory
reference, credit and background checks on key management of Borrower;
(m) Lender shall have received the results of
lien searches against Borrower and its Subsidiaries from all applicable
jurisdictions, which shall evidence that there are no Liens of record against
Borrower or any of its Subsidiaries, other than Permitted Liens;
(n) Lender shall have received satisfactory
evidence that all tax returns required to be filed by Borrower have been timely
filed and all taxes upon Borrower and its Subsidiaries or their respective
properties, assets, income, and franchises (including real property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;
(o) Lender shall have received evidence
satisfactory to it that, after making the initial Advance hereunder on the
Amendment Closing Date, Borrower shall have on the Amendment Closing Date cash
on hand or Excess Availability in an amount equal to or greater than $3,000,000;
and
(p) all other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Lender and its counsel.
45
3.2 Conditions Precedent to all Advances, all Letters of
Credit and the Term Loans. The following shall be conditions precedent to all
Advances, all Letters of Credit and the Term Loans hereunder:
(a) the representations and warranties contained
in this Agreement and the other Loan Documents shall be true and correct in all
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have
occurred and be continuing on the date of such extension of credit, nor shall
either result from the making thereof; and
(c) no injunction, writ, restraining order, or
other order of any nature prohibiting, directly or indirectly, the extending of
such credit shall have been issued and remain in force by any Governmental
Authority against Borrower, Lender, or any of their Affiliates.
3.3 Condition Subsequent. As a condition subsequent to initial
closing hereunder, Borrower shall perform or cause to be performed the following
(the failure by Borrower to so perform or cause to be performed constituting an
Event of Default):
(a) Within ninety (90) days of the Amendment
Closing Date, Borrower shall deliver to Lender the certified copies of the
policies of insurance, as are required by Section 6.6, the form and substance of
which shall be satisfactory to Lender and its counsel; provided, however, that
copies of all endorsements to such insurance policies shall be delivered within
thirty (30) days after the Amendment Closing Date.
(b) Within thirty (30) days after the Amendment
Closing Date, Borrower shall deliver to Lender evidence satisfactory to Lender
that all defaults and events of default under the Lease Agreement dated April 6,
1997, between Frame-N-Lens Optical, Inc. and Banc One Leasing Corporation have
been cured.
(c) Within thirty (30) days after the Amendment
Closing Date, Lender shall have (i) received appraisals of the Inventory
satisfactory to Lender and (ii) completed a field examination or audit of the
assets of Borrower and its Subsidiaries and an inspection of each warehouse or
distribution center storing any Inventory, and the results thereof shall be
acceptable to Lender in its sole discretion.
(d) On or before May 31, 2000, Borrower shall
deliver to Lender evidence satisfactory to Lender that Borrower and its
Subsidiaries have completed the implementation of a new automated point of sale
system.
46
(e) Within sixty (60) days of the Amendment
Closing Date, Lender shall have received a complete business valuation appraisal
from Ernst & Young of Borrower and its Subsidiaries, in form and substance
satisfactory to Lender.
(f) Within thirty (30) days of the Amendment
Closing Date, Borrower shall deliver to Lender Blocked Account Agreements with
respect to the Retail Store Accounts at ▇▇▇▇▇ Fargo Bank, National Association.
(g) On or before December 31, 1999, Borrower
shall deliver to Lender evidence that (i) Borrower and each of its Subsidiaries
is duly qualified as a foreign corporation or limited liability and in good
standing under the laws of each jurisdiction where their ownership, lease or
operation of property or conduct of their business requires such qualification,
and (ii) Borrower has filed in each jurisdiction in which it is qualified to do
business an amendment to its qualification to the effect that Borrower's name
has changed from "National Vision Associates, Ltd." to "Vista Eyecare, Inc." to
the extent that Borrower is permitted to use such name in such jurisdiction.
(h) Within five (5) days of the Amendment
Closing Date, Lender shall have received an assignment, in recordable form,
assigning the Administrative Agent's rights and obligations under the Collateral
Assignment of Deed of Trust to Lender.
(i) On or before December 31, 1999, Borrower
will provide a reconciliation between the October month end perpetual inventory
and the October month end general ledger.
3.4 Term. This Agreement shall become effective upon the
execution and delivery hereof by Borrower and Lender and shall continue in full
force and effect for a term ending May 31, 2002 (the "Maturity Date"). The
foregoing notwithstanding, Lender shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrower with respect to any outstanding Letters of Credit) immediately shall
become due and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Borrower of Borrower's duties,
Obligations, or covenants hereunder, and Lender's continuing security interests
in the Collateral shall remain in effect until all Obligations have been fully
and finally discharged and Lender's obligation to provide additional credit
hereunder is terminated.
47
3.6 Early Termination by Borrower. The provisions of Section
3.4 that allow termination of this Agreement by Borrower only on the Maturity
Date (but not any extension thereof), Borrower has the option, at any time upon
ninety (90) days' prior written notice to Lender, to terminate this Agreement by
paying to Lender, in cash, the Obligations (including an amount equal to one
hundred five percent (105%) of the undrawn amount of the Letters of Credit), in
full, together with a premium (the "Early Termination Premium") equal to one
percent (1.00%) of the Maximum Revolving Amount as determined immediately prior
to termination.
3.7 Termination Upon Event of Default. If Lender terminates
this Agreement prior to the Maturity Date (but not any extension thereof) upon
the occurrence of an Event of Default, in view of the impracticability and
extreme difficulty of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of Lender's lost profits as a result
thereof, Borrower shall pay to Lender upon the effective date of such
termination, a premium in an amount equal to the Early Termination Premium;
provided, however, that if this Agreement is terminated upon the occurrence of
an Event of Default which has not been wilfully caused by Borrower, the Early
Termination Premium shall be reduced by fifty percent (50%). The Early
Termination Premium shall be presumed to be the amount of damages sustained by
Lender as the result of the early termination and Borrower agrees that it is
reasonable under the circumstances currently existing. The Early Termination
Premium provided for in this Section 3.7 shall be deemed included in the
Obligations.
4. [Intentionally Omitted]
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement,
Borrower makes the following representations and warranties which shall be true,
correct, and complete in all respects as of the date hereof, and shall be true,
correct, and complete in all respects as of the Amendment Closing Date, and at
and as of the date of the making of each Advance, Letter of Credit or Term Loan
made thereafter, as though made on and as of the date of such Advance, Letter of
Credit or Term Loan (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
5.1 Corporate Existence and Power. Borrower and each of
its Subsidiaries:
(a) is a corporation or limited liability company
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization;
(b) has the power and authority and all
governmental licenses, authorizations, consents and approvals to own its assets,
carry on its business and, as applicable, to execute, deliver, and perform its
obligations under the Loan Documents;
48
(c) is duly qualified as a foreign corporation
or limited liability company and is licensed and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification or license and where the
failure to be so qualified or licensed could reasonably be expected to have a
Material Adverse Effect; and
(d) is in compliance in all material respects
with all Requirements of Law;
5.2 Corporate Authorization; No Contravention. The execution,
delivery and performance by Borrower and its Restricted Subsidiaries of this
Agreement and each other Loan Document to which such Person is party, have been
duly authorized by all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's
Governing Documents;
(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any
Contractual Obligation to which such Person is a party or any order, injunction,
writ or decree of any Governmental Authority to which such Person or its
property is subject; or
(c) violate any Requirement of Law.
5.3 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to Lender under the Collateral Documents) is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, Borrower or any of its Restricted Subsidiaries of the Agreement or any
other Loan Document.
5.4 Binding Effect. This Agreement and each other Loan
Document to which Borrower or any of its Restricted Subsidiaries is a party
constitute the legal, valid and binding obligations of Borrower and any of its
Restricted Subsidiaries to the extent it is a party thereto, enforceable against
such Person in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
5.5 Litigation. Except as specifically disclosed in Schedule
5.5, there are no actions, suits, proceedings, claims or disputes pending, or to
the best knowledge of Borrower, threatened or contemplated, at law, in equity,
in arbitration or before any Governmental Authority, against Borrower or its
Subsidiaries or any of their respective properties. None of the items disclosed
on Schedule 5.5:
49
(a) purport to affect this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or thereby;
or
(b) if determined adversely to Borrower or any of
its Subsidiaries, could reasonably be expected to have a Material Adverse
Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.6 No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by Borrower or from the grant or
perfection of the Liens of Lender on the Collateral. Except for the Existing
Defaults, as of the Amendment Closing Date, neither Borrower nor any of its
Subsidiaries is in default under or with respect to any Contractual Obligation
(other than any agreement relating to the lease of real property) in any respect
which, individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect, or that would, if such default had
occurred after the Amendment Closing Date, create an Event of Default under
Section 8.5. Except for the Existing Defaults, neither Borrower nor any of its
Subsidiaries is in default under or with respect to any agreement relating to
the lease of real property, which default, with respect to any such lease,
individually or together with all such defaults, could reasonably be expected to
have a Material Adverse Effect, or that would, if such default had occurred
after the Amendment Closing Date, create an Event of Default under Section 8.5.
As of the Amendment Closing Date, Borrower and its Restricted Subsidiaries have
made all lease payments required to be made under all agreements relating to the
lease of real property. As of the Amendment Closing Date, no material default
exists with respect to any of the leases described in Section 5.22.
5.7 ERISA Compliance.
(a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the IRC and other federal or
state law. Each Plan which is intended to qualify under Section 401(a) of the
IRC has received a favorable determination letter from the IRS and, to the best
knowledge of Borrower, nothing has occurred which would cause the loss of such
qualification. Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the IRC, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the IRC has been made with respect to any Plan;
(b) There are no pending or, to the best
knowledge of Borrower, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
50
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect; and
(c) (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) neither Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) neither Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA, which in
the case of any occurrence described in any of clauses (i) through (v) above has
resulted in or could reasonably be expected to result in a liability of Borrower
and its Subsidiaries in excess of $250,000.
5.8 Use of Proceeds; Margin Regulations. The proceeds of the
Loans are to be used solely for the purposes set forth in and permitted by
Section 6.12 and Section 7.7. Neither Borrower nor any Subsidiary is generally
engaged in the business of purchasing or selling Margin Stock or extending
credit for the purpose of purchasing or carrying Margin Stock.
5.9 Title to Properties. Each of Borrower and its Subsidiaries
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
businesses, except for such defects in title as could not reasonably be expected
to have a Material Adverse Effect. As of the Amendment Closing Date, the
property of Borrower and its Restricted Subsidiaries is subject to no Liens,
other than Permitted Liens.
5.10 Taxes. Each of Borrower and its Subsidiaries has filed
all Federal and other material tax returns and reports required to be filed, and
has paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon it or its properties, income or
assets otherwise due and payable, except those which are subject to a Permitted
Protest. There is no material proposed tax assessment against Borrower or any of
its Subsidiaries. The amounts and types of all estimated accrued and unpaid
taxes (including, without limitation, any sales or ad valorem taxes) owing by
Borrower or any of its Subsidiaries is set forth, as of October 31, 1999, on
Schedule 5.10.
5.11 Financial Condition.
(a) The audited consolidated financial statements
of Borrower and its Subsidiaries dated January 2, 1999, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the fiscal year ended on that date, and the unaudited consolidated
financial statements of Borrower and its Subsidiaries dated July 3, 1999, and
the related consolidated statements of income or operations, shareholder's
equity and cash flows for the fiscal quarter ended on that date:
51
(i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and, in the case of the quarterly
statements dated July 3, 1999, subject to ordinary, good faith year
end audit adjustments;
(ii) fairly present the financial condition
of Borrower and its Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
(iii) except as specifically disclosed in
Schedule 5.11, show all material indebtedness and other liabilities,
direct or contingent, of Borrower and its consolidated Subsidiaries as
of the date thereof, including liabilities for taxes, material
commitments and Contingent Obligations.
(b) Since January 2, 1999, there has occurred no
event which has had a Material Adverse Effect.
(c) Borrower's and its Subsidiaries' fiscal
year end is a 52/53 week retail calendar year ending on the Saturday closest to
December 31st (except that certain of the Managed Care Subsidiaries and the
Foreign Subsidiaries may have a calendar year end).
5.12 Environmental Matters.
(a) Except as specifically disclosed in Schedule
5.12, the on-going operations of Borrower and each of its Subsidiaries comply in
all respects with all Environmental Laws, except such non-compliance which would
not (if enforced in accordance with applicable law) result in liability in
excess of $250,000 in the aggregate.
(b) Except as specifically disclosed in Schedule
5.12, Borrower and each of its Subsidiaries have obtained all material licenses,
permits, authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for their respective ordinary course
operations, all such Environmental Permits are in good standing, and Borrower
and each of its Subsidiaries are in compliance with all material terms and
conditions of such Environmental Permits.
(c) Except as specifically disclosed in Schedule
5.12, none of Borrower, any of its Subsidiaries or any of their respective
present property or operations, is subject to any outstanding written order from
or agreement with any Governmental Authority, nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material, which would reasonably be expected to
give rise to Environmental Claims with potential liability of Borrower and its
Subsidiaries in excess of $250,000 in the aggregate.
52
(d) Except as specifically disclosed in Schedule
5.12, there are no Hazardous Materials or other conditions or circumstances
existing with respect to any property of Borrower or any of its Subsidiaries, or
arising from operations prior to the Amendment Closing Date, of Borrower or any
of its Subsidiaries that would reasonably be expected to give rise to
Environmental Claims with a potential liability of Borrower and its Subsidiaries
in excess of $250,000 in the aggregate for any such condition, circumstance or
property. In addition, (i) neither Borrower nor any of its Subsidiaries has any
underground storage tanks (x) that are not properly registered or permitted
under applicable Environmental Laws, or (y) that are leaking or disposing of
Hazardous Materials off-site, and which in the case of any occurrence described
in clause (x) or (y) could reasonably be expected to give rise to Environment
Claims with potential liability of Borrower and its Subsidiaries in excess of
$250,000 in the aggregate, and (ii) Borrower and its Subsidiaries have notified
all of their respective employees of the existence, if any, of any health hazard
arising from the conditions of their employment and have met all notification
requirements under Title III of CERCLA and all other Environmental Laws.
5.13 Collateral Documents.
(a) The provisions of each of the Collateral
Documents are effective to create in favor of Lender, acting on its own behalf
and for its own benefit, a legal, valid and enforceable first priority security
interest in all right, title and interest of Borrower and its Subsidiaries in
the Collateral described therein, subject to Permitted Liens, if any, which are
not subordinated to the Liens under the Collateral Documents; and financing
statements have been filed in the offices in all of the jurisdictions listed in
the schedule to the Security Agreement and the Subsidiary Security Agreement.
Each of the applicable patent security agreements, trademark security agreements
and copyright security agreements attached to the Security Agreement and the
Subsidiary Security Agreement as Exhibits has been filed in the U.S. Patent and
Trademark Office and the U.S. Copyright Office.
(b) All representations and warranties of
Borrower and each of its Restricted Subsidiaries party thereto contained in the
Collateral Documents are true and correct.
5.14 Regulated Entities. None of Borrower, any Person
controlling Borrower, or any Subsidiary of Borrower, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. Borrower is not
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code,
or any other Federal or state statute or regulation limiting its ability to
incur Indebtedness.
5.15 No Burdensome Restrictions. Neither Borrower nor any of
its Subsidiaries is a party to or bound by any Contractual Obligation, or
subject to any restriction in any Governing Document, or any Requirement of Law,
which could reasonably be expected to have a Material Adverse Effect.
53
5.16 Copyrights, Patents, Trademarks and Licenses, Etc. Each
of Borrower and its Subsidiaries own or are licensed or otherwise have the right
to use all of the material patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of Borrower,
no slogan or other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed, by Borrower
or any of its Subsidiaries infringes upon any rights held by any other Person
which could reasonably be expected to result in a claim by any other Person in
excess of $250,000. Except as specifically disclosed in Schedule 5.5, no claim
or litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of Borrower,
proposed.
5.17 Subsidiaries. Borrower has no Subsidiaries other than
those specifically disclosed in part (a) of Schedule 5.17 hereto (which Schedule
designates whether each Subsidiary is a Restricted Subsidiary or an Unrestricted
Subsidiary as of the Amendment Closing Date) and has no equity investments in
any other corporation or entity other than those specifically disclosed in part
(b) of Schedule 5.17.
5.18 Insurance. Except as specifically disclosed in Schedule
5.18, the properties of Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies which are not Affiliates of
Borrower, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Borrower or such Subsidiary operates.
5.19 Solvency. Borrower and eac of its Subsidiaries are
Solvent.
5.20 Full Disclosure. None of the representations or
warranties made by Borrower or any Restricted Subsidiary in the Loan Documents
as of the date such representations and warranties are made or deemed made, and
none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of Borrower or any Restricted Subsidiary
in connection with the Loan Documents contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
5.21 Accounts and Inventory.
54
(a) (i) The Eligible Accounts are and will continue
to be bona fide existing obligations created by the sale of goods, the rendering
of services, or the furnishing of other good and sufficient consideration to the
relevant Account Debtors in the regular course of business; (ii) all shipping
and delivery receipts and other documents furnished or to be furnished to Lender
in connection therewith are and will be genuine; and (iii) none of the Accounts
identified or included on any schedule, certificate or report as Eligible
Accounts will, to Borrower's knowledge, fail at the time so identified or
included to satisfy any of the requirements for eligibility set forth in the
definition of Eligible Accounts.
(b) As to each schedule of Inventory delivered to
Lender, to Borrower's knowledge:
(i) the descriptions, origins, sizes,
qualities, quantities, weights, and markings of all goods stated thereon, or on
any attachment thereto, are true and correct in all material respects; and
(ii) none of the goods are defective, of
second quality, used, or goods returned after shipment, except where described
as such.
5.22 Leases.
(a) Each of the supplements to the master lease
between Wal-Mart and Borrower with respect to retail locations of Borrower or
any of its Subsidiaries located in a Wal-Mart retail store is substantially in
the form of Exhibit C;
(b) Each of the leases between Wal-Mart and Borrower
with respect to retail locations of Borrower or any of its Subsidiaries located
in a Sam's Club retail store is substantially in the form of Exhibit D; and
(c) Each of the leases between ▇▇▇▇ ▇▇▇▇▇, Inc. and
Borrower is substantially in the form of Exhibit E.
5.23 Compliance With Laws. Each of Borrower and its
Subsidiaries has timely filed all material reports, documents and other
materials required to be filed by it under all applicable Requirements of Law
with any Governmental Authority, has retained all material records and documents
required to be retained by it under all applicable Requirements of Law, and is
otherwise in material compliance with all applicable Requirements of Law in
respect of the conduct of its business and the ownership and operation of its
properties.
55
5.24 Year 2000 Compatibility. Any reprogramming by or on
behalf of Borrower or any of its Subsidiaries, required to permit the proper
functioning, before, on and after January 1, 2000, of Borrower's and its
Subsidiaries' (i) computer-based systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with which
Borrower's or any of its Subsidiaries' systems interface), and the testing of
all such systems and equipment, as so reprogrammed, will be completed by
November 30, 1999. The cost to Borrower and its Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of the
year 2000 to Borrower and its Subsidiaries (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of Borrower and its Subsidiaries are
and, with ordinary course upgrading and maintenance will continue for the term
of this Agreement to be, sufficient to permit Borrower and its Subsidiaries to
conduct their respective businesses without a Material Adverse Effect.
5.25 Material Contracts. Schedule 5.25 lists, as of the
Amendment Closing Date, each "material contract" (within the meaning of Item
601(b)(10) of Regulation S-K under the Exchange Act) to which Borrower or any of
its Subsidiaries is a party, by which any of them or their respective properties
is bound or to which any of them is subject (collectively, "Material
Contracts"). As of the Amendment Closing Date, (i) each Material Contract is in
full force and effect and is enforceable in all material respects by Borrower or
the Subsidiary of Borrower that is a party thereto in accordance with its terms,
and (ii) neither Borrower nor any of its Subsidiaries (nor, to the knowledge of
Borrower, any other party thereto) is in breach of or default under any Material
Contract in any material respect or has given notice of termination or
cancellation of any Material Contract. Schedule 5.25 also lists, as of the
Amendment Closing Date, all of the Credit Card Agreements then in effect.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, and unless Lender shall otherwise consent in writing, Borrower
shall do all of the following:
6.1 Financial Statements. Borrower shall deliver to Lender:
(a) as soon as available, but not later than ninety (90) days
after the end of each fiscal year, a copy of the audited consolidated and
unaudited consolidating balance sheet of Borrower and its Subsidiaries as at the
end of such year and the related audited consolidated and unaudited
consolidating statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of a
56
nationally-recognized independent public accounting firm ("Independent Auditor")
which report shall state that such consolidated and consolidating financial
statements present fairly the financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with prior fiscal years. Such
opinion shall not be qualified or limited because of a restricted or limited
examination by the Independent Auditor of any material portion of Borrower's or
any Subsidiary's records and shall be delivered to Lender;
(b) as soon as available, but not later than forty-five (45)
days after the end of each of the first three (3) fiscal quarters of each fiscal
year (commencing with the fiscal quarter ended closest to September 30, 1999), a
copy of the unaudited consolidated and consolidating balance sheet of Borrower
and its Subsidiaries (and separate balance sheet for each Unrestricted
Subsidiary), as of the end of such quarter and the related unaudited
consolidated and consolidating statements of income, shareholders' equity and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of each of
Borrower and its Subsidiaries (and separate statements for each Unrestricted
Subsidiary);
(c) as soon as available, but not later than thirty (30) days
after the end of each month (commencing with the month ended October 31, 1999),
a copy of the unaudited consolidated and consolidating balance sheets of
Borrower and its Subsidiaries and the related consolidating statements of
income, shareholders' equity and cash flows for such month and a statement of
EBITDA for the twelve (12) month period then ended, all certified by a
Responsible Officer as fairly presenting, in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the financial position and the
results of operations of each of Borrower and its Subsidiaries.
6.2 Certificates; Other Information. Borrower shall furnish
to Lender:
(a) The following documents at the following
times in form satisfactory to Lender: (i) on each Business Day, a flash sales
report, collection journal, and credit register, (ii) on a monthly basis and, in
any event, by no later than the thirtieth (30th) day of each month during the
term of this Agreement, (x) a detailed calculation of the Borrowing Base, and
(y) a detailed aging, by total, of the Accounts, (iii) on a monthly basis and,
in any event, by no later than the thirtieth (30th) day of each month during the
term of this Agreement, a summary aging, by vendor, of the accounts payable and
any book overdraft of Borrower and its Restricted Subsidiaries, (iv) on a weekly
basis, Inventory reports specifying Borrower's or the applicable Restricted
Subsidiary's cost of its Inventory by category, with additional detail showing
additions to and deletions from the Inventory, (v) to the extent not delivered
under clause (i) above, on each Business Day, notice of all returns, disputes,
57
or claims, (vi) upon request, copies of invoices in connection with the
Accounts, customer statements, credit memos, remittance advices and reports,
deposit slips, shipping and delivery documents in connection with the Accounts
and for Inventory and Equipment acquired by Borrower or any Restricted
Subsidiary, purchase orders and invoices, (vii) a monthly basis, a calculation
of the Dilution for the prior month; (viii) promptly upon the opening of any new
location of Borrower or any Restricted Subsidiary, a report detailing the
address of such new location and whether Borrower or such Restricted Subsidiary
has delivered to Lender (A) a Uniform Commercial Code financing statement with
respect to the jurisdiction in which such location is situated and (B) a
Collateral Access Agreement with respect to such location; and (ix) such other
reports, including, without limitation, electronic data, as to the Collateral as
Lender may request from time to time;
(b) concurrently with the delivery of the
financial statements referred to in Section 6.1(a), a certificate of the
Independent Auditor stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default under Section 7.14,
except as specified in such certificate;
(c) concurrently with the delivery of the
financial statements referred to in Section 6.1(a) and Section 6.1(b), a
Compliance Certificate executed by a Responsible Officer;
(d) concurrently with the delivery of the
financial statements referred to in Section 6.1(b), a certificate executed by a
Responsible Officer setting forth dividends and other distributions from
Unrestricted Subsidiaries to Borrower or any Restricted Subsidiary for the
immediately preceding fiscal quarter;
(e) (i) a monthly budget for each fiscal year
on or before the date thirty (30) days after the first day of such fiscal year
and (ii) a projected monthly budget forecast, in form and substance acceptable
to Lender, for each upcoming fiscal year on or before the date thirty (30) days
prior to the first day of such upcoming fiscal year;
(f) promptly, copies of all financial statements and
reports that Borrower sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports (including Forms 10K, 10Q
and 8K) that Borrower or any Subsidiary may make to, or file with, the SEC;
(g) promptly upon receipt, a copy of any "management
letter" received by it that has been prepared by its internal or outside
accountants;
(h) promptly, such additional information regarding
the business, financial or corporate affairs of Borrower or any Subsidiary as
Lender may from time to time reasonably request; and
58
(i) at least fifteen (15) days prior to the closing
of any retail store location, notice of the closing of such retail store
location, together with an estimate of reasonably anticipated cash closing
expenses for such closing and a calculation of the total cash closing expenses
for all retail store closings from the Amendment Closing Date.
6.3 Notices. Borrower shall promptly notify Lender:
(a) of the occurrence of any Default or Event of
Default;
(b) of (i) any breach or non-performance of,
or any default under, any Contractual Obligation of Borrower or any of its
Subsidiaries which could reasonably be expected to result in a Material Adverse
Effect; and (ii) any dispute, litigation, investigation, proceeding or
suspension which may exist at any time between Borrower or any of its
Subsidiaries and any Governmental Authority which could reasonably be expected
to result in a Material Adverse Effect;
(c) of the commencement of, or any material
development in, any litigation or proceeding affecting Borrower or any of its
Subsidiaries (i) in which the amount of damages claimed is $250,000 (or its
equivalent in another currency or currencies) or more, (ii) in which injunctive
or similar relief is sought and which, if adversely determined, would reasonably
be expected to have a Material Adverse Effect, or (iii) in which the relief
sought is an injunction or other stay of the performance of this Agreement or
any Loan Document;
(d) upon, but in no event later than ten (10)
days after, becoming aware of (i) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened
against Borrower or any of its Subsidiaries or any of their respective
properties pursuant to any applicable Environmental Laws, (ii) all other
Environmental Claims, and (iii) any environmental or similar condition on any
real property adjoining or in the vicinity of the property of Borrower or any of
its Subsidiaries that could reasonably be anticipated to cause such property or
any part thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of such property under any Environmental Laws, and which
in the case of any event described in clause (i), (ii) or (iii) above has
resulted or could reasonably be expected to result in liability of Borrower and
its Subsidiaries in excess of $250,000 in the aggregate;
(e) of any other litigation or proceeding
affecting Borrower or any of its Subsidiaries which Borrower would be required
to report to the SEC pursuant to the Exchange Act, within four (4) days after
reporting the same to the SEC;
59
(f) of the occurrence of any of the following
events affecting Borrower or any ERISA Affiliate which has resulted or could
reasonably be expected to result in liability of Borrower and its Subsidiaries
in excess of $250,000 in the aggregate (but in no event more than ten (10) days
after such event), and deliver to Lender a copy of any notice with respect to
such event that is filed with a Governmental Authority and any notice delivered
by a Governmental Authority to Borrower or any ERISA Affiliate with respect to
such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded
Pension Liability of any Pension Plan;
(iii) the adoption of, or the commencement
of contributions to, any Plan subject to Section 412 of the IRC by Borrower
or any ERISA Affiliate; or
(iv) the adoption of any amendment to a
Plan subject to Section 412 of the IRC, if such amendment results in a
material increase in contributions or Unfunded Pension Liability.
(g) of any material change in accounting
policies or financial reporting practices by Borrower or any of its consolidated
Subsidiaries; and
(h) at least thirty (30) days prior thereto,
that Borrower or any of its Subsidiaries intends to change its name or address
from that disclosed to Lender as of the Amendment Closing Date, together with
disclosures of such new name or address.
Each notice under this Section shall be accompanied
by a written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action Borrower or any affected
Subsidiary of Borrower proposes to take with respect thereto and at what time.
Each notice under Section 6.3(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document that have been
(or foreseeably will be) breached or violated.
6.4 Preservation of Corporate Existence, Etc. Borrower
shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and
effect its corporate existence and good standing under the laws of its state or
jurisdiction of incorporation.
(b) preserve and maintain in full force
and effect all governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal conduct of its
business except in connection with transactions permitted by Section 7.3 and
sales of assets permitted by Section 7.2;
60
(c) use reasonable efforts, in the ordinary
course of business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its material
registered patents, trademarks, trade names and service marks.
Nothing in this Section 6.4 shall prohibit the liquidation or dissolution of any
Subsidiary into Borrower or another Subsidiary of Borrower (but if the
liquidating or dissolving Subsidiary is a Restricted Subsidiary, it must
liquidate or dissolve into Borrower or another Restricted Subsidiary).
6.5 Maintenance of Property. Borrower shall maintain, and
shall cause each of its Subsidiaries to maintain, and preserve all its property
which is used or useful in its business in good working order and condition,
ordinary wear and tear excepted, except as permitted by Section 7.2. Borrower
and each Subsidiary shall use the standard of care typical in the industry in
the operation and maintenance of its facilities; provided, however, that nothing
in this Section 6.5 shall prevent Borrower or any of its Subsidiaries from
discontinuing the use, operation or maintenance of any of its properties, or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Board of Directors of Borrower or of the Board of Directors of the
Subsidiary concerned, or of an officer (or other agent employed by Borrower or
any of its Subsidiaries) of Borrower or such Subsidiary having managerial
responsibility for such property, desirable in the conduct of the business of
Borrower or such Subsidiary; provided further, however, that any disposal of any
property pursuant to the immediately preceding proviso shall be subject to the
terms and conditions of Article 7 of this Agreement.
6.6 Insurance.
(a) At Borrower's expense, Borrower and its
Subsidiaries shall keep the Collateral insured against loss or damage by fire,
theft, explosion, sprinklers, and all other hazards and risks, and in such
amounts, as are ordinarily insured against by other owners in similar
businesses. Borrower and its Subsidiaries also shall maintain business
interruption, public liability, product liability, and property damage insurance
relating to their ownership and use of the Collateral, as well as insurance
against larceny, embezzlement, and criminal misappropriation. All such insurance
shall contain an endorsement showing Lender as an additional insured or loss
payee, as applicable.
(b) All such policies of insurance shall be in
such form, with such companies, and in such amounts as may be reasonably
satisfactory to Lender. All insurance required herein shall be written by
companies which are authorized to do insurance business in the State of
California. All hazard insurance and such other insurance as Lender shall
specify, shall contain a California Form 438BFU (NS) mortgagee endorsement, or
an equivalent endorsement satisfactory to Lender, showing Lender as sole loss
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payee thereof, and shall contain a waiver of warranties. Every policy of
insurance referred to in this Section 6.6 shall contain an agreement by the
insurer that it will not cancel such policy except after thirty (30) days prior
written notice to Lender and that any loss payable thereunder shall be payable
notwithstanding any act or negligence of Borrower, any of its Subsidiaries or
Lender which might, absent such agreement, result in a forfeiture of all or a
part of such insurance payment. Borrower shall deliver to Lender certified
copies of such policies of insurance and evidence of the payment of all premiums
therefor within ninety (90) days of the Amendment Closing Date.
(c) Original policies or certificates thereof
satisfactory to Lender evidencing such insurance shall be delivered to Lender at
least thirty (30) days prior to the expiration of the existing or preceding
policies. Borrower shall give Lender prompt notice of any loss in excess of
$250,000 covered by such insurance, and Lender shall have the right to adjust
any loss. Lender shall have the exclusive right to adjust all losses payable
under any such insurance policies without any liability to Borrower or any of
its Subsidiaries whatsoever in respect of such adjustments. Any monies received
as payment for any loss in excess of $250,000 under any insurance policy
including the insurance policies mentioned above, shall be paid over to Lender
to be applied at the option of Lender either to the prepayment of the
Obligations without premium, in such order or manner as Lender may elect, or
shall be disbursed to Borrower or any of its Subsidiaries under stage payment
terms satisfactory to Lender for application to the cost of repairs,
replacements, or restorations; provided, however, that all insurance proceeds
received by Borrower after the occurrence and during the continuation of an
Event of Default shall be promptly paid over to Lender to be applied to the
Obligations as determined by Lender in its sole discretion. All repairs,
replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items or property
destroyed prior to such damage or destruction. Upon the occurrence of an Event
of Default, Lender shall have the right to apply all prepaid premiums to the
payment of the Obligations in such order or form as Lender shall determine.
(d) Neither Borrower nor any of its Subsidiaries
shall take out separate insurance concurrent in form or contributing in the
event of loss with that required to be maintained under this Section 6.6, unless
Lender is included thereon as named insured with the loss payable to Lender
under a standard California 438BFU (NS) Mortgagee endorsement, or its local
equivalent. Borrower immediately shall notify Lender whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and originals of such policies
immediately shall be provided to Lender.
6.7 Payment of Obligations. Borrower shall, and shall cause
each of its Subsidiaries to, pay and discharge as the same shall become due and
payable, all of the following obligations and liabilities:
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(a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are the subject of a Permitted Protest; and
(b) all lawful claims which, if unpaid, would by
law become a Lien upon its property, unless the same are the subject of a
Permitted Protest; and
(c) after the Amendment Closing Date, all
interest payments due in respect of the Senior Notes.
6.8 Compliance with Laws. Borrower shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act), except such as
may be contested in good faith or as to which a bona fide dispute may exist.
6.9 Compliance with ERISA. Borrower shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the IRC and other
federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the IRC to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the IRC, except where
Borrower failure to comply with the requirements of (a), (b) and (c) hereof has
not resulted or could not reasonably be expected to result in liability of
Borrower and its Subsidiaries in excess of $250,000 in the aggregate.
6.10 Inspection of Property and Books and Records. Borrower
shall maintain, and shall cause each of its Subsidiaries to maintain, proper
books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of Borrower and such
Subsidiary (which shall include, without limitation, accurate records of all
intercompany transfers among Borrower and its Subsidiaries). Borrower shall
permit, and shall cause each of its Subsidiaries to permit, representatives and
independent contractors of Lender to visit and inspect any of their respective
Books and Records, properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, and to check, test and
appraise the Collateral (including, but not limited to, appraisals for the
purpose of determining the GOB Rate) in order to verify their respective
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral, all at the expense of Borrower and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to Borrower; provided, however, when an
Event of Default exists Lender may do any of the foregoing at the expense of
Borrower at any time during normal business hours and without advance notice
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6.11 Environmental Laws.
(a) Borrower shall, and shall cause each of its
Subsidiaries to, conduct its operations and keep and maintain its property in
compliance in all material respects with all Environmental Laws.
(b) Upon the written request of Lender,
Borrower shall submit and cause each of its Subsidiaries to submit, to Lender,
at Borrower's sole cost and expense, at reasonable intervals, a report providing
an update of the status of any environmental, health or safety compliance,
hazard or liability issue identified in any notice or report required pursuant
to Section 6.3(d), that could, individually or in the aggregate, result in
liability in excess of $250,000.
6.12 Use of Proceeds. Borrower shall use the proceeds of the
Loans to refinance Indebtedness outstanding under the Prior Credit Agreement, to
finance capital expenditures and for working capital and other general corporate
purposes including (i) to make interest payments when due on the Senior Notes,
and (ii) to make investments in and loans to Restricted Subsidiaries so long as
such investments and loans are accurately accounted for in Borrower's Books and
Records.
6.13 Further Assurances.
(a) Borrower shall ensure that all written
information, exhibits and reports furnished to Lender do not and will not
contain any untrue statement of a material fact and do not and will not omit to
state any material fact or any fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and will
promptly disclose to Lender and correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgment
or recordation thereof.
(b) Promptly upon request by Lender, Borrower
shall (and shall cause any of its Subsidiaries to) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register, any and all
such further acts, deeds, conveyances, security agreements, mortgages,
assignments, estoppel certificates, financing statements and continuations
thereof, termination statements, notices of assignment, transfers, certificates,
assurances and other instruments Lender may reasonably require from time to time
in order (i) to carry out more effectively the purposes of this Agreement or any
other Loan Document, (ii) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests covered by any
of the Collateral Documents, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to Lender the rights granted or
now or hereafter intended to be granted to Lender under any Loan Document or
under any other document executed in connection therewith.
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(c) Original sales invoices evidencing daily
sales shall be mailed by Borrower and its Restricted Subsidiaries, as
applicable, to each Account Debtor (other than retail customers) and, at
Lender's direction after the occurrence and during the continuation of an Event
of Default, the invoices shall indicate on their face that the Account has been
assigned to Lender and that all payments are to be made directly to Lender.
6.14 Bank Accounts. Borrower shall not, and shall not permit
any Restricted Subsidiary to, open or maintain any deposit or investment account
with any bank or other financial institution other than the accounts described
on Schedule 6.14 as supplemented on a quarterly basis by notice of Lender.
6.15 Year 2000 Compatibility. Borrower will, and will cause
each of its Subsidiaries to, take all action necessary to ensure that its
computer-based systems are able to operate and effectively process data
including dates on and after January 1, 2000, except where the failure to do so
could not reasonably be expected to result in a Material Adverse Effect. At the
request of Lender, Borrower will provide reasonable assurance of its and its
Subsidiaries' year 2000 compatibility.
6.16 Covenants Regarding Formation of Subsidiaries. At any
time of (a) the formation of any new Subsidiary by Borrower or any of its
Subsidiaries whether pursuant to a permitted Acquisition or otherwise or (b) any
Unrestricted Subsidiary becoming a Restricted Subsidiary hereunder, Borrower
will, and will cause any such Restricted Subsidiaries (a) to provide to Lender
supplements to the Subsidiary Guaranty and Subsidiary Security Agreement
executed by such new Restricted Subsidiary, together with appropriate UCC-1
financing statements and appropriate attachments, all in form and substance
satisfactory to Lender, and (b) to provide to Lender, a duly executed supplement
to the Pledge Agreement or the Subsidiary Pledge Agreement, as appropriate,
together with such other documentation as is, in the reasonable opinion of
Lender, appropriate to give effect to the pledge of the shares of such
Restricted Subsidiary, in form and substance satisfactory to Lender. In addition
to the foregoing, Borrower shall provide to Lender such opinions and other
documentation as shall be reasonably requested by Lender. Each document,
agreement or instrument executed or issued pursuant to this Section 6.16 shall
be a "Collateral Document" for purposes of this Credit Agreement.
6.17 Tax Returns. Borrower shall deliver to Lender copies of
each of Borrower's and its Subsidiaries' future federal income tax returns, and
any amendments thereto, within thirty (30) days of the filing thereof with the
IRS.
6.18 Returns. Cause returns and allowances, if any, as between
Borrower and its Restricted Subsidiaries and their respective Account Debtors to
be on the same basis and in accordance with the usual customary practices of
Borrower and its Restricted Subsidiaries, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
65
has occurred and is continuing, any Account Debtor returns any Inventory to
Borrower or any Restricted Subsidiary, such Person promptly shall determine the
reason for such return and, if such Person accepts such return, issue a credit
memorandum in the appropriate amount to such Account Debtor. If, at a time when
an Event of Default has occurred and is continuing, any Account Debtor (other
than a retail customer) returns any Inventory to Borrower or any Restricted
Subsidiary, such Person promptly shall determine the reason for such return,
issue a credit memorandum (with a copy to be sent to Lender) in the appropriate
amount to such Account Debtor.
6.19 Title to Equipment. Upon Lender's request, Borrower
immediately shall deliver to Lender, properly endorsed, any and all certificates
of title or applications for certificates of title to any items of Equipment of
Borrower and its Restricted Subsidiaries.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not do any of the following without Lender's prior
written consent:
7.1 Limitation on Liens. Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) any Lien (other than a Lien on the
Collateral) existing on property of Borrower or any of its Subsidiaries on the
Amendment Closing Date and set forth in Schedule 7.1 securing Indebtedness
outstanding on such date or any extension, renewal or refinancing thereof so
long as the Indebtedness secured by such Lien is not increased and the terms of
such extension, renewal or refinancing are not more onerous on Borrower and its
Subsidiaries than the Indebtedness so extended, renewed or refinanced;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or
other governmental charges which are not delinquent or remain payable without
penalty, or to the extent that non-payment thereof is permitted by Section 6.7,
provided that no notice of lien has been filed or recorded under the IRC;
(d) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain payable without
penalty or which are being contested in good faith and by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto;
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(e) Liens (other than any Lien imposed by
ERISA and other than on the Collateral) consisting of pledges or deposits
required in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other social security legislation;
(f) Liens on the property of Borrower or any
of its Subsidiaries securing (i) the non-delinquent performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, (ii)
contingent obligations on surety and appeal bonds, and (iii) other
non-delinquent obligations of a like nature; in each case, incurred in the
ordinary course of business, provided all such Liens in the aggregate would not
(even if enforced) cause a Material Adverse Effect;
(g) Liens consisting of judgment or judicial
attachment liens that do not constitute Events of Default under Section 8.1(i);
(h) easements, rights-of-way, restrictions
and other similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount, and which do not in any
case materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of Borrower and its
Subsidiaries;
(i) Liens on assets of corporations which
become Subsidiaries after the date of this Agreement; provided, however, that
such Liens existed at the time the respective corporations became Subsidiaries
and were not created in anticipation thereof, and the Indebtedness secured
thereby shall be permitted under Section 7.5(f);
(j) purchase money security interests on any
property acquired or held by Borrower or its Subsidiaries securing Indebtedness
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring such property; provided that (i) any such Lien attaches to such
property concurrently with or within forty-five (45) days after the acquisition
thereof, (ii) such Lien attaches solely to the property so acquired in such
transaction, (iii) the principal amount of the debt secured thereby does not
exceed one hundred percent (100%) of the cost of such property, and (iv) the
Purchase Money Indebtedness secured by any and all such purchase money security
interests shall be permitted under Section 7.5(f);
(k) Liens securing Capitalized Lease Obligations
on assets subject to such leases, provided that the Indebtedness secured thereby
shall be permitted under Section 7.5(f);
(l) Liens arising solely by virtue of any
statutory or common law provision relating to banker's liens, rights of set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided that (i) such deposit account
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is not a dedicated cash collateral account and is not subject to restrictions
against access by Borrower in excess of those set forth by regulations
promulgated by the Board of Governors of the Federal Reserve System, and (ii)
such deposit account is not intended by Borrower or any of its Subsidiaries to
provide collateral to the depository institution;
(m) Liens on any Managed Care Subsidiary
pursuant to the applicable rules and regulations of, or undertakings made to,
any regulatory entity having jurisdiction and authority over such Managed Care
Subsidiary; and
(n) Liens on intercompany Indebtedness permitted
under Section 7.5(c) hereof.
7.2 Disposition of Assets. Borrower shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of (i) Inventory in the ordinary course of
business, or (ii) used, worn-out or surplus Equipment in the ordinary course of
business in an amount not to exceed $250,000 in the aggregate during the term of
this Agreement;
(b) the sales of equipment, in an amount not to exceed
$250,000 in the aggregate during the term of this Agreement, to the extent that
such Equipment is exchanged for credit against the purchase price of similar
replacement Equipment, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement Equipment; provided, that (i)
Lender shall have a first priority perfected Lien on such replacement Equipment
and (ii) any cash proceeds remaining after the purchase of such Replacement
Equipment shall be applied as a repayment of the Obligations;
(c) Disposition not otherwise permitted hereunder which are
made for fair market value; provided, that (i) at the time of any disposition,
no Event of Default shall exist or shall result from such Disposition, (ii) the
aggregate sales price from such disposition shall be paid in Qualified Proceeds,
(iii) (x) the aggregate value of all assets so sold by Borrower and its
Subsidiaries, together, shall not exceed $100,000, or (y) such Disposition shall
constitute a Disposition of a retail store location permitted under Section
7.18(b), and (iv) the cash portion of Net Proceeds relating to any such
Disposition promptly shall be used to make a prepayment of the Loans and the
non-cash portion of any such Net Proceeds promptly shall be pledged to Lender to
secure the Obligations pursuant to documentation reasonably acceptable to
Lender; and
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(d) subleases of real property and Equipment in the ordinary
course of business to independent eye care professionals.
7.3 Consolidations and Mergers. Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, merge, reorganize,
recapitalize, reclassify its capital stock or other equity interests,
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions all or substantially
all of its assets (whether now owned or hereafter acquired) to or in favor of
any Person, form any new subsidiary, or liquidate, wind up, or dissolve itself
(or suffer any liquidation or dissolution), except:
(a) any Subsidiary may merge with Borrower,
provided that Borrower shall be the continuing or surviving corporation, or with
any one or more Restricted Subsidiaries, provided that if any transaction shall
be between an Unrestricted Subsidiary and a Restricted Subsidiary, the
Restricted Subsidiary shall be the continuing or surviving corporation, and any
Unrestricted Subsidiary may merge with another Unrestricted Subsidiary; and
(b) any Subsidiary may sell or transfer all
or substantially all of its assets (upon voluntary liquidation or otherwise), to
Borrower or a Restricted Subsidiary, and any Unrestricted Subsidiary may sell or
transfer all or substantially all of its assets (upon voluntary liquidation or
otherwise) to another Unrestricted Subsidiary.
7.4 Loans and Investments. Borrower shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of Borrower (together, "Investments"), except for:
(a) Investments held by Borrower or any
Subsidiary in the form of cash equivalents;
(b) extensions of credi in the nature of
accounts receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) Investments by Borrower in any of its
Restricted Subsidiaries or by any of its Restricted Subsidiaries in another of
its Restricted Subsidiaries;
(d) so long as Borrower has Excess Availability,
on the date of such Investment and after giving effect thereto, of at least
$1,500,000, Investments made or after the Amendment Closing Date by Borrower or
any Restricted Subsidiary in existing Unrestricted Subsidiaries not to exceed
$750,000 in the aggregate; and
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(e) Loans to employees of Borrower or its
Subsidiaries not to exceed $200,000 at any time outstanding.
7.5 Limitation on Indebtedness. Borrower shall not, and shall
not suffer or permit any Subsidiary to, create, incur, assume, suffer to exist,
or otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this
Agreement;
(b) Indebtedness consisting of Contingent
Obligations permitted pursuant to Section 7.8;
(c) Intercompany Indebtedness issued to Borrower
by its Restricted Subsidiaries and, to the extent permitted by Section 7.4(e),
intercompany Indebtedness issued to Borrower by Unrestricted Subsidiaries
provided that any and all of such Indebtedness shall be evidenced by a
promissory note or notes which shall be assigned and delivered to Lender
pursuant to the Security Agreement;
(d) Indebtedness existing on the Amendment
Closing Date and set forth in Schedule 7.5;
(e) prior to March 1, 2000, unsecured
Indebtedness of Borrower pursuant to its interest rate swap arrangements with
Wachovia Bank, N.A., in an aggregate notional amount not to exceed $5,000,000
(the "Wachovia Swap Obligations");
(f) Indebtedness in an aggregate amount not
to exceed $1,000,000 at any time secured by Liens otherwise permitted by Section
7.1(i), (j) and (k);
(g) Indebtedness outstanding under the Senior
Notes; and
(h) Any extension, renewal or refinancing of
any of the foregoing Indebtedness so long as the principal amount thereof is not
increased as a result thereof and the terms thereof are no more adverse to
Borrower and its Subsidiaries or Lender than the Indebtedness so extended,
renewed or refinanced.
7.6 Transactions with Affiliates. Borrower shall not, and
shall not suffer or permit any Subsidiary to, enter into any transaction with
any Affiliate of Borrower, except upon fair and reasonable terms no less
favorable to Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of Borrower or such
Subsidiary.
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7.7 Use of Proceeds. Borrower shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the proceeds of the Loans or any
Letter of Credit, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance Indebtedness of Borrower or others incurred
to purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act, except in
compliance with such Sections.
7.8 Contingent Obligations. Borrower shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in
the ordinary course of business;
(b) prior to March 1, 2000, the Wachovia Swap
Obligations;
(c) Contingent Obligations of Borrower and its
Subsidiaries existing as of the Amendment Closing Date and listed in Schedule
7.8;
(d) Contingent Obligations with respect to Surety
Instruments incurred to provide security for workers' compensation claims,
payment obligations in connection with self-insurance or similar requirements,
in each case incurred in the ordinary course of business and securing
obligations not constituting Indebtedness;
(e) Contingent Obligations with respect to Surety
Instruments incurred in respect of trade letters of
credit, standby letters of credit or performance, surety or appeal bonds, in
each case incurred in the ordinary course of business and securing obligations
not constituting Indebtedness and not exceeding at any time $250,000 in the
aggregate in respect of Borrower and its Subsidiaries together; and
(f) Contingent Obligations with respect to any
liability of Borrower or any Restricted Subsidiary which is otherwise permitted
under this Agreement.
7.9 Joint Ventures. Borrower shall not, and shall not suffer
or permit any Subsidiary to enter into any Joint Venture, except that Borrower
and its Subsidiaries may enter into alliances with other retailers or managed
care companies to solicit and perform managed care contracts which agreements
must be reasonably acceptable to Lender.
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7.10 Restricted Payments. Borrower shall not, and shall not
suffer or permit any Subsidiary to, declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of its capital stock, or
purchase, redeem or otherwise acquire for value any shares of its capital stock
or any warrants, rights or options to acquire such shares, now or hereafter
outstanding (all such dividends, distributions, purchases, redemptions or
acquisitions are herein referred to as "Restricted Payments"), except that
Borrower and any Restricted Subsidiary may:
(a) declare and make dividend payments or other
distributions payable solely in its common stock;
(b) make repurchases of the common stock of
Borrower from employees of Borrower or any of its Subsidiaries or their
authorized representatives or successors upon the death, disability or
termination of employment of such employees in an aggregate amount not to exceed
$100,000 in any calendar year as long as no Default or Event of Default shall
have occurred and be continuing or result therefrom; and
(c) make repurchases of the common stock of
Borrower pursuant to the terms of the Put Option Agreement, dated October 1,
1997, by and between Borrower and ▇▇▇▇▇ ▇▇▇▇▇▇▇, O.D., as such agreement is in
effect in all material respects on the Amendment Closing Date, as long as no
Default or Event of Default shall have occurred and be continuing or result
therefrom, in an aggregate amount not to exceed $900,000 during the period from
January 1, 2000 until February 1, 2000.
7.11 ERISA. Borrower shall not, and shall not suffer or permit
any of its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably expected to result in liability of Borrower in
an aggregate amount in excess of $250,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA which has resulted or could
reasonably be expected to result in liability by Borrower in an aggregate amount
in excess of $250,000.
7.12 Change in Business; Change of Name. Borrower shall not,
and shall not suffer or permit any Subsidiary to, engage in any material line of
business which is not reasonably related or complimentary to those lines of
business carried on by Borrower and its Subsidiaries on the Amendment Closing
Date. Borrower shall not, and shall not suffer or permit any Subsidiary to,
change its corporate or other organizational structure (within the meaning of
Section 11-9-402(7) of the Code) without Foothill's prior written consent.
Borrower shall not, and shall not suffer or permit any Subsidiary to, change its
name, or identity, or add any new fictitious name, without thirty (30) days'
prior written notice to Lender.
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7.13 Accounting Changes. Borrower shall not, and shall not
suffer or permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of Borrower or of any Subsidiary.
7.14 Financial Covenants. Borrower shall not fail to maintain
the financial covenants as set forth on Schedule 7.14.
7.15 Amendments. Borrower shall not, and shall not permit any
Subsidiary to, permit or suffer any material amendments, modifications,
supplements, or restatements of (a) its certificate of incorporation, by-laws,
or other governing documents, as applicable, or (b) in any manner adverse to
Lender, the Senior Notes, the Indenture, any leases referred to in Section 5.22
or any of its other Material Contracts, or any Indebtedness permitted under
Section 7.5.
7.16 No Other Negative Pledges. Borrower will not, and will
not permit or cause any of its Subsidiaries to, directly or indirectly, enter
into or suffer to exist any agreement or restriction that prohibits or
conditions the creation, incurrence or assumption of any Lien upon or with
respect to any part of its property or assets, whether now owned or hereafter
acquired, or agree to do any of the foregoing, other than as set forth in (i)
this Agreement, the Collateral Documents or the Indenture, (ii) any agreement or
instrument creating a Permitted Lien (but only to the extent such agreement or
restriction applies to the assets subject to such Permitted Lien), and (iii)
operating leases of real or personal property entered into by Borrower or any of
its Subsidiaries as lessee in the ordinary course of business.
7.17 Prepayments. Except in connection with a refinancing
permitted by Section 7.5(f), prepay, redeem, retire, defease, purchase, or
otherwise acquire any Indebtedness owing to any third Person, other than the
Obligations in accordance with this Agreement.
7.18 Real Estate; Store Locations. Borrower will not, and will
not permit or cause any of its Subsidiaries to, (a) purchase any real property
or (b) close any of its retail store locations without the prior written consent
of Lender which shall not be unreasonably withheld.
7.19 Capital Expenditures. Borrower shall not, and shall not
permit any of its Subsidiaries to, make (a) capital expenditures related to the
opening of new retail store locations in an aggregate amount in excess of
$3,500,000 during any fiscal year, or (b) capital expenditures in an aggregate
amount in excess of $10,000,000 during any fiscal year.
8. EVENTS OF DEFAULT. Any of the following shall constitute an "Event
of Default":
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8.1 Non-Payment. If Borrower fails to pay when due and payable
or when declared due and payable, any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due
Lender, reimbursement of Lender Expenses, or other amounts constituting
Obligations); or
8.2 Representation or Warranty. Any representation or warranty
by Borrower or any of its Subsidiaries made or deemed made herein (other than in
Section 5.20), in any other Loan Document or which is contained in any
certificate, document or financial or other statement by Borrower, any of its
Subsidiaries or any Authorized Person, furnished at any time under this
Agreement, or in or under any other Loan Document, is incorrect in any material
respect on or as of the date made or deemed made; or
8.3 Specific Defaults. Borrower fails to perform or observe
any term, covenant or agreement contained in any of Sections 6.1, 6.2, 6.3, 6.6,
6.9 or 6..12 or in Article 7; or
8.4 Other Defaults. Borrower or any of its Subsidiaries party
thereto fails to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document, and such default shall continue unremedied
for a period of five (5) Business Days after the date upon which an Authorized
Person knew or reasonably should have known of such failure; or
8.5 Cross-Default. (i) Borrower or any of its Subsidiaries (A)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation, having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $250,000 when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise); or (B) fails to perform or observe any other condition or covenant,
or any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Contingent Obligation, if the
effect of such failure, event or condition is to cause, or to permit the holder
or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded or (ii)
Borrower or any of its Subsidiaries (A) shall have received notice of
termination with respect to, or notice of an intent to terminate, the Wal-Mart
Master Lease Agreement, (B) shall be in default with respect to fifteen (15) or
more leases of real property related to retail store locations within Wal-Mart
stores to the extent the defaults under such leases would permit termination
thereof, or (c) shall be in default with respect to twenty-five (25) or more
leases of real property related to retail store locations (other than locations
within Wal-Mart stores ) to the extent the defaults under such leases would
74
permit termination thereof; provided, however, that the foregoing shall not
apply to the Existing Defaults so long as such Existing Defaults are cured as
provided in Section 3.1(j) and Section 3.3(b); or
8.6 Insolvency; Voluntary Proceedings. Borrower or any of its
Subsidiaries (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
8.7 Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against Borrower or any of its Subsidiaries, or
any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of Borrower's or any of its
Subsidiaries' properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within sixty (60) days
after commencement, filing or levy; (ii) Borrower or any of its Subsidiaries
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) Borrower or any of its
Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or
8.8 ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of Borrower under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$250,000; or (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $250,000; or (iii) Borrower or any ERISA
Affiliate shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $250,000; or
8.9 Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against Borrower or any of its Subsidiaries involving in the aggregate a
liability (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) as to any single or related series
of transactions, incidents or conditions, of $250,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
twenty (20) days after the entry thereof; or
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8.10 Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against Borrower or any of its Subsidiaries which does or
would reasonably be expected to have a Material Adverse Effect, and there shall
be any period of twenty (20) consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect; or
8.11 Change of Control. There occurs any Change of Control; or
8.12 Loss of Licenses. Any Governmental Authority revokes or
fails to renew any material license, permit or franchise of Borrower or any of
its Subsidiaries, or Borrower or any of its Subsidiaries for any reason loses
any material license, permit or franchise, or Borrower or of its Subsidiaries
suffers the imposition of any restraining order, escrow, suspension or impound
of funds in connection with any proceeding (judicial or administrative) with
respect to any material license, permit or franchise, provided that such event
results in or could reasonably be expected to result in a loss of annual revenue
or potential revenue of at least the lesser of (i) $3,000,000 or (ii) one
percent (1%) of the gross revenues of Borrower (on a consolidated basis with its
Subsidiaries) for the most recently ended twelve (12) month period; or
8.13 Adverse Change. There occurs a Material Adverse Effect; or
8.14 Collateral.
(a) any material provision of any Collateral Document
shall for any reason cease to be valid and binding on or enforceable
against Borrower or any of its Subsidiaries party thereto or Borrower
or any of its Subsidiaries shall so state in writing or bring an action
to limit its obligations or liabilities thereunder; or
(b) any Collateral Document shall for any reason
(other than pursuant to the terms thereof) cease to create a valid
security interest in the Collateral purported to be covered thereby or
such security interest shall for any reason cease to be a perfected and
first priority security interest subject only to Permitted Liens; or
8.15 There shall occur a default or event of default under the
Senior Notes; or
8.16 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall cease to be the chairman and chief
executive officer of Borrower and shall not have been replaced by a new officer
reasonably acceptable to Lender within ninety (90) days; or
8.17 Borrower or any of its Subsidiaries shall at any time
disavow any of its obligations under, or shall assert the invalidity or
enforceability of, any of the Collateral Documents; or
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8.18 If Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs; or
8.19 If Borrower or any of its Subsidiaries makes any payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness.
8.20 (a) If a notice of Lien, levy, or assessment is filed of
record with respect to any of Borrower's or any Subsidiary's properties or
assets in an amount in excess of $150,000 by the United States government, or
any department, agency, or instrumentality thereof, or by any state, county,
municipal or governmental agency (except with respect to any taxes which are the
subject of a Permitted Protest), or (b) if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien in an amount in
excess of $150,000, whether ▇▇▇▇▇▇ or otherwise, upon any of Borrower's or any
Subsidiary's properties or assets and the same is not paid on the payment date
thereof (except with respect to any taxes which are the subject of a Permitted
Protest); provided that Lender shall have the right to establish a reserve
against the Borrowing Base in an amount of any such Lien without waiving its
rights and remedies with respect to an Event of Default arising under this
Section 8.20.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, Lender may, at its election, without
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or
for the benefit of Borrower under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and Lender;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of Lender, but without
affecting Lender's rights and security interests in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Lender considers
advisable, and in such cases, Lender will credit Borrower's Loan Account with
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only the net amounts received by Lender in payment of such disputed Accounts
after deducting all Lender Expenses incurred or expended in connection
therewith;
(e) Cause Borrower to hold all returned Inventory in
trust for Lender, segregate all returned Inventory from all other property of
Borrower or in Borrower's possession and conspicuously label said returned
Inventory as the property of Lender;
(f) Without notice to or demand upon Borrower or any
guarantor, make such payments and do such acts as Lender considers necessary or
reasonable to protect its security interests in the Collateral. Borrower agrees
to assemble the Collateral if Lender so requires, and to make the Collateral
available to Lender as Lender may reasonably designate. Borrower authorizes
Lender to enter the premises where the Collateral is located, to take and
maintain possession of the Collateral, or any part of it, and to pay, purchase,
contest, or compromise any encumbrance, charge, or Lien that in Lender's
determination appears to conflict with its security interests and to pay all
expenses incurred in connection therewith. With respect to any of Borrower's
owned or leased premises, Borrower hereby grants Lender a license to enter into
possession of such premises and to occupy the same, without charge, for up to
one hundred twenty (120) days in order to exercise any of Lender's rights or
remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of Section 11-9-505 of the
Code), set off and apply to the Obligations any and all (i) balances and
deposits of Borrower held by Lender (including any amounts received in the
Blocked Accounts), or (ii) indebtedness at any time owing to or for the credit
or the account of Borrower held by Lender;
(h) Hold, as cash collateral, any and all balances
and deposits of Borrower held by Lender, and any amounts received in the Blocked
Accounts, to secure the full and final repayment of all of the Obligations;
(i) Seek the appointment of a receiver or keeper to
take possession of the Collateral and to enforce any of Lender's remedies with
respect to such appointment without prior notice or hearing, and Borrower hereby
consents to such right and such appointment and hereby waives any objection
Borrower may have thereto or the right to have a bond or other security posted
by Lender in connection therewith;
(j) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Lender is hereby granted a non-exclusive license or
other right to use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service
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marks, and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit(to the extent it does not
cause a violation or forfeiture thereof);
(k) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Lender determines is commercially reasonable. It is not necessary that the
Collateral be present at any such sale;
(l) Lender shall give notice of the disposition of
the Collateral as follows:
(1) Lender shall give Borrower and each
holder of a security interest in the Collateral who has filed with Lender a
written request for notice, a notice in writing of the time and place of public
sale, or, if the sale is a private sale or some other disposition other than a
public sale is to be made of the Collateral, then the time on or after which the
private sale or other disposition is to be made;
(2) The notice shall be personally
delivered or mailed, postage prepaid, to Borrower as provided in Section 12, at
least five (5) days before the date fixed for the sale, or at least five (5)
days before the date on or after which the private sale or other disposition is
to be made; no notice needs to be given prior to the disposition of any portion
of the Collateral that is perishable or threatens to decline speedily in value
or that is of a type customarily sold on a recognized market. Notice to Persons
other than Borrower claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Lender;
(3) If the sale is to be a public sale,
Lender also shall give notice of the time and place by publishing a notice one
time at least five (5) days before the date of the sale in a newspaper of
general circulation in the county in which the sale is to be held;
(m) Lender may credit bid and purchase at any public
sale;
(n) Any deficiency that exists after disposition of
the Collateral as provided above will be paid immediately by Borrower. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Lender to Borrower; and
(o) Borrower acknowledges that the Obligations arose
out of a commercial transaction, and agree that if an Event of Default shall
occur, Lender shall have the right to an immediate writ of possession without
notice of a hearing.
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9.2 Remedies Cumulative. Lender's rights and remedies under
this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Lender
determines that such failure by Borrower could reasonably be expected to have a
Material Adverse Effect, in its discretion and without prior notice to Borrower,
Lender may do any or all of the following: (a) make payment of the same or any
part thereof; (b) set up such reserves in Borrower's Loan Account as Lender
deems necessary to protect Lender from the exposure created by such failure; or
(c) obtain and maintain insurance policies of the type described in Section 6.6,
and take any action with respect to such policies as Lender deems prudent. Any
such amounts paid by Lender shall constitute Lender Expenses. Any such payments
made by Lender shall not constitute an agreement by Lender to make similar
payments in the future or a waiver by Lender of any Event of Default under this
Agreement. Lender need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Lender on which Borrower may in any way be liable.
11.2 Lender's Liability for Collateral. So long as Lender
complies with its obligations, if any, under Section 11-9-207 of the Code,
Lender shall not in any way or manner be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person. All risk of loss, damage, or destruction of
the Collateral shall be borne by Borrower.
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11.3 Indemnification. Borrower shall pay, indemnify, defend,
and hold Lender, each Participant, and each of their respective officers,
directors, employees, counsel, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys' fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them in connection with or
as a result of or related to the execution, delivery, enforcement, performance,
and administration of this Agreement and any other Loan Documents or the
transactions contemplated herein, and with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). Borrower shall have no obligation to any
Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other Loan Document shall
be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, or facsimile to Borrower or to
Lender, as the case may be, at its address set forth below:
If to Borrower: VISTA EYECARE, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: VISTA EYECARE, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Road, N.E., Suite 1450
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Business Finance Division Manager
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
81
with copies to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or demands sent in accordance with this Section 12, other
than notices by Lender in connection with Sections 11-9-504 or 11-9-505 of the
Code, shall be deemed received on the earlier of the date of actual receipt or
three (3) Business Days after the deposit thereof in the mail. Borrower
acknowledges and agrees that notices sent by Lender in connection with Sections
11-9-504 or 11-9-505 of the Code shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted facsimile or
other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANY OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA. THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF ▇▇▇▇▇▇, STATE OF GEORGIA OR,
AT THE SOLE OPTION OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE
LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY. EACH OF BORROWER AND LENDER WAIVES, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 13. BORROWER AND LENDER HEREBY WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH OF BORROWER AND LENDER REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other papers
delivered to Lender may be destroyed or otherwise disposed of by Lender four (4)
months after they are delivered to or received by Lender, unless Borrower
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requests, in writing, the return of said documents, schedules, or other papers
and makes arrangements, at Borrower's expense, for their return.
15. GENERAL PROVISIONS.
15.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrower and Lender.
15.2 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and assigns of each of the
parties; provided, however, that Borrower may not assign this Agreement or any
rights or duties hereunder without Lender's prior written consent and any
prohibited assignment shall be absolutely void. No consent to an assignment by
Lender shall release Borrower from its Obligations. Lender may assign this
Agreement and its rights and duties hereunder and no consent or approval by
Borrower is required in connection with any such assignment. Lender reserves the
right to sell, assign, transfer, negotiate, or grant participations in all or
any part of, or any interest in Lender's rights and benefits hereunder. In
connection with any such assignment or participation, Lender may disclose all
documents and information which Lender now or hereafter may have relating to
Borrower or Borrower's business. To the extent that Lender assigns its rights
and obligations with respect to the Loans and the commitment hereunder to a
third Person, Lender thereafter shall be released from such assigned obligations
to Borrower and such assignment shall effect a novation between Borrower and
such third Person. With respect to any Person that purchases any portion of
Lender's rights and obligations under this Agreement pursuant to the terms of
this Section 15.2, such Person shall be entitled (i) to all of the benefits of
Section 11.3 hereof and (ii) to the payment of all Lender Expenses and expenses
of the type described in paragraph (c) of the Fee Letter as if such Person were
the "Lender" as defined herein and in the Fee Letter.
15.3 Section Headings. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each section applies equally to this entire
Agreement.
15.4 Interpretation. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against Lender or
Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
15.5 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
15.6 Amendments in Writing. This Agreement can only be
amended by a writing signed by both Lender and Borrower.
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15.7 Counterparts; Facsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
facsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by facsimile also shall deliver an original executed counterpart
of this Agreement but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement.
15.8 Revival and Reinstatement of Obligations. If the
incurrence or payment of the Obligations by Borrower or any guarantor of the
Obligations or the transfer by either or both of such parties to Lender of any
property of either or both of such parties should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, and other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
Lender is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that Lender is required or
elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys' fees of Lender related thereto, the liability of Borrower or such
guarantor automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.
15.9 Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
15.10 Time is of the Essence. Time is of the essence of this
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in Atlanta, Georgia.
VISTA EYECARE, INC.,
a Georgia corporation
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President
FOOTHILL CAPITAL CORPORATION, a
California corporation with an
office in Atlanta, Georgia, as
lender and as agent for itself and
certain other Persons
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
FOOTHILL CAPITAL CORPORATION, a
California corporation with an
office in Atlanta, Georgia, as the
sole Bank, the Issuing Bank, the
Documentation Agent and the
Administrative Agent under the Prior
Credit Agreement
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
85
TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION.........................................3
1.1 Definitions.................................................3
1.2 Accounting Terms...........................................25
1.3 Code.......................................................25
1.4 Construction...............................................25
1.5 Schedules and Exhibits.....................................25
2. LOAN AND TERMS OF PAYMENT...........................................25
2.1 Revolving Advances.........................................25
2.2 Letters of Credit..........................................27
2.3 Term Loan..................................................29
2.4 [Intentionally Omitted]....................................30
2.5 Overadvances...............................................30
2.6 Interest and Letter of Credit Fees: Rates, Payments, and
Calculations; Promise to Pay.............................30
2.7 Collection of Accounts.....................................32
2.8 Crediting Payments; Application of Collections.............34
2.9 Designated Account.........................................34
2.10 Maintenance of Loan Account; Statements of Obligations.....35
2.11 Fees.......................................................35
2.12 Eurodollar Rate Advances...................................35
2.13 Illegality.................................................37
2.14 Requirements of Law........................................37
2.15 Indemnity..................................................39
3. CONDITIONS; TERM OF AGREEMENT.......................................39
3.1 Conditions Precedent to the Initial Advance, Letter of
Credit and the Term Loans................................39
3.2 Conditions Precedent to all Advances, all Letters of
Credit and the Term Loans................................41
3.3 Condition Subsequent.......................................42
3.4 Term.......................................................43
3.5 Effect of Termination......................................43
3.6 Early Termination by Borrower..............................43
3.7 Termination Upon Event of Default..........................43
4. [Intentionally Omitted].............................................44
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5. REPRESENTATIONS AND WARRANTIES......................................44
5.1 Corporate Existence and Power..............................44
5.2 Corporate Authorization; No Contravention..................44
5.3 Governmental Authorization. ...............................45
5.4 Binding Effect.............................................45
5.5 Litigation.................................................45
5.6 No Default.................................................45
5.7 ERISA Compliance...........................................46
5.8 Use of Proceeds; Margin Regulations........................46
5.9 Title to Properties........................................47
5.10 Taxes......................................................47
5.11 Financial Condition........................................47
5.12 Environmental Matters......................................48
5.13 Collateral Documents.......................................48
5.14 Regulated Entities.........................................49
5.15 No Burdensome Restrictions.................................49
5.16 Copyrights, Patents, Trademarks and Licenses, Etc..........49
5.17 Subsidiaries...............................................49
5.18 Insurance..................................................50
5.19 Solvency...................................................50
5.20 Full Disclosure............................................50
5.21 Accounts and Inventory.....................................50
5.22 Leases.....................................................50
5.23 Compliance With Laws.......................................51
5.24 Year 2000 Compatibility....................................51
5.25 Material Contracts.........................................51
6. AFFIRMATIVE COVENANTS...............................................51
6.1 Financial Statements.......................................52
6.2 Certificates; Other Information............................52
6.3 Notices....................................................54
6.4 Preservation of Corporate Existence, Etc...................55
6.5 Maintenance of Property....................................56
6.6 Insurance..................................................56
6.7 Payment of Obligations.....................................57
6.8 Compliance with Laws.......................................58
6.9 Compliance with ERISA......................................58
6.10 Inspection of Property and Books and Records...............58
6.11 Environmental Laws.........................................58
6.12 Use of Proceeds............................................59
6.13 Further Assurances.........................................59
6.14 Bank Accounts..............................................59
6.15 Year 2000 Compatibility....................................60
6.16 Covenants Regarding Formation of Subsidiaries..............60
6.17 Tax Returns................................................60
6.18 Returns....................................................60
6.19 Title to Equipment.........................................60
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7. NEGATIVE COVENANTS..................................................60
7.1 Limitation on Liens........................................61
7.2 Disposition of Assets......................................62
7.3 Consolidations and Mergers.................................63
7.4 Loans and Investments......................................64
7.5 Limitation on Indebtedness.................................64
7.6 Transactions with Affiliates...............................65
7.7 Use of Proceeds............................................65
7.8 Contingent Obligations.....................................65
7.9 Joint Ventures.............................................66
7.10 Restricted Payments........................................66
7.11 ERISA......................................................66
7.12 Change in Business; Change of Name.........................67
7.13 Accounting Changes.........................................67
7.14 Financial Covenants........................................67
7.15 Amendments.................................................67
7.16 No Other Negative Pledges..................................67
7.17 Prepayments................................................67
7.18 Real Estate; Store Locations...............................67
8. EVENTS OF DEFAULT...................................................68
9. LENDER'S RIGHTS AND REMEDIES........................................71
9.1 Rights and Remedies........................................71
9.2 Remedies Cumulative........................................73
10. TAXES AND EXPENSES..................................................73
11. WAIVERS; INDEMNIFICATION............................................74
11.1 Demand; Protest; etc.......................................74
11.2 Lender's Liability for Collateral..........................74
11.3 Indemnification............................................74
12. NOTICES.............................................................75
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..........................76
14. DESTRUCTION OF BORROWER'S DOCUMENTS.................................76
15. GENERAL PROVISIONS..................................................76
15.1 Effectiveness..............................................76
15.2 Successors and Assigns.....................................77
15.3 Section Headings...........................................77
15.4 Interpretation.............................................77
15.5 Severability of Provisions.................................77
15.6 Amendments in Writing......................................77
15.7 Counterparts; Facsimile Execution..........................77
15.8 Revival and Reinstatement of Obligations...................78
15.9 Integration................................................78
15.10 Time is of the Essence.....................................78
88