EXHIBIT 10.7
CREDIT AGREEMENT
This Credit Agreement (the "Agreement"), dated as of October 27, 1997 is
between City National Bank("CNB") and SIGNATURE EYEWEAR, INC., a California
Corporation ("Borrower").
1. DEFINITIONS. As used in this Agreement, these terms have the following
meanings:
"ACCOUNT" or "ACCOUNTS" mean any right to payment for goods sold or leased or
for services rendered which is not evidenced by an instrument or chattel paper,
whether or not it has been earned by performance.
"AFFILIATE" means any Person directly or indirectly controlling, controlled
by, or under common control with, Borrower, and includes any employee stock
ownership plan of Borrower or an Affiliate. "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
"BUSINESS DAY" means a day that CNB's Head Office is open and conducts a
substantial portion of its business.
"CASH FLOW FROM OPERATIONS" will be determined on a consolidated basis for
Borrower and the Subsidiaries and means the sum of (a) net income after taxes
and before extraordinary items in accordance with GAAP earned over the twelve
month period ending on the date of determination, plus (b) amortization of
intangible assets, plus (c) interest expense, plus (d) depreciation expenses
during the twelve month period ending on the date of determination.
"CODE" means the California Uniform Commercial Code, except where the Uniform
Commercial Code of another state governs the perfection of a security interest
in Collateral located in that state.
"COLLATERAL" means the property, if any, securing the Obligations.
"CURRENT ASSETS" will be determined on a consolidated basis for Borrower and the
Subsidiaries in accordance with GAAP excluding, however, loans to stockholders,
management or employees, amounts due from Subsidiaries or Affiliates, deferred
costs, and other intangible assets.
"CURRENT LIABILITIES" will be determined on a consolidated basis for Borrower
and the Subsidiaries in accordance with GAAP and will include without limitation
(a) all payments on Subordinated Debt required to be made within one (1) year
after the date on which the determination is made; and (b) all indebtedness
payable to stockholders, Affiliates, Subsidiaries or officers regardless of
maturity, unless such indebtedness has been subordinated, on terms satisfactory
to CNB, to the Obligations.
"DEBT" means, at any date, the aggregate amount of, without duplication, (a) all
obligations of Borrower or any Subsidiary for borrowed money; (b) all
obligations of Borrower or any Subsidiary evidenced by bonds, debentures, notes
or other similar instruments; (c) all obligations of Borrower or any Subsidiary
to pay the deferred purchase price of property or services: (d) all capitalized
lease obligations of Borrower or any Subsidiary: (e) all obligations or
liabilities of others secured by a lien on any asset of Borrower or any
Subsidiary, whether or not such obligation or liability is assumed; (f) all
obligations guaranteed by Borrower or any Subsidiary; (g) all obligations of
Borrower or any Subsidiary, direct or indirect, for letters of credit; and (h)
any other obligations or liabilities which are required by generally accepted
accounting principles to be shown as debt on the balance sheet of Borrower or
any Subsidiary.
"DEBT SERVICE" means (a) the aggregate amount of Current Maturity of Long Term
Debt plus (b) all interest incurred on borrowed money during the twelve month
period ending on the date of determination. "Current Maturity of Long Term Debt"
means that portion of Borrower's consolidated long term liabilities, determined
in accordance with GAAP, which shall, by the terms thereof, become due and
payable within one (1) year following the date of the balance sheet upon which
such calculations are based.
"EUROCURRENCY RESERVE REQUIREMENT" means the aggregate (without duplication) of
the rates (expressed as a decimal) of reserves (including, without limitation,
any basic, marginal, supplemental, or emergency reserves) that are required to
be maintained by banks during the Interest Period under any regulations of the
Board of Governors of the Federal Reserve System, or any other governmental
authority having jurisdiction with respect thereto, applicable to funding based
on so-called "Eurocurrency Liabilities", including Regulation D (12 CFR 204).
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"GAAP" means generally accepted accounting principles and practices,
consistently applied.
"INTEREST PERIOD" means the period commencing on the date a LIBOR Loan is made
(including the date a Prime Loan is converted to a LIBOR Loan, or a LIBOR Loan
is renewed as a LIBOR Loan, which, in the latter case, will be the last day of
the expiring Interest Period) and ending one (1), two (2), three (3), or six (6)
months thereafter, as selected by the Borrower; provided, however, (a) any
Interest Period that would end on a day not a Business Day, will extend to the
next Business Day; and (b) no Interest Period may extend beyond the Termination
Date.
"INVENTORY" means goods held for sale or lease in the ordinary course of
business, work in process and any and all raw materials used in connection with
the foregoing.
"LETTERS OF CREDIT" means any Commercial Letters of Credit and Standby Letters
of Credit issued under this Agreement.
"LIBOR BASE RATE" means the British Banker's Association definition of the
London InterBank Offered Rates as made available by Telerate Monitor on Telerate
Screen 3750, or such other information service available to CNB, for the
applicable Interest Period for the LIBOR Loan selected by Borrower and as quoted
by CNB on the Business Day Borrower requests a LIBOR Loan.
"LIBOR INTEREST RATE" means the rate per year (rounded upward to the next
one-sixteenth (1/16th) of one percent (0.0625%), if necessary) determined by CNB
to be the quotient of (a) the LIBOR Base Rate divided by (b) one minus the
Eurocurrency Reserve Requirement for the Interest Period; which is expressed by
the following formula:
LIBOR BASE RATE
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1-Eurocurrency Reserve Requirement
"LIBOR LOAN" means any Loan tied to the LIBOR Interest Rate.
"LOAN" or "LOANS" means one or more of the Loans extended by CNB to Borrower
under Section 2.
"LOAN DOCUMENTS" means, individually and collectively, this Agreement, any Note,
guaranty, security or pledge agreement, financing statement and all other
contracts, instruments, addenda and documents executed in connection with or
related to the extension(s) of credit, and any Collateral therefor, which are
the subject of this Agreement.
"NOTES" means the Notes referenced in Section 2.
"OBLIGATIONS" means all present and future liabilities and obligations of
Borrower to CNB hereunder and all other liabilities and obligations of Borrower
to CNB of every kind, now existing or hereafter owing, matured or unmatured,
direct or indirect, absolute or contingent, joint or several, including any
extensions and renewals thereof and substitutions therefor.
"PERSON" means any individual or entity.
"POTENTIAL EVENT OF DEFAULT" means any condition that with the giving of notice
or passage of time or both would, unless cured or waived, become an Event of
Default.
"PRIME RATE" means the rate most recently announced by CNB at its principal
office in Beverly Hills, California as its "Prime Rate." Any change in the
interest rate resulting from a change in the Prime Rate will be effective on the
day on which each change in the Prime Rate is announced by CNB.
"QUICK ASSETS" means the sum of cash, plus cash equivalents, plus accounts
receivable, plus securities classified as short-term marketable securities
according to GAAP, as such items appear on Borrower's consolidated balance
sheet, determined in accordance with GAAP.
"SUBORDINATED DEBT" means Debt of Borrower or any Subsidiary, the repayment of
which is subordinated to the Obligations on terms satisfactory to CNB.
"SUBSIDIARY" means any corporation, the majority of whose voting shares are at
any time owned, directly or indirectly by Borrower and/or by one or more
Subsidiaries.
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"TANGIBLE NET WORTH" means the total of all assets appearing on a balance sheet
prepared in accordance with GAAP for Borrower and the Subsidiaries on a
consolidated basis, minus (a) all intangible assets, including, without
limitation, unamortized debt discount, Affiliate, employee and officer
receivables or advances, goodwill, research and development costs, patents,
trademarks, the excess of purchase price over underlying values of acquired
companies, any covenants not to compete, deferred charges, copyrights,
franchises and appraisal surplus; minus (b) all obligations which are required
by GAAP to be reflected as a liability on the consolidated balance sheet of
Borrower and the Subsidiaries; minus (c) the amount, if any, at which shares of
stock of a non-wholly owned Subsidiary appear on the asset side of Borrower's
consolidated balance sheet, as determined in accordance with GAAP; minus (d)
minority interests; and minus (e) deferred income and reserves not otherwise
reflected as a liability on the consolidated balance sheet of Borrower and the
Subsidiaries.
"TERMINATION DATE" means March 31, 2000 unless the Revolving Credit Commitment
is renewed for an additional term by CNB giving Borrower prior written notice of
such renewal, in which event the Termination Date will mean the renewed
maturity date of the Revolving Credit COmmitment set forth in the notice.
Notwithstanding the foregoing, CNB may, at its option, terminate this Agreement
pursuant to Section 7.3; the date of any such termination will become the
Termination Date as that term is used in this Agreement.
"TOTAL SENIOR LIABILITIES" means, as of any date of determination, the amount of
all obligations that should be reflected as a liability on a consolidated
balance sheet of Borrower and the Subsidiaries prepared in accordance with GAAP,
less Subordinated Debt.
2. LOANS.
2.1 REVOLVING CREDIT LOANS. CNB agrees to make loans ("Revolving Credit Loans")
to Borrower up to, but not including, the Termination Date, at Borrower's
request, up to the amount of Five Million Dollars ($5,000,000.00)(the "Revolving
Credit Commitment"). The Revolving Credit Loans may be repaid and reborrowed at
any time up to the Termination Date; provided, however, that the aggregate
unpaid principal amount of outstanding Revolving Credit Loans will at no time
exceed the Revolving Credit Commitment. All Revolving Credit Loans will be paid
by Borrower to CNB on the Termination Date. The Revolving Credit Loans will be
evidenced by a promissory note ("Revolving Credit Note") in the form attached
hereto as Exhibit "A."
2.1.1 INTEREST ON REVOLVING CREDIT LOANS.
Each Revolving Credit Loan will bear interest from disbursement until due
(whether at stated maturity, by acceleration or otherwise) at a rate equal to,
at Borrower's option, either (a) for a LIBOR Revolving Loan, the LIBOR Interest
Rate plus two percent (2.0%) per annum, or (b) for a Prime Revolving Loan, the
fluctuating Prime Rate per annum. Interest on the Revolving Credit Loans will
accrue daily and be payable (a) if a Prime Revolving Loan, monthly, in arrears,
on the first (1st) day of each month, commencing on the first such date
following disbursement; (b) if a LIBOR Revolving Loan, (i) at the same time as
interest payments are due on Prime Revolving Loans, (ii) on the last day of each
Interest Period, and (iii) upon any prepayment of any LIBOR Revolving Loan (to
the extent accrued on the amount prepaid); (c) on the date a Prime Revolving
Loan is converted to a LIBOR Revolving Loan; and (d) at the Termination Date. A
Revolving Credit Loan tied to the LIBOR Interest Rate is called a "LIBOR"
Revolving Loan", and a Revolving Credit Loan tied to the Prime Rate is called a
"Prime Revolving Loan." A Revolving Credit Loan will be a Prime Revolving Loan
any time it is not a LIBOR Revolving Loan.
2.1.2 PROCEDURE FOR REVOLVING CREDIT LOANS. Each Revolving Credit Loan may
be made by CNB at the oral or written request of anyone who is authorized in
writing by Borrower to request Revolving Credit Loans until written notice of
the revocation of such authority is received by CNB.
2.2 LIBOR LOAN TERMS AND CONDITIONS
2.2.1 PROCEDURE FOR LIBOR LOANS. Borrower may request that a Loan be a
LIBOR Loan, if herein allowed (including conversion of a Prime Loan to a LIBOR
Loan, or continuation of a LIBOR Loan as a LIBOR Loan upon the expiration of the
Interest Period). Borrower's request will be irrevocable, and will be made to
CNB, using the "Notice of Borrowing" form attached hereto as Exhibit "B", no
earlier than two (2) Business Days before and no later than 1:00 p.m. Pacific
Time on the date the LIBOR Loan is to be made, and will specify the Interest
Period, the amount of the LIBOR Loan, and such other information as CNB
requests. If Borrower fails to select a LIBOR Loan in accordance herewith, the
Loan will be a Prime Loan, and any LIBOR Loan will be deemed a Prime Loan upon
expiration of the Interest Period.
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2.2.2 AVAILABILITY OF LIBOR LOANS. Notwithstanding anything herein to
the contrary, each LIBOR Loan must be in the minimum amount of $500,000.00 and
increments of $500,000.00 Borrower may have Prime Loans and LIBOR Loans
outstanding simultaneously.
2.2.3 PREPAYMENT OF PRINCIPAL. Borrower may not make a partial principal
prepayment on a LIBOR Loan. Borrower may prepay the full outstanding principal
balance on a LIBOR Loan prior to the end of the Interest Period, provided,
however, that such prepayment is accompanied a fee ("LIBOR Prepayment Fee")
equal to the amount, if any, by which (a) the additional interest which would
have been earned by CNB had the LIBOR Loan not been prepaid exceeds (b) the
interest which would have been recoverable by CNB by placing the amount of the
LIBOR Loan on deposit in the LIBOR market for a period starting on the date on
which it was prepaid and ending on the last day of the applicable Interest
Period. CNB's calculation of the Libor Prepayment Fee will be conclusive absent
manifest error.
2.2.4 SUSPENSION OF LIBOR LOANS. In the event CNB, on any Business Day,
is unable to determine the LIBOR Base Rate applicable for a new, continued, or
converted LIBOR Loan for any reason, or any law, regulation, or governmental
order, rule or determination, makes it unlawful for CNB to make a LIBOR Loan,
Borrower's right to select LIBOR Loans will be suspended until CNB is again able
to determine the LIBOR Base Rate or make LIBOR Loans, as the case may be.
During such suspension, new Loans, outstanding Prime Loans and LIBOR Loans whose
Interest Periods terminate may only be Prime Loans.
2.3 LOANS AND PAYMENTS. All payments will be in United States Dollars and in
immediately available funds. Interest will be computed on the basis of a 360-day
year, actual days elapsed. All payments of principal, interest, fees and other
charges on the Loans will be made by charging, and Borrower hereby authorizes
CNB to charge, Borrower's demand deposit account at CNB for the amount of each
such payment. Borrower must have sufficient collected balances in its demand
deposit account with CNB in order that each such payment will be available when
due. CNB is authorized to note the date, amount and interest rate of each Loan
and each payment of principal and interest on CNB's books and records, which
notations will constitute presumptive evidence of the accuracy of the
information noted. Any Loan will be conclusively presumed to have been made to
or for the benefit of Borrower when CNB, in its sole discretion, believes that
the request therefor has been made by authorized persons (whether in fact that
is the case), or when the Loan is deposited to the credit of Borrower's account
with CNB, regardless of whether any Person other than Borrower may have
authority to draw against such account.
2.4 DEFAULT INTEREST RATE. From and after written notice by CNB to Borrower of
the occurrence of an Event of Default (and without constituting a waiver of such
Event of Default), the Loans (and interest thereon to the extent permitted by
law) will bear additional interest at a fluctuating rate equal to three percent
(3.0%) per annum higher than the interest rate stated in Sections 2.1.1 until
the Event of Default has been cured; provided, however, for purposes of this
Section, a LIBOR Loan will be treated as a Prime Loan upon the termination of
the Interest Period. All interest provided for in this Section will be
compounded monthly and payable on demand.
3. CONDITIONS PRECEDENT.
3.1 EXTENSION OF CREDIT. The obligation of CNB to make any Loan or other
extension of credit hereunder is subject to CNB's receipt of each of the
following, in form and substance satisfactory to CNB, and duly executed as
required by CNB:
3.1.1 All Loan Documents required by CNB, including but not limited to such
documents necessary to perfect CNB's first priority security interest in the
Collateral, and evidence of such perfection;
3.1.2 Where Borrower or any party signing a Loan Document is a business
entity, such authorization documents as CNB may require, in form and substance
satisfactory to CNB.
3.2 CONDITIONS TO EACH EXTENSION OF ALL LOANS. The obligation of CNB to make
any Loan or other extension of credit hereunder will be subject to the
fulfillment of each of the following conditions to CNB's satisfaction:
3.2.1 If a Commerical Letter of Credit is to be issued, CNB will have
received an Irrevocable Letter of Credit Application and Security Agreement,
duly executed and delivered by Borrower, in the form customarily used by CNB;
3.2.2 If a Standby Letter of Credit is to be issued, CNB will have
received an Irrevocable Standby Letter of Credit Application and Letter of
Credit Agreement, duly executed and delivered by Borrower, in the form
customarily used by CNB;
3.2.3 The representations and warranties of Borrower set forth in Section
4 of this Agreement and in all other Loan
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Documents will be true and correct on the date of the making of each Loan or
other extension of credit with the same effect as though such representations
and warranties had been made on and as of such date;
3.2.4 There will be no Event of Default or Potential Event of Default
under this Agreement or any of the Loan Documents; and
3.2.5 All other documents and legal matters in connection with the
transactions described in this Agreement will be satisfactory in form and
substance to CNB.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants (and each
request for a Loan or other extension of credit will be deemed a representation
and warranty made on the date of such request) that:
4.1 CORPORATE EXISTENCE, POWER AND AUTHORIZATION. Borrower and each Subsidiary
is duly organized, validly existing and in good standing under the laws of the
state of its organization, and is duly qualified to conduct business in each
jurisdiction in which its business is conducted. The execution, delivery and
performance of all Loan Documents executed by Borrower are within Borrower's
powers and have been duly authorized by the Board of Directors of Borrower and
do not require any consent or approval of the stockholders of Borrower.
4.2 BINDING AGREEMENT. The Loan Documents constitute the valid and legally
binding obligations of Borrower, enforceable against Borrower in accordance
with their terms.
4.3 ANCILLARY DOCUMENTS. To the extent that any security agreement,
subordination agreement or Guaranty is required to be executed by a Subsidiary
or Affiliate, the representations and warranties set forth in Sections 4.1 and
4.2 are also true and correct with respect to any such Subsidiary or Affiliate
and such document.
4.4 OTHER AGREEMENTS. The execution and performance of the Loan Documents will
not violate any provision of law or regulation (including, without limitation,
Regulations X and U of the Federal Reserve Board) or any order of any
governmental authority, court, or arbitration board or the Articles of
Incorporation or By-laws of Borrower, or result in the breach of, constitute a
default under, contravene any provisions of, or result in the creation of any
security interest, lien, charge or encumbrance upon any of the assets of
Borrower pursuant to any indenture or agreement to which Borrower or any of its
properties is bound, except liens and security interests in favor of CNB.
4.5 LITIGATION. There is no litigation, tax claim, investigation or proceeding
pending, threatened against or affecting Borrower, any Subsidiary, any Guarantor
or any of their respective properties which, if adversely determined, would have
a material adverse effect on the business, operations or condition, financial or
otherwise, of Borrower, any Subsidiary or any Guarantor.
4.6 FINANCIAL CONDITION. Borrower's most recent financial statements, copies
of which have been delivered to CNB, have been prepared in accordance with GAAP
and are true, complete and correct and fairly present the financial condition of
Borrower and the Subsidiaries, including operating results, as of the accounting
period referenced therein. There has been no material adverse change in the
financial condition or business of Borrower or any Subsidiary since the date of
such financial statements. Neither Borrower nor any Subsidiary has any material
liabilities for taxes or long-term leases or commitments, except as
disclosed in the financial statements.
4.7 NO VIOLATIONS. Borrower is not, nor is any Subsidiary, in violation of any
law, ordinance, rule or regulation to which it or any of its properties is
subject.
4.8 USE OF PROCEEDS. Borrower will use the proceeds of the Revolving Credit
Loans solely for business purposes.
4.9 ERISA. Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). No Reportable Event (as defined in ERISA and the regulations issued
thereunder other than a "Reportable Event" not subject to the provision for
thirty (30) day notice to the Pension Benefit Guaranty Corporation ("PBGC")
under such regulations) has occurred with respect to any benefit plan of
Borrower nor are there any unfunded vested liabilities under any benefit plan of
Borrower. Borrower has met its minimum funding requirements under ERISA with
respect to each of its plans and has not incurred any material liability to the
PBGC in connection with any such plan.
4.10 CONSENTS. No consent, license, permit, or authorization of, exemption by,
notice to, report to, or registration, filing or
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declaration with, any governmental authority or agency is required in connection
with the execution and performance by Borrower of the Loan Documents or the
transactions contemplated hereunder.
4.11 REGULATION U. Borrower is not engaged principally, or as one of its
principal activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations U or X of
the Federal Reserve Board). No part of the proceeds of the Loans will be used
by Borrower to purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying such margin stock.
4.12 ENVIRONMENTAL MATTERS.
4.12.1 The operations of Borrower and each Subsidiary comply in all
material respects with all applicable federal, state and local environmental,
health and safety statutes, regulations and ordinances, and fully comply with
all terms of all required permits and licenses;
4.12.2 Borrower and each Subsidiary have received no notices of any
threatened or pending governmental or private civil, criminal or administrative
proceeding regarding any environmental or health and safety statute, regulation
or ordinance and have not been subject to any federal, state or local
investigations, inspections or orders regarding any environmental or health and
safety statute, regulation or ordinance;
4.12.3 Neither Borrower nor any Subsidiary knows of any facts or
conditions which may exist which may subject Borrower or any Subsidiary to
liability or contingent liability and neither Borrower nor any Subsidiary is
presently liable or contingently liable for any removal, remedial, response or
other costs or damages in connection with any release into the environment of
toxic or hazardous substances or waste included on any federal, state or local
hazardous chemical or substance lists under any federal, state or local statute,
regulation or ordinance.
4.12.4 Borrower will, at all times, defend and indemnify and hold CNB
(which for purposes of this Section 4.12 and Section 8.8 includes CNB's parent
company and subsidiaries and all of their respective shareholders, directors,
officers, employees, agents, representatives, successors, attorneys and assigns)
harmless from and against any liabilities, claims, demands, causes of action,
losses, damages, expenses (including without limitation reasonable
attorneys' fees, which attorneys may be employees of CNB, or may be outside
counsel) costs, settlements, judgments or recoveries (collectively, "Claims")
directly or indirectly arising out of or attributable to the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal, or presence of a hazardous substance on, under or about Borrower's
property or operations or property leased to or used by Borrower. For these
purposes, the term "hazardous substances" means any substance which is or
becomes designated as "hazardous" or "toxic" under any Federal, state, or local
law. Any obligation or liability of Borrower to CNB under this Section will
survive the expiration or termination of this Agreement and the repayment of all
Loans and the payment or performance of all other Obligations of Borrower to
CNB.
5. AFFIRMATIVE COVENANTS. Borrower agrees that until payment in full of all
Obligations, Borrower will comply with the following covenants:
5.1 BOOKS AND RECORDS. Borrower will maintain, in accordance with sound
accounting practices, accurate records and books of account showing, among other
things, all Inventory and Accounts, the proceeds of the sale or other
disposition thereof and the collections therefrom. Borrower will not change the
accounting method used to determine Borrower's Inventory cost without
notification to CNB. CNB may, at any reasonable time, inspect, audit, and make
extracts from, or copies of, all books, records and other data, inspect any of
Borrower's properties and confirm balances due on Accounts by direct inquiry to
Account Debtors (defined as those Persons obligated on the Accounts). Borrower
will furnish CNB with all information regarding the business or finances of
Borrower promptly upon CNB's request.
5.2 FINANCIAL STATEMENTS. Borrower will furnish to CNB on a continuing basis:
5.2.1 Within forty-five (45) days after the end of each quarterly
accounting period of each fiscal year excluding the fiscal quarter ending
October 31st, a financial statement for Borrower and the Subsidiaries consisting
of not less than a balance sheet, and income statement, with notes thereto,
prepared in accordance with GAAP, which financial statement may be internally
prepared;
5.2.2 Within one hundred twenty (120) days after the end of each fiscal
year, a copy of the annual financial statements for such year for Borrower and
the Subsidiaries including therein a balance sheet, income statement,
reconciliation of net worth
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and statement of cash flows, with notes thereto, audited by an independent
certified public accountant acceptable to CNB, and certified by such accountant
to have been prepared in accordance with GAAP:
5.2.3 Such additional information, reports and/or statements as CNB may,
from time to time, reasonably request.
5.3 TAXES AND PREMIUMS. Borrower will, and will cause each Subsidiary to, pay
and discharge all taxes, assessments, governmental charges and real and personal
property taxes, including, but not limited to, federal and state income taxes,
employee withholding taxes and payroll taxes, and all premiums for insurance
required under this Agreement, prior to the date upon which penalties are
attached thereto.
5.4 INSURANCE
5.4.1 Borrower will, and will cause each Subsidiary to, provide and maintain
the insurance required under the Loan Documents;
5.4.2 In addition to the insurance required above, Borrower will, and will
cause each Subsidiary to, maintain insurance of the types and in amounts
customarily carried in its lines of business, including, but not limited to,
fire, public liability, property damage, business interruption and extra expense
and worker's compensation, such insurance to be carried with companies and in
amounts satisfactory to CNB, and will deliver to CNB from time to time, upon
CNB's request, schedules setting forth all insurance then in effect; and
5.4.3 If Borrower fails to provide, maintain, or furnish to CNB the policies
required by this Section, CNB may immediately procure such insurance or other
insurance necessary to protect CNB's interest, and Borrower will pay all
premiums thereon promptly upon demand by CNB, together with interest, at the
highest rate provided for any of the Loans exclusive of LIBOR Loans extended
under Section 2 above, from the date of expenditure, and if not paid within ten
(10) days of CNB's demand therefor (and without constituting a waiver of an
Event of Default), at a rate five percent (5%) per year higher than such
interest rate until such amount (and interest thereon, to the extent permitted
by law), is paid in full.
5.5 NOTICE. Borrower will promptly advise CNB in writing of (a) the opening of
any new, or the closing of any existing, places of business, each location at
which Inventory or Equipment is or will be kept, and any change to Borrower's
name, trade name or other name under which it does business or of any such new
or additional name; (b) the occurrence of any Event of Default or Potential
Event of Default; (c) any litigation pending or threatened against Borrower, any
Subsidiary or any Guarantor where the amount or amounts in controversy exceed
$1,000,000.00; (d) any unpaid taxes of Borrower, any Subsidiary or any
Guarantor, which are more than fifteen (15) days delinquent; and (e) any other
matter that might materially or adversely affect Borrower's, any Subsidiary's or
any Guarantor's financial condition, property or business.
5.6 FAIR LABOR STANDARDS ACT. Borrower will, and will cause each subsidiary to,
comply with the requirements of, and all regulations promulgated under, the Fair
Labor Standards Act of 1938 (29 U.S.C. Code (S) 01 et seq.).
5.7 CORPORATE EXISTENCE. Borrower will, and will cause each Subsidiary to,
maintain its corporate existence and all of its rights, privileges and
franchises necessary or desirable in the normal course of its business.
5.8 COMPLIANCE WITH LAW. Borrower will, and will cause each subsidiary to,
comply with the requirements of all applicable laws, rules, regulations, orders
of any governmental agency and all material agreements to which they are a
party,
5.9 FINANCIAL TESTS. Borrower will maintain:
5.9.1 Tangible Net Worth plus Subordinated Debt of not less than
$15,500,000.00 as of October 31, 1997 and $16,500,000.00 as of October 31, 1998
and at all times thereafter.
5.9.2 A ratio of Total Senior Liabilities to Tangible Net Worth plus
Subordinated Debt of not more than 0.75 to 1 at all times;
5.9.3 A ratio of Quick Assets to Current Liabilities of not less than 3.0
to 1 at all times; and
5.9.4 Net income after taxes per fiscal year of greater than zero at all
times.
7
6. NEGATIVE CONVENANTS. Borrower agrees that until payment in full of all
Obligations, Borrower will not, nor will it permit any Subsidiary to, do any of
the following, without CNB's prior written consent:
6.1 BORROWING. Create, incur, assume or permit to exist any Debt, except Debt
to CNB, the Subordinated Debt, purchase money and trade Debt incurred in the
ordinary course of business.
6.2 SALE OF ASSETS. Sell, lease or otherwise dispose of any of Borrower's or
any Subsidiary's assets, other than in the ordinary course of business.
6.3 LOANS. Make loans or advances to any Person without prior approval from
CNB except credit extended to employees or to customers in the ordinary course
of its business.
6.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable for the obligation of any Person including
Borrower, a Subsidiary, or Affiliate, except (a) by the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business, and (b) contingent liabilities in favor of CNB.
6.5 INVESTMENTS. Purchase or acquire the obligations or stock of, or any other
interest in, any partnership, joint venture or corporation, except (a) direct
obligations of the United States of America and its Agencies (b) investments in
certificates of deposit issued by, and other deposits with, commercial banks
organized under the United States or a State thereof having capital of at least
One Hundred Million Dollars ($100,000,000.00) (c) direct obligations of
corporations whose obligations are rated by Standard & Poor's as A or better or
by ▇▇▇▇▇'▇ Investor Services as A2P2 or better; and (d) direct obligations of
municipalities rated by Standard & Poor's as BBB or better.
6.6 MORTGAGES, LIENS, ETC. Mortgage, pledge, hypothecate, grant or contract to
grant any security interest of any kind in any property or assets, to anyone
except CNB.
6.7 INVOLUNTARY LIENS. Permit any involuntary liens to arise with respect to
any property or assets including but not limited to those arising from the levy
of a writ of attachment or execution, or the levy of any state or federal tax
lien which lien will not be removed within a period of thirty (30) days.
6.8 SALE AND LEASEBACK. Enter into any sale-leaseback transaction.
6.9 MERGERS AND ACQUISITIONS. Enter into any merger or consolidation, or
acquire all or substantially all the assets of any Person, except a Subsidiary
may be merged into or consolidated with another Subsidiary or with Borrower.
6.10 EVENT OF DEFAULT. Permit a default to occur under any document or
instrument evidencing Debt incurred under any indenture, agreement or other
instrument under which such Debt may be issued, or any event to occur under any
of the foregoing which would permit any holder of the Debt outstanding
thereunder to declare the same due and payable before its stated maturity,
whether or not such acceleration occurs or such default be waived.
7. EVENTS OF DEFAULT.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following will constitute
an Event of Default:
7.1.1 Borrower fails to pay when due any installment of principal or
interest or any other amount payable under the Loan Documents;
7.1.2 Any Person, or any Subsidiary of any Person, which is a party to
any Loan Document fails to perform or observe any of the terms, provisions,
covenants, conditions, agreements or obligations contained in the Loan
Documents;
7.1.3 The entry of an order for relief or the filing of an involuntary
petition with respect to Borrower, any Subsidiary or any Guarantor under the
UNITED STATES BANKRUPTCY CODE, the appointment of a receiver, trustee, custodian
or liquidator of or for any part of the assets or property of Borrower, any
Subsidiary or any Guarantor, or Borrower, any Subsidiary or any Guarantor makes
a general assignment for the benefit of creditors;
7.1.4 Any financial statement, representation or warranty made or
furnished by Borrower, any Subsidiary or any Guarantor in connection with the
Loan Documents provides to be in any material respect incorrect:
8
7.1.5 CNB's security interest in or lien on any portion of any Collateral
becomes impaired or otherwise unenforceable;
7.1.6 Any Person obtains an order or decree in any court of competent
jurisdiction enjoining or prohibiting Borrower or CNB or either of them from
performing this Agreement, and such proceedings are not dismissed or such decree
is not vacated within ten (10) days after the granting thereof;
7.1.7 Borrower or any Subsidiary neglects, fails or refuses to keep in
full force and effect any governmental permit or approval which is necessary to
the operation of its business;
7.1.8 All or substantially all of the property of Borrower, any Guarantor
or any Subsidiary is condemned, seized or otherwise appropriated;
7.1.9 The occurrence of (a) a Reportable Event as defined in ERISA which
CNB determines in good faith constitutes grounds for the institution of
proceedings to terminate any pension plan by the PBGC, (b) an appointment of a
trustee to administer any pension plan of Borrower, or (c) any other event or
condition which might constitute grounds under ERISA for the involuntary
termination of any pension plan of Borrower, where such event set forth in (a),
(b) or (c) results in a significant monetary liability to Borrower;
7.1.10 The Termination Date is not extended.
7.2 NOTICE OF DEFAULT AND CURE OF POTENTIAL EVENTS OF DEFAULT. Except with
respect to the Events of Default specified in Sections 7.1.1, 7.1.3, or 7.1.5
above, and subject to the provisions of Section 7.4, CNB will give Borrower at
least ten (10) days' written notice of any event which constitutes or, with the
lapse of time would become an Event of Default, during which time Borrower will
be entitled to cure same.
7.3 CNB'S REMEDIES. Upon the occurrence of an Event of Default, at the sole
and exclusive option of CNB, and upon written notice to Borrower, CNB may (a)
declare the principal of and accrued interest on the Loans, and all other
Obligations immediately due and payable in full, whereupon the same will
immediately become due and payable; (b) terminate this Agreement as to any
future liability or obligation of CNB, but without affecting CNB's rights and
security interest in the Collateral and without affecting the Obligations owing
by Borrower to CNB; and/or (c) exercise its rights and remedies under the Loan
Documents and all rights and remedies of a secured party under the Code and
other applicable laws with respect to all of the Collateral.
7.4 ADDITIONAL REMEDIES. Nothwithstanding any other provision of this
Agreement, upon the occurrence of any event, action or inaction by Borrower, or
if any action or inaction is threatened which CNB reasonably believes will
materially affect the value of the Collateral, CNB may take such legal actions
as it deems necessary to protect the Collateral, including but not limited to,
seeking injunctive relief and the appointment of a receiver, whether or not an
Event of Default or Potential Event of Default has occurred under this
Agreement.
8. MISCELLANEOUS.
8.1 REIMBURSEMENT OF COSTS AND EXPENSES. Borrower will reimburse CNB for
all costs and expenses relating to this Agreement including, but not limited to,
filing, recording or search fees, audit or verification fees, appraisals of the
Collateral and other out-of-pocket expenses, and reasonable attorneys' fees and
expenses expended or incurred by CNB (or allocable to CNB's in-house counsel) in
documenting or administering the Loan Documents or collecting any sum which
becomes due CNB under the Loan Documents, irrespective of whether suit is filed,
or in the protection, perfection, preservation or enforcement of any and all
rights of CNB in connection with the Loan Documents, including, without
limitation, the fees and costs incurred in any out-of-court work-out or a
bankruptcy or reorganization proceeding. All amounts due under this Section 8.1
will bear interest at the highest rate provided for any of the Loans exclusive
of LIBOR Loans extended under Section 2 above, from the date of expenditure (or
allocation), and if not paid within ten (10) days of CNB's demand therefor (and
without constituting a waiver of an Event of Default), at a rate five percent
(5%) per year higher than such interest rate until such amount (and interest
thereon, to the extent permitted by law), is paid in full.
9
8.2 DISPUTE RESOLUTION.
8.2.1 MANDATORY ARBITRATION. At the request of CNB or Borrower, any
dispute, claim or controversy of any kind (whether in contract or tort,
statutory or common law, legal or equitable) now existing or hereafter arising
between CNB and Borrower and in any way arising out of, pertaining to or in
connection with: (1) this Agreement, and/or any renewals, extensions, or
amendments thereto; (2) any of the Loan Documents; (3) any violation of this
Agreement of the Loan Documents; (4) all past, present and future loans; (5) any
incidents, omissions, acts, practices or occurrences arising out of or related
to this Agreement or the Loan Documents causing injury to either party whereby
the other party or its agents, employees or representatives may be liable, in
whole or in part, or (6) any aspect of the past, present or future relationships
of the parties, will be resolved through final and binding arbitration conducted
at a location determined by the arbitrator in Los Angeles, California, and
administered by the American Arbitration Association ("AAA") in accordance with
the California Arbitration Act (Title 9, California Code of Civil Procedure
Section 1280 et. seq.) and the then existing Commercial Rules of the AAA.
Judgment upon any award rendered by the arbitrator(s) may be entered in any
state or federal courts having jurisdiction thereof.
8.2.2 REAL PROPERTY COLLATERAL. Notwithstanding the provisions of
subsection 8.2.1, no controversy or claim will be submitted to arbitration
without the consent of all the parties if, at the time of the proposed
submission, such controversy or claim arises from or relates to an obligation
owed to CNB which is secured in whole or in part by real property collateral.
If all parties do not consent to submission of such a controversy or claim to
arbitration, the controversy or claim will be determined as provided in
subsection 8.2.3.
8.2.3 JUDICIAL REFERENCE. At the request of any party, a controversy or
claim which is not submitted to arbitration as provided and limited in
subsections 8.2.1 and 8.2.2 will be determined by a reference in accordance
with California Code of Civil Procedure Sections 638 et. seq. If such an
-- ---
election is made, the parties will designate to the court a referee or referees
selected under the auspices of the AAA in the same manner as arbitrators are
selected in AAA-sponsored proceedings. The presiding referee of the panel, or
the referee if there is a single referee, will be an active attorney or
retired judge. Judgment upon the award rendered by such referee or referees will
be entered in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645.
8.2.4 PROVISIONAL REMEDIES, SELF HELP AND FORECLOSURE. No provision of this
Agreement will limit the right of any party to: (1) foreclose against any real
property collateral by the exercise of a power of sale under a deed of trust,
mortgage or other security agreement or instrument, or applicable law, (2)
exercise any rights or remedies as a secured party against any personal property
collateral pursuant to the terms of a security agreement or pledge agreement, or
applicable law, (3) exercise self help remedies such as setoff, or (4) obtain
provisional or ancillary remedies such as injunctive relief or the appointment
of a receiver from a court having jurisdiction before, during or after the
pendency of any arbitration or referral. The institution and maintenance of an
action for judicial relief or pursuit of provisional or ancillary remedies, or
exercise of self help remedies will not constitute a waiver of the right of any
party, including the plaintiff, to submit any dispute to arbitration or judicial
reference.
8.2.5 POWERS AND QUALIFICATIONS OF ARBITRATORS. The arbitrator(s) will
give effect to statutes of limitation, waiver and estoppel and other affirmative
defenses in determining any claim. Any controversy concerning whether an issue
is arbitratable will be determined by the arbitrator(s). The laws of the State
of California will govern. The arbitration award may include equitable and
declaratory relief. All arbitrator(s) selected will be required to be a
practicing attorney or retired judge licensed to practice law in the State of
California and will be required to be experienced and knowledgeable in the
substantive laws applicable to the subject matter of the controversy or claim at
issue.
8.2.6 DISCOVERY. The provisions of California Code of Civil Procedure
Section 1283.05 or its successor section(s) are incorporated herein and made a
part of this Agreement. Depositions may be taken and discovery may be obtained
in any arbitration under this Agreement in accordance with said section(s).
8.2.7 MISCELLANEOUS. The arbitrator(s) will determine which is the
prevailing party and will include in the award that party's reasonable
attorneys' fees and costs (including allocated costs of in-house legal counsel).
Each party agrees to keep all controversies and claims and the arbitration
proceedings strictly confidential, except for disclosures of information
required in the ordinary course of business of the parties or by applicable law
or regulation.
10
8.3 CUMULATIVE RIGHTS AND NO WAIVER. All rights and remedies granted to CNB
under the Loan Documents are cumulative and no one such right or remedy is
exclusive of any other. No failure or delay on the part of CNB in exercising any
power, right or remedy under any Loan Document will operate as a waiver
thereof, and no single or partial exercise or waiver by CNB of any such power,
right or remedy will preclude any further exercise thereof or the exercise of
any other power, right or remedy.
8.4 APPLICABLE LAW. This Agreement will be governed by California law.
8.5 LIEN AND RIGHT OF SETOFF. Borrower grants to CNB a continuing lien for all
Obligations of Borrower to CNB upon any and all moneys, securities and other
property of Borrower and the proceeds thereof, now or hereafter held or received
by or in transit to CNB from or for Borrower, whether for safekeeping, custody,
pledge, transmission, collection or otherwise, and also upon any and all
deposits (general or special) and credits of Borrower with, and any and all
claims of Borrower against CNB at any time existing. Upon the occurrence of any
Event of Default, CNB is authorized at any time and from time to time, without
notice to Borrower or any other Person, to setoff, appropriate and apply any or
all items hereinabove referred to against all Obligations of Borrower whether
under this Agreement or otherwise, and whether now existing or hereafter
arising.
8.6 NOTICES. Any notice required under any Loan Document will be given in
writing and will be deemed to have been given when personally delivered or when
sent by the U.S. mail, postage prepaid, certified, return receipt requested, to
the address listed at the end of this Agreement or such other address which a
party may provide to the other.
8.7 COUNTERPARTS. This Agreement may be signed in any number of counterparts
which, when taken together, will constitute but one agreement.
8.8 INDEMNIFICATION. Borrower will, at all times, defend and indemnify and hold
CNB harmless from and against any and all Claims (as that term is defined in
Section 4.12.4) arising out of or resulting from (a) any breach of the
representations, warranties, agreements or covenants made by Borrower herein;
(b) any suit or proceeding of any kind or nature whatsoever against CNB arising
from or connected with the transactions contemplated by the Loan Documents or
any of the rights and properties assigned to CNB hereunder, and/or (c) any suit
or proceeding that CNB may deem necessary or advisable to institute, in the name
of CNB, Borrower or both, against any other Person, for any reason whatsoever to
protect the rights of CNB hereunder or under any of the documents, instruments
or agreements executed or to be executed pursuant hereto, including attorneys'
fees and court costs and all other costs and expenses incurred by CNB (or
allocable to CNB's in-house counsel), all of which will be charged to and paid
by Borrower and will be secured by the Collateral. Any obligation or liability
of Borrower to CNB under this Section will survive the expiration or termination
of this Agreement and the repayment of all Loans and the payment or performance
of all other Obligations of Borrower to CNB.
8.9 ASSIGNMENTS. The provisions of this Agreement are hereby made applicable to
and will inure to the benefit of CNB's successors and assigns and Borrower's
successors and assigns; provided, however, that Borrower may not assign or
transfer its rights or Obligations under this Agreement without the prior
written consent of CNB.
8.10 ACCOUNTING TERMS. Except as otherwise stated in this Agreement, all
accounting terms and financial covenants and information will be construed in
conformity with, and all financial data required to be submitted will be
prepared in conformity with, GAAP as in effect on the date hereof.
8.11 SEVERABILITY. Any provision of the Loan Documents which is prohibited or
unenforceable in any jurisdiction, will be, only as to such jurisdiction,
ineffective to the extent of such prohibition or unenforceability, but all the
remaining provisions of the Loan Documents will remain valid.
8.12 COMPLETE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement of the parties and supersedes any
prior or contemporaneous oral or written agreements or understandings, if any,
which are merged into this Agreement. This Agreement may be amended only in a
writing signed by Borrower and CNB.
8.13 JOINT AND SEVERAL. Should more than one Person sign this Agreement, the
obligations of each signer will be joint and several.
11
This Agreement is executed as of the date stated at the top of the first
page.
"Borrower" Signature Eyewear, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, CFO
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer
"CNB" City National Bank
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
City of Industry, California 91746
Attention: Manager
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
with a copy of all Notices to: City National Bank, Legal Department
400 North Roxbury Drive, 5th Floor
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
12
EXHIBIT A
REVOLVING CREDIT NOTE
(FOR PRIME AND/OR LIBOR OPTIONS)
496077 #24593
$5,000,000.00 City of Industry, California
October 27, 1997
For Value Received, the undersigned, SIGNATURE EYEWEAR, INC., a California
corporation ("Borrower"), promises to pay on the Termination Date to the order
of CITY NATIONAL BANK, a national banking association ("CNB"), at its Office
located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
the principal amount of FIVE MILLION DOLLARS ($5,000,000.00) or so much thereof
as may be advanced and be outstanding, with interest thereon to be computed on
each Revolving Credit Loan from the date of its disbursement at a rate computed
on the basis of a 360-day year, actual days elapsed, at the rates, times and in
accordance with the terms of that certain Credit Agreement between Borrower and
CNB, dated as of October 27, 1997, as may be amended from time to time (the
"Credit Agreement"). Capitalized terms not defined herein shall have the
meanings given them in that certain Credit Agreement.
All or any portion of the principal of this Revolving Credit Note
("Note") may be borrowed, repaid and reborrowed from time to time prior to the
Termination Date, provided at the time of any borrowing no default exists under
this Note and no Event of Default or Potential Event of Default exists under
the terms and conditions of the Credit Agreement and provided, further that the
total borrowings outstanding at any one time shall not exceed the Revolving
Credit Commitment less the amount of Letters of Credit issued and outstanding
under the Credit Agreement. Each borrowing and repayment of a Revolving Credit
Loan shall be noted in the books and records of CNB. The excess of borrowings
over repayments as noted on such books and records shall constitute presumptive
evidence of the principal balance due hereon from time to time and at any time.
If payment on this Note becomes due and payable on a non-business day,
the maturity thereof shall be extended to the next business day and, with
respect to payments of principal or interest thereon shall be payable during
such extension at the then applicable rate. Upon the occurrence of one or more
of the Events of Default specified in the Credit Agreement, all amounts
remaining unpaid on this Note may become or be declared to be immediately
payable as provided in the Credit Agreement, without presentment, demand or
notice of dishonor, all of which are expressly waived. Borrower agrees to pay
all costs of collection of this Note and reasonable attorneys' fees (including
attorneys' fees allocable to CNB's in-house counsel) in connection therewith,
irrespective of whether suit is brought thereon.
This is the Revolving Credit Note referred to in the Credit Agreement
and is entitled to the benefits thereof.
Upon CNB's written notice to Borrower of the occurrence of an Event of
Default, the outstanding principal balance (and interest, to the extent
permitted by law) shall bear additional
EXHIBIT A
interest from the date of such notice at the rate of Five Percent (5.0%) per
annum higher than the interest rate as determined and computed above, provided,
however, for the purposes hereof, a LIBOR Loan shall be treated as a Prime Loan
upon the termination of the Interest Period, and continuing thereafter until the
Event of Default is cured.
This Note shall be governed by the laws of the State of California. If
this Note is executed by more than one Borrower, all obligations are joint and
several.
"BORROWER"
SIGNATURE EYEWEAR, INC., a
California corporation
By:
-----------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, CFO
EXHIBIT B
NOTICE OF BORROWING/INTEREST SELECTION
This Notice of Borrowing/Interest Selection ("Notice") is executed and
delivered by Signature Eyewear, Inc. ("Borrower") to City National Bank, a
national banking association ("CNB"), pursuant to that Credit Agreement entered
into by Borrower and CNB as of October 27, 1997 ("Agreement"). Terms not defined
herein will have the meanings as defined in the Agreement.
1. REQUEST FOR A REVOLVING CREDIT LOAN. Borrower requests a Revolving Credit
Loan as follows:
1.1 Interest Selection-State "LIBOR" OR "Prime": ___________
1.2 Principal Amount of Loan: $ ___________[if LIBOR Loan, minimum
advances of $ ________________, increments of $ ______________]
1.3 LIBOR Loan-Effective Date of Interest Period: _____________, 199_
1.4 LIBOR Loan-Interest Period: _______ days/month(s) [1, 3, 6, 9 or 12
months only]
2. CONVERSION TO LIBOR LOAN. Borrower requests conversion of an outstanding
Prime Loan to a Libor Loan.
2.1 Effective Date of Conversion: _________________, 19__
2.2 Principal Amount of Conversion: $ _______________[if LIBOR Loan,
minimum advances of $ ____________, increments of $ ___________]
2.3 Interest Period: _________ days/month(s) [1, 3, 6, 9 or 12 months only]
3. RENEWAL OF LIBOR LOAN. Borrower requests renewal of an outstanding LIBOR
Loan as follows:
3.1 Principal Amount of Renewal of LIBOR Loan: $ ___________[if LIBOR
Loan, minimum advances of $ ________, increments of $ ___________] (Amount of
LIBOR Loan not renewed as a LIBOR Loan will be a Prime Loan)
3.2 Date of Renewal: ___________, 19__ [last date of current Interest
Period]
3.3 Interest Period: ____________ month(s) [1, 3, 6, or 12 months only]
4. CONVERSION TO PRIME LOAN. A LIBOR Loan will automatically convert to Prime
Loan at the end of an Interest Period if CNB fails to timely receive a Notice
for an outstanding LIBOR Loan.
5. WARRANTY. In connection with the action requested herein, Borrower hereby
represents and warrants to CNB that, as of the date of such request, no Event of
Default has occurred and is continuing.
This Notice is executed on ______________, 19___, by an authorized officer
of Borrower, on behalf of Borrower.
"Borrower" Signature Eyewear, Inc. a California corporation
By: _____________________