AMENDMENT NO. 3 TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment Agreement") is effective as of this 31st day of December, 1998,
by and among BOLLE INC., a Delaware corporation having its chief executive
office in Rye, New York (the "Borrower"), NATIONSBANK, NATIONAL ASSOCIATION, a
national banking association organized and existing under the laws of the United
States of America ("NationsBank"), in its capacity as agent for the Lenders (as
defined below) (in such capacity, the "Agent"), and each of the Lenders
executing and delivering a signature page hereto.
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower, the Agent and the lenders from time to time
party thereto (the "Lenders") have entered into that certain Second Amended and
Restated Credit Agreement dated as of March 11, 1998, as amended by Amendment
No. 1 to Second Amended and Restated Credit Agreement dated as of May 29, 1998,
and by Amendment No. 2 to Second Amended and Restated Credit Agreement dated as
of November 30, 1998 (as heretofore and hereby amended, and as from time to time
further amended, modified, supplemented or restated, the "Credit Agreement"),
pursuant to which the Lenders have made available to the Borrower a term loan
facility and a revolving credit facility, including a letter of credit facility;
and
WHEREAS, the Borrower, the Agent and the Lenders have agreed that the
Credit Agreement be amended as set forth herein upon the terms and conditions
also set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and the
fulfillment of the conditions set forth herein, the parties hereto do hereby
agree as follows:
1. Definitions. Any capitalized terms used herein without definition
shall have the meanings set forth in the Credit Agreement.
2. Amendment to Credit Agreement. Subject to the terms and conditions
set forth herein, the Credit Agreement is hereby amended as follows:
(a) The table appearing in the definition of "Applicable
Margin" and "Applicable Unused Fee" is amended and restated in its
entirety as follows:
Applicable Margin Applicable
Fixed Rate Loans and Margin
Consolidated for Letter of Credit for Applicable
Leverage Ratio Fees Base Rate Loans Unused Fee
-------------------------- --------------------- --------------- ----------
Greater than 3.00 to 1.00 3.00% 1.50% .500%
Less than or equal to 3.00 2.00% .500% .375%
to 1.00 but greater than
2.50 to 1.00
Less than or equal to 2.50 1.25% 0% .250%
to 1.00 but greater than
2.00 to 1.00
Less than or equal to 2.00 1.00% 0% .250%
to 1.00
(b) The definitions of "Excess Cash Flow" and "Total Revolving
Credit Commitment" in Section 1.2 are amended and restated in their
entirety as follows:
"Excess Cash Flow" means, with respect to the
Borrower and its Subsidiaries for any Fiscal Year, the
difference of (i) Consolidated EBITDA for such period
(including therein any net gain or loss, as applicable, of an
extraordinary nature otherwise excluded from the calculation
thereof in the definition of "Consolidated Net Income") minus
(ii) the sum of (A) the Change in Consolidated Working Capital
as at the end of such Fiscal Year, provided any positive
Change in Consolidated Working Capital shall not exceed
$2,500,000 for any Fiscal Year, plus (B) Capital Expenditures,
plus (C) Consolidated Interest Expense, plus (D) required
principal payments on Consolidated Funded Indebtedness and
optional prepayments of the Term Loan, plus (E) taxes on
income accrued during such period, plus (F) all cash paid as
part of the cost of any Acquisition plus (G) all amounts
included in the calculation of Consolidated EBITDA for the
purposes of this definition to the extent such amounts are Net
Proceeds subject to the mandatory prepayment provisions of
Section 2.6(a), (b) or (e) hereof or such amounts are Net
Proceeds which were applied as a mandatory prepayment pursuant
to Section 3 of Amendment No. 3 to Second Amended and Restated
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Credit Agreement among all the parties hereto dated as of
December 31, 1998;
"Total Revolving Credit Commitment" means $16,337,700
as reduced from time to time in accordance with Sections 3.6
and 3.7 hereof;
(c) Section 1.2 of the Credit Agreement is hereby amended by
adding each of the following definitions in their proper alphabetical
order in the Credit Agreement:
"Year 2000 Compliant" means all computer applications
of the Borrower and its Subsidiaries (including those affected
by information received from its suppliers and vendors) that
are material to the Borrower's or any of its Subsidiaries'
business and operations will, not later than September 30,
1999, be able to perform, and will have been tested
successfully to perform, properly date-sensitive functions
involving all dates on and after January 1, 2000;
"Year 2000 Problem" means the risk that computer
applications used by the Borrower or any of its Subsidiaries
(including those affected by information received from its
suppliers and vendors) may be unable to recognize and perform
properly date-sensitive functions involving certain dates on
and after January 1, 2000.
(d) Section 2.2 is hereby amended and restated in its entirety
as set forth below:
SECTION 2.2 PAYMENT OF PRINCIPAL. Subject to
mandatory and optional prepayments provided for in Sections
2.5 and 2.6 hereof, the principal amount of the Term Loan
shall be repaid quarterly, commencing with the quarter ending
June 30, 1999, in the French Franc amounts of the Term Loan,
and on the dates, set forth below; provided, however, that the
entire amount of Term Loan Outstandings shall be due and
payable in full on the Term Loan Termination Date:
Due Date Amount
-------- ------
June 30, 1999 FF 1,400,000
September 30, 1999 FF 1.400,000
December 31, 1999 FF 1,400,000
March 31, 2000 FF 1,410,621
June 30, 2000 FF 1,410,621
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September 30, 2000 FF 1,410,621
December 31, 2000 FF 1,410,621
March 31, 2001 FF 1,410,621
June 30, 2001 FF 1,410,621
September 30, 2001 FF 1,410,621
December 31, 2001 FF 1,410,621
March 31, 2002 FF 1,410,621
June 30, 2002 FF 1,410,621
September 30, 2002 FF 1,410,621
December 31, 2002 FF 1,410,621
March 11, 2003 All remaining principal
amount outstanding
(e) Section 2.6 is hereby amended and restated in its entirety
as set forth below:
SECTION 2.6 MANDATORY PREPAYMENTS. In addition to the required
payments of principal of the Term Loan set forth in Section 2.2 hereof
and any optional payments of principal of the Term Loan effected under
Section 2.5 hereof, the Borrower shall make the following required
prepayments commencing January 1, 1999, each such payment to be made to
the Agent for the benefit of the Lenders within the time period
specified below in the FF Equivalent Amount of the amount due:
(a) Asset Dispositions. The Borrower shall make, or
shall cause each applicable Subsidiary to make, a prepayment
from the Net Proceeds of any Asset Disposition resulting in
Net Proceeds which (i) exceed $150,000 for any single or
series of related transactions or (ii) when aggregated with
all other Net Proceeds from Asset Dispositions received
during any Fiscal Year exceed $300,000, in each case, in an
amount equal to one hundred percent (100%) of such Net
Proceeds in excess of such threshold amounts. Each such
prepayment shall be made within five (5) Business Days of
receipt of such Net Proceeds and upon not less than three
(3) Business Days' written notice to the Agent, which notice
shall include a certificate of an Authorized Representative
setting forth in reasonable detail the calculations utilized
in computing the amount of Net Proceeds. Notwithstanding the
foregoing, however, there shall be excluded from the
calculation of the Net Proceeds for any payment required
under this Section 2.6(a) 100% of the Net Proceeds from any
disposition of the investments or other assets of the
Borrower or any Subsidiary which are made in accordance with
Section 2.6(e) below.
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(b) Equity Offerings. In the event that the
Consolidated Leverage Ratio exceeds 2.50 to 1.00 for the most
recently ended Four-Quarter Period preceding any Equity
Offering, the Borrower shall make a prepayment from the Net
Proceeds of such Equity Offering in an amount equal to the
lesser of (i) 100% of such Net Proceeds or (ii) the amount of
such Net Proceeds which would result in a Consolidated
Leverage Ratio equal to 2.50 to 1.00 after giving pro forma
effect to such prepayment for such Four-Quarter Period. Each
such prepayment shall be made within five (5) Business Days
of receipt of such Net Proceeds and upon not less than three
(3) Business Days' written notice to the Agent, which notice
shall include a certificate of an Authorized Representative
setting forth in reasonable detail the calculations utilized
in computing the amount of Net Proceeds.
(c) Reserved.
(d) Excess Cash Flow. The Borrower shall make a
prepayment on April 15 of each year in the amount equal to
fifty percent (50%) of the Borrower's Excess Cash Flow for
the Fiscal Year ended immediately prior thereto, commencing
with the Fiscal Year ending December 31, 1998. Each such
prepayment shall include a certificate of an Authorized
Representative setting forth in reasonable detail the
calculations utilized in computing Excess Cash Flow.
(e) Investment Net Proceeds. The Borrower shall
make a prepayment of (i) 100% of the Net Proceeds from the
disposition of shares of Accessories Associates common stock
received upon the exchange of the AAi Preferred Stock in
connection with or subsequent to the Accessories Associates
IPO and (ii) 100% of the Net Proceeds from (A) the redemption
or any other disposition by the Borrower (except as provided
for in (i) immediately above) of the AAi Preferred Stock
after application of such Net Proceeds in compliance with the
terms of the ▇▇▇▇ of Sale and/or (B) if less than $1,000,000
of such Net Proceeds as set forth in (A) immediately above is
available for a prepayment hereunder, the Borrower shall
immediately seek an equity or capital investment therein and
prepay hereunder on the next Business Day after the receipt
of such investment an amount of the gross proceeds of such an
equity investment in the Borrower which, together with the
Net Proceeds available under (A)
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immediately available for a prepayment hereunder, equals
$1,000,000 (such prepayment pursuant to this Subsection
2.6(e), the "AAi Prepayment"). Each such prepayment shall be
made within five (5) Business Days of receipt of such Net
Proceeds and upon not less than three (3) Business Days=
written notice to the Agent, which notice shall include a
certificate of an Authorized Representative setting forth in
reasonable detail the calculations utilized in computing the
amount of Net Proceeds.
All mandatory prepayments shall be applied pro rata to the
scheduled installments of principal remaining outstanding
under the Term Loan pursuant to Section 2.2 hereof (as
adjusted to give effect to any prior payments or prepayments
of principal). If as a result of the making of any payment
required to be made pursuant to this Section 2.6 the Borrower
would incur costs pursuant to Section 5.5 hereof in excess of
$5,000, it may deposit the amount of such payment with the
Agent, for the benefit of the Lenders, in a cash collateral
account with and in the name of the Agent established for
such purpose pursuant to the terms of a Cash Collateral
Account Agreement, as to which the Agent shall have exclusive
control, until the end of the applicable Interest Period at
which time such payment shall automatically be made. Any
prepayment of the Term Loan pursuant to this Section 2.6
other than on the last day of an Interest Period which is not
subject to escrow pursuant to the immediately preceding
sentence shall be accompanied by the additional payment, if
any, required by Section 5.5 hereof. If at any time all Term
Loan Outstandings shall be paid in full, the prepayment
requirements of this Section 2.6 shall continue and all such
payments shall be applied to permanently reduce the Revolving
Credit Commitment pursuant to Section 3.6(b).
(f) Sections 9.1(c), 9.1(d), 9.1(e) and 9.1(f) are hereby
redesignated to be Sections 9.1(d), 9.1(e), 9.1(f) and 9.1(g) and a new
Section 9.1(c) is hereby added to the Credit Agreement as set forth below:
(c) as soon as practical and in any event within
25 days after the end of each month during 1999 other than
January, and not later than March 25, 1999 with respect to
January, deliver to the Agent and each Lender (i) the
consolidated and consolidating balance sheets of the Borrower
and its Subsidiaries as of the end of such month, and the
related consolidated and consolidating statements of earnings
and cash flow for such month and for the period from the
beginning of the Fiscal Year through the end of such month,
accompanied by a certificate of an Authorized Representative
to the effect that such financial statements present fairly
the financial
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position of the Borrower and its Subsidiaries as of the end
of such month and the results of their operations for such
month, in conformity with the standards set forth in Section
8.6(a) with respect to interim financial statements and the
standards utilized in preparation of the interim financial
statements required to be delivered pursuant to Section
9.1(b) above;
(g) The Credit Agreement is hereby amended by adding the following
new Section 8.21:
SECTION 8.21 YEAR 2000 PROBLEM. The Borrower and its
Subsidiaries have (i) initiated a review and assessment of all areas
within its and each of its Subsidiaries' business and operations
(including those affected by information received from suppliers and
vendors) that could reasonably be expected to be adversely affected
by the Year 2000 Problem, (ii) developed a plan and time line for
addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan substantially in accordance with that
timetable. The Borrower reasonably believes that all computer
applications including those affected by information received from
its suppliers and vendors) that are material to its or any of its
Subsidiaries' business and operations will, no later than September
30, 1999, be Year 2000 Compliant, except to the extent that a failure
to do so could not reasonably be expected to have Material Adverse
Effect.
(h) The Credit Agreement is hereby amended by adding the following
new Section 9.23:
SECTION 9.23 YEAR 2000 COMPLIANCE. The Borrower will
promptly notify the Administrative Agent and the Lenders in the
event the Borrower discovers or determines that any computer
application (including those affected by information received from
its suppliers and vendors) that is material to its or any of its
Subsidiaries= business and operations will not be Year 2000
Compliant on a timely basis, except to the extent that such failure
could not reasonably be expected to have a Material Adverse Effect.
(i) Section 11.1 is hereby amended by deleting such section in its
entirety and replacing it with the following:
SECTION 11.1 CONSOLIDATED FIXED CHARGE RATIO. Permit
at any time during the periods set forth below, the Consolidated
Fixed Charge Ratio at the end of each such period to be greater
than the ratio set forth opposite such period set forth below:
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The three fiscal quarters ending
September 30, 1999 (annualizing the
numerator thereof by dividing the
difference of Consolidated EBITDA
less Capital Expenditures for such
three fiscal quarters by 3/4) 1.25 to 1.00
The Four-Quarter Periods ending
December 31, 1999 and
March 31, 2000 1.25 to 1.00
Each Four-Quarter Period thereafter 1.50 to 1.00
(j) Section 11.2 is hereby amended by deleting such section in its
entirety and replacing it with the following:
SECTION 11.2. CONSOLIDATED LEVERAGE RATIO. Permit at any
time during the periods set forth below, the Consolidated Leverage
Ratio at the end of each such period to be greater than the ratio
set forth opposite such period set forth below:
The three fiscal quarters ending
September 30, 1999 (annualizing the
denominator thereof by dividing
Consolidated EBITDA for such three
fiscal quarters by 3/4) 3.35 to 1.00
The Four-Quarter Periods ending
December 31, 1999 and
March 31, 2000 3.35 to 1.00
The Four-Quarter Periods ending June 30,
2000 and September 30, 2000 3.00 to 1.00
Each Four-Quarter Period thereafter 2.50 to 1.00
(k) Section 11.3 is hereby amended to delete the words "the Closing
Date" appearing on the second line thereof and to substitute in lieu thereof the
date "December 31, 1998."
(l) A new Section 11.5 is hereby added to the Credit Agreement as
set forth below:
SECTION 11.5 CONSOLIDATED EBITDA. Permit at any time
during any period of the Borrower ending below, Consolidated
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EBITDA at the end of such period to be less than the amount
set forth opposite such period below:
Period Consolidated EBITDA
------ -------------------
Three months ending $ 760,000
March 31, 1999
Three months ending $1,500,000
June 30, 1999
3. Sale of Capital Stock of Eyecare Products. The Borrower hereby
agrees with the Agent and the Lenders that not later than February 28, 1999 it
will sell all shares of capital stock of Eyecare Products it owns, beneficially
or of record, and receive ,3,104,416.95 (not less than $4,900,000 on a Dollar
equivalent basis) in Net Proceeds therefrom and notwithstanding anything in
Section 2.6 to the contrary, that (i) FF 17,929,600 (the Dollar Equivalent
Amount of $3,000,000) of the Net Proceeds shall be applied as a mandatory
prepayment of the scheduled installments of principal remaining outstanding
under the Term Loan pursuant to Section 2.2 hereof (as adjusted to give effect
to any prior payments or prepayments of principal), accompanied by the
additional payment, if any, required by Section 5.5 of the Credit Agreement in
connection with such prepayment and the amendment and restatement of Section 2.2
of the Credit Agreement in Section 2(d) of this Amendment Agreement is made
after giving effect to such prepayment and (ii) the remainder of such Net
Proceeds shall be available to Borrower for working capital needs and general
corporate purposes and will not be applied as a mandatory prepayment of any
Loan.
4. Representations, Warranties and Covenants. By its execution and
delivery of this Amendment Agreement, the Borrower represents and warrants to
the Agent and the Lenders as follows:
(a) The representations and warranties made by Borrower in
Article VIII of the Credit Agreement are true and correct on and as of
the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date;
(b) There has been no material adverse change in the
condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole, since the date of the most recent
financial statements of the Borrower received by the Agent and the
Lenders under Section 9.1 of the Credit Agreement except as set forth
in the draft financial statements of the Borrower delivered to the
Agent and the Lenders in compliance with Section 12(iii) of this
Amendment Agreement (the "Draft 1998 Statements"); and
(c) No event has occurred and is continuing which constitutes,
and no condition exists which upon the consummation of the transaction
and amendments of the Credit Agreement contemplated hereby would
constitute, a Default or an Event of Default on the part of the
Borrower under the Credit Agreement.
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The Borrower also covenants and agrees with the Agent and the Lenders
that the financial statements to be delivered by the Borrower in compliance with
Section 9.1(a) of the Credit Agreement for the Fiscal Year ended December 31,
1998 will not vary in any material respects from the Draft 1998 Statements, and
all parties hereto agree that any such variance in any material respect shall
constitute an Event of Default under the Credit Agreement.
5. Entire Agreement. This Amendment Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relative to such subject matter. No promise, condition, representation
or warranty, express or implied, not herein set forth shall bind any party
hereto, and not one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that, except
as otherwise expressly stated in this Amendment Agreement, no representations,
warranties or commitments, express or implied, have been made by any party to
the other. None of the terms or conditions of this Amendment Agreement may be
changed, modified, waived or canceled orally or otherwise, except by writing,
signed by all the parties hereto, specifying such change, modification, waiver
or cancellation of such terms or conditions, or of any proceeding or succeeding
breach thereof.
6. Full Force and Effect of Agreement. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all other Loan
Documents are hereby confirmed and ratified in all respects and shall remain in
full force and effect according to their respective terms. Each Guarantor hereby
acknowledges and agrees to the amendments of the Credit Agreement set forth
herein and hereby confirms and ratifies in all respects the Guaranty and
enforceability of the Guaranty against such Guarantor in accordance with its
terms.
7. Counterparts. This Amendment Agreement may be executed in any number
of counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument.
8. Governing Law. This Amendment Agreement shall in all respects be
governed by the laws and judicial decisions of the state of New York, without
giving effect to the conflict of laws provisions thereof.
9. Enforceability. Should any one or more of the provisions of this
Amendment Agreement be determined to be illegal or unenforceable as to one or
more of the parties hereto, all other provisions nevertheless shall remain
effective and binding on the parties hereto.
10. Credit Agreement. All references in any of the Loan Documents to
the "Credit Agreement" shall mean the Credit Agreement as amended hereby.
11. Successors and Assigns. This Amendment Agreement shall be binding
upon and inure to the benefit of each of the Borrower, the Lenders and the Agent
and their respective successors, assigns and legal representatives; provided,
however, that the Borrower, without the prior consent of the Agent and each of
the Lenders, may not assign any rights, powers, duties or obligations hereunder.
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12. Conditions Precedent. The effectiveness of this Agreement shall be
conditioned upon (i) the Borrower and the Required Lenders executing and
delivering to the Agent a fully-executed counterpart of this Amendment Agreement
and such further documentation as is necessary to carry out the terms of this
Agreement, (ii) the Borrower paying an amendment fee to each Lender in an amount
equal to .25% of the sum of such Lender's Revolving Credit Commitment and Term
Loan Commitment after giving effect to the reduction of the Term Loan
Commitments resulting from mandatory prepayments made pursuant to Section 3
hereof, and (iii) the Borrower delivering to the Agent and each Lender the
current draft of its consolidated balance sheet and income statement as of and
for the Fiscal Year ended December 31, 1998.
[SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
BORROWER:
BOLLE INC.
By:
--------------------------------
Name:
------------------------------
Title:
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LENDERS:
NATIONSBANK, NATIONAL ASSOCIATION as
Agent for the Lenders and as a
Lender
By:
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
AMENDMENT NO.3
SIGNATURE PAGE 1 OF 2
BANK BOSTON, N.A.
By:
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Name:
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Title:
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CREDIT AGRICOLE INDOSUEZ
By:
--------------------------------
Name:
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Title:
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By:
--------------------------------
Name:
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Title:
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EUROPEAN AMERICAN BANK
By:
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Name:
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Title:
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IMPERIAL BANK
By:
--------------------------------
Name:
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Title:
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NATIONAL CITY BANK OF KENTUCKY
By:
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Name:
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Title:
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AMENDMENT NO.3
SIGNATURE PAGE 2 OF 2
