EXHIBIT 10.1
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AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of October 28, 2002
among
SOLA INTERNATIONAL INC.,
as Borrower,
THE LENDERS NAMED HEREIN
and
UNION BANK OF CALIFORNIA, N.A.,
as Sole Lead Arranger,
Administrative Agent and Collateral Agent
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions............................................................................ 1
SECTION 1.01. Defined Terms............................................... 1
SECTION 1.02. Terms Generally............................................. 26
ARTICLE II The Credits........................................................................... 27
SECTION 2.01. Commitments................................................. 27
SECTION 2.02. Revolving Loans............................................. 27
SECTION 2.03. Borrowing Procedure......................................... 29
SECTION 2.04. Evidence of Debt; Repayment of Revolving Loans.............. 29
SECTION 2.05. Fees........................................................ 30
SECTION 2.06. Interest on Revolving Loans................................. 31
SECTION 2.07. Default Interest............................................ 32
SECTION 2.08. Alternate Rate of Interest.................................. 32
SECTION 2.09. Termination and Reduction of Commitments.................... 32
SECTION 2.10. Conversion and Continuation of Borrowings................... 33
SECTION 2.11. Optional Prepayments........................................ 34
SECTION 2.12. Mandatory Prepayments....................................... 34
SECTION 2.13. Reserve Requirements; Change in Circumstances............... 35
SECTION 2.14. Change in Legality.......................................... 37
SECTION 2.15. Indemnity................................................... 38
SECTION 2.16. Pro Rata Treatment.......................................... 38
SECTION 2.17. Sharing of Setoffs.......................................... 38
SECTION 2.18. Payments.................................................... 39
SECTION 2.19. Taxes....................................................... 40
SECTION 2.20. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate............................................ 41
SECTION 2.21. Letters of Credit........................................... 42
SECTION 2.22. Funding Sources............................................. 46
SECTION 2.23. Negative Exchange Event..................................... 47
ARTICLE III Representations and Warranties....................................................... 52
SECTION 3.01. Organization; Powers........................................ 52
SECTION 3.02. Authorization............................................... 52
SECTION 3.03. Enforceability.............................................. 53
SECTION 3.04. Governmental Approvals...................................... 53
SECTION 3.05. Financial Statements........................................ 53
SECTION 3.06. No Material Adverse Change.................................. 53
SECTION 3.07. Title to Properties; Possession Under Leases................ 54
SECTION 3.08. Subsidiaries................................................ 54
SECTION 3.09. Litigation; Compliance with Laws............................ 54
SECTION 3.10. Agreements.................................................. 55
SECTION 3.11. Federal Reserve Regulations................................. 55
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.. 55
SECTION 3.13. Use of Proceeds............................................. 55
SECTION 3.14. Tax Returns................................................. 55
SECTION 3.15. No Material Misstatements................................... 56
SECTION 3.16. Employee Benefit Plans...................................... 56
SECTION 3.17. Environmental Matters....................................... 56
SECTION 3.18. Insurance................................................... 57
SECTION 3.19. Security Documents.......................................... 57
SECTION 3.20. Labor Matters............................................... 58
SECTION 3.21. Solvency.................................................... 58
SECTION 3.22. Intellectual Property....................................... 58
SECTION 3.23. PP&E........................................................ 59
SECTION 3.24. No Burdensome Restrictions.................................. 59
ARTICLE IV Conditions of Lending................................................................. 59
SECTION 4.01. All Credit Events........................................... 59
SECTION 4.02. Closing Date................................................ 60
SECTION 4.03. First Credit Event.......................................... 63
ARTICLE V Affirmative Covenants.................................................................. 64
SECTION 5.01. Existence; Businesses and Properties........................ 64
SECTION 5.02. Insurance................................................... 65
SECTION 5.03. Obligations and Taxes....................................... 65
SECTION 5.04. Financial Statements, Reports, etc. ........................ 65
SECTION 5.05. Litigation and Other Notices................................ 68
SECTION 5.06. Employee Benefits........................................... 69
SECTION 5.07. Maintaining Records; Access to Properties and Inspections... 69
SECTION 5.08. Use of Proceeds............................................. 69
SECTION 5.09. Compliance with Environmental Laws.......................... 69
SECTION 5.10. Preparation of Environmental Reports........................ 70
SECTION 5.11. Further Assurances; Additional Collateral................... 70
SECTION 5.12. Certain Matters Relating to Accounts........................ 73
SECTION 5.13. Guarantees.................................................. 73
SECTION 5.14. Release of Certain Collateral............................... 74
ARTICLE VI Negative Covenants.................................................................... 74
SECTION 6.01. Indebtedness................................................ 75
SECTION 6.02. Liens....................................................... 76
SECTION 6.03. Sale and Lease-Back Transactions............................ 79
SECTION 6.04. Investments, Loans and Advances............................. 79
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions... 81
SECTION 6.06. Dividends................................................... 82
SECTION 6.07. Transactions with Affiliates................................ 82
SECTION 6.08. Capital Expenditures........................................ 82
SECTION 6.09. Consolidated Interest Coverage Ratio........................ 83
SECTION 6.10. Maximum Total Leverage Ratio................................ 83
SECTION 6.11. Minimum Net Worth........................................... 83
SECTION 6.12. Maximum Senior Secured Debt Ratio........................... 84
SECTION 6.13. Minimum Liquidity........................................... 84
SECTION 6.14. Limitation on Modifications or Prepayment
of Indebtedness; Modifications of
Certificate of Incorporation, or
Other Constitutive Documents, By-laws and
Certain Other Agreements, etc. ............................. 84
SECTION 6.15. Limitation on Certain Restrictions on Subsidiaries.......... 84
SECTION 6.16. Limitation on Issuance of Capital Stock..................... 85
SECTION 6.17. Limitation on Creation of Subsidiaries...................... 85
SECTION 6.18. Business.................................................... 85
SECTION 6.19. Limitation on Accounting Changes............................ 85
SECTION 6.20. Fiscal Year................................................. 86
SECTION 6.21. Interest Rate Protection and Hedging........................ 86
ARTICLE VII Events of Default.................................................................... 86
ARTICLE VIII The Administrative Agent and the Collateral Agent................................... 89
ARTICLE IX Miscellaneous......................................................................... 92
SECTION 9.01. Notices..................................................... 92
SECTION 9.02. Survival of Agreement....................................... 93
SECTION 9.03. Binding Effect.............................................. 93
SECTION 9.04. Successors and Assigns...................................... 94
SECTION 9.05. Expenses; Indemnity......................................... 97
SECTION 9.06. Right of Setoff............................................. 98
SECTION 9.07. Applicable Law.............................................. 99
SECTION 9.08. Waivers; Amendment.......................................... 99
SECTION 9.09. Interest Rate Limitation.................................... 100
SECTION 9.10. Entire Agreement............................................ 100
SECTION 9.11. Waiver of Jury Trial........................................ 100
SECTION 9.12. Severability................................................ 100
SECTION 9.13. Counterparts................................................ 101
SECTION 9.14. Headings.................................................... 101
SECTION 9.15. Jurisdiction; Consent to Service of Process................. 101
SECTION 9.16. Confidentiality............................................. 102
SECTION 9.17. Lender Addendum............................................. 102
Schedule 1.01(a) Permitted Asset Dispositions
Schedule 1.01(b) Contract Warehouses
Schedule 2.21(b) Existing Letters of Credit
Schedule 3.08(a) Subsidiaries
Schedule 3.08(b) Structure Chart
Schedule 3.09 Litigation
Schedule 3.10(a) Material Agreements
Schedule 3.10(b) Leased Real Property
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 4.03 Foreign Counsel
Schedule 5.11(e)(i) Certain Pledged Securities
Schedule 5.11(e)(ii) Certain Foreign Counsel Opinions
Schedule 6.01 Indebtedness Outstanding on Closing Date
Schedule 6.02 Liens Existing on Closing Date
Schedule 6.04(l) Investments Existing on the Closing Date
Exhibit A Form of Lender Addendum
Exhibit B Form of Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Borrowing Request
Exhibit E Form of Borrowing Base Certificate
Exhibit F Form of Landlord Lien Waiver and Access Agreement
Exhibit G Form of Amended and Restated Security Agreement
Exhibit H Form of Guarantee Agreement
Exhibit I-1 Form of Opinion of ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
Exhibit I-2 Form of Foreign Counsel Opinion
Exhibit J Form of Amended and Restated Perfection Certificate
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is dated
and entered into as of October 28, 2002, among SOLA INTERNATIONAL INC., a
Delaware corporation (the "Borrower"), the Lenders (as defined in Article I),
UNION BANK OF CALIFORNIA, N.A., as sole lead arranger (in such capacity, the
"Arranger"), as an Issuing Bank (as defined in Article I), as administrative
agent (in such capacity, the "Administrative Agent"), and as collateral agent
(in such capacity, the "Collateral Agent") for the Lenders, with reference to
the following facts:
R E C I T A L S
A. Borrower and Union Bank of California, N.A. ("Union
Bank") are parties to that certain Credit Agreement dated as of July 26, 2001
(the "Existing Credit Agreement"), pursuant to which Union Bank and other
parties thereto provided a $45,000,000 senior secured credit facility to
Borrower (the "Existing Credit Facility"). UBS AG, Stamford Branch, was the
Administrative Agent and Collateral Agent under the Existing Credit Facility.
B. Borrower has requested an increase in the aggregate
amount of the Existing Credit Facility from $45,000,000 to $100,000,000. In
addition, the parties to the Existing Credit Facility wish to substitute Union
Bank as Administrative Agent, Collateral Agent and other agency roles described
therein pursuant to a Substitution of Agent Agreement of even date herewith. In
addition, UBS AG, Stamford Branch, ABN-AMRO Bank and RZB Finance LLC, have
re-assigned their interests in the Existing Credit Facility to Union Bank
pursuant to Assignment Agreements of even date herewith.
C. Borrower, the Lenders and the Administrative Agent
wish to enter into this Agreement, pursuant to which the Lenders will provide an
amended senior secured revolving credit facility described herein to Borrower,
the proceeds of which shall be utilized for working capital and general
corporate purposes of Borrower and its Subsidiaries (including repayment of the
Notes from time to time).
D. This Agreement amends, restates and supercedes in
full the Existing Credit Agreement.
E. It is understood and agreed by the parties hereto
that as of the date of this Agreement there exist no Domestic Subsidiaries. Any
reference to a Domestic Subsidiary shall mean a future Domestic Subsidiary, if
any.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Revolving Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Accounts" shall have the meaning assigned to such term in the Security
Agreement.
"Acquired Indebtedness" shall mean (a) with respect to any person that
becomes a Subsidiary after the Closing Date, Indebtedness of such person and its
subsidiaries existing at the time such person becomes a Subsidiary that was not
incurred in connection with, or in contemplation of, such person becoming a
Subsidiary and (b) with respect to the Borrower or any Subsidiary, any
Indebtedness of a person (other than the Borrower or such Subsidiary) existing
at the time such person is merged with or into the Borrower or such Subsidiary,
or Indebtedness expressly assumed by the Borrower or any Subsidiary in
connection with a Permitted Acquisition, which Indebtedness was not, in any
case, incurred by such other person in connection with, or in contemplation of,
such merger or acquisition.
"Acquisition Consideration" shall mean the purchase consideration for
any Permitted Acquisition and all other payments by the Borrower or any
Subsidiary in exchange for, or as part of, or in connection with any Permitted
Acquisition, whether paid in cash or by exchange of Equity Interests or of
assets or otherwise and whether payable at or prior to the consummation of such
Permitted Acquisition or deferred for payment at any future time, whether or not
any such future payment is subject to the occurrence of any contingency, and
includes any and all payments representing the purchase price and any
assumptions of Indebtedness, "earn-outs" and other profit payment arrangements,
consulting agreements, service agreements and non-competition agreements.
"Administrative Agent" shall have the meaning assigned to such term in
the preamble hereof.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B, or such other form as may be supplied
from time to time by the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified; provided, however, that, for purposes of Section 6.07, the term
"Affiliate" shall also include any person that directly or indirectly owns more
than 5% of any class of Equity Interests of the person specified or that is an
officer or director of the person specified.
"Agents" shall mean the Administrative Agent and the Collateral Agent.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
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"Agreement" shall have the meaning assigned to such term in the
preamble hereof.
"Alternate Base Rate" shall mean, as of any date of determination, the
rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to
the higher of (a) the Prime Rate in effect on such date, or (b) the Federal
Funds Rate in effect on such date plus 0.50%.
"Applicable Percentage" shall mean, for any day, with respect to any
Revolving Loan, any Standby Letter of Credit or the Commitment Fee, as the
context may require, the applicable percentage set forth below under the caption
"Eurodollar Margin" or "ABR Margin" or "Commitment Fee," as the case may be,
based upon the Total Leverage Ratio as of the relevant date of determination:
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Eurodollar Commitment
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Total Leverage Ratio Margin ABR Margin Fee
-------------------- ---------- ---------- ----------
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Category 1
Greater than or equal to 3.5 to 1.00 3.00% 1.50% .50%
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Category 2
Greater than or equal to 3.0 to 1.00, but less than 3.5
to 1.00 2.75% 1.25% .50%
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Category 3
Greater than or equal to 2.5, but less than 3.0 to 1.00 2.50% 1.00% .50%
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Category 4
Less than 2.5 to 1.00 2.25% 0.75% .375%
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Each change in the Applicable Percentage resulting from a change in the
Total Leverage Ratio shall be effective with respect to the Commitment Fee and
all Revolving Loans and Standby Letters of Credit outstanding on and after the
date of delivery to the Administrative Agent of the financial statements and
certificates required by Section 5.04(a) or (b) and Section 5.04(d),
respectively, indicating such change until the date immediately preceding the
next date of delivery of such financial statements and certificates indicating
another such change. Notwithstanding the foregoing, (i) from the Closing Date to
the date of delivery to the Administrative Agent of the financial statements and
certificates required by Section 5.04(b) and Section 5.04(d) for the fiscal
quarter ending at least six months after the Closing Date, the Total Leverage
Ratio shall be deemed to be in Category 1 for purposes of determining the
Applicable Percentage, (ii) (a) at any time during which the Borrower has failed
to deliver the financial statements and certificates required by Section 5.04(a)
or (b) and Section 5.04(d), respectively, or (b) at any time after the
occurrence and during the continuance of an Event of Default, the Total Leverage
Ratio shall be deemed to be in Category 1 for purposes of determining the
Applicable Percentage and (iii) during any Underusage Period, the applicable
percentage set forth under the caption "Commitment Fee" shall be increased by
0.50%.
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"Applicable Revolving Commitment Fee Percentage" shall mean, from time
to time, the Applicable Percentage set forth under the caption "Commitment Fee,"
calculated as set forth therein.
"Arranger" shall have the meaning assigned to such term in the preamble
hereof.
"Asset Sale" shall mean the issuance, sale, transfer or other
disposition (by way of merger or otherwise) by the Borrower or any Subsidiary to
any person other than the Borrower or any Guarantor of (a) any Equity Interests
of any Subsidiary (other than directors' qualifying shares) or (b) any other
assets of the Borrower or any Subsidiary (other than, for purposes of Section
2.12(b), (i) dispositions permitted by Section 6.05(b), (f) or (h), (ii)
dispositions resulting in Net Cash Proceeds from Casualty Events applied as set
forth in the first proviso to Section 2.12(c) or any transfer or series of
related transfers that, but for this clause, would be Asset Sales, if after
giving effect to such transfers, the aggregate fair market value of the assets
transferred does not exceed $25,000,000 in the aggregate during the term of this
Agreement provided that Borrower applies at least fifty percent (50%) of the Net
Cash Proceeds arising from such transfer to first, repay Indebtedness of
Borrower and its Subsidiaries owing to Lenders under the Loan Documents, and
then to other Indebtedness of Borrower and its Subsidiaries, or (iii)
dispositions set forth on Schedule 1.01(a); provided that any such dispositions
pursuant to this clause (iii) shall have been consummated no later than the
first anniversary of the Closing Date).
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit C, or such other form as shall be approved by the
Administrative Agent.
"Attributable Indebtedness" shall mean, when used with respect to any
sale and lease-back transaction, as at the time of determination, the present
value (discounted at a rate equivalent to the Borrower's then-current weighted
average cost of funds for borrowed money as at the time of determination,
compounded on a semi-annual basis) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in any such sale
and lease-back transaction.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower" shall have the meaning assigned to such term in the preamble
hereof.
"Borrowing" shall mean a group of Revolving Loans of a single Type
made, converted or continued on a single date and as to which a single Interest
Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit D, or
such other form as shall be approved by the Administrative Agent.
"Breakage Event" shall have the meaning assigned to such term in
Section 2.15.
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"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in California are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Asset Exchange" shall mean a substantially contemporaneous
exchange, or series of related exchanges, of assets constituting property, plant
or equipment for like-kind assets that are useful in the business of the
Borrower and the Subsidiaries and that have a fair market value (determined in
good faith by the Borrower) at least equal to the fair market value of the
exchanged assets; provided that no Capital Asset Exchange shall exceed $1.0
million in fair market value.
"Capital Expenditures" shall mean, with respect to any person, all
expenditures by such person that should be capitalized in accordance with GAAP,
including all such expenditures with respect to fixed or capital assets
(including expenditures for molds, maintenance and repairs that should be
capitalized in accordance with GAAP) and, without duplication, the amount of
Capital Lease Obligations incurred by such person.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Equivalents" shall mean, as to any person: (a) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
one year from the date of acquisition by such person; (b) time deposits and
certificates of deposit or acceptances of any Lender or any commercial bank
having, or which is the principal banking subsidiary of a bank holding company
organized under the laws of the United States, any State thereof or the District
of Columbia having, capital, surplus and undivided profits aggregating in excess
of $500,000,000 and a rating of at least "B" from ▇▇▇▇▇▇▇▇, with maturities of
not more than one year from the date of acquisition by such person; (c)
repurchase obligations with a term of not more than 10 days for underlying
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (b) above; (d) commercial paper
issued by any person incorporated in the United States rated at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by ▇▇▇▇▇'▇,
and in each case maturing not more than one year after the date of acquisition
by such person; (e) investments in money market funds substantially all of whose
assets are comprised of securities of the types described in clauses (a) through
(d) above; and (f) demand deposit accounts maintained in the ordinary course of
business, both in and outside the United States.
"Casualty Event" shall mean, with respect to any property (including
Real Property) of the Borrower or any Subsidiary, any loss of title with respect
to Real Property or any theft,
5
loss or destruction of or damage to, or any condemnation or other taking
(including by any Governmental Authority) of, such property (including Real
Property) for which the Borrower or any Subsidiary receives insurance proceeds
or proceeds of a condemnation award or other compensation. "Casualty Event"
shall include but not be limited to any taking of any Real Property of the
Borrower or any Subsidiary or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any law, general or special, or by reason
of the temporary requisition of the use or occupancy of any Real Property of the
Borrower or any Subsidiary or any part thereof, by any Governmental Authority,
civil or military.
"Change in Control" shall mean the occurrence at any time of (a) the
direct or indirect acquisition (as a result of a purchase, acquisition, merger,
consolidation or otherwise) by any person or a group (as such term is defined in
Section 13(d)(3) of the Exchange Act), of beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the
outstanding voting power of the then-outstanding voting power of the Borrower;
(b) during any period of 24 consecutive months, individuals who at the beginning
of such period constituted the Borrower's board of directors (together with any
new directors whose election by the Borrower's shareholders was approved by a
vote of at least two-thirds of the directors then still in office (who either
were 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 the directors then in office; or (c) the occurrence of a "Change in
Control" as such term is defined in any of the Notes Documents.
"Charges" shall have the meaning set forth in Section 9.09.
"Closing Date" shall mean October 29, 2002.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" shall mean all of the Pledged Collateral and all other
property of whatever kind and nature pledged as collateral under any Security
Document.
"Collateral Account" shall have the meaning assigned to such term in
the Security Agreement.
"Collateral Agent" shall have the meaning assigned to such term in the
preamble hereof.
"Commercial Letter of Credit" shall mean any letter of credit issued
pursuant to Section 2.21 to support the purchase of goods by Borrower which is
determined to be a commercial letter of credit by the Issuing Bank.
"Commitment" shall mean, with respect to each Lender, the commitment of
such Lender to make Revolving Loans and participate in Letters of Credit
hereunder as set forth on Schedule 1 to the Lender Addendum executed and
delivered by such Lender, or in the Assignment and Acceptance pursuant to which
such Lender assumed its Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and
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(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Consolidated EBITDA" shall mean, for any period, Consolidated Net
Income for such period, adjusted, in each case only to the extent (and in the
same proportion) deducted in determining Consolidated Net Income and with
respect to the portion of Consolidated Net Income attributable to any Subsidiary
only if a corresponding amount would be permitted at the date of determination
to be distributed to the Borrower by such Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Subsidiary or its stockholders, by
(x) adding thereto the amount of (i) Consolidated Interest Expense, (ii)
provision for taxes based on income, (iii) amortization, (iv) depreciation, and
(v) all other non-cash items reducing the Consolidated Net Income (excluding any
non-cash charge that results in an accrual of a reserve for cash charges in any
future period), and (y) subtracting the aggregate amount of all non-cash items,
determined on a consolidated basis, to the extent such items increased
Consolidated Net Income for such period.
"Consolidated Interest Coverage Ratio" shall mean, for the most recent
four fiscal quarters, the ratio of (x) Consolidated EBITDA for such most recent
four fiscal quarters to (y) Consolidated Interest Expense for such most recent
four fiscal quarters.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of the Borrower and its consolidated Subsidiaries
for such period (calculated without regard to any limitations on the payment
thereof and including amortization of debt discount and deferred financing
costs, capitalized interest, commitment fees, letter of credit fees but
excluding amortization of debt issuance costs and other financing fees and
expenses incurred in connection with the Loan Documents and the Notes Documents)
determined in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, the consolidated
net after tax income of the Borrower and its consolidated Subsidiaries
determined in accordance with GAAP, but excluding in any event (a) any
extraordinary gains or losses; (b) gains or losses realized from (i) the
acquisition of any securities, or the extinguishment of any Indebtedness, of the
Borrower or any Subsidiary, or (ii) any sales of assets; (c) net earnings or
loss of any other person (other than a Subsidiary) in which the Borrower or any
consolidated Subsidiary has an ownership interest, except (in the case of any
such net earnings) to the extent such net earnings shall have actually been
received by the Borrower or such consolidated Subsidiary (subject to the
limitation in clause (d) below) in the form of cash distributions; (d) any
portion of the net earnings of any consolidated Subsidiary which is unavailable
for payment of dividends to the Borrower or any other consolidated Subsidiary by
reason of the provisions of any agreement or applicable law or regulation; (e)
the income (or loss) of any person accrued prior to the date it becomes a
Subsidiary of the Borrower or any consolidated Subsidiary or is merged into or
consolidated with the Borrower or any consolidated Subsidiary or that person's
assets are acquired by the Borrower or such consolidated Subsidiary.
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"Consolidated Net Worth" shall mean at the date of determination
thereof, the sum of all items which in conformity with GAAP would be classified
as stockholders equity on a consolidated balance sheet of the Borrower at such
date.
"Contested Collateral Lien Conditions" shall mean, with respect to any
Permitted Lien of the type described in clause (a), (b) or (f) of Section 6.02,
the following conditions:
(i) any proceeding instituted contesting such Lien shall
conclusively operate to stay the sale or forfeiture of any portion of
the Collateral on account of such Lien;
(ii) at the option and upon request of the Administrative
Agent, the appropriate Loan Party shall maintain cash reserves in an
amount sufficient to pay and discharge such Lien and the Administrative
Agent's reasonable estimate of all interest and penalties related
thereto; and
(iii) such Lien shall in all respects be subject and
subordinate in priority to the Lien and security interest created and
evidenced by the Security Documents, except if and to the extent that
the law or regulation creating, permitting or authorizing such Lien
provides that such Lien is or must be superior to the Lien and security
interest created and evidenced by the Security Documents.
"Contingent Obligation" shall mean, as to any person, any obligation of
such person guaranteeing or intended to guarantee or otherwise be responsible
for any Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of such person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor; (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor; (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation; or (d) otherwise to assure or hold harmless
the holder of such primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business, any
products warranties in the ordinary course of business and any lease guarantees
executed by the Borrower in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated potential liability in respect
thereof (assuming such person is required to perform thereunder) as reasonably
determined by such person in good faith.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership
8
of voting securities, by contract or otherwise, and the terms "Controlling" and
"Controlled" shall have meanings correlative thereto.
"Corporate Credit Rating" means, for any person, the applicable rating
with respect to the Notes as determined by S&P or ▇▇▇▇▇'▇.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"Default" shall mean any event or condition which is, or upon notice,
lapse of time or both would constitute, an Event of Default.
"Designated Deposit Account" shall mean a deposit account to be
maintained by the Borrower with the Administrative Agent or one of its
Affiliates, as from time to time designated by the Borrower by written
notification to the Administrative Agent.
"Direct Foreign Subsidiary" means a Subsidiary (i) not a Domestic
Subsidiary and (ii) the Equity Interests of which are directly owned by the
Borrower or any Domestic Subsidiary.
"Disqualified Stock" shall mean any Equity Interest which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary of the Revolving Credit Maturity Date, (b) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a)
above, in each case at any time prior to the first anniversary of the Revolving
Credit Maturity Date or (c) contains any repurchase obligation which may come
into effect prior to payment in full of all amounts hereunder.
"Dividend" with respect to any person shall mean that such person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other distribution, payment or delivery of property
(other than common stock of such person) or cash to its stockholders as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
a consideration any shares of any class of its capital stock outstanding on or
after the Closing Date (or any options or warrants issued by such person with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock of such person outstanding on or after the Closing Date (or any options or
warrants issued by such person with respect to its capital stock). Without
limiting the foregoing, "Dividends" with respect to any person shall also
include all payments made or required to be made by such person with respect to
any stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
"dollars" or "$" shall mean lawful money of the United States of
America.
9
"Domestic Subsidiary" shall mean a Subsidiary incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.
"Downgrade Date" means any date after any Rating Date on which the
Corporate Credit Rating of Borrower is lower than BBB- by S&P and Baa3 by
▇▇▇▇▇'▇.
"English Security Document" shall have the meaning assigned to such
term in Article VIII.
"Environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written notice of violation,
claim, demand, order, directive, cost recovery action or other cause of action
by, or on behalf of, any Governmental Authority or any person for damages,
injunctive or equitable relief, personal injury (including sickness, disease or
death), Remedial Action costs, tangible property damage, natural resource
damages, nuisance, pollution, any adverse effect on the Environment caused by
any Hazardous Material, or for fines, penalties or restrictions, resulting from
or based upon (a) the existence of a Release, (b) exposure to any Hazardous
Material, (c) the presence, use, handling, transportation, storage, treatment or
disposal of any Hazardous Material or (d) the violation or alleged violation of
any Environmental Law or Environmental Permit.
"Environmental Law" shall mean the common law, any and all applicable
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
Environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to public or
occupational health and safety matters, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
Sections 9601 et seq. (collectively "CERCLA"), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901 et seq., the Federal
Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33
U.S.C. Sections 1251 et seq., the Clean Air Act of 1970, as amended, 42 U.S.C.
Sections 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C.
Sections 2601 et seq., the Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C.Sections 651 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Sections 11001 et seq., the Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. Sections 300(f) et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. Sections 5101 et seq., and any similar
or implementing state, local or foreign law, and all amendments or regulations
promulgated under any of the foregoing and, in each case, as in effect at the
relevant time.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
10
"Equity Interest" shall mean, with respect to any person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of the equity
capital of such person, including, if such person is a partnership, partnership
interests (whether general or limited) and any other interest or participation
that confers on a person the right to receive a share of the profits and losses
of, or distributions of assets of, such partnership, whether outstanding on the
date hereof or issued after the Closing Date.
"Equity Issuance" shall mean, without duplication, any issuance or sale
by the Borrower after the Closing Date of (a) any Equity Interests of the
Borrower (including any Equity Interests of the Borrower issued upon exercise of
any warrant or option) or any warrants or options to purchase Equity Interests
of the Borrower or (b) any other security interest representing any Equity
Interest of the Borrower (or the right to obtain any Equity Interest of the
Borrower), including any preferred stock; provided, however, that "Equity
Issuance" shall not include (i) issuances by the Borrower of non-qualified
options to purchase stock of the Borrower to managers, officers and directors of
the Borrower in connection with any performance-based stock option plan and (ii)
issuances by the Borrower of rights to purchase equity of the Borrower to
shareholders of the Borrower pursuant to a shareholders' rights plan.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event," as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan, or the occurrence of any event or condition which could reasonably be
expected to constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal from any Plan or Multiemployer Plan; (g) the receipt by the Borrower
or any of its ERISA Affiliates of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any of its ERISA Affiliates of any
notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the making of any
amendment to any Plan which could result in the
11
imposition of a lien or the posting of a bond or other security; and (i) the
occurrence of a nonexempt prohibited transaction (within the meaning of Section
4975 of the Code or Section 406 of ERISA) which could result in liability to the
Borrower or any of the Subsidiaries.
"euro" or "(euro)" means the single currency of participating member
states of the European Union.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Eurodollar Rate in accordance with the
provisions of Article II.
"Eurodollar Market" shall mean a regular established market located
outside the United States of America by and among banks for the solicitation,
offer and acceptance of dollar deposits in such banks.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Borrowing,
(x) the average of the interest rates per annum (rounded upward, if necessary,
to the next 1/16 of 1%) at which deposits in dollars are offered to the
Administrative Agent in the London Eurodollar Market at or about 11:00 a.m.,
London, England time, two (2) Business Days before the first day of the
applicable Eurodollar Period in an aggregate amount approximately equal to the
amount of such Eurodollar Borrowing and for the period of time comparable to the
number of days in the applicable Interest Period divided by (y) one (1) minus
the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest
Period.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Taxes" shall mean, with respect to the Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) such recipient's net income by the
United States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or in which
it is engaged in business or, in the case of any Lender, in which its applicable
lending office is located; (b) any branch profits taxes imposed by the United
States of America or any similar tax imposed by any other jurisdiction in which
the Borrower is located; and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.20(a)), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lender's failure to comply
with Section 2.19(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower with
respect to such withholding tax pursuant to Section 2.19(a).
12
"Eyeglass Lens Business" means (i) the design, manufacture and
distribution of plastic and glass eyeglass lenses, (ii) the design, manufacture
and distribution of lens coatings and treatments and (iii) other optical
lens-related businesses.
"Federal Funds Rate" shall mean, as of any date of determination, the
rate set forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Board (including any such successor,
"H.15(519)") for such date opposite the caption "Federal Funds (Effective)". If
for any relevant date such rate is not yet published in H.15(519), the rate for
such date will be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotations") for such
date under the caption "Federal Funds Effective Rate". If on any relevant date
the appropriate rate for such date is not yet published in either H.15(519) or
the Composite 3:30 p.m. Quotations, the rate for such date will be the
arithmetic mean of the rates for the transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that date by each of the
three leading brokers of Federal funds transactions in New York City selected by
the Administrative Agent. For purposes of this Agreement, any change in the
Alternate Base Rate due to a change in the Federal Funds Rate shall be effective
as of the opening of business on the effective date of such change.
"Fee Letter" shall mean the fee letter agreement, dated September 13,
2002, between the Borrower and the Administrative Agent.
"Fees" shall mean the Commitment Fees, the Administrative Agent Fees,
the L/C Participation Fees, the Issuing Bank Fees and the other fees described
in Section 2.05(c) of this Agreement.
"Financial Officer" of any person shall mean the Chief Financial
Officer or such other officer of such person acceptable to the Administrative
Agent.
"Foreign Lender" shall mean any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" shall mean a Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles in the
United States applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Governmental Real Property Disclosure Requirements" shall mean any
Requirement of Law of any Governmental Authority requiring notification of the
buyer, mortgagee or assignee of Real Property, or notification, registration, or
filing to or with any Governmental Authority, prior to the sale, mortgage or
assignment of any Real Property or transfer of
13
control of an establishment, of the actual or threatened presence or release
into the Environment, or the use, disposal, or handling of Hazardous Material
on, at, under or near the Real Property to be sold, mortgaged or assigned or the
establishment for which control is to be transferred.
"Granting Lender" has the meaning specified in Section 9.04(i).
"Guarantee" has the meaning specified in Section 5.13.
"Guarantee Agreement" shall mean a Guarantee Agreement, substantially
in the form of Exhibit H, made by one or more Guarantors in favor of the
Lenders.
"Guarantor" shall mean each Subsidiary that is or becomes a party to a
Guarantee Agreement pursuant to Section 5.13 or otherwise.
"Hazardous Materials" shall mean all explosive or radioactive
materials, substances or wastes, hazardous or toxic materials, substances or
wastes, pollutants, contaminants, and solid, liquid or gaseous wastes,
including, without limitation, petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other materials, substances or wastes of any nature subject or regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any Interest Rate Protection Agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement
entered into between any Lender and Borrower or any Subsidiary of Borrower and
not entered into for speculation.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind (including subtenant deposits with respect to subleases);
(b) all obligations of such person evidenced by bonds, debentures, notes or
similar instruments; (c) all obligations of such person upon which interest
charges are customarily paid or accrued; (d) all obligations of such person
under conditional sale or other title retention agreements relating to property
purchased by such person; (e) all obligations of such person issued or assumed
as the deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business on
normal trade terms and not overdue by more than 60 days); (f) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such person, whether or not the obligations secured thereby
have been assumed (provided, that if such obligations have not been assumed, the
amount of such Indebtedness included for the purposes of this definition will be
the amount equal to the lesser of the fair market value of such property and the
amount of the Indebtedness secured); (g) all Contingent Obligations of such
person; (h) all Capital Lease Obligations of such person; (i) all Attributable
Indebtedness of such person; (j) all obligations of such person as an account
party in respect of letters of credit and bankers' acceptances; and (k) the
maximum fixed redemption or repurchase price of all Disqualified Stock of such
person. The
14
Indebtedness of any person shall include the Indebtedness of any partnership in
which such person is a general partner.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Indemnitee" shall have the meaning assigned to such term in Section
9.05(b).
"Independent Director" means a director of the Borrower who (a) is
independent with respect to the transaction at issue; (b) does not have any
material indirect financial interest in the Borrower or any of its Affiliates;
and (c) has not and whose Affiliates or affiliate firm has not at any time
during the twelve months prior to the taking of any action with respect to the
transaction at issue, directly or indirectly, received, or entered into any
understanding or agreement to receive, any compensation, payment or other
benefit, of any type or form, from the Borrower or any of its Affiliates, other
than customary directors' fees for serving on the Board of Directors of the
Borrower or any Affiliate and reimbursement of out-of-pocket expenses for
attendance at the Borrower's or Affiliate's board and board committee meetings.
"Insignificant Direct Foreign Subsidiary" means a Direct Foreign
Subsidiary with (1) net sales that are less than 5.0% of the consolidated net
sales of the Borrower and the Subsidiaries for the most recent fiscal quarter
for which a consolidated income statement of the Borrower is available and (2)
tangible assets that are less than 2.5% of Total Assets as of the end of the
most recent fiscal quarter for which a consolidated balance sheet of the
Borrower and the Subsidiaries is available.
"Insignificant Domestic Subsidiary" means a Domestic Subsidiary with
(1) net sales that are less than 5.0% of the consolidated net sales of the
Borrower and the Subsidiaries for the most recent fiscal quarter for which a
consolidated income statement of the Borrower is available and (2) tangible
assets that are less than 2.5% of Total Assets as of the end of the most recent
fiscal quarter for which a consolidated balance sheet of the Borrower and the
Subsidiaries is available.
"Instruments" shall have the meaning assigned to such term in the
Security Agreement.
"Intellectual Property" shall have the meaning assigned to such term in
Section 3.22.
"Interest Payment Date" shall mean with respect to any Revolving Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Revolving Loan is a part and, in the case of a Eurodollar Borrowing with an
Interest Period of more than three months' duration, each day that would have
been an Interest Payment Date had successive Interest Periods of three months'
duration been applicable to such Borrowing, and, in addition, the date of any
prepayment of any Revolving Loan or conversion of a Eurodollar Borrowing to an
ABR Borrowing.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect (or, in the case of a seven-day
15
Interest Period as set forth in clause (i) of Section 2.03, the seventh day
after the date of such Borrowing), and (b) as to any ABR Borrowing, the period
commencing on the date of such Borrowing and ending on the earlier of (i) the
next succeeding last Business Day of March, June, September or December, and
(ii) the Revolving Credit Maturity Date; provided, however, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates and not entered into for
speculation.
"Inventory" shall have the meaning assigned to such term in the
Security Agreement.
"Investments" shall have the meaning assigned to such term in Section
6.04.
"Issuing Bank" shall mean, as the context may require, (a) Union Bank
of California, N.A., with respect to Letters of Credit issued by it; (b) any
other Lender that may become an Issuing Bank pursuant to Section 2.21(i) or (k),
with respect to Letters of Credit issued by such Lender; or (c) collectively,
all the foregoing.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"Landlord Lien Waiver and Access Agreement" shall mean the Landlord
Lien Waiver and Access Agreement, substantially in the form of Exhibit F, made
by the landlord of each leased Real Property identified on Schedule 3.10(b) in
favor of the Collateral Agent for the benefit of the Secured Parties.
"L/C Commitment" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.21.
"L/C Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Lender at any time shall mean
its Pro Rata Percentage of the aggregate L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
16
"Leases" shall mean any and all leases, subleases, tenancies, options,
concession agreements, rental agreements, occupancy agreements, franchise
agreements, access agreements and any other agreements (including all
amendments, extensions, replacements, renewals, modifications and/or guarantees
thereof), whether or not of record and whether now in existence or hereafter
entered into, affecting the use or occupancy of all or any portion of any Real
Property.
"Lender Addendum" shall mean with respect to any initial Lender, a
lender addendum in the form of Exhibit A, to be executed and delivered by such
Lender on the Closing Date as provided in Section 9.17.
"Lenders" shall mean (a) each of the financial institutions that
executes a Lender Addendum on the Closing Date (other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance.
"Letter of Credit" shall mean any Standby Letter of Credit or
Commercial Letter of Credit issued pursuant to Section 2.21.
"Lien" shall mean, with respect to any property, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation,
security interest or encumbrance of any kind, any other type of preferential
arrangement in respect of such property or any filing of any financing statement
under the UCC or any other similar notice of Lien under any similar notice or
recording statute of any Governmental Authority, including any easement,
right-of-way or other encumbrance on title to Real Property, in each of the
foregoing cases whether voluntary or imposed by law, and any agreement to give
any of the foregoing; (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such property; and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" shall mean this Agreement, the Revolving Notes, the
Letters of Credit, the Fee Letter, the Guarantee Agreements and the Security
Documents, as amended, modified, supplemented or reaffirmed from time to time in
accordance with the terms of this Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Management Report" shall have the meaning assigned to such term in
Section 5.04(a).
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a material adverse effect on
the condition (financial or otherwise), business, operations, assets or
liabilities of the Borrower and the Subsidiaries, taken as a whole; (b) material
impairment of the ability of the Loan Parties to perform any of their
obligations under any Loan Document; (c) material impairment of the
17
rights of or benefits or remedies available to the Lenders or any Agent under
any Loan Document; or (d) a material adverse effect on the Collateral or the
Liens in favor of the Collateral Agent (for its benefit and for the benefit of
the other Secured Parties) on the Collateral or the priority of such Liens.
"Maximum Rate" shall have the meaning set forth in Section 9.09.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor or
assignee of the business of such company in the business of rating securities.
"Multiemployer Plan" shall mean a multiemployer plan within the meaning
of Section 4001(a)(3) of ERISA (i) to which the Borrower, a Subsidiary or any
ERISA Affiliate is then making or accruing an obligation to make contributions;
(ii) to which the Borrower, a Subsidiary or any ERISA Affiliate has within the
preceding five plan years made contributions; or (iii) with respect to which the
Borrower or a Subsidiary could reasonably be expected to incur liability.
"Negative Exchange Event" shall mean that Administrative Agent's
closing rate of exchange between the euro and the dollar shall be greater than
$1.11 to (euro)1.00 for any consecutive fifteen (15) Business Day period.
"Net Cash Proceeds" shall mean with respect to any Asset Sale, the cash
proceeds received by any Loan Party (including cash proceeds subsequently
received (as and when received by any Loan Party) in respect of noncash
consideration initially received) net of (a) selling expenses (including
reasonable broker's fees or commissions, legal fees, transfer and similar taxes
and the Borrower's good faith estimate of income taxes paid or payable in
connection with such sale); (b) amounts provided as a reserve, in accordance
with GAAP, against any liabilities under any indemnification obligations
associated with such Asset Sale (provided that, to the extent and at the time
any such amounts are released from such reserve, such amounts shall constitute
Net Cash Proceeds); (c) the Borrower's good faith estimate of payments required
to be made with respect to unassumed liabilities relating to the assets sold
within 120 days of such Asset Sale (provided that, to the extent such cash
proceeds are not used to make payments in respect of such unassumed liabilities
within 120 days of such Asset Sale, such cash proceeds shall constitute Net Cash
Proceeds); and (d) the principal amount, premium or penalty, if any, interest
and other amounts on any Indebtedness for borrowed money which is secured by a
senior Lien on the asset sold in such Asset Sale and which is repaid with such
proceeds (other than any such Indebtedness assumed by the purchaser of such
asset).
"Notes" shall mean the Borrower's 11% Senior Notes Due 2008 and the
Borrower's 6 7/8% Senior Notes due 2008 issued pursuant to the Notes Agreements
and any registered notes issued by the Borrower in exchange for, and as
contemplated by, the Notes with terms substantially identical to the terms of
the Notes.
"Notes Agreements" shall mean the indentures, note purchase agreements
and other agreements pursuant to which the Notes have been issued and as
thereafter amended from time to time in accordance with the requirements thereof
and of this Agreement.
18
"Notes Documents" shall mean the Notes, the Notes Agreements and all
other documents executed and delivered with respect to the Notes or the Notes
Agreements.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to any
Lender or its respective successors, transferees or assignees pursuant to the
terms of any Loan Document or secured by any of the Security Documents, whether
or not the right of such person to payment in respect of such obligations and
liabilities is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
and whether or not such claim is stayed or otherwise affected by any bankruptcy
case or insolvency or liquidation proceeding.
"Other Hedging Agreement" shall mean, as entered into between any
Lender and Borrower or its Subsidiaries, any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against fluctuations in currency or commodity
values and not entered into for speculation.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"PP&E" shall mean all personal property and equipment of Borrower and
any future Domestic Subsidiaries owned and used in connection with their
operations.
"Perfection Certificate" shall mean an Amended and Restated Perfection
Certificate substantially in the form of Exhibit J.
"Permitted Acquisition" shall mean, with respect to the Borrower or any
Wholly Owned Subsidiary of the Borrower, any transaction or series of related
transactions for the direct or indirect (a) acquisition of all or substantially
all of the property of any other person, or of any business or division of any
other person; (b) acquisition of 100% of the Equity Interests of any other
person, or otherwise causing any other person to become a Wholly Owned
Subsidiary of such person; or (c) merger or consolidation or any other
combination with any other person, if each of the following conditions are met:
(i) no Default then exists or would result therefrom;
(ii) after giving pro forma effect to such acquisition,
(1) the Borrower shall be in compliance with all covenants set forth in
Sections 6.09, 6.10 and 6.11 as of the most recent test date (assuming,
for purposes of Sections 6.09, 6.10, and 6.11, that such acquisition,
and all other Permitted Acquisitions consummated since the first day of
the most recent four fiscal quarters for each of the financial
covenants set forth in Sections 6.09, 6.10, and 6.11 ending on or prior
to the date of such acquisition, had occurred on the first day of such
most recent four fiscal quarters), and (2) the
19
Borrower and the Subsidiaries can reasonably be expected to remain in
compliance with such covenants through the Revolving Credit Loan
Maturity Date and to have sufficient cash liquidity to conduct their
respective business and pay their respective debts and other
liabilities as they come due;
(iii) none of the Borrower or any Subsidiary shall, in
connection with any such acquisition, assume or remain liable with
respect to any Indebtedness or other liability (including any material
tax or ERISA liability) of the related seller, except (1) to the extent
permitted under Section 6.01, and (2) obligations of the seller
incurred in the ordinary course of business and necessary or desirable
to the continued operation of the underlying properties or business,
and any other such liabilities or obligations not permitted to be
assumed or otherwise supported by the Borrower or any Subsidiary
hereunder shall be paid in full or released as to the assets being so
acquired on or before the consummation of such acquisition;
(iv) the acquired person shall be engaged in the Eyeglass
Lens Business as conducted by the Borrower and the Subsidiaries on the
Closing Date and the property of the type that constitutes Collateral
on the date hereof acquired in connection with any such acquisition
shall be made subject to the Lien of the Security Documents and shall
be free and clear of any Liens, other than Permitted Liens;
(v) the board of directors or other similar governing
body of the acquired person shall not have indicated publicly its
opposition to the consummation of such acquisition;
(vi) with respect to any acquisition involving Acquisition
Consideration of more than $5.0 million, the Borrower shall have
provided the Administrative Agent and the Lenders with (1) historical
financial statements for the last three fiscal years of the person or
business to be acquired (audited if available without undue cost or
delay) and unaudited financial statements thereof for the most recent
interim period which are available, (2) reasonably detailed projections
for the period up to and including the Revolving Credit Maturity Date
(but in any case for no less than one year from and after the proposed
date of acquisition) pertaining to the person or business to be
acquired, (3) a reasonably detailed description of all material
information relating thereto and copies of all material documentation
pertaining to such acquisition, (4) a reasonably detailed description
of any earnout, deferred compensation or other contingent liability to
the seller in connection with such acquisition, and (5) all such other
information and data relating to such acquisition or the person or
business to be acquired as may be reasonably requested by the
Administrative Agent or the Required Lenders;
(vii) the Borrower shall have delivered to the Agents and
the Lenders a certificate of a Financial Officer of the Borrower
certifying that (1) such acquisition complies with this definition
(which shall have attached thereto reasonably detailed backup data and
calculations showing such compliance), and (2) such acquisition could
not reasonably be expected to result in a Material Adverse Effect;
20
(viii) the aggregate Acquisition Consideration for all
Permitted Acquisitions shall not exceed $75.0 million in the current
fiscal year ending March 31, 2003, and $75.0 million in the fiscal year
ending March 31, 2004 and $50.0 million in the fiscal year ending March
31, 2005; provided, further, that any Equity Interests constituting all
or a portion of such Acquisition Consideration shall not have a cash
dividend requirement on or prior to the Revolving Credit Maturity Date;
and
(ix) such acquisition has been approved in writing by the
Required Lenders if the Acquisition Consideration for such acquisition
exceeds $25,000,000.
"Permitted Liens" shall have the meaning assigned to such term in
Section 6.02.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA
or with respect to which the Borrower or a Subsidiary could incur liability.
"Pledged Collateral" shall have the meaning set forth in any Security
Agreement delivered on the Closing Date or thereafter pursuant to Sections 4.03
or 5.11 hereof.
"Pledged Securities" shall have the meaning set forth in any Security
Agreement, the English Security Document or such other Security Document
delivered on the Closing Date or thereafter pursuant to Sections 4.03 or 5.11
hereof and shall in any event include a pledge by Borrower of (i) 100% of its
stock in any future Domestic Subsidiaries (other than any Insignificant Domestic
Subsidiary) and (ii) 65% of its stock in Direct Foreign Subsidiaries (other than
Insignificant Direct Foreign Subsidiaries).
"Preferred Stock" means, with respect to any Person, any and all
preferred or preference stock or other equity interests (however designated) of
such Person whether now outstanding or issued after the Closing Date.
"Prime Rate" shall mean the rate of interest publicly announced from
time to time by the Administrative Agent in San Francisco, California (or other
headquarters city of the Administrative Agent), as its "reference rate." The
"reference rate" is one of several base rates used by the Administrative Agent
and serves as the basis upon which effective rates of interest are calculated
for loans and other credits making reference thereto. The "reference rate" is
not necessarily the lowest base interest rate used by the Administrative Agent.
The "reference rate" is evidenced by the recording thereof after its
announcement in such internal publication or publications as the Administrative
Agent may designate. Any change in the Prime Rate announced by the
Administrative Agent shall take effect at the opening of business on the day
specified in the public announcement of such change.
21
"Pro Forma Basis" shall mean, in making any calculation with respect to
a period, giving pro forma effect, on a basis consistent with Regulation S-X
under the Exchange Act, to each Permitted Acquisition and each Asset Sale
consummated during such period or after the end of such period and prior to the
date on which such calculation is made, as if such Permitted Acquisition or
Asset Sale occurred at the beginning of such period, including the incurrence or
repayment of any Indebtedness in connection therewith and including or excluding
the Consolidated EBITDA of the business acquired or disposed of (after giving
effect to any pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Exchange Act); provided, that only
Permitted Acquisitions for which financial statements are required to be
delivered to the Administrative Agent and the Lenders in accordance with clause
(vii) of the definition thereof, or such financial statements are otherwise so
delivered, shall be included in such calculation, unless otherwise agreed to by
the Lenders.
"Pro Rata Percentage" of any Lender at any time shall mean the
percentage of the Total Commitment represented by such Lender's Commitment.
"property" shall mean any right, title or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including Equity Interests or other ownership
interests of any person and whether now in existence or owned or hereafter
entered into or acquired.
"Purchase Money Indebtedness" means Indebtedness of the Borrower or any
Subsidiary incurred for the purpose of financing all or any part of the purchase
price of any assets (including Equity Interests of any person) or the cost of
installation, construction or improvement of any property or assets and any
refinancing thereof; provided, however, that any Lien arising in connection with
any such Indebtedness shall be limited to the specified assets being financed
(including the assets of any person whose Equity Interests are acquired) or, in
the case of real property or fixtures, including additions and improvements, the
real property to which such asset is attached; provided, further, however, that
such Indebtedness is incurred within 90 days after such acquisition of such
asset by the Borrower or such Subsidiary.
"Rating Date" means the date on which the Borrower's Corporate Credit
Rating is not less than BBB- by S&P and not less than Baa3 by Moody's for
purposes of Section 5.14.
"Real Property" shall mean, collectively, all right, title and interest
(including any leasehold estate) in and to any and all parcels of or interests
in real property owned, leased or operated by any person, whether by lease,
license or other use agreement, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all improvements and
appurtenant fixtures and equipment, all general intangibles and contract rights
and other property and rights incidental to the ownership, lease or operation
thereof.
"Register" shall have the meaning assigned to such term in Section
9.04(d).
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
22
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Fund" shall mean, with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the Environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or other person or voluntarily undertaken
to: (i) remediate, clean up, remove, treat, ▇▇▇▇▇ or in any other way address
any Hazardous Material in the Environment; (ii) prevent the Release or threat of
Release, or minimize the further Release, of any Hazardous Material so it does
not migrate or endanger or threaten to endanger public health, welfare or the
Environment; or (iii) perform studies and investigations in connection with, or
as a precondition to, clause (i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Revolving
Loans, L/C Exposure and unused Commitments representing at least 51% of the sum
of all Revolving Loans outstanding, L/C Exposure and unused Commitments at such
time.
"Requirements of Law" shall mean, collectively, any and all
requirements of any Governmental Authority including any and all laws,
ordinances, rules, regulations or similar statutes or case law.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure.
"Revolving Credit Maturity Date" shall mean October 31, 2005 (three
years from the Closing Date).
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to Section 2.01. Each Revolving Loan shall be an ABR Loan
or a Eurodollar Loan.
23
"Revolving Notes" shall mean, individually or collectively, the
promissory notes made payable by Borrower to the order of a Lender hereunder to
evidence such Lender's Commitment.
"S&P" means Standard & Poor's Rating Services, a division of McGraw
Hill, Inc., or any successor or assignee of the business of such division in the
business of rating securities.
"Secured Parties" shall have the meaning assigned to such term in the
Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Collateral" shall have the meaning assigned to such term in
the Security Agreement and shall in any event include a pledge by Borrower of
(i) 100% of its stock in any future Domestic Subsidiaries (other than any
Insignificant Domestic Subsidiary) and (ii) 65% of its stock in Direct Foreign
Subsidiaries (other than Insignificant Direct Foreign Subsidiaries).
"Security Agreement" shall mean an Amended and Restated Security
Agreement, substantially in the form of Exhibit G, among the Borrower and the
Collateral Agent for the benefit of the Secured Parties, as the same may be
amended in accordance with the terms thereof and hereof or such other agreements
in form and substance acceptable to the Collateral Agent effective to grant to
the Collateral Agent a perfected first priority Lien on and security interest in
the Pledged Collateral.
"Security Documents" shall mean the Security Agreement, each
reaffirmation of a Security Agreement, the Landlord Lien Waiver and Access
Agreements and each other security document or pledge agreement required by
applicable Requirements of Law to grant a valid, perfected Lien on and security
interest in any property of the type that constitutes Collateral on the date
hereof acquired or developed pursuant to a Permitted Acquisition or any other
additional property required to be made subject to the Lien of the Security
Documents pursuant to Section 5.11, and all UCC or other financing statements or
instruments or agreements which shall contain such provisions as shall be
necessary to conform such agreements to applicable Requirements of Law required
by this Agreement or the Security Agreement to be executed and/or filed with
respect to the security interests in property created pursuant to any Security
Agreement and any other document or instrument utilized to pledge or grant a
security interest in any property of whatever kind or nature as Collateral for
the Obligations including any and all documents or instruments delivered
pursuant to Section 5.11.
"Senior Secured Debt Ratio" shall mean, at any date of determination,
the ratio of (x) the aggregate Senior Secured Indebtedness of the Borrower and
the Subsidiaries on such date to (y) Consolidated EBITDA for the most recent
four fiscal quarters.
"Senior Secured Indebtedness" shall mean all Indebtedness and
Obligations, at any time existing, owing to the Lenders and their respective
successors, transferees or assignees pursuant to the terms of any Loan Document
and secured by any of the Security Documents.
24
"SPC" has the meaning specified in Section 9.04(i).
"Standby Letter of Credit" shall mean any letter of credit, that is not
determined to be a Commercial Letter of Credit by the Issuing Bank, issued
pursuant to Section 2.21 to support the payment or performance of an obligation
by Borrower.
"Statutory Reserves" shall mean, for any Interest Period for any
Eurodollar Borrowing, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the United
States Federal Reserve System in New York City with deposits exceeding one
billion dollars against "Eurocurrency liabilities" (as such term is used in
Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurocurrency
liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exceptions or offsets which may be available from time to
time to any Lender under Regulation D.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned, controlled or
held, by the parent or one or more subsidiaries of the parent or by the parent
and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇▇ Financial BancWatch.
"Total Assets" shall mean, as of any date, the total amount of tangible
and intangible assets of Borrower and the Subsidiaries on a consolidated basis
at the end of the fiscal quarter immediately preceding such date.
"Total Commitment" shall mean, at any time, the aggregate amount of the
Commitments, as in effect at such time.
"Total Leverage Ratio" shall mean, at any date of determination, the
ratio of (x) the aggregate Indebtedness of the Borrower and the Subsidiaries on
such date to (y) Consolidated EBITDA for the most recent four fiscal quarters
provided, that for the purpose of this definition, the rate of exchange between
the euro (based on the existing 11% euro notes) and the dollar shall be $0.8905
to (euro) 1.00.
"Total Tangible Assets" means, as of any date, the total amount of
tangible assets of the Borrower and the Subsidiaries on a consolidated basis at
the end of the fiscal quarter immediately preceding such date.
25
"Transactions" shall mean, collectively, the transactions to occur on
or prior to the Closing Date pursuant to the Loan Documents, including the
execution and delivery of the Loan Documents and effectiveness of the
Commitments hereunder and the payment of all fees and expenses to be paid on or
prior to the Closing Date and owing in connection with the foregoing.
"Type," when used in respect of any Revolving Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Revolving Loan or on
the Revolving Loans comprising such Borrowing is determined. For purposes
hereof, the term "Rate" shall include the Eurodollar Rate and the Alternate Base
Rate.
"UCC" shall mean the Uniform Commercial Code as in effect in the
applicable state or jurisdiction.
"Underusage Period" shall mean any quarterly period commencing with the
quarter beginning April 1, 2003, in which Borrower's average Aggregate Revolving
Credit Exposure is less than 33% of the Total Commitment hereunder.
"Wholly Owned Subsidiary" shall mean, as to any person, (a) any
corporation 100% of whose capital stock (other than directors' qualifying
shares) is at the time owned by such person and/or one or more Wholly Owned
Subsidiaries of such person and (b) any partnership, association, joint venture,
limited liability company or other entity in which such person and/or one or
more Wholly Owned Subsidiaries of such person have a 100% equity interest at
such time.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time, (b) all financial statements to be
delivered pursuant to this Agreement shall be prepared in accordance with GAAP
as in effect from time to time and (c) all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect on the date
hereof unless agreed to by the Borrower and the Required Lenders. The term
"Domestic Subsidiary" as used herein shall only be applicable to the extent that
a Domestic Subsidiary of the Borrower exists.
26
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Revolving Loans to the Borrower, at
any time and from time to time after the Closing Date, and until the earlier of
the Revolving Credit Maturity Date and the termination of the Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal amount at
any time outstanding that will not result in such Lender's Revolving Credit
Exposure exceeding such Lender's Commitment. As of the date hereof and until
such time as Administrative Agent has notified Borrower that it has obtained
additional Commitments of $10.0 million, the Total Commitment shall not exceed
$90.0 million less any reductions required or permitted by Section 2.09 or 2.12;
thereafter, the Total Commitment shall not exceed $100.0 million less any
reductions required or permitted by Section 2.09 or 2.12. Within the limits set
forth in the preceding sentences and subject to the terms, conditions and
limitations set forth herein, the Borrower may borrow, pay or prepay and
reborrow Revolving Loans.
SECTION 2.02. Revolving Loans.
(a) Each Revolving Loan shall be made as part of a
Borrowing consisting of Revolving Loans made by the Lenders ratably in
accordance with their applicable Commitments; provided, however, that the
failure of any Lender to make any Revolving Loan shall not in itself relieve any
other Lender of its obligation to lend hereunder (it being understood, however,
that no Lender shall be responsible for the failure of any other Lender to make
any Revolving Loan required to be made by such other Lender). Except for Loans
deemed made pursuant to Section 2.02(f), (x) the ABR Loans comprising any
Borrowing shall be in an aggregate principal amount that is (i) an integral
multiple of $100,000 and not less than $100,000 or (ii) equal to the remaining
available balance of the applicable Commitments and (y) the Eurodollar Loans
comprising any Borrowing shall be in an aggregate principal amount that is (i)
an integral multiple of $500,000 and not less than $500,000 or (ii) equal to the
remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.08 and 2.14, each Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request pursuant to Section 2.03. Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Revolving Loan; provided that any exercise of such option
shall not affect the obligation of the Borrower to repay such Revolving Loan in
accordance with the terms of this Agreement. Borrowings of more than one Type
may be outstanding at the same time; provided, however, that the Borrower shall
not be entitled to request any Borrowing that, if made, would result in more
than twenty-five (25) Eurodollar Borrowings outstanding hereunder at any time.
For purposes of the foregoing, Borrowings having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Borrowings.
27
(c) Except with respect to Revolving Loans made pursuant
to Section 2.02(f), each Lender shall make each Revolving Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds to such account in California as the Administrative Agent may designate
not later than 12:00 noon, California time, and the Administrative Agent shall
promptly credit the amounts so received to an account as directed by the
Borrower in the applicable Borrowing Request maintained with the Administrative
Agent or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Lenders.
(d) Unless the Administrative Agent shall have received
notice from a Lender prior to the date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above, and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith, in the case of such
Lender, on demand, and, in the case of the Borrower, within two Business Days of
demand, such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent at (i) in the case of the Borrower,
the interest rate applicable at the time to the Revolving Loans comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount shall constitute such Lender's Revolving Loan as part of such Borrowing
for purposes of this Agreement.
(e) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request any Revolving Credit
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Credit Maturity Date.
(f) If the Issuing Bank shall not have received from the
Borrower the payment required to be made by Section 2.21(e) within the time
specified in such Section, the Issuing Bank will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative Agent will
promptly notify each Lender of such L/C Disbursement and its Pro Rata Percentage
thereof. Each Lender shall pay by wire transfer of immediately available funds
to the Administrative Agent on such date (or, if such Lender shall have received
such notice later than 12:00 (noon), California time, on any day, not later than
11:00 a.m., California time, on the immediately following Business Day), an
amount equal to such Lender's Pro Rata Percentage of such L/C Disbursement (it
being understood that such amount shall be deemed to constitute an ABR Loan of
such Lender, and such payment shall be deemed to have reduced the L/C Exposure),
and the Administrative Agent will promptly pay to the Issuing Bank amounts so
received by it from the Lenders. The Administrative Agent will promptly pay to
the Issuing Bank any amounts received by it from the Borrower pursuant to
Section 2.21(e) prior to the time that any Lender makes any payment pursuant to
this paragraph (f); any such amounts received by the Administrative Agent
thereafter will be
28
promptly remitted by the Administrative Agent to the Lenders that shall have
made such payments and to the Issuing Bank, as their interests may appear. If
any Lender shall not have made its Pro Rata Percentage of such L/C Disbursement
available to the Administrative Agent as provided above, such Lender and the
Borrower severally agree to pay interest on such amount, for each day from and
including the date such amount is required to be paid in accordance with this
paragraph (f) to, but excluding, the date such amount is paid, to the
Administrative Agent for the account of the Issuing Bank at (i) in the case of
the Borrower, a rate per annum equal to the interest rate applicable to
Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of such
Lender, for the first such day, the Federal Funds Rate, and for each day
thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a deemed Borrowing pursuant to Section 2.02(f), as to which this
Section 2.03 shall not apply), the Borrower shall hand deliver or telecopy to
the Administrative Agent a duly completed Borrowing Request (a) in the case of a
Eurodollar Borrowing, not later than 9:00 a.m., California time, at least three
Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 10:00 a.m., California time, one Business Day before a
proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be signed
by or on behalf of the Borrower and shall specify the following information: (i)
whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
provided that until the Arranger shall have notified the Borrower that the
primary syndication of the Commitments has been completed (which notice shall be
given as promptly as practicable and, in any event, within 180 days after the
Closing Date), the Borrower shall only be permitted to request (x) ABR
Borrowings or (y) Eurodollar Borrowings with an Interest Period of seven days,
unless otherwise agreed to by the Administrative Agent; (ii) the date of such
Borrowing (which shall be a Business Day); (iii) the number and location of the
account to which funds are to be disbursed (which shall be an account that
complies with the requirements of Section 2.02(c)); (iv) the amount of such
Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto; provided, however, that, notwithstanding
any contrary specification in any Borrowing Request, each requested Borrowing
shall comply with the requirements set forth in Section 2.02. If no election as
to the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration, except as
set forth above. The Administrative Agent shall promptly advise the applicable
Lenders of any notice given pursuant to this Section 2.03 (and the contents
thereof) and of each Lender's portion of the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Revolving Loans.
(a) The Borrower hereby unconditionally promises to pay
to the Administrative Agent for the account of each Lender, the then unpaid
principal amount of each Revolving Loan of such Lender on the Revolving Credit
Maturity Date.
(b) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing the indebtedness of the
Borrower to such Lender resulting from each Revolving Loan made by such Lender
from time to time, including the amounts of
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principal and interest payable and paid to such Lender from time to time under
this Agreement.
(c) The Administrative Agent shall maintain accounts in
which it will record (i) the amount of each Revolving Loan made hereunder, the
Type thereof and the Interest Period applicable thereto; (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder; and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower or any Guarantor and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant
to paragraphs (b) and (c) above shall be prima facie evidence of the existence
and amounts of the obligations therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligations of the Borrower
to repay the Revolving Loans in accordance with their terms.
(e) The Revolving Loans shall be evidenced by the
Revolving Notes payable to each Lender and its registered assigns and in a form
and substance reasonably acceptable to the Administrative Agent and the
Borrower. Notwithstanding any other provision of this Agreement, the interests
represented by such Revolving Notes shall at all times (including after any
assignment of all or part of such interests pursuant to Section 9.04) be
represented by one or more Revolving Notes payable to the payee named therein or
its registered assigns, until such Revolving Note is returned to the Borrower
and duly canceled or other arrangements are made to the satisfaction of the
Administrative Agent.
SECTION 2.05. Fees.
(a) The Borrower agrees to pay to each Lender, through
the Administrative Agent, on the last Business Day of March, June, September and
December in each year and on each date on which any Commitment of such Lender
shall expire or be terminated as provided herein, a commitment fee (a
"Commitment Fee") equal to the Applicable Revolving Commitment Fee Percentage
per annum on the average daily unused amount of the Commitments (which
calculations shall not take into account L/C Exposure relating to Commercial
Letters of Credit) of such Lender during the preceding quarter (or other period
commencing with the date hereof or ending with the Revolving Credit Maturity
Date or the date on which the Commitments of such Lender shall expire or be
terminated). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. The Commitment Fee due to each
Lender shall commence to accrue on the date hereof and shall cease to accrue on
the date on which the Commitment of such Lender shall expire or be terminated as
provided herein.
(b) The Borrower agrees to pay to the Administrative
Agent, for its own account, such fees as set forth in the Fee Letter (the
"Administrative Agent Fees").
(c) With respect to each Letter of Credit, the Borrower
agrees to pay: (i) to the Issuing Bank with respect to each Letter of Credit,
concurrently with the issuance of each
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Letter of Credit and annually thereafter, a fronting fee equal to 0.125% per
annum on the aggregate outstanding face amount of such Letter of Credit (the
"Issuing Bank Fees"); (ii) quarterly in advance, to the Administrative Agent for
the ratable account of the Lenders in accordance with each Lender's Pro Rata
Percentage of the aggregate L/C Exposure (excluding the portion thereof
attributable to unreimbursed L/C Disbursements), a standby letter of credit fee
(the "L/C Participation Fee") in an amount equal to (A) the Applicable
Percentage per annum in effect at the time of issuance of such Standby Letter of
Credit used to determine the interest rate on Revolving Credit Borrowings
comprised of Eurodollar Loans pursuant to Section 2.06 times (B) the face amount
of such Standby Letter of Credit through the termination or expiration of such
Standby Letter of Credit, which fee the Administrative Agent shall promptly pay
to the Lenders; (iii) concurrently with the issuance of each Commercial Letter
of Credit, to the Administrative Agent for the ratable account of the Lenders in
accordance with each Lender's Pro Rata Percentage of the aggregate L/C Exposure
(excluding the portion thereof attributable to unreimbursed L/C Disbursements),
a commercial letter of credit issuance fee in the amount set forth from time to
time as the Issuing Bank's published scheduled fee for the issuance of
commercial letters of credit, which fee the Administrative Agent shall promptly
pay to the Lenders; and (iv) and concurrently with each negotiation, drawing or
amendment of each Commercial Letter of Credit, to the Issuing Bank for the sole
account of the Issuing Bank, negotiation, drawing and amendment fees in the
amounts set forth from time to time as the Issuing Bank's published scheduled
fees for such services.
(d) All Fees shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for distribution, if
and as appropriate, among the Lenders, except that the Issuing Bank Fees and any
fees incurred pursuant to Section 2.05(c)(iv) shall be paid directly to the
Issuing Bank. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. Interest on Revolving Loans.
(a) Subject to the provisions of Section 2.07, the
Revolving Loans comprising each ABR Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be) at a rate per annum equal to the Alternate Base Rate plus
the Applicable Percentage in effect from time to time.
(b) Subject to the provisions of Section 2.07, the
Revolving Loans comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the Eurodollar Rate for the Interest Period
in effect for such Borrowing plus the Applicable Percentage in effect from time
to time.
(c) Interest on each Revolving Loan shall be payable on
the Interest Payment Dates applicable to such Revolving Loan except as otherwise
provided in this Agreement. The applicable Alternate Base Rate or Eurodollar
Rate for each Interest Period or day within an Interest Period, as the case may
be, shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error.
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SECTION 2.07. Default Interest. Upon and during the continuance of
any Event of Default, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on the Revolving Loans and any other
amount due hereunder or under any other Loan Document at the higher of (a) a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be) equal to the rate that would be
applicable to an ABR Loan plus 2.00% and (b) the rate otherwise applicable to a
Revolving Loan pursuant to Section 2.06 plus 2.00% per annum.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
reasonably determined that quotations for interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for Eurodollar Loans as provided herein, or that
the rates at which such dollar deposits are being offered will not adequately
and fairly reflect the cost to any Lender of making or maintaining its
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Eurodollar Rate, the Administrative Agent shall, as
soon as practicable thereafter, give written or telecopy notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments.
(a) The Commitments and the L/C Commitment shall
automatically terminate on the Revolving Credit Maturity Date.
(b) The Total Commitment shall automatically reduce by
$10.0 million on each anniversary of the Closing Date.
(c) Upon at least three Business Days' prior irrevocable
written or telecopy notice to the Administrative Agent, the Borrower may at any
time in whole permanently terminate, or from time to time in part permanently
reduce, the Commitments; provided, however, that (i) each partial reduction of
the Commitments shall be in an integral multiple of $1.0 million and in a
minimum amount of $5.0 million, and (ii) the Total Commitment shall not be so
reduced to an amount that is less than the Aggregate Revolving Credit Exposure
at the time.
(d) Each reduction in the Commitments hereunder shall be
made ratably among the Lenders in accordance with their respective applicable
Commitments. The Borrower shall pay to the Administrative Agent for the account
of the applicable Lenders, on the date of each termination or reduction, the
Commitment Fees on the amount of the Commitments so terminated or reduced
accrued to but excluding the date of such termination or reduction.
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SECTION 2.10. Conversion and Continuation of Borrowings. The
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 10:00 a.m., California time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 9:00 a.m., California time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 9:00 a.m.,
California time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro
rata among the Lenders in accordance with the respective principal
amounts of the Revolving Loans comprising the converted or continued
Borrowing;
(ii) if less than all the outstanding principal amount of
any Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and
the Administrative Agent by recording for the account of such Lender
the new Revolving Loan of such Lender resulting from such conversion
and reducing the Revolving Loan (or portion thereof) of such Lender
being converted by an equivalent principal amount; accrued interest on
any Eurodollar Loan (or portion thereof) being converted shall be paid
by the Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time
other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.15;
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as
a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing;
(vii) upon notice to the Borrower from the Administrative
Agent given at the request of the Required Lenders (A) after the
occurrence and during the continuance of a Default, Revolving Loans may
only be converted into, or continued as, (x) ABR Loans or (y)
Eurodollar Loans with an Interest Period of one month or less and (B)
after the occurrence and during the continuance of an Event of Default,
no outstanding Revolving Loan may be converted into, or continued as, a
Eurodollar Loan; and
33
(viii) until the Administrative Agent shall have notified
the Borrower that the primary syndication of the Commitments has been
completed (which notice shall be given by the Arranger as promptly as
practicable and, in any event, within 180 days after the Closing Date),
an ABR Borrowing may be converted only into a Eurodollar Borrowing with
an Interest Period of seven days, unless otherwise agreed to by the
Administrative Agent.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued; (ii) whether
such Borrowing is to be converted into or continued as a Eurodollar Borrowing or
an ABR Borrowing; (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day); and (iv) if such Borrowing is to be
converted into or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion into or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the Lenders of any notice given
pursuant to this Section 2.10 and of each Lender's portion of any converted or
continued Borrowing. If the Borrower shall not have given notice in accordance
with this Section 2.10 to continue any Borrowing into a subsequent Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Optional Prepayments.
(a) The Borrower shall have the right at any time and
from time to time to prepay any Borrowing, in whole or in part, (i) upon at
least three Business Days' prior written or telecopy notice in the case of
Eurodollar Loans or (ii) or upon at least one Business Day's prior written or
telecopy notice in the case of ABR Loans, to the Administrative Agent before
9:00 a.m., California time; provided, however, that each partial prepayment
shall be in an amount that is an integral multiple of $100,000 and not less than
$100,000.
(b) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Borrowing (or portion thereof)
to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing by the amount stated therein on the date stated therein. All
prepayments under this Section 2.11 shall be subject to Section 2.15 but shall
be otherwise without premium or penalty. All prepayments under this Section 2.11
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.
SECTION 2.12. Mandatory Prepayments.
(a) In the event of any termination of all the
Commitments as provided in this Agreement, the Borrower shall, on the date of
such termination, repay or prepay all its outstanding Revolving Credit
Borrowings and replace all outstanding Letters of Credit and/or deposit an
amount equal to the L/C Exposure in cash in a cash collateral account
established
34
with the Collateral Agent for the benefit of the Secured Parties. In the event
of any partial or mandatory reduction of the Commitments or, if applicable
pursuant to Section 2.23, the Borrowing Base (including as evidenced by the most
recently delivered Borrowing Base Certificate) then (i) at or prior to the
effective date of such reduction, the Administrative Agent shall notify the
Borrower and the Lenders of the Aggregate Revolving Credit Exposure after giving
effect thereto and (ii) if the Aggregate Revolving Credit Exposure would exceed
the Total Commitment after giving effect to such reduction or termination, or
(iii) if the Aggregate Revolving Credit Exposure would exceed the lesser of the
Total Commitment and, if applicable, pursuant to Section 2.23, the Borrowing
Base, in each case after giving effect to such reduction or termination, then
the Borrower shall, on the date of such reduction or termination, repay or
prepay Revolving Credit Borrowings to the then-required amount and/or replace or
cash collateralize outstanding Letters of Credit in an amount sufficient to
eliminate such excess.
(b) Not later than one Business Day following the receipt
of any Net Cash Proceeds of any Asset Sale, the Revolving Loans shall be repaid
in accordance with the provisions of this Agreement in an aggregate amount equal
to 100% of the Net Cash Proceeds received with respect to such Asset Sale.
(c) Not later than one Business Day following the receipt
of any Net Cash Proceeds from a Casualty Event, the Revolving Loans shall be
repaid in accordance with the provisions of this Agreement in an aggregate
amount equal to 100% of the Net Cash Proceeds from such Casualty Event.
(d) The Borrower shall deliver to the Administrative
Agent, at the time of each prepayment required under this Section 2.12, (i) a
certificate signed by a Financial Officer of the Borrower setting forth in
reasonable detail the calculation of the amount of such prepayment and (ii) to
the extent practicable, at least three days' prior written notice of such
prepayment. Each notice of prepayment shall specify the prepayment date, the
Type of each Loan being prepaid and the principal amount of each Loan (or
portion thereof) to be prepaid. All prepayments of Borrowings under this Section
2.12 shall be subject to Section 2.15, but shall otherwise be without premium or
penalty.
(e) Amounts to be applied pursuant to this Section 2.12
to the prepayment of Revolving Loans shall be applied first to reduce
outstanding ABR Loans. Any amounts remaining after each such application shall
be applied to prepay Eurodollar Loans provided that if a prepayment of a
Eurodollar Loan pursuant to subparagraphs (b) and (c), above, would create a
Breakage Event, Administrative Agent shall hold such Net Cash Proceeds in an
interest-bearing account for the benefit of Borrower and shall cause such
prepayment on the last day of the Interest Period for such Eurodollar Loan.
SECTION 2.13. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision of this
Agreement, if after the Closing Date any change in applicable law or regulation
or in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof (whether or not having
the force of law) shall impose, modify or deem
35
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by any Lender or the
Issuing Bank (except any such reserve requirement which is reflected in the
Eurodollar Rate) or shall impose on such Lender or the Issuing Bank or the
London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or participation
therein, and the result of any of the foregoing shall be to increase the cost to
such Lender or the Issuing Bank of making or maintaining any Eurodollar Loan or
increase the cost to any Lender of issuing or maintaining any Letter of Credit
or purchasing or maintaining a participation therein or to reduce the amount of
any sum received or receivable by such Lender or the Issuing Bank hereunder
(whether of principal, interest or otherwise) by an amount deemed by such Lender
or the Issuing Bank to be material, then the Borrower will pay to such Lender or
the Issuing Bank, as the case may be, within 10 days after demand such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank shall have
determined that the adoption after the Closing Date of any law, rule,
regulation, agreement or guideline regarding capital adequacy, or any change
after the date hereof in any such law, rule, regulation, agreement or guideline
(whether such law, rule, regulation, agreement or guideline has been adopted) or
in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Lender (or any lending office of such Lender) or the Issuing Bank or any
Lender's or the Issuing Bank's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
Governmental Authority has or would have the effect of reducing the rate of
return on such Lender's or the Issuing Bank's capital or on the capital of such
Lender's or the Issuing Bank's holding company, if any, as a consequence of this
Agreement or the Revolving Loans made or participations in Letters of Credit
purchased by such Lender pursuant hereto or the Letters of Credit issued by the
Issuing Bank pursuant hereto to a level below that which such Lender or the
Issuing Bank or such Lender's or the Issuing Bank's holding company could have
achieved but for such applicability, adoption, change or compliance (taking into
consideration such Lender's or the Issuing Bank's policies and the policies of
such Lender's or the Issuing Bank's holding company with respect to capital
adequacy) by an amount deemed by such Lender or the Issuing Bank to be material,
then from time to time the Borrower shall pay to such Lender or the Issuing
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank,
setting forth in reasonable detail the reason therefor, the amount or amounts
necessary to compensate such Lender or the Issuing Bank or its holding company,
as applicable, as specified in paragraph (a) or (b) above, and the calculation
thereof, shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank the
amount shown as due on any such certificate delivered by it within 10 days after
its receipt of the same.
(d) Failure or delay on the part of any Lender or the
Issuing Bank to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on capital shall not
constitute a waiver of such Lender's or the Issuing
36
Bank's right to demand such compensation; provided that the Borrower shall not
be under any obligation to compensate any Lender or the Issuing Bank under
paragraph (a) or (b) above with respect to increased costs or reductions with
respect to any period prior to the date that is 270 days prior to such request
if such Lender or the Issuing Bank knew or could reasonably have been expected
to be aware of the circumstances giving rise to such increased costs or
reductions and of the fact that such circumstances would in fact result in a
claim for increased compensation by reason of such increased costs or
reductions; provided, further, that the foregoing limitation shall not apply to
any increased costs or reductions arising out of the retroactive application of
any law, regulation, rule, guideline or directive as aforesaid within such
six-month period. Each Lender's determination and calculation of amounts due it
under this Section 2.13 shall be binding on all parties hereto absent manifest
error.
SECTION 2.14. Change in Legality.
(a) Notwithstanding any other provision of this
Agreement, if, after the date hereof, any change in any law or regulation or in
the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar
Loans will not thereafter (for the duration of such unlawfulness) be
made by such Lender hereunder (or be continued for additional Interest
Periods and ABR Loans will not thereafter (for such duration) be
converted into Eurodollar Loans), whereupon any request for a
Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar
Borrowing or to continue a Eurodollar Borrowing for an additional
Interest Period) shall, as to such Lender only, be deemed a request for
an ABR Loan (or a request to continue an ABR Loan as such for an
additional Interest Period or to convert a Eurodollar Loan into an ABR
Loan, as the case may be), unless such declaration shall be
subsequently withdrawn; and
(ii) such Lender may require that all outstanding
Eurodollar Loans made by it be converted into ABR Loans, in which event
all such Eurodollar Loans shall be automatically converted into ABR
Loans as of the effective date of such notice as provided in paragraph
(b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the
Borrower by any Lender shall be effective as to each Eurodollar Loan made by
such Lender, if lawful, on the last day of the Interest Period currently
applicable to such Eurodollar Loan; in all other cases such notice shall be
effective on the date of receipt by the Borrower.
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SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor;
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor; or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Revolving Loan shall have been given by the Borrower
hereunder (any of the events referred to in this clause (a) being called a
"Breakage Event") or (b) any default in the making of any payment or prepayment
required to be made hereunder. In the case of any Breakage Event, such loss
shall include an amount equal to the excess, as reasonably determined by such
Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the
subject of such Breakage Event for the period from the date of such Breakage
Event to the last day of the Interest Period in effect (or that would have been
in effect) for such Revolving Loan over (ii) the amount of interest likely to be
realized by such Lender in redeploying the funds released or not utilized by
reason of such Breakage Event for such period (excluding any Applicable
Percentage). A certificate of any Lender setting forth any amount or amounts
which such Lender is entitled to receive pursuant to this Section 2.15 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
SECTION 2.16. Pro Rata Treatment. Except as provided below in this
Section 2.16 and as required under Sections 2.12(c) and 2.14, each Borrowing,
each payment or prepayment of principal of any Borrowing, each payment of
interest on the Revolving Loans, each payment of the Commitment Fees, each
reduction of the Commitments and each conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type shall be allocated pro
rata among the Lenders in accordance with their respective applicable
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Revolving
Loans). Each Lender agrees that in computing such Lender's portion of any
Borrowing to be made hereunder, the Administrative Agent may, in its discretion,
round each Lender's percentage of such Borrowing to the next higher or lower
whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower or any other Loan Party, or pursuant to a secured claim
under Section 506 of Title 11 of the United States Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary) in
respect of any Revolving Loan or L/C Disbursement as a result of which the
unpaid principal portion of its Revolving Loans and participations in L/C
Disbursements shall be proportionately less than the unpaid principal portion of
the Revolving Loans and participations in L/C Disbursement of any other Lender,
it shall be deemed simultaneously to have purchased from such other Lender at
face value, and shall promptly pay to such other Lender the purchase price for,
a participation in the Revolving Loans and L/C Exposure, as the case may be, of
such other Lender, so that the aggregate unpaid principal amount of the
Revolving Loans and L/C
38
Exposure and participations in Revolving Loans and L/C Exposure held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Revolving Loans and L/C Exposure then outstanding as the principal amount
of its Revolving Loans and L/C Exposure prior to such exercise of banker's lien,
setoff or counterclaim or other event was to the principal amount of all
Revolving Loans and L/C Exposure outstanding prior to such exercise of banker's
lien, setoff or counterclaim or other event; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.17
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in a Revolving Loan or L/C Disbursement deemed to
have been so purchased may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by the Borrower to such
Lender by reason thereof as fully as if such Lender had made a Revolving Loan
directly to the Borrower in the amount of such participation.
SECTION 2.18. Payments.
(a) The Borrower shall make each payment (including
principal of or interest on any Borrowing or any L/C Disbursement or any Fees or
other amounts) hereunder and under any other Loan Document not later than 11:00
a.m., California time, on the date when due in immediately available dollars,
without setoff, defense or counterclaim. Each such payment (other than Issuing
Bank Fees and any fees incurred pursuant to Section 2.05(c)(iv), which shall be
paid directly to the Issuing Bank) shall be made to the Administrative Agent at
its address for notices set forth in Section 9.01 of this Agreement, or such
other address that the Administrative Agent may designate in writing to the
Borrower.
(b) Except as otherwise expressly provided herein,
whenever any payment (including principal of or interest on any Borrowing or any
Fees or other amounts) hereunder or under any other Loan Document shall become
due, or otherwise would occur, on a day that is not a Business Day, such payment
may be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of interest or Fees, if
applicable.
(c) The Borrower hereby authorizes the Administrative
Agent to debit the Designated Deposit Account to effect any payment due to the
Lenders or the Administrative Agent pursuant to this Agreement provided
Administrative Agent has given Borrower prior notice of the amount and timing of
such debit. Any resulting overdraft in such account shall be payable by the
Borrower to the Administrative Agent on the next succeeding Business Day.
(d) Unless the Administrative Agent shall have been
notified by the Borrower prior to the date on which any payment to be made by
the Borrower hereunder is due that the Borrower does not intend to remit such
payment, the Administrative Agent may, in its discretion, assume that Borrower
has remitted such payment when so due and the Administrative Agent may, in its
discretion and in reliance upon such assumption, make available to each Lender
on such payment date an amount equal to such Lender's share of
39
such assumed payment. If the Borrower has not in fact remitted such payment to
the Administrative Agent, each Lender shall forthwith on demand repay to the
Administrative Agent the amount of such assumed payment made available to such
Lender, together with interest thereon in respect of each day from and including
the date such amount was made available by the Administrative Agent to such
Lender to the date such amount is repaid to the Administrative Agent at the
Federal Funds Rate.
SECTION 2.19. Taxes.
(a) Any and all payments by or on account of any
obligation of the Borrower or any Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower or any Loan
Party shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.19) the Administrative Agent or such Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made; (ii) the Borrower or such Loan Party shall
make such deductions; and (iii) the Borrower or such Loan Party shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, the Borrower shall pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent
and each Lender, within five days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent
or such Lender, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower or any Loan Party hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 2.19) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, or by the Administrative Agent on its behalf or on behalf
of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower or any other Loan Party to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
(e) Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement
40
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) If the Administrative Agent or any Lender receives a
refund in respect of Indemnified Taxes or Other Taxes paid by the Borrower,
which in the good faith judgment of the Administrative Agent or such Lender is
allocable to such payment, it shall promptly pay such refund, but only to the
extent of indemnity payments made or additional amounts paid by the Borrower
under this Section 2.13 with respect to Taxes and Other Taxes, to the Borrower,
net of all reasonable out-of-pocket expenses (including any Taxes to which such
Lender has become subject as a result of its receipt of such refund) of the
Administrative Agent or such Lender incurred in obtaining such refund and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, however, that the Borrower
agrees to promptly return such refund (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to the Administrative
Agent or the applicable Lender, as the case may be, if it receives notice from
the Administrative Agent or the applicable Lender that the Administrative Agent
or such Lender is required to repay such refund to such Governmental Authority.
Nothing contained in this Section 2.19(f) shall require the Administrative Agent
or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems to be confidential) to the Borrower or any
other person.
SECTION 2.20. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate.
(a) In the event (i) any Lender or the Issuing Bank
delivers a certificate requesting compensation pursuant to Section 2.13; (ii)
any Lender or the Issuing Bank delivers a notice described in Section 2.14; or
(iii) the Borrower is required to pay any additional amount to any Lender or the
Issuing Bank or any Governmental Authority on account of any Lender or the
Issuing Bank pursuant to Section 2.19 the Borrower may, at its sole expense and
effort (including with respect to the processing and recordation fee referred to
in Section 9.04(b)), upon notice to such Lender or the Issuing Bank and the
Administrative Agent, require such Lender or the Issuing Bank to transfer and
assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (x) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction, (y) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Commitment is being assigned, of the Issuing Bank), which
consent shall not unreasonably be withheld or delayed, and (z) the Borrower or
such assignee shall have paid to the affected Lender or the Issuing Bank in
immediately available funds an amount equal to the sum of the principal of and
interest accrued to the date of such payment on the outstanding Revolving Loans
or L/C Disbursements of such Lender or the Issuing Bank, respectively, plus all
Fees and other amounts accrued for the account of such Lender or the Issuing
Bank hereunder (including any amounts under Section 2.13 and Section 2.15);
provided, further, that, if prior to any such
41
transfer and assignment the circumstances or event that resulted in such
Lender's or the Issuing Bank's claim for compensation under Section 2.13 or
notice under Section 2.14 or the amounts paid pursuant to Section 2.19, as the
case may be, cease to cause such Lender or the Issuing Bank to suffer increased
costs or reductions in amounts received or receivable or reduction in return on
capital, or cease to have the consequences specified in Section 2.14, or cease
to result in amounts being payable under Section 2.19, as the case may be
(including as a result of any action taken by such Lender or the Issuing Bank
pursuant to paragraph (b) below), or if such Lender or the Issuing Bank shall
waive its right to claim further compensation under Section 2.13 in respect of
such circumstances or event or shall withdraw its notice under Section 2.14 or
shall waive its right to further payments under Section 2.19 in respect of such
circumstances or event, as the case may be, then such Lender or the Issuing Bank
shall not thereafter be required to make any such transfer and assignment
hereunder.
(b) If (i) any Lender or the Issuing Bank shall request
compensation under Section 2.13; (ii) any Lender or the Issuing Bank delivers a
notice described in Section 2.14; or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.19, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Borrower or (y)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.13 or enable it to
withdraw its notice pursuant to Section 2.14 or would reduce amounts payable
pursuant to Section 2.19, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender or the
Issuing Bank in connection with any such filing or assignment, delegation and
transfer.
SECTION 2.21. Letters of Credit.
(a) General. The Borrower may request the issuance of a
Letter of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
while the Commitments remain in effect. This Section 2.21 shall not be construed
to impose an obligation upon the Issuing Bank to issue any Letter of Credit that
is inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. In order to request the issuance of a Letter of Credit (or
to amend, renew or extend an existing Letter of Credit), the Borrower shall hand
deliver or telecopy to the Issuing Bank and the Administrative Agent (at least
two Business Days in advance of the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) below), the amount of
such Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be
42
necessary to prepare such Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if, and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and
warrant that, after giving effect to such issuance, amendment, renewal or
extension (i) the L/C Exposure shall not exceed $20,000,000 and (ii) the
Aggregate Revolving Credit Exposure shall not exceed the Total Commitment as in
effect at such time, and (iii) if applicable under Section 2.23, the Aggregate
Revolving Credit Exposure shall not exceed the lesser of (x) the Total
Commitment and (y) the Borrowing Base, as in effect at such time. The Issuing
Bank shall issue the requested Letter of Credit within 14 days after notice
given pursuant to and in accordance with this Section 2.21. The existing letters
of credit identified on Schedule 2.21(b) shall be deemed issued under and
pursuant to this Section 2.21(b) and shall be treated as Letters of Credit for
all purposes under this Agreement.
(c) Expiration Date. Each Letter of Credit shall expire
at the close of business on the earlier of (x) the date one year after the date
of the issuance of such Letter of Credit (unless the Issuing Bank and the
Administrative Agent shall agree otherwise) and (y) in any event, the date that
is five Business Days prior to the Revolving Credit Maturity Date, unless such
Letter of Credit expires by its terms on an earlier date.
(d) Participations. By the issuance of a Letter of Credit
and without any further action on the part of the Issuing Bank or the Lenders,
the Issuing Bank hereby grants to each Lender, and each such Lender hereby
acquires from the applicable Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Pro Rata Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the Issuing Bank, such Lender's Pro
Rata Percentage of each L/C Disbursement made by the Issuing Bank and not
reimbursed by the Borrower (or, if applicable, another party pursuant to its
obligations under any other Loan Document) forthwith on the date due as provided
in Section 2.02(f). Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph (d) in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the Borrower shall pay to the
Administrative Agent an amount equal to such L/C Disbursement not later than the
end of the day on which the Borrower shall have received notice from the Issuing
Bank that payment of such draft will be made, or, if the Borrower shall have
received such notice later than 11:00 a.m., California time, on any Business
Day, not later than 11:00 a.m., California time, on the immediately following
Business Day (it being acknowledged that the Borrower may pay such L/C
Disbursement from the unused portion of the Revolving Commitment).
(f) Obligations Absolute. The Borrower's obligations to
reimburse L/C Disbursements as provided in paragraph (e) above shall be
absolute, unconditional and
43
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, under any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of
any Letter of Credit or any Loan Document, or any term or provision
therein;
(ii) any amendment or waiver of or any consent to
departure from all or any of the provisions of any Letter of Credit or
any Loan Document;
(iii) the existence of any claim, setoff, defense
or other right that the Borrower, any other party guaranteeing, or
otherwise obligated with, the Borrower, any Subsidiary or other
Affiliate thereof or any other person may at any time have against the
beneficiary under any Letter of Credit, the Issuing Bank, the
Administrative Agent or any Lender or any other person, whether in
connection with this Agreement, any other Loan Document or any other
related or unrelated agreement or transaction;
(iv) any draft or other document presented under
a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Issuing Bank under a Letter
of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of
any kind of the Issuing Bank, the Lenders, the Administrative Agent or
any other person or any other event or circumstance whatsoever, whether
or not similar to any of the foregoing, that might, but for the
provisions of this Section 2.21, constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly understood and
agreed that the absolute and unconditional obligation of the Borrower hereunder
to reimburse L/C Disbursements will not be excused by the gross negligence or
willful misconduct of the Issuing Bank. However, the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
gross negligence or willful misconduct in determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof; it
is understood that the Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary and, in making any
payment under any Letter of Credit, (i) the Issuing Bank's exclusive reliance on
the documents presented to it under such Letter of Credit as to any and all
matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to
44
be insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute willful misconduct or gross negligence of the Issuing
Bank.
(g) Disbursement Procedures. The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The Issuing Bank shall
as promptly as possible give telephonic notification, confirmed by telecopy, to
the Administrative Agent and the Borrower of such demand for payment and whether
the Issuing Bank has made or will make an L/C Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Issuing Bank and the Lenders with
respect to any such L/C Disbursement. The Administrative Agent shall promptly
give each Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall make any
L/C Disbursement in respect of a Letter of Credit, then, unless the Borrower
shall reimburse such L/C Disbursement in full on such date, the unpaid amount
thereof shall bear interest for the account of the Issuing Bank, for each day
from and including the date of such L/C Disbursement, to but excluding the
earlier of the date of payment by the Borrower or the date on which interest
shall commence to accrue thereon as provided in Section 2.02(f), at the rate per
annum that would apply to such amount if such amount were an ABR Loan.
(i) Resignation or Removal of the Issuing Bank. The
Issuing Bank may resign at any time by giving 180 days' prior written notice to
the Administrative Agent, the Lenders and the Borrower, and may be removed at
any time by the Borrower by notice to the Issuing Bank, the Administrative Agent
and the Lenders (it being understood that during such 180 day period the Issuing
Bank will continue to issue the Letters of Credit pursuant to this Agreement).
Subject to the next succeeding sentence, upon (x) the acceptance of any
appointment as the Issuing Bank hereunder by a Lender that shall agree to serve
as successor Issuing Bank and (y) consent to such appointment by the
Administrative Agent, which shall not be unreasonably withheld or delayed, such
successor shall succeed to and become vested with all the interests, rights and
obligations of the retiring Issuing Bank, and the retiring Issuing Bank shall be
discharged from its obligations to issue additional Letters of Credit hereunder.
At the time such removal or resignation shall become effective, the Borrower
shall pay all accrued and unpaid fees pursuant to Section 2.05(c)(ii). The
acceptance of any appointment as the Issuing Bank hereunder by a successor
Lender shall be evidenced by an agreement entered into by such successor, in a
form satisfactory to the Borrower and the Administrative Agent, and, from and
after the effective date of such agreement, (i) such successor Lender shall have
all the rights and obligations of the previous Issuing Bank under this Agreement
and the other Loan Documents and (ii) references herein and in the other Loan
Documents to the term "Issuing Bank" shall be deemed to refer to such successor
or to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. After the resignation or removal of the
Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto
and shall continue to have all the rights and
45
obligations of an Issuing Bank under this Agreement and the other Loan Documents
with respect to Letters of Credit issued by it prior to such resignation or
removal, but shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall
occur and be continuing, the Borrower shall, on the Business Day it receives
notice thereof and of the amount to be deposited from the Administrative Agent
or the Required Lenders (or, if the maturity of the Revolving Loans has been
accelerated, Lenders holding participations in outstanding Letters of Credit
representing 51% or more of the aggregate undrawn amount of all outstanding
Letters of Credit), deposit in an account with the Collateral Agent, for the
benefit of the Lenders, an amount in cash equal to the L/C Exposure as of such
date. Such deposit shall be held by the Collateral Agent as collateral for the
payment and performance of the Obligations. The Collateral Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits, which investments shall be made at the option and sole discretion of
the Collateral Agent, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall (i) automatically be applied by the Administrative Agent to
reimburse the Issuing Bank for L/C Disbursements for which it has not been
reimbursed; (ii) be held for the satisfaction of the reimbursement obligations
of the Borrower for the L/C Exposure at such time; and (iii) if the maturity of
the Revolving Loans has been accelerated (but subject to the consent of Lenders
holding participations in outstanding Letters of Credit representing 51% or more
of the aggregate undrawn amount of all outstanding Letters of Credit), be
applied to satisfy the Obligations. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount together with any accrued and unapplied earnings thereon
(to the extent not applied as aforesaid) shall be returned to the Borrower
within three Business Days after all Events of Default have been cured or
waived.
(k) Additional Issuing Banks. The Borrower may, at any
time and from time to time with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld) and such Lender, designate one or
more additional Lenders to act as an issuing bank under the terms of this
Agreement. Any Lender designated as an issuing bank pursuant to this paragraph
(k) shall be deemed (in addition to being a Lender) to be the Issuing Bank with
respect to Letters of Credit issued or to be issued by such Lender, and all
references herein and in the other Loan Documents to the term "Issuing Bank"
shall, with respect to such Letters of Credit, be deemed to refer to such Lender
in its capacity as Issuing Bank, as the context shall require.
SECTION 2.22. Funding Sources. Nothing in this Agreement shall be
deemed to obligate the Administrative Agent, the Issuing Bank or any Lender to
obtain the funds for any Borrowing, Revolving Loan or L/C Disbursement in any
particular place or manner or to constitute a representation by the
Administrative Agent, the Issuing Bank or any Lender that it has obtained or
will obtain the funds for any Borrowing, Revolving Loan or L/C Disbursement in
any particular place or manner.
46
SECTION 2.23. Negative Exchange Event.
(a) Upon the occurrence of a Negative Exchange Event, Administrative
Agent shall provide Borrower with notice of such Negative Exchange Event and ten
(10) days after such notice is given, notwithstanding anything to the contrary
contained in Section 2.01 or elsewhere in this Agreement, no Lender shall,
pursuant to Section 2.01 or otherwise, make any Revolving Loan to or for the
account of the Borrower, and the Borrower shall not be entitled to borrow, if,
after giving effect to the requested Revolving Loan, the Aggregate Revolving
Credit Exposure would exceed the lesser of (i) the Total Commitment and (ii) the
Borrowing Base as in effect at such time.
In addition, Borrower shall thereafter comply with the repayment
provisions of Section 2.12 of this Agreement. Notwithstanding that a Negative
Exchange Event shall cease to occur, Borrower shall remain subject to the
requirements and limitations of this Section 2.23 unless (a) otherwise approved
by Required Lenders or (b) the Negative Exchange Event shall cease to occur for
at least forty-five (45) consecutive Business Days, in which case Administrative
Agent shall duly notify Borrower of such event.
(b) As used in this Section 2.23, the following terms have the
following meanings:
"Borrowing Base" shall mean, as at any date, the sum
of (i) 50% of the aggregate value of Eligible Inventory at said date
which has been Eligible Inventory for one year or less, (ii) 25% of the
aggregate value of Eligible Inventory which has been Eligible Inventory
at said date for over one year (but less than 24 months) from the date
it became Eligible Inventory, (iii) 0% of the aggregate value of
Eligible Inventory at said date which has been Eligible Inventory for
24 months or more from the date it became Eligible Inventory) and (iv)
80% of the aggregate value of Eligible Accounts Receivable at said
date.
"Borrowing Base Certificate" shall mean a certificate
of a Financial Officer of the Borrower, substantially in the form of
Exhibit E and appropriately completed.
"Eligible Accounts Receivable" shall mean, as at any
date of determination, Accounts solely of the Borrower that arise from
the bona fide sale and delivery, in the ordinary course of business, of
Inventory. Without limiting the foregoing, to qualify as an Eligible
Account Receivable, an Account shall indicate as sole payee and as sole
remittance party, the Borrower. In determining the amount to be so
included, the face amount of Accounts shall be reduced by the amount of
all returns, discounts, claims, credits, charges, chargebacks,
collections in transit, markdown allowances, extra or co-op advertising
credits, rebates, advances, deposits, progress payments or other
allowances and by the aggregate amount of all reserves, limits and
deductions provided for in this definition and elsewhere in this
Agreement. For the avoidance of doubt, the amount of any Eligible
Account Receivable shall not include prepayment penalties, sales or
other taxes or interest. Unless otherwise approved, from time to time,
in writing by the Administrative Agent, no Account shall be deemed to
be an Eligible Account Receivable if:
47
(a) the Borrower does not have sole lawful and absolute
title to such Account; or
(b) the Account is not the valid, binding and legally
enforceable obligation of the account debtor subject, as to
enforceability, only to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect
affecting the enforceability of creditors' rights generally and (ii)
judicial discretion in connection with the remedy of specific
performance and other equitable remedies; or
(c) it arises out of a sale made by the Borrower to an
Affiliate or to an officer, director or employee of any Loan Party, or
the account debtor includes any such person; or
(d) the Account or any portion thereof is unpaid more
than 150 days after the original invoice date; or
(e) it is from an account debtor or one of such account
debtor's Affiliates that has an Account excluded under clause (d) above
and fifty percent (50%) or more of all Accounts from such account
debtor and such of its Affiliates in the aggregate are ineligible under
clause (d) above; or
(f) the account debtor for the Account is a creditor of
any Loan Party, has or has asserted a right of setoff, has disputed its
liability or has made any claim with respect to the Account or any
other Account which has not been resolved, to the extent of the amount
owed by such Loan Party to the account debtor, the amount of such
actual or asserted right of setoff (whichever is greater) or the amount
of such dispute or claim, as the case may be; or
(g) the account debtor for such Account has presently
commenced a voluntary case under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar laws, as now
constituted or hereafter amended, or has presently made an assignment
for the benefit of creditors or if a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect
of the account debtor in an involuntary case under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar laws, as now
constituted or hereafter amended, or if any other petition or other
application for relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar laws has presently been filed by or
against the account debtor, or if the account debtor has failed,
suspended business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or
for all or a significant portion of its assets or affairs, in each case
unless such Account constitutes an administrative expense (or claim of
similar priority) in such proceeding; or
(h) the sale to the account debtor is on a ▇▇▇▇-and-hold,
guaranteed sale, sale-and-return, ship-and-return, sale on approval or
consignment or other similar basis or made pursuant to any other
written agreement providing for repurchase or
48
return of any merchandise which has been claimed to be defective or
otherwise unsatisfactory; or
(i) the account debtor is any Governmental Authority; or
(j) the goods giving rise to such Account have not been
shipped and delivered to the account debtor, or the Account otherwise
does not represent a final sale; or
(k) the Account does not comply with all Requirements of
Law; or
(l) (i) either the perfection, enforceability or validity
of the Agent's security interest or the Lenders' right or ability to
receive direct payments as to such Account is governed by any statutory
requirement of any Governmental Authority other than those of the
Uniform Commercial Code, (ii) the account debtor has not waived
counterclaims or setoff as to such Account, (iii) it is not subject to
a valid and perfected first priority Lien in favor of the Collateral
Agent for the benefit of the Lenders, subject to no Liens other than
the Liens (if any) permitted by the applicable Security Document, or
(iv) it does not otherwise conform to the representations and
warranties contained in the Loan Documents; or
(m) as to all or any part of such Account a check,
promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment and returned
uncollected for any reason; or
(n) such Account does not comply with all applicable
legal requirements including, where applicable, the Federal Consumer
Credit Protection Act, the Federal Truth in Lending Act and Regulation
Z of the Board of Governors of the Federal Reserve System, in each
case, as amended; or
(o) the account debtor on such Account is not located in
the United States or is not Centennial, Inc., a Canadian corporation;
or
(p) the Administrative Agent determines, upon three
Business Days' notice to the Borrower, in good faith in accordance with
its internal credit policies that (i) collection of the Account is
insecure or (ii) such account may not be paid by reason of the account
debtor's financial inability to pay.
"Eligible Inventory" shall mean, as at any date of
determination, Inventory solely of the Borrower deemed by the
Administrative Agent to be eligible for inclusion in the calculation of
the Borrowing Base of the Borrower as specified below. Without limiting
the foregoing, to qualify as "Eligible Inventory," no Person (other
than the Borrower) shall have any direct or indirect interest in or
title to such Inventory and no Person other than the Borrower shall be
indicated on any purchase order or invoice with respect to such
Inventory as having or purporting to have an interest therein. In
determining the amount to be so included, such Inventory shall be
valued at the first in/first out method of accounting on a lower of
cost or market and on a basis otherwise consistent with the Borrower's
current and historical accounting
49
practice. Unless otherwise from time to time approved in writing by the
Administrative Agent, no Inventory shall be deemed Eligible Inventory
if:
(a) it is not owned solely by the Borrower, or the
Borrower does not have sole and good, valid and marketable title
thereto; or
(b) it is not either (i) located in the United States or
(ii) loaded freight charges and insurance premiums paid, upon a vessel
bound for a port in the United States and covered by bills of lading or
other shipping documents, originals of which are in the possession of
the Administrative Agent; or
(c) it is not located on property owned or leased by the
Borrower or in a contract warehouse, in each case, specified on
Schedule 1.01(b) (as amended from time to time by the Borrower and
accepted by the Administrative Agent), and, except as otherwise
approved by the Administrative Agent, covered by a collateral access
agreement in form and substance reasonably acceptable to the
Administrative Agent and executed by the lessor, or the contract
warehouseman, as the case may be, and segregated or otherwise
separately identifiable from goods of all others, if any (including any
other Loan Party), stored on the premises; or
(d) it is packing or shipping materials or maintenance
supplies; or
(e) it is not subject to a valid and perfected first
priority Lien in favor of the Collateral Agent, except, with respect to
Inventory stored at sites described in clause (c) above, for Liens for
unpaid rent or normal and customary warehousing charges, in each case,
not yet due; or
(f) it is goods returned or rejected by the Borrower's
customers to the extent the invoice price of such returns and
rejections exceeds $5.0 million in the aggregate since the beginning of
the fiscal quarter four quarters prior to such calculation or goods in
transit to third parties (other than to warehouse sites covered by a
collateral access agreement in accordance with clause (c) above); or
(g) it is not a product that is (i) in good condition,
meets all standards imposed by any Governmental Authority having
authority over the Inventory, its use and/or sales, or (ii) currently
saleable in the ordinary course of the Borrower's business, or (iii) in
compliance with all standards imposed under any agreements relating to
the manufacture, sale and/or distribution thereof; or
(h) it (i) is raw materials or work-in-process or (ii) is
excess (as so reserved by the Borrower from time to time or as
otherwise determined by the Administrative Agent) or (iii) is seconds
or thirds or (iv) is obsolete, discontinued, "closed-out," slow moving
or unmerchantable or (v) is freight/drayage reserves or (vi) is samples
or Inventory on hand which is used for promotional and other sales
activities or (vii) does not otherwise conform to the representations
and warranties contained in the Loan Documents; or
50
(i) it is consigned to a customer of the Borrower, is
used or repossessed or is attached, seized, made subject to a writ or
distress warrant, levied upon or brought within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors;
or
(j) it is goods acquired by the Borrower in or as part of
a "bulk" transfer or sale of assets and such acquisition is not
consummated in the ordinary course of business unless the Borrower has
complied with all applicable bulk sales or bulk transfer laws in
connection with such acquisition; or
(k) the Administrative Agent, in the good faith exercise
of its discretion, determines, upon three Business Days' notice to the
Borrower, it to be ineligible.
(c) During the effectiveness of this Section 2.23,
Borrower shall deliver the following additional reporting documents:
(x) Borrowing Base Audits. At the request of the
Administrative Agent or the Required Lenders, but in no event more frequently
than (i) annually, so long as no Default has occurred and is continuing, (ii)
monthly in the event a Default shall have occurred and be continuing and (iii)
at any time in the event an Event of Default has occurred and is continuing, a
report, the scope and cost of which shall be reasonably acceptable to the
Lenders and the Borrower (the reasonable cost and expense of which shall be for
the sole account of the Borrower), of an independent collateral auditor (which
may be, or be affiliated with, one of the Lenders) with respect to the Accounts
and Inventory included in the Borrowing Base as at the end of a monthly
accounting period, which report shall indicate that, based upon a review by such
auditors of the Accounts and Inventory (including verification as to the value,
location and respective types), the information set forth in the Borrowing Base
Certificate delivered by the Borrower as at the end of such accounting period is
accurate and complete in all material respects; and
(y) Borrowing Base Certificate. As soon as
available and in any event within ten Business Days after the end of each
monthly accounting period (ending on the last day of each calendar month)
beginning with the monthly accounting period ending as of the month such
Negative Exchange Event occurred, a Borrowing Base Certificate as of the last
day of such accounting period (subject to adjustments with respect to such
certificates which are not issued at a fiscal quarter end not to exceed $500,000
in respect of intercompany transfers of inventory; provided that notice is given
of such adjustments that would decrease the Borrowing Base in excess of $50,000
within ten Business Days of the delivery of such certificate); each Borrowing
Base Certificate shall have attached to it such additional schedules and/or
other information as the Administrative Agent may reasonably request (if the
Borrower fails to deliver any such Borrowing Base Certificate within ten
Business Days after the end of any such month or within 15 Business Days after
the end of any such month that is also a fiscal quarter end, then the Borrowing
Base shall be deemed to be $0 (however, no prepayment shall be required pursuant
to Section 2.12(a) solely by reason of such deemed reduction) until such time as
the Borrower shall deliver such required Borrowing Base Certificate); the
Borrower shall notify the Administrative Agent promptly upon becoming
51
aware of any event or condition that could reasonably be expected to have a
Material Adverse Effect on the Borrowing Base.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent, the
Collateral Agent, the Issuing Bank and each of the Lenders (with references to
the Borrower and the Subsidiaries being references thereto after giving effect
to the Transactions unless otherwise expressly stated) that:
SECTION 3.01. Organization; Powers. The Borrower and each of the
Subsidiaries (a) is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization except where the failure to be duly organized,
validly existing or in good standing individually, or together with all such
failures for all Subsidiaries, could not reasonably be expected to result in a
Material Adverse Effect; (b) has all requisite corporate or other power and
authority to own or lease its property and to carry on its business as now
conducted and as proposed to be conducted; (c) is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required, except where the failure so to qualify could not reasonably be
expected to result in a Material Adverse Effect; and (d) has the organizational
power and authority to execute, deliver and perform its obligations under each
of the Loan Documents and each other agreement or instrument contemplated hereby
to which it is or will be a party and, in the case of the Borrower, to borrow
hereunder.
SECTION 3.02. Authorization. The execution, delivery and
performance by each Loan Party of each of the Loan Documents to which it is a
party and the consummation by the Loan Parties of the Transactions (including
the borrowings hereunder) (i) have been duly authorized by all requisite
corporate or other constitutional and, if required, stockholder action and (ii)
will not (A) violate (I) any provision of law, statute, rule or regulation
applicable to the Borrower or any Subsidiary, or of the certificate or articles
of incorporation or other constitutive documents or by-laws of the Borrower or
any Subsidiary, (II) any order of any Governmental Authority or (III) any
provision of any indenture, agreement or other instrument to which the Borrower
or any Subsidiary is a party or by which any of them or any of their property is
or may be bound; (B) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under, or give rise to
any right to accelerate or to require the prepayment, repurchase or redemption
of any obligation under any such indenture, agreement or other instrument; or
(C) result in the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Borrower or any Subsidiary
(other than any Lien created hereunder or under the Security Documents) except,
in the case of clause (ii)(A)(III), where such violation, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect (other than any such violation under any of the Notes Documents).
52
SECTION 3.03. Enforceability. This Agreement has been duly executed
and delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by the each Loan Party thereto will constitute, a legal,
valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforceability of creditors' rights generally and by equitable principles of
general applicability (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of UCC financing statements and (b) such as have been made or
obtained and are in full force and effect.
SECTION 3.05. Financial Statements.
(a) The Borrower has heretofore furnished to the Lenders
its consolidated balance sheets and related statements of income, stockholders'
equity and cash flows as of and for the fiscal years ended March 31, 2000, 2001
and 2002, audited by and accompanied by the opinion of PricewaterhouseCoopers
LLP for 2000, 2001 and 2002, independent public accountants. Such financial
statements have been prepared in accordance with GAAP consistently applied
(except as disclosed therein), shall conform to Section 5.04(a) of this
Agreement, and present fairly and accurately in all material respects the
financial condition and results of operations and cash flows of the Borrower as
of such dates and for such periods. Except as set forth in such financial
statements or otherwise disclosed in the Schedules hereto, there are no
liabilities of the Borrower or any Subsidiary of any kind, whether accrued,
contingent, absolute, determined, determinable or otherwise, which could
reasonably be expected to result in a Material Adverse Effect, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than liabilities under the Loan
Documents and the Notes Documents.
(b) All financial statements delivered pursuant to
Section 5.04 will be prepared in accordance with GAAP consistently applied and
present fairly and accurately in all material respects the financial condition
and results of operations and cash flows of the Borrower as of such dates and
for such periods (subject, in the case of unaudited statements, to normal
year-end adjustments). Except as set forth in such financial statements or
otherwise disclosed in the Schedules hereto, there are no material liabilities
of the Borrower or any Subsidiary of any kind, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a liability, other than liabilities under the Loan Documents
and the Notes Documents.
SECTION 3.06. No Material Adverse Change. There has been no
material adverse change in the business, assets, operations or condition
(financial or otherwise) of the Borrower and the Subsidiaries, taken as a whole,
since September 30, 2002.
53
SECTION 3.07. Title to Properties; Possession Under Leases.
(a) Each of the Borrower and the Subsidiaries has good
and marketable title to, or valid leasehold interests in, all its Real Property
free and clear of all Liens, other than Permitted Liens.
(b) Each Lease to which any Loan Party is a party is
valid and in full force and effect and none of the Borrower or any Subsidiary is
in default under any such Lease and, to the knowledge of the Borrower, the other
party or parties thereto are not in default of its or their obligations
thereunder except for defaults which, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.
(c) Title to all property (other than Real Property) is
held by the Borrower and/or each Subsidiary free and clear of all Liens except
for Permitted Liens.
(d) The property of the Borrower and the Subsidiaries,
taken as a whole, (i) is in good operating order, condition and repair (ordinary
wear and tear excepted) and (ii) constitutes all the assets and properties which
are required for the business and operations of the Borrower and the
Subsidiaries as presently conducted.
(e) None of the Borrower or any Subsidiary has received
any notice of, nor has any knowledge of, the occurrence or pendency or
contemplation of any Casualty Event affecting all or any material portion of its
respective property.
SECTION 3.08. Subsidiaries.
(a) Schedule 3.08(a) sets forth a list of all
Subsidiaries and the percentage Equity Interest of the Loan Parties therein. The
Equity Interests so indicated on Schedule 3.08(a) are fully paid and
non-assessable and are owned by the Borrower, directly or indirectly, free and
clear of all Liens other than Liens created by the Security Agreement.
(b) An accurate organization chart, showing the ownership
structure of the Borrower and each Subsidiary on the Closing Date, and after
giving effect to the Transactions, is set forth on Schedule 3.08(b).
SECTION 3.09. Litigation; Compliance with Laws.
(a) Except as set forth on Schedule 3.09 or Schedule
3.17, there are not any actions, suits or proceedings at law or in equity by or
before any Governmental Authority now pending or, to the knowledge of the
Borrower or any Subsidiary, threatened against or affecting the Borrower, any
Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) Except for matters covered by Section 3.17, none of
the Borrower or any Subsidiary or any of their respective property is in
violation of, nor will the continued
54
operation of their property as currently conducted violate, any Requirements of
Law (including any zoning or building ordinance, code or approval or any
building permits) or any restrictions of record or agreements affecting the Real
Property or is in default with respect to any judgment, writ, injunction, decree
or order of any Governmental Authority, where such violation or default could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. Agreements.
(a) None of the Borrower or any Subsidiary is a party to
any agreement or instrument or subject to any corporate or other constitutional
restriction that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(b) None of the Borrower or any Subsidiary is in default
in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other agreement or instrument to
which it is a party or by which it or any of its property is or may be bound,
where such default could reasonably be expected to result in a Material Adverse
Effect. None of the Borrower or any Subsidiary is in default in any manner under
any provision of any of the Notes Documents.
(c) Schedule 3.10(a) accurately and completely lists all
material agreements (other than Leases of Real Property set forth on Schedule
3.10(b)) to which the Borrower and any Subsidiary are a party which are in
effect on the date hereof in connection with the operation of the business
conducted thereby and whether such material agreement requires the consent of
any third-party thereunder to the Transactions.
SECTION 3.11. Federal Reserve Regulations.
(a) None of the Borrower or any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Revolving Loan or any
Letter of Credit will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of
the Board, including Regulation T, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act. None of the Borrower or any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. All proceeds of all Revolving Loans
shall be used solely for the Borrower's and the Subsidiaries' working capital
and general corporate purposes (including to effect Permitted Acquisitions).
SECTION 3.14. Tax Returns. Each of the Borrower and the
Subsidiaries has filed or caused to be filed all Federal tax returns and all
material, state, local and foreign tax returns or materials required to have
been filed by it and has paid or caused to be paid all
55
taxes due and payable by it and all assessments received by it, except taxes
that are being contested in good faith by appropriate proceedings and for which
the Borrower or such Subsidiary, as applicable, shall have set aside on its
books adequate reserves in accordance with GAAP.
SECTION 3.15. No Material Misstatements. None of any information,
report, financial statement, exhibit or schedule furnished by or on behalf of
the Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain, taken as a whole, any material
misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading as of the date such
information is dated or certified; provided that, to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, the Borrower represents only that it acted
in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
SECTION 3.16. Employee Benefit Plans. Each of the Borrower and its
ERISA Affiliates is, with respect to each Plan, in compliance in all material
respects with the applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder. No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, could reasonably be expected to result in material
liability of the Borrower or any of its ERISA Affiliates. The present value of
all accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed by more than $14,200,000 the fair market value of the
assets of all such underfunded Plans. Using actuarial assumptions and
computation methods consistent with subpart 1 of subtitle E of Title IV of
ERISA, the aggregate liabilities of each Borrower, Subsidiary or ERISA Affiliate
to all Multiemployer Plans in the event of a complete withdrawal therefrom, as
of the close of the most recent fiscal year of each such Multiemployer Plan,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.17. Environmental Matters. Except as set forth in
Schedule 3.17:
(a) The Real Property owned or operated by the Borrower
and the Subsidiaries do not contain any Hazardous Materials in amounts or
concentrations which (i) constitute, or constituted a violation of, (ii) require
Remedial Action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, Remedial Actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(b) The Real Property and all operations of the Borrower
and the Subsidiaries are in compliance, and in the last three years have been in
compliance, with all applicable Environmental Laws and all necessary
Environmental Permits have been obtained and are in effect, except to the extent
that such non-compliance or failure to obtain any
56
necessary permits, in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect;
(c) There have been no Releases or threatened Releases by
the Borrower or any Subsidiary or, to their knowledge, by any other party, at,
from, under or proximate to the Real Property or otherwise in connection with
the operations of the Borrower or the Subsidiaries, which Releases or threatened
Releases, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect;
(d) None of the Borrower or any Subsidiary has received
any notice of an Environmental Claim in connection with the Real Property or the
operations of the Borrower or the Subsidiaries or with regard to any person
whose liabilities for environmental matters the Borrower or the Subsidiaries has
retained or assumed, in whole or in part, contractually, by operation of law or
otherwise, which, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect; and
(e) Hazardous Materials have not been transported from
the Real Property by or on behalf of the Borrower or any Subsidiary, nor have
Hazardous Materials been generated, treated, stored or disposed of at, on or
under any of the Real Property in a manner that could give rise to liability
under any Environmental Law, nor have the Borrower or the Subsidiaries retained
or assumed any liability, contractually or by operation of law, with respect to
the generation, treatment, storage or disposal of Hazardous Materials, which
transportation, generation, treatment, storage or disposal, or retained or
assumed liabilities, in the aggregate, could reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete
and correct description of each insurance policy that purports to provide
coverage in excess of $1.0 million maintained by the Borrower or by the Borrower
for the Subsidiaries. Such insurance is in full force and effect and all
premiums have been duly paid. The Borrower and the Subsidiaries have insurance
in such amounts and covering such risks and liabilities as are in accordance
with normal industry practice.
SECTION 3.19. Security Documents.
(a) The Security Agreement is effective to create in
favor of the Collateral Agent, for the benefit of the Secured Parties, a legal,
valid and enforceable security interest in and Lien on the Pledged Collateral
and, when (i) financing statements and other filings in appropriate form are
filed in the offices specified on Schedule 3.3 to the Security Agreement, and
(ii) the Securities Collateral (as defined in the Security Agreement) is
delivered to the Collateral Agent, the Security Agreement shall constitute a
fully perfected first priority Lien on, and security interest in, all right,
title and interest of the grantors thereunder in such Pledged Collateral (other
than such Pledged Collateral in which a security interest cannot be perfected
under the Uniform Commercial Code as in effect at the relevant time in the
relevant jurisdiction), in each case subject to no Liens other than Permitted
Liens.
(b) Each Security Document delivered pursuant to Section
5.11 will, upon execution and delivery thereof, be effective to create in favor
of the Collateral Agent, for the
57
ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on
all of the Loan Parties' right, title and interest in and to the Collateral
thereunder, and when such Security Document is filed or recorded in the
appropriate offices as may be required under applicable law, such Security
Document will constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in such Collateral, in each
case subject to no Liens other than the applicable Permitted Liens.
SECTION 3.20. Labor Matters. As of the Closing Date, there are no
strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending
or, to the knowledge of the Borrower, threatened. The hours worked by and
payments made to employees of the Borrower and the Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters in any manner which could
reasonably be expected to result in a Material Adverse Effect. All payments due
from the Borrower or any Subsidiary, or for which any claim may be made against
the Borrower or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of the Borrower or such Subsidiary except where the failure to do
so could not reasonably be expected to result in a Material Adverse Effect. The
consummation of the Transactions will not give rise to any right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which the Borrower or any Subsidiary is bound.
SECTION 3.21. Solvency. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Revolving Loan and after giving effect to the application of the
proceeds of each Revolving Loan, (a) the fair value of the assets of each Loan
Party will exceed its debts and liabilities, subordinated, contingent or
otherwise; (b) the present fair saleable value of the property of each Loan
Party will be greater than the amount that will be required to pay the probable
liability on its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
each Loan Party will be able to pay the probable liability on its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) each Loan Party will not have
unreasonably small capital with which to conduct its business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Closing Date.
SECTION 3.22. Intellectual Property. Each Loan Party owns, or is
licensed to use, all patents, patent applications, trademarks, tradenames,
servicemarks, copyrights, technology, trade secrets, proprietary information,
know-how and processes necessary for the conduct of its business as currently
conducted (the "Intellectual Property"), except for those the failure to own or
license which, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No claim has been asserted and
is pending by any person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does any Loan Party know of any valid basis for any such claim,
except for such claims that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. The use of such
Intellectual Property by each Loan Party does not infringe the rights of any
person, except for such claims and infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
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SECTION 3.23. PP&E. Borrower and each Domestic Subsidiary owns the
PP&E described as "owned" in the financial statements delivered to
Administrative Agent prior to the date of this Agreement.
SECTION 3.24. No Burdensome Restrictions. Except as may have been
disclosed by the Loan Parties in writing to the Administrative Agent, no Loan
Party is a party to any agreement or instrument or subject to any other
obligation or any charter or corporate or partnership restriction, as the case
may be, which, individually or in the aggregate, is likely to have a Material
Adverse Effect.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Revolving Loans and of the
Issuing Bank to issue Letters of Credit hereunder are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing and
on the date of each issuance, amendment, extension or renewal of a Letter of
Credit (each such event being called a "Credit Event"):
(a) The Administrative Agent shall have received a notice
of such Borrowing Request (or such notice shall have been deemed given in
accordance with Section 2.03) or, in the case of the issuance, amendment,
extension or renewal of a Letter of Credit, the Issuing Bank and the
Administrative Agent shall have received a notice requesting the issuance,
amendment, extension or renewal of such Letter of Credit as required by Section
2.21(b).
(b) The Borrower and each other Loan Party shall be in
compliance in all material respects with all the terms and provisions set forth
herein and in each other Loan Document on its part to be observed or performed,
and, at the time of and immediately after such Credit Event, no Default shall
have occurred and be continuing.
(c) The representations and warranties set forth in
Article III hereof or in any other Loan Document shall be true and correct in
all material respects on and as of the date of such Credit Event with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(d) If Section 2.23 of this Agreement is then applicable,
for each Revolving Credit Loan and each Letter of Credit issuance, the Borrowing
Base (as determined upon the most recent Borrowing Base Certificate delivered
hereunder) shall exceed the Aggregate Revolving Credit Exposure after giving
effect to such Credit Event.
(e) No law or regulation shall have been adopted, no
order, judgment or decree of any Governmental Authority shall have been issued,
and no litigation shall be pending, which does or seeks to enjoin, prohibit or
restrain, the making or repayment of the Revolving Loans.
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(f) There shall not have occurred any event or
circumstances that has had or could reasonably be expected to result in a
Material Adverse Effect since September 30, 2002.
(g) If Section 2.23 of this Agreement is then applicable,
the Administrative Agent and the Lenders shall have received and the
Administrative Agent shall be satisfied (as to form and substance) with a
Borrowing Base Certificate prepared as of the Business Day immediately preceding
such Credit Event.
Each Credit Event and each delivery of a Borrowing Request shall be
deemed to constitute a representation and warranty by the Borrower on the date
of such Credit Event as to the matters specified in paragraphs (b), (c) and (d)
of this Section 4.01.
SECTION 4.02. Closing Date. On the Closing Date:
(a) Loan Documents. All legal matters incident to this
Agreement, the Borrowings and extensions of credit hereunder and the other Loan
Documents shall be reasonably satisfactory to the Lenders, to the Issuing Bank
and to the Administrative Agent and there shall have been delivered to the
Administrative Agent an executed counterpart of each Revolving Note and each of
the other Loan Documents and a reaffirmation of each Security Document and the
Perfection Certificate in form and substance satisfactory to Administrative
Agent.
(b) Fees. The Arranger and Administrative Agent shall
have received all Fees and other amounts due and payable on or prior to the
Closing Date, as set forth in an invoice containing reasonable detail,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses (including the legal fees and expenses of Sheppard, Mullin, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel to the Administrative Agent, the Collateral Agent and the
Arranger, and the fees and expenses of any foreign local counsel) required to be
reimbursed or paid by the Borrower hereunder or under any other Loan Document.
(c) Opinions of Counsel. The Administrative Agent shall
have received, on behalf of itself, the other Agents, the Arranger, the Lenders
and the Issuing Bank, favorable written opinions of ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fields Claman Machtinger & ▇▇▇▇▇▇▇▇ LLP, counsels for the
Loan Parties, substantially to the effect set forth in Exhibit I-1, (a) dated
the Closing Date, (b) addressed to the Issuing Bank, the Agents, the Arranger
and the Lenders and (c) covering such other matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall reasonably
request, and the Borrower hereby requests such counsel to deliver such opinions.
(d) Corporate Documents. The Administrative Agent shall
have received (i) a copy of the certificate or articles of incorporation or
other constitutive documents, including all amendments thereto, of the Borrower,
certified as of a recent date by the Secretary of State of the state of its
organization, and a certificate as to the good standing of the Borrower as of a
recent date, from such Secretary of State; (ii) a certificate of the Secretary
or Assistant Secretary of the Borrower dated the Closing Date and certifying (a)
that attached thereto is a true and complete copy of the by-laws of the Borrower
as in effect on the
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Closing Date and at all times since a date prior to the date of the resolutions
described in clause (b) below, (b) that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of the Borrower
authorizing the execution, delivery and performance of the Loan Documents to
which the Borrower is a party, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (c) that the certificate or articles of incorporation or other
constitutive documents of the Borrower have not been amended since the date of
the last amendment thereto shown on the certificate of good standing furnished
pursuant to clause (i) above, and (d) as to the incumbency and specimen
signature of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of the Borrower; (iii) a certificate
of another officer as to the incumbency and specimen signature of the Secretary
or Assistant Secretary executing the certificate pursuant to (ii) above; and
(iv) such other documents as the Lenders, the Issuing Bank or the Administrative
Agent may reasonably request.
(e) Officer's Certificate. The Administrative Agent shall
have received a certificate, dated the Closing Date and signed by a Financial
Officer of the Borrower, affirming that all representations, warranties and
covenants of this Agreement are true and correct and confirming compliance with
the conditions precedent set forth in paragraphs (b), (c) and (d) of Section
4.01 and paragraphs (b), (c) and (d) of this Section 4.02.
(f) Solvency. The Lenders shall have received a
certificate, dated the Closing Date and signed by an officer of the Borrower, in
form and substance satisfactory to the Administrative Agent, as to the solvency
of each of the Loan Parties after giving effect to the Transactions.
(g) Security Agreement. The Security Agreement shall have
been duly executed by the Borrower and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date.
(h) Collateral Deliveries. The Borrower shall have
authorized, executed and/or delivered or caused to be delivered each of the
following to the Collateral Agent:
(1) UCC Financing Statements (Form UCC-1, UCC-2
or UCC-3, as appropriate) in appropriate form for filing under
the UCC and such other documents under applicable Requirements
of Law in each jurisdiction as may be necessary or appropriate
to perfect the Liens created, or purported to be created in
the Collateral (other than Securities Collateral), by the
Security Agreement;
(2) certified copies of Requests for Information
(Form UCC-11), tax lien, judgment lien, bankruptcy and pending
lawsuit searches or equivalent reports or lien search reports,
each of a recent date listing all effective financing
statements, lien notices or comparable documents that name the
Borrower as debtor and that are filed in those state and
county jurisdictions in which any of the property of the
Borrower is located, the state and county jurisdictions in
which the Borrower's principal place of business is located
and
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the state jurisdiction in which the Borrower is organized,
none of which encumber the Collateral covered or intended to
be covered by the Security Documents other than those relating
to Prior Liens (as defined in the Security Agreement)
acceptable to the Collateral Agent);
(3) the Perfection Certificate executed by
Borrower;
(4) with respect to each Real Property, copies
of all Leases relating to locations where Inventory is located
in which a Loan Party holds any interest;
(5) evidence of the completion of all recordings
and filings of, or with respect to, the Security Agreement and
the execution and/or delivery of such other security and other
documents, and the taking of all actions as may be necessary
or, in the opinion of the Collateral Agent, desirable, to
perfect the Liens created, or purported to be created, by the
Security Agreement, except for any of the foregoing to be
provided after the Closing Date pursuant to Sections 4.03 and
5.11 hereof; and
(6) evidence acceptable to the Collateral Agent
of payment by the Loan Parties of all applicable recording
taxes, fees, charges, costs and expenses required for the
recording of the Security Documents.
(i) Insurance. The Administrative Agent shall have
received a copy of, or a certificate as to coverage under, the insurance
policies required by Section 5.02 and the applicable provisions of the Security
Documents, each of which shall be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement and to name the
Collateral Agent as additional insured, in form and substance satisfactory to
the Administrative Agent.
(j) Indebtedness and Minority Interests. After giving
effect to the Transactions and the other transactions contemplated hereby, none
of the Borrower or any Subsidiary shall have outstanding any Indebtedness,
preferred stock or minority interests other than (i) the Revolving Loans and
extensions of credit hereunder, (ii) the Notes, (iii) minority interests in
subsidiaries reflected on Schedule 3.08(a), (iv) Indebtedness owed to the
Borrower or any Guarantor, and (v) Indebtedness otherwise permitted pursuant to
Section 6.01.
(k) Requirements of Law. The Lenders shall be satisfied
that the Transactions shall be in full compliance with all material Requirements
of Law, including without limitation Regulations T, U and X of the Board.
(l) Consents. The Lenders shall be satisfied that all
requisite Governmental Authorities and third parties shall have approved or
consented to the Transactions, and there shall be no governmental or judicial
action, actual or threatened, that has or would have, singly or in the
aggregate, a reasonable likelihood of restraining, preventing or imposing
burdensome conditions on the Transactions.
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(m) Litigation. There shall be no litigation, public or
private, or administrative proceedings, governmental investigation or other
legal or regulatory developments, actual or threatened, that, singly or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or could materially and adversely affect the ability of the Borrower and the
Subsidiaries to fully and timely perform its obligations under the Loan
Documents, or the ability of the parties to consummate the financings
contemplated hereby or the other Transactions.
(n) Material Adverse Change. There shall have not
occurred, in the reasonable judgment of the Administrative Agent, a material
adverse change or material disruption in the financial, banking or capital
markets generally prior to the Closing Date (including the markets for loans to
companies similar to the Borrower) which has had or could reasonably be expected
to have a material adverse effect on the syndication of the Revolving Loans.
(o) Financial Statement; Pro Forma Balance Sheet;
Projections. The Lenders shall have received and shall be reasonably satisfied
with the financial statements described in Section 3.05.
(p) Fees and Expenses. The Borrower shall have paid all
fees and expenses of the Agents and Lenders as set forth in Section 9.05.
(q) Existing Credit Agreement. The Substitution of Agent
Agreement shall have been duly executed by all parties to the Existing Credit
Agreement and Administrative Agent shall have received duly executed Assignment
Agreements from each lender listed in Recital B hereof.
SECTION 4.03. First Credit Event. Prior to the first Credit Event
to occur other than issuance of the Letters of Credit listed in Schedule
2.21(b), (i) the Borrower shall have delivered to Administrative Agent evidence
of its good standing in the States of California, Georgia, Kentucky, New York
and Minnesota, (ii) the Borrower shall have authorized, executed and delivered
all documents and taken all actions necessary or appropriate to grant in favor
of the Collateral Agent a fully perfected first priority pledge of and security
interest in the Pledged Securities, other than those Pledged Securities
identified on Schedule 5.11(e)(i) hereto, under the laws of the jurisdiction of
organization of the applicable issuer of such Pledged Securities (including,
without limitation, the taking of all actions or the foreign equivalent, if
applicable, and the delivery of all items, or their foreign equivalent, if
applicable, of the type and nature enumerated in Section 4.02(h)(1), (h)(2),
(h)(5) and (h)(6) of this Agreement, and the delivery of all certificates,
agreements or instruments representing such Pledged Securities, accompanied by
instruments of transfer endorsed in blank to the extent required or permitted
under the jurisdiction or organization of the applicable issuer of such Pledged
Securities) and (iii) the Collateral Agent shall have received, on behalf of
itself, the other Agents, the Arranger, the Lenders and the Issuing Bank, a
reaffirmation of the foregoing, an amendment thereto if required in such foreign
jurisdiction (other than the Pledged Securities identified in Schedule
5.11(e)(i) hereto) , and, if required by Administrative Agent, a favorable
written opinion of each foreign counsel listed on Schedule 4.03(b), other than
the foreign counsel listed on Schedule 5.11(e)(ii), substantially to the
63
extent set forth in Exhibit I-2 and with such additions, deletions and/or
changes as shall be acceptable to the Collateral Agent, (a) dated no later than
the date of such first Credit Event, (b) addressed to the Issuing Bank, the
Agents, the Arranger and the Lenders and (c) covering such other matters
relating to the Loan Documents and the Transactions as the Administrative Agent
shall reasonably request, and the Borrower hereby requests such counsel to
deliver such opinions.
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Revolving Loan, all Fees and all other
expenses or amounts payable under any Loan Document shall have been paid in full
and all Letters of Credit have been canceled or have expired and all amounts
drawn thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and will cause each of the
Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties.
(a) Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence, except as
otherwise expressly permitted under Section 6.05 or, in the case of any
Subsidiary, where any such failures, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(b) Do or cause to be done all things necessary to
obtain, preserve, renew, extend and keep in full force and effect the rights,
licenses, permits, franchises, authorizations, patents, copyrights, trademarks
and trade names material to the conduct of its business; maintain and operate
such business in substantially the manner in which it is presently conducted and
operated; comply with all applicable Requirements of Law (including any and all
zoning, building, Environmental Law, ordinance, code or approval or any building
permits or any restrictions of record or agreements affecting the Real Property)
and decrees and orders of any Governmental Authority, whether now in effect or
hereafter enacted, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect; pay and perform its obligations under all Leases; perform and comply in
all material respects with its obligations under its material contracts,
agreements and other instruments; and at all times maintain and preserve all
property material to the conduct of such business and keep such property in good
repair, working order and condition and from time to time make, or cause to be
made, all necessary repairs, renewals, additions, improvements and replacements
(including those necessary as a result of a Casualty Event) thereto necessary in
order that the business carried on in connection therewith may be properly
conducted at all times; provided, however, that nothing in this Section 5.01(b)
shall prevent (i) sales of assets, consolidations or mergers by or involving the
Borrower or any Subsidiaries in accordance with Section 6.05; (ii) the
withdrawal by the Borrower or any Subsidiaries of their qualification as a
foreign corporation
64
in any jurisdiction where such withdrawal, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect; or
(iii) the abandonment by the Borrower or any Subsidiaries of any rights,
franchises, permits, authorizations, copyrights, trademarks, trade names,
licenses and patents or property that such person reasonably determines are not
useful to its business.
SECTION 5.02. Insurance.
(a) Keep its insurable property adequately insured at all
times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, including
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
property owned, occupied or controlled by it; and maintain such other insurance
as may be required by law; and, with respect to the Collateral, otherwise
maintain all insurance coverage required under the applicable Security
Documents.
(b) Notify the Administrative Agent and the Collateral
Agent immediately whenever any separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 5.02 is taken out by the Borrower; and promptly deliver to the
Administrative Agent and the Collateral Agent a duplicate original copy of such
policy or policies.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such
Indebtedness, tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Borrower shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP and such contest operates to suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a Lien
and, in the case of Collateral, the Borrower or the applicable Subsidiary shall
have otherwise complied with the provisions of the applicable Security Document
in connection with such nonpayment.
SECTION 5.04. Financial Statements, Reports, etc. Furnish to the
Administrative Agent and each Lender:
(a) Annual Reports. Within 120 days after the end of each
fiscal year, (i) the consolidated balance sheet of the Borrower as of the end of
such fiscal year and related consolidated statements of income, cash flows and
stockholders' equity for such fiscal year, and notes thereto, all prepared in
accordance with Regulation S-X under the Securities Act and accompanied by an
opinion of PricewaterhouseCoopers LLP or other comparable
65
independent public accounting firm (which opinion shall not be qualified as to
scope or contain any going concern or other qualification), stating that such
financial statements fairly present, in all material respects, the consolidated
financial condition, results of operations, cash flows and changes in
stockholders' equity of the Borrower and the Subsidiaries as of the end of and
for such fiscal year in accordance with GAAP consistently applied, (ii) a
management report in a form reasonably satisfactory to the Administrative Agent
setting forth, on a consolidating basis, the financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries as of the end of
and for such fiscal year, as compared to its financial condition, results of
operations and cash flows as of the end of and for the previous fiscal year and
its budgeted results of operations and cash flows; and (iii) a management's
discussion and analysis of the financial condition and results of operations for
such fiscal year, as compared to the previous fiscal year;
(b) Quarterly Reports. Within 45 days after the end of
each of the first three fiscal quarters of each fiscal year, (i) the
consolidated balance sheet of the Borrower as of the end of such fiscal quarter
and related consolidated statements of income for such fiscal quarter and for
the then elapsed portion of the fiscal year and related consolidated statements
of income and cash flows for the then elapsed portion of the fiscal year, in
each case in comparative form with the consolidated statements of income and
cash flows for the comparable periods in the previous fiscal year, and notes
thereto, all prepared in accordance with Regulation S-X under the Securities Act
and accompanied by a certificate of a Financial Officer stating that such
financial statements fairly present, in all material respects, the consolidated
financial condition, results of operations and cash flows of the Borrower and
the Subsidiaries as of the date and for the periods specified in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments, (ii) a
management report in a form reasonably satisfactory to the Administrative Agent
setting forth, on a consolidating basis, the financial condition, results of
operations and cash flows of the Borrower and its Subsidiaries as of the end of
and for such fiscal quarter and for the then elapsed portion of the fiscal year,
as compared to its financial condition, results of operations and cash flows as
of the end of such fiscal quarter and for the comparable periods in the previous
fiscal year and its budgeted results of operations and cash flows, and (iii) a
management's discussion and analysis of the financial condition and results of
operations for such fiscal quarter and the then elapsed portion of the fiscal
year, as compared to the comparable periods in the previous fiscal year;
(c) Liquidity Compliance Certificates. Within 15 Business
Days after the end of each month, a statement of balances of cash and Cash
Equivalents and a statement of gross amounts of Accounts and Inventory, and a
certificate evidencing Borrower's Compliance with the covenant set forth in
Section 6.13 of this Agreement;
(d) Financial Officer's Certificate. (i) Concurrently
with any delivery of financial statements under subparagraph (a), (b) or (c)
above, a certificate of a Financial Officer certifying that no Default has
occurred or, if such a Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with respect
thereto; (ii) concurrently with any delivery of financial statements under
sub-paragraph (a) or (b) above, a certificate of a Financial Officer setting
forth computations in reasonable detail satisfactory to the Administrative Agent
demonstrating compliance with the
66
covenants contained in Sections 6.08, 6.09, 6.10, 6.11, 6.12 and 6.13; and (iii)
in the case of paragraph (a) above, a report of the accounting firm opining on
or certifying such financial statements stating that in the course of its
regular audit of the financial statements of the Borrower and the Subsidiaries,
which audit was conducted in accordance with GAAP, such accounting firm obtained
no knowledge that any Default has occurred or, if in the opinion of such
accounting firm such a Default has occurred, specifying the nature and extent
thereof;
(e) Financial Officer's Certificate Regarding Collateral.
Concurrently with the delivery of financial statements under subparagraph (a)
above, Borrower (on behalf of itself and the other Loan Parties) shall deliver
to the Administrative Agent a certificate of a Financial Officer (i) setting
forth the information required pursuant to the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Closing Date or the date of the most
recent certificate delivered pursuant to this subparagraph (e) and (ii)
certifying that all UCC financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the security interests under the Security Agreement for a period of not
less than 18 months after the date of such certificates (except as noted therein
with respect to any continuation statements to be filed within such period);
(f) Information Regarding Collateral. The Borrower will
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's legal name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or structure or (iv) in any Loan Party's
Federal Taxpayer Identification Number. The Borrower agrees not to effect or
permit any change referred to in the preceding sentence unless written notice
has been delivered to the Collateral Agent, together will all applicable
information to enable the Administrative Agent to make all filings under the UCC
or otherwise that are required in order for the Collateral Agent (for the
benefit of the Secured Parties) to continue at all times following such change
to have a valid, legal and perfected security interest in all the Collateral;
(g) Public Reports. Promptly after the same become
publicly available, copies of all periodic and other reports, proxy statements
and other materials filed by the Borrower or any Subsidiary with the Securities
and Exchange Commission, or any Governmental Authority succeeding to any or all
of the functions of said Commission, or with any national securities exchange,
or distributed to holders of any of its securities pursuant to the terms of the
documentation governing such securities (or any trustee, agent or other
representative therefor), as the case may be;
67
(h) Management Letters. Promptly after the receipt
thereof by the Borrower or any other Loan Party, a copy of any "management
letter" received by any such person from its certified public accountants and
the management's responses thereto;
(i) Budgets. As soon as completed but in any event no
later than 60 days after the first day of each fiscal year of the Borrower, a
budget in form reasonably satisfactory to the Administrative Agent (including
budgeted statements of income by each of the Borrower's business units and
sources and uses of cash and balance sheets) prepared by the Borrower and marked
confidential for (i) each fiscal quarter of such fiscal year prepared in detail
and (ii) each of the years immediately following such fiscal year up to and
including the Revolving Credit Maturity Date prepared in summary form, in each
case, of the Borrower and their respective subsidiaries, with appropriate
presentation and discussion of the principal assumptions upon which such budgets
are based, accompanied by the statement of a Financial Officer of the Borrower
to the effect that the budget of the Borrower is a reasonable estimate for the
period covered thereby;
(j) Annual Meetings with Lenders. Within 120 days (or at
a date mutually agreeable between Borrower and Administrative Agent) after the
close of each fiscal year, the Borrower shall, at the request of the
Administrative Agent or Required Lenders, hold a meeting (at a mutually
agreeable location and time) with all Lenders who choose to attend such meeting
at which meeting shall be reviewed the financial results of the previous fiscal
year and the financial condition of the Borrower and the Subsidiaries and the
budgets presented for the current fiscal year of the Borrower and the
Subsidiaries; and
(k) Other Information. Promptly, from time to time, such
other information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the terms of any
Loan Document, as the Administrative Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, and each Lender prompt written notice of the following:
(a) any Default, specifying the nature and extent thereof
and the corrective action (if any) taken or proposed to be taken with respect
thereto;
(b) the filing or commencement of, or any threat or
notice of intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity by or before any Governmental Authority,
(i) against the Borrower or any Subsidiary thereof that could reasonably be
expected to result in a Material Adverse Effect or (ii) with respect to any Loan
Document;
(c) any development that has resulted in, or could
reasonably be expected to result in a Material Adverse Effect;
(d) the occurrence of a Casualty Event in excess of
$500,000; and
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(e) (i) the incurrence of any Lien (other than Permitted
Liens) on, or claim asserted against, any material portion of the Collateral or
(ii) the occurrence of any other event which could materially adversely affect
the value of the Collateral.
SECTION 5.06. Employee Benefits. (a) Comply in all material
respects with the applicable provisions of ERISA and the Code and (b) furnish to
the Administrative Agent (i) as soon as possible after, and in any event within
10 days after any Responsible Officer of the Borrower or any Subsidiary knows or
has reason to know that, any ERISA Event has occurred that, alone or together
with any other ERISA Event could reasonably be expected to result in liability
of the Borrower in an aggregate amount exceeding $1,000,000, a statement of a
Financial Officer of the Borrower setting forth details as to such ERISA Event
and the action, if any, that the Borrower proposes to take with respect thereto,
and (ii) upon request by the Administrative Agent, copies of: (i) each Schedule
B (Actuarial Information) to the annual report (Form 5500 Series) filed by the
Borrower, any Subsidiary or any ERISA Affiliate with the Internal Revenue
Service with respect to each Plan; (ii) the most recent actuarial valuation
report for each Plan; (iii) all notices received by the Borrower, any Subsidiary
or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental
agency concerning an ERISA Event; and (iv) such other documents or governmental
reports or filings relating to any Plan (or employee benefit plan sponsored or
contributed to by the Borrower or Subsidiary) as the Administrative Agent shall
reasonably request.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law are made of
all dealings and transactions in relation to its business and activities, except
where the failure to comply with such Requirements of Law could not have a
Material Adverse Effect. The Borrower will, and will cause each of the
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender to visit and inspect the financial records and the property
of the Borrower or any Subsidiary at reasonable times during regular business
hours, upon reasonable notice and as often as reasonably requested and to make
extracts from and copies of such financial records, in each case in the presence
of an employee of any Loan Party, and permit any representatives designated by
the Administrative Agent or any Lender to discuss the affairs, finances and
condition of the Borrower or any Subsidiary with the officers thereof and
independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Revolving
Loans and request the issuance of Letters of Credit only for the purposes set
forth in Section 3.13.
SECTION 5.09. Compliance with Environmental Laws. Comply, and cause
all lessees and other persons occupying its Real Property to comply, in all
material respects with all Environmental Laws and Environmental Permits
applicable to its operations and Real Property; obtain and renew all material
Environmental Permits necessary for its operations and Real Property; and
conduct any Remedial Action in accordance with Environmental Laws, except in the
case of any of the foregoing where the failure to do the same, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect; provided, however, that none of the Borrower or any Subsidiary shall be
required to undertake any Remedial Action to the extent that its obligation to
do so is being contested in good faith
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and by proper proceedings and appropriate reserves are being maintained with
respect to such circumstances in accordance with GAAP.
SECTION 5.10. Preparation of Environmental Reports. If a Default
caused by reason of a breach of Section 3.17 or Section 5.09 shall have occurred
and be continuing for more than 30 days without the Borrower or the Subsidiaries
commencing activities reasonably likely to cure such Default, at the written
request of the Required Lenders through the Administrative Agent, provide to the
Lenders within 60 days after such request, at the expense of the Borrower, an
environmental site assessment report regarding the matters which are the subject
of such Default prepared by an environmental consulting firm reasonably
acceptable to the Administrative Agent and indicating the presence or absence of
Hazardous Materials and the estimated cost of any compliance or Remedial Action
in connection with such Default.
SECTION 5.11. Further Assurances; Additional Collateral.
(a) Execute any and all further documents, financing
statements, agreements and instruments, and take all further action (including,
giving notices of assignment, filing UCC and other financing statements and
delivering legal opinions and, in the event a Default shall have occurred and be
continuing, including creation of lockbox, cash collection accounts and/or sweep
accounts) that may be required under applicable law, or that the Required
Lenders, the Administrative Agent or the Collateral Agent may request, in order
to, among other things, effectuate the transactions contemplated by the Loan
Documents and in order to grant, preserve, protect and perfect the validity and
first priority of the security interests created or intended to be created by
the Security Documents.
(b) The parties hereto acknowledge and agree that it is
their intention that the Obligations shall be secured by, among other things, a
first priority Lien (subject only to Permitted Liens) on all of the domestic
Accounts and Inventory and Pledged Securities owned by the Borrower (and such
Accounts, Inventory and Pledged Securities owned by any Subsidiary to the extent
required to be pledged pursuant to Section 5.11(f) hereof), whether now owned or
hereafter acquired. Promptly, and in any event within 30 days after the
acquisition of any Accounts, Inventory or Pledged Securities by the Borrower
(and/or such Accounts, Inventory and Pledged Securities owned by any Subsidiary
to the extent required to be Pledged pursuant to Section 5.11(f) hereof) or any
Permitted Acquisition, the Borrower will, at its sole cost and expense, promptly
secure the Obligations by pledging or creating, or causing to be pledged or
created, perfected first priority security interests with respect to such
Accounts, Inventory or Pledged Securities, as applicable. Such security
interests and Liens will be created under the Security Documents and other
instruments and documents in form and substance reasonably satisfactory to the
Collateral Agent, and the Borrower shall deliver or cause to be delivered to the
Collateral Agent all such instruments and documents (including legal opinions,
lien waivers, and lien searches) as the Collateral Agent shall reasonably
request to evidence compliance with this Section 5.11. The Borrower shall take
all further action of the type described in Section 5.11(a) in order to grant,
preserve, protect and perfect such Lien and security interest.
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(c) In addition to the Borrower's obligations under
Section 5.04(e) and under Section 2.23(c), if and when applicable, the Borrower
shall, from time to time, provide such evidence as the Collateral Agent shall
reasonably request as to the perfection and priority status of each security
interest and Lien contemplated herein. With respect to each Real Property in
which a Loan Party holds the tenant's interest thereunder set forth on Schedule
3.10(b) and where Collateral is located, such Loan Party shall use its
commercially reasonable efforts to obtain as promptly as practicable a Landlord
Lien Waiver and Access Agreement substantially as set forth in Exhibit F with
such additions, deletions and/or changes as shall be acceptable to the
Collateral Agent.
(d) The Borrower shall, with respect to each Real
Property in which a Loan Party holds the tenant's interest thereunder as set
forth on Schedule 3.10(b) and at which Collateral is located and to the extent
that the same has not been delivered to the Collateral Agent on or prior to the
Closing Date, take all further commercially reasonable action necessary to
obtain a Landlord Lien Waiver and Access Agreement with respect to such Real
Property and a reaffirmation of such Landlord Lien Waiver and Access Agreement,
if required by Administrative Agent; provided that a demand by any landlord for
a material increase in the rent for such Real Property or a material extension
of the lease relating thereto shall be deemed commercially unreasonable;
provided, further, that each Loan Party will furnish to the Lenders and their
counsel on the first Business Day of each month beginning January 1, 2003, a
status report describing such actions and to the extent that a landlord shall
refuse to execute a Landlord Lien Waiver and Access Agreement, a detailed
description of the reason for such refusal and/or the exact terms pursuant to
which such landlord would have agreed to execute such agreement if such terms
were deemed commercially unreasonable by the Borrower.
(e) As promptly as practicable and in any event not later
than 60 days after the Closing Date, (i) the Borrower shall have authorized,
executed and delivered all documents and taken all actions necessary or
appropriate to grant in favor of the Collateral Agent a fully perfected first
priority pledge of and security interest in the Pledged Securities identified on
Schedule 5.11(e)(i) hereto under the laws of the jurisdiction of organization of
the applicable issuer of such Pledged Securities (including, without limitation,
the taking of all actions or the foreign equivalent, if applicable, and the
delivery of all items, or their foreign equivalent, if applicable, of the type
and nature enumerated in Section 4.02(h)(1), (h)(2), (h)(5) and (h)(6) of this
Agreement, and the delivery of all certificates, agreements or instruments
representing such Pledged Securities, accompanied by instruments of transfer
endorsed in blank to the extent required or permitted under the jurisdiction or
organization of the applicable issuer of such Pledged Securities) and (ii) the
Collateral Agent shall have received, on behalf of itself, the other Agents, the
Arranger, the Lenders and the Issuing Bank, a favorable written opinion of each
foreign counsel listed on Schedule 5.11(e)(ii), substantially to the effect set
forth in Exhibit I-2 and with such additions, deletions and/or changes as shall
be acceptable to the Collateral Agent, (a) dated no later than such 60th day
after the Closing Date, (b) addressed to the Issuing Bank, the Agents, the
Arranger and the Lenders and (c) covering such other matters relating to the
Loan Documents and the Transactions as the Administrative Agent shall reasonably
request, and the Borrower hereby requests such counsel to deliver such opinions.
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(f) If, after the Closing Date, (i) the Borrower or any
Domestic Subsidiary shall acquire or create a Domestic Subsidiary or Direct
Foreign Subsidiary (other than an Insignificant Domestic Subsidiary or an
Insignificant Direct Foreign Subsidiary), (ii) any Direct Foreign Subsidiary
that was an Insignificant Direct Foreign Subsidiary fails to continue to qualify
as an Insignificant Direct Foreign Subsidiary, (iii) any Insignificant Domestic
Subsidiary fails to continue to qualify as an Insignificant Domestic Subsidiary
or (iv) the Administrative Agent shall so request with respect to any Domestic
Subsidiary or Direct Foreign Subsidiary (other than an Insignificant Domestic
Subsidiary or an Insignificant Direct Foreign Subsidiary), then, in each such
case, the Borrower shall or shall cause the applicable Domestic Subsidiary or
Direct Foreign Subsidiary (other than an Insignificant Domestic Subsidiary or an
Insignificant Direct Foreign Subsidiary), at its expense:
(A) within 30 days after such event, duly
execute and deliver to the Collateral Agent (i) a joinder
agreement and/or pledge amendment to the Security Agreement
and (ii) a pledge agreement securing payment of all the
Obligations of the Loan Parties under the Loan Documents and
creating a first priority security interest in, and Lien on,
not less than (x) 100% of the voting Equity Interest of the
applicable Domestic Subsidiary or (y) 65% of the voting Equity
Interest of the applicable Direct Foreign Subsidiary owned by
the Borrower or such Subsidiary, as the case may be, in form
and substance sufficient under the laws of such Domestic
Subsidiary's or Direct Foreign Subsidiary's jurisdiction of
organization and otherwise acceptable to the Collateral Agent,
and take, and cause such Subsidiary to take, whatever other
action may be necessary or advisable in the reasonable opinion
of the Collateral Agent, to perfect the first priority
security interest in and Lien on the Equity Interest purported
to be created by such pledge, subject to no Liens, and
enforceable against all third parties in accordance with its
terms;
(B) within 30 days after such event, deliver to
the Collateral Agent, upon the request of the Collateral Agent
in its reasonable discretion, a signed copy of a legal opinion
of foreign counsel substantially to the effect set forth in
Exhibit I-2 and with such additions, deletions and/or changes
as shall be acceptable to the Collateral Agent, addressed to
the Collateral Agent and the Lenders, of counsel for the Loan
Parties reasonably acceptable to the Collateral Agent and such
other opinions as to such other matters as the Collateral
Agent may reasonably request; and
(C) at any time and from time to time, promptly
execute and deliver any and all further instruments and
documents (including, without limitation, solvency
certificates with respect to such pledge) and take all such
action as the Collateral Agent may deem necessary or
reasonably desirable to obtain the full benefits of the
agreements described in Section 5.11(f)(A) above, and/or to
perfect and preserve the first priority Liens in favor of the
Collateral Agent on the applicable Equity Interests pledged
hereby.
(g) Each Loan Party agrees that, unless otherwise
indicated in this Section 5.11, each action required by this Section 5.11 shall
be completed within 30 days of
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the date such action is requested or required to be taken. The foregoing
requirement of Section 5.11(f) shall not apply from and after the Rating Date
until the Downgrade Date, if any.
SECTION 5.12. Certain Matters Relating to Accounts.
(a) Upon the Collateral Agent's demand made at any time
after the occurrence and during the continuance of an Event of Default and at
the Borrower's or the applicable Loan Party's sole cost and expense, deliver or
cause to be delivered all tangible evidence of Accounts, including, without
limitation, copies of all documents evidencing Accounts and of any books and
records relating thereto to the Collateral Agent or to its representatives. Upon
the occurrence and during the continuance of an Event of Default, the Collateral
Agent may transfer a full and complete copy of any Loan Party's books, records,
credit information, reports, memoranda and all other writing relating to the
Accounts to and for the use by any person that has acquired or is contemplating
acquisition of an interest in the Accounts or the Collateral Agent's security
interest therein without the consent of any Loan Party.
(b) At the request of the Collateral Agent made at any
time after the occurrence and during the continuance of any Event of Default and
in form and manner reasonably satisfactory to the Collateral Agent, legend the
Accounts and the other books, records and documents of such Loan Party
evidencing or pertaining to the Accounts with an appropriate reference to the
fact that the Accounts have been pledged to the Collateral Agent for the benefit
of the Secured Parties and that the Collateral Agent has a security interest
therein.
(c) Deliver to the Collateral Agent, within 10 days after
receipt thereof by Borrower or any Loan Party, any Instrument evidencing
Accounts which is in the principal amount of $50,000 or more. Any Instrument
delivered to the Collateral Agent pursuant to this Section 5.12(b) shall be
appropriately endorsed (if applicable) to the order of the Collateral Agent, as
agent for the Secured Parties, and shall be held by the Collateral Agent as
further security hereunder; provided, however, that so long as no Default or
Event of Default shall have occurred and be continuing and the Collateral Agent
is collecting Accounts, the Collateral Agent shall, promptly upon request of
such Loan Party, make appropriate arrangements for making any Instrument pledged
by such Loan Party available to such Loan Party for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent
reasonably deemed appropriate by the Collateral Agent, against trust receipt or
like document).
SECTION 5.13. Guarantees.
(a) If, after the Closing Date, (a) the Borrower or any
Subsidiary shall acquire or create another Subsidiary (other than (i) an
Insignificant Domestic Subsidiary or (ii) a Foreign Subsidiary) or (b) any
Subsidiary that was an Insignificant Domestic Subsidiary fails to continue to
qualify as an Insignificant Domestic Subsidiary then, in each such case, cause
such Subsidiary to:
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(1) execute and deliver to the Collateral Agent
a Guarantee Agreement; and
(2) deliver to the Lenders one or more opinions
of counsel satisfactory to the Collateral Agent that such
Guarantee Agreement (x) has been duly authorized, executed and
delivered by such Subsidiary and (y) constitutes a valid and
legally binding obligation of such Subsidiary in accordance
with its terms.
In addition, in the event that (a) the aggregate net sales of
all Insignificant Domestic Subsidiaries which have not become
Guarantors exceed 5.0% of the consolidated net sales of the Borrower
and the Subsidiaries for any fiscal quarter or (b) the aggregate
tangible assets of all Insignificant Domestic Subsidiaries which have
not become Guarantors exceed 5.0% of Total Tangible Assets as of the
end of any such fiscal quarter, the Borrower shall cause one or more
Domestic Subsidiaries to become Guarantors and take such other actions
so that the Insignificant Domestic Subsidiaries which have not become
Guarantors do not exceed in the aggregate either of the totals in
clauses (a) or (b) of this paragraph.
The Borrower may at its option cause any other Subsidiary to
become a Guarantor by complying with the provisions of clause (1) and
(2) above.
(b) Cause each Subsidiary which now or hereafter
guarantees any of the obligations under the Borrower's 11% Senior Notes due
2008, concurrent with the granting of any such guarantee, to guarantee the
Borrower's obligations hereunder by duly executing and delivering a Guarantee
Agreement.
SECTION 5.14. Release of Certain Collateral.
From and after the Rating Date, the Collateral Agent shall at the
written request and sole expense of the Borrower, take any reasonable action and
execute all reasonable documents and instruments to effect the release of the
Lien of the Security Documents on all stock of Direct Foreign Subsidiaries. Such
release shall no longer be permitted if any Downgrade Date occurs, and the
Borrower shall, at its sole expense, take any action and execute all documents
and instruments necessary or desirable to reattach Liens on 65% of the stock of
Direct Foreign Subsidiaries released after a Rating Date, in each case as
promptly as practicable but in no event later than 60 days after such Downgrade
Date.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Revolving Loan, all Fees
and all other expenses or amounts payable under any Loan Document have been paid
in full and all Letters of Credit have been canceled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the
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Required Lenders shall otherwise consent in writing, the Borrower will not, nor
will it cause or permit any Subsidiaries to:
SECTION 6.01. Indebtedness
Incur, create, assume or permit to exist, directly or indirectly, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and
the other Loan Documents;
(b) Indebtedness of the Borrower and the Guarantors under
the Notes Documents in an aggregate principal amount not to exceed (euro)205.0
million for the 11% Senior Notes and $94.7 million for the 6 7/8% Senior Notes,
in each case less the aggregate amount of all repayments thereunder effected
after the Closing Date;
(c) Indebtedness actually outstanding on the Closing Date
and listed on Schedule 6.01, and refinancings or renewals thereof; provided that
(i) any such refinancing Indebtedness is in an aggregate principal amount not
greater than the aggregate principal amount of the Indebtedness being renewed or
refinanced, plus the amount of any premiums required to be paid thereon and fees
and expenses associated therewith; (ii) such refinancing Indebtedness has a
later or equal final maturity and longer or equal weighted average life than the
Indebtedness being renewed or refinanced; and (iii) the covenants, events of
default, subordination and other provisions thereof (including any guarantees
thereof) shall be, in the aggregate, no less favorable to the Lenders than those
contained in the Indebtedness being renewed or refinanced;
(d) intercompany Indebtedness of the Borrower and the
Subsidiaries outstanding to the extent permitted by Section 6.04(e);
(e) in addition to any Indebtedness permitted by the
preceding paragraph (e), Indebtedness of any Wholly Owned Subsidiary to the
Borrower or another Wholly Owned Subsidiary constituting the purchase price in
respect of intercompany transfers of goods and services made in the ordinary
course of business to the extent not constituting Indebtedness for borrowed
money;
(f) Indebtedness under performance bonds, letter of
credit obligations to provide security for worker's compensation claims and bank
overdrafts, in each case incurred in the ordinary course of business; provided
that any obligations arising in connection with such bank overdraft Indebtedness
is extinguished within five Business Days;
(g) Purchase Money Indebtedness or Indebtedness in
respect of Capital Lease Obligations and refinancings or renewals thereof
incurred after the Closing Date in an aggregate amount not to exceed at any time
outstanding $20.0 million;
(h) Indebtedness arising in connection with endorsement
of instruments for deposit in the ordinary course of business;
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(i) Contingent Obligations of the Borrower or any
Guarantor in respect of Indebtedness otherwise permitted hereunder and other
Contingent Obligations of the Borrower or any Guarantor in respect of
obligations of the Borrower or any Guarantor (other than Indebtedness) incurred
in the ordinary course of business;
(j) Indebtedness of the Borrower under senior
subordinated note offerings in an aggregate principal amount not to exceed $50.0
million; provided that the Borrower may incur such Indebtedness only if at the
time of such incurrence no Default or Event of Default shall have occurred and
be continuing; and
(k) other Indebtedness (in addition to the Indebtedness
permitted in the foregoing clauses (a)-(j)) of the Borrower not to exceed $20.0
million in the aggregate at any time outstanding; provided that the Borrower may
incur such Indebtedness only if at the time of such incurrence no Default or
Event of Default shall have occurred and be continuing.
SECTION 6.02. Liens. Create, incur, assume or permit to exist,
directly or indirectly, any Lien upon or with respect to any property or assets
now owned or hereafter acquired by it or any Subsidiary or on any income or
revenues or rights in respect thereof, except as provided for in the Loan
Documents, or sell any Collateral, property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
Collateral, property or assets or assign any right to receive income, or file or
permit the filing of any financing statement under the UCC or any other similar
notice of Lien under any similar recording or notice statute, except the
following (the "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies, which (i) are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, which proceedings (or orders entered in connection with
such proceedings) have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien, or (ii) in the case of any such
charge or claim which has or may become a Lien against an of the Collateral,
such Lien and the contest thereof shall satisfy the Contested Collateral Lien
Conditions;
(b) Liens in respect of property of the Borrower or any
of the Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's, landlord's and mechanics' liens and
other similar Liens arising in the ordinary course of business, and (i) which
are being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, which proceedings (or
orders entered in connection with such proceedings) have the effect of
preventing the forfeiture or sale of the property or assets subject to any such
Lien and (ii) in the case of any such Lien which has or may become a Lien
against any of the Collateral, such Lien and the contest thereof shall satisfy
the Contested Collateral Lien Conditions;
(c) Liens in existence on the Closing Date and set forth
on Schedule 6.02; provided that (i) the aggregate principal amount of the
Indebtedness, if any, secured by such
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Liens does not increase; and (ii) such Liens do not encumber any property or
assets other than the property or assets subject thereto on the Closing Date of
Borrower or any Subsidiary;
(d) easements, rights-of-way, restrictions (including
zoning restrictions), covenants, encroachments, protrusions and other similar
charges or encumbrances, and minor title deficiencies on or with respect to any
Real Property, in each case whether now or hereafter in existence, not (i)
securing Indebtedness, (ii) materially impairing the value or marketability of
such Real Property and (iii) materially interfering with the conduct of the
business of the Borrower and the Subsidiaries at such Real Property;
(e) Liens arising out of judgments or awards not
resulting in a Default and in respect of which the Borrower or any of the
Subsidiaries shall in good faith be prosecuting an appeal or proceedings for
review in respect of which there shall be secured a subsisting stay of execution
pending such appeal or proceedings; provided that the aggregate amount of all
such judgments or awards (and any cash and the fair market value of any property
subject to such Liens) does not exceed $2.0 million at any time outstanding;
(f) Liens (other than any Lien imposed by ERISA) (i)
imposed by law or deposits made in connection therewith in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, (ii) incurred in the ordinary course of business
to secure the performance of tenders, statutory obligations (other than excise
taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases,
government contracts, trade contracts, performance and return of money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money) or (iii) arising by virtue of deposits made in the ordinary course of
business to secure liability for premiums to insurance carriers; provided that
(x) with respect to clauses (i), (ii) and (iii) hereto such Liens are set
amounts not yet due and payable or delinquent or, to the extent such amounts are
so due and payable, such amounts are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, which proceedings for orders entered in connection with
such proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien, (y) to the extent such Liens are
not imposed by Law, such Liens shall in no event encumber any Property other
than cash and Cash Equivalents and (z) in the case of any such Lien against any
of the Collateral, such Lien and the contest thereof shall satisfy the Contested
Collateral Lien Conditions the aggregate amount of deposits at any time pursuant
to clause (ii) and clause (iii) shall not exceed $250,000 in the aggregate;
(g) any interest or title of a lessor, sublessor,
licensee or licensor under any Lease permitted by this Agreement;
(h) Liens in favor of customs and revenue authorities
arising as a matter of law to secure the payment of customs duties in connection
with the importation of goods;
(i) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of goods entered
into by the Borrower or any of the Subsidiaries in the ordinary course of
business in accordance with the past practices of the Borrower and the
Subsidiaries;
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(j) Liens to secure Purchase Money Indebtedness or
arising pursuant to Capital Lease Obligations incurred pursuant to Section
6.01(g); provided that (i) the Indebtedness secured by any such Lien (including
refinancings thereof) does not exceed 100% of the cost of the property being
acquired or leased at the time of the incurrence of such Indebtedness and (ii)
any such Liens attach only to the property being financed to secure Purchase
Money Indebtedness or pursuant to Capital Lease Obligations and do not encumber
any other property of any Loan Party;
(k) bankers' Liens, rights of setoff and other similar
Liens existing solely with respect to cash and Cash Equivalents on deposit in
one or more accounts maintained by the Borrower or any Subsidiary, in each case
granted in the ordinary course of business in favor of the bank or banks with
which such accounts are maintained, securing amounts owing to such bank with
respect to cash management and operating account arrangements, including those
involving pooled accounts and netting arrangements; provided that in no case
shall any such Liens secure (either directly or indirectly) the repayment of any
Indebtedness;
(l) Liens on assets of a person existing at the time such
person is acquired or merged with or into or consolidated with the Borrower or
any Subsidiary (and not created in anticipation or contemplation thereof),
including without limitation, Liens securing Acquired Indebtedness; provided
that such Liens do not extend to assets not subject to such Liens at the time of
acquisition (other than improvements thereon) and are no more favorable to the
lienholders than those securing such Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Borrower or a Subsidiary; and
(m) Liens incurred in the ordinary course of business of
the Borrower or any Subsidiary with respect to obligations (other than
Indebtedness) that do not in the aggregate exceed $15.0 million at any time
outstanding;
provided, however, that no Liens shall be permitted to exist, directly or
indirectly, on any Securities Collateral, any Intellectual Property or any PP&E,
and except for existing negative pledges under the Notes Documents and other
Material Contracts listed on Schedule 3.10(b), which negative pledge shall be
exclusive to Administrative Agent as additional consideration for Lender's
agreements under the Loan Documents.
Except with respect to specific property encumbered pursuant to a Lien
permitted to be incurred pursuant to this Section 6.02, the Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, enter
into any agreement on or after the Closing Date prohibiting or restricting in
any manner (directly or indirectly and including by way of covenant,
representation or warranty or event of default) the creation or assumption of
any Lien upon their property (including, without limitation, intellectual
property of the Borrower and its Subsidiaries), whether now owned or hereafter
acquired, except pursuant to the Loan Documents, the Notes Documents or
Indebtedness incurred pursuant to Section 6.01(j) containing such prohibitions
or restrictions not more restrictive or prohibitive in any material respect than
those contained in the Notes Documents and customary provisions contained in
Leases.
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SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred unless (i) the sale of such
property is permitted by Section 6.05 and (ii) any Liens arising in connection
with its use of such property are permitted by Section 6.02.
SECTION 6.04. Investments, Loans and Advances. Directly or
indirectly, lend money or credit or make advances to any person, or purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any other person, or purchase or own a futures
contract or otherwise become liable for the purchase or sale of currency or
other commodities at a future date in the nature of a futures contract (all of
the foregoing, collectively, "Investments"), except that the following shall be
permitted:
(a) the Borrower and the Subsidiaries may acquire and
hold accounts receivable owing to any of them if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary terms;
(b) the Borrower and the Subsidiaries may acquire and
hold cash and Cash Equivalents;
(c) the Borrower and the Subsidiaries may endorse
negotiable instruments for collection in the ordinary course of business;
(d) [Intentionally deleted];
(e) any Loan Party may make intercompany loans to any
other Loan Party; provided that upon the request of the Collateral Agent or the
Required Lenders any promissory notes evidencing such intercompany loans shall
be pledged (and delivered) by the Borrower or the respective Wholly Owned
Subsidiary that is the lender of such intercompany loan as Collateral pursuant
to the Security Agreement;
(f) the Borrower and the Subsidiaries may sell or
transfer amounts to the extent permitted by Section 6.05;
(g) the Borrower may establish Subsidiaries to the extent
permitted by Section 6.17;
(h) the Borrower or any Subsidiary may consummate
Permitted Acquisitions;
(i) loans and advances to directors, officers and
employees of the Borrower and the Subsidiaries for bona fide business purposes
in an aggregate amount not to exceed $2.0 million at any time outstanding;
(j) Investments by any Loan Party in any other Loan Party
for so long as a Loan Party;
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(k) Investments in any Loan Party by any Subsidiary;
(l) Investments outstanding on the Closing Date and set
forth on Schedule 6.04(l);
(m) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers;
(n) Investments made by the Borrower or any Subsidiary as
a result of consideration received in connection with an Asset Sale made in
compliance with Section 6.05;
(o) lease, utility and other similar deposits in the
ordinary course of business;
(p) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Borrower or any Subsidiary or in satisfaction of judgments;
(q) Investments (other than Collateral) by the Borrower
or any Subsidiary in any other Subsidiary to the extent made in the ordinary
course to fund or support the ordinary course operations of such Subsidiary;
provided, however, that upon the request of the Collateral Agent or the Required
Lenders all or any part of such Investments made as intercompany indebtedness
shall be evidenced by promissory notes in form, and shall be pledged to the
Collateral Agent pursuant to documentation, reasonably satisfactory to the
Collateral Agent;
(r) Investments in the form of intercompany loans by the
Borrower in Subsidiaries located in China, Brazil and Venezuela not to exceed
$15.0 million in the aggregate to support such Subsidiaries' development,
construction and expansion of production lines; provided, however, that upon the
request of the Collateral Agent or the Required Lenders all or any part of such
Investments shall be evidenced by promissory notes in form, and shall be pledged
to the Collateral Agent pursuant to documentation, reasonably satisfactory to
the Collateral Agent;
(s) Investments for the purpose of repaying the Notes or
repurchasing the bond obligations under the Notes, in an aggregate amount not to
exceed $25,000,000 for each fiscal year ended March 31, 2003, 2004, 2005 and
2006; provided however that the unused portion of the permitted Investment
amount under this sub-paragraph (t) in any fiscal year may be used in the
immediately following fiscal year in addition to the amounts permitted in such
fiscal year;
(t) other Investments in an aggregate amount not to
exceed $7.0 million at any time outstanding (with such Investment being valued
as of the date made and without regard to subsequent changes in value); and
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(u) investments for the purpose of repurchasing Equity
Interests in Borrower or any Subsidiary in an amount not to exceed $20.0 million
in the aggregate.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. Wind up, liquidate or dissolve its affairs or enter into any
transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or any
part of its property, or purchase or otherwise acquire (in one or a series of
related transactions) any part of the property (other than purchases or other
acquisitions of inventory, materials, equipment and intangible assets in the
ordinary course of business) of any person (or agree to do any of the foregoing
at any future time), except that:
(a) Capital Expenditures by the Borrower and the
Subsidiaries shall be permitted to the extent permitted by Section 6.08;
(b) each of the Borrower and the Subsidiaries may, in the
ordinary course of business, sell, lease or otherwise dispose of any equipment
that is obsolete or no longer useful in its business with fair market value of
less than $5.0 million (or such greater amount as approved in writing by
Required Lenders) in the aggregate in any fiscal year;
(c) sales, leases or other dispositions of equipment or
real or personal property of the Borrower or any Subsidiary determined by the
Board of Directors or senior management of the Borrower or such Subsidiary to be
no longer useful or necessary in the operation of the business of the Borrower
or such Subsidiary; provided that the Net Cash Proceeds thereof shall be applied
in accordance with Section 2.12(b);
(d) Investments and Permitted Acquisitions may be made to
the extent permitted by Section 6.04 provided that the aggregate amount thereof
shall not exceed $75,000,000 during each of Borrower's fiscal years ended March
31, 2003 and March 31, 2004, and $50,000,000 for Borrower's fiscal years ended
March 31, 2005 and March 31, 2006;
(e) each of the Borrower and the Subsidiaries may lease
(as lessee) real or personal property and may guaranty such lease in the
ordinary course of business (i) to the extent otherwise permitted hereunder and
(ii) so long as any such lease does not create a Capital Lease Obligation except
to the extent permitted by Section 6.01;
(f) each of the Borrower and the Subsidiaries may make
sales or transfers of inventory in the ordinary course of business and
consistent with past practices (including without limitation sales or transfers
of inventory by the Borrower to the Subsidiaries);
(g) any Loan Party may transfer, lease or otherwise
acquire property or assets to or from any other Loan Party and any Subsidiary
may transfer or lease any property or assets to any Loan Party or any Wholly
Owned Subsidiary may be merged into the Borrower (so long as the Borrower is the
surviving corporation of such merger) or any other Wholly Owned Subsidiary that
is a Guarantor; provided, however, that the Lien on and security interest in
such property granted in favor of the Collateral Agent under the Security
Documents shall be maintained in accordance with the provisions of Section 5.11;
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(h) the Borrower and the Subsidiaries may make the sales
and/or dispositions identified in clause (iii) of the proviso to the definition
of "Asset Sale"; and
(i) sales, leases or other dispositions of assets through
Capital Asset Exchanges.
To the extent the Required Lenders waive the provisions of this Section 6.05
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 6.05, such Collateral (unless sold to the Borrower or
its subsidiaries) shall be sold free and clear of the Liens created by the
Security Documents, and the Administrative Agent and Collateral Agent shall take
all actions deemed appropriate in order to effect the foregoing.
SECTION 6.06. Dividends. Authorize, declare or pay, directly or
indirectly, any Dividends with respect to the Borrower or any Subsidiary, except
that any Subsidiary of the Borrower (i) may pay cash Dividends to the Borrower
or any Wholly Owned Subsidiary of the Borrower, and (ii) if such Subsidiary is
not a Wholly Owned Subsidiary, may pay cash Dividends to its shareholders
generally so long as the Borrower or its respective Subsidiary which owns the
equity interest or interests in the Subsidiary paying such Dividends receives at
least its proportionate share thereof (based upon its relative holdings of
equity interests in the Subsidiary paying such Dividends and taking into account
the relative preferences, if any, of the various classes of equity interests in
such Subsidiary), and except that Borrower and any Subsidiary may make
Investments permitted under Section 6.04(u)
SECTION 6.07. Transactions with Affiliates. Enter into, directly or
indirectly, any transaction or series of related transactions, whether or not in
the ordinary course of business, with any Affiliate of the Borrower or any
Subsidiary, other than in the ordinary course of business and on terms and
conditions substantially as favorable to the Borrower or such Subsidiary as
would reasonably be obtained by the Borrower or such Subsidiary at that time in
a comparable arm's-length transaction with a person other than an Affiliate,
except that:
(a) Dividends may be paid to the extent provided in
Section 6.06;
(b) Investments may be made and other transactions may be
entered into between and among the Borrower and the Subsidiaries to the extent
permitted by Sections 6.01 and 6.04; and
(c) reasonable director, officer and employee
compensation and other benefits (including retirement, health and other benefit
plans) and indemnification arrangements, in each case approved by the
Independent Directors.
SECTION 6.08. Capital Expenditures
(a) Make any Capital Expenditures, except that during
each fiscal year ended March 31, 2003, 2004, 2005 and 2006, the Borrower and the
Subsidiaries may make Capital Expenditures in an aggregate amount not to exceed
$40,000,000 for such fiscal year.
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provided, however, that the unused portion of the permitted Capital Expenditure
amount as set forth above in any fiscal year may be used in the immediately
following fiscal year in addition to the amounts otherwise permitted in such
fiscal year; provided, further, that upon the consummation of a Permitted
Acquisition by any Loan Party, the Capital Expenditure limits set forth above
for each fiscal year shall be increased by the amount of acquired assets that
should be capitalized under GAAP.
(b) In addition to the Capital Expenditures permitted
pursuant to preceding paragraph (a), the Borrower and the Subsidiaries may make
additional Capital Expenditures consisting of the reinvestment of the Net Cash
Proceeds from Asset Sales permitted in Section 2.12(b) and casualty insurance
proceeds; provided, however, that the property acquired in connection with such
reinvestment shall be made subject to the Lien of the Security Documents
pursuant to the provisions of Section 5.11 to the extent Section 5.11 requires
such property to be subject to such Lien.
SECTION 6.09. Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio at any time during the most recent four
fiscal quarters ending on the last day of a fiscal quarter set forth below to be
less than the ratio set forth opposite such period below:
Period Ratio
------ -----
December 31, 2002 2.50 to 1.0
March 31, 2003 3.00 to 1.0
June 30, 2003 3.00 to 1.0
September 30, 2003 3.00 to 1.0
December 31, 2003 3.00 to 1.0
March 31, 2004 and thereafter 3.25 to 1.0
SECTION 6.10. Maximum Total Leverage Ratio. Permit the Total
Leverage Ratio, at any time during the most recent four fiscal quarters ending
on the last day of a fiscal quarter set forth below to be greater than the ratio
set forth opposite such fiscal quarter below:
Period Ratio
------ -----
December 31, 2002 4.00 to 1.0
March 31, 2003 3.50 to 1.0
June 30, 2003 3.50 to 1.0
September 30, 2003 3.50 to 1.0
December 31, 2003 3.50 to 1.0
March 31, 2004 3.25 to 1.0
June 30, 2004 3.25 to 1.0
September 30, 2004 3.25 to 1.0
December 31, 2004 3.25 to 1.0
March 31, 2005 and thereafter 3.00 to 1.0
SECTION 6.11. Minimum Net Worth. Permit Consolidated Net Worth,
calculated on a Pro Forma Basis and without giving effect to any cumulative
translation adjustments, at any time on or after June 30, 2002 to be less than
the sum of $256.0 million,
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plus 50% of positive Consolidated Net Income for each fiscal quarter after June
30, 2002 to the date of calculation.
SECTION 6.12. Maximum Senior Secured Debt Ratio. Permit the Senior
Secured Debt Ratio at the end of each fiscal quarter, calculated based on the
most recent trailing four fiscal quarters, to be greater than 1.25 to 1.0 during
the period from the Closing Date until March 31, 2004 and 1.00 to 1.00 for each
quarterly period thereafter.
SECTION 6.13. Minimum Liquidity. From and after December 1, 2002,
permit the aggregate of unrestricted cash and unrestricted Cash Equivalents of
Borrower to be less than $50.0 million at any time; provided however, that
Borrower's compliance with this covenant shall be suspended at any time that
Section 2.23 is in effect and Borrower is subject to the Borrowing Base
thereunder.
SECTION 6.14. Limitation on Modifications or Prepayment of
Indebtedness; Modifications of Certificate of Incorporation, or Other
Constitutive Documents, By-laws and Certain Other Agreements, etc. (i) Amend or
modify, or permit the amendment or modification of, any provision of any
Indebtedness (other than the Loan Documents) or of any agreement (including any
purchase agreement, indenture, loan agreement or security agreement) relating
thereto other than any amendments or modifications to Indebtedness which do not
in any way materially adversely affect the interests of the Lenders and are
otherwise permitted under Section 6.01(c); (ii) make (or give any notice in
respect thereof) any voluntary or optional payment or prepayment on or
redemption or acquisition for value of, or any prepayment or redemption as a
result of any asset sale, change of control or similar event of, any
Indebtedness outstanding under the Notes or any Indebtedness incurred pursuant
to Section 6.01(l) (other than an exchange offer or registration of the Notes
pursuant to and in accordance with registration rights under the Notes
Documents); (iii) amend or modify, or permit the amendment or modification of,
any provision of any Notes or any Indebtedness incurred pursuant to Section
6.01(l) or any agreement (including any Notes Document) relating thereto other
than amendments or modifications which do not in any way materially adversely
affect the interests of the Lenders or which are effected to make technical
corrections to the respective documentation; or (iv) amend, modify or change its
articles of incorporation or other constitutive documents (including by the
filing or modification of any certificate of designation) or by-laws, or any
agreement entered into by it, with respect to its capital stock (including any
shareholders' agreement), or enter into any new agreement with respect to its
capital stock, other than any amendments, modifications, agreements or changes
pursuant to this clause (iv) or any such new agreements pursuant to this clause
(iv) which do not in any way materially adversely affect in any material respect
the interests of the Lenders.
SECTION 6.15. Limitation on Certain Restrictions on Subsidiaries.
Directly or indirectly create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to (a)
pay dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any of the
Borrower's Subsidiaries or (c) transfer any of its properties to the Borrower or
any of the Borrower's Subsidiaries, except for such encumbrances or restrictions
existing under or by
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reason of (i) applicable law; (ii) this Agreement and the other Loan Documents;
(iii) the Notes Documents or any Indebtedness incurred pursuant to Section
6.01(l) containing such encumbrances or restrictions not more restrictive in any
material respect than those contained in the Notes Documents; (iv) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of the Borrower or a Subsidiary; (v) customary provisions
restricting assignment of any agreement entered into by the Borrower or a
Subsidiary of the Borrower in the ordinary course of business; (vi) restrictions
imposed by the holder of a Lien permitted by Section 6.02 which restrict the
transfer of the asset or assets subject thereto; and (vii) restrictions which
are not more restrictive than those contained in this Agreement contained in any
documents governing any Indebtedness incurred after the Closing Date in
accordance with the provisions of this Agreement.
SECTION 6.16. Limitation on Issuance of Capital Stock. Issue, or
permit any Subsidiary to issue, any Equity Interest (including by way of sales
of treasury stock) or any options or warrants to purchase, or securities
convertible into, Equity Interests, except (i) any of the foregoing where the
Net Cash Proceeds of any such Equity Issuance is applied by Borrower to the
then-outstanding Indebtedness of Borrower and its Subsidiaries to the extent
outstanding and which repayment is then permitted in accordance with its terms
without any prepayment fee or premium, (ii) for stock splits, stock dividends
and additional Equity Interest issuances which do not decrease the percentage
ownership of the Borrower or any Subsidiary in any class of the Equity Interest
of such Subsidiary, (iii) Subsidiaries of the Borrower formed after the Closing
Date pursuant to Section 6.17 may issue Equity Interests to the Borrower or the
respective Subsidiary of the Borrower which is to own such stock, (iv) issuances
by the Borrower of non-qualified options to purchase stock of the Borrower to
managers, officers and directors of the Borrower in connection with any
performance-based stock option plan. All Equity Interests issued to any Loan
Party in accordance with this Section 6.16 shall, to the extent required by the
Security Agreement, be delivered to the Collateral Agent for pledge pursuant to
the Security Agreement and (v) up to $25,000,000 in the aggregate during the
Loan term, of Equity Interests in Borrower may be issued to pay all or part of
the purchase price in a merger or acquisition permitted under this Agreement.
SECTION 6.17. Limitation on Creation of Subsidiaries. Establish,
create or acquire any additional Subsidiaries without the prior written consent
of the Required Lenders; provided that the Borrower may establish or create one
or more Wholly Owned Subsidiaries of the Borrower or one of its Wholly Owned
Subsidiaries without such consent so long as (i) 65% of the Equity Interests of
any new Direct Foreign Subsidiary (other than an Insignificant Direct Foreign
Subsidiary) is upon the creation or establishment of any such new Subsidiary
pledged and delivered to the Collateral Agent for the benefit of the Secured
Parties under the Security Agreement and (ii) upon the creation or establishment
of any new Domestic Subsidiary such Subsidiary becomes a party to the applicable
Security Documents in accordance with Section 5.11 and the other Loan Documents.
SECTION 6.18. Business. Engage (directly or indirectly) in any
business other than the Eyeglass Lens Business of the type conducted as of the
Closing Date.
SECTION 6.19. Limitation on Accounting Changes. Make or permit any
change in accounting policies or reporting practices, without the consent of the
Required Lenders,
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which consent shall not be unreasonably withheld, except changes that are
required by GAAP. In the event that any such changes are required by GAAP, the
terms and conditions of this Agreement shall be changed as the Administrative
Agent may deem reasonably necessary to take account of such changes.
SECTION 6.20. Fiscal Year. Change its fiscal year-end to a date
other than March 31.
SECTION 6.21. Interest Rate Protection and Hedging. Nothing in this
Article 6 shall prohibit Borrower from purchasing or entering into agreements
for interest rate protection, hedging, foreign currency exchange or commodity
price protection with any Lender or other party; provided, however, that the
Security Documents shall only secure obligations of Lenders (and the Existing
Issuer as defined therein) for such agreements and liabilities thereunder.
ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made by
any Loan Party pursuant to any Loan Document or the borrowings or issuances of
Letters of Credit hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial statement or other
instrument furnished by or on behalf of any Loan Party pursuant to any Loan
Document, shall prove to have been false or misleading in any material respect
when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal
of any Revolving Loan or the reimbursement with respect to any L/C Disbursement
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest
on any Revolving Loan or any Fee or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as the same
shall become due and payable, and such default shall continue unremedied for a
period of three Business Days;
(d) default shall be made in the due observance or
performance by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or
performance by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in (b), (c)
or (d) above) and such default shall continue unremedied or shall not be waived
for a period of 30 days after written notice thereof from the Administrative
Agent or any Lender to the Borrower;
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(f) the Borrower or any Subsidiary shall (i) fail to pay
any principal or interest, regardless of amount, due in respect of any
Indebtedness (other than the Obligations), when and as the same shall become due
and payable (after giving effect to any applicable grace period), or (ii) fail
to observe or perform any other term, covenant, condition or agreement contained
in any agreement or instrument evidencing or governing any such Indebtedness if
the effect of any failure referred to in this clause (ii) is to cause, or to
permit the holder or holders of such Indebtedness or a trustee on its or their
behalf (with or without the giving of notice, the lapse of time or both) to
cause, such Indebtedness to become due prior to its stated maturity; provided
that it shall not constitute an Event of Default pursuant to this paragraph (f)
unless the aggregate amount of all such Indebtedness referred to in clauses (i)
and (ii) exceeds $2.5 million at any one time;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Borrower or any Subsidiary, or of a substantial
part of the property or assets of the Borrower or a Subsidiary, under Title 11
of the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law;
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of the property or assets of the Borrower or a Subsidiary; or
(iii) the winding-up or liquidation of the Borrower or any Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(h) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law;
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in
(g) above; (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of the property or assets of the Borrower
or any Subsidiary; (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding; (v) make a general assignment
for the benefit of creditors; (vi) become unable, admit in writing its inability
or fail generally to pay its debts as they become due; (vii) take any action for
the purpose of effecting any of the foregoing; or (viii) wind up or liquidate;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $2.5 million shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Borrower or any Subsidiary to
enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the
opinion of the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of the Borrower and
its ERISA Affiliates in an aggregate amount exceeding $1.0 million;
87
(k) any security interest and Lien purported to be
created by any Security Document shall cease to be in full force and effect, or
shall cease to give the Collateral Agent, for the benefit of the Secured
Parties, the Liens granted under such Security Documents (including a perfected
first priority security interest in and Lien on, all of the Collateral
thereunder (except as otherwise expressly provided in this Agreement or such
Security Documents)) in favor of the Collateral Agent, or shall be asserted by
the Borrower or any other Loan Party not to be, a valid, perfected, first
priority (except as otherwise expressly provided in this Agreement or such
Security Document) security interest in or Lien on the Collateral covered
thereby;
(l) any Guarantee Agreement shall cease to be in full
force and effect;
(m) any Loan Document or any material provisions thereof
shall at any time and for any reason be declared by a court of competent
jurisdiction to be null and void, or a proceeding shall be commenced by any Loan
Party or any other person, or by any Governmental Authority, seeking to
establish the invalidity or unenforceability thereof (exclusive of questions of
interpretation of any provision thereof), or any Loan Party shall repudiate or
deny that it has any liability or obligation for the payment of principal or
interest or other obligations purported to be created under any Loan Document;
(n) there shall have occurred a Change in Control; or
(o) any Loan Party shall be prohibited or otherwise
restrained from conducting the business theretofore conducted by it in any
manner that has or could reasonably be expected to result in a Material Adverse
Effect by virtue of any determination, ruling, decision, decree or order of any
court or Governmental Authority of competent jurisdiction;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Revolving Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Revolving Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to the Borrower described in
paragraph (g) or (h) above, the Commitments shall automatically terminate and
the principal of the Revolving Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
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ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this Agreement,
(a) Union Bank of California, N.A., is hereby appointed to act as Administrative
Agent and (b) Union Bank of California, N.A., is hereby appointed to act as
Collateral Agent and, in each case, on behalf of the Lenders and the Issuing
Bank (for purposes of this Article VIII, the Administrative Agent and the
Collateral Agent are referred to collectively as the "Agents"). Each of the
Lenders and each assignee of any such Lender, hereby irrevocably authorizes the
Agents to take such actions on behalf of such Lender or assignee or the Issuing
Bank and to exercise such powers as are specifically delegated to the Agents by
the terms and provisions hereof and of the other Loan Documents, together with
such actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders and the Issuing Bank,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders and the Issuing Bank all payments of principal of and interest on the
Revolving Loans, all payments in respect of L/C Disbursements and all other
amounts due to the Lenders hereunder, and promptly to distribute to each Lender
or the Issuing Bank its proper share of each payment so received; (b) to give
notice on behalf of each of the Lenders to the Borrower of any Event of Default
specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by the Borrower or any other Loan Party pursuant to this
Agreement or the other Loan Documents as received by the Administrative Agent.
Without limiting the generality of the foregoing, the Agents are hereby
expressly authorized to execute any and all documents (including releases and
supplements) with respect to the Collateral and the rights of the Secured
Parties with respect thereto, as contemplated by and in accordance with the
provisions of this Agreement and the Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or their own gross negligence or willful misconduct,
or be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents, instruments or
agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with instructions of the Required Lenders
and, except as otherwise specifically provided herein, such instructions and any
action or inaction pursuant thereto shall be binding on all the Lenders. Each
Agent shall, in the absence of knowledge to the contrary, be entitled to rely on
any instrument or document believed by it in good faith to be genuine and
correct and to have been signed or sent by the proper person or persons. Neither
the Agents nor any of their respective directors, officers, employees or agents
shall have any responsibility to the Borrower or any other Loan Party on account
of the failure of or delay in performance or breach by any Lender or the Issuing
Bank of any of its obligations hereunder or to any Lender or the Issuing Bank on
account of the
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failure of or delay in performance or breach by any other Lender or the Issuing
Bank or the Borrower or any other Loan Party of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith. Each of the Agents may execute any and all duties hereunder by or
through agents or employees and shall be entitled to rely upon the advice of
legal counsel selected by it with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that no Agent shall be under any duty to
take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, any Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor, with the written consent of the Borrower, which
consent shall not be unreasonably withheld; provided that such consent shall not
be required if such successor shall be a Lender under this Agreement or if any
Default shall have occurred and be continuing. If no successor shall have been
so appointed by the Required Lenders and consented to by the Borrower as
provided herein and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, which shall be a bank with
an office in San Francisco, California, having a combined capital and surplus of
at least $5.0 billion or an Affiliate of any such bank. Upon the acceptance of
any appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
With respect to the Revolving Loans made by it hereunder, each Agent in
its individual capacity and not as Agent shall have the same rights and powers
as any other Lender and may exercise the same as though it were not an Agent,
and the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business the Borrower or any Subsidiary or other
Affiliate thereof as if it were not an Agent. The Agents need not account to any
other Lender for any monies received by it for reimbursement of its costs and
expenses as Agents hereunder, or (subject to Section 2.17) for any monies
received by it in its capacity as a Lender hereunder.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on the aggregate amount of its outstanding
Commitment hereunder) of any reasonable expenses incurred for the benefit of the
Lenders by the Agents, including reasonable counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, that
shall not have been reimbursed by the Borrower and (b) to indemnify and hold
harmless each Agent and any of its directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, and
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reasonable expenses or disbursements of any kind or nature whatsoever that may
be imposed on, incurred by or asserted against it in its capacity as Agent or
any of them in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have been
reimbursed by the Borrower or any other Loan Party, provided that no Lender
shall be liable to an Agent or any such other indemnified person for any portion
of such liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Agent or any of its
directors, officers, employees or agents. Each Lender agrees to reimburse the
Issuing Bank and its directors, employees and agents, in each case, to the same
extent and subject to the same limitations as provided above for the Agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder. Each of the parties
hereto acknowledges and agrees that the Syndication Agent and the Arranger shall
have no duties, responsibilities, obligations or liabilities, as such, hereunder
or under the other Loan Documents.
The Collateral Agent in its capacity as trustee or otherwise under any
Security Document governed by English law (an "English Security Document"), (a)
is not liable for any failure, omission or defect in perfecting or registering
the security constituted or created by any English Security Document, (b) may
accept without enquiry such title as the Borrower or any Guarantor may have to
any asset secured by any English Security Document, (c) is not under any
obligation to hold any English Security Document or any other document in
connection with the Loan Documents or the assets secured by any English Security
Document (including title deeds) in its own possession or to take any steps to
protect or preserve the same, and (d) may permit the Borrower and/or any
Guarantor to retain any English Security Document or other document in its
possession.
Except where the Collateral Agent holds a legal mortgage over, or over
an interest in, real property or shares, the Collateral Agent in its capacity as
trustee or otherwise shall not be under any obligation to hold any title deeds,
English Security Documents or any other documents in connection with the
property charged by any English Security Document or any other such security in
its own possession or to take any steps to protect or preserve the same. The
Collateral Agent may permit the Borrower or the Guarantor, as the case may be,
to retain such title deeds and other documents in its possession.
All moneys which under the trusts contained in the English Security
Documents are received by the Collateral Agent in its capacity as trustee or
otherwise may be invested in the name of or under the control of the Collateral
Agent in any investment authorized by English
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law for the investment by trustees of trust money or in any other investments
which may be selected by the Collateral Agent. Additionally, the same may be
placed on deposits in the name of or under control of the Collateral Agent at
such bank or institution (including the Collateral Agent) and upon such terms as
the Collateral Agent may think fit.
Each Secured Party authorizes, empowers and directs the Collateral
Agent (by itself or by such person as it may nominate) to execute and enforce
the English Security Documents as trustee on its behalf in accordance with the
terms of such English Security Documents.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:
(a) if to the Borrower, to it at:
Sola International Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, EVP and CFO
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇@▇▇▇▇.▇▇▇
copies to:
▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇
(b) if to the Administrative Agent or Collateral Agent,
to:
Union Bank of California, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
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copies to:
Sheppard, Mullin, ▇▇▇▇▇▇▇ & Hampton LLP
Four ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(c) if to a Lender, to it at its address (or telecopy
number) set forth on the applicable Lender Addendum or in the Assignment and
Acceptance pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the earlier of the date of receipt or the date five Business Days
after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in this
Section 9.01 or in accordance with the latest unrevoked direction from such
party given in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Revolving Loans and the issuance of Letters of
Credit by the Issuing Bank, regardless of any investigation made by the Lenders
or the Issuing Bank or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Revolving Loan
or any Fee or any other amount payable under this Agreement or any other Loan
Document is outstanding and unpaid or any Letter of Credit is outstanding and so
long as the Commitments have not been terminated. The provisions of Sections
2.13, 2.15, 2.19 and 9.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Revolving
Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent, the Collateral Agent, the Issuing Bank or any
Lender.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have received counterparts (or fax
copies of counterparts) hereof which, when taken together, bear the signatures
of each of the other parties hereto, and thereafter shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
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SECTION 9.04. Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the permitted
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Borrower, the Administrative Agent, the Issuing Bank or
the Lenders that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all
or a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Revolving Loans at the
time owing to it); provided, however, that (i) except in the case of an
assignment to a Lender or an Affiliate or Related Fund of such Lender, (x) the
Administrative Agent (and, in the case of any assignment of a Commitment, the
Issuing Bank) must give its prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed), (y) unless a Default or
Event of Default has occurred and is continuing, the Borrower must give its
prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed) and (z) the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $2,500,000 (or, if less, the entire
remaining amount of such Lender's Commitment) or such lesser amount as to which
the Administrative Agent and, so long as no Default or Event of Default shall
have occurred and be continuing, the Borrower may from time to time agree; and
(ii) the parties to each such assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500.00, payable by such parties except as otherwise
provided herein; and (iii) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire. Upon
acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment and Acceptance, (a)
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (b) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.15, 2.19 and 9.05, as well as to any Fees accrued
for its account and not yet paid).
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the assignee thereunder shall be
deemed to confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of any adverse claim
and that its Commitment, and the outstanding balances of its Revolving Loans,
without giving effect to assignments thereof which have not become effective,
are as set forth in such Assignment and Acceptance; (ii) except as set forth in
(i) above, such assigning Lender makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in
94
connection with this Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto, or
the financial condition of the Borrower or any Subsidiary or the performance or
observance by the Borrower or any Subsidiary of any of its obligations under
this Agreement, any other Loan Document or any other instrument or document
furnished pursuant hereto; (iii) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and Acceptance; (iv) such
assignee confirms that it has received a copy of this Agreement and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as
an agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Revolving Loans owing to, each Lender pursuant to the terms hereof
from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Issuing Bank, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank, the Collateral Agent
and any Lender (with respect to its own interest), at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above and, if required, the written consent of the Borrower,
the Issuing Bank and the Administrative Agent to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance; (ii)
record the information contained therein in the Register; and (iii) give prompt
notice thereof to the Borrower and the Issuing Bank. No assignment shall be
effective unless it has been recorded in the Register as provided in this
paragraph (e).
(f) Each Lender may without the consent of the Borrower,
the Issuing Bank or the Administrative Agent sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Revolving
Loans owing to it); provided, however, that (i) such
95
Lender's obligations under this Agreement shall remain unchanged; (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations; (iii) the participating banks or other entities
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.13, 2.15 and 2.19 to the same extent as if they were Lenders;
provided that no participating bank or other entity shall be entitled to receive
any greater amount pursuant to such Sections than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by the transferor Lender to such participating bank or other entity
had no such transfer occurred; and (iv) the Borrower, the Administrative Agent,
the Issuing Bank and the Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Revolving Loans or L/C Disbursements
and to approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers increasing or
decreasing the Commitment of such Lender (except in connection with a ratable
decrease in the Commitments of all Lenders), subjecting such Lender to any
additional obligation, reducing the principal of or rate of interest on, or
change the currency of, any Revolving Loan of such Lender, postponing the date
fixed for any payment of principal of or interest on any Revolving Loan of such
Lender, amending or modifying the definition of the term "Required Lenders", or
modifying the provisions of Section 9.08).
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 9.04, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that each such assignee or participant
or proposed assignee or participant shall agree to preserve the confidentiality
of such confidential information on terms no less restrictive than those
applicable to the Lenders pursuant to Section 9.16.
(h) Any Lender may at any time assign all or any portion
of its rights under this Agreement to secure extensions of credit to such Lender
or in support of obligations owed by such Lender; provided that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained
herein, any Lender (a "Granting Lender") may grant to a special purpose funding
vehicle (an "SPC"), identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the Borrower, the option to
provide to the Borrower all or any part of any Revolving Loan that such Granting
Lender would otherwise be obligated to make to the Borrower pursuant to this
Agreement; provided that (i) nothing herein shall constitute a commitment by any
SPC to make any Revolving Loan; and (ii) if an SPC elects not to exercise such
option or otherwise fails to provide all or any part of such Revolving Loan, the
Granting Lender shall be obligated to make such Revolving Loan pursuant to the
terms hereof. The making of a Revolving Loan by an SPC hereunder shall utilize
the Commitment of the Granting Lender to the same extent, and as if, such
Revolving Loan were made by such Granting Lender. Each party hereto hereby
agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). In
96
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in this Section 9.04, any SPC may (i) with
notice to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Revolving Loans to the Granting Lender or
to any financial institutions (consented to by the Borrower and Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Revolving Loans and (ii) disclose
on a confidential basis on terms no less restrictive than those applicable to
Lenders pursuant to Section 9.16 any non-public information relating to its
Revolving Loans to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC.
(j) The Borrower shall not assign or delegate any of its
rights or duties hereunder without the prior written consent of the
Administrative Agent, the Issuing Bank and each Lender, and any attempted
assignment without such consent shall be null and void.
(k) In the event that S&P, ▇▇▇▇▇'▇ and ▇▇▇▇▇▇▇▇ (or
InsuranceWatch Ratings Service, in the case of Lenders that are insurance
companies (or Best's Insurance Reports, if such insurance company is not rated
by InsuranceWatch Ratings Service)) shall, after the date that any Lender
becomes a Lender, downgrade the long-term certificate deposit ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 and C, respectively
(or BB, in the case of a Lender that is an insurance company (or B, in the case
of an insurance company not rated by InsuranceWatch Ratings Service)), then the
Issuing Bank shall have the right, but not the obligation, at its own expense,
upon notice to such Lender and the Administrative Agent, to replace such Lender
with an assignee (in accordance with and subject to the restrictions contained
in paragraph (b) above), and such Lender hereby agrees to transfer and assign
without recourse (in accordance with and subject to the restrictions contained
in paragraph (b) above) all its interests, rights and obligations in respect of
its Commitment to such assignee; provided, however, that (i) no such assignment
shall conflict with any law, rule and regulation or order of any Governmental
Authority; (ii) the Issuing Bank or such assignee, as the case may be, shall pay
to such Lender in immediately available funds on the date of such assignment the
principal of and interest accrued to the date of payment on the Revolving Loans
made by such Lender hereunder and all other amounts accrued for such Lender's
account or owed to it hereunder; and (iii) such Lender or assignee shall pay the
processing and recordation fee of $3,500.00.
SECTION 9.05. Expenses; Indemnity.
(a) The Borrower agrees to pay all reasonable
out-of-pocket expenses (including but not limited to expenses incurred in
connection with due diligence and travel, courier, reproduction, printing and
delivery expenses) incurred by the Administrative Agent, the Collateral Agent
and the Issuing Bank in connection with the syndication of the credit
97
facilities provided for herein and the preparation, execution, delivery and
administration of this Agreement and the other Loan Documents or in connection
with any amendments (or proposals thereof), modifications (or proposals
thereof), enforcement costs, documentary taxes or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated). The Borrower agrees to pay all reasonable
out of pocket expenses incurred by the Administrative Agent, the Collateral
Agent or any Lender in connection with the enforcement or protection of its
rights in connection with this Agreement and the other Loan Documents or in
connection with the Revolving Loans made or Letters of Credit issued hereunder,
including the reasonable fees, charges and disbursements of Sheppard, Mullin,
▇▇▇▇▇▇▇ & Hampton LLP, counsel for the Administrative Agent and the Collateral
Agent, and, in connection with any such enforcement or protection, the
reasonable fees, charges and disbursements of any other counsel for the
Administrative Agent, the Collateral Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative
Agent, the Collateral Agent, each Lender and the Issuing Bank, each Affiliate of
any of the foregoing persons and each of their respective directors, officers,
trustees, employees and agents (each such person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, all reasonable out-of-pocket
costs and any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) any actual or proposed use of the proceeds of the Revolving
Loans or issuance of Letters of Credit, (ii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto, or (iii) any actual or alleged presence or
Release of Hazardous Materials on any Real Property owned, leased or operated by
the Borrower or any Subsidiary, or any Environmental Claim related in any way to
the Borrower or the Subsidiaries; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such costs, losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Revolving Loans, the expiration of the Commitments, the
expiration of any Letter of Credit, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender. All amounts due under this Section 9.05
shall be payable on written demand therefor accompanied by reasonable
documentation with respect to any reimbursement, indemnification or other amount
requested.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement and
other Loan
98
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section 9.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have. Each Lender agrees to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender (provided that the failure to give such notice shall not affect
the validity of such setoff and application).
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA.
SECTION 9.08. Waivers; Amendment
(a) No failure or delay of the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the
Collateral Agent, the Issuing Bank and the Lenders hereunder and under the other
Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
any other Loan Document or consent to any departure by the Borrower or any other
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Borrower in any case shall in and of itself entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may
be waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of any scheduled principal payment date or date for the
payment of any interest on any Revolving Loan or any date for reimbursement of
an L/C Disbursement, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Revolving Loan or L/C Disbursement or
change the currency of any Revolving Loan or L/C Disbursement, without the prior
written consent of each Lender affected thereby; (ii) increase, decrease or
extend the Commitment (except for a ratable decrease in the Commitments of all
Lenders) or decrease or extend the date for payment of the Commitment Fees of
any Lender or subject any Lender to any additional obligation, in each case
without the prior written consent of such Lender; (iii) amend or modify the
definition of "Borrowing Base", clause (l) of the definition of "Eligible
Accounts Receivable," clause (e) of the definition of "Eligible Inventory,"
Section 2.01, 2.12(a), the second sentence of Section 2.21(b) or Section
4.01(d), in each case without the prior written consent of each Lender; (iv)
amend or modify the pro rata requirements of Section 2.16, the provisions of
Section 9.04(j), the provisions of this Section 9.08, the
99
definition of the term "Required Lenders" or release any Guarantor (other than
in connection with a transaction permitted hereunder) or all or substantially
all of the Collateral, without the prior written consent of each Lender; or (v)
amend or modify the protections afforded to an SPC pursuant to the provisions of
Section 9.04(i) without the written consent of such SPC; provided, further, that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, the Collateral Agent or the Issuing Bank hereunder
or under any other Loan Document without the prior written consent of the
Administrative Agent, the Collateral Agent or the Issuing Bank, respectively.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Revolving Loan or participation in any L/C Disbursement, together with all fees,
charges and other amounts which are treated as interest on such Revolving Loan
or participation in such L/C Disbursement under applicable law (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by the Lender holding
such Revolving Loan or participation in accordance with applicable law, the rate
of interest payable in respect of such Revolving Loan or participation
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Revolving Loan or participation
but were not payable as a result of the operation of this Section 9.09 shall be
cumulated, and the interest and Charges payable to such Lender in respect of
other Revolving Loans or participations or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Rate to the date of repayment, shall have
been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and
the other Loan Documents constitute the entire contract between the parties
relating to the subject matter hereof. Any other previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any party
other than the parties hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby
100
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). Any invalid, illegal or unenforceable
provision shall be deemed replaced with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process.
(a) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
California State court or Federal court of the United States of America sitting
in the City of San Francisco, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
California State court or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Collateral Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or the other Loan Documents
against the Borrower or its properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any California State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
101
SECTION 9.16. Confidentiality. The Administrative Agent, Issuing
Lender and each Lender (each, a "Lending Party") agrees to keep confidential in
accordance with its customary practice (and to use its reasonable efforts to
cause its respective agents and representatives to keep confidential) any
information furnished or made available to it by the Borrower pursuant to this
Agreement that is marked confidential; provided that nothing herein shall
prevent any Lending Party from disclosing such information (a) to any other
Lending Party or any Affiliate of any Lending Party, or any officer, director,
employee, agent, or advisor of any Lending Party or Affiliate of any Lending
Party, (b) to any other person if reasonably incidental to the administration or
hedging of the credit facility provided herein, (c) as required by any law,
rule, or regulation, (d) upon the order of any court or administrative agency,
(e) upon the request or demand of any regulatory agency or authority, (f) that
is or becomes available to the public or that is or becomes available to such
Lending Party other than as a result of a disclosure by such Lending Party
prohibited by this Agreement, (g) in connection with any litigation to which
such Lending Party or any of its affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any remedy under this Agreement or
any other Loan Document, and (i) subject to provisions substantially similar to
those contained in this Section, to any actual or proposed participant or
assignee.
SECTION 9.17. Lender Addendum. Each initial Lender shall become a
party to this Agreement by delivering to the Administrative Agent a Lender
Addendum duly executed by such Lender, the Borrower and the Administrative
Agent.
[Signature Pages Follow]
102
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SOLA INTERNATIONAL INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
EVP and CFO
UNION BANK OF CALIFORNIA, N.A., as a
Lender, Administrative Agent, Collateral
Agent and an Issuing Bank
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
103
Schedule 1.01(a)
PERMITTED ASSET DISPOSITIONS
- Sale of vacant building at ▇▇▇▇ Industrial de la calle 2 Oriente,
Ciudad Industrial, Tijuana, Baja California--This facility is owned by
AO Lensmex, a Mexican company, and is not currently in use. The
Borrower estimates proceeds at $500,000.
- Sale of Rx laboratory in Hong Kong at ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ Hing
Centre, 13 ▇▇▇▇▇▇ ▇▇▇▇ Road, Kowloon Bay, Kowloon--The sale and price
of this prescription laboratory are currently being negotiated. The
Borrower estimates proceeds at $1.0 million.
Schedule 1.01(b)
CONTRACT WAREHOUSE
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule 2.21(b)
LETTERS OF CREDIT
1. Irrevocable Standby Letter of Credit No. 306S234450, dated October 16,
2002, in the amount of US $1,925,000, issued by Union Bank of
California, N.A. to CHINATRUST COMMERCIAL BANK, as beneficiary.
2. Irrevocable Standby Letter of Credit No. 306S234448, dated October 16,
2002, in the amount of US $550,000, issued by Union Bank of California,
N.A. to LUMBERMANS MUTUAL CASUALTY COMPANIES, as beneficiary.
Schedule 3.08(a)
SUBSIDIARIES
Unless otherwise indicated, all subsidiaries are, either directly or indirectly,
wholly owned by the Loan Parties.
SUBSIDIARY % OWNED BY THE BORROWER(1)
---------- --------------------------
Sola Argentina S.A. 100%
Sola Optical Partners, a Limited Partnership 100%
Sola Technologies Pty. Ltd. 100%
Sola Corporation Limited 100%
Sola Optical Licensing Pty. Ltd. 100%
Sola International Holdings Ltd. 100%
Sola Optical Australia Pty. Ltd. 100%
Norinco Sola Optical Ltd. 50%
Sola Belgium N.V. 100%
American Optical Benelux 100%
Sola Brasil Industria Optica Ltda 100%
A.O. Brasil Ltda 100%
SOLA Industria e Comerico Ltda 100%
Sociedade Amazonense de Oculos Ltda 100%
American Optical Lens Company Limited 100%
1132782 Ontario, Inc. 100%
Sola Optical CZ, S.R.O. 100%
Sola Optical (U.K.) Limited 100%
UKO International Limited 100%
American Optical U.K. Ltd. 100%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Group Limited 100%
United Kingdom Optical Company Limited 100%
The ▇▇▇▇▇▇ Company Limited 100%
Levers Optical (Manufacturing) Limited 100%
J&H ▇▇▇▇▇▇ Group Limited 100%
Raphael's Limited 100%
UKO International (Overseas Holding) Ltd. 100%
▇. ▇▇▇▇▇▇▇ and Company (South Africa) Limited 100%
▇. ▇▇▇▇▇▇▇ and Company (Zimbabwe) Limited 100%
AO European Services Limited 100%
Alpha Lens Company Limited 100%
British American Optical Company Limited 100%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited 100%
U.K. ▇▇▇▇▇▇▇ Limited 100%
▇. ▇▇▇▇▇▇▇ and Company Limited 100%
SILS Ltd. 100%
Sola Optical Holdings S.A.R.L. 100%
Industrie Optique Sola S.A. 100%
Sola Optical S.A. 100%
--------------------------
(1) Indicates direct ownership and indirect ownership through subsidiaries
SUBSIDIARY % OWNED BY THE BORROWER(1)
---------- --------------------------
AO Ouest Optique S.A. 100%
Sola Group Holdings GmbH 100%
Sola Optical GmbH 100%
American Optical GmbH 100%
Sola Hong Kong Ltd. 100%
Sola Optical Lens Marketing Pvt. Ltd. 100%
Sola Holdings Ireland Limited 100%
Sola IFSC 100%
Sola ADC Lenses Limited 100%
Sola RDC Limited 100%
Sola Ophthalmic Products Ltd. 100%
Sola Optical Italia S.p.A. 100%
American Optical Italia SRL 100%
Sola Optical Japan K.K. 100%
Solnox Kougau K.K. 50%
Sun Ophthalmic Lenses Distribution SDN BHD 100%
Sola Optical Lens Malaysia SDN BHD 100%
Lentes Sola S.A. de C.V. 100%
American Optical de Mexico S.A. de C.V. 100%
Optica Sola de Mexico S.R.L. de C.V. 100%
Imgo Industries B.V. 100%
Sola Nordic 100%
Sola Optical (Poland) Sp.zo.o. 100%
▇▇▇▇ Industria Optica S.A. 89%
Sola Optical Singapore Pte Ltd. 100%
American Optical Co. Pte. Ltd. 100%
Sola Optical Espana Lentes Oftalmicas SL 100%
American Optical Company International A.G. 100%
Sola Optical Taiwan Ltd. 100%
Sola Optical Holdings I Ltd. 100%
Sola Optical Holdings II Ltd. 100%
Sola Optical Holdings III Ltd. 100%
Sola Optical Holdings IV Ltd. 100%
Sola Optical Holdings V Ltd. 100%
Sola Optical Holdings VI Ltd. 100%
Sola Optical Holdings Aus. Ltd. 100%
Sola Optical Holdings Fr. Ltd. 100%
Sola Optical Holdings Mex LLC 100%
American Optical Lens Company 100%
Sola Custom Coatings Inc. 100%
U.S. Coatings of Oregon, LLC 100%
Sola Venezuela Industria Optica C.A. 100%
Sola Optical Guangzhou Ltd. 100% **
Sola Shanghai Omyl Ltd. 50% **
Sola Guangzhou Lens Manufacturing Ltd. 100% **
Sola Optical China Limited 76%
** Indicates percentage ownership of Sola Optical China Limited in which
Borrower holds a 70% interest.
2
Schedule 3.08(b)
[Schedule 3.08(b) is an Organizational Chart of Sola International Inc. by
Country]
Schedule 3.09
LITIGATION
None
Schedule 3.10(a)
MATERIAL AGREEMENTS
Description of consent
required for the
Description of Material Agreement Transactions, if any
--------------------------------- ----------------------
Rights Agreement dated as of August 27, 1998 between SOLA International Inc. and Bank None
Boston N.A.
Indenture by and between the Company and State Street Bank and Trust Company of None
California, N.A., as Trustee, with respect to the 6 7/8% Notes due 2008
Officers' Certificate Related to Terms of Senior Notes None
Indenture dated as of April 17, 2001 by and between the Company and The Bank of New None
York, as Trustee, with respect to the 11% Notes due 2008
Registration Rights Agreement dated as of April 17, 2001 by and among the None
Company and None UBS AG acting through its business group UBS Warburg, as
Initial Purchaser, with respect to the 11% Notes due 2008
Purchase Agreement, dated as of September 1, 1993 by and between SOLA Holdings Inc., None
▇▇▇▇▇▇▇▇▇▇ plc and certain of ▇▇▇▇▇▇▇▇▇▇ plc's subsidiaries
Employment Agreement between SOLA International Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇, dated as of None
September 2, 1997
Confidential Severance Agreement between SOLA International Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇, None
dated as of October 13, 1997
Lease Agreement, dated May 10, 1993, between SOLA Optical Taiwan Ltd. and ▇▇▇▇▇ ▇▇▇ None
Co., Ltd. (including English summary of principal terms)
Lease Agreement between Optical SOLA de Mexico and Messrs. ▇▇▇▇▇▇▇▇▇ Luttenroth-▇▇▇▇▇ None
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ (including English summary of principal terms)
SOLA Investors Inc. Stock Option Plan None
Amendment Number One to SOLA Investors Inc. Stock Option Plan None
Amended and Restated 1998 SOLA International Inc. Stock Option Plan None
Form of Indemnification Agreement between the executive officers and directors of the None
Company and the Company
SOLA International Inc. Management Incentive Plan None
SOLA Optical 401(k) Savings Plan None
Trust Agreement entered into as of May 15, 1996 between SOLA Optical USA, Inc. and None
Chase Manhattan Bank, N.A.
Employment Agreement between Sola International Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, dated None
as of November 6, 2000
Letter Agreement with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated February 7, 2001 None
Confidential Severance Agreement between Sola International Inc. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, None
dated January 1, 1997
Confidential Severance Agreement between Sola International Inc. and ▇▇▇▇ ▇▇▇▇▇▇▇▇, None
dated April 6, 2002
Letter Agreement between Sola International Inc. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated May 7, 2001 None
Schedule 3.10(b)
LEASES OF REAL PROPERTY
Full Service Lease-Gross, dated July 10, 2000, between ▇▇▇▇▇▇▇/▇▇▇▇▇▇ #15 and
Sola International Inc.
Standard Office Lease-Gross, dated November 4, 1997, between ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ and American Optical Lens Company, as amended
Standard Industrial Lease, dated June 12, 1989, as amended, between MIP
Properties, Inc. (as successor) and Sola International Inc. (as successor)
▇▇▇▇▇▇ Court Lease, dated November 3, 2000, between Brookwood Sorrento
Investors, L.L.C. and Sola International Inc.
Industrial Lease Agreement, dated November 8, 2000, between Industrial
Developments International, Inc. and Sola International Inc., as amended
Sublease, dated June 19, 1996, between American Optical Corporation and American
Optical Lens Company
Lease, dated March 1, 1996, as amended, between Plan Way Properties, L.L.C. (as
successor) and Sola International Inc. (as successor)
Lease, dated January 5, 2000, between Spectron Laser Systems, Ltd. and Sola
International Inc. (as successor)
Underlease, dated September 22, 1983, between Techno Limited and UKO
International Ltd. (as assignee/successor)
Lease, dated June 1, 1998, between ▇▇▇▇▇ Industrial Company Limtied and UK
Optical Limited
Lease, dated December 21, 1989, between ▇▇▇▇▇▇▇ Estates Limited and Sola Optical
UK Limited
Supplemental Lease, dated September 4, 2000, between ▇▇▇▇▇ Industries Limited
and Sola Optical UK Limited
Bail Commercial, dated December 8, 2000, between Espace Enterprises du Pays de
Fougeres and AO Ouest Optique
Bail Commercial, dated October 11, 2000, between S.C.I. des Quatre Vents and AO
Ouest Optiquie
Bail Commercial, dated January 1, 2001, between Actipierre 2 and AO Ouest
Optique
Memorandum of Lease, dated June 1, 1995, between Sola International Holdings
Ltd. and Transitions Optical Pty. Ltd.
Memorandum of Lease, dated October 1, 1995, between Industrial and Commercial
Premises Corporation and Sola International Holdings Limited
Lease, dated May 16, 2001, between ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, LLC and Sola
International Inc.
Office Building Lease, dated July 24, 2001, between Torrey
View Assoicates, LP and Sola International Inc.
Schedule 3.17
ENVIRONMENTAL MATTERS
None.
` Schedule 3.18
INSURANCE
Type of Policy Policy Number Carrier/Insurer
----------------------------------------------------------------------------------------------------------------
Property & Boiler/Machinery HFP003977701 Winterhur Int'l America
PPR9303617-00 Zurich
Marine Open Cargo & Stock Throughput JC475202 Royal & Sun Alliance, et al
Commercial General Liability 3578-19-28 Chubb
Business Automobile Liability 7498-39-26 Chubb
Foreign Liability 3578-20-54 Chubb
Umbrella Liability 9363-18-08 Chubb
Crime ▇▇▇-▇▇-▇▇ National Union Fire Insurance
Fiduciary Liability 8156-49-53-B Chubb
Employment Practices Liability 8156-49-53-B Chubb
Directors and Officers ▇▇▇-▇▇-▇▇ National Union Fire
GA0349943 Gulf
3DY-018351-00 Lubermann's Mutual
8169-0547 Chubb
Schedule 4.03
FOREIGN COUNSEL
None.
Schedule 5.11(e)(i)
CERTAIN PLEDGED SECURITIES
Sola Brasil Industria Optica Ltda. (Brazil)
Optica SOLA de Mexico S.R.L. de C.V. (Mexico)
Sola Optical Partners, a Limited Partnership (Australia)
Sola Optical Holdings S.A.R.L. (France)
Lentes SOLA S.A. de C.V. (Mexico)
Sola Optical Italia S.p.A. (Italy)
Sola Optical (U.K.) Limited (UK)
Sola Holdings Ireland Limited (Ireland)
Schedule 5.11(e)(ii)
CERTAIN FOREIGN COUNSEL OPINIONS
None.
Schedule 6.01
OUTSTANDING INDEBTEDNESS ON CLOSING DATE
All Indebtedness on the balance sheet of the Borrower, dated June 30,
2002, as filed with the Securities and Exchange Commission as an exhibit to the
Company's Form 10-Q for fiscal year ended June 30, 2002, in the amount of
approximately $307.8 million, being the amount outstanding as of June 30, 2002,
and the approximate amount outstanding as of the Closing Date.
All letters of credit on Schedule 2.21(b) above.
Notes payable to banks which, as of March 31, 2002, represented
borrowings generally denominated in foreign currencies under several foreign
credit agreements with lenders in the amount of approximately $0.2 as of June
30, 2002. The weighted average interest rates as of March 31, 2002 and 2001 were
5.5% and 6.0%, respectively.
Uncollateralized promissory note, interest rates varying from 6.5% to
7.5% at March 31, 2002, principal and interest payable through January 2003, in
the amount of approximately $2.0 million as of March 31, 2002.
Uncollateralized term loans, interest rates varying from 4.0% to 15.0%
at March 31, 2002, principal and interest payable through December 2008, in the
amount of approximately $1.7 million as of March 31, 2002.
Uncollateralized term loan, interest 1.85% at March 31, 2001, principal
and interest payable through June 2008, in the amount of approximately $0.48
million as of March 31, 2002.
Loans collateralized by equipment and other assets, interest rates
varying from 3.2% to 12.0% at March 31, 2002, principal and interest payable
through August 2002 in the amount of approximately $4.1 million as of March 31,
2002.
Loans collateralized by equipment and other assets, interest rates
indexed to LIBOR and Bank Base Rate (LIBOR 3.5% and Bank Base Rate 4.0% at March
31, 2002), principal and interest payable through March 2007 in the amount of
approximately $.6 as of March 31, 2002.
6 7/8% Senior Notes, issued under an indenture dated March 19, 1998,
with State Street Bank and Trust Company of California, N.A., as Trustee, in the
amount of approximately $94.7 million, being the amount outstanding as of March
31, 2002. The
6 7/8% Senior Notes are unsecured senior obligations, limited to
$100 million aggregate principal amount, and will mature on March 15, 2008.
11% Senior Notes, issued under an indenture dated April 17, 2001, with
The Bank of New York, as Trustee, in the amount of approximately $178.4 million,
being the amount outstanding as of March 31, 2002. The 11% Senior Notes are
unsecured senior obligations, limited to (euro)205 million aggregate principal
amount, and will mature on March 15, 2008.
2
Schedule 6.02
LIENS EXISTING ON CLOSING DATE
----------------------- --------------------- -------------------- --------------------- -------------------------------------
DEBTOR SECURED PARTY JURISDICTION FILE NUMBER COMMENTS
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Sun Data, Inc. Secretary of State, UCC-1 9702260584 Equipment on Lease No. 150723 (see
CA attachment to financing statement)
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Mellon First United Secretary of State, UCC-1 9716860693 Equipment -- printer, carrier,
Leasing CA prompt, high speed printer label
printer (Lease #65101)
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Mellon First United Secretary of State, UCC-1 9720660487 Equipment -- mailing machine,
Leasing CA scale, acct. software, differential
weight (Lease #92345)
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Mellon First United Secretary of State, UCC-1 9811261083 Equipment: 1 CH5000 Challenger, 1
Leasing CA Eltron Printer and equipment (Lease
#1997977531)
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Mellon First United Secretary of State, UCC-1 9811860999 Equipment -- A.H. 5000 Manifest
Leasing CA Challenger System w/access. (Lease
#199797756)
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Secretary of State, UCC-1 9818360303 Equipment - Blanket lien associated
CA with computer programs and software
from Lease #6754578-001
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Xerox Corp. Secretary of State, UCC-1 9821760512 Equipment -- Xerox 5385 copier
CA w/access. (Lease #957487275)
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. IBM Credit Secretary of State, UCC-1 9829461094 Computers, information processing
Corporation CA and peripheral equipment an goods
referenced on IBM Supplement 547333
dated 8/31/98
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. IBM Credit Secretary of State, UCC-1 9913160549 Computers, information processing
Corporation CA and peripheral equipment an goods
referenced on IBM Supplement 657608
dated 4/26/99
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. IBM Credit Secretary of State, UCC-1 9935160863 Computers, information processing
Corporation CA and peripheral equipment an goods
referenced on IBM Supplement 744423
dated 11/5/99
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Fidelity Leasing Inc. Secretary of State, UCC-1 0107160629 Equipment -- 3 Cisco 2610 router
CA
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Fidelity Leasing Inc. Secretary of State, UCC-1 0110660197 Equipment -- Cisco 2610 routers
CA
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Sun Microsystems Secretary of State, UCC-1 0113060415 All equipment and related items
Finance CA described in any Lease Schedule to
Master Lease Agreement No. 4067082
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. UBS AG, Stamford Secretary of State, UCC-1 0121360001 Blanket Lien
Branch CA
----------------------- --------------------- -------------------- --------------------- -------------------------------------
----------------------- --------------------- -------------------- --------------------- -------------------------------------
DEBTOR SECURED PARTY JURISDICTION FILE NUMBER COMMENTS
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. UBS AG, Stamford Secretary of State, UCC-1 10754692 Blanket Lien
Branch DE
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. IBM Credit Secretary of State, UCC-1 21937584 Software Equipment under lease
Corporation DE number
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. CIT Communications Secretary of State, UCC-1 22277246 Software Equipment under lease
Finance Corporaiton DE number H00271
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Department of State, UCC-1 980000140996 Computer Equipment and Software
FL under Lease #6754578
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Clerk of Superior UCC-1 Computer equipment and software
Court Gwinnett ▇▇▇-▇▇▇▇-▇▇▇▇▇▇ under Master Lease Agreement
County, GA #6754578
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Service Secretary of State, UCC-1 2467785 Computer equipment and software
KS under Lease #6754578
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. CIT Communications County Clerk UCC-1 2019682 Equipment including but not limited
Finance Corporation ▇▇▇▇▇ County, KY to data equipment acquired or sole
to debtor by secured party pursuant
to Lease #S421603
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Secretary of State, UCC-1 155666 Computer equipment and software
KY under Lease #6754578
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Fidelity Leasing Inc. County Clerk UCC-1 456402 Cisco Computer equipment
Kenton County,
Covington
Courthouse, KY
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. UBS AG, Stamford Secretary of State, UCC-1 ▇▇▇▇-▇▇▇▇▇▇▇-▇▇ Blanket Lien
Branch KY
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. Fidelity Leasing Inc. Secretary of the UCC-1 200101365390 Computer Equipment - Cicsco routers
Commonwealth MA
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. UBS AG, Stamford Secretary of State, UCC-1 2010001423446 Blanket Lien
Branch ME
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Secretary of State, UCC-1 2049113 Computer equipment and software
MN under Lease Agreement #6754578
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Secretary of State, UCC-1 2930850 All equipment, inventory, general
MO intangibles, accounts and chattel
paper evidenced by the Master Lease
Agreement No. 6754578-001
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Recorder of Deeds UCC-1 3763 Computer Equipment and Software
▇▇▇▇▇▇ County, MO under Lease #6754578-001
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. UBS AG, Stamford Secretary of State, UCC-1 20018008595 Blanket Lien
Branch MO
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. UBS AG, Stamford Secretary of State, UCC-1 02059086 Blanket Lien
Branch NJ
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Secretary of the UCC-1 29090945 Computer equipment and software
Commonwealth, under Master Lease Agreement
Pennsylvania #6754578
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Prothonotary UCC-1 1123 ST 1998 Computer equipment and software
Dauphin County, PA under Lease #6754578
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. UBS AG, Stamford Secretary of State, UCC-1 722 Blanket Lien
Branch RI
----------------------- --------------------- -------------------- --------------------- -------------------------------------
2
----------------------- --------------------- -------------------- --------------------- -------------------------------------
DEBTOR SECURED PARTY JURISDICTION FILE NUMBER COMMENTS
----------------------- --------------------- -------------------- --------------------- -------------------------------------
Sola International Inc. MCI Capital Services Secretary of State, UCC-1 98-129211 Computer equipment and software
TX under Lease #6754578-001
----------------------- --------------------- -------------------- --------------------- -------------------------------------
3
Schedule 6.04(l)
INVESTMENTS EXISTING ON CLOSING DATE
The Borrower has the following investments as of the Closing Date:
- The Borrower has investments in its direct and indirect
subsidiaries listed in Schedule 3.08(a)
- The Borrower has an investment in the form of an outstanding
loan made to Polylite Taiwan Co. Ltd., Polylite Holding Co.
Ltd., and Polylite Hong Kong Company Limited. The balance due
to the Borrower under this loan as of June 30, 2001, was
$3,000,000.
- The Borrower holds a convertible note made by Micro Optics
Design Corporation. The balance due to the Borrower under this
convertible note as of June 30, 2001, was $2,302,765.31.
- The Borrower has an agreement to defer payment in an amount
not to exceed $4.0 million in accounts receivable due to the
Borrower from U.S. Vision, Inc. Repayment of such investment
is subordinated to repayment of U.S. Vision, Inc.'s other
lenders.
EXHIBIT A
FORM OF
LENDER ADDENDUM
Reference is made to that certain Amended and Restated Credit Agreement
dated as of October 28, 2002 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among SOLA
INTERNATIONAL INC., the Lenders (as defined in Article I thereof), UNION BANK OF
CALIFORNIA, N.A., as Sole Lead Arranger, as an Issuing Bank, as Administrative
Agent, and as Collateral Agent for the Lenders. Capitalized terms used and not
defined herein are used with the meanings assigned to such terms in the Credit
Agreement.
Upon execution and delivery of this Lender Addendum by the parties
hereto as provided in Section 9.17 of the Credit Agreement, the undersigned
hereby becomes a Lender thereunder having the Commitment set forth in Schedule 1
hereto, effective as of the Closing Date.
THIS LENDER ADDENDUM SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
This Lender Addendum may be executed by one or more of the parties
hereto on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
Delivery of an executed signature page hereof by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum
to be duly executed and delivered by their proper and duly authorized officers
as of this ____ day of ___________ 2002.
[Name of Lender]
By: ___________________________
Name:
Title:
Accepted and agreed:
SOLA INTERNATIONAL INC.,
a Delaware corporation
By: ________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
By: ________________________
Name:
Title:
2
SCHEDULE 1
COMMITMENTS AND NOTICE ADDRESS
1. Name of Lender: ______________________
2. Address: ______________________
======================
3. Attention: ______________________
Telephone: ______________________
Facsimile: ______________________
4. Commitment: $_____________________
3
SCHEDULE 1
COMMITMENTS AND NOTICE ADDRESS
1. Name of Lender: ______________________
Notice Address: ______________________
Attention: ______________________
Telephone: ______________________
Facsimile: ______________________
2. Commitment: $_____________________
4
SCHEDULE 1
COMMITMENTS AND NOTICE ADDRESS
1. Name of Lender: ______________________
Notice Address: ______________________
Attention: ______________________
Telephone: ______________________
Facsimile: ______________________
2. Commitment: $_____________________
5
EXHIBIT B
UNION BANK OF CALIFORNIA, N.A.
FORM OF
ADMINISTRATIVE QUESTIONNAIRE--SOLA INTERNATIONAL INC.
-------------------------------------------------------------------------------
Lending
Institution: ___________________________________________________________________
Name for
Signature Pages: ______________________________________________________________
Will sign Credit Agreement: [ ]
Will come via Assignment: [ ] Number of Days post Closing:____
Name for
Signature Blocks: ______________________________________________________________
Name for
Publicity: ______________________________________________________________
Address: ______________________________________________________________
Main Telephone: ______________________________________________________________
Telex No/Answer
back: ______________________________________________________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CONTACT-Credit Name: ____________________________________________
Address: ____________________________________________
---------------------------------
Telephone: _________________________________
Fax: _________________________________
CONTACT-Operations Name: ____________________________________________
Address: ____________________________________________
---------------------------------
Telephone: _________________________________
Fax: _________________________________
--------------------------------------------------------------------------------
PAYMENT INSTRUCTIONS
--------------------------------------------------------------------------------
Bank Name: ___________________________________________________________
ABA/Routing No. ___________________________________________________________
Account Name ___________________________________________________________
Account No. ___________________________________________________________
For further credit: ___________________________________________________________
Account No. ___________________________________________________________
Attention: ___________________________________________________________
Reference: ___________________________________________________________
--------------------------------------------------------------------------------
UNION BANK OF CALIFORNIA, N.A., ADMINISTRATIVE DETAILS
--------------------------------------------------------------------------------
Union Bank of California, N.A. Account Administrator Secondary Contact
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Tel: [( ) ] Tel: [( ) ]
Main Telephone: [( ) ] Fax: [( ) ] Fax: [( ) ]
Wire Instructions: The Agents wire instructions will be
disclosed at the time of closing.
EXHIBIT C
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to that certain Amended and Restated Credit Agreement
dated as of October 28, 2002 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") among SOLA
INTERNATIONAL INC., the Lenders (as defined in Article I thereof), UNION BANK OF
CALIFORNIA, N.A., as Sole Lead Arranger, as an Issuing Bank, as Administrative
Agent, and as Collateral Agent for the Lenders. Capitalized terms used and not
defined herein are used with the meanings assigned to such terms in the Credit
Agreement.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Closing Date set forth below (but not prior to
the registration of the information contained herein in the Register pursuant to
Section 9.04(e) of the Credit Agreement), the interests set forth below (the
"Assigned Interest") in the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents, including, without limitation, the
amounts and percentages set forth below of (i) the Commitments of the Assignor
on the Closing Date; (ii) the Loans owing to the Assignor which are outstanding
on the Closing Date; and (iii) participations held by the Assignor in Letters of
Credit which are outstanding on the Closing Date. Each of the Assignor and the
Assignee hereby makes and agrees to be bound by all the representations,
warranties and agreements of such party set forth in Section 9.04(c) of the
Credit Agreement, a copy of which has been received by each such party. From and
after the Closing Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the interests assigned
by this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents and (ii) the Assignor shall, to the
extent of the interests assigned by this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender (as
defined in the Credit Agreement), the forms specified in Section 2.19(e) of the
Credit Agreement, duly completed and executed by such Assignee; (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form of Exhibit B to the Credit Agreement; and (iii) a
processing and recordation fee of $3,500.00.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of California.
4. Date of Assignment:
5. Legal Name of Assignor:
6. Legal Name of Assignee:
7. Assignee's Address for Notices:
8. Closing Date of Assignment (may not be fewer than 5 Business Days
after the Date of Assignment unless the Administrative Agent shall otherwise
agree):
9. Percentage Assigned of Applicable Facility/Commitment:
Percentage Assigned of Applicable
Facility/Commitment (set forth, to at
least 8 decimals, as a percentage of
the Facility and the aggregate
Principal Amount Commitments of all Lenders
Facility/Commitment Assigned thereunder)
------------------- ------------------ -------------------------------------
Revolving Loans $ %
2
The terms set forth above are hereby agreed to:
----------------------------------,
as Assignor
By: ______________________________
Name:
Title:
----------------------------------,
as Assignee
By: ______________________________
Name:
Title:
Accepted:*
SOLA INTERNATIONAL INC.,
a Delaware corporation
By: ____________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
By: ____________________________
Name:
Title:
--------------------------
* To be completed to the extent consents are required under Section
9.04(b) of the Credit Agreement.
3
EXHIBIT D
FORM OF
REVOLVER BORROWING REQUEST
AND INTEREST RATE ELECTION NOTICE
This certificate is delivered to the Administrative Agent (as defined
below) pursuant to Section 2.03 of that certain Amended and Restated Credit
Agreement dated as of October 28, 2002 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein are used with the meanings assigned to such terms
in the Credit Agreement), among SOLA INTERNATIONAL INC. (the "Borrower"), the
Lenders (as defined in Article I thereof), and UNION BANK OF CALIFORNIA, N.A.,
as Sole Lead Arranger, as an Issuing Bank, as Administrative Agent, and as
Collateral Agent for the Lenders.
As of ______________, the Borrower is requesting Revolving Loans in the
aggregate amount of _____________________. The Borrower hereby requests that
said Revolving Loans be made in the amount(s) and Type(s) and for the Interest
Period(s) specified below:
------------------------------------------------------------------------------
Amount ABR or Eurodollar Interest Period (Eurodollar)
------ ----------------- ----------------------------
------------------------------------------------------------------------------
$
$
------------------------------------------------------------------------------
SOLA INTERNATIONAL INC.,
a Delaware corporation
By: ____________________________
Name:
Title:
EXHIBIT E
FORM OF
BORROWING BASE CERTIFICATE
Monthly Accounting period ended ___________, ____
Reference is made to that certain Amended and Restated Credit
Agreement, dated as of October 28, 2002 (as amended, amended and restated,
supplemented and otherwise modified from time to time, the "Credit Agreement"),
among SOLA INTERNATIONAL INC., a Delaware corporation (the "Borrower"), the
Lenders (as defined in Article I thereof), UNION BANK OF CALIFORNIA, N.A., as
Sole Lead Arranger, as an Issuing Bank, as Administrative Agent, and as
Collateral Agent for the Lenders. Capitalized terms defined in the Credit
Agreement are used herein as defined therein.
Pursuant to Section [4.01(g)] of the Credit Agreement, the undersigned,
the Chief Financial Officer of the Borrower, certifies (to the best of [his/her]
knowledge) and the Borrower certifies that attached hereto as Annex 1 is a true
and accurate calculation of the Borrowing Base as at the end of the monthly
accounting period ended ____________, ____ determined in accordance with the
requirements of the Credit Agreement.
All Inventory produced by Borrower and covered by this certificate has
been produced in compliance with the minimum wage and overtime requirements of
the Fair Labor Standards Act of 1938, as amended.
1. Credit Agreement Eligible Accounts Receivable
(from Schedule 1) _________________________
2. Credit Agreement Eligible Inventory
(from Schedule 1) _________________________
3. Borrowing Base, sum of lines 1 and 2 _________________________
4. Actual Borrowing Base,
lesser of line 3 and the Total
Commitment
5. Aggregate amount of outstanding
Revolving Loans
(including L/C Exposure) _________________________
6. Total loan availability, line 5 minus line 4 _________________________
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
duly executed as of the ____ day of ______________, ____.
SOLA INTERNATIONAL INC.,
a Delaware corporation
By: _______________________________
Name:
Title: Chief Financial Officer
2
ANNEX 1
ACCOUNTS
--------
Gross Accounts Receivable (as of last month-end) _________
Returns, discounts, claims, rebates, offsets, credits, charges and allowances _________
Other adjustments _________
Sub-total _________
Ineligibles and Deductions:
(a) Borrower does not have sole legal and valid title _________
(b) Unenforceable obligations of account debtor _________
(c) Intercompany/Affiliate invoices of the type disallowed by the Credit Agreement _________
(d) Accounts which are unpaid more than 150 days after the date of the original
invoice _________
(e) Account debtor or its affiliates that has an Account excluded
under clause (d) above and 50% or more of all Accounts from
such account debtor and affiliates in the aggregate are
ineligible under clause (d) _________
(f) Accounts payable to or disputed by account debtors, as provided in the Credit
Agreement _________
(g) Accounts from account debtors presently in bankruptcy, etc. _________
(h) Contingent sales, etc. _________
(i) Account debtor is a Governmental Authority _________
(j) Account does not represent a final sale _________
(k) Account does not comply with all Requirements of Law _________
(l) No first priority Lien, etc. _________
(m) All or part of such Account relates to returned check, promissory note _________
(n) Accounts that fail to comply in all material respects with all applicable legal
requirements _________
(o) Account debtor is not located in the U.S. or is not Centennial, Inc. _________
(q) Other reserves and deductions _________
Total Ineligibles/Deductions _________
3
Total Eligible Accounts Receivable _________
Credit Agreement Eligible Accounts Receivable
(80% of Total Eligible Accounts Receivable from above) _________
INVENTORY
Inventory (as of last month-end) _________
Ineligibles and Deductions: _________
(a) Not solely owned by a Borrower _________
(b) Not located in U.S. _________
(c) Not stored on property owned or leased by (i) Borrower or (ii) a contracted
warehouseman _________
(d) Packing or shipping materials _________
(e) Not subject to lien _________
(f) Returns and rejections in excess of $5.0 million in the aggregate on a rolling
four quarter basis _________
(g) Not in good condition, not saleable, not in compliance with agreements _________
(h) Raw materials, obsolete, slow moving, samples _________
(i) Consigned, attached goods _________
(j) "Bulk" transfer or sale _________
(k) Other reserves and deductions _________
Total ineligibles/deductions _________
Total Eligible Inventory _________
1. Eligible Inventory from above which has been Eligible Inventory for one year or less _________
2. Eligible Inventory from above which has been Eligible Inventory for more than one
year and less that 24 months _________
3. Eligible Inventory from above which has been Eligible Inventory for 24 months
or more _________
4. 50% of line 1 above _________
4
5. 25% of line 2 above _________
6. 0% of line 3 above _________
Credit Agreement Eligible Inventory (sum of lines 4, 5 and 6 above) _________
5
EXHIBIT F
FORM OF
LANDLORD'S LIEN WAIVER AND ACCESS AGREEMENT
THIS LANDLORD'S LIEN WAIVER AND ACCESS AGREEMENT (the "Agreement") is
made and entered into as of ____________, 2002 by and between ______________,
having an office at _________________________ ("Landlord") and Union Bank of
California, N.A., having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as collateral agent (in such capacity, "Agent") for
the benefit of the Lenders (as hereinafter defined) which are or may hereafter
become parties to the Credit Agreements (as hereinafter defined).
RECITALS:
A. Landlord is the record title holder and owner of the real
property described in Schedule A attached hereto (the "Real Property").
B. Landlord has leased all or a portion of the Real Property (the
"Leased Premises") to Sola International Inc. ("Lessee") pursuant to a certain
lease agreement described in Schedule B attached hereto (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Lease").
C. Pursuant to that certain Amended and Restated Credit Agreement
dated as of October 28, 2002 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement), among Sola International Inc., as borrower
("Borrower"), the lending institutions (the "Lenders") from time to time party
thereto, UNION BANK OF CALIFORNIA, N.A., as Sole Lead Arranger, as an Issuing
Bank, as Administrative Agent, and as Collateral Agent for the benefit of the
Lenders, the Lenders will agree to make to or for the account of Borrower
certain Loans.
D. As security for the payment and performance of the Obligations
under the Credit Agreement and the other Loan Documents, Agent will acquire a
security interest in and lien upon all of Lessee's inventory and accounts
(together with all proceeds of the foregoing, collectively, the "Personal
Property").
E. Agent has requested that Landlord execute this Agreement as a
condition precedent to the making of the Loans under the Credit Agreement.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord hereby represents, warrants and agrees in favor of Agent,
as follows:
1. Subject to the last sentence of Section 4 below, Landlord
hereby waives and releases unto Agent (i) any contractual landlord's lien and
any other landlord's lien which it may be entitled to at law or in equity
against any Personal Property, (ii) any and all rights granted by or under any
present or future laws to levy or distrain for rent or any other charges which
may be due to the Landlord against the Personal Property and (iii) any and all
claims, liens and demands of every kind which it has or may hereafter have
against the Personal Property (including, without limitation, any right to
include the Personal Property in any secured financing Landlord may become party
to). Landlord acknowledges that the Personal Property is and will remain
personal property and not fixtures even though it may be affixed to or placed on
the Real Property.
2. Landlord certifies that (i) Landlord is the landlord under the
Lease described in Schedule B attached hereto, (ii) the Lease is in full force
and effect and has not been amended, modified or supplemented except as set
forth in Schedule B hereto, (iii) there is no defense, offset, claim or
counterclaim by or in favor of Landlord against Lessee under the Lease or
against the obligations of Landlord under the Lease and (iv) no notice of
default has been given under or in connection with the Lease which has not been
cured, and Landlord has no knowledge of any occurrence of any other default
under or in connection with the Lease.
3. Landlord agrees that Agent has the right to remove the
Personal Property from the Leased Premises at any time prior to the occurrence
of a default under the Lease and, after the occurrence of such a default, during
the Standstill Period (as hereinafter defined), provided that Agent shall repair
any damage arising from such removal. Landlord further agrees that, during the
foregoing periods, Landlord will not (i) remove any of the Personal Property
from the Leased Premises or (ii) hinder Agent's actions in removing Personal
Property from the Leased Premises or Agent's actions in otherwise enforcing its
security interest in the Personal Property. Agent shall not be liable for any
diminution in value of the Leased Premises caused by the absence of Personal
Property actually removed or by the need to replace the Personal Property after
such removal. Landlord acknowledges that Agent shall have no obligation to
remove the Personal Property from the Leased Premises.
4. Landlord acknowledges and agrees that Lessee's granting of a
security interest in the Personal Property in favor of the Agent (for its
benefit and the benefit of the Lenders) shall not constitute a default under the
Lease nor permit Landlord to terminate the Lease or re-enter or repossess the
Leased Premises or otherwise be the basis for the exercise of any remedy by
Landlord and Landlord hereby expressly consents to the granting of such security
interest. Notwithstanding anything to the contrary contained in this Agreement
or the Lease, in the event of a default by Lessee under the Lease, Landlord
agrees that (i) it shall provide to Agent at the address set forth in the
introductory paragraph hereof a copy of any notice of default delivered to
Lessee under the Lease and (ii) it shall not exercise any of its remedies
against Lessee provided in favor of Landlord under the Lease or at law or in
equity until the date which is 30 days after the date the Landlord delivers
written notice of such default to Agent (such 30-day period being referred to as
the "Standstill Period"). Agent shall have the right, but not the obligation,
during the Standstill Period, to cure such default and Landlord shall accept any
such cure by Agent or Lessee. If, during the Standstill Period, Agent or Lessee
or any other Person cures the default, then Landlord shall rescind the notice of
default. Landlord shall not, after the expiration of the Standstill Period,
terminate the Lease, or exercise any other remedies available to it thereunder
at
2
law or in equity, so long as Agent (i) complies with all provisions of the
Lease requiring the payment or expenditure of money by Lessee, including,
without limitation, the payment of all (a) past due rent not later than the
expiration of the Standstill Period and (b) current rent on a timely basis as
and when the same becomes due and payable and (ii) cures any existing
nonmonetary defaults to the reasonable satisfaction of Landlord within 60 days
of the end of the Standstill Period. If Agent fails to pay rent or to cure all
existing non-monetary defaults as provided in the immediately preceding
sentence, the waiver and release set forth in Section 1 will be deemed null and
of no further force and effect and Landlord will be entitled to exercise all
rights and remedies that it may have under the Lease or applicable law against
Lessee and the Personal Property.
5. The terms and provisions of this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of Landlord
(including, without limitation, any successor owner of the Real Property) and
Agent.
6. All notices to any party hereto under this Agreement shall be
in writing and sent to such party at its respective address set forth above (or
at such other address as shall be designated by such party in a written notice
to the other party complying as to delivery with the terms of this Section 6) by
certified mail, postage prepaid, return receipt requested or by overnight
delivery service.
7. The provisions of this Agreement shall continue in effect
until Landlord shall have received Agent's written certification that the Loans
have been paid in full and all of Lessee's other Obligations under the Credit
Agreement and the other Loan Documents have been satisfied.
8. THE INTERPRETATION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF CALIFORNIA,
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
9. Landlord agrees to execute, acknowledge and deliver such
further instruments as Agent may request to allow for the proper recording of
this Agreement (including, without limitation, a revised landlord's waiver in
form and substance sufficient for recording) or to otherwise accomplish the
purposes of this Agreement.
3
IN WITNESS WHEREOF, Landlord and Agent have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the date
first above written.
________________________________
as Landlord
By: ______________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Agent
By: ______________________________
Name:
Title:
4
SCHEDULE A
DESCRIPTION OF REAL PROPERTY
5
SCHEDULE B
DESCRIPTION OF LEASE
Location/
Property
Lessor Lessee Dated Modification Address
------ ------ ----- ------------ -------
6
EXHIBIT G - FORM OF AMENDED AND RESTATED SECURITY AGREEMENT
================================================================================
AMENDED AND RESTATED
SECURITY AGREEMENT
By
SOLA INTERNATIONAL INC.,
as Borrower
and
THE GUARANTORS FROM TIME TO TIME PARTY HERETO
and
UNION BANK OF CALIFORNIA, N.A.,
as Collateral Agent
-------------------------
Dated as of October 28, 2002
================================================================================
TABLE OF CONTENTS
Page
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PREAMBLE............................................................................................................. 1
RECITALS............................................................................................................. 1
AGREEMENT............................................................................................................ 2
ARTICLE I DEFINITIONS AND INTERPRETATION............................................................................. ii
SECTION 1.1 Definitions............................................................................... ii
SECTION 1.2 Interpretation............................................................................ xiii
SECTION 1.3 Resolution of Drafting Ambiguities........................................................ xiii
ARTICLE II GRANT OF SECURITY AND SECURED OBLIGATIONS................................................................. xiii
SECTION 2.1 Pledge.................................................................................... xiii
SECTION 2.2 Secured Obligations....................................................................... xiv
SECTION 2.3 Future Advances........................................................................... xiv
SECTION 2.4 No Release................................................................................ xiv
ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF PLEDGED COLLATERAL................................... xiv
SECTION 3.1 Delivery of Certificated Securities Collateral............................................ xiv
SECTION 3.2 Perfection of Uncertificated Securities Collateral........................................ xv
SECTION 3.3 Financing Statements and Other Filings.................................................... xv
SECTION 3.4 [Intentionally Omitted]................................................................... xvi
SECTION 3.5 Joinder of Affiliates..................................................................... xvi
SECTION 3.6 Intellectual Property..................................................................... xvi
SECTION 3.7 Supplements; Further Assurances........................................................... xvi
SECTION 3.8 Use and Pledge of Pledged Collateral...................................................... xvii
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS................................................................. xvii
SECTION 4.1 Payment................................................................................... xvii
SECTION 4.2 Authority and Validity; Preservation of Corporate Existence............................... xvii
SECTION 4.3 Perfection Actions; Prior Liens........................................................... xviii
SECTION 4.4 Limitation on Liens....................................................................... xviii
SECTION 4.5 Other Financing Statements................................................................ xviii
SECTION 4.6 Jurisdiction of Organization; Chief Executive Office; Records; Change of Name............. xviii
SECTION 4.7 Location of Inventory..................................................................... xix
SECTION 4.8 Warehouse Receipts Non-Negotiable......................................................... xix
SECTION 4.9 [Intentionally Omitted]................................................................... xix
SECTION 4.10 Corporate Names; Prior Transactions....................................................... xix
SECTION 4.11 Due Authorization and Issuance............................................................ xix
SECTION 4.12 No Violations, etc........................................................................ xx
Page
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SECTION 4.13 No Options, Warrants. etc................................................................. xx
SECTION 4.14 No Claims................................................................................. xx
SECTION 4.15 No Conflicts, Consents, etc............................................................... xx
SECTION 4.16 Pledged Collateral........................................................................ xxi
SECTION 4.17 Insurance; Condemnation................................................................... xxi
SECTION 4.18 Payment of Taxes; Compliance with Laws; Contesting Liens; Claims.......................... xxiv
SECTION 4.19 Access to Pledged Collateral, Books and Records; Other Information........................ xxv
ARTICLE V CERTAIN PROVISIONS CONCERNING ACCOUNTS..................................................................... xxv
SECTION 5.1 Special Representations and Warranties.................................................... xxv
SECTION 5.2 Maintenance of Records.................................................................... xxv
SECTION 5.3 Legend.................................................................................... xxvi
SECTION 5.4 Modification of Terms, etc................................................................ xxvi
SECTION 5.5 Collection................................................................................ xxvi
SECTION 5.6 Instruments............................................................................... xxvii
SECTION 5.7 Payment into Lockboxes.................................................................... xxvii
ARTICLE VI CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL....................................................... xxvii
SECTION 6.1 Pledge of Additional Securities Collateral................................................ xxvii
SECTION 6.2 Voting Rights; Distributions, etc......................................................... xxvii
SECTION 6.3 No New Securities......................................................................... xxix
SECTION 6.4 Operative Agreements...................................................................... xxix
SECTION 6.5 Defaults, etc............................................................................. xxix
ARTICLE VII [INTENTIONALLY OMITTED].................................................................................. xxx
ARTICLE VIII CERTAIN PROVISIONS CONCERNING COLLATERAL ACCOUNT AND COLLECTION OF ACCOUNTS............................. xxx
SECTION 8.1 [Intentionally Omitted]................................................................... xxx
SECTION 8.2 Collateral Account........................................................................ xxx
SECTION 8.3 Cover for Letter of Credit Liabilities.................................................... xxxi
SECTION 8.4 Collection of Accounts.................................................................... xxxi
SECTION 8.5 Restriction on Credit Balances in Deposit Accounts........................................ xxxii
ARTICLE IX TRANSFERS AND OTHER LIENS................................................................................. xxxiii
ARTICLE X EVENTS OF DEFAULT AND REMEDIES............................................................................. xxxiii
SECTION 10.1 Remedies.................................................................................. xxxiii
SECTION 10.2 Notice of Sale............................................................................ xxxv
SECTION 10.3 Waiver of Notice and Claims............................................................... xxxv
SECTION 10.4 Certain Sales of Pledged Collateral....................................................... xxxv
SECTION 10.5 No Waiver; Cumulative Remedies............................................................ xxxvii
SECTION 10.6 [Intentionally Omitted]................................................................... xxxvii
ARTICLE XI APPLICATION OF PROCEEDS................................................................................... xxxvii
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ARTICLE XII MISCELLANEOUS............................................................................................ xxxviii
SECTION 12.1 Concerning Collateral Agent............................................................... xxxviii
SECTION 12.2 Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact................. xxxix
SECTION 12.3 Expenses.................................................................................. xl
SECTION 12.4 Indemnity................................................................................. xl
SECTION 12.5 Continuing Security Interest; Assignment.................................................. xli
SECTION 12.6 Termination; Release...................................................................... xli
SECTION 12.7 Modification in Writing................................................................... xli
SECTION 12.8 Notices................................................................................... xlii
SECTION 12.9 GOVERNING LAW............................................................................. xlii
SECTION 12.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL..................... xlii
SECTION 12.11 Severability of Provisions................................................................ xlii
SECTION 12.12 Execution in Counterparts................................................................. xliii
SECTION 12.13 Limitation on Interest Payable............................................................ xliii
SECTION 12.14 Business Days............................................................................. xliii
SECTION 12.15 Relationship.............................................................................. xliii
SECTION 12.16 Waiver of Stay............................................................................ xliv
SECTION 12.17 No Credit for Payment of Taxes or Imposition.............................................. xliv
SECTION 12.18 No Claims Against Collateral Agent........................................................ xliv
SECTION 12.19 Obligations Absolute...................................................................... xliv
SCHEDULE 1.1(a) Initial Intercompany Notes
SCHEDULE 1.1(b) Initial Pledged Interests
SCHEDULE 1.1(c) Initial Pledged Shares
SCHEDULE 1.1(d) Prior Liens
SCHEDULE 3.3 Financing Statements and Other Necessary Filings
SCHEDULE 4.15 Required Consents
EXHIBIT 1 Form of Issuer Acknowledgement
EXHIBIT 2 Form of Pledge Amendment
EXHIBIT 3 Form of Joinder Agreement
EXHIBIT 4 Form of Lockbox Agreement
EXHIBIT 5 Existing Issuer Obligations
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement"), dated
as of October 28, 2002, is made by SOLA INTERNATIONAL INC., a Delaware
corporation having an office at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), and EACH OF THE GUARANTORS FROM TIME TO TIME
PARTY HERETO BY EXECUTION OF A JOINDER AGREEMENT (collectively, the
"Guarantors") as pledgors, assignors and debtors (the Borrower, together with
any such Guarantors, in such capacities and together with any successors in such
capacities, the "Pledgors," and each, a "Pledgor"), in favor of UNION BANK OF
CALIFORNIA, N.A., having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in its capacity as Collateral Agent for the lending
institutions (the "Lenders") from time to time party to the Credit Agreement (as
hereinafter defined), as pledgee, assignee and secured party and for the issuers
of hedging agreements and interest rate protection agreements described in
Exhibit 5 attached hereto (the "Existing Issuers") (in such capacities and
together with any successors in such capacities, the "Collateral Agent").
RECITALS:
A. Pursuant to that certain Credit Agreement dated as of July 26,
2001 (as amended, restated and superceded by that certain Amended and Restated
Credit Agreement dated as of even date herewith or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, the Lenders and the
Collateral Agent, the Lenders have agreed to make to or for the account of the
Borrower certain Loans (as hereinafter defined) and to issue certain Letters of
Credit (as hereinafter defined) for the account of the Borrower.
B. It is contemplated that the Borrower or any Subsidiary (as
hereinafter defined) of Borrower may enter into one or more agreements
(collectively, the "Interest Rate Protection Agreements") with the Lenders or
their Affiliates (as hereinafter defined) fixing the interest rates with respect
to the Loans under the Credit Agreement.
C. It is contemplated that the Borrower or any Subsidiary of
Borrower may enter into one or more agreements (collectively, the "Hedging
Agreements") with the Lenders or their Affiliates fixing or hedging the price of
foreign currency exchange rates or the cost of certain commodities.
D. It is acknowledged by the Parties hereto that there are not
currently any Guarantors hereunder. In the future, as provided under the Credit
Agreement, Each Guarantor will, contemporaneous with the execution of a Joinder
Agreement (as hereinafter defined) enter into a certain guarantee (the
"Guarantee"), guaranteeing, among other things, the obligations of the Borrower
under the Credit Agreement and the other Loan Documents (as hereinafter
defined).
E. Upon the execution of the Guarantee, each Guarantor will
receive substantial benefits from the execution, delivery and performance of the
Loan Documents and each is, therefore, willing to join into this Agreement.
-i-
F. Each Pledgor is or will be the legal and/or beneficial owner
of the Pledged Collateral (as hereinafter defined) to be pledged by it
hereunder.
G. It is a condition to the obligations of the Lenders to make
the Loans under the Credit Agreement, a condition to any Lender issuing Letters
of Credit under the Credit Agreement, and a condition to the Administrative
Agent entering into any Interest Rate Protection Agreement or Hedging Agreement
that each Pledgor execute and deliver the applicable Loan Documents, including
this Agreement.
H. This Agreement is given by each Pledgor in favor of the
Collateral Agent for its benefit and the benefit of the Lenders and the Existing
Issuers until Borrower's obligations under the agreements described in Exhibit 5
expire by their terms (collectively, the "Secured Parties") to secure the
payment and performance of all of the Secured Obligations (as hereinafter
defined).
I. This Agreement amends and restates in full that certain
Security Agreement dated as of July 26, 2001, made by the Borrower and the
guarantors thereto, in favor of UBS AG, Stamford Branch, in its capacity as
Collateral Agent at the time.
AGREEMENT:
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgors and the Collateral Agent hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. The following terms used in this Agreement shall have the following
meanings:
"Accounts" shall mean, with respect to each Pledgor, collectively, (i)
all "accounts," as such term is defined in the UCC and (ii) all (A) book debts
and other forms of obligations and receivables now or hereafter owned or held by
or payable to such Pledgor relating in any way to or arising from the sale or
lease of goods or the rendering of services by such Pledgor or any other party,
including the right to payment of any interest or finance charge with respect
thereto, together with all merchandise represented by any of the accounts, (B)
all such merchandise that may be reclaimed or repossessed or returned to such
Pledgor, (C) all of such Pledgor's rights as an unpaid vendor, including
stoppage in transit, reclamation, replevin and sequestration, (D) all
"supporting obligations" (as such term may be defined in the UCC), including,
without limitation, all assets pledged, assigned, hypothecated or granted to,
and all letters of credit, guarantee claims, Liens and security interests held
by Pledgor to secure payment of any accounts and which are delivered for or on
behalf of any account debtor, (E) all accessions to all of the foregoing
described properties and interests in properties, (F) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection with the foregoing and (G) all evidence of the filing of financing
statements and other
-ii-
statements and the registration of other instruments in connection therewith and
amendments thereto, notices to other creditors or secured parties and
certificates from filing or other registration offices.
"Additional Pledged Interests" shall mean, collectively, with respect
to each Pledgor, all (i) options, warrants, rights, agreements, additional
membership or partnership interests or other interests of whatever class of any
issuer of Initial Pledged Interests or any interest in any such issuer,
including, without limitation, all rights, privileges, authority and powers of
such Pledgor relating to the equity or membership or partnership interests in
any such issuer or under the Operative Agreement of any such issuer, from time
to time acquired by such Pledgor in any manner and (ii) membership, partnership
or other interests, as applicable, of each limited liability company,
partnership or other entity (other than a corporation) hereafter acquired or
formed by such Pledgor within or outside the United States other than an
Insignificant Domestic Subsidiary or Insignificant Direct Foreign Subsidiary and
all options, warrants, rights, agreements, additional membership or partnership
interests or other interests of whatever class of such limited liability
company, partnership or other entity including, without limitation, all rights,
privileges, authority and powers of such Pledgor to such membership, partnership
or other interests or under the Operative Agreement of such limited liability
company, partnership or other entity from time to time acquired after the date
hereof by such Pledgor in any manner, in each case including, subject to the
provisions of Section 3.2, certificates, instruments and agreements representing
such additional interests (which, subject to the provisions of Section 3.2, are
and shall remain at all times until this Agreement terminates, certificated
interests) and any and all interest of such Pledgor in the entries on the books
of any financial intermediary pertaining to such additional interests.
"Additional Pledged Shares" shall mean, collectively, with respect to
each Pledgor, all (i) options, warrants, rights, agreements, additional shares
of capital stock of whatever class of any issuer of the Initial Pledged Shares
or any interest in any such issuer, including, without limitation, all rights,
privileges, authority and powers of such Pledgor relating to the additional
shares issued by any such issuer under the Operative Agreement of any such
issuer, from time to time acquired by such Pledgor in any manner and (ii) the
issued and outstanding shares of capital stock of each corporation hereafter
acquired or formed by such Pledgor within or outside the United States other
than an Insignificant Domestic Subsidiary or Insignificant Direct Foreign
Subsidiary and all options, warrants, rights, agreements or additional shares of
capital stock of whatever class of such corporation including, without
limitation, all rights, privileges, authority and powers of such Pledgor
relating to such shares or under the Operative Agreement of such corporation
from time to time acquired by such Pledgor in any manner, in each case including
the certificates representing such additional shares (which are and shall remain
at all times until this Agreement terminates, certificated shares) and any and
all interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to such additional shares.
"Affiliate" shall have the meaning assigned to such term in the Credit
Agreement.
"Agreement" shall mean this Agreement, as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the provisions hereof.
-iii-
"Allocation Indebtedness" shall have the meaning assigned to such term
in Section 12.20(i) hereof.
"Allocation Notice" shall have the meaning assigned to such term in
Section 12.20(i) hereof.
"Bank Accounts" shall mean, collectively, (i) the L/C Sub-Account, the
Lockboxes, the Collection Accounts and the Lockbox Concentration Account and all
accounts and sub-accounts relating to any of the foregoing accounts and (ii) all
cash, funds, checks, notes and any instruments from time to time on deposit in
any of the accounts or sub-accounts described in clause (i) of this definition.
"Borrower" shall have the meaning assigned to such term in the Preamble
hereof.
"Business Day" shall have the meaning assigned to such term in the
Credit Agreement.
"Capital Lease Obligation" shall have the meaning assigned to such term
in the Credit Agreement.
"Cash Equivalents" shall have the meaning assigned to such term in the
Credit Agreement.
"Cash Management Agreements" shall mean cash management agreements
between the Borrower and any Lender or its respective Affiliates specifically
identified in writing by the Borrower to the Collateral Agent from time to time;
provided, however, a cash management agreement shall not constitute a "Cash
Management Agreement" hereunder unless such cash management agreement is on
terms acceptable to the Collateral Agent in its sole discretion and the
Collateral Agent has acknowledged and agreed in writing that such cash
management agreement shall constitute a "Cash Management Agreement" hereunder.
"Charges" shall mean any and all property and other taxes, assessments
and special assessments, levies, fees and all governmental charges imposed upon
or assessed against, and all claims (including claims for labor, materials,
supplies and warehousing and other claims arising by operation of law) against,
all or any portion of the Pledged Collateral.
"Chattel Paper" shall mean, collectively, with respect to each Pledgor,
all "chattel paper," as such term is defined in the UCC relating to Accounts and
Inventory.
"Collateral" shall have the meaning assigned to such term in Section
12.20(i) hereof.
"Collateral Account" shall mean a collateral account or sub-account
established and maintained by the Collateral Agent (or a Lender that agrees to
be a collateral sub-agent for the Collateral Agent) in its name as Collateral
Agent for the Secured Parties in accordance with the provisions of Section 8.2
hereof and all funds from time to time on deposit in the Collateral Account
including, without limitation, all Cash Equivalents and all certificates and
instruments from time to time representing or evidencing such investments; all
notes, certificates of deposit,
-iv-
checks and other instruments from time to time hereafter delivered to or
otherwise possessed by the Collateral Agent for or on behalf of any Pledgor in
substitution for, or in addition to, any or all of the Pledged Collateral; and
all interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the items constituting Pledged Collateral.
"Collateral Agent" shall have the meaning assigned to such term in the
Preamble hereof.
"Collection Account" shall have the meaning assigned to such term in
Section 8.4(i) hereof.
"Collections" shall mean all cash, funds, checks, notes, instruments
and any other form of remittance tendered by account debtors in payment of
Accounts.
"Commitments" shall have the meaning assigned to such term in the
Credit Agreement.
"Contested Liens" shall mean, collectively, any Liens contested
pursuant to Section 6.02 of the Credit Agreement.
"Contracts" shall mean, collectively, with respect to each Pledgor, all
"contracts," as such term is defined in the UCC, of such Pledgor relating to
Accounts and Inventory (whether written or oral, or third party or intercompany)
between such Pledgor and third parties, and all assignments, amendments,
restatements, supplements, extensions, renewals, replacements or modifications
thereof.
"Credit Agreement" shall have the meaning assigned to such term in
Recital A hereof.
"Default" shall have the meaning assigned to such term in the Credit
Agreement.
"Default Rate" shall mean the rate per annum equal to the highest rate
then payable under the Credit Agreement.
"Destruction" shall mean any and all damage to, or loss or destruction
of, all or any portion of the Pledged Collateral.
"Direct Foreign Subsidiary" shall have the meaning assigned to such
term in the Credit Agreement.
"Distributions" shall mean, collectively, with respect to each Pledgor,
all dividends, cash, options, warrants, rights, instruments, distributions,
returns of capital or principal, income, interest, profits and other property,
interests (debt or equity) or proceeds, including as a result of a split,
revision, reclassification or other like change of the Pledged Securities, from
time to time received, receivable or otherwise distributed to such Pledgor in
respect of or in exchange for any or all of the Pledged Securities or
Intercompany Notes.
-v-
"Documents" shall mean, collectively, with respect to each Pledgor, all
"documents," as such term is defined in the UCC, of such Pledgor related to
Accounts and Inventory, and in any event, shall include, without limitation, all
receipts of such Pledgor covering, evidencing or representing Accounts and
Inventory.
"Domestic Subsidiary" shall have the meaning assigned to such term in
the Credit Agreement.
"Event of Default" shall have the meaning assigned to such term in the
Credit Agreement.
"GAAP" shall have the meaning assigned to such term in the Credit
Agreement.
"General Collateral" shall mean the Pledged Collateral other than the
Securities Collateral.
"General Intangibles" shall mean, collectively, with respect to each
Pledgor, all "general intangibles," as such term is defined in the UCC, of such
Pledgor relating to Accounts and Inventory and, in any event shall include,
without limitation, (i) all of such Pledgor's rights, title and interest in, to
and under all Insurance Policies and Contracts related to Accounts and
Inventory, and (ii) all lists, books, records, correspondence, ledgers,
print-outs, files (whether in printed form or stored electronically), tapes and
other papers or materials containing information relating to any of the Pledged
Collateral including, without limitation, all customer lists, identification of
suppliers, data, plans, recorded knowledge, studies, catalogs, research data,
sales data and other information relating to sales of products now or hereafter
manufactured, distributed or franchised by such Pledgor, accounting information
pertaining to such Pledgor's operations or any of the Pledged Collateral and all
media in which or on which any of the information or knowledge or data or
records relating to such operations or any of the Pledged Collateral may be
recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data, and (iii) all "payment
intangibles", as such term is defined in the UCC.
"Governmental Authority" shall mean any Federal, state, local, foreign
or other governmental, quasi-governmental or administrative (including
self-regulatory) body, instrumentality, department, agency, authority, board,
bureau, commission, office of any nature whatsoever or other subdivision
thereof, or any court, tribunal, administrative hearing body, arbitration panel
or other similar dispute-resolving body, whether now or hereafter in existence,
or any officer or official thereof, having jurisdiction over any Pledgor or the
Pledged Collateral or any portion thereof.
"Guarantee" shall have the meaning assigned to such term in Recital E
hereof.
"Guarantors" shall have the meaning assigned to such term in the
Preamble hereof.
"Hedging Agreements" shall have the meaning assigned to such term in
the Credit Agreement and also shall include any such obligations to an Existing
Issuer as described in Exhibit 5.
-vi-
"Indemnified Liabilities" shall have the meaning assigned to such term
in Section 12.4(i) hereof.
"Indemnitees" shall have the meaning assigned to such term in Section
12.4(i) hereof.
'Initial Pledged Interests" shall mean, with respect to each Pledgor,
all membership interests and/or partnership interests, as applicable, of each
issuer described in Schedule 1.1(b) annexed hereto together with all rights,
privileges, authority and powers of such Pledgor in and to each such issuer or
under the Operative Agreement of each such issuer, and the certificates,
instruments and agreements representing such membership or partnership interests
and any and all interest of such Pledgor in the entries on the books of any
financial intermediary pertaining to such membership or partnership interests.
"Initial Pledged Shares" shall mean, collectively, with respect to each
Pledgor, the issued and outstanding shares of capital stock of each Person
described in Schedule 1.1(c) annexed hereto together with all rights,
privileges, authority and powers of such Pledgor in and to each such issuer or
under the Operative Agreement of each such issuer, and the certificates,
instruments and agreements representing the Initial Pledged Shares and any and
all interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to the Initial Pledged Shares.
"Insignificant Direct Foreign Subsidiary" shall have the meaning
assigned to such term in the Credit Agreement.
"Insignificant Domestic Subsidiary" shall have the meaning assigned to
such term in the Credit Agreement.
"Instruments" shall mean, collectively, with respect to each Pledgor,
all "instruments," as such term is defined in the UCC relating to Accounts and
Inventory, and in any event shall include, without limitation, all promissory
notes, drafts, bills of exchange or acceptances relating to Accounts and
Inventory.
"Insurance Certificate" shall mean a certificate evidencing the
Insurance Requirements (i) in substantially the form commonly known as "▇▇▇▇▇
27" that (A) provides that the insurance has been issued, is in full force and
effect, and conveys all the rights and privileges afforded under the Insurance
Policies, (B) provides an unequivocal obligation to give advance notice to
additional interest parties of termination and notification of changes and (C)
purports to convey all the privileges of the Insurance Policies to the
certificate holders and (ii) that otherwise complies with the requirements with
respect thereto set forth in Section 4.17 hereof.
"Insurance Policies" shall mean, collectively, with respect to each
Pledgor, all insurance policies held by such Pledgor or naming such Pledgor as
insured, additional insured or loss payee (including, without limitation, the
Required Insurance Policies), all such insurance policies entered into after the
date hereof, other than insurance policies (or certificates of insurance
evidencing such insurance policies) relating to health and welfare insurance and
life insurance policies in which such Pledgor is not named as beneficiary (i.e.,
insurance policies that
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are not "Key Man" insurance policies) and all rights, claims and recoveries
relating thereto (including, without limitation, all dividends, returned
premiums and other rights to receive money in respect of any of the foregoing).
"Insurance Requirements" means, collectively, with respect to each
Pledgor, all provisions of the Required Insurance Policies, all requirements of
the issuer of any of the Required Insurance Policies and all orders, rules,
regulations and any other requirements of the National Board of Fire
Underwriters (or any other body exercising similar functions) binding upon such
Pledgor and applicable to the Pledged Collateral or any use or condition
thereof.
"Intercompany Notes" shall mean, with respect to such Pledgor, all
intercompany notes described in Schedule 1.1(a) annexed hereto (and each other
intercompany note hereafter acquired by such Pledgor and requested to be pledged
pursuant to Sections 6.04(e), 6.04(q) or 6.04(r) of the Credit Agreement) and
all certificates, instruments or agreements evidencing such intercompany notes
and all assignments, amendments, restatements, supplements, extensions,
renewals, replacements or modifications thereof to the extent permitted pursuant
to the terms of this Agreement.
"Interest Rate Protection Agreement" shall have the meaning assigned to
such term in the Credit Agreement and shall include any such obligations to an
Existing Issuer as described in Exhibit 5.
"Inventory" shall mean, collectively, with respect to each Pledgor, all
"inventory," as such term is defined in the UCC, of such Pledgor wherever
located and of every class, kind and description and, in any event shall
include, without limitation, (i) all "goods" as such term is defined in the UCC,
merchandise, raw materials, work-in-process, returned goods, finished goods,
samples and consigned goods (to the extent of the consignee's interest therein),
materials and supplies of any kind or nature which are or might be used in
connection with the manufacture, printing, publication, packing, shipping,
advertising, selling or finishing of any such goods and all other products,
goods, materials and supplies, (ii) all inventory as is temporarily out of such
Pledgor's custody or possession, items in transit and any returns and
repossessions upon any Accounts and (iii) all substitutions there-for or
replacements thereof, and all additions and accessions thereto.
"Joinder Agreement" shall mean the form of joinder agreement attached
hereto as Exhibit 3.
"L/C Sub-Account" shall have the meaning assigned to such term in
Section 8.3 hereof.
"Lenders" shall have the meaning assigned to such term in the Preamble
hereof.
"Letters of Credit" shall have the meaning assigned to such term in the
Credit Agreement.
"Liability Insurance" shall mean, collectively, the insurance policies
and coverages described in clause (B) and, to the extent applicable, clauses (E)
and (F) of Section 4.17(i) hereof.
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"Lien" shall have the meaning assigned to such term in the Credit
Agreement.
"Loan Documents" shall have the meaning assigned to such term in the
Credit Agreement.
"Loan Parties" shall have the meaning assigned to such term in the
Credit Agreement.
"Loans" shall have the meaning assigned to such term in the Credit
Agreement.
"Lockbox Agreement" shall mean each Lockbox Agreement substantially in
the form of Exhibit 4 annexed hereto, entered into in connection with this
Agreement, in each case, with such changes as the Collateral Agent may, in its
sole discretion, approve.
"Lockbox Bank" shall have the meaning assigned to such term in Section
8.4(i) hereof.
"Lockbox Concentration Account" shall have the meaning assigned to such
term in Section 8.4(ii) hereof.
"Lockboxes" shall have the meaning assigned to such term in Section
8.4(i) hereof.
"Net Condemnation Award" shall mean the proceeds of any award or
payment on account of a Taking, together with any interest earned thereon, less
the amount of any expenses incurred in litigating, arbitrating, compromising or
settling any claim arising out of such Taking.
"Net Insurance Proceeds" shall mean the proceeds of any insurance
payable in respect of such Destruction together with any interest earned
thereon, less the amount of any expenses incurred in litigating, arbitrating,
compromising or settling any claim arising out of such Destruction.
"Officers' Certificate" shall mean, as applied to any corporation (or
limited liability company or partnership), a certificate executed on behalf of
such corporation (or limited liability company or partnership) by its Chairman
of the Board (if an officer) or its Chief Executive Officer or one of its Vice
Presidents (or an equivalent officer or, in the case of a limited liability
company, its managing member if no such equivalent officer has been so appointed
or, in the case of a partnership, its general partner) and by its Chief
Financial Officer, Vice President-Finance or its Treasurer (or an equivalent
officer or, in the case of a limited liability company, its managing member if
no such equivalent officer has been so appointed or, in the case of a
partnership, its general partner) or any Assistant Treasurer in their official
(and not individual) capacities; provided, however, that every Officers'
Certificate with respect to the compliance with a condition precedent to the
making of any Loan or the taking of any other action hereunder shall include (i)
a statement that the officers making or giving such Officers' Certificate have
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, and (ii) a statement as to whether, in the opinion
of the signers, such condition has been complied with.
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"Operative Agreement" shall mean (i) in the case of any limited
liability company or partnership, any membership or partnership agreement
thereof or the foreign equivalent and (ii) in the case of any corporation, any
charter or certificate of incorporation and by-laws thereof or the foreign
equivalent.
"Perfection Certificate" shall have the meaning assigned to such term
in the Credit Agreement.
"Permitted Liens" shall have the meaning assigned to such term in the
Credit Agreement.
"Person" shall have the meaning assigned to such term in the Credit
Agreement.
"Pledge Amendment" shall have the meaning assigned to such term in
Section 6.1 hereof.
"Pledged Collateral" shall have the meaning assigned to such term in
Section 2.1 hereof.
"Pledged Interests" shall mean, collectively, the Initial Pledged
Interests and the Additional Pledged Interests; provided, however, that such
Pledgor shall not be required to pledge shares possessing more than 65% of the
voting power of all classes of capital stock entitled to vote of any Subsidiary
which is a controlled foreign corporation (as defined in Section 957(a) of the
Tax Code) and, in any event, shall not be required to pledge the shares of stock
of any Subsidiary otherwise required to he pledged pursuant to this Agreement to
the extent that such pledge would constitute an investment of earnings in United
States property under Section 956 (or a successor provision) of the Tax Code,
which investment would trigger an increase in the gross income of a United
States shareholder of such Pledgor pursuant to Section 951 (or a successor
provision) of the Tax Code.
"Pledged Securities" shall mean, collectively, the Pledged Interests,
the Pledged Shares and the Successor Interests, and shall in any event include a
pledge by Borrower of (i) 100% of its stock in Domestic Subsidiaries (other than
any Insignificant Domestic Subsidiaries) and (ii) 65% of its stock in Direct
Foreign Subsidiaries (other than Insignificant Direct Foreign Subsidiaries).
"Pledged Shares" shall mean, collectively, the Initial Pledged Shares
and the Additional Pledged Shares; provided, however, that such Pledgor shall
not be required to pledge shares possessing more than 65% of the voting power of
all classes of capital stock entitled to vote of any Subsidiary which is a
controlled foreign corporation (as defined in Section 957(a) of the Tax Code)
and, in any event, shall not be required to pledge the shares of stock of any
Subsidiary otherwise required to be pledged pursuant to this Agreement to the
extent that such pledge would constitute an investment of earnings in United
States property under Section 956 (or a successor provision) of the Tax Code,
which investment would trigger an increase in the gross income of a United
States shareholder of such Pledgor pursuant to Section 951 (or a successor
provision) of the Tax Code.
"Pledgor" shall have the meaning assigned to such term in the Preamble
hereof.
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"Prior Liens" shall mean, collectively, the Liens identified in
Schedule 1.1(d) annexed to this Agreement relating to the items of Pledged
Collateral identified in such Schedule.
"Proceeds" shall mean, collectively, all "proceeds," as such term is
defined in the UCC or under other relevant law, and in any event shall include,
without limitation, any and all (i) proceeds of the conversion, voluntary or
involuntary, of the Pledged Collateral or any portion thereof into cash or
liquidated claims, (ii) proceeds of any insurance (except payments made to a
Person which is not a party to this Agreement), indemnity, warranty, guaranty or
claim payable to the Collateral Agent or to such Pledgor from time to time with
respect to any of the Pledged Collateral including, without limitation, proceeds
in respect of any and all Required Insurance Policies, (iii) payments (in any
form whatsoever) made or due and payable to such Pledgor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any portion of the Pledged Collateral by any Governmental
Authority (or any Person acting on behalf of a Governmental Authority), (iv)
products of the Pledged Collateral and (v) other amounts from time to time paid
or payable under or in connection with any of the Pledged Collateral.
"Property Insurance" shall mean, collectively, the insurance policies
and coverages described in clauses (A), (C) and (D) and, to the extent
applicable, clause (F) of Section 4 17(n) hereof.
"Prudent Operator" shall mean the standard of care taken by a prudent
operator of property and assets similar in use and configuration to the Pledged
Collateral and located in the locality where the Pledged Collateral is located.
"Required Insurance Policies" means, collectively, with respect to each
Pledgor, the insurance policies and coverages maintained by such Pledgor with
respect to the Pledged Collateral pursuant to Section 4.17 hereof and all
renewals and extensions thereof.
"Requirements of Law" shall mean, collectively, any and all
requirements of any Governmental Authority including, without limitation, any
and all laws, ordinances, rules, regulations or similar statutes or case law.
"Secured Obligations" shall mean all obligations (whether or not
constituting future advances, obligatory or otherwise) of the Borrower and any
and all of the other Loan Parties from time to time arising under or in respect
hereof, the Credit Agreement, the Interest Rate Protection Agreements, the
Hedging Agreements, the Cash Management Agreements and the other Loan Documents
(including, without limitation, the obligations to pay principal, interest and
all other charges, fees, expenses, commissions, reimbursements, premiums,
indemnities and other payments related to or in respect of the obligations
contained in this Agreement, the Credit Agreement, the Interest Rate Protection
Agreements, the Hedging Agreements, the Cash Management Agreements and the other
Loan Documents), in each case whether (i) such obligations are direct or
indirect, secured or unsecured, joint or several, absolute or contingent, due or
to become due whether at stated maturity, by acceleration or otherwise, (ii)
arising in the regular course of business or otherwise, (iii) for payment or
performance and/or (iv) now existing or hereafter arising (including, without
limitation, interest and other obligations
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arising or accruing after the commencement of any bankruptcy, insolvency,
reorganization or similar proceeding with respect to any Loan Party, or which
would have arisen or accrued but for the commencement of such proceeding, even
if such obligation or the claim therefor is not enforceable or allowable in such
proceeding); provided, however, the Secured Obligations shall not include any
extension, re-issuance or redocumentation of any obligation to any Existing
Issuer as described in Exhibit 5.
"Secured Parties" shall have the meaning assigned to such term in
Recital I hereof.
"Securities Act" shall have the meaning assigned to such term in
Section 10.4(ii) hereof.
"Securities Collateral" shall mean, collectively, the Pledged
Securities, the Intercompany Notes and the Distributions.
"Security Documents" shall have the meaning assigned to such term in
the Credit Agreement.
"Subsidiaries" shall have the meaning assigned to such term in the
Credit Agreement.
"Successor Interests" shall mean, collectively, with respect to each
Pledgor, all shares of each class of the capital stock of the successor
corporation or interests or certificates of the successor limited liability
company or partnership owned by such Pledgor (unless such successor is such
Pledgor itself) formed by or resulting from any consolidation or merger in which
any Person listed in Schedule 1.1(c) or Schedule 1.1(d) annexed hereto is not
the surviving entity; provided, however, that the pledge of the Successor
Interests affected hereby shall in no event affect the obligations of such
Pledgor under any provision prohibiting such action hereunder or under the
Credit Agreement.
"Taking" shall mean any taking of the General Collateral or any portion
thereof, in or by condemnation or other eminent domain proceedings pursuant to
any law, general or special, or by reason of the temporary requisition of the
use of the Pledged Collateral or any portion thereof, by any Governmental
Authority, civil or military.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of California; provided, however, that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any item or portion of the Pledged
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of California, "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
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SECTION 1.2 Interpretation. In this Agreement, unless otherwise
specified, (i) singular words include the plural and plural words include the
singular, (ii) words importing any gender include the other gender, (iii)
references to any Person include such Person's successors and assigns and in the
case of an individual, the word "successors" includes such Person's heirs,
devisees, legatees, executors, administrators and personal representatives, (iv)
references to any statute or other law include all applicable rules, regulations
and orders adopted or made thereunder and all statutes or other laws amending,
consolidating or replacing the statute or law referred to, (v) the words
"consent," "approve" and "agree," and derivations thereof or words of similar
import, mean the prior written consent, approval or agreement of the Person in
question, (vi) the words "include" and "including," and words of similar import,
shall be deemed to be followed by the words "without limitation", (vii) the
words "hereto," "herein," "hereof" and "hereunder," and words of similar import,
refer to this Agreement in its entirety, (viii) unless otherwise expressly
indicated, references to Articles, Sections, Schedules, Exhibits, subsections,
paragraphs and clauses are to the Articles, Sections, Schedules, Exhibits,
subsections, paragraphs and clauses hereof, (ix) the Schedules and Exhibits to
this Agreement, in each case as amended, amended and restated, supplemented or
otherwise modified from time to time in accordance with the provisions hereof
are incorporated herein by reference, (x) the titles and headings of Articles,
Sections, Schedules, Exhibits, subsections, paragraphs and clauses are inserted
as a matter of convenience only and shall not affect the construction of any
provisions hereof and (xi) all obligations of each Pledgor hereunder shall be
satisfied by each Pledgor at each Pledgor's sole cost and expense.
SECTION 1.3 Resolution of Drafting Ambiguities. Each Pledgor
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party (i.e., the Collateral Agent) shall not be employed in the
interpretation hereof.
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1 Pledge. As collateral security for the payment and
performance in full of all the Secured Obligations, each Pledgor hereby pledges,
assigns, transfers and grants to the Collateral Agent for its benefit and for
the benefit of the Secured Parties, a security interest in and to and pledge of
all of the right, title and interest of such Pledgor in, to and under the
following property, wherever located, whether now existing or hereafter arising
or acquired from time to time (collectively, the "Pledged Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) Documents;
(iv) Instruments;
(v) Chattel Paper;
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(vi) Pledged Securities;
(vii) Distributions;
(viii) General Intangibles;
(ix) Bank Accounts;
(x) Intercompany Notes;
(xi) Collateral Account; and
(xii) Proceeds of any and all of the foregoing.
SECTION 2.2 Secured Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the payment and performance in
full when due of the Secured Obligations.
SECTION 2.3 Future Advances. This Agreement shall secure the payment of
any and all amounts advanced from time to time pursuant to the Loan Documents,
the Interest Rate Protection Agreements, the Hedging Agreements and the Cash
Management Agreements.
SECTION 2.4 No Release. Nothing set forth in this Agreement shall
relieve any Pledgor from the performance of any term, covenant, condition or
agreement on such Pledgor's part to be performed or observed under or in respect
of any of the Pledged Collateral or from any liability to any Person under or in
respect of any of the Pledged Collateral or shall impose any obligation on the
Collateral Agent or any other Secured Party to perform or observe any such term,
covenant, condition or agreement on such Pledgor's part to be so performed or
observed or shall impose any liability on the Collateral Agent or any other
Secured Party for any act or omission on the part of such Pledgor relating
thereto or for any breach of any representation or warranty on the part of such
Pledgor contained in this Agreement, any Interest Rate Protection Agreement, the
Hedging Agreements, the Cash Management Agreements or any other Loan Document,
or under or in respect of the Pledged Collateral or made in connection herewith
or therewith. The obligations of each Pledgor contained in this Section 2.4
shall survive the termination hereof and the discharge of such Pledgor's other
obligations under this Agreement, any Interest Rate Protection Agreement, the
Hedging Agreements, the Cash Management Agreements and the other Loan Documents.
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1 Delivery of Certificated Securities Collateral. All
certificates, agreements or instruments representing or evidencing the
Securities Collateral, to the extent not previously delivered to the Collateral
Agent, shall immediately upon receipt thereof by any Pledgor be delivered to and
held by or on behalf of the Collateral Agent pursuant hereto provided, however,
such delivery shall not be required to the extent prohibited under the laws of
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the jurisdiction of organization of such issuer and shall not be required until
such time as all acts necessary to effect a perfected first priority security
interest in and lien on such Security Collateral under the laws of the
jurisdiction of organization of such issuer of such Pledged Security shall have
been taken as required pursuant to Section 4.03 of the Credit Agreement. All
certificated Securities Collateral shall be in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank (or the foreign equivalent to the extent required under the
laws of the jurisdiction of organization of the issuer of such Pledged
Security), all in form and substance reasonably satisfactory to the Collateral
Agent. The Collateral Agent shall have the right, at any time upon the
occurrence and during the continuance of any Event of Default, to endorse,
assign or otherwise transfer to or to register in the name of the Collateral
Agent or any of its nominees or endorse for negotiation any or all of the
Securities Collateral, without any indication that such Securities Collateral is
subject to the security interest hereunder. In addition, the Collateral Agent
shall have the right at any time to exchange certificates representing or
evidencing Securities Collateral for certificates of smaller or larger
denominations.
SECTION 3.2 Perfection of Uncertificated Securities Collateral. If any
issuer of Pledged Securities is organized in a jurisdiction which does not
permit the use of certificates to evidence equity ownership, or if any of the
Pledged Securities are at any time not evidenced by certificates of ownership,
then each applicable Pledgor shall, to the extent permitted by applicable law,
record such pledge on the equityholder register or the books of the issuer,
cause the issuer to execute and deliver to the Collateral Agent an
acknowledgment of the pledge of such Pledged Securities substantially in the
form of Exhibit 1 annexed hereto, execute any customary pledge forms or other
documents necessary or appropriate to complete the pledge and give the
Collateral Agent the right to transfer such Pledged Securities under the terms
hereof and provide to the Collateral Agent an opinion of counsel, in form and
substance satisfactory to the Collateral Agent, confirming such pledge and
perfection thereof
SECTION 3.3 Financing Statements and Other Filings. The only filings,
registrations and recordings necessary and appropriate to create, preserve,
protect and perfect the security interest granted by each Pledgor to the
Collateral Agent pursuant to this Agreement in respect of the Pledged Collateral
are listed in Schedule 3.3 annexed hereto. Except as otherwise provided by
Section 4.03 of the Credit Agreement, all such filings, registrations and
recordings have been filed, registered and recorded contemporaneously with the
execution of the Loan Documents or shall be filed, registered and recorded
immediately after the date thereof. Each Pledgor agrees that at any time and
from time to time, it will execute and, at the sole cost and expense of the
Pledgors file and refile, or permit the Collateral Agent to file and refile,
such financing statements, financing statement amendments, continuation
statements and other documents (including, without limitation, this Agreement),
in form acceptable to the Collateral Agent, in such offices as may be necessary
or the Collateral Agent may deem reasonably appropriate, wherever required or
permitted by law in order to perfect, continue and maintain a valid,
enforceable, first priority security interest in the Pledged Collateral as
provided herein and to preserve the other rights and interests granted to the
Collateral Agent hereunder, as against third parties, with respect to any
Pledged Collateral. Each Pledgor hereby authorizes the Collateral Agent to file
any such financing, amendment or continuation statement or other document
without the signature of such Pledgor where permitted by law.
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SECTION 3.4 [Intentionally Omitted].
SECTION 3.5 Joinder of Affiliates. The Pledgors shall cause each
Affiliate of the Borrower which, from time to time, after the date hereof shall
be required to pledge any assets to the Collateral Agent for the benefit of the
Secured Parties pursuant to the provisions of the Credit Agreement, to execute
and deliver to the Collateral Agent a joinder agreement substantially in the
form of Exhibit 3 annexed hereto and, upon such execution and delivery, such
Affiliate shall be deemed to be a "Guarantor" and a "Pledgor" for all purposes
hereunder.
SECTION 3.6 Intellectual Property. After an Event of Default has
occurred and is continuing, each Pledgor hereby grants to the Collateral Agent
the right to the use of all Intellectual Property, to the extent necessary to
permit the Collateral Agent to exercise any and all rights and remedies relating
to the Pledged Collateral provided for under this Agreement. The rights
described in this Section 3.6 shall be without any liability for royalties or
other related charges from the Collateral Agent to the Pledgors. Each of the
Pledgors hereby acknowledges that such Pledgor has, pursuant to this Agreement,
granted to the Collateral Agent, the rights described in the foregoing
provisions of this Section 3.6. Notwithstanding the foregoing, the license
granted under this Section 3.6 shall not include any license agreement which by
its terms prohibits the granting of such license until such time as the
applicable Pledgor shall have obtained consent to the granting thereof,
provided, that each applicable Pledgor shall use its commercially reasonable
efforts promptly to obtain consent to the granting of such license to the
Collateral Agent, and at such time such consent is obtained, such license shall
be included in the license granted hereunder.
SECTION 3.7 Supplements; Further Assurances. Each Pledgor agrees to
take such further actions, and to execute and deliver to the Collateral Agent
such additional assignments, agreements, supplements, powers and instruments, as
may be necessary or the Collateral Agent may deem reasonably appropriate,
wherever required or permitted by law, in order to perfect, preserve and protect
the security interest in the Pledged Collateral as provided herein and the
rights and interests granted to the Collateral Agent hereunder, to carry into
effect the purposes hereof or better to assure and confirm unto the Collateral
Agent or permit the Collateral Agent to exercise and enforce its respective
rights, powers and remedies hereunder with respect to any Pledged Collateral
(including, without limitation, all actions necessary in the judgment of the
Collateral Agent to continue and confirm its security interest in the Pledged
Collateral in connection with the enactment of Revised Uniform Commercial Code
Article 9). Without limiting the generality of the foregoing, each Pledgor shall
make, execute, endorse, acknowledge, file or refile and/or deliver to the
Collateral Agent from time to time such lists, descriptions and designations of
the Pledged Collateral, copies of warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, supplements, additional security
agreements, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments, all as may
be necessary or otherwise reasonably requested by the Collateral Agent to carry
out the intent of this Agreement. After providing notice to the Pledgors and the
Pledgors failing to promptly take such action requested, the Collateral Agent
may institute and maintain, in its own name or in the name of any Pledgor, such
suits and proceedings as the Collateral Agent may be advised by counsel shall be
necessary or expedient to prevent any
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impairment of the security interest in or the perfection thereof in the Pledged
Collateral. All of the foregoing shall be at the sole cost and expense of the
Pledgors.
SECTION 3.8 Use and Pledge of Pledged Collateral. Unless an Event of
Default shall have occurred and be continuing, the Collateral Agent shall from
time to time execute and deliver, upon written request of any Pledgor and at the
sole cost and expense of the Pledgors, any and all instruments, certificates or
other documents, in a form reasonably requested by such Pledgor, necessary or
appropriate in the reasonable judgment of such Pledgor to enable such Pledgor to
continue to exploit, license, use, enjoy and protect the Pledged Collateral in
accordance with the terms hereof and the Credit Agreement. The Pledgors and the
Collateral Agent acknowledge that this Agreement is intended to grant to the
Collateral Agent for the benefit of the Secured Parties a security interest in
and Lien upon the Pledged Collateral and shall not constitute or create a
present assignment of any of the Pledged Collateral.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Pledgor represents, warrants and covenants as follows:
SECTION 4.1 Payment. Such Pledgor shall pay as and when the same shall
become due, whether at its stated maturity, by acceleration or otherwise, each
and every amount payable by such Pledgor under the Loan Documents, the Interest
Rate Protection Agreements, the Hedging Agreements and the Cash Management
Agreements each in accordance with the terms thereof.
SECTION 4.2 Authority and Validity; Preservation of Corporate
Existence.
(i) Such Pledgor represents and warrants that (A) it is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (B) it is duly qualified to transact business
and is in good standing in each state in which the Pledged Collateral is
located, (C) it has full organizational power and lawful authority to execute
and deliver this Agreement and to pledge the Pledged Collateral as contemplated
herein, and all corporate governmental actions, consents, authorizations and
approvals necessary or required therefor have been duly and effectively taken or
obtained and (D) this Agreement is a legal, valid and binding obligation of such
Pledgor, enforceable against such Pledgor in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally and by equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(ii) Such Pledgor shall (A) preserve and maintain in full force and
effect its existence and good standing under the laws of the jurisdiction of its
organization, (B) preserve and maintain in full force and effect its
qualification to transact business and good standing in the state in which the
Pledged Collateral is located and (C) preserve and maintain in full force and
effect all consents, authorizations and approvals necessary or required of any
Governmental Authority or any other Person relating to the execution, delivery
and performance hereof.
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SECTION 4.3 Perfection Actions; Prior Liens. Upon the completion of the
deliveries, filings and other actions contemplated in Section 3.1 through
Section 3.3 hereof, the security interest granted to the Collateral Agent for
the benefit of the Secured Parties pursuant to this Agreement in and to the
Pledged Collateral will constitute a perfected, continuing first priority
security interest therein, superior and prior to the rights of all other Persons
therein other than with respect to the holders of (i) Prior Liens and (ii)
Contested Liens.
SECTION 4.4 Limitation on Liens. Such Pledgor is as of the date hereof,
and, as to Pledged Collateral acquired by it from time to time after the date
hereof, such Pledgor will be, the sole direct and beneficial owner of all
Pledged Collateral pledged by it hereunder free from any Lien or other right,
title or interest of any Person other than Permitted Liens. Pledgor shall defend
the Pledged Collateral pledged by it hereunder against all claims and demands of
all Persons at any time claiming any interest therein adverse to the Collateral
Agent or any other Secured Party. There is no agreement, and no Pledgor shall
enter into any agreement or take any other action, that would result in the
imposition of any other Lien, restrict the transferability of any of the Pledged
Collateral or otherwise impair or conflict with such Pledgors' obligations or
the rights of the Collateral Agent hereunder.
SECTION 4.5 Other Financing Statements. There is no (nor will there be
any) valid or effective financing statement (or similar statement or instrument
of registration under the law of any jurisdiction) covering or purporting to
cover any interest of any kind in the Pledged Collateral other than financing
statements relating to Permitted Liens, and so long as any of the Secured
Obligations remain unpaid or the Commitments of the Lenders to make any Loan or
to issue any Letter of Credit shall not have expired or been sooner terminated,
no Pledgor shall execute, authorize or permit to be filed in any public office
any financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) or statements relating to any Pledged
Collateral, except, in each case, financing statements filed or to be filed in
respect of and covering the security interests granted by such Pledgor to the
holder of the Permitted Liens.
SECTION 4.6 Jurisdiction of Organization; Chief Executive Office;
Records; Change of Name. As of the date hereof, the chief executive office,
jurisdiction or organization and type of organization (together with the
organizational identification number, if any, issued by the applicable
jurisdiction with respect to such Pledgor) of such Pledgor is located at the
address indicated next to its name in Schedules 1(a) and 2(a) annexed to the
Perfection Certificate. Such Pledgor shall not move its chief executive office
to any location other than one within the continental United States that is
listed in such Schedule 2(a) annexed to the Perfection Certificate except to
such new location as such Pledgor may establish in accordance with the last
sentence of this Section 4.6. All tangible evidence of all Accounts and General
Intangibles of such Pledgor and the only original books of account and records
of such Pledgor relating thereto are, and will continue to be, kept at such
chief executive office or such other location listed in Schedule 2(a) annexed to
the Perfection Certificate, or at such new location for such chief executive
office as such Pledgor may establish in accordance with the last sentence of
this Section 4.6. All Accounts and General Intangibles of such Pledgor are, and
will continue to be, controlled and monitored (including, without limitation,
for general accounting purposes) from such chief executive office or such other
location listed in Schedule 2(a) annexed to the Perfection Certificate, or at
such new location for such chief executive office as such Pledgor may establish
in accordance with the last sentence of this Section 4.6. Such Pledgor shall not
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establish a new location for its chief executive office to any location other
than one within the continental United States that is listed in Schedule 2(a)
annexed to the Perfection Certificate or change its name, identity or structure
or jurisdiction of organization until (i) it shall have given the Collateral
Agent not less than 30 days' prior written notice (in the form of an Officers'
Certificate) of its intention so to do, clearly describing such new location
within the continental United States or name, identity, structure or
jurisdiction and providing such other information in connection therewith as the
Collateral Agent may request and (ii) with respect to such new location or name,
identity, structure or jurisdiction, such Pledgor shall have taken all action
reasonably satisfactory to the Collateral Agent to maintain the perfection and
priority of the security interest of the Collateral Agent for the benefit of the
Secured Parties in the Pledged Collateral intended to be granted hereby,
including, without limitation, using commercially reasonably efforts to obtain
waivers of landlord's or warehouseman's liens with respect to such new location,
if applicable.
SECTION 4.7 Location of Inventory. All Inventory of such Pledgor are
located at the chief executive office or such other location listed in Schedule
2(d) annexed to the Perfection Certificate. Such Pledgor shall not move any
Inventory to any location other than one within the continental United States
that is listed in such Schedule 2(d) annexed to the Perfection Certificate until
(i) it shall have given the Collateral Agent not less than 30 days' prior
written notice (in the form of an Officers' Certificate) of its intention so to
do, clearly describing such new location within the continental United States
and providing such other information in connection therewith as the Collateral
Agent may request and (ii) with respect to such new location, such Pledgor shall
have taken all action reasonably satisfactory to the Collateral Agent to
maintain the perfection and priority of the security interest of the Collateral
Agent for the benefit of the Secured Parties in the Pledged Collateral intended
to be granted hereby, including, without limitation, using commercially
reasonable efforts to obtain waivers of landlord's or warehouseman's liens with
respect to such new location, if applicable.
SECTION 4.8 Warehouse Receipts Non-Negotiable. If any warehouse receipt
or receipt in the nature of a warehouse receipt is issued with respect to any of
the Pledged Collateral, the applicable Pledgor shall not permit such warehouse
receipt or receipt in the nature thereof to be "negotiable" (as such term is
used in Section 7-104 of the UCC).
SECTION 4.9 [Intentionally Omitted].
SECTION 4.10 Corporate Names; Prior Transactions. Such Pledgor has not,
during the past five years, been known by or used any other corporate or
fictitious name or been a party to any merger or consolidation, or acquired all
or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in Schedules l(b) and 4 annexed to the Perfection Certificate.
SECTION 4.11 Due Authorization and Issuance. All of the Pledged Shares
have been, and to the extent hereafter issued will be upon such issuance, duly
authorized, validly issued and fully paid and nonassessable. All of the Initial
Pledged Interests have been fully paid for, and there is no amount or other
obligation owing by any Pledgor to any issuer of the Initial Pledged Interests
in exchange for or in connection with the issuance of the Initial Pledged
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Interests or any Pledgor's status as a partner or a member of any issuer of the
Initial Pledged Interests.
SECTION 4.12 No Violations, etc. The pledge of the Pledged Securities
pursuant to this Agreement does not violate Regulations T, U or X of the Federal
Reserve Board.
SECTION 4.13 No Options, Warrants. etc. There are no options, warrants,
calls, rights, commitments or agreements of any character to which such Pledgor
is a party or by which it is bound obligating such Pledgor to issue, deliver or
sell or cause to be issued, delivered or sold additional Pledged Securities or
obligating such Pledgor to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. There are no voting trusts or other
agreements or understandings to which such Pledgor is a party with respect to
the transfer, voting or exercise of any other right of the equity interests of
any issuer of the Pledged Securities.
SECTION 4.14 No Claims. Such Pledgor owns or has rights to use all of
the Pledged Collateral pledged by it hereunder and all rights with respect to
any of the foregoing used in, necessary for or material to such Pledgor' s
business as currently conducted and as contemplated to be conducted pursuant to
the Loan Documents. The use by such Pledgor of such Pledged Collateral and all
such rights with respect to the foregoing do not infringe on the rights of any
Person, except for such infringement, violation or conflict which could not be
reasonably expected to have a Material Adverse Effect. No claim has been made
and remains outstanding that such Pledgor's use of any Pledged Collateral does
or may violate the rights of any third Person that would have a Material Adverse
Effect.
SECTION 4.15 No Conflicts, Consents, etc. Neither the execution and
delivery hereof by each Pledgor nor the consummation of the transactions herein
contemplated nor the fulfillment of the terms hereof (i) violates any Operative
Agreement of such Pledgor or any issuer of Pledged Securities, (ii) violates the
terms of any agreement, indenture, mortgage, deed of trust, equipment lease,
instrument or other document to which such Pledgor is a party, or by which it
may be bound or to which any of its properties or assets may be subject, except
for such infringement, violation or conflict which could not be reasonably
expected to have a Material Adverse Effect, (iii) conflicts with any Requirement
of Law applicable to any such Pledgor or its property, or (iv) results in or
requires the creation or imposition of any Lien (other than the Lien
contemplated hereby) upon or with respect to any of the property now owned or
hereafter acquired by such Pledgor. No consent of any party (including, without
limitation, equityholders or creditors of such Pledgor or any account debtor
under an Account) and no consent, authorization, approval, license or other
action by, and no notice to or filing with, any Governmental Authority or
regulatory body or other Person is required for (A) the pledge by such Pledgor
of the Pledged Collateral pledged by it pursuant to this Agreement or for the
execution, delivery or performance hereof by such Pledgor, except as set forth
in Schedule 4.15 annexed hereto, (B) the exercise by the Collateral Agent of the
voting or other rights provided for in this Agreement or (C) the exercise by the
Collateral Agent of the remedies in respect of the Pledged Collateral pursuant
to this Agreement. With respect to each consent, authorization, approval,
license or other action described in Schedule 4.15 annexed hereto, such Pledgor
shall use its commercially reasonable efforts to cause the counterparty with
respect thereto to deliver such consent, authorization, approval or license or
otherwise cause such other action to be taken within 30 days after the date
hereof; provided, however, that such Pledgor shall in no event be
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required to pay or cause to be paid any remuneration to any such counterparty in
order to obtain such consent, authorization, approval or licenses to the extent
that it would be commercially unreasonable so to do. In the event that the
Collateral Agent desires to exercise any remedies, voting or consensual rights
or attorney-in-fact powers set forth in this Agreement and determines it
necessary to obtain any approvals or consents of any Governmental Authority or
any other Person therefor, then, upon the reasonable request of the Collateral
Agent, such Pledgor agrees to use its commercially reasonable efforts to assist
and aid the Collateral Agent to obtain as soon as practicable any necessary
approvals or consents for the exercise of any such remedies, rights and powers.
SECTION 4.16 Pledged Collateral. All information set forth herein,
including the schedules annexed hereto, and all information contained in any
documents, schedules and lists heretofore delivered to any Secured Party in
connection with this Agreement, in each case, relating to the Pledged
Collateral, is accurate and complete in all material respects. The Pledged
Collateral described on the schedules annexed hereto constitutes all of the
property of such type of Pledged Collateral owned or held by the Pledgors.
SECTION 4.17 Insurance; Condemnation.
(i) Required Insurance Policies and Coverages. No Pledgor shall
take any action that impairs the rights of the Collateral Agent or any Secured
Party in the Pledged Collateral and (A) as of the date hereof, the Pledged
Collateral and the use thereof comply with all Insurance Requirements, and there
exists no default under any Insurance Requirement, (B) all premiums due and
payable with respect to the Required Insurance Policies have been paid, (C) all
Insurance Policies are in full force and effect and such Pledgor has not
received notice of violation or cancellation thereof and (D) all Insurance
Policies or Insurance Certificates required to be delivered pursuant to Section
4.02(i) of the Credit Agreement have been delivered to the Collateral Agent in
form satisfactory to the Collateral Agent. Each Pledgor shall at all times keep
the Pledged Collateral insured, at such Pledgor's own expense, to the Collateral
Agent's reasonable satisfaction against fire, theft and all other risks to which
the Pledged Collateral may be subject, in such amounts and with such deductibles
as would be maintained by a Prudent Operator or as the Collateral Agent may
otherwise require, including, without limitation, the following insurance
policies and coverages:
(A) physical hazard insurance on an "all risk" basis covering,
without limitation, hazards commonly covered by fire and extended coverage,
lightning, windstorm, civil commotion, hail, riot, strike, water damage,
sprinkler leakage, collapse and malicious mischief, in an amount equal to
the Full Replacement Cost of the Inventory;
(B) commercial general liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the
Pledged Collateral, and covering any and all claims, including, without
limitation, all legal liability to the extent insurable imposed upon the
Collateral Agent and all court costs and attorneys' fees, arising out of or
in connection with the possession, use or condition of the Pledged
Collateral;
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(C) explosion insurance in respect of any boilers, machinery and
similar apparatus used in the production of, located near or otherwise
effecting the Inventory;
(D) business interruption insurance;
(E) worker's compensation insurance as required by the laws of the
state where the Pledged Collateral is located to protect such Pledgor and
the Collateral Agent against claims for injuries sustained in the course of
employment at the premises of such Pledgor; and
(F) such other insurance against risks as the Collateral Agent may
from time to time reasonably require.
(ii) Required Form of Insurance Policies. Each Insurance Policy
described in clause (i) of this Section 4.17 shall provide that:
(A) it may not be modified, reduced, canceled or otherwise
terminated without at least thirty (30) days' prior written notice to the
Collateral Agent;
(B) the Collateral Agent is permitted to pay any premium therefor
within thirty (30) days after receipt of any notice stating that such
premium has not been paid when due;
(C) all losses thereunder shall be payable notwithstanding any act
or negligence of such Pledgor or its agents or employees which otherwise
might have resulted in a forfeiture of all or a part of such insurance
payments;
(D) to the extent such Insurance Policy constitutes Property
Insurance relating to Inventory, all losses payable thereunder shall be
payable to the Collateral Agent, as loss payee, pursuant to a standard
non-contributory New York mortgagee endorsement and shall be in an amount
at least sufficient to prevent coinsurance liability; and
(E) with respect to Liability Insurance, the Collateral Agent
shall be named as an additional insured.
(iii) Settlements. Settlement of any claim under any of the Required
Insurance Policies, if such claim involves any loss in excess of $500,000 (in
the reasonable judgment of the Collateral Agent), shall require the prior
written approval of the Collateral Agent, and such Pledgor shall cause each such
policy to contain a provision to such effect.
(iv) Renewals. At least ten (10) days prior to the expiration of
any Required Insurance Policy, such Pledgor shall deliver to the Collateral
Agent a Required Insurance Policy or Policies renewing or extending such
expiring Required Insurance Policy or Policies, renewal or extension Insurance
Certificates or other reasonable evidence of renewal or extension providing that
the Insurance Policies are in full force and effect.
(v) Additional Insurance. Such Pledgor shall not purchase separate
insurance policies concurrent in form or contributing in the event of loss with
those Required Insurance
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Policies required to be maintained under this Section 4.17, unless the
Collateral Agent is included thereon as an additional insured and, if
applicable, with loss payable to the Collateral Agent under an endorsement
containing the provisions described in clause (ii) of this Section 4.17. Such
Pledgor shall immediately notify the Collateral Agent whenever any such separate
insurance policy is obtained and shall promptly deliver to the Collateral Agent
the Required Insurance Policy or Insurance Certificate evidencing such
insurance.
(vi) Blanket Coverage. Such Pledgor may maintain the coverages
required by clause (i) of this Section 4.17 under blanket policies covering the
Pledged Collateral and other property owned or operated by such Pledgor or an
Affiliate of such Pledgor if the terms of such blanket policies otherwise comply
with the provisions of clause (i) of this Section 4.17 and contain specific
coverage allocations in respect of the Inventory complying with the provisions
of clause (i) of this Section 4.17.
(vii) Proceeds of Destructions and Taking.
(A) If there shall occur any Destruction in excess of $100,000.00,
such Pledgor shall promptly send to the Collateral Agent a notice setting
forth the nature and extent of such Destruction. If there shall occur any
Taking, such Pledgor shall immediately notify the Collateral Agent upon
receiving notice of such Taking or commencement of proceedings therefor.
The Collateral Agent may participate in any proceedings or negotiations
which might result in any Taking, and such Pledgor shall deliver or cause
to be delivered to the Collateral Agent all instruments reasonably
requested by it to permit such participation. The Collateral Agent may be
represented by counsel satisfactory to it at the expense of such Pledgor in
connection with any such participation. Such Pledgor shall pay all
reasonable fees, costs and expenses incurred by the Collateral Agent in
connection with any Taking and in seeking and obtaining any award or
payment on account thereof. The Net Insurance Proceeds and Net Condemnation
Awards are hereby assigned and shall be paid to the Collateral Agent. Such
Pledgor shall take all steps necessary to notify the condemning authority
of such assignment. All Net Insurance Proceeds and Net Condemnation Awards
shall be applied in accordance with the provisions of Sections 4.17(vii)(B)
and 4.17(vii)(C).
(B) So long as no Event of Default shall have occurred and be
continuing, in the event there shall be a Net Condemnation Award or Net
Insurance Proceeds in an amount less than $2,500,000, such Pledgor shall
have the right, at such Pledgor's option, to apply such Net Condemnation
Award or Net Insurance Proceeds to the payment of the Secured Obligations
in accordance with the provisions of Section 2.12 of the Credit Agreement
or to perform a restoration (each, a "Restoration") of the Pledged
Collateral. In the event such Pledgor elects to perform a Restoration, such
Pledgor shall within thirty (30) days after the date that such Pledgor
receives notice of collection by the Collateral Agent of the applicable
Net Insurance Proceeds or Net Condemnation Award, as the case may be,
deliver to the Collateral Agent (1) a written notice of such election and
(2) an Officers' Certificate stating that (a) the Net Insurance Proceeds or
Net Condemnation Award, as the case may be, shall be utilized to perform a
Restoration in the manner contemplated by this Section 4.17(vii)(B) and (b)
no Event of Default has occurred and is continuing (the items described in
clauses (1) and (2)of this sentence,
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collectively, the "Restoration Election Notice"). In the event the
Collateral Agent does not receive a Restoration Election Notice within such
30-day period, the Collateral Agent may apply any such Net Insurance
Proceeds or Net Condemnation Award held by the Collateral Agent to the
payment of the Secured Obligations in accordance with the provisions of
Section 2.12(c) of the Credit Agreement. In the event such Pledgor elects
to perform any Restoration contemplated by this Section 4.17(vii)(B), the
Collateral Agent shall release such Net Condemnation Award or Net Insurance
Proceeds to such Pledgor as soon as practicable following receipt of a
Restoration Election Notice in accordance with the provisions of Section
8.2(ii) hereof. Such Pledgor shall, within fifteen (15) days following the
date of its receipt of any proceeds in respect of a Destruction or Taking,
as the case may be, commence and diligently continue to perform the
Restoration of that portion or portions of the Pledged Collateral subject
to such Destruction or affected by such Taking so that, upon the completion
of the Restoration, the Pledged Collateral will be in substantially the
same condition and shall be of at least equal value and utility for its
intended purposes as the Pledged Collateral was immediately prior to such
Destruction or Taking. Such Pledgor shall so complete such Restoration with
its own funds to the extent that the amount of any Net Condemnation Award
or Net Insurance Proceeds is insufficient for such purpose.
(C) In the event there shall be a Net Condemnation Award or Net
Insurance Proceeds in an amount equal to or greater than $2,500,000, the
Collateral Agent shall have the option to apply such Net Condemnation Award
or Net Insurance Proceeds, as the case may be, to the payment of the
Secured Obligations in accordance with the provisions of Section 2.12 of
the Credit Agreement or to require a Restoration of the Pledged Collateral.
In the event a Restoration is to be performed under this Section
4.17(vii)(C), the Collateral Agent shall not release any part of the Net
Condemnation Award or Net Insurance Proceeds until such Pledgor has
furnished to the Collateral Agent an Officers' Certificate setting forth:
(1) a brief description of the repair, rebuilding or replacement to be made
and (2) the dollar amount of the expenditures to be made, or costs incurred
by such Pledgor; provided, however, that such Pledgor shall so complete
such Restoration with its own funds to the extent that the amount of any
Net Condemnation Award or Net Insurance Proceeds is insufficient for such
purpose.
(D) In the event that there shall be any surplus after application
of the Net Condemnation Award or the Net Insurance Proceeds to Restoration
of the Improvements, such surplus shall be applied as Net Cash Proceeds in
accordance with Section 2.12 of the Credit Agreement.
(viii) Delivery After Foreclosure. In the event that the proceeds of
any insurance claim are paid after the Collateral Agent has exercised its right
to foreclose after an Event of Default, such proceeds shall be paid to the
Collateral Agent to satisfy any deficiency remaining after such foreclosure. The
Collateral Agent shall retain its interest in the Insurance Policies required to
be maintained pursuant to this Agreement during any redemption period.
SECTION 4.18 Payment of Taxes; Compliance with Laws; Contesting
Liens; Claims. Each Pledgor represents and warrants that all Charges imposed
upon or assessed against the Pledged Collateral have been paid and discharged
except to the extent such Charges
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constitute a Lien not yet due and payable or constitute Contested Liens. Each
Pledgor shall pay prior to the date on which any penalties would attach thereto
all Charges against the Pledged Collateral. Each Pledgor shall comply with all
Requirements of Law applicable to the Pledged Collateral the failure to comply
with which would have a Material Adverse Effect. Notwithstanding the foregoing,
each Pledgor may at its own expense contest the validity, amount or
applicability of any Charges pursuant to the provisions of Section 6.02 of the
Credit Agreement.
SECTION 4.19 Access to Pledged Collateral, Books and Records; Other
Information. Upon reasonable notice to each Pledgor, the Collateral Agent, its
agents, accountants and attorneys shall have full and free access to visit and
inspect, as applicable, during normal business hours and such other reasonable
times as may be reasonably requested by the Collateral Agent, all of the Pledged
Collateral including, without limitation, all of the books, correspondence and
records of such Pledgor relating thereto. The Collateral Agent and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and such Pledgor agrees to render to the Collateral Agent,
at such Pledgor's cost and expense, such clerical and other assistance as may be
requested by the Collateral Agent with regard thereto. Such Pledgor shall, at
any and all times, within a reasonable time after written request by the
Collateral Agent, furnish or cause to be furnished to the Collateral Agent, in
such manner and in such detail as may be reasonably requested by the Collateral
Agent, additional information with respect to the Pledged Collateral.
ARTICLE V
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 5.1 Special Representations and Warranties. As of the time when
each of its Accounts arises, each Pledgor shall be deemed to have represented
and warranted that such Account and all records, papers and documents relating
thereto (i) are genuine and correct and in all material respects what they
purport to be, (ii) represent the legal, valid and binding obligation of the
account debtor, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability, evidencing amounts unpaid and owed by such account debtor,
arising out of the performance of labor or services or the sale or lease and
delivery of the merchandise listed therein or out of an advance or a loan, not
subject to the fulfillment of any contract or condition whatsoever or to any
defenses, set-offs or counterclaims except with respect to refunds, returns and
allowances in the ordinary course of business, or stamp or other taxes, (iii)
will, in the case of an Account, except for the original or duplicate original
invoice sent to a purchaser evidencing such purchaser's account, be the only
original writings evidencing and embodying such obligation of the account debtor
named therein and (iv) are in compliance and conform with all applicable
Federal, state and local laws and applicable laws of any relevant foreign
jurisdiction except where the failure to so comply or conform could not be
reasonably expected to have a Material Adverse Effect.
SECTION 5.2 Maintenance of Records. Each Pledgor shall keep and
maintain at its own cost and expense complete records of each Account, in a
manner consistent with prudent business practice, including, without limitation,
records of all payments received, all credits
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granted thereon, all merchandise returned and all other documentation relating
thereto. Each Pledgor shall, at such Pledgor's sole cost and expense, upon the
Collateral Agent's demand made at any time after the occurrence and during the
continuance of any Event of Default, deliver all tangible evidence of Accounts,
including, without limitation, all documents evidencing Accounts and any books
and records relating thereto, to the Collateral Agent or to its representatives
(copies of which evidence and books and records may be retained by such
Pledgor). Upon the occurrence and during the continuance of any Event of
Default, the Collateral Agent may transfer a full and complete copy of any
Pledgor's books, records, credit information, reports, memoranda and all other
writings relating to the Accounts to and for the use by any Person that has
acquired or is contemplating acquisition of an interest in the Accounts or the
Collateral Agent's security interest therein without the consent of any Pledgor
but subject to the confidentiality provisions of the Credit Agreement.
SECTION 5.3 Legend. Each Pledgor shall legend, at the request of the
Collateral Agent made at any time after the occurrence of any Event of Default
and in form and manner satisfactory to the Collateral Agent, the Accounts and
the other books, records and documents of such Pledgor evidencing or pertaining
to the Accounts with an appropriate reference to the fact that the Accounts have
been pledged to the Collateral Agent for the benefit of the Secured Parties and
that the Collateral Agent has a security interest therein.
SECTION 5.4 Modification of Terms, etc. No Pledgor shall rescind or
cancel any indebtedness evidenced by any Account or modify any term thereof or
make any adjustment with respect thereto except in the ordinary course of
business consistent with prudent business practice, or extend or renew any such
indebtedness except in the ordinary course of business consistent with prudent
business practice or compromise or settle any dispute, claim, suit or legal
proceeding relating thereto except in the ordinary course of business consistent
with prudent business practice or sell any Account or interest therein without
the prior written consent of the Collateral Agent. Each Pledgor shall timely
fulfill all obligations on its part to be fulfilled under or in connection with
the Accounts.
SECTION 5.5 Collection. Each Pledgor shall cause to be collected from
the account debtor of each of the Accounts, as and when due (including, without
limitation, Accounts that are delinquent, such Accounts to be collected in
accordance with generally accepted commercial collection procedures), any and
all amounts owing under or on account of such Account, and apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Account, except that any Pledgor may, with respect to an Account, allow
in the ordinary course of business (i) a refund or credit due as a result of
returned or damaged or defective merchandise and (ii) such extensions of time to
pay amounts due in respect of Accounts and such other modifications of payment
terms or settlements in respect of Accounts as shall be commercially reasonable
in the circumstances, all in accordance with such Pledgor's ordinary course of
business consistent with its collection practices as in effect from time to
time. The costs and expenses (including, without limitation, attorneys' fees) of
collection, in any case, whether incurred by any Pledgor and after an Event of
Default should have occurred and be continuing, the Collateral Agent or any
Secured Party, shall be paid by the Pledgors.
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SECTION 5.6 Instruments. Each Pledgor shall deliver to the Collateral
Agent, within five days after receipt thereof by such Pledgor, any Instrument
evidencing Accounts which is in the principal amount of $50,000 or more. Any
Instrument delivered to the Collateral Agent pursuant to this Section 5.6 shall
be appropriately endorsed (if applicable) to the order of the Collateral Agent,
as agent for the Secured Parties, and shall be held by the Collateral Agent as
further security hereunder; provided, however, that so long as no Event of
Default shall have occurred and be continuing, the Collateral Agent shall,
promptly upon request of such Pledgor, make appropriate arrangements for making
any Instrument pledged by such Pledgor available to such Pledgor for purposes of
presentation, collection or renewal (any such arrangement to be effected, to the
extent deemed appropriate by the Collateral Agent, against trust receipt or like
document).
SECTION 5.7 Payment into Lockboxes. After the occurrence of a Default
and upon the request of the Collateral Agent, each Pledgor shall cause all
payments in respect of the Accounts to be deposited into Lockboxes and otherwise
comply with the provisions of Section 8.4 hereof. The costs and expenses
(including, without limitation, reasonable attorneys' fees) of collection,
whether incurred by the Collateral Agent or any Secured Party, shall be paid by
the Pledgors.
ARTICLE VI
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 6.1 Pledge of Additional Securities Collateral. Each Pledgor
shall, upon obtaining any Pledged Securities or Intercompany Notes of any Person
required to be Pledged to the Collateral Agent for the benefit of the Lenders
pursuant to the provisions of Section 5.11 of the Credit Agreement or this
Agreement, accept the same in trust for the benefit of the Collateral Agent and
promptly (and in any event within five Business Days) deliver to the Collateral
Agent a pledge amendment, duly executed by such Pledgor, in substantially the
form of Exhibit 2 annexed hereto (each, a "Pledge Amendment"), and the
certificates and other documents required under Section 3.1 and Section 3.2
hereof in respect of the additional Pledged Securities or Intercompany Notes
which are to be pledged pursuant to this Agreement or the Credit Agreement, and
confirming the attachment of the Lien hereby created on and in respect of such
additional Pledged Securities or Intercompany Notes. Each Pledgor hereby
authorizes the Collateral Agent to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Securities or Intercompany Notes listed on
any Pledge Amendment delivered to the Collateral Agent shall for all purposes
hereunder be considered Pledged Collateral.
SECTION 6.2 Voting Rights; Distributions, etc.
(i) So long as no Event of Default shall have occurred and be
continuing:
(A) Each Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Securities Collateral or any
part thereof for any purpose not inconsistent with the terms or purposes
hereof or any other Loan Document; provided, however, that no Pledgor shall
in any event exercise such rights in any manner
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which may have an adverse effect on the value of the Pledged Collateral or
the Lien and security interest intended to be granted to the Collateral
Agent hereunder.
(B) Each Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the Lien hereof, any and all Distributions, but
only if and to the extent made in accordance with the provisions of the
Credit Agreement; provided, however, that any and all such Distributions
consisting of rights or interests in the form of securities shall be
forthwith delivered to the Collateral Agent to hold as Pledged Collateral
and shall, if received by any Pledgor, be received in trust for the benefit
of the Collateral Agent, be segregated from the other property or funds of
such Pledgor and be forthwith delivered to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsement); provided, further, however, that no Pledgor shall be so
required to pledge any Distributions consisting of rights or interests in
the form of securities if such pledge shall result in the Collateral Agent
possessing more than 65% of the voting power of all classes of capital
stock entitled to vote of any Subsidiary which is a controlled foreign
corporation (as defined in Section 957(a) of the Tax Code) or would
constitute an investment of earnings in United States property under
Section 956 (or a successor provision) of the Tax Code, which investment
would trigger an increase in the gross income of a United States
shareholder of such Pledgor pursuant to Section 951 (or a successor
provision) of the Tax Code.
(C) The Collateral Agent shall be deemed without further action or
formality to have granted to each Pledgor all necessary consents relating
to voting rights and shall, if necessary, upon written request of any
Pledgor and at the sole cost and expense of the Pledgors, from time to time
execute and deliver (or cause to be executed and delivered) to such Pledgor
all such instruments as such Pledgor may reasonably request in order to
permit such Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to Section 6.2(i)(A) hereof and to receive
the Distributions which it is authorized to receive and retain pursuant to
Section 6.2(i)(B) hereof.
(ii) Upon the occurrence and during the continuance of any Event of
Default:
(A) All rights of each Pledgor to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant to
Section 6.2(i)(A) hereof without any action or the giving of any notice
shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall thereupon have the sole right to exercise
such voting and other consensual rights.
(B) All rights of each Pledgor to receive Distributions which it
would otherwise be authorized to receive and retain pursuant to Section
6.2(i)(B) hereof shall cease and all such rights shall thereupon become
vested in the Collateral Agent, which shall thereupon have the sole right
to receive and hold as Pledged Collateral such Distributions; provided,
however, that no Pledgor shall be so required to pledge any Distributions
consisting or rights of interest in the form of securities if such pledge
shall result in the Collateral Agent possessing more than 65% of the voting
power of all classes of capital stock entitled to vote of any Subsidiary
which is a controlled foreign corporation (as defined in Section 957(a) of
the Tax Code) or would constitute an
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investment of earnings in United States property under Section 956 (or a
successor provision) of the Tax Code, which investment would trigger an
increase in the gross income of a United States shareholder of such Pledgor
pursuant to Section 951 (or a successor provision) of the Tax Code.
(iii) Each Pledgor shall, at its sole cost and expense, from time to
time execute and deliver to the Collateral Agent appropriate instruments as the
Collateral Agent may request in order to permit the Collateral Agent to exercise
the voting and other rights which it may be entitled to exercise pursuant to
Section 6.2(ii)(A) hereof and to receive all Distributions which it may be
entitled to receive under Section 6.2(ii)(B) hereof.
(iv) All Distributions which are received by any Pledgor contrary
to the provisions of Section 6.2(ii)(B) hereof shall be received in trust for
the benefit of the Collateral Agent, shall be segregated from other funds of
such Pledgor and shall immediately be paid over to the Collateral Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsement).
SECTION 6.3 No New Securities. Except to the extent otherwise permitted
under Article IX hereof, each Pledgor shall cause each issuer of the Pledged
Securities not to issue any stock or other securities or equity interests in
addition to or in substitution for the Pledged Securities issued by such issuer,
except to such Pledgor.
SECTION 6.4 Operative Agreements. Each Pledgor has delivered to the
Collateral Agent true, correct and complete copies of the Operative Agreements.
The Operative Agreements are in full force and effect, have not as of the date
hereof been amended or modified except as disclosed to the Collateral Agent, and
there is no existing default by any party thereunder or any event which, with
the giving of notice of passage of time or both, would constitute a default by
any party thereunder. Each Pledgor shall deliver to the Collateral Agent a copy
of any notice of default given or received by it under any Operative Agreement
within ten days after such Pledgor gives or receives such notice. No Pledgor
will terminate or agree to terminate any Operative Agreement or make any
amendment or modification to any Operative Agreement which may have an adverse
effect on the value of the Pledged Securities and Distributions relating thereto
or the Lien and security intended to be granted to the Collateral Agent
hereunder.
SECTION 6.5 Defaults, etc. Such Pledgor is not in default in the
payment of any portion of any mandatory capital contribution, if any, required
to be made under any agreement to which such Pledgor is a party relating to the
Pledged Securities pledged by it, and such Pledgor is not in violation of any
other provisions of any such agreement to which such Pledgor is a party, or
otherwise in default or violation thereunder. No Securities Collateral pledged
by such Pledgor is subject to any defense, offset or counterclaim, which have
been asserted or alleged against such Pledgor by any Person with respect
thereto, and as of the date hereof, there are no certificates, instruments,
documents or other writings (other than the Operative Agreements and
certificates, if any, delivered to the Collateral Agent) which evidence any
Pledged Securities of such Pledgor.
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ARTICLE VII
[INTENTIONALLY OMITTED]
ARTICLE VIII
CERTAIN PROVISIONS CONCERNING
COLLATERAL ACCOUNT AND COLLECTION OF ACCOUNTS
SECTION 8.1 [Intentionally Omitted].
SECTION 8.2 Collateral Account.
(i) Deposits into Collateral Account. Each Pledgor shall deposit
into the Collateral Account from time to time (A) after the occurrence of a
Default, the cash proceeds of any of the Pledged Collateral (including pursuant
to any disposition thereof), (B) after the occurrence of a Default, the cash
proceeds of any Taking or Destruction or loss of title with respect to any
Pledged Collateral, (C) any cash in respect of any Pledged Collateral to which
the Collateral Agent is entitled pursuant to Section 6.2 hereof, (D) such
amounts that such Pledgor is required to pledge as additional collateral
security hereunder pursuant to the Loan Documents and (E) any other amounts that
such Pledgor desires to pledge to the Collateral Agent for the benefit of the
Secured Parties as additional collateral security hereunder.
(ii) Application of Amounts in Collateral Account. The balance from
time to time in the Collateral Account shall constitute part of the Pledged
Collateral hereunder and shall not constitute payment of the Secured Obligations
until applied as hereinafter provided. So long as no Event of Default has
occurred and is continuing or will result therefrom, the Collateral Agent shall
within two Business Days of receiving a request of such Pledgor for release of
cash proceeds from the Collateral Account remit the cash proceeds on deposit in
the Collateral Account to or upon the order of such Pledgor, in periodic
installments, if applicable, so long as such Pledgor has with respect to any
Pledged Collateral, satisfied the conditions relating thereto set forth in
Section 4.17(vii) hereof. At any time following the occurrence and during the
continuance of an Event of Default, the Collateral Agent may (and, if instructed
by the Lenders as specified in the Credit Agreement, shall) in its (or their)
discretion apply or cause to be applied (subject to collection) the balance from
time to time outstanding to the credit of the Collateral Account to the payment
of the Secured Obligations in the manner specified in Article XI hereof subject,
however, in the case of amounts deposited in the L/C Sub-Account, to the
provisions of Section 8.3 hereof. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided herein.
(iii) Investment of Balance in Collateral Account. Amounts on
deposit in the Collateral Account shall be invested from time to time in such
Cash Equivalents as the respective Pledgor (or, after the occurrence and during
the continuance of an Event of Default, the Collateral Agent) shall determine,
which Cash Equivalents shall be held in the name and be under the control of the
Collateral Agent (or any sub-agent); provided, however, that at any time
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after the occurrence and during the continuance of an Event of Default, the
Collateral Agent may (and, if instructed by the Lenders as specified in the
Credit Agreement, shall) in its (or their) discretion at any time and from time
to time elect to liquidate any such Cash Equivalents and to apply or cause to be
applied the proceeds thereof to the payment of the Secured Obligations in the
manner specified in Article XI hereof.
SECTION 8.3 Cover for Letter of Credit Liabilities. Amounts deposited
into the Collateral Account as cover for liabilities in respect of Letters of
Credit under the Credit Agreement pursuant to Section 2.21 thereof shall be held
by the Collateral Agent in a separate sub-account designated as the "L/C
Sub-Account" (the "L/C Sub-Account") and, notwithstanding any other provision
hereof to the contrary, all amounts held in the L/C Sub-Account shall constitute
collateral security first for the liabilities in respect of Letters of Credit
outstanding from time to time and second as collateral security for the other
Secured Obligations hereunder until such time as all Letters of Credit shall
have been terminated and all of the liabilities in respect of Letters of Credit
have been paid in full.
SECTION 8.4 Collection of Accounts.
(i) Lockboxes. After the occurrence of a Default and upon the
request of the Collateral Agent, each Pledgor shall establish one or more
lockboxes (the "Lockboxes") with a Lockbox Bank and shall irrevocably instruct
all account debtors on all of the Accounts of such Pledgor, all agents for the
collection of Accounts and all issuers or obligors under letters of credit or
other documents supporting Accounts to remit all Collections to such Lockboxes.
Each Pledgor, the Collateral Agent and each of the financial institutions
selected by such Pledgor and reasonably acceptable to the Collateral Agent
(each, a "Lockbox Bank" and, collectively, the "Lockbox Banks") shall enter into
Lockbox Agreements, which among other things shall provide for the opening of an
account for the deposit of Collections (each, a "Collection Account" and,
collectively, the "Collection Accounts") at a Lockbox Bank. Each Pledgor shall
maintain separate and distinct Lockboxes and Collection Accounts and the
Lockboxes and Collection Accounts of each Pledgor will be clearly identified as
the Lockbox and Collection Accounts of such Pledgor and no other Person,
including no other Pledgor. Such amounts shall be so deposited on a daily basis.
All Collections and other amounts received by or on behalf of each such Pledgor
from any account debtor, agent or credit support party shall be held in trust
for the benefit of the Collateral Agent and shall be deposited into the
Collection Account of such Pledgor within one Business Day after such Pledgor's
receipt thereof. Such arrangements shall not be modified or terminated without
the prior written consent of the Collateral Agent.
(ii) Lockbox Concentration Account. Upon the terms and subject to
the conditions set forth in the Lockbox Agreements, all good funds held in each
Collection Account shall be wired each Business Day into a separate account for
each such Pledgor (each, a "Lockbox Concentration Account") maintained by the
Collateral Agent. Each Pledgor shall accurately report all amounts deposited in
the Collection Accounts to ensure the proper transfer of funds as set forth
above. Each Pledgor acknowledges and agrees that, (A) pursuant to the Lockbox
Agreements executed and delivered by such Pledgor it has irrevocably directed
the Lockbox Banks to transfer no later than [2:00 p.m.] (California time) each
Business Day all available funds, investments, money, cash, Instruments,
securities, rights, Proceeds and other property and amounts contained in their
respective Collection Accounts into the Lockbox
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Concentration Account established for such Pledgor hereunder and (B) the
Collateral Agent shall have exclusive dominion and control of the Lockbox
Concentration Accounts. If any Pledgor receives directly any remittance or
payments notwithstanding the arrangements for payments directly into Collection
Accounts (as provided for in the Lockbox Agreements), such Pledgor shall hold
such remittance and payments in trust for the Collateral Agent, and shall
deposit such amounts into its respective Lockbox Concentration Account within
one Business Day after such Pledgor's receipt thereof.
(iii) Dispositions from Lockbox Concentration Account. After an
Event of Default shall have occurred and be continuing and with the approval of
the Collateral Agent acting at the direction of the Required Lenders (which
approval may be granted or withheld in the sole and absolute discretion of the
Required Lenders), each Pledgor is hereby authorized by the Collateral Agent to
direct on any Business Day the disposition of any and all moneys, financial
assets, checks, drafts, securities, instruments and other property deposited in
its Lockbox Concentration Account into one or more deposit accounts for use by
such Pledgor in a manner permitted by the Credit Agreement. The Collateral Agent
shall make such disposition by [2:00 p.m.] California time on each such date.
(iv) Revocation of Withdrawal Right. Upon the occurrence and during
continuance of any Event of Default and revocation by the Collateral Agent
acting at the direction of the Required Lenders (which revocation may be made in
the sole and absolute discretion of the Required Lenders), the authorization of
the Pledgors under Section 8.4(iii) shall be revoked and all deposits maintained
in the Lockbox Concentration Accounts, and any additional moneys and other
property subsequently maintained with any Lockbox Bank, shall be transferred to
the Collateral Account. All such deposits in the Collateral Account shall be
held by the Collateral Agent as Pledged Collateral for the Secured Obligations
or applied to the payment of the Secured Obligations in accordance with Article
XI hereof. The costs and expenses (including attorney's fees) of collection,
whether incurred by any Pledgor or the Collateral Agent (or any sub-agent),
shall be borne by the Pledgors.
SECTION 8.5 Restriction on Credit Balances in Deposit Accounts. The
Pledgors shall not at any time deposit or cause to be deposited into any
account, except as otherwise specifically permitted pursuant to the provisions
of this Article VIII, any funds, investments, money, cash, instruments,
securities, rights, proceeds and other property and amounts received by or on
behalf of the Pledgors from any Account; provided, however, that so long as no
Event of Default shall have occurred and be continuing, the Pledgors may deposit
or cause to be deposited into such account such funds, investments, money, cash,
instruments, securities, rights, proceeds and other property and amounts
received by or on behalf of the Pledgors so long as the aggregate sum thereof
shall in no event exceed at any time $500,000; provided, further, that all
amounts in excess of $500,000 shall be deposited directly into the Collection
Account of the applicable Pledgor or the Collateral Account in accordance with
the provisions of this Article VIII.
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ARTICLE IX
TRANSFERS AND OTHER LIENS
No Pledgor shall (i) sell, convey, assign or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral pledged by it
hereunder except as permitted by the Credit Agreement, (ii) create or permit to
exist any Lien upon or with respect to any of the Pledged Collateral pledged by
it hereunder other than Permitted Liens or (iii) permit any issuer of the
Pledged Securities to merge, consolidate or change its legal form, unless (A)
such entity is organized in a jurisdiction outside the United States and 65% of
all of the outstanding equity interests of the surviving or resulting entity
are, upon such merger or consolidation, pledged hereunder and any cash,
securities or other property is distributed in respect of the outstanding equity
interests of any other entity that was merged into or consolidated with such
issuer is deposited in the Collateral Account and (B) such Pledgor shall have
complied with the applicable provisions of the Credit Agreement.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 Remedies. Upon the occurrence and during the continuance
of any Event of Default, the Collateral Agent may from time to time exercise in
respect of the Pledged Collateral, in addition to the other rights and remedies
provided for herein or otherwise available to it:
(i) Personally, or by agents or attorneys, reasonably and
immediately take possession of the Pledged Collateral or any part thereof, from
any Pledgor or any other Person who then has possession of any part thereof with
or without notice or process of law, and for that purpose may enter upon any
Pledgor's premises where any of the Pledged Collateral is located, remove such
Pledged Collateral, remain present at such premises to receive copies of all
communications and remittances relating to the Pledged Collateral and use in
connection with such removal and possession any and all services, supplies, aids
and other facilities of any Pledgor;
(ii) Demand, ▇▇▇ for, collect or receive any money or property at
any time payable or receivable in respect of the Pledged Collateral including,
without limitation, instructing the obligor or obligors on any agreement,
instrument or other obligation constituting part of the Pledged Collateral to
make any payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent, and in connection with any of the
foregoing, compromise, settle, extend the time for payment and make other
modifications with respect thereto; provided, however, that in the event that
any such payments are made directly to any Pledgor, prior to receipt by any such
obligor of such instruction, such Pledgor shall segregate all amounts received
pursuant thereto in trust for the benefit of the Collateral Agent and shall
promptly (but in no event later than one Business Day after receipt thereof)
deposit such amounts into the Collateral Account;
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(iii) Sell, assign, grant a license to use or otherwise liquidate,
or direct any Pledgor to sell, assign, grant a license to use or otherwise
liquidate, any and all investments made in whole or in part with the Pledged
Collateral or any part thereof, and take possession of the proceeds of any such
sale, assignment, license or liquidation;
(iv) Take possession of the Pledged Collateral or any part thereof,
by directing any Pledgor in writing to deliver the same to the Collateral Agent
at any place or places within the continental United States so designated by the
Collateral Agent, in which event such Pledgor shall at its own expense: (A)
forthwith cause the same to be moved to the place or places designated by the
Collateral Agent and there delivered to the Collateral Agent, (B) store and keep
any Pledged Collateral so delivered to the Collateral Agent at such place or
places pending further action by the Collateral Agent and (C) while the Pledged
Collateral shall be so stored and kept, provide such security and maintenance
services as shall be reasonably necessary to protect the same and to preserve
and maintain them in good condition. Each Pledgor's obligation to deliver the
Pledged Collateral as contemplated in this Section l0.l(iv) is of the essence
hereof. Upon application to a court of equity having jurisdiction, the
Collateral Agent shall be entitled to a decree requiring specific performance by
any Pledgor of such obligation;
(v) Withdraw all moneys, instruments, securities and other
property in any Bank Account or other account of any Pledgor pledged to the
Collateral Agent hereunder (including, without limitation, the accounts
contemplated in Article VIII and/or Section 3.4 hereof) for application to the
Secured Obligations as provided in Article XI hereof;
(vi) Retain and apply the Distributions to the Secured Obligations
as provided in Article XI hereof;
(vii) Exercise any and all rights as beneficial and legal owner of
the Pledged Collateral, including, without limitation, perfecting assignment of
and exercising any and all voting, consensual and other rights and powers with
respect to any Pledged Collateral; and
(viii) All the rights and remedies of a secured party on default
under the UCC, and the Collateral Agent may also in its sole discretion, without
notice except as specified in Section 10.2 hereof, sell, assign or grant a
license to use the Pledged Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker's board or at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable. The Collateral Agent or any
other Secured Party or any of their respective Affiliates may be the purchaser,
licensee, assignee or recipient of any or all of the Pledged Collateral at any
such sale and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Pledged Collateral sold, assigned or licensed at such sale, to use and apply any
of the Secured Obligations owed to such Person as a credit on account of the
purchase price of any Pledged Collateral payable by such Person at such sale.
Each purchaser, assignee, licensee or recipient at any such sale shall acquire
the property sold, assigned or licensed absolutely free from any claim or right
on the part of any Pledgor, and each Pledgor hereby waives, to the fullest
extent permitted by law, all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. The Collateral Agent shall not be
obligated to make
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any sale of Pledged Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Pledgor hereby waives, to the fullest extent permitted by law, any claims
against the Collateral Agent arising by reason of the fact that the price at
which any Pledged Collateral may have been sold, assigned or licensed at such a
private sale was less than the price which might have been obtained at a public
sale, even if the Collateral Agent accepts the first offer received and does not
offer such Pledged Collateral to more than one offeree.
SECTION 10.2 Notice of Sale. Each Pledgor acknowledges and agrees
that, to the extent notice of sale shall be required by law, ten days' notice to
such Pledgor of the time and place of any public sale or of the time after which
any private sale or other intended disposition is to take place shall be
commercially reasonable notification of such matters. No notification need be
given to any Pledgor if it has signed, after the occurrence of an Event of
Default, a statement renouncing or modifying any right to notification of sale
or other intended disposition.
SECTION 10.3 Waiver of Notice and Claims. Each Pledgor hereby waives,
to the fullest extent permitted by applicable law, notice or judicial hearing in
connection with the Collateral Agent's taking possession or the Collateral
Agent's disposition of any of the Pledged Collateral, including, without
limitation, any and all prior notice and hearing for any prejudgment remedy or
remedies and any such right which such Pledgor would otherwise have under law,
and each Pledgor hereby further waives, to the fullest extent permitted by
applicable law: (i) all damages occasioned by such taking of possession, (ii)
all other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Collateral Agent's rights
hereunder and (iii) all rights of redemption, appraisal, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law. The
Collateral Agent shall not be liable for any incorrect or improper payment made
pursuant to this Article X in the absence of gross negligence or willful
misconduct. Any sale of, or the grant of options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the applicable
Pledgor therein and thereto, and shall be a perpetual bar both at law and in
equity against such Pledgor and against any and all Persons claiming or
attempting to claim the Pledged Collateral so sold, optioned or realized upon,
or any part thereof, from, through or under such Pledgor.
SECTION 10.4 Certain Sales of Pledged Collateral.
(i) Each Pledgor recognizes that, by reason of certain
prohibitions contained in law, rules, regulations or orders of any Governmental
Authority, the Collateral Agent may be compelled, with respect to any sale of
all or any part of the Pledged Collateral, to limit purchasers to those who meet
the requirements of such Governmental Authority. Each Pledgor acknowledges that
any such sales may be at prices and on terms less favorable to the Collateral
Agent than those obtainable though a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such restricted sale shall
be deemed to have been made in a commercially reasonable manner and that, except
as may be required by applicable law, the Collateral Agent shall have no
obligation to engage in public sales.
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(ii) Each Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, the Collateral Agent
may be compelled, with respect to any sale of all or any part of the Securities
Collateral, to limit purchasers to Persons who will agree, among other things,
to acquire such Securities Collateral for their own account, for investment and
not with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sales may be at prices and on terms less favorable to the
Collateral Agent than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made pursuant to
a registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Securities Collateral for the period of time necessary to permit the
issuer thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if such
issuer would agree to do so.
(iii) Notwithstanding the foregoing, each Pledgor shall, upon the
occurrence and during the continuance of any Event of Default, at the request of
the Collateral Agent, for the benefit of the Collateral Agent, cause any
registration, qualification under or compliance with any Federal or state
securities law or laws to be effected with respect to all or any part of the
Securities Collateral as soon as practicable and at the sole cost and expense of
the Pledgors. Each Pledgor will use its commercially reasonable efforts to cause
such registration to be effected (and be kept effective) and will use its
commercially reasonable efforts to cause such qualification and compliance to be
effected (and be kept effective) as may be so requested and as would permit or
facilitate the sale and distribution of such Securities Collateral including,
without limitation, registration under the Securities Act (or any similar
statute then in effect), appropriate qualifications under applicable blue sky or
other state securities laws and appropriate compliance with all other
requirements of any Governmental Authority. Each Pledgor shall cause the
Collateral Agent to be kept advised in writing as to the progress of each such
registration, qualification or compliance and as to the completion thereof,
shall furnish to the Collateral Agent such number of prospectuses, offering
circulars or other documents incident thereto as the Collateral Agent from time
to time may request, and shall indemnify and shall cause the issuer of the
Securities Collateral to indemnify the Collateral Agent and all others
participating in the distribution of such Securities Collateral against all
claims, losses, damages and liabilities caused by any untrue statement (or
alleged untrue statement) of a material fact contained therein (or in any
related registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(iv) If the Collateral Agent determines to exercise its right to
sell any or all of the Securities Collateral, upon written request, the
applicable Pledgor shall from time to time furnish to the Collateral Agent all
such information as the Collateral Agent may request in order to determine the
number of securities included in the Securities Collateral which may be sold by
the Collateral Agent as exempt transactions under the Securities Act and the
rules of the Securities and Exchange Commission thereunder, as the same are from
time to time in effect.
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SECTION 10.5 No Waiver; Cumulative Remedies.
(i) No failure on the part of the Collateral Agent to exercise, no
course of dealing with respect to, and no delay on the part of the Collateral
Agent in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any such right, power
or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy; nor shall the Collateral Agent be
required to look first to, enforce or exhaust any other security, collateral or
guaranties. The remedies herein provided are cumulative and are not exclusive of
any remedies provided by law.
(ii) In the event that the Collateral Agent shall have instituted
any proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Collateral Agent, then and in every such case, the Pledgors, the
Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Pledged
Collateral, and all rights, remedies and powers of the Collateral Agent and the
other Secured Parties shall continue as if no such proceeding had been
instituted.
SECTION 10.6 [Intentionally Omitted].
ARTICLE XI
APPLICATION OF PROCEEDS
The proceeds received by the Collateral Agent in respect of any sale
of, collection from or other realization upon all or any part of the Pledged
Collateral pursuant to the exercise by the Collateral Agent of its remedies as a
secured creditor as provided in Article X hereof shall be applied, together with
any other sums then held by the Collateral Agent pursuant to this Agreement,
promptly by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses, fees, commissions and
taxes of such sale, collection or other realization including, without
limitation, the costs and expenses of the Collateral Agent and its agents
and counsel, and all expenses, liabilities and advances made or incurred by
the Collateral Agent in connection therewith, together with interest on
each such amount at the highest rate then in effect under the Credit
Agreement from and after the date such amount is due, owing or unpaid until
paid in full;
SECOND, to the payment of all other costs and expenses of such sale,
collection or other realization including, without limitation, the costs
and expenses of the Lenders and their agents and counsel and all costs,
liabilities and advances made or incurred by the Lenders in connection
therewith, together with interest on each such amount at the highest rate
then in effect under the Credit Agreement from and after the date such
amount is due, owing or unpaid until paid in full;
THIRD, without duplication of amounts applied pursuant to clauses FIRST
and SECOND above, to the indefeasible payment in full in cash, pro rata, of
(i) interest, principal and other amounts constituting Secured Obligations
(other than the obligations
-xxxvii-
arising under the Interest Rate Protection Agreements, the Hedging
Agreements and the Cash Management Agreements) in accordance with the terms
of the Credit Agreement and (ii) the obligations arising under the Interest
Rate Protection Agreements, the Hedging Agreements and the Cash Management
Agreements in accordance with the terms of the Interest Rate Protection
Agreements, the Hedging Agreements and the Cash Management Agreements, as
applicable; and
FOURTH, the balance, if any, to the Person lawfully entitled thereto
(including the Pledgors or their respective successors or assigns).
In the event that any such proceeds are insufficient to pay in full the
items described in clauses FIRST though THIRD of this Article XI, the Pledgors
shall remain liable for any deficiency.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Concerning Collateral Agent.
(i) The Collateral Agent has been appointed as Collateral Agent
pursuant to the Credit Agreement. The actions of the Collateral Agent hereunder
are subject to the provisions of the Credit Agreement. The Collateral Agent
shall have the right hereunder to make demands, to give notices, to exercise or
refrain from, exercising any rights, and to take or refrain from taking action
(including, without limitation, the release or substitution of the Pledged
Collateral), in accordance with this Agreement and the Credit Agreement. The
Collateral Agent may employ agents and attorneys-in-fact in connection herewith
and shall not be liable for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Collateral Agent may resign
and a successor Collateral Agent may be appointed in the manner provided in the
Credit Agreement. Upon the acceptance of any appointment as the Collateral Agent
by a successor Collateral Agent, that successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its duties and obligations
under this Agreement. After any retiring Collateral Agent's resignation, the
provisions hereof shall inure to its benefit as to any actions taken or omitted
to be taken by it under this Agreement while it was the Collateral Agent.
(ii) The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment substantially
equivalent to that which the Collateral Agent, in its individual capacity,
accords its own property consisting of property of a similar kind and nature as
the Pledged Collateral, it being understood that neither the Collateral Agent
nor any of the Secured Parties shall have responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relating to any Securities Collateral, whether or not the
Collateral Agent or any other Secured Party has or is deemed to have knowledge
of such matters, or (ii) taking any necessary steps to preserve rights against
any Person with respect to any Pledged Collateral.
-xxxviii-
(iii) The Collateral Agent shall be entitled to rely upon any
written notice, statement, certificate, order or other document or any telephone
message believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper person, and, with respect to all matters
pertaining to this Agreement and its duties hereunder, upon advice of counsel
selected by it.
(iv) With respect to any of its rights and obligations as a Lender,
Collateral Agent shall have and may exercise the same rights and powers
hereunder. The term "Lenders," "Lender" or any similar terms shall, unless the
context clearly otherwise indicates, include Collateral Agent in its individual
capacity as a Lender. Collateral Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with such
Pledgor or any Affiliate of such Pledgor to the same extent as if Collateral
Agent were not acting as collateral agent.
(v) If any item of Pledged Collateral also constitutes collateral
granted to Collateral Agent under any other deed of trust, mortgage, security
agreement, pledge or instrument of any type, in the event of any conflict
between the provisions hereof and the provisions of such other deed of trust,
mortgage, security agreement, pledge or instrument of any type in respect of
such collateral, Collateral Agent, in its sole discretion, shall select which
provision or provisions shall control.
SECTION 12.2 Collateral Agent May Perform; Collateral Agent Appointed
Attorney-in-Fact. If any Pledgor shall fail to perform any covenants contained
in this Agreement, (including, without limitation, such Pledgor's covenants to
(i) pay the premiums in respect of all required insurance policies hereunder,
(ii) pay Charges, (iii) make repairs, (iv) discharge Liens or (v) pay or perform
any obligations of such Pledgor under any Pledged Collateral) or if any warranty
on the part of any Pledgor contained herein shall be breached, after an Event of
Default shall have occurred and be continuing, the Collateral Agent may (but
shall not be obligated to) do the same or cause it to be done or remedy any such
breach, and may expend funds for such purpose; provided, however, that
Collateral Agent shall in no event be bound to inquire into the validity of any
tax, lien, imposition or other obligation which such Pledgor fails to pay or
perform as and when required hereby and which such Pledgor does not contest in
accordance in accordance with the provision of Section 4.18 hereof. Any and all
amounts so expended by the Collateral Agent shall be paid by the Pledgors in
accordance with the provisions of Section 12.3 hereof. Neither the provisions of
this Section 12.2 nor any action taken by Collateral Agent pursuant to the
provisions of this Section 12.2 shall prevent any such failure to observe any
covenant contained in this Agreement nor any breach of warranty from
constituting an Event of Default. After an Event of Default shall have occurred
and be continuing, each Pledgor hereby appoints the Collateral Agent its
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor, or otherwise, from time to time in the Collateral
Agent's discretion to take any action and to execute any instrument consistent
with the terms hereof and the other Loan Documents which the Collateral Agent
may deem necessary or advisable to accomplish the purposes hereof. The foregoing
grant of authority is a power of attorney coupled with an interest and such
appointment shall be irrevocable for the term hereof. Each Pledgor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof.
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SECTION 12.3 Expenses. Each Pledgor will upon demand pay to the
Collateral Agent the amount of any and all reasonable costs and expenses,
including the fees and expenses of its counsel and the fees and expenses of any
experts and agents which the Collateral Agent may incur in connection with (i)
any action, suit or other proceeding affecting the Pledged Collateral or any
part thereof commenced, in which action, suit or proceeding the Collateral Agent
is made a party or participates or in which the right to use the Pledged
Collateral or any part thereof is threatened, or in which it becomes necessary
in the judgment of the Collateral Agent to defend or uphold the Lien hereof
(including, without limitation, any action, suit or proceeding to establish or
uphold the compliance of the Pledged Collateral with any requirements of any
Governmental Authority or law), (ii) the collection of the Secured Obligations,
(iii) the enforcement and administration hereof, (iv) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (v) the exercise or enforcement of any of the rights
of the Collateral Agent or any Secured Party hereunder or (vi) the failure by
any Pledgor to perform or observe any of the provisions hereof. All amounts
expended by the Collateral Agent and payable by any Pledgor under this Section
12.3 shall be due upon demand therefor (together with interest thereon accruing
at the Default Rate during the period from and including the date on which such
funds were so expended to the date of repayment) and shall be part of the
Secured Obligations. Each Pledgor's obligations under this Section 12.3 shall
survive the termination hereof and the discharge of such Pledgor's other
obligations under this Agreement, the Credit Agreement, any Interest Rate
Protection Agreement, the Hedging Agreements, the Cash Management Agreements and
the other Loan Documents.
SECTION 12.4 Indemnity.
(i) Indemnity. Each Pledgor agrees to indemnify, pay and hold
harmless the Collateral Agent and each of the other Secured Parties and the
officers, directors, employees, agents and Affiliates of the Collateral Agent
and each of the other Secured Parties (collectively, the "Indemnitees") from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs (including, without limitation,
settlement costs), expenses or disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding, commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) which may be imposed on, incurred by, or
asserted against that Indemnitee, in any manner relating to or arising out
hereof, any Interest Rate Protection Agreement, the Hedging Agreements, the Cash
Management Agreements or any other Loan Document (including, without limitation,
any misrepresentation by any Pledgor in this Agreement, any Interest Rate
Protection Agreement, the Hedging Agreements, the Cash Management Agreements or
any other Loan Document) (the "Indemnified Liabilities"); provided, however,
that no Pledgor shall have any obligation to an Indemnitee hereunder with
respect to Indemnified Liabilities if it has been determined by a final
non-appealable decision of a court of competent jurisdiction that such
Indemnified Liabilities arose from the gross negligence or willful misconduct of
that Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, each Pledgor shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
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(ii) Survival. The obligations of the Pledgors contained in this
Section 12.4 shall survive the termination hereof and the discharge of the
Pledgors' other obligations under this Agreement, any Interest Rate Protection
Agreement, the Hedging Agreements, the Cash Management Agreements and under the
other Loan Documents.
(iii) Reimbursement. Any amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Pledged Collateral.
SECTION 12.5 Continuing Security Interest; Assignment. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) be binding upon the Pledgors, their respective successors and assigns and
(ii) inure, together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Collateral Agent and the other Secured Parties
and each of their respective successors, transferees and assigns. No other
Persons (including, without limitation, any other creditor of any Pledgor) shall
have any interest herein or any right or benefit with respect hereto. Without
limiting the generality of the foregoing clause (ii) and subject to the terms of
the Credit Agreement, any Lender may assign or otherwise transfer any
indebtedness held by it secured by this Agreement to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender, herein or otherwise, subject however, to the
provisions of the Credit Agreement and any applicable Interest Rate Protection
Agreement, the Hedging Agreements or the Cash Management Agreements.
SECTION 12.6 Termination; Release. When all the Secured Obligations
have been paid in full and the Commitments of the Lenders to make any Loan or to
issue any Letter of Credit under the Credit Agreement shall have expired or been
sooner terminated, this Agreement shall terminate. Upon termination hereof or
any release of Pledged Collateral in accordance with the provisions of the
Credit Agreement, the Collateral Agent shall, upon the request and at the sole
cost and expense of the Pledgors, forthwith assign, transfer and deliver to
Pledgor, against receipt and without recourse to or warranty by the Collateral
Agent, such of the Pledged Collateral to be released (in the case of a release)
as may be in possession of the Collateral Agent and as shall not have been sold
or otherwise applied pursuant to the terms hereof, and, with respect to any
other Pledged Collateral, proper documents and instruments (including UCC-3
termination statements or releases) acknowledging the termination hereof or the
release of such Pledged Collateral, as the case may be.
SECTION 12.7 Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision hereof, nor consent to
any departure by any Pledgor therefrom, shall be effective unless the same shall
be made in accordance with the terms of the Credit Agreement and unless in
writing and signed by the Collateral Agent. Any amendment, modification or
supplement of or to any provision hereof, any waiver of any provision hereof and
any consent to any departure by any Pledgor from the terms of any provision
hereof shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement or any other Loan Document, no notice to or demand on any Pledgor
in any case shall entitle any Pledgor to any other or further notice or demand
in similar or other circumstances.
-xli-
SECTION 12.8 Notices. Unless otherwise provided herein or in the Credit
Agreement, any notice or other communication herein required or permitted to be
given shall be given in the manner and become effective as set forth in the
Credit Agreement, as to any Pledgor, addressed to it at the address of the
Borrower set forth in the Credit Agreement and as to the Collateral Agent,
addressed to it at the address set forth in the Credit Agreement, or in each
case at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this
Section 12.8.
SECTION 12.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS EXCEPT TO
THE GREATEST EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR ITEM OR TYPE OF
PLEDGED COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF CALIFORNIA.
SECTION 12.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF
JURY TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR WITH RESPECT TO
THIS AGREEMENT MAY BE BROUGHT IN ANY CALIFORNIA STATE COURT OR FEDERAL COURT OF
THE UNITED STATES OF AMERICA SITTING IN THE CITY OF SAN FRANCISCO, AND ANY
APPELLATE COURT OF ANY THEREOF, AND BY EXECUTION AND DELIVERY HEREOF, EACH
PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. EACH PLEDGOR AGREES THAT SERVICE OF PROCESS IN ANY
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO BORROWER
AT ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF
WHICH THE COLLATERAL AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. IF ANY
AGENT APPOINTED BY ANY PLEDGOR REFUSES TO ACCEPT SERVICE, SUCH PLEDGOR HEREBY
AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT TO BRING PROCEEDINGS
AGAINST ANY PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION. THE PLEDGORS HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 12.11 Severability of Provisions. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
-xlii-
SECTION 12.12 Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
SECTION 12.13 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or Federal,
that are applicable to the transaction of which this Agreement is a part. All
agreements between the Pledgors and the Collateral Agent whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited so
that in no contingency or event whatsoever shall the amount paid or agreed to be
paid by the Pledgors for the use, forbearance or detention of the money to be
loaned under the Credit Agreement, any Interest Rate Protection Agreement, the
Hedging Agreements, the Cash Management Agreements or any other Loan Document,
or for the payment or performance of any covenant or obligation contained herein
or in the Credit Agreement, any Interest Rate Protection Agreement, the Hedging
Agreements, the Cash Management Agreements or any other Loan Document, exceed
the maximum amount permissible under applicable Federal or state usury laws. If
under any circumstances whatsoever fulfillment of any such provision, at the
time performance of such provision shall be due, shall involve exceeding the
limit of validity prescribed by law, then the obligation to be fulfilled shall
be reduced to the limit of such validity. If under any circumstances the
Pledgors shall have paid an amount deemed interest by applicable law, which
would exceed the highest lawful rate, such amount that would be excessive
interest under applicable usury laws shall be applied to the reduction of the
principal amount owing in respect of the Secured Obligations and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal and any other amounts due hereunder, the excess shall be refunded to
the Pledgors. All sums paid or agreed to be paid for the use, forbearance or
detention of the principal under any extension of credit by the Collateral Agent
shall, to the extent permitted by applicable law, and to the extent necessary to
preclude exceeding the limit of validity prescribed by law, be amortized,
prorated, allocated and spread from the date hereof until payment in full of the
Secured Obligations so that the actual rate of interest on account of such
principal amounts is uniform throughout the term hereof.
SECTION 12.14 Business Days. In the event any time period or any date
provided in this Agreement ends or falls on a day other than a Business Day,
then such time period shall be deemed to end and such date shall be deemed to
fall on the next succeeding Business Day, and performance herein may be made on
such Business Day, with the same force and effect as if made on such other day.
SECTION 12.15 Relationship. The relationship of Collateral Agent to
each of the Pledgors hereunder is strictly and solely that of lender to borrower
and secured party to pledgor, and nothing contained in the Credit Agreement,
this Agreement, any Interest Rate Protection Agreement, the Hedging Agreements,
the Cash Management Agreements or any other document or instrument now existing
and delivered in connection therewith or otherwise in connection with the
Secured Obligations is intended to create, or shall in any event or under any
circumstance be construed as creating a partnership, joint venture,
tenancy-in-common, joint tenancy or other relationship of any nature whatsoever
between Collateral Agent and each of the Pledgors other than as lender and
borrower and mortgagee and mortgagor.
-xliii-
SECTION 12.16 Waiver of Stay. Each Pledgor agrees that in the event
that such Pledgor or any property or assets of such Pledgor shall hereafter
become the subject of a voluntary or involuntary proceeding under the Bankruptcy
Code or such Pledgor shall otherwise be a party to any Federal or state
bankruptcy, insolvency, moratorium or similar proceeding to which the provisions
relating to the automatic stay under Section 362 of the Bankruptcy Code or any
similar provision in any such law is applicable, then, in any such case, whether
or not the Collateral Agent has commenced foreclosure proceedings under this
Agreement, the Collateral Agent shall be entitled to relief from any such
automatic stay as it relates to the exercise of any of the rights and remedies
(including, without limitation, any foreclosure proceedings) available to the
Collateral Agent as provided in this Agreement or in any other Loan Document.
SECTION 12.17 No Credit for Payment of Taxes or Imposition. Such
Pledgor shall not be entitled to any credit against the principal, premium, if
any, or interest payable under the Credit Agreement, and such Pledgor shall not
be entitled to any credit against any other sums which may become payable under
the terms thereof or hereof, by reason of the payment of any Tax on the Pledged
Collateral or any part thereof
SECTION 12.18 No Claims Against Collateral Agent. Nothing contained in
this Agreement shall constitute any consent or request by the Collateral Agent,
express or implied, for the performance of any labor or services or the
furnishing of any materials or other property in respect of the Pledged
Collateral or any part thereof, nor as giving any Pledgor any right, power or
authority to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against the Collateral Agent in respect thereof
or any claim that any Lien based on the performance of such labor or services or
the furnishing of any such materials or other property is prior to the Lien
hereof.
SECTION 12.19 Obligations Absolute. All obligations of each Pledgor
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Pledgor or any other
Loan Party;
(ii) any lack of validity or enforceability of the Credit
Agreement, any Interest Rate Protection Agreement, the Hedging Agreements, the
Cash Management Agreements, any Letter of Credit or any other Loan Document, or
any other agreement or instrument relating thereto;
(iii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or any consent to any departure from the Credit Agreement, any
Interest Rate Protection Agreement, the Hedging Agreements, the Cash Management
Agreements, any Letter of Credit or any other Loan Document, or any other
agreement or instrument relating thereto;
(iv) any pledge, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any departure
from any guarantee, for all or any of the Secured Obligations;
-xliv-
(v) any exercise, non-exercise or waiver of any right, remedy,
power or privilege under or in respect hereof, any Interest Rate Protection
Agreement, the Hedging Agreements, the Cash Management Agreements or any other
Loan Document except as specifically set forth in a waiver granted pursuant to
the provisions of Section 12.7 hereof; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Pledgor.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the Pledgors and the Collateral Agent have
caused this Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
SOLA INTERNATIONAL INC.,
as Pledgor
By: ___________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Collateral Agent
By: ___________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
-xlvi-
EXHIBIT 1
FORM OF
ISSUER ACKNOWLEDGMENT
The undersigned hereby (i) acknowledges receipt of a copy of that
certain Amended and Restated Security Agreement dated as of October 28, 2002 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Security Agreement"; capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Security
Agreement), among Sola International Inc. (the "Borrower"), the Guarantors from
time to time party thereto, Union Bank of California, N.A., as Collateral Agent
(in such capacity and together with any successors in such capacity, the
"Collateral Agent"), and the Lenders, (ii) agrees promptly to note on its books
the security interests granted to the Collateral Agent and confirmed under the
Security Agreement (iii) agrees that after it has received notice of an Event of
Default it will comply with instructions of the Collateral Agent with respect to
the applicable Securities Collateral without further consent by the applicable
Pledgor, (iv) agrees to notify the Collateral Agent upon obtaining knowledge of
any interest in favor of any Person in the applicable Securities Collateral that
is adverse to the interest of the Collateral Agent therein and (v) waives any
right or requirement at any time hereafter to receive a copy of the Security
Agreement in connection with the registration of any Securities Collateral
thereunder in the name of the Collateral Agent or its nominee or the exercise of
voting rights by the Collateral Agent or its nominee.
[NAME OF ISSUER]
By: ___________________________
Name:
Title:
EXHIBIT 2
FORM OF
PLEDGE AMENDMENT
This Pledge Amendment, dated as of [_____________, ______] is delivered
pursuant to Section 6.1 of that certain Amended and Restated Security Agreement
dated as of October ___, 2002 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Security Agreement"; capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Security Agreement), among the undersigned, the Borrower, the
Guarantors from time to time party thereto, Union Bank of California, N.A., as
Collateral Agent (in such capacity and together with any successors in such
capacity, the "Collateral Agent"), and the Lenders. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Security Agreement and
that the Pledged Securities and/or Intercompany Notes listed on this Pledge
Amendment shall be deemed to be and shall become part of the Pledged Collateral
and shall secure all Secured Obligations.
_______________________________
as Pledgor
By: ___________________________
Name:
Title:
PLEDGED SECURITIES
PERCENTAGE OF
NUMBER ALL ISSUED CAPITAL
CLASS OF PAR CERTIFICATE OF OR OTHER EQUITY
ISSUER STOCK VALUE NO(S). SHARES INTERESTS OF ISSUER
------ ----- ----- ------ ------ -------------------
PLEDGED INTERCOMPANY NOTES
PRINCIPAL DATE OF INTEREST MATURITY
ISSUER AMOUNT ISSUANCE RATE DATE
------ ------ -------- ---- ----
EXHIBIT 3
FORM OF
JOINDER AGREEMENT
[Name of New Pledgor]
[Address of New Pledgor]
[Date]
[Name and Address
of Collateral Agent]
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Security
Agreement dated as of October ___, 2002 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Security Agreement";
capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Security Agreement), among Sola International Inc.
(the "Borrower"), each of the Guarantors listed on the signature pages thereto
or from time to time party thereto by execution of a joinder agreement, Union
Bank of California, N.A., as Collateral Agent (in such capacity and together
with any successors in such capacity the "Collateral Agent"), and the Lenders.
This letter supplements the Security Agreement and is delivered by the
undersigned, ______________ (the "New Pledgor"), pursuant to Section 3.5 of the
Security Agreement. The New Pledgor hereby agrees to be bound as a Guarantor and
as a Pledgor by all of the terms, covenants and conditions set forth in the
Security Agreement to the same extent that it would have been bound if it had
been a signatory to the Security Agreement on the execution date of the Security
Agreement. The New Pledgor hereby makes each of the representations and
warranties and agrees to each of the covenants applicable to the Pledgors
contained in the Security Agreement.
Attached hereto are supplements to each of the schedules to the
Security Agreement with respect to the New Pledgor. Such supplements shall be
deemed to be part of the Security Agreement.
This agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same agreement.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, EXCLUDING (TO THE
GREATEST EXTENT PERMITTED BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the New Pledgor has caused this letter agreement to
be executed and delivered by its duly authorized officer as of the date first
above written.
[NEW PLEDGOR]
By: _______________________________
Name:
Title:
AGREED TO AND ACCEPTED:
UNION BANK OF CALIFORNIA, N.A.,
as Collateral Agent
By: ________________________
Name:
Title:
[Schedules to be attached]
EXHIBIT 4
FORM OF
LOCKBOX AGREEMENT
LOCKBOX AGREEMENT (the "Agreement"), dated as of [_____, ___] by and
among [_______], a [_______], ("Pledgor"), Union Bank of California, N.A., as
pledgee, assignee and secured party, in its capacity as agent (in such
capacities, "Collateral Agent") for the financial institutions (the "Lenders")
from time to time party to the Credit Agreement (as hereinafter defined), and
[_______] (the "Bank").
RECITALS:
A. Pursuant to that certain Amended and Restated Credit
Agreement, dated as of October ___, 2002 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement), by and among [Pledgor (the
Company")]*, the Lenders party thereto, Collateral Agent as administrative
agent, collateral agent and sole lead arranger, the Lenders have agreed to (i)
make to or for the account of [Pledgor or the Company] * certain Revolving Loans
up to an aggregate principal amount of [____________] and (ii) issue certain
Letters of Credit at the request of [Pledgor or the Company].*
B. In connection with the Credit Agreement, [Pledgor or the
Company]* and each of the other Loan Parties [, including Pledgor,]** has
granted to Collateral Agent, for its benefit and the benefit of the Lenders, a
security interest in their present and future Accounts, and the Proceeds (as
hereinafter defined) thereof, and the Loan Parties[, including Pledgor,]** have
agreed that all collections and proceeds of such Accounts shall be remitted in
kind to Collateral Agent.
C. Pledgor has agreed to instruct all account debtors on the
Accounts of Pledgor to remit to lockboxes established by Pledgor all payments to
be made to Pledgor by checks or other drafts.
D. Pledgor has agreed to deposit in an account at the Bank all
collections and proceeds of the Accounts (subject to the provisions of the Loan
Documents) received in United States currency.
---------------------------
* Insert "Pledgor" in the case of the Lockbox Agreement executed by the
Company and "the Company" in the case of each Lockbox Agreement executed by
any other Credit Party.
* * Delete bracketed language in the case of the Lockbox Agreement executed
by the Company; delete brackets in the case of Lockbox Agreements executed
by any other Credit Party.
E. Collateral Agent and Pledgor desire to use the lockbox service
of the Bank and the Bank is willing to provide such service for Pledgor and
Collateral Agent commencing as of
AGREEMENT:
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Post Office Box. The Bank will rent P.O. Box [ ] (the
"Bank Lockbox") of the post office located at [ ] in the name of Pledgor. All
account debtors on the Accounts of Pledgor have been, or will be, instructed
to mail their remittances to the Bank Lockbox.
Section 2. Access to Mail. The Bank will have exclusive and
unrestricted access to the Bank Lockbox and will have complete and exclusive
authority to receive, pick up and open all regular, registered, certified or
insured mail addressed to the Bank Lockbox. On written demand of Collateral
Agent, the Bank shall cease its processing of such mail, and shall release the
same, in kind, to Collateral Agent, without the prior consent of Pledgor, and
Collateral Agent shall thereafter process said mail promptly in accordance with
this agreement. The Bank shall not inquire into Collateral Agent's right to make
such a demand under any agreement among Collateral Agent, Lenders and Pledgor,
and shall be forever released of all obligations with respect to said
remittances upon release to Collateral Agent. Pledgor shall have no control
whatsoever over any mail, checks, money orders, collections or other forms of
remittances received in any Lockbox. Appropriate instructions have been, or will
be, given by the Bank to the United States Post Office where the Bank Lockbox is
maintained, and such instructions shall not be revoked without the prior written
consent of Collateral Agent. Except as permitted under Section 3 below, any
instruction given to the Bank by Pledgor without the prior written agreement of
Collateral Agent shall be void and of no force or effect. All mail addressed to
the Bank Lockbox will be picked up by the Bank according to its regular
collection schedule.
Section 3. Remittance Collection. On the day received, the Bank will
open all mail addressed to the Bank Lockbox and remove and inspect the
enclosures. All checks, money orders and other forms or orders for the payment
of money and other collection remittances (hereinafter collectively referred to
as "checks") shall be processed by the Bank as follows:
(i) Missing Date. All undated checks will be dated by the Bank as
of the postmark date and processed as hereafter provided.
(ii) Postdated. Checks postdated up to three days from date of
receipt shall be processed on the date indicated on the check. The Bank
shall not deposit checks postdated more than three days, but shall notify
Collateral Agent by telephone of such checks and follow Collateral Agent's
instructions for disposition of such checks.
(iii) Stale Date. Checks dated six months or more prior to the date
of collection will not be deposited and shall be sent to Collateral Agent.
(iv) Different Amount. Where written and numeric amounts differ,
a check will be processed by the Bank only if the correct amount can be
determined from the accompanying documents, otherwise the check will not be
deposited and shall be sent to Collateral Agent.
(v) Signature Missing. Checks which do not bear the drawer's
signature and do not indicate the drawer's identity will not be deposited
but shall be sent to Collateral Agent. If, as determined by the Bank, the
drawer can be identified from the face of the check, the Bank will deposit
and process the check by affixing a stamped impression requesting the
drawer bank to contact the drawer for authority to pay.
(vi) Alterations and Restrictions. Checks with alterations and
checks bearing restrictive notations such as "Payment in Full" will not be
deposited, and the Bank shall notify Collateral Agent of such checks by
telephone on the day of receipt and will deposit, hold or forward such
checks with accompanying written matter, if any, as requested by Collateral
Agent.
(vii) Foreign Banks and Currency. Checks drawn in foreign currency
will be processed in accordance with the Bank's normal procedure for such
checks and Collateral Agent will be notified by telephone of any such
checks on the date received by the Bank.
(viii) Instruments or Other Payments. Instruments evidencing, or
other forms of payment in respect of, the Accounts, will be processed in
accordance with the Bank's normal procedure, and the Bank shall notify
Collateral Agent of such Instruments or other forms of payment by telephone
on the day of receipt and will hold or forward such Instruments or other
forms of payment with accompanying written matter, if any, as requested by
Collateral Agent.
To the extent requested by Collateral Agent, Pledgor shall assist and instruct
Collateral Agent in connection with the orderly and expeditious processing of
the checks described in clauses (i)-(vii). Any items which Collateral Agent has
specifically instructed the Bank in writing not to process will not be deposited
and shall be sent to Collateral Agent.
Section 4. Processing Acceptable Checks. All checks, except those not
acceptable for deposit under the terms hereof, shall be deposited on the day of
receipt by the Bank to Account No. [______] at the Bank (the "Collection
Account"), which is an account owned and controlled exclusively by Collateral
Agent, and all such checks shall be endorsed as follows:
credited to account number [_________];
absence of endorsement hereby supplied and guaranteed by [Lockbox Bank]
Any available funds in the Collection Account will be wired no later
than 2:00 p.m. (New York time) each Business Day with the following
instructions:
[ ]
ABA[ ]
for [ ]
[ ]
Acct. No. [ ]
Attn: [ ]
Ref.: [Loan Party]
All remittance advices, envelopes, and written matter (except as expressly
provided herein) received in the Bank Lockbox together with photocopies of all
checks shall be sent to Pledgor and, if requested by Collateral Agent, copies of
same shall be sent to Collateral Agent. The Bank shall mail both a deposit
advice for all deposits to the Collection Account, on a daily basis, and a
statement of account, on a monthly basis, to both Collateral Agent and Pledgor
and, if no deposit is made on a Bank business day, a deposit advice, correctly
dated, will be sent to Collateral Agent and Borrower with the notation "No
Deposit" appearing thereon.
Section 5. Returned Checks. Checks deposited in the Collection Account
which are returned unpaid because of "Insufficient Funds," "Uncollected Funds,"
etc. will be redeposited by the Bank only once. If a returned check exceeds
$10,000 the Bank shall also telephone Pledgor for further instructions
on the day such check is received. If redeposit is not warranted for reasons
such as "account closed" or "payment stopped" or if a check is returned a second
time, the Bank will send a debit advice with the item to Pledgor with copies of
same to Collateral Agent.
Section 6. Remittance Received by Pledgor. Remittances which are sent
directly to or received by Pledgor shall be forwarded to the Bank Lockbox on
the day received.
Section 7. Record Maintenance. All deposit checks will be microfilmed
(on front and back) by the Bank and retained for five years by the Bank prior to
destruction. Photocopies of filmed items will be provided to Collateral Agent or
Pledgor on request, within the five-year period.
Section 8. Bank Charges. All charges of the Bank for services rendered
pursuant to this Agreement shall be billed to and paid directly by Pledgor. Said
charges shall not be charged against remittances nor shall they be debited to
the Collection Account.
Section 9. No Offset. The Bank hereby agrees that it will treat all
remittances received in the Bank Lockbox in accordance with the terms hereof,
and it will not, directly or indirectly, offset or assert any claim against the
Bank Lockbox or the Collection Account or divert such remittances on account of
any obligations owed to the Bank by Pledgor or by the party making the
remittance, except as provided in Section 5 hereof
Section 10. Bank Liability. In acting under this Agreement, the Bank
shall not be liable to any Lender or Pledgor for any error of judgment, or for
any act done or step taken or omitted by it in good faith, except for gross
negligence or willful misconduct.
Section 11. Term. This Agreement shall continue in full force and
effect until termination by the Bank on 60 days' prior written notice to all
other parties. Collateral Agent may terminate this Agreement at any time, which
termination shall be effective on receipt of written notice by the Bank, and in
the event of such termination, Collateral Agent shall at its option have the
sole right to remove mail from the Bank Lockbox. Pledgor shall have no right to
unilaterally terminate this Agreement.
Section 12. Definitions. The following terms shall have the following
meanings. All such definitions shall be equally applicable to the singular and
plural forms of the terms defined.
"Instruments" shall mean, collectively, with respect to each Pledgor,
all "instruments," as such term is defined in the UCC, and in any event shall
include, without limitation, all promissory notes, drafts, bills of exchange or
acceptances.
"Proceeds" shall mean all "proceeds," as such term is defined in the
UCC, and in any event shall include, without limitation, any and all (i)
proceeds of any insurance (except payments made to a Person which is not a party
to this Agreement), indemnity, warranty, guaranty or claim payable to the
Collateral Agent or to such Pledgor from time to time with respect to any of the
Pledged Collateral, (ii) payments (in any form whatsoever) made or due and
payable to such Pledgor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Pledged Collateral by any Governmental Authority (or any Person acting on behalf
of a Governmental Authority), (iii) instruments representing obligations to pay
amounts in respect of the Pledged Collateral, (iv) products of the Pledged
Collateral and (v) other amounts from time to time paid or payable under or in
connection with any of the Pledged Collateral.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in any applicable jurisdiction.
Section 13. Modification. This Agreement may only be modified by a
writing signed by all of the parties hereto.
Section 14. Notices.
(a) All notices, including phone notice, daily deposit advices,
monthly statements of account and copies of all checks and the documents which
are to be given or sent to Collateral Agent shall be sent to the following
address or transmitted to the following facsimile number, and, where applicable,
given at the following phone number:
Union Bank of California, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: [ ]
Telephone: [ ]
Facsimile: [ ]
(b) All notices to the Bank shall be sent to:
[ ]
[ ]
[ ]
Attention: [ ]
Telephone: [ ]
Facsimile: [ ]
(c) All notices and items which are to be sent to Pledgor shall be
sent to:
Sola International Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: [ ]
Telephone No.: [ ]
or to such other address, telephone number or facsimile number as any such party
may designate for itself by like notice.
Section 15. Pledgor's Agreement. Pledgor agrees that it will indemnify
and hold the Bank harmless from any and all loss, liability, expense or damage
that the Bank may incur in processing lockbox items in accordance with this
Agreement, including, without limitation, any loss that the Bank experiences as
a result of returned items to the extent the balances in the Collection Account
referenced in Section 4 are insufficient to cover such losses, except for any
loss, liability, expense or damage that the Bank may incur as a result of the
Bank's gross negligence or willful misconduct.
Section 16. Limitation on Liability. Collateral Agent and Pledgor
acknowledge that the Bank undertakes to perform only such duties as are
expressly set forth in this Agreement and those which are normally undertaken by
the Bank in connection with lockbox processing. Notwithstanding any other
provision hereof, it is agreed by the parties that the Bank shall not be liable
for any action taken by the Bank or any of its directors, officers, agents or
employees in accordance with this Agreement, except for the Bank's or such
natural person's gross negligence or willful misconduct. In no event shall the
Bank be liable for losses or delays resulting from force majeure, computer
malfunction, interruption of communication facilities, labor difficulties or
other causes beyond its reasonable control or for any indirect, special or
consequential damages.
Section 17. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA, EXCLUDING (TO THE GREATEST EXTENT PERMITTED BY LAW) ANY
RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF CALIFORNIA, AND EXCEPT TO THE EXTENT THAT THE VALIDITY
OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL, ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
Section 18. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF
JURY TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR WITH RESPECT TO
THIS AGREEMENT MAY BE BROUGHT IN ANY CALIFORNIA STATE COURT OR FEDERAL COURT OF
THE UNITED STATES OF AMERICA SITTING IN THE CITY OF SAN FRANCISCO, AND ANY
APPELLATE COURT OF ANY THEREOF, AND BY EXECUTION AND DELIVERY HEREOF, EACH
PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. EACH PLEDGOR AGREES THAT SERVICE OF PROCESS IN ANY
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO BORROWER
AT ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF
WHICH THE COLLATERAL AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO. IF ANY
COLLATERAL AGENT APPOINTED BY ANY PLEDGOR REFUSES TO ACCEPT SERVICE, SUCH
PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT TO
BRING PROCEEDINGS AGAINST ANY PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION.
THE PLEDGORS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 19. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party and all covenants, promises, and agreements
by or on behalf of Pledgor, the Bank or Collateral Agent shall bind and inure to
the benefit of the successors and assigns of Pledgor, the Bank or Collateral
Agent and the Lenders, as the case may be.
Section 20. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties on separate
counterparts and each such counterpart shall for all purposes be deemed an
original, but all such counterparts shall together constitute but one and the
same agreement. Pledgor, the Bank and Collateral Agent hereby acknowledge
receipt of a true, correct, and complete counterpart hereof.
Section 21. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 22. Headings. The section headings in this Agreement are
inserted for convenience of reference and shall not be considered a part hereof
or used in its interpretation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the day and year first
above written.
[________________________]
as Pledgor
By: ______________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Collateral Agent
By: _____________________________
Name:
Title:
[________________________]
as Bank
By: _____________________________
Name:
Title:
EXHIBIT 5
EXISTING ISSUER OBLIGATIONS
All of the obligations owed to ABN-AMRO BANK under foreign exchange or
hedging agreements existing as of the date of this Agreement and
disclosed to Collateral Agent.
EXHIBIT H
FORM OF
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (this "Agreement") dated as of [ ], among SOLA
INTERNATIONAL INC., a Delaware corporation (the "Borrower"), [INSERT NAME OF
GUARANTOR], (the "Guarantor") and UNION BANK OF CALIFORNIA, N.A., as collateral
agent (in such capacity, the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to that certain Amended and Restated Credit
Agreement dated as of October 28, 2002 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among the Borrower, the Lenders (as defined in Article I thereof), UNION BANK OF
CALIFORNIA, N.A., as Sole Lead Arranger, as an Issuing Bank, as Administrative
Agent, and as Collateral Agent for the Lenders. Capitalized terms used and not
defined herein (including, without limitation, the term "Obligations," as used
in Section 1 and elsewhere herein) are used with the meanings assigned to such
terms in the Credit Agreement.
The Lenders have agreed to make Revolving Loans to the Borrower, and
the Issuing Bank has agreed to issue Letters of Credit for the account of the
Borrower, in each case pursuant to, and upon the terms and subject to the
conditions specified in, the Credit Agreement. The Guarantor is a Subsidiary of
the Borrower and acknowledges that it has derived and will derive substantial
benefit from the making of the Revolving Loans by the Lenders to the Borrower
and the issuance of the Letters of Credit by the Issuing Bank for the account of
the Borrower. As consideration therefor and in order to induce the Lenders to
make Revolving Loans and the Issuing Bank to issue Letters of Credit, the
Guarantor is willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. The Guarantor unconditionally guarantees,
jointly with any other guarantors of the Obligations under the Credit Agreement
and other Loan Documents (the "Other Guarantors") and severally, as a primary
obligor and not merely as a surety, the due and punctual payment of the
Obligations. The Guarantor waives notice of and hereby consents to any
agreements or arrangements whatsoever by the Secured Parties with any other
person pertaining to the Obligations, including agreements and arrangements for
payment, extension, renewal, subordination, composition, arrangement, discharge
or release of the whole or any part of the Obligations, or for the discharge or
surrender of any or all security, or for the compromise, whether by way of
acceptance of part payment or otherwise, and the same shall in no way impair the
Guarantor's liability hereunder.
SECTION 2. Obligations Not Waived. To the fullest extent permitted
by applicable law, the Guarantor waives presentment to, demand of payment from
and protest to the Borrower or any other person of any of the Obligations, and
also waives notice of acceptance of its guarantee, notice of protest for
nonpayment and all other formalities. To the fullest extent permitted by
applicable law, the obligations of the Guarantor hereunder shall not be affected
by
(a) the failure of any Loan Party to assert any claim or demand or to enforce or
exercise any right or remedy against the Borrower or any Other Guarantor under
the provisions of the Credit Agreement, any other Loan Document or otherwise;
(b) any extension, renewal or increase of or in any of the Obligations; (c) any
rescission, waiver, amendment or modification of, or any release from, any of
the terms or provisions of this Agreement, the Credit Agreement, any other Loan
Document, any guarantee or any other agreement or instrument, including with
respect to any Other Guarantor under the Loan Documents; (d) the release of (or
the failure to perfect a security interest in) any of the security held by or on
behalf of the Collateral Agent or any other Secured Party; or (e) the failure or
delay of any Secured Party to exercise any right or remedy against the Borrower
or any Other Guarantor of the Obligations.
SECTION 3. Security. The Guarantor authorizes the Collateral Agent
to (a) take and hold security for the payment of this Guarantee and the
Obligations and exchange, enforce, waive and release any such security; (b)
apply such security and direct the order or manner of sale thereof as it in its
sole discretion may determine subject to the terms of any other Loan Documents;
and (c) release or substitute any one or more endorsees, other guarantors or
other obligors. In no event shall this Section 3 require any Guarantor to grant
security, except as required by the terms of the Loan Documents.
SECTION 4. Guarantee of Payment. The Guarantor further agrees that
its guarantee constitutes a guarantee of payment when due and not of collection,
and waives any right to require that any resort be had by the Collateral Agent
or any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or any
other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The
obligations of the Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense (other than a defense of payment) or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of the
Guarantor hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Collateral Agent or any other Secured Party to assert any
claim or demand or to enforce any remedy under the Credit Agreement, any other
Loan Document, any guarantee or any other agreement or instrument, by any
amendment, waiver or modification of any provision of the Credit Agreement or
any other Loan Document or other agreement or instrument, by any default,
failure or delay, willful or otherwise, in the performance of the Obligations,
or by any other act, omission or delay to do any other act that may or might in
any manner or to any extent vary the risk of the Guarantor or that would
otherwise operate as a discharge of the Guarantor as a matter of law or equity
(other than the indefeasible payment in full in cash of all the Obligations) or
which would impair or eliminate any right of the Guarantor to subrogation.
SECTION 6. Defenses Waived. To the fullest extent permitted by
applicable law, the Guarantor waives any defense based on or arising out of the
unenforceability of the Obligations or any part thereof from any cause or the
cessation from any cause of the liability (other than the
2
final and indefeasible payment in full in cash of the Obligations) of the
Borrower or any other person. The Collateral Agent and the other Secured Parties
may, at their election, foreclose on any security held by one or more of them by
one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of the Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. Pursuant to applicable law,
the Guarantor waives any defense arising out of any such election even though
such election operates, pursuant to applicable law, to impair or to extinguish
any right of reimbursement or subrogation or other right or remedy of the
Guarantor against the Borrower or any other guarantor or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against the Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash an amount equal to the
unpaid principal amount of such Obligations then due, together with accrued and
unpaid interest and fees on such Obligations. Upon payment by the Guarantor of
any sums to the Collateral Agent or any Secured Party as provided above, all
rights of the Guarantor against the Borrower arising as a result thereof by way
of right of subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations. In addition, any
indebtedness of the Borrower or any Subsidiary now or hereafter held by the
Guarantor is hereby subordinated in right of payment to the prior payment in
full of the Obligations. If any amount shall be paid to the Guarantor on account
of (i) such subrogation, contribution, reimbursement, indemnity or similar right
or (ii) any such indebtedness at any time when any Obligation then due and owing
has not been paid, such amount shall be held in trust for the benefit of the
Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. General Limitation on Guarantee Obligations. In any
action or proceeding involving any state corporate law, or any state, Federal or
foreign bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of the Guarantor under this Agreement
would otherwise be held or determined to be void, voidable, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under this Agreement, then, notwithstanding any
other provision to the contrary, the amount of such liability shall, without any
further action by the Guarantor, any creditor or any other Person, be
automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding.
SECTION 9. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, all other circumstances
3
bearing upon the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that the Guarantor assumes and incurs hereunder and agrees
that none of the Collateral Agent or the other Secured Parties will have any
duty to advise the Guarantor of information known to it or any of them regarding
such circumstances or risks.
SECTION 10. Representations and Warranties. The Guarantor represents
and warrants as to itself that all representations and warranties relating to it
contained in the Credit Agreement are true and correct.
SECTION 11. Termination. The Guarantees made hereunder (a) shall
terminate when (i) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on all Revolving Loans; (ii) each payment required
to be made under the Credit Agreement in respect of any Letter of Credit; and
(iii) all other Obligations then due and owing, have in each case been
indefeasibly paid in full and the Lenders have no further commitment to lend
under the Credit Agreement, the L/C Exposure has been reduced to zero and the
Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement and (b) shall continue to be effective or be reinstated, as the
case may be, if at any time any payment, or any part thereof, on any Obligation
is rescinded or must otherwise be restored by any Secured Party upon the
bankruptcy or reorganization of the Borrower, the Guarantor or otherwise.
SECTION 12. Binding Effect; Several Agreement; Assignments;
Releases. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the
Guarantor that are contained in this Agreement shall bind and inure to the
benefit of each party hereto and their respective successors and assigns. This
Agreement shall become effective as to the Guarantor when a counterpart hereof
executed on behalf of the Guarantor shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon the Guarantor and the
Collateral Agent and their respective successors and assigns, and shall inure to
the benefit of the Guarantor, the Collateral Agent and the other Secured
Parties, and their respective successors and assigns, except that neither the
Borrower nor the Guarantor shall have the right to assign its rights or
obligations hereunder or any interest herein (and any such attempted assignment
shall be void) without the prior written consent of the Required Lenders. The
Collateral Agent is hereby expressly authorized to, and agrees upon request of
the Borrower that it will, release the Guarantor from its obligations hereunder
in the event that all the capital stock of the Guarantor shall be sold,
transferred or otherwise disposed of to a person that is not an Affiliate of the
Borrower in a transaction permitted by Section 6.05 of the Credit Agreement.
SECTION 13. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this
4
Agreement or consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on the Guarantor in any
case shall entitle the Guarantor to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Borrower, the Guarantor and the Collateral Agent (with the consent of the
Lenders if required under the Credit Agreement).
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 15. Notices. All communications and notices hereunder shall
be in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to the Guarantor shall be given to it at
its address set forth in Schedule 1 hereof with a copy to the Borrower.
SECTION 16. Survival of Agreement; Severability.
(a) All covenants, agreements, representations and warranties made
by the Borrower and the Guarantor herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied
upon by the Collateral Agent and the other Secured Parties and shall survive the
making by the Lenders of the Revolving Loans and the issuance of the Letters of
Credit by the Issuing Bank regardless of any investigation made by the Secured
Parties or on their behalf, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Loan or any other fee or
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid, the L/C Exposure does not equal zero or the Commitments and the L/C
Commitment have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 12 hereof. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.
5
SECTION 18. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 19. Jurisdiction; Consent to Service of Process.
(a) The Guarantor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any California
State court or Federal court of the United States of America sitting in the City
of San Francisco, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding maybe heard and determined in such
California State court or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Guarantor or
its properties in the courts of any jurisdiction.
(b) The Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any California State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15 hereof. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 20. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.
SECTION 21. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Secured Party is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time
6
or demand, provisional or final) at any time held and other Indebtedness at any
time owing by such Secured Party to or for the credit or the account of the
Guarantor against any or all the obligations of the Guarantor now or hereafter
existing under this Agreement and the other Loan Documents held by such Secured
Party, irrespective of whether or not the Collateral Agent or any Secured Party
shall have made any demand under this Agreement or any other Loan Document and
although such obligations may be unmatured. The rights of each Secured Party
under this Section 21 are in addition to other rights and remedies (including
other rights of setoff) which such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SOLA INTERNATIONAL INC.,
a Delaware corporation
as Borrower
By:
Name:
Title:
[INSERT NAME OF GUARANTOR],
as Guarantor
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Collateral Agent
By:
Name:
Title:
7
EXHIBIT H
SCHEDULE 1
TO THE GUARANTEE AGREEMENT
Guarantor Address
Attention:
(Fax No.: ( ) )
with copies to:
Attention:
(Fax No.: ( ) )
EXHIBIT I-1
FORM OF
OPINION OF ▇▇▇▇▇▇▇, CARTON & ▇▇▇▇▇▇▇
October 29, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇.▇., as
Sole Lead Arranger, Administrative
Agent and Collateral Agent
The Lenders (each as defined in the
Credit Agreement referred to
below)
Re: Amended and Restated Credit Agreement dated as of October 28, 2002
(the "Credit Agreement") by and among Sola International Inc. (the
"Borrower"), the Lenders signatory thereto (the "Lenders"), Union
Bank of California, N.A., as sole lead arranger, administrative
agent and collateral agent (the "Collateral Agent")
Ladies and Gentlemen:
We have acted as counsel to the Borrower in connection with the negotiation
and documentation of the Credit Agreement. This opinion is being delivered
pursuant to Section 4.02(c) of the Credit Agreement. All capitalized terms used
but not defined herein shall have the meanings assigned thereto in the Credit
Agreement. All other capitalized terms used without definition in this opinion
have the meanings given to them in the Uniform Commercial Code (the "Code") as
adopted and in effect in the State of Incorporation.
In connection with the delivery of this opinion, we have examined
originals, or copies certified or otherwise identified to our satisfaction, of
the documents set forth below. Except as otherwise noted, all of the following
documents are dated as of October 28, 2002:
(i) the Credit Agreement;
(ii) the Revolving Notes of the Borrower payable to the order of each
Lender in the original amount of its Commitment (the "Notes");
(iii) the Amended and Restated Security Agreement by Borrower in favor of
the Collateral Agent (the "Security Agreement");
(iv) UCC-1 Financing Statement listed on Schedule A hereto describing
certain personal property of the Borrower and naming Borrower as
debtor and the Collateral Agent as secured party (the "Financing
Statement");
(v) the Certificate of Incorporation of the Borrower certified by the
Secretary of State of Delaware (the "State of Incorporation") as of
October 23, 2002 and certified to us by an officer of the Borrower
as being complete and in full force and effect as of the date of
this opinion (the "Certificate of Incorporation");
(vi) the By-laws of the Borrower certified to us by an officer of the
Borrower as being complete and in full force and effect as of the
date of this opinion (the "By-laws");
(vii) a certificate of Good Standing relating to the Borrower issued by
the Delaware Secretary of State; and
(viii) foreign corporation good standing or similar certificates related
to the Borrower issued by each of the States of Florida, Missouri,
Ohio, Pennsylvania, Rhode Island, Texas, Virginia and West
Virginia.
The documents referenced in items (i) through (iii) above are collectively
referred to herein as the "Loan Documents". The documents referenced in items
(iii) and (iv) above are collectively referred to herein as the "Security
Documents".
Our opinion as expressed in Opinion 1 as to the good standing of the
Borrower under the laws of the states specified is based solely upon
certificates of good standing from each of such jurisdictions and we have made
no additional investigation with respect to the status of the Borrower in such
jurisdictions either before or after the respective dates of such certificates.
We have also examined originals, executed counterparts or copies of such
other agreements, company records, instruments and certificates, certificates of
public authorities and such matters of law as we have deemed necessary for the
purpose of rendering this opinion. To the extent we deemed necessary for
purposes of this opinion, we have relied upon (i) the statements and
representations of officers of the Borrower as to factual matters, (ii) the
corporate records provided to us by such officers, and (iii) certificates and
other documents obtained from public officials. We have further relied as to
factual matters on the representations and warranties contained in the Loan
Documents and we have assumed the completeness and accuracy of all such
representations and warranties as to factual matters. We express no opinion
herein as to the enforceability of the choice of law provisions of the Loan
Documents. As to matters of enforceability, it is our understanding that you are
relying on the opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fields Claman Machtinger & ▇▇▇▇▇▇▇▇
LLP dated of even date herewith. To the extent that laws of the State of
California are applicable, this opinion is subject to the same exceptions,
assumptions, qualifications and other limitations as set forth in the opinion of
▇▇▇▇▇▇▇▇▇ Glusker Fields Claman Machtinger & ▇▇▇▇▇▇▇▇ LLP.
We have assumed the genuineness of all signatures, the legal capacity of
all individuals who have executed the Loan Documents and all other documents we
have reviewed, the authenticity of all documents submitted to us as originals
and the conformity to original documents of all documents submitted to us as
certified, photostatic, reproduced or conformed copies. We have also assumed
that the Loan Documents have been duly authorized, executed and delivered by
each of the parties thereto (other than the Borrower as to due authorization)
and
2
are enforceable in accordance with their terms against the parties thereto and
that the execution and delivery of the Loan Documents by each of the parties
thereto (other than the Borrower) and the performance of their respective
obligations thereunder do not and will not result in a breach of, or constitute
a default under, any agreement, instrument or other document to which such party
is a party or any order, judgment, writ or decree applicable to such party or to
which such party's property is subject.
We confirm that we do not have knowledge of any fact or circumstance that
has caused us to conclude that our reliance and assumptions cited in the two
immediately preceding paragraphs are unwarranted.
Whenever our opinion with respect to factual matters is indicated to be
based on our knowledge, we are referring to the actual knowledge of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Borders, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, who are all of the ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇ attorneys who
have represented the Borrower in connection with the transactions contemplated
by the Credit Agreement. Except as expressly set forth herein, we have not
undertaken any independent investigation to determine the existence or absence
of such facts, and no inference as to our knowledge of the existence or absence
of such facts should be drawn from such representation.
We have also assumed the following:
A. The Lenders have given value pursuant to the Loan Documents.
B. The Borrower has, or has the power to transfer, rights in the personal
property collateral described in the Security Documents.
C. The descriptions of collateral contained in, or attached as schedules
to, the Security Documents (other than the Financing Statement)
sufficiently describe the collateral intended to be covered by the
Security Documents.
D. The Financing Statement will be duly filed in the office of the
Secretary of State of the State of Incorporation in accordance with
the provisions of the Code of the State of Incorporation.
E. The Pledged Securities (as defined in the Security Agreement) are
certificated securities located in the State of Incorporation.
We express no opinion as to the priority of any security interest created,
or purported to be created by any of the Security Documents.
Based upon and subject to our examination as aforesaid and subject to the
assumptions, exceptions and qualifications set forth herein, we are of the
opinion that:
1. The Borrower is a corporation validly existing and in good standing
under the General Corporation Law of the State of Delaware and has the requisite
corporate power and
3
authority to execute and deliver the Loan Documents to which it is a party and
to perform its obligations under such Loan Documents and to own or lease its
property and to carry on its business now conducted. The Borrower is qualified
to do business in and is in good standing in each of the following states:
Florida, Kentucky, Missouri, Ohio, Pennsylvania, Rhode Island, Texas, Virginia
and West Virginia.
2. Each of the Loan Documents has been duly authorized by all necessary
corporate action by the Borrower.
3. The execution and delivery of the Loan Documents by the Borrower and
the performance of its obligations thereunder (i) are not in contravention of
any provisions of the Certificate of Incorporation or By-laws of the Borrower,
(ii) will not result in a breach of, or constitute a default under, or result in
the creation of any lien upon or with respect to any property of the Borrower
(other than any Lien created under the Security Documents) pursuant to the
provisions of, (A) any agreement listed on Schedule 3.10(a) of the Credit
Agreement or (B) any order, writ, judgment or decree known to us, based solely
on discussions with the Borrower, to which the Borrower or its property is
subject, and (iii) do not violate any provision of any applicable federal or
Illinois state statute, rule or regulation which is normally applicable to
transactions of the type contemplated by the Loan Documents. We express no
opinion as to whether the execution and delivery of the Loan Documents by the
Borrower and the performance of its obligations thereunder will constitute a
breach of, or constitute a default under, any covenant or provision with respect
to financial ratios or tests or any aspect of the financial condition or results
of operations of the Borrower contained in an agreement to which the Borrower is
a party. We would also note that certain of the agreements listed on Schedule
3.10(a) of the Credit Agreement are governed by laws other than the laws of the
State of Illinois, and we have assumed, with your permission, that such
agreements are governed by the laws of the State of Illinois for purposes of
rendering our opinion as set forth in clause (A) above.
4. Except for such filings, authorizations or approvals as are
specifically contemplated by the Loan Documents, no authorizations or approvals
of, and no filings with, any governmental or regulatory authority or agency of
the United States or the State of Illinois, are necessary for the execution or
delivery of the Loan Documents by the Borrower or the performance of its
obligations thereunder.
5. A security interest in favor of the Collateral Agent has attached under
the Code in the Pledged Collateral (as defined in the Security Agreement)
described in the Security Documents consisting of personal property to which a
security interest may attach under Article 9 of the Code. Subject to the
appropriate filing of continuation statements relating to the Financing
Statement in accordance with the Code, the Security Agreement is in proper form
under the Code to create a valid security interest in favor of the Collateral
Agent in after acquired Pledged Collateral covered by Article 9 of the Code to
secure Revolving Loans made after the date hereof.
6. The Financing Statement is in proper form for filing in the office of
the Secretary of State of the State of Incorporation and, upon due filing in
such office, the security interest
4
created by the Security Documents in the Pledged Collateral described in the
Financing Statement will be perfected to the extent a security interest can be
perfected in such Pledged Collateral under the Code by the filing of a financing
statement in that office.
7. The security interest in the certificated securities described in the
Security Agreement (the "Pledged Shares") will be a perfected security interest
in the Pledged Shares upon (i) the execution and delivery of the Security
Agreement by all parties to that agreement, (ii) the Collateral Agent taking
possession of the Pledged Shares, and (iii) the Collateral Agent executing and
delivering an acknowledgment to such effect. In reliance on the representations
of the Collateral Agent in the Security Agreement as to the absence of any other
agreements covering the Pledged Shares to which the Collateral Agent is a party,
and assuming the Pledged Shares have been endorsed in blank, in each case by an
effective endorsement, the Collateral Agent has a security interest in the
Pledged Shares.
8. To our knowledge, based solely upon discussion with the Borrower, there
is no pending or overtly threatened action or proceeding before any court,
governmental agency or arbitrator against or directly involving the Borrower or
its Subsidiaries which, in any case, (i) may materially and adversely affect the
financial condition or operation of the Borrower, (ii) seeks to restrain or
would otherwise have a material adverse effect on the transactions contemplated
by the Loan Documents or (iii) would affect the validity or enforceability of
all or any of the Loan Documents.
9. No registration under the Securities Act is required for the execution
or delivery by the Borrower of the Loan Documents or the performance of its
obligations thereunder.
10. Before and after giving effect to the Transactions, the Borrower is not
required to be registered as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Our opinions are further qualified as follows:
(a) Except as set forth in Opinions 5, 6 and 7 above, we express no opinion
as to the creation or perfection of any lien, mortgage or security interest
granted pursuant to the Loan Documents and we express no opinion as to the
priority of any lien, mortgage or security interest granted pursuant to the Loan
Documents. We have further assumed that the name of the secured party shown on
the Financing Statement is correct and the address of the secured party on such
financing statements is an address from which information concerning the
security interest can be obtained. Perfection of a security interest in proceeds
of any collateral may be limited as provided in Section 9-315 of the Code. A
security interest in collateral acquired after the respective dates of the
applicable Security Documents may not attach to such collateral under Bankruptcy
Code Section 552.
(b) We express no opinion as to the enforceability of (i) self-help
provisions, (ii) provisions which purport to establish evidentiary standards,
(iii) provisions relating to waiver of remedies, waiver of right of
reinstatement, disclaimers, liability limitations, releases of legal or
equitable rights, discharge of defenses or waivers of breach of the peace, or
(iv) contribution
5
or indemnification provisions, the enforcement of which may be limited by public
policy considerations.
(c) We express no opinion herein as to the validity or enforceability of
any provision of the Loan Documents which (i) purports to waive trial by jury,
(ii) provides that waivers, consents, amendments or modifications must be in
writing, (iii) purports to confer, waive or consent to the jurisdiction of any
court, (iv) specifies the law intended to govern the Loan Documents, or (v)
provides for reimbursement for attorneys' fees to the extent such attorneys'
fees are not reasonable.
(d) We express no opinion as to the enforceability of any provision
purporting to preserve and maintain the liability of any party despite the fact
that the guaranteed debt is unenforceable.
(e) We express no opinion as to any provision of the Loan Documents
relating to severability, as applied to any portion thereof deemed by a court to
be material.
(f) Except as provided in Opinions 9 and 10 above, we express no opinion
regarding the applicability or effect of or any compliance with any federal or
state antitrust laws, securities laws, environmental laws, ERISA laws, banking
laws, zoning laws, health laws, safety laws, building laws, land use laws,
subdivision laws and the rules and regulations pertaining thereto.
(g) We express no opinion herein as to the validity or enforceability of
any provision of any of the Loan Documents regarding penalties, liquidated
damages, forfeiture or interest on past due interest.
The continued perfection of the security interests created by the Security
Agreement and perfected by the filing of the Financing Statement will depend
upon the filing of periodic continuation statements relating to the Financing
Statement in accordance with the Code and may depend upon (i) the continued
incorporation of the Borrower in the State of Incorporation; and (ii) the
continuation of the Borrower's present corporate name.
The foregoing opinions are limited to the laws and regulations of the
United States, the State of Illinois, the Delaware General Corporation Law, and
the Code of the State of Incorporation (as to the perfection requirements of the
Code of such state) and we have not considered and express no opinion on the
laws or regulations of any other jurisdiction. This opinion is rendered only
with respect to the laws and the regulations thereunder which are in effect as
of the date hereof. Please be advised that no member of this firm is admitted to
practice in the State of Incorporation. In rendering the opinions set forth in
Opinions 5, 6 and 7 of this opinion, insofar as such opinions involve
conclusions under the law of the State of Incorporation, such opinions are based
solely upon our review of Article 9 of the Code as in effect in such state as it
appears in the Secured Transactions Guide published by Commerce Clearing House,
Inc., as updated through July 31, 2002, and we have not reviewed any cases
interpreting such Code. We assume no responsibility for updating this opinion to
take into account any event, action, interpretation or change of law occurring
subsequent to the date hereof that may affect the validity of any of the
opinions expressed herein.
6
This opinion is furnished by us solely for your benefit for use in
connection with the Loan Documents and the transactions contemplated thereby and
it may not be furnished or quoted to, or relied upon by, any other person,
without our prior written consent (except that it may be furnished to any of
your federal, state or local regulators having jurisdiction over you and
entitled to such disclosure and your participants and assigns in accordance with
the terms of the Credit Agreement).
Very truly yours,
FORM OF
OPINION OF ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ FIELDS CLAMAN MACHTINGER & KINESLLA LLP
October 29, 2002
Union Bank of California, N.A.
As Sole Lead Arranger, an Issuing Bank,
Administrative (each as defined in the Credit
Agreement referred to below)
Re: Amended and Restated Credit Agreement dated as of October 28,
2002 (the "Credit Agreement") by and among Sola International
Inc. (the "Borrower"), the Lenders signatory thereto (the
"Lenders"), and Union Bank of California, N.A., as sole leader
arranger, as an Issuing Bank, as Administrative Agent as
Collateral Agent ("UBOC")
Ladies and Gentlemen:
We have acted as special California counsel to the Borrower in connection
with the Credit Agreement. This opinion is being delivered pursuant to Section
4.02 (c) of the Credit Agreement. All capitalized terms used but not otherwise
defined herein shall have the meanings assigned thereto in the Credit Agreement.
In rendering the opinion set forth below we have examined the Credit
Agreement, the Security Agreement and the Revolving Notes. We have also made
such examination of the law as we have deemed necessary for the purposes of this
opinion.
The term "Transaction Documents" is used in this opinion to refer
collectively to the Credit Agreement, the Security Agreement and the Revolving
Notes.
7
We have assumed that (i) each of the Transaction Documents has been duly
authorized, executed and delivered by each of the parties thereto; (ii) each
such party is validly organized and subsisting and in good standing in all
relevant jurisdictions and has all requisite power and authority, and has taken
all necessary action, to enter into the Transaction Documents to which it is a
party and to effect the transactions contemplated thereby; (iii) the Transaction
Documents are binding upon and enforceable against the Lenders and UBOC; and
(iv) all documents submitted to us as copies conform with the original
documents.
Based upon our examination and assumptions described above, relying on
statements of facts contained in the documents we have examined and subject to
the qualifications and limitations set forth in this opinion below, it is our
opinion that:
1. Each of the Transaction Documents constitutes a legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
2. The execution and delivery by the Borrower of the Transaction
Documents, the borrowings by the Borrower in accordance with the terms
of the Credit Agreement, the application of the proceeds thereof as
provided in the Credit Agreement, the performance of the Borrower's
payment and other obligations under the Transaction Documents and the
consummation of the transactions contemplated by the Transaction
Documents will not violate or result in a breach or default under the
laws of the State of California.
3. A federal or state court sitting in California will honor the
parties' choice of internal laws of the State of California as the law
applicable to the Transaction Documents.
4. Except for such filings and recordings which are necessary to
perfect the security interests granted under the Transaction Documents
and such other filings, authorizations or approvals as are specifically
contemplated by the Transaction Documents, no authorizations or
approvals of, and no filings with any governmental or regulatory agency
of the State of California are necessary for the execution, delivery or
performance of the Transaction Documents by the Borrower.
The opinions set forth herein are subject to the following limitations,
qualifications and exceptions:
A. The enforceability of the Transaction Documents against the Borrower
may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, receivership, fraudulent conveyance or similar laws
affecting or relating to the enforcement of creditors' rights generally
and (ii) equitable principals, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance, injunctive relief or
other equitable remedies, regardless of whether enforcement is sought
in a proceeding in equity or at law.
B. We express no opinion as to the legality, validity, binding effect
or enforceability of (i) indemnification provisions in the Transaction
Documents to the extent the same may be limited by applicable laws or
public policy; (ii) provisions in the Transaction Documents that relate
to the consent of the Borrower to venue in any legal action arising
under the Transaction Documents in any state or federal court in
California; (iii) provisions to the effect that failure to exercise or
delay in exercising rights or remedies
8
will not operate as a waiver of any such rights or remedies, or
provisions which state that waivers or modification must be in writing;
(iv) provisions waiving broadly or vaguely stated rights, unknown
future rights or rights which may not be waived on statutory or public
policy grounds, or provisions stating the rights or remedies are not
exclusive, that every right or remedy is cumulative and may be
exercised in addition to or with any other right or remedy, or that the
election of a right or remedy does not preclude recourse to one or more
others: (v) provisions which purport to create a conclusive presumption
or permit a conclusive determination; and (vi) the Transaction
Documents, with respect to any state securities laws.
C. We express no opinion as to the enforceability of provisions that
purport to give the Administrative Agent or the Collateral Agent the
right to apply and dispose of any insurance or condemnation proceeds
(including, without limitation, the right to apply all of such proceeds
to reduce the Commitments or to repay the Secured Obligations), in view
of the California real estate cases which require the security to have
been impaired and the lender to deal in good faith with the borrower
with respect to the application and disposition of such proceeds.
D. We do not believe that the provision authorizing the Collateral
Agent or any other Secured Party to purchase any or all of the Pledged
Collateral at a private sale would be enforceable by reason of Section
9610 (c)(2) of the UCC unless it can be demonstrated that the Pledged
Collateral to be purchased "is of a kind that is customarily sold in a
recognized market or the widely distributed standard price quotations".
We are unaware whether such standard can be met.
We are licensed to practice law only in the State of California.
Accordingly, the foregoing opinions apply only insofar as the laws of
the State of California may be concerned and we do not express any
opinion as to matters governed by any federal laws or the laws of any
other state.
This opinion addresses only the matters requested by you and you must
judge whether the matters addressed herein are sufficient for your
purposes. We do not express any opinion as to any other matter.
This opinion speaks only as of its date and is limited to present
statutes, regulations, judicial interpretations, orders, directives and
decrees applicable to the facts as they presently exist. In rendering
this opinion, we assume no obligation to revise or supplement this
opinion should the present laws be changed by legislative or regulatory
action, judicial decision or otherwise.
This opinion may be relied upon only by you and your successors and
assigns, and only in connection with the transactions described herein,
and may not be used or relied upon by you or any other person for any
other purpose whatsoever, without in each instance our prior written
consent.
Very truly yours,
9
EXHIBIT I-2
FORM OF
FOREIGN COUNSEL OPINION
NONE
EXHIBIT J
FORM OF
AMENDED AND RESTATED
PERFECTION CERTIFICATE
The undersigned, a President and Chief Executive Officer and Chief
Financial Officer of SOLA INTERNATIONAL INC., a Delaware corporation (the
"Borrower"), with reference to that certain Amended and Restated Credit
Agreement dated as of October 28, 2002 (as amended, amended and restated,
supplemented and otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein but not otherwise defined shall have the meaning
assigned to such terms in the Credit Agreement), among the Borrower, the Lenders
party thereto from time to time (the "Lenders"), and Union Bank of California,
N.A., as Sole Lead Arranger, as an Issuing Bank, as Administrative Agent, and as
Collateral Agent for the Lenders, hereby certify to the Administrative Agent and
each other Secured Party as follows:
1. Names.
(a) SCHEDULE 1(a) attached hereto and made a part hereof sets forth
the exact corporate name of the Borrower, as such name appears in
its organizational document, the state and type of organization
(together with the organizational identification number, if any,
issued with respect to Borrower) of Borrower, and the federal
employer identification number of Borrower.
(b) Set forth below is a list of all other names (including trade
names or similar appellations) used by Borrower or any of its
divisions or other business units in connection with the conduct
of its business or ownership of its properties at any time during
the past five years:
See SCHEDULE 1(b) attached hereto and made a part
hereof.
(c) Except as set forth in SCHEDULE 1(c) hereto, Borrower has not
changed its identity or corporate structure in any way within the
past five years. Changes in identity or corporate structure would
include mergers, consolidations and acquisitions, as well as any
change in the form, nature or jurisdiction of corporate
organization. If any such change has occurred, include in
SCHEDULE 1(c) the information required by Sections 1 and 2 of
this certificate as to each acquiree or constituent party to a
merger or consolidation.
2. Current Locations.
(a) The address of the chief executive office of Borrower is set
forth below:
SEE SCHEDULE 2(a) ATTACHED HERETO AND A MADE A PART
HEREOF.
2
(b) The following are all other locations in which Borrower maintains
any books, records or documents relating to any of the Collateral
(as defined in the Credit Agreement):
SEE SCHEDULE 2(b) ATTACHED HERETO AND MADE A PART
HEREOF.
(c) The following are all other places of business of Borrower in the
United States of America:
SEE SCHEDULE 2(c) ATTACHED HERETO AND MADE A PART
HEREOF.
(d) The following are all other locations in the United States of
America where any of the Collateral is located:
SEE SCHEDULE 2(d) ATTACHED HERETO AND MADE A PART
HEREOF.
(e) The following are the names and addresses of entities other than
Borrower, such as lessees, consignees, bailees, warehousemen,
which have possession, other than common carriers and items in
transit, or are intended to have possession of any of the
Collateral:
SEE SCHEDULE 2(e) ATTACHED HERETO AND MADE A PART
HEREOF.
3. Prior Locations.
(a) Set forth below is the information required by subparagraphs (a),
(b) and (c) of Section 2 with respect to each location or place
of business previously maintained by Borrower at any time during
the past five years in a state in which Borrower has previously
maintained a location or place of business at any time during the
past four months:
SEE SCHEDULE 3(a) ATTACHED HERETO AND MADE A PART
HEREOF.
(b) Set forth below is all information required by subparagraphs (d)
and (e) of Section 2 with respect to each other location at
which, or other person or entity with which, any of the
Collateral has been previously held at any time during the last
four months:
SEE SCHEDULE 3(b) ATTACHED HERETO AND MADE A PART
HEREOF.
4. Unusual Transactions. Except for those purchases, acquisitions and
other transactions described on SCHEDULE 4 attached hereto, all Accounts
Receivable have been originated by the Borrower and all Collateral has been
acquired by the Borrower in the ordinary course of business.
5. Stock Ownership and other Equity Interests. Attached hereto as
SCHEDULE 5 is a true and correct list of all the issued and outstanding
stock, partnership interests, limited liability company membership
interests or other equity interests owned or held by Borrower.
3
6. File Search Reports. File search reports have been obtained from
each Uniform Commercial Code filing office identified with respect to
Borrower in Section 2 hereof, and such search reports reflect no liens
against any of the Collateral other than those permitted under the
Credit Agreement with respect to Collateral.
7. UCC Filings. The Administrative Agent is authorized to file
appropriate financing statement amendments on Form UCC-3 in the UCC
filing office in the jurisdiction identified with respect to Borrower
in Section 1(a) hereof and to file any necessary financing statement
amendments in other jurisdictions to preserve and maintain existing
filings.
8. Schedule of Filings. SCHEDULE 8 attached hereto sets forth, with
respect to the filings described in Section 7 above, each filing and
the filing office in which such filing is to be made. No other filings
or consents are required to create, preserve, protect and perfect the
security interests granted pursuant to the Security Agreement to the
extent such security interests are capable of being perfected pursuant
to the Uniform Commercial Code.
9. Real Property Locations. Attached hereto as SCHEDULE 9 is a schedule
setting forth, with respect to each owned and leased Real Property the
exact name of the person that owns such property as such name appears
in the applicable lease documents.
10. No Change. The undersigned knows of no change or anticipated change
in any of the circumstances or with respect to any of the
matters contemplated in Sections 1 through 9 of this Perfection
Certificate except as set forth on SCHEDULE 10
hereto.
This Certificate amends, restates and supercedes in full that certain
Perfection Certificate dated as of July 26, 2001, executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
as President and Chief Executive Officer of Borrower, and ▇▇▇▇▇▇ ▇. ▇▇▇▇, as
Chief Financial Officer of Borrower, for the benefit of the Administrative Agent
and each other Secured Party.
IN WITNESS WHEREOF, we have hereunto signed this Certificate on
_____________, 2002.
SOLA INTERNATIONAL INC.,
A DELAWARE CORPORATION
By: __________________
Name:
Title:
By: ___________________
Name:
Title:
4