<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO________
COMMISSION FILE NUMBER 1-14360
BEC GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 13-3868804
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(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
Suite B-302
555 Theodore Fremd Avenue
Rye, New York 10580
- -------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
Registrant's telephone number, including area code: (914) 967-9400
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO _____
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES
OF COMMON STOCK AS OF THE LATEST PRACTICABLE DATE.
Common Shares, par value $.01 -- 17,628,996 Shares as of August 7, 1996
Page 1 of 317.
Exhibit Index Appears at page 14
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PART I FINANCIAL INFORMATION
ITEM 1 CONDENSED FINANCIAL STATEMENTS
BEC GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,560 $ 4,903
Trade receivables, net 36,160 29,438
Inventories 38,205 52,337
Investment in discontinued operations - 127,316
Other current assets 5,412 7,313
-------- --------
Total current assets 87,337 221,307
Property and equipment, net 17,307 17,532
Goodwill, net 17,160 17,341
Intangible assets, net 10,351 10,985
Equity in affiliated companies 11,368 10,564
Other assets 16,077 19,015
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Total assets $159,600 $296,744
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of long term debt $ 21,275 $ 62,738
Accounts payable 15,412 23,068
Accrued compensation 2,095 3,080
Other accrued expenses 15,553 11,728
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Total current liabilities 54,335 100,614
Term loan 20,000 -
Long-term debt 18,424 18,606
Convertible subordinated notes 21,133 40,950
Other 9,251 5,517
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Total liabilities 123,143 165,687
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Contingent valuation right 4,570 -
Stockholders' equity:
Preferred stock - par value $1;
500 shares authorized; none outstanding - -
Common stock - par value $.01; 50,000 shares
authorized; 17,629 and 32,101 shares issued 176 321
Additional paid-in capital 28,601 131,553
Cumulative translation adjustment (75) (77)
Treasury stock - 0 and 195 shares, at cost - (1,365)
Retained earnings 3,185 625
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Total stockholders' equity 31,887 131,057
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Total liabilities and stockholders' equity $159,600 $296,744
======== ========
</TABLE>
2
See accompanying notes to consolidated financial statements
<PAGE> 3
BEC GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 48,651 $ 51,602 $ 94,315 $ 97,104
COSTS AND EXPENSES:
Cost of sales 28,283 26,086 53,830 49,172
Selling, general and administrative 14,845 19,646 31,040 37,156
Interest expense 1,610 1,917 3,266 3,486
Other income (830) (1,482) (1,294) (2,431)
--------------------------------------------------------
Total costs and expenses 43,908 46,167 86,842 87,383
--------------------------------------------------------
Income from continuing operations before taxes 4,743 5,435 7,473 9,721
Provision for income taxes 1,558 1,957 2,541 3,500
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Income from continuing operations 3,185 3,478 4,932 6,221
Income from discontinued operations -- 3,166 101,727 5,443
--------------------------------------------------------
Net income $ 3,185 $ 6,644 $ 106,659 $ 11,664
Weighted average shares outstanding 17,718 17,600 17,659 17,600
PRIMARY EARNINGS PER SHARE:
Income from continuing operations $ 0.18 $ 0.20 $ 0.28 $ 0.35
Income from discontinued operations 0.00 0.18 5.76 0.31
--------------------------------------------------------
Net income $ 0.18 $ 0.38 $ 6.04 $ 0.66
========================================================
SUPPLEMENTARY INFORMATION:
Depreciation and amortization from continuing operations $ 2,904 $ 3,094 $ 5,351 $ 5,673
Capital expenditures by continuing operations 1,955 7,854 5,330 11,589
</TABLE>
See accompanying notes to consolidated financial statements.
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BEC GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
For the six months ended June 30,
- ---------------------------------------------------------------------------------------------
1996 1995
---------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net cash provided (used) by operating activities
of continuing operations $ 1,367 $ (14,198)
Net cash provided by operating activities
of discontinued operations 2,441 3,422
--------- ---------
Net cash provided (used) by operating activities 3,808 (10,776)
--------- ---------
Cash flows from investing activities:
Cash expended in acquisitions, net of cash received (2,207)
Capital expenditures (5,329) (11,590)
Intangible assets (2) (207)
Proceeds from sale of fixed assets 157 3,648
Net cash provided (used) by investing activities
of discontinued operations 250,737 (17,599)
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Net cash used by investing activities 245,563 (27,955)
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Cash flows from financing activities:
Proceeds from revolving credit line 1,400 14,050
Proceeds (payments) from long term obligations (176) 2,578
Proceeds (payments) from short term obligations 50 (4,351)
Proceeds from issuance of common stock 2,464 22,763
Cash dividends to stockholders (230,071) --
Net cash used by financing activities
of discontinued operations (20,383) (2,654)
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Net cash provided (used) by financing activities (246,716) 32,386
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Effect on cash of changes in foreign exchange rates 2 (2)
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Net increase (decrease) in cash 2,657 (6,347)
Cash and cash equivalents at beginning of year 4,903 17,350
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Cash and cash equivalents at end of period $ 7,560 $ 11,003
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles, Regulation S-X and
the instructions for Form 10-Q and Regulation S-X. These statements contain
all adjustments, consisting of only normal recurring adjustments, which in the
opinion of management are necessary to fairly present the consolidated
financial position of the Company as of June 30, 1996 and its results of
operations and cash flows for the three and six months ended June 1996 and
1995. The results of operations of the interim periods presented are not
necessarily indicative of the results to be expected for the full fiscal year.
The consolidated balance sheet at December 31, 1995 reflects the investment in
discontinued operations. These condensed financial statements should be read
in conjunction with the financial statements and notes thereto included in the
Company's Registration Statement on Form S-1.
NOTE 2 - DISCONTINUED OPERATIONS
On May 3, 1996, Benson Eyecare Corporation ("Benson"), BEC Group (the "Company"
or "BEC"), Essilor International, S.A. ("Essilor"), Essilor of America, Inc.
("Essilor of America"), a wholly owned subsidiary of Essilor and Essilor
Acquisition Corporation, Inc. ("Essilor Sub"), a wholly owned subsidiary of
Essilor of America, entered into an Agreement and Plan of Merger, as amended
(the "Merger") pursuant to which Essilor purchased Benson and the Omega Group,
Benson's wholesale optical laboratory business. Benson also entered into an
Asset Purchase Agreement, pursuant to which Benson's lens manufacturing
business, Orcolite, was purchased by the Monsanto Company (the "Asset Sale").
Pursuant to the Merger, each outstanding share of Benson common stock was
exchanged for $6.60 in cash and one share of BEC's common stock was received
for every two shares of Benson common stock. Upon consummation of the Merger,
the equity interest in Benson of its stockholders ceased and Benson became a
wholly owned subsidiary of Essilor of America. Also upon consummation of the
Merger, BEC became a Registrant whose common shares are traded on the New York
Stock Exchange.
For accounting purposes, BEC is considered the continuing entity. Accordingly,
the Merger and Asset Sale were considered to be a sale of Omega and Orcolite by
BEC to Essilor and Monsanto, respectively. The accounting treatment of the
Merger and Asset Sale differs from the legal and federal income tax treatment.
The gain on the sale of these businesses and the results of operations for
these businesses are presented as discontinued operations of BEC. The cash
merger consideration is treated as a dividend of BEC Group, Inc. The assets of
the discontinued operations, net of liabilities, are presented as investment in
discontinued operations at December 31, 1995.
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The weighted average shares outstanding shown on the prior year statements of
operations represent 17.6 million of pro forma weighted average shares
outstanding.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Merger and Asset Sale
On May 3, 1996, Benson, BEC, Essilor, Essilor of America and Essilor Sub
effected a Merger pursuant to which Essilor purchased Benson and the Omega
Group, Benson's wholesale optical laboratory business. Benson also entered
into an Asset Purchase Agreement, pursuant to which Benson's lens manufacturing
business, Orcolite, was purchased by the Monsanto Company on May 3, 1996 (the
"Asset Sale"). Pursuant to the Merger, each outstanding share of Benson common
stock was exchanged for $6.60 in cash and one share of BEC's common stock was
received for every two shares of Benson common stock. For accounting purposes,
BEC is considered the continuing entity. Accordingly, the Merger and Asset
Sale were considered to be a sale of Omega and Orcolite by BEC to Essilor and
Monsanto, respectively. The accounting treatment of the Merger and Asset Sale
differs from the legal structure and the federal income tax treatment. The
gain on the sale of these businesses and the results of operations for these
businesses are presented as discontinued operations of BEC. The cash merger
consideration is treated as a dividend of BEC Group, Inc. The assets of the
discontinued operations, net of liabilities, are presented as investment in
discontinued operations at December 31, 1995.
All amounts relating to the discontinued operations in 1996 were reflected in
first quarter results. Accordingly, the discussion of the results of
operations will consist of a discussion of the continuing operations of BEC
Group, Inc.
Results of Operations
QUARTER ENDED JUNE 30, 1996 COMPARED TO QUARTER ENDED JUNE 30, 1995
Net sales for the three months ended June 30, 1996 were $48.7 million compared
to $51.6 million for the same period in 1995. The Company's Optical
Technologies Group sales increased from $9.2 million in the second quarter of
1995 to $11.1 million for the same period in 1996. These increases were offset
by a decrease in sales in the Sunglass Group driven by the sales decreases
experienced at the Foster Grant Group. Fee income of $1.3 million from
Superior Eye Care, Inc. ("Superior"), which was sold on June 28, 1995, was
also included in second quarter 1995 sales.
6
<PAGE> 7
The gross profit margin decreased from 49.4% in the second quarter of 1995 to
41.9% in 1996. Furthermore, the Sunglass Group is contributing lower gross
margins in 1996 as a result of the Foster Grant Group reorganization in 1995
and its continuing turnaround process in 1996. Gross margins in the Optical
Technologies Group were consistent with prior years.
Selling, general and administrative expense decreased from $19.6 million or 38%
of net sales in the second quarter of 1995 to $14.8 million or 31% of net sales
in the second quarter of 1996. This decrease was effected by head office cost
savings achieved at Bolle and BEC and operating cost savings at Foster Grant
Group and in the Optical Technologies Group. Bolle's savings result from the
elimination of the costs of being a stand-alone public company. BEC costs have
decreased accordingly with the smaller size of BEC as compared to Benson. The
Optical Technologies Group continues to combine sales growth with cost
efficiencies and increasing operating margins.
Interest expense for the second quarter of 1996 was $1.6 million compared to
$1.9 million in 1995. Interest rates on the credit facility have decreased by
approximately 40 basis points. Additionally, convertible debt has decreased by
approximately $20 million as a result of the Merger and related transactions.
Other income in 1996 consists primarily of equity income from the Company's
investment in Eyecare Products, plc and interest income on notes receivable.
In 1995, other income was higher due to nonrecurring income earned from the
sale of assets.
The effective income tax rate used for the second quarter of 1996 was 33%,
based on the expected effective income tax rate for the year of 34%. For 1995,
a pro forma tax rate of 36% was applied to continuing operations.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Net sales for the six months ended June 30, 1996 were $94.3 million versus
$97.1 million for the six months ended June 30, 1995. The Company's Optical
Technologies Group sales increased 24% from $17.5 million for the six months
ended June 30, 1995 to $21.9 million for the same period in 1996. These
increases were offset by a 6% decrease in sales at the Sunglass Group, driven
by a $5 million decrease experienced at the Foster Grant Group, offset by an
increase at Bolle. Fee income of $2.6 million from Superior was also included
in the 1995 six month period.
The gross profit margin decreased from 49.4% for the six months ended June 30,
1995 to 42.9% in 1996, primarily due to the Sunglass Group contributing lower
gross margins in 1996 as a result of the Foster Grant Group reorganization in
1995 and its continuing turnaround process in 1996.
Selling, general and administrative expense decreased from $37 million or 38.3%
of net sales in 1995 to $31 million or 32.9% of net sales for the six months
ended June 30, 1996. This decrease was affected by the same factors discussed
in the quarter comparison.
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Interest expense for the six months ended June 30, 1996 was $3.3 million
compared to $3.5 million for the same period in 1995. Applicable interest
rates in 1996 have remained relatively stable, and BEC's average effective
interest rate on the revolving credit facility has been below 7.5% versus
slightly above 7.5% in 1995. Additionally, convertible debt has decreased by
approximately $20 million.
Other income in 1996 consists primarily of equity income from the Company's
investment in Eyecare Products, plc and interest income on notes receivable.
In 1995, other income was higher due to nonrecurring income earned from the
sale of assets.
The estimated effective income tax rate for 1996 is 34%, based on the expected
effective income tax rate for BEC. For 1995, a pro forma tax rate of 36% was
applied to continuing operations.
Liquidity and Capital Resources
During the six months ended June 30, 1996, working capital and continuing
operations generated $1.4 million of cash for the six months ended June 30,
1996, reflecting the use of $17.5 million of cash to reduce accounts payable
and accrued expenses and a $6.8 million increase in accounts receivable, offset
primarily by a $12.2 million decrease in inventory. In 1995, operating
activities generated $3.4 million in cash. The significant increase in
accounts receivable is primarily due to the Sunglass Group, where seasonality
causes receivables to increase through the first quarter. Receivables start to
decline from their seasonal high in the second quarter and continue throughout
the third quarter. The decrease in inventory reflects the Foster Grant Group's
return to normal inventory levels. Capital expenditures for BEC's continuing
operations required the use of $5.3 million of cash, primarily consisting of
display expenditures in the Sunglass Group. During the same period in 1995,
capital expenditures were $11.6 million. This significant decrease is a
positive result of the 1995 reorganization of Foster Grant Group's display
operations. The uses of cash in 1996 were funded primarily through proceeds
from stock issuance and a small increase in the revolving credit facility.
The Company expects cash flow from operations combined with available borrowing
capacity under the revolving credit facility to be sufficient to fund the
Company's operating needs in the short term. On a long term basis, if cash for
expansion or acquisitions is required, the Company has had a successful track
record of being able to access the public equity and debt markets for capital
and liquidity.
Seasonality and Quarterly Results
The Company's Sunglass Group is seasonal in nature with the first and second
quarters having increased sales due to the high demand for sunglasses during
that period. Therefore, operating results will be subject to fluctuation from
quarter to quarter.
8
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On May 3, 1996, the Company effected its spinoff from Benson Eyecare
Corporation ("Benson") and commenced trading on the New York Stock Exchange.
The Company is a leading optics company through its Sunglass Group and Optical
Technologies Group.
The spinoff accompanied the merger of Benson into Essilor International, S.A.
In the spinoff, shareholders of Benson received $6.60 in cash for each share of
Benson held plus one share of the common stock of the Company for every two
shares of Benson held.
The Sunglass Group includes the Foster Grant Group, the largest distributor of
popular-priced sunglasses and non- prescription reading glasses in the United
States, and Bolle America, Inc. which co-designs, markets and distributes
premium sunglasses, sport shields and ski goggles under the Bolle(R) trademark
in the U.S., Mexico and Costa Rica. The Foster Grant Group's owned brands
include Foster Grant(R), Blues(R), FG Sport(R), and Rebels(R); its licensed
brands include ABC Sports(R), Coppertone(R), Revlon(R) and Spalding(R).
The Optical Technologies Group is composed of ORC Lighting Products, which
designs and manufactures xenon and mercury- xenon short-arc lamps and
mini-systems that incorporate lamps, optics and electronic componentry; ORC
Electronic Products, which manufactures the Opti-Beam(R) and Pro-Form(R) lines
of photo exposure systems, and ORC Electroformed Products, which manufactures
metal optics and abrasion protection products.
In addition, the Company owns approximately 27% of Eyecare Products, plc, a
London Stock Exchange listed company that owns L'Amy, the largest optical frame
manufacturer in France. L'Amy has the worldwide licenses to the Lacoste(R),
Nina Ricci(R), Ted Lapidus(R) and Chevignon(R) brands and sells its own
Lunettes L'Amy(R) and Visions(R) brands.
On April 3, 1996, the Company and certain of its subsidiaries entered into a
Credit Agreement (the "Credit Agreement") with a syndicate of lenders (the
"Lenders"), led by NationsBank, N.A., ("NationsBank"). The Credit Agreement
provides for a $50 million credit facility, which is comprised of two separate
facilities: a term loan facility which provides a term loan in the principal
amount of $20 million and a revolving credit facility in the maximum aggregate
principal amount of $30 million, which includes a letter of credit subfacility
of $5 million. The interest rate applicable to the credit facilities will
equal the Base Rate or the Eurodollar Rate (each, as defined in the Credit
Agreement), as the Company from time to time elects. The Base Rate will
generally be equal to the sum of (a) the greater of (i) the prime rate as
announced from time to time by NationsBank or (ii) the Federal Funds Rate plus
one-half percent (0.5%), and (b) a margin ranging from 0% to .375%, depending
upon the Company's satisfaction of certain financial criteria. The Eurodollar
Rate will generally be equal to the interbank offered rate for Eurodollar
deposits, as adjusted to give effect to Eurodollar reserve requirements, plus a
margin ranging from .625% to 1.625%, depending upon the Company's satisfaction
of certain financial criteria. The
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principal amount of the term loan is repayable in fifteen (15) equal
consecutive quarterly installments of $1,250,000, commencing June 30, 1997; a
sixteenth (16th) and final installment in the amount of all outstanding and
unpaid principal is payable on May 3, 2001.
On May 3, 1996, in conjunction with the closing of the Merger and the Asset
Sale described in Part I, Items 1 and 2 to this Quarterly Report on Form 10-Q,
a total of $44.5 million was advanced to the Company under the Credit
Agreement.
On May 3, 1996, the Company appointed the following Directors: Nora A. Bailey,
Richard W. Hanselman; David L. Moore; William T. Sullivan; and Charles F.
Sydnor, M.D. Martin E. Franklin, Chairman and Ian G.H. Ashken, were appointed
Directors effective December 28, 1995 and also continue as Directors.
In a Current Report on Form 8-K dated July 30, 1996, the Company reported that
it is engaged in discussions regarding prospective transactions which, if
consummated, will have a material impact on the Company and its financial
results.
The Company has determined to divest its Foster Grant Group ("Foster Grant")
operation. Foster Grant markets and distributes popular priced sunglasses,
reading glasses and eyewear accessories. During 1995 and into 1996, Foster
Grant's performance has failed to meet the Company's expectations, and Foster
Grant has undergone substantial restructuring in an effort to restore
profitability levels. The Company has determined that Foster Grant's full
recovery will require longer than originally anticipated and that it is in the
best interests of both the Company and Foster Grant that Foster Grant operate
in a private company environment rather than as a substantial component part of
a publicly held company. Consequently, the Company has entered into
discussions with prospective investor groups, including management, regarding
the sale of Foster Grant. Based on such discussions, the Company is cautiously
optimistic that a sale can be completed prior to the release of third quarter
results, although no agreement has been executed as of the date hereof. It is
anticipated that the purchase price would be approximately $45 million, with a
further payment of up to $15 million to the Company based on Foster Grant's
future performance. The Company has created an independent committee of
disinterested Board members to evaluate offers that may be received, and it is
the intent of the Board of Directors to retain an investment banking firm to
render a fairness opinion on any transaction that may be negotiated.
Additionally, the Company is engaged in preliminary discussions with the
manufacturer and certain key independent distributors of Bolle(R) brand
products regarding the prospective consolidation and unification of the
Bolle(R) brand worldwide. Bolle America, Inc. ("Bolle America"), a
wholly-owned subsidiary of the Company, is the exclusive licensee of the
Bolle(R) brand in North America and is the largest independent distributor of
Bolle(R) brand products in the world. It is the Company's intent to actively
pursue these discussions.
There can be no assurance that either of the transactions described herein will
be consummated or, if consummated, will be consummated on the terms presently
under discussion.
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ITEM 6. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
The following exhibits are filed herewith or are incorporated by reference.
4.1 Form of Agreement for Conversion and Exchange of Note, by and
among Benson Eyecare Corporation; BEC Group, Inc.; and,
certain note holders.
4.2 BEC Group, Inc. 1996 Employee Stock Purchase Plan.
10.1 Agreement and Plan of Merger, dated as of February 11, 1996,
between Essilor International, S.A., Essilor of America, Inc.,
Essilor Acquisition Corporation, Benson Eyecare Corporation,
BEC Group, Inc. and Omega Opco, Inc.
10.2 Form of Spinoff Agreement between Benson Eyecare Corporation
and BEC Group, Inc.
10.3 Indemnification Agreement, dated as of February 11, 1996, by
and among Essilor International, S.A., Essilor of America,
Inc., Essilor Acquisition Corporation, Benson Eyecare
Corporation and BEC Group, Inc.
10.4 Form of Indemnification Agreement entered into by and between
the Company and its directors and certain officers.
10.5 Asset Purchase Agreement, dated as of February 11, 1996, by
and among Benson Eyecare Corporation, BEC Group, Inc. and
Optical Radiation Corporation and Monsanto Company.
10.6 Credit Agreement among BEC Group, Inc. And NationsBank, N.A.,
et al, dated as of April 3, 1996. Filed together with this
Exhibit 10.6 are the following ancillary agreements to which
BEC Group, Inc. and/or certain of its subsidiaries or
affiliates are parties:
(a) Subsidiary Guaranty Agreement, dated as of April 3,
1996, among certain subsidiaries of BEC Group, Inc.
and NationsBank, N.A.
(b) Assignment of Patents, Trademarks, Copyrights and
Licenses, dated as of April 3, 1996.
(c) Intellectual Property Security Agreement dated as of
April 3, 1996.
(d) Stock Pledge Agreement, dated as of April 3, 1996.
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(e) Collateral Assignment of Partnership Interests, dated
as of April 3, 1996.
(f) Security Agreement, dated as of April 3, 1996.
27 Financial Data Schedule (for electronic filing only).
(B) REPORTS ON FORM 8-K:
The following Current Reports on Form 8-K were filed during the quarter
ended June 30, 1996:
<TABLE>
<CAPTION>
Description Date of Report
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<S> <C>
Form 8-K, reporting under Item 5 the Registrant's formal May 20, 1996
offer to acquire ILC Technologies, Inc. ("ILC").
Form 8-K, reporting under Item 5 ILC's decision not to pursue June 6 ,1996
further discussions regarding the Registrant's acquisition
offer and withdrawal of the Registrant's offer; and, filing under
Item 7 the Registrant's audited restated financial statements for
the years ended December 31, 1995, 1994 and 1993.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BEC GROUP, INC.
/s/ Martin E. Franklin
Date: August 9, 1996 By:
------------------------------------
Martin E. Franklin
Chairman and Chief Executive Officer
/s/ Ian G.H. Ashken
Date: August 9, 1996 By:
------------------------------------
Ian G.H. Ashken
Chief Financial Officer
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EXHIBIT INDEX
The following Exhibits are filed herewith or incorporated by reference:
<TABLE>
<CAPTION>
Number Exhibit Page No.
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<S> <C> <C>
4.1 Form of Agreement for Conversion and Incorporated by reference to Annex F
Exchange of Note, by and among Benson to Benson Eyecare Corporation's Proxy
Eyecare Corporation; BEC Group, Inc.; Statement, dated April 5, 1996
and certain note holders. (Commission File No. 1-9435).
4.2 BEC Group, Inc. 1996 Employee Stock Filed electronically herewith, at page 16.
Purchase Plan.
10.1 Agreement and Plan of Merger, dated as Incorporated by referenced to Exhibit
of February 11, 1996, between Essilor 10.1 to the Company's Registration
International, S.A., Essilor of Statement on From S-1, (Reg. No.
America, Inc., Essilor Acquisition 333-3186) (Commission File No. 1-14360).
Corporation, Benson Eyecare
Corporation, BEC Group, Inc. and Omega
Opco, Inc.
10.2 Form of Spinoff Agreement between Incorporated by reference to Exhibit
Benson Eyecare Corporation and BEC 10.2 to the Company's Registration
Group, Inc. Statement on Form S-1, (Reg. No.
333-3186) (Commission File No. 1-14360).
10.3 Indemnification Agreement, dated as of Incorporated by reference to Exhibit
February 11, 1996, by and among 10.3 to the Company's Registration
Essilor International, S.A., Essilor Statement on Form S-1 (Reg. No.
of America, Inc., Essilor Acquisition 333-3186) (Commission File No. 1-14360).
Corporation, Benson Eyecare
Corporation, and BEC Group, Inc.
10.4 Form of Indemnification Agreement Incorporated by reference to Exhibit
entered into by and between the 10.4 to the Company's Current Report
Company and its directors and certain on Form 10-Q for the period ending
officers. March 31, 1996 (Commission File No.
1-14360).
</TABLE>
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<TABLE>
<CAPTION>
Number Exhibit Page No.
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<S> <C> <C>
10.5 Asset Purchase Agreement, dated as Incorporated by reference to Exhibit
February 11, 1996, by and among Benson 10.2 to Benson Eyecare Corporation's
Eyecare Corporation, BEC Group, Inc. Current Report on Form 8-K, dated
and Optical Radiation Corporation and February 12, 1996 (Commission File No.
Monsanto Company. 1-9435).
10.6 Credit Agreement among BEC Group, Inc. Filed electronically herewith, at page 28.
and NationsBank, N.A., et al, dated as
-- --
of April 3, 1996. Filed together with
such Exhibit 10.6 are copies of the
following ancillary agreements:
(a) Subsidiary Guaranty Agreement,
dated as of April 3, 1996, among
certain subsidiaries of BEC Group,
Inc. and NationsBank, N.A.
(b) Assignment of Patents,
Trademarks, Copyrights and Licenses,
dated as of April 3, 1996.
(c) Intellectual Property Security
Agreement, dated as of April 3, 1996.
(d) Stock Pledge Agreement, dated as
of April 3, 1996.
(e) Collateral Assignment of
Partnership Interests, dated as of
April 3, 1996.
(f) Security Agreement, dated as of
April 3, 1996.
27 Financial Data Schedule (for Filed electronically herewith, at page 317.
electronic filing only).
</TABLE>
15
<PAGE> 1
EXHIBIT 4.2
BEC GROUP, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended. The provisions of the Plan, accordingly, shall be construed so as to
extend and limit participation in a manner consistent with the requirements of
that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Compensation Committee of the Board,
or such other committee as may be appointed by the Board, each member of which
shall be a "disinterested person" within the meaning of Rule 16b-3, which shall
be the administrative committee for the Plan.
(d) "Common Stock" shall mean the Common Stock of the Company, $0.01
par value per share.
(e) "Company" shall mean BEC Group, Inc., a Delaware corporation.
(f) "Compensation" shall mean all base straight time gross earnings,
exclusive of payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses, commissions and other compensation.
(g) "Designated Subsidiaries" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(h) "Employee" shall mean any individual who is an employee of the
Company or a Designated Subsidiary for purposes of tax withholding under the
Code whose customary employment with the Company or any Designated Subsidiary
is at least twenty (20) hours per week and more than five (5) months in any
calendar year. For purposes of the Plan, the employment relationship shall be
treated as continuing intact while the individual is on sick leave or other
leave of absence approved by
<PAGE> 2
the Company. Where the period of leave exceeds 90 days and the individual's
right to reemployment is not guaranteed either by statute or by contract, the
employment relationship will be deemed to have terminated on the 91st day of
such leave.
(i) "Enrollment Date" shall mean the first day of each Offering
Period.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exercise Date" shall mean the last day of each Offering Period.
(l) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), its Fair Market Value shall be the average of the
high and low sale price for the Common Stock (or the average of the closing bid
and asked prices, if no sales were reported), as quoted on such exchange (or
the exchange with the greatest volume of trading in Common Stock) or system on
the date of such determination, as reported in The Wall Street Journal or such
other source as the Committee deems reliable; or
(2) If the Common Stock is quoted on NASDAQ (but not on the
National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the average of the closing bid and asked prices for the Common Stock
on the date of such determination, as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or
(3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Committee.
(m) "Offering Period" shall mean, subject to the second sentence of
Section 4 hereof, a semi-annual period of approximately six (6) months, the
first such semi-annual period commencing on the first Trading Day on or after
January 1, of each year and terminating on the last Trading Day on or prior to
the following June 30, and the second such semi-annual period commencing on the
first Trading Day on or after July 1 of each year and terminating on the last
Trading Day on or prior to the following December 31; provided, however, that
the first Offering Period shall commence on the first Trading Day after the
consummation of the Spinoff and end on the last Trading Day in the period
ending on or prior to June 30, 1996.
2
<PAGE> 3
(n) "Parent" shall mean a corporation which is a "parent corporation"
of the Company within the meaning of section 424(e) of the Code.
(o) "Plan" shall mean this BEC Group, Inc. 1996 Employee Stock
Purchase Plan.
(p) "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(q) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(r) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act or any successor provision.
(s) "Spinoff" shall mean the pro rata spinoff to the stockholders of
Benson Eyecare Corporation of all of the outstanding Common Stock in connection
with the merger of Benson Eyecare Corporation with and into Essilor Acquisition
Corporation pursuant to the terms of the Agreement and Plan of Merger dated
February 11, 1996, between Benson Eyecare Corporation, Essilor International,
S.A., Essilor America, Inc. and Essilor Acquisition Corporation.
(t) "Subsidiary" shall mean a corporation which is a "subsidiary
corporation" of the Company within the meaning of section 424(f) of the Code.
(u) "Trading Day" shall mean a day on which national stock exchanges
and NASDAQ are open for trading.
3. Eligibility.
(a) Each person who is an Employee, on the date of the consummation
of the Spinoff shall be eligible to participate in the Plan. Thereafter, each
person who is an Employee on a given Enrollment Date and who has completed at
least one full year as an Employee shall be eligible to participate in the
Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after
the grant, such Employee would own stock (together with stock owned by any
other person or entity that would be attributed to such Employee pursuant to
section 424(d) of the Code) of the Company (including, for this purpose, all
shares of stock subject to any outstanding options to purchase such stock,
whether or not currently exercisable and irrespective of whether such options
are subject to the favorable
3
<PAGE> 4
tax treatment of section 421(a) of the Code) possessing five percent (5%) or
more of the total combined voting power or value of all classes of stock of the
Company or of any Parent or Subsidiary, or (ii) which permits his or her rights
to purchase stock under all employee stock purchase plans (within the meaning
of section 423 of the Code) of the Company and its Parents and Subsidiaries to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the Fair Market Value of the stock at the time such option
is granted) for each calendar year in which such option is outstanding at any
time. The limitation described in clause (ii) of the preceding sentence shall
be applied in a manner consistent with Section 423(b)(8) of the Code.
4. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods continuing from the first Offering Period until terminated in
accordance with Section 19 hereof. The Board shall have the power to change the
duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without stockholder approval if such change is
announced at least fifteen (15) days prior to the scheduled beginning of the
first Offering Period to be affected thereafter.
5. Participation.
(a) An Employee may become a participant in the Plan for an Offering
Period by completing a subscription agreement authorizing payroll deductions in
the form of Exhibit A to this Plan and filing it with the Company's payroll
office at least five (5) business days prior to the applicable Enrollment Date,
unless a later time for filing the subscription agreement is set by the Board
for all Employees with respect to a given Offering Period.
(b) Payroll deductions for a participant shall commence on the first
payroll date following the Enrollment Date and shall end on the last payroll
date in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay
day during the Offering Period in an amount (expressed as a whole number
percentage) not exceeding ten percent (10%) of the Compensation which he or she
receives on each pay day during the Offering Period; provided, however, that in
no event may any participant have payroll deductions made for any Offering
Period in excess of $10,000.
4
<PAGE> 5
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and will be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the
Plan, as provided in Section 10 hereof, at any time during the Offering Period
prior to the Exercise Date. Once an Offering Period has commenced, a
participant may not increase or decrease the rate of his or her payroll
deductions for that Offering Period, but may, during that Offering Period,
increase or decrease the rate of his or her payroll deductions for the next
succeeding Offering Period, by completing or filing with the Company a new
subscription agreement, at least ten (10) business days prior to the end of
that Offering Period, authorizing a change in payroll deduction rate. A
participant's subscription agreement shall remain in effect for successive
Offering Periods unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, a participant's payroll deductions
may be decreased to 0% (i) at any time, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 3(b) hereof, and (ii) for each
Offering Period, at such time during such Offering Period that the aggregate of
all payroll deductions accumulated with respect to such Offering Period equal
or would otherwise exceed $10,000. Subject to clause (i) of the preceding
sentence, payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the next succeeding
Offering Period, unless terminated by the participant as provided in Section 10
hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Common Stock issued under the Plan is disposed of,
the participant must make adequate provisions for the Company's federal, state,
or other tax withholding obligations, if any, which arise upon the exercise of
the option or the disposition of the Common Stock. At any time, the Company
may, but will not be obligated to, withhold from the participant's compensation
the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the
Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
Employee participating in such Offering Period shall be granted an option to
purchase on the Exercise Date of such Offering Period (at the applicable
Purchase Price) up to a number of shares of the Company's Common Stock
determined by dividing such Employee's payroll deductions accumulated prior to
such Exercise Date and retained in the participant's account as of the Exercise
Date by the applicable Purchase Price;
5
<PAGE> 6
provided, however, that in no event shall an Employee be permitted to purchase
during each Offering Period more than a number of Shares determined by dividing
$12,500 by the Fair Market Value of a share of Common Stock on the Enrollment
Date, and provided, further, that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. Exercise of the option
shall occur as provided in Section 8 hereof, unless the participant has
withdrawn pursuant to Section 10 hereof, and shall expire on the last day of
the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
will be exercised automatically on the Exercise Date, and, subject to the
limitations set forth in Sections 3(b), 7 and 12 hereof, the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided
in Section 10 hereof. Any other monies left over in a participant's account
after the Exercise Date shall also be retained in the participant's account for
the subsequent Offering Period. During a participant's lifetime, a
participant's option to purchase shares hereunder is exercisable only by the
participant.
9. Delivery. Common Stock certificates representing shares of Common
Stock purchased for a participant shall generally be retained by the Company
and held for the benefit of the participant until such time as the participant
requests delivery of such certificate. As promptly as practicable after a
participant requests delivery of a Common Stock certificate held by the Company
for his benefit, the Company shall arrange the delivery of the certificate to
or for the account of such participant, as appropriate.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time prior to the last business day of an
Offering Period by giving written notice to the Company in the form of Exhibit
B to this Plan. All of the participant's payroll deductions credited to his or
her account will be paid to such participant promptly after receipt of notice
of withdrawal and such participant's option for the Offering Period will be
automatically terminated, and no further payroll deductions for the purchase of
shares will be made during the Offering Period. If a participant withdraws from
the Plan during an Offering Period, he or she may not resume participation
until the next Offering Period. He or she may
6
<PAGE> 7
resume participation for any other Offering Period by delivering to the Company
a new subscription agreement at least five (5) days prior to the Enrollment
Date for such Offering Period.
(b) Upon a participant's ceasing to be an Employee, for any reason,
he or she will be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such participant's account during the Offering
Period but not yet used to exercise the option will be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 14 hereof, and such participant's option will be
automatically terminated.
(c) A participant's withdrawal from an Offering Period will not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company.
11. Interest.
No interest or other increment shall accrue or be payable with respect
to any of the payroll deductions of a participant in the Plan.
12. Stock.
(a) The shares of Common Stock to be sold to participants under the
Plan may, at the election of the Company, be either treasury shares or
authorized but previously unissued shares of Common Stock. The maximum number
of shares of Common Stock which shall be made available for sale under the Plan
shall be 500,000 shares, subject to adjustment upon changes in capitalization
of the Company as provided in Section 18 hereof. If on a given Exercise Date
the number of shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan, the Company shall make a
pro rata allocation of the shares remaining available for purchase in as
uniform a manner as shall be practicable and as it shall determine to be
equitable.
(b) No participant will have an interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the
Committee. The Committee shall have full and exclusive discretionary authority
to construe, interpret and apply the terms of the Plan, to determine
eligibility and to
7
<PAGE> 8
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Committee shall, to the full extent permitted by
law, be final and binding upon all parties. Members of the Board who are
Employees are permitted to participate in the Plan, provided that:
(1) Members of the Board who are eligible to participate in the
Plan may not vote on any matter affecting the administration of the Plan or the
grant of any option pursuant to the Plan.
(2) No member of the Committee may participate in the Plan.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 provides
specific requirements for the administrators of plans of this type, the Plan
shall be only administered by such a body and in such a manner as shall comply
with the applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3,
no discretion concerning decisions regarding the Plan shall be afforded to any
committee or person that is not "disinterested" as that term is used in Rule
16b-3.
The terms and conditions of options granted hereunder to, and the
purchase of shares by, persons subject to Section 16 of the Exchange Act shall
comply with the applicable provisions of Rule 16b-3 thereunder. This Plan shall
be deemed to contain, and such options shall contain, and the shares issued
upon exercise thereof shall be subject to, such additional conditions and
restrictions as may be required by Rule 16b-3 to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise
Date on which the option is exercised but prior to delivery to such participant
of such shares or cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the participant's
account under the Plan in the event of such participant's death prior to
exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver
8
<PAGE> 9
such shares or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees at
least annually, within such time as the Committee may reasonably determine,
which statements will set forth the amounts of payroll deductions, the Purchase
Price, the number of shares purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves as well as the price per share of
Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common
Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
9
<PAGE> 10
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed
or an equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress by
setting a new Exercise Date (the "New Exercise Date"). If the Board shortens
the Offering Period then in progress in lieu of assumption or substitution in
the event of a merger or sale of assets, the Board shall notify each
participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for his option has been changed to the
New Exercise Date and that his option will be exercised automatically on the
New Exercise Date, unless prior to such date he has withdrawn from the Offering
Period as provided in Section 10 hereof. For purposes of this paragraph, an
option granted under the Plan shall be deemed to be assumed if, following the
sale of assets or merger, the option confers the right to purchase, for each
share of option stock subject to the option immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by holders of Common Stock
for each share of Common Stock held on the effective date of the transaction
(and if such holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if such consideration received in the
sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in the
event the Company effects one
10
<PAGE> 11
or more reorganizations, recapitalizations, rights offerings or other increases
or reductions of shares of its outstanding Common Stock, and in the event of
the Company being consolidated with or merged into any other corporation.
19. Amendment or Termination.
(a) The Board may at any time and for any reason terminate or amend
the Plan. Except as provided in Section 18 hereof, no such termination may
adversely affect options previously granted; provided, that an Offering Period
may be terminated by the Board on any Exercise Date if the Board determines
that the termination of the Plan is in the best interests of the Company and
its stockholders. Except as provided in Section 18 hereof, no amendment may
make any change in any option theretofore granted which adversely affects the
rights of any participant. To the extent necessary to comply with Rule 16b-3 or
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain stockholder approval in
such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or the Committee) shall be entitled to change the Offering Periods,
limit the frequency or number of changes in the amount withheld during an
Offering Period, establish the exchange ratio applicable to amounts withheld in
a currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or the Committee) finds, in its sole discretion, advisable and
consistent with the Plan.
20. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder and the requirements of
11
<PAGE> 12
any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without
any present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years thereafter unless sooner terminated under Section 19 hereof.
* * *
As adopted by the Board of Directors
of BEC Group, Inc. on _____ __, 1996.
12
<PAGE> 1
EXHIBIT 10.6
================================================================================
CREDIT AGREEMENT
Among
BEC GROUP, INC.,
as Borrower,
and
NATIONSBANK, N.A.,
EUROPEAN AMERICAN BANK,
NATIONAL CITY BANK, KENTUCKY,
and
THE OTHER FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO,
as Lenders,
and
NATIONSBANK, N.A.,
as Agent.
Dated as of April 3, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE 1
DEFINITIONS
<S> <C> <C>
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 2
The Term Loan
SECTION 2.1 Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.2 Term Loan Advance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.3 Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.4 Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.5 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.6 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.7 Mandatory Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.8 Borrower's Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.9 Term Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.10 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.11 Conversions and Elections of Subsequent
Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.12 Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 3
REVOLVING LOANS
SECTION 3.1 The Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.2 Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.3 Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.4 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.5 Voluntary Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.6 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.7 Increase and Decrease in Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.8 Borrower's Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.9 Revolving Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.10 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.11 Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.12 Conversions and Elections of Subsequent
Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.13 Unused Fee and Upfront Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.14 Deficiency Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 3.16 Additional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE 4
LETTERS OF CREDIT
<S> <C> <C>
SECTION 4.1 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.2 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.3 Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.4 Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 5
YIELD PROTECTION AND ILLEGALITY
SECTION 5.1 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.2 Suspension of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.3 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.4 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.5 Alternate Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 6
SECURITY
SECTION 6.1 Security Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.3 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.4 Pledge of Intercompany Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.5 Lease Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 7
CONDITIONS PRECEDENT
SECTION 7.1 Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.2 Conditions to Initial Advance and
Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.3 Conditions of All Advances and
Issuances of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
SECTION 8.1 Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.2 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.3 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.4 Subsidiaries and Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.5 Ownership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.6 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.7 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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SECTION 8.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.9 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.11 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.12 Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.13 Patents, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.14 No Untrue Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.15 No Consents, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.17 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.19 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.20 Spinoff and Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 9
AFFIRMATIVE COVENANTS
SECTION 9.1 Financial Reports, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.2 Maintain Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.3 Existence, Qualification, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.4 Regulations and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.6 True Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.7 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.8 Observe all Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.9 Covenants Extending to Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 9.10 Officer's Knowledge of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 9.11 Suits or Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 9.12 Notice of Discharge of Hazardous
Material or Environmental Complaint . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 9.13 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 9.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 9.15 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 9.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 9.17 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 9.18 ERISA Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 9.19 Continued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 9.20 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 9.21 New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 9.22 Rate Hedging Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 10
NEGATIVE COVENANTS
SECTION 10.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 10.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 10.3 Investments; Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 10.4 Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.5 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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SECTION 10.6 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.7 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.8 Dissolution, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 10.9 Rate Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 10.10 Dividends, Redemptions and Other Payments . . . . . . . . . . . . . . . . . . . . . 84
SECTION 10.11 Subordinated Debt and TIA Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 10.12 Defaults Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.13 Compensation; Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.14 Change in Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.15 Limitations on Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.16 Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 10.17 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE 11
FINANCIAL COVENANTS
SECTION 11.1 Consolidated Fixed Charge Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.2 Consolidated Funded Indebtedness to
Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 11.3 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 11.4 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 11.5 Special Calculations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 12
EVENTS OF DEFAULT
SECTION 12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 12.2 Agent to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 12.3 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 12.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 12.5 Allocation of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE 13
THE AGENT
SECTION 13.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 13.2 Attorneys-in-fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 13.3 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 13.4 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 13.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 13.6 No Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 13.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 13.8 Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 13.9 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 13.10 Sharing of Payments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
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ARTICLE 14
ASSIGNMENTS AND PARTICIPATIONS
<S> <C>
SECTION 14.1 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 14.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
ARTICLE 15
GENERAL PROVISIONS
SECTION 15.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 15.2 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 15.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 15.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 15.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 15.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 15.7 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 15.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 15.9 Headings and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
SECTION 15.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
SECTION 15.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
SECTION 15.12 Agreement Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
SECTION 15.13 Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
SECTION 15.14 Governing Law; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
EXHIBIT A Applicable Commitment Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Form of Assignment and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Form of Notice of Appointment (or Revocation) of
Authorized Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D Form of Borrowing Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT E Form of Guaranty Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F Form of Interest Rate Selection Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G Form of Stock Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
EXHIBIT H Form of Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
EXHIBIT I-1 Form of Term Loan Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1-1
EXHIBIT I-2 Form of Revolving Credit Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2-1
EXHIBIT J Form of Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-1
EXHIBIT K Form of Intellectual Property Security Agreement . . . . . . . . . . . . . . . . . . . . . . . K-1
EXHIBIT L Form of Partnership Interest Assignment Agreement . . . . . . . . . . . . . . . . . . . . . . . L-1
EXHIBIT M Upfront Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M-1
EXHIBIT N Forms of Opinions of Counsel to the Borrower and
the Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N-1
EXHIBIT O Form of Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . O-1
EXHIBIT P Form of Landlord Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P-1
EXHIBIT Q Form of Lease Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Q-1
Schedule 1 Material Leased Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-1
Schedule 8.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-2
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Schedule 8.5 Ownership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-3
Schedule 8.6 Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-4
Schedule 8.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-5
Schedule 8.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-6
Schedule 8.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-7
Schedule 8.13 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-8
Schedule 8.15 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-9
Schedule 8.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-10
Schedule 8.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-11
Schedule 8.19 Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-12
Schedule 9.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-13
Schedule 10.1 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-14
Schedule 10.4 Mergers and Consolidations . . . . . . . . . . . . . . . . . . . . . . . . . . Sch-15
Schedule 10.5 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . Sch-16
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") made as of this 3rd day of
April, 1996 by and among BEC GROUP, INC., a Delaware corporation having its
chief executive office in Rye, New York (the "Borrower"), EACH LENDER EXECUTING
AND DELIVERING A SIGNATURE PAGE HERETO and each other lender which may
hereafter execute and deliver an instrument of assignment and assumption with
respect to this Agreement pursuant to Section 14.1 hereof (hereinafter such
lenders may be referred to individually as a "Lender" or collectively as the
"Lenders") and NATIONSBANK, N.A., a national banking association organized and
existing under the laws of the United States of America ("NationsBank") in its
capacity as agent for the Lenders (in such capacity, and any successor
appointed in accordance with the terms of Section 13.9 hereof, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders and the Agent
enter into this Agreement and make available to the Borrower hereunder credit
facilities in an aggregate principal amount of $50,000,000 consisting of a term
loan facility in the principal amount of $20,000,000 and a revolving credit
facility in the maximum aggregate principal amount at any time outstanding of
$30,000,000, which shall include a letter of credit subfacility of up to
$5,000,000; and
WHEREAS, the Lenders are willing to make all such credit facilities
available to the Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms, covenants, provisions
and conditions hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. For the purposes of this Agreement, in
addition to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (including the purchase of an
option, warrant or convertible or similar type security to acquire
such a controlling interest at the time it becomes exercisable by the
holder thereof), whether by purchase of such equity interest or upon
exercise of an option or warrant for, or conversion of securities
into,
<PAGE> 9
such equity interest, or (ii) assets of another Person for which the
Cost of Acquisition equals or exceeds two percent (2%) of Consolidated
Total Assets determined as of the last day of the fiscal quarter of
the Borrower immediately preceding the date of the agreement related
to such Acquisition;
"Advance" means (a) the advance of the Term Loan and (b) any
borrowing under the Revolving Credit Facility consisting of a Base
Rate Loan or a Eurodollar Rate Loan, as the case may be;
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or
is under common control with, the Borrower; (ii) which beneficially
owns or holds 10% or more of any class of the outstanding voting stock
of the Borrower; or (iii) 10% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation,
10% or more of the equity interest) of which is beneficially owned or
held by the Borrower. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, whether through
ownership of voting stock, by contract or otherwise;
"Applicable Commitment Percentage" means, at any time for each
Lender with respect to the Total Credit Commitment (including its
Participations and its obligations hereunder to Issuing Bank to
acquire Participations), a fraction (expressed as a percentage), (A)
the numerator of which shall be the sum of such Lender's Revolving
Credit Commitment and Term Loan Commitment at such date of
determination (which as of the Closing Date are set forth on Exhibit A
attached hereto and incorporated herein by reference), and (B) the
denominator of which shall be the Total Credit Commitment at such date
of determination; provided that the Applicable Commitment Percentage
of each Lender shall be increased or decreased to reflect any
assignments to or by such Lender effected in accordance with Section
14.1 hereof;
"Applicable Margin" means for purposes of calculating (i) the
applicable interest rate for the Interest Period for any Eurodollar
Rate Loan or the applicable rate of the Issuing Bank's fee for the
issuance of any Standby Letters of Credit, (ii) the applicable
interest rate for any Base Rate Loan, (iii) the applicable rate of the
Issuing Bank's fee for the issuance of any Commercial Letters of
Credit and (iv) the applicable rate of the Unused Fee for any date for
purposes of Section 3.13 hereof, that percent per annum set forth
below, which shall be (A) determined as of each Determination Date
based upon the computations set forth in
2
<PAGE> 10
the compliance certificates delivered to the Agent pursuant to
Sections 8.6, 9.1(a)(ii), 9.1(b)(ii) and 9.1(c) hereof, subject to
review and approval of such computations by the Agent, and delivered
to the Agent not later than the time set forth in Sections 8.6,
9.1(a), 9.1(b) and 9.1(c) hereof (the "Compliance Date") and (B)
applicable to all Eurodollar Rate Loans and Base Rate Loans made,
renewed or converted, Standby Letters of Credit and Commercial Letters
of Credit outstanding and any Unused Fee due and payable, on or after
the most recent Compliance Date to occur based upon the ratio of
Consolidated Funded Indebtedness as at the Determination Date to
Consolidated EBITDA for the Four-Quarter-Period then ended, as
specified below:
<TABLE>
<CAPTION>
Ratio of Applicable
Consolidated Margin for
Funded Eurodollar Rate Applicable Margin
Indebtedness to Loans and Applicable for Commercial
Consolidated Standby Letters Margin for Base Applicable Margin Letter of
EBITDA of Credit Fee Rate Loans for Unused Fee Credit Fee
------ ---------- ---------- --------------- ----------------
<S> <C> <C> <C> <C>
Greater than or
equal to 3.00 to
1.00 1.625% .375% .375% .50%
Greater than or
equal to 2.25 to
1.00 but less
than 3.00 to
1.00 1.375% .125% .300% .375%
Greater than or
equal to 2.00 to
1.00 but less
than 2.25 to
1.00 1.125% .000% .250% .30%
Greater than or
equal to 1.25 to
1.00 but less
than 2.00 to
1.00 .875% .000% .225% .25%
Less than 1.25
to 1.00 .625% .000% .200% .20%
</TABLE>
3
<PAGE> 11
provided, however, the calculation of Consolidated EBITDA for each
Determination Date prior to June 30, 1997 shall be based upon the pro
forma income statements delivered pursuant to Section 9.1 hereof with
respect to the Four-Quarter Period ending on such Determination Date.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit
executed by the Borrower from time to time and delivered to Issuing
Bank to support the issuance of Letters of Credit;
"Asset Disposition" means any voluntary disposition, whether
by sale, lease or transfer, other than as permitted under Section 10.4
hereof, of (a) any or all of the assets of the Borrower or its
Subsidiaries, and (b) any of the capital stock, or securities or
investments exchangeable, exercisable or convertible for or into, or
otherwise entitling the holder to receive, any of the capital stock of
any Subsidiary (other than a disposition to a Guarantor).
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B attached hereto and incorporated
herein by reference (with blanks appropriately filled in) delivered to
the Agent in connection with an assignment of a Lender's interest
under this Agreement pursuant to Section 14.1;
"Authorized Representative" means any of the Chairman,
President, Executive Vice Presidents, Senior Vice Presidents or Vice
Presidents of the Borrower and, with respect to financial matters, the
Chief Financial Officer, Vice President-Finance or Controller of the
Borrower or any other person expressly designated by the Board of
Directors of the Borrower (or the appropriate committee thereof) as an
Authorized Representative of the Borrower, as set forth from time to
time in a certificate in the form attached hereto as Exhibit C and
incorporated herein by reference;
"Base Rate" means the per annum rate of interest equal to the
sum of (a) the greater of (i) the Prime Rate or (ii) the Federal Funds
Rate plus one-half of one percent (.5%) plus (b) the Applicable Margin
for Base Rate Loans. Each change in such Base Rate shall be effective
as of the effective date of any change in the Prime Rate or the
Federal Funds Rate giving rise thereto;
"Base Rate Loan" means any Revolving Loan or a Segment of the
Term Loan for which the rate of interest is determined by reference to
the Base Rate;
"Base Rate Segment" means a Segment bearing interest or to
bear interest at the Base Rate;
4
<PAGE> 12
"BEC Distribution" means BEC Distribution, Inc., a Delaware
corporation;
"Benson" means Benson Eyecare Corporation, a Delaware
corporation;
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body);
"Bolle America" means Bolle America, Inc., a Delaware
corporation;
"Bonneau" means The Bonneau Company, a Texas corporation and
wholly owned subsidiary of the Borrower;
"Borrower's Account" means demand deposit account number
001841311 (North Carolina) with the Agent, or any successor account
with the Agent, which may be maintained at one or more offices of the
Agent or an agent of the Agent;
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Term Loan
Facility or the Revolving Credit Facility, in the form attached hereto
as Exhibit D and incorporated herein by reference;
"Breakage Event" has the meaning set forth in Section 5.4
hereof;
"Business Day" means, (i) with respect to any Base Rate Loan,
any day which is not a Saturday, Sunday or a day on which banks in the
State of New York or State of North Carolina are authorized or
obligated by law, executive order or governmental decree to be closed
and, (ii) with respect to any Eurodollar Rate Loan, any day which is a
Business Day, as described above, and on which the relevant
international financial markets are open for the transaction of
business contemplated by this Agreement in London, England, New York,
New York and Charlotte, North Carolina;
"Capital Expenditures" means, with respect to the Borrower and
its Subsidiaries, for any period the sum of (without duplication) (i)
all expenditures (whether paid in cash or accrued as liabilities) by
the Borrower or any Subsidiary during such period for items that would
be classified as "property, plant or equipment" or comparable items on
the consolidated balance sheet of the Borrower and its Subsidiaries,
including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance as evidenced in writing
and submitted to the Agent together with any
5
<PAGE> 13
compliance certificate delivered pursuant to Section 9.1(a) or (b)
hereof, and (ii) with respect to any Capital Lease entered into by the
Borrower or its Subsidiaries during such period, the present value of
the lease payments due under such Capital Lease over the term of such
Capital Lease applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated interest rate,
that rate used in the preparation of the financial statements
described in Section 9.1(a) hereof), all the foregoing in accordance
with Generally Accepted Accounting Principles applied on a Consistent
Basis; provided, however, for the purposes of calculating the
Borrower's Consolidated Fixed Charge Ratio, "Capital Expenditures"
shall only include capital expenditures for the purchase of Displays
in excess of $6,000,000 during the period of determination;
"Capital Leases" means all leases which have been or should be
capitalized in accordance with Generally Accepted Accounting
Principles, including Statement No. 13 of the Financial Accounting
Standards Board and any successor thereof, applied on a Consistent
Basis;
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in Section 7.1 hereof have been satisfied or
waived;
"Code" means the Internal Revenue Code of 1986, as amended,
any successor provision or provisions and any regulations promulgated
thereunder;
"Collateral" means the collateral described in the Stock
Pledge Agreements and the Security Instruments;
"Commercial Letter of Credit" means an irrevocable documentary
letter of credit issued hereunder for the account of the Borrower;
provided that the expiry date of a Commercial Letter of Credit shall
not be later than six (6) months subsequent to the date of issuance
thereof;
"Common Stock" means the common stock, par value $.01 per
share, of the Borrower;
"Compliance Date" has the meaning assigned to such term in the
definition of "Applicable Margin" in Section 1.1 hereof;
"Consistent Basis" in reference to the application of
Generally Accepted Accounting Principles means the accounting
principles observed in the period referred to are comparable in all
material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in Section 8.6(a)
hereof;
6
<PAGE> 14
"Consolidated EBITDA" means, with respect to the Borrower and
its Subsidiaries for any period of computation thereof, the sum of,
without duplication, (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) taxes on income, (iv) amortization, and (v)
depreciation, all determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles applied on a Consistent
Basis;
"Consolidated Fixed Charge Ratio" means, with respect to the
Borrower and its Subsidiaries for the period of computation thereof,
the ratio of (i) Consolidated EBITDA for such period less (A) Capital
Expenditures for such period and (B) the amount of depreciation during
such period in excess of $6,000,000 attributable to Displays, to (ii)
Consolidated Fixed Charges for such period;
"Consolidated Fixed Charges" means, with respect to Borrower
and its Subsidiaries for any period of computation thereof, the sum
of, without duplication, (i) Consolidated Interest Expense less
non-cash interest expense with respect to the Subordinated Debt, (ii)
the principal amount of Consolidated Funded Indebtedness due and
payable during such period, (iii) all dividends and other
distributions (other than distributions in the form of any stock
(including without limitation capital stock of the Borrower),
security, note or other instrument) paid during such period
(regardless of when declared) on any shares of capital stock of the
Borrower then outstanding, including without limitation its Common
Stock, (iv) all payments under Capital Leases made during such period
and (v) all state and Federal taxes paid in cash during such period,
all determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis;
"Consolidated Funded Indebtedness" means, with respect to the
Borrower and its Subsidiaries, at any time as of which the amount
thereof is to be determined, the sum of (i) Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries at such time less the
amount of all outstanding Subordinated Debt at such time and (ii) the
face amount of all outstanding letters of credit issued for the
account of the Borrower or any of its Subsidiaries and all obligations
(to the extent not duplicative) arising under such letters of credit,
all determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis;
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Borrower and its Subsidiaries, including without limitation (i) the
current amortized portion of debt discounts to the extent included in
gross interest expense,
7
<PAGE> 15
(ii) the current amortized portion of all fees (including, without
limitation, fees payable in respect of a Swap Agreement) payable in
connection with the incurrence of Indebtedness to the extent included
in gross interest expense and (iii) the portion of any payments made
in connection with Capital Leases allocable to interest expense, all
determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis;
"Consolidated Net Income" means, for any period of computation
thereof, the net income of the Borrower and its Subsidiaries, but
excluding as income any net gain or credit of an extraordinary nature,
all determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis;
"Consolidated Net Worth" means at any time as of which the
amount thereof is to be determined, Consolidated Shareholders' Equity;
"Consolidated Pretax Income" means, for any period of
computation thereof, Consolidated Net Income plus all taxes on income
of the Borrower and its Subsidiaries, all determined on a consolidated
basis in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis;
"Consolidated Shareholders' Equity" means at any time as of
which the amount thereof is to be determined, the sum of the following
in respect of the Borrower and its Subsidiaries (determined on a
consolidated basis and excluding intercompany items among the Borrower
and its Subsidiaries and any upward adjustment after the Closing Date
due to revaluation of assets): (i) the amount of issued and
outstanding share capital, plus (ii) the amount of additional paid-in
capital and retained income (or, in the case of a deficit, minus the
amount of such deficit), plus (iii) the amount of any foreign currency
translation adjustment (if positive, or, if negative, minus the amount
of such translation adjustment) minus (iv) the amount of any treasury
stock, all as determined in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis;
"Consolidated Total Assets" means, as at any time of
calculation thereof, the net book value of all assets of the Borrower
and its Subsidiaries as determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis;
8
<PAGE> 16
"Contingent Obligation" of any Person means all contingent
liabilities (other than obligations of the Borrower and its
Subsidiaries with respect to the fulfillment of purchase orders issued
in the ordinary course of business) required (or which, upon the
creation or incurring thereof, would be required) to be included in
the consolidated financial statements (including footnotes) of such
Person in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis, including Statement No. 5 of the
Financial Accounting Standards Board, and any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness,
dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including
obligations of such Person however incurred:
(i) to purchase such Indebtedness or other
obligation or any property or assets constituting security
therefor;
(ii) to advance or supply funds in any manner (A)
for the purchase or payment of such Indebtedness or other
obligation, or (B) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(iii) to grant or convey any Lien, security
interest, pledge, charge or other encumbrance on any property
or assets of such Person to secure payment of such
Indebtedness or other obligation;
(iv) to lease property or to purchase securities
or other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(v) otherwise to assure the owner of the
Indebtedness or such obligation of the primary obligor against
loss in respect thereof.
With respect to Contingent Obligations (such as litigation, guarantees
and pension plan liabilities), such liabilities shall be computed at
the amount which, in light of all the facts and circumstances existing
at the time, represent the present value of the amount which can
reasonably be expected to become an actual or matured liability;
9
<PAGE> 17
"Core Business" means, with respect to the Borrower and its
Subsidiaries, the business of subcontracting, selling, distributing
and marketing sunglasses and nonprescription eyeglasses (including
frames, accessories and other parts thereof) and the manufacturing and
distributing of high intensity illumination systems for industrial,
medical and cinematic uses and specialized photo exposure systems used
in the production of circuit boards, microcircuits, flexible circuits
and flat panel displays, in each case whether within or outside of the
United States of America;
"Corporate Guarantors" means BEC Distribution, Bolle America,
Bonneau, Bonneau Holdings, Bonneau General, Optical Radiation, O-Ray,
ORC, ORC Caribe, and Opti-Ray;
"Cost of Acquisition" means, with respect to any Acquisition,
as at the date of entering into any agreement therefor, the sum of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of Borrower or any
Subsidiary to be transferred in connection therewith, (ii) any cash or
other property (excluding property described in clause (i)) and the
unpaid principal amount of any debt instrument given as consideration,
(iii) any Indebtedness assumed by the Borrower or its Subsidiaries in
connection with such Acquisition, and (iv) out of pocket transaction
costs for the services and expenses of attorneys, accountants and
other consultants incurred in effecting such a transaction, and other
similar transaction costs so incurred (all such costs in excess of
such amount being included as a "Cost of Acquisition" for such
transaction). For purposes of determining the Cost of Acquisition for
any transaction, (A) the capital stock of the Borrower shall be valued
(I) at its market value as reported on the New York Stock Exchange
with respect to shares that are freely tradeable, and (II) with
respect to shares that are not freely tradeable, as determined by the
Board of Directors of the Borrower and, if requested by the Agent,
determined to be a reasonable valuation by the independent public
accountants referred to in Section 9.1(a) hereof, (B) the capital
stock of any Subsidiary shall be valued as determined by the Board of
Directors of such Subsidiary and, if requested by the Agent,
determined to be a reasonable valuation by the independent public
accountants referred to in Section 9.1(a) hereof, and (C) with respect
to any Acquisition accomplished pursuant to the exercise of options or
warrants or the conversion of securities, the Cost of Acquisition
shall include both the cost of acquiring such option, warrant or
convertible security as well as the cost of exercise or conversion;
10
<PAGE> 18
"Debt Offering" means the incurrence of any Indebtedness For
Money Borrowed permitted hereunder whether in connection with a public
or private offering of debt securities of the Borrower or any
Subsidiary (other than debt securities issued to the Borrower or a
Guarantor) or otherwise;
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder;
"Default Rate" means the Base Rate plus two percent (2%) or
the maximum rate permitted by law, whichever is lower;
"Determination Date" means the last day of each fiscal quarter
of the Borrower;
"Displays" means all displays for retail sales of
non-prescription eyeware purchased by the Borrower or a Subsidiary in
the ordinary course of business;
"Dollars" and the symbol "$" mean dollars constituting legal
tender for the payment of public and private debts in the United
States;
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(i) Government Securities;
(ii) obligations of any corporation organized
under the laws of any state of the United States or under the
laws of any other nation, payable in the United States,
expressed to mature not later than 90 days following the date
of issuance thereof and rated in an investment grade rating
category by S&P and Moody's;
(iii) interest bearing demand or time deposits
issued by any Lender or certificates of deposit, bankers
acceptances and other "money market instruments" maturing
within one hundred eighty (180) days from the date of issuance
thereof and issued by a bank or trust company organized under
the laws of the United States or of any state thereof having
capital surplus and undivided profits aggregating at least
$1,000,000;
(iv) prime commercial paper of the Agent, each
Lender or their respective affiliates, and prime commercial
paper rated P-1 by Moody's, or A-1 by S&P;
11
<PAGE> 19
(v) Repurchase Agreements;
(vi) Municipal Obligations;
(vii) shares of mutual funds which invest exclusively
in obligations described in paragraphs (i) through (v) above,
the shares of which mutual funds are at all times rated "AAA"
by S&P;
(viii) shares of "money market funds," each such
fund having net assets of not less than $5,000,000,000; and
(ix) shares of common stock of any corporation
trading on a national stock exchange or the NASDAQ National
Market System having an aggregate purchase price not to exceed
$3,000,000;
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for
employees of the Borrower or is assumed by the Borrower in connection
with any Acquisition or any of its ERISA Affiliates or (b) has at any
time since October 16, 1992 been maintained for the employees of the
Borrower or any current or former ERISA Affiliate;
"Environmental Laws" means any statute, law, ordinance, code,
rule, regulation, order or decree, as from time to time amended and in
effect, of the United States or any foreign nation or any province,
territory, state, protectorate, city, town or other political
subdivision thereof, regulating, relating to or imposing liability or
standards of conduct concerning any hazardous, dangerous or toxic
waste, substance or material (including without limitation, petroleum
products, lead-based paint and asbestos-containing materials),
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery
Act, the Toxic Substances Control Act, the Clean Air Act, the Clean
Water Act and any other "Superfund" or "Superlien" law;
"Equity Offering" means a public or private offering of equity
securities (including, without limitation, any security or investment
not constituting Indebtedness exchangeable, exercisable or convertible
for or into, or otherwise entitling the holder to receive, equity
securities) of the Borrower or any Subsidiary (other than securities
issued to the Borrower or another Subsidiary); provided, however, the
term "Equity Offering" shall not include any Equity Offering that does
not result in any Net Proceeds to the Borrower or any Subsidiary;
12
<PAGE> 20
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder;
"ERISA Affiliate", as applied to the Borrower, means any Person
or trade or business which is a member of a group which is under
common control with the Borrower, who together with the Borrower, is
treated as a single employer within the meaning of Section 414(b) and
(c) of the Code;
"Eurodollar Rate" means the interest rate per annum determined
pursuant to the following formula:
Interbank Offered Rate Applicable
Eurodollar Rate = ------------------------------------------ + Margin
1 -- Eurodollar Reserve Percentage
"Eurodollar Rate Loan" means any Revolving Loan or Segment of
the Term Loan for which the rate of interest is determined by
reference to the Eurodollar Rate;
"Eurodollar Rate Segment" means a Segment bearing interest or
to bear interest at the Eurodollar Rate.
"Eurodollar Reserve Percentage" means, for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under the Regulation D of the Board, as such regulation may be
amended from time to time or any successor regulation, as the maximum
reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable
with respect to Eurocurrency liabilities as that term is defined in
Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate of
Eurodollar Rate Loans is determined), whether or not the Agent has any
Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve
requirements without benefits of credit for proration, exceptions or
offsets that may be available from time to time to the Agent. The
Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage;
"Event of Default" means any of the occurrences set forth as
such in Section 12.1 hereof;
"Facilities" means the Term Loan Facility, the Revolving
Credit Facility and the Letter of Credit Facility;
13
<PAGE> 21
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, provided that (a)
if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business
Day, and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average
rate quoted to the Agent on such day on such transactions as
determined by the Agent in a commercially reasonable manner;
"Fiscal Year" means the twelve (12) month period ended
December 31 of each calendar year;
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan;
"Foster Grant Facility" means that certain distribution and
office facility of Foster Grant LP located in Dallas, Texas.
"Foster Grant LP" means Foster Grant Group, L.P., a Delaware
limited partnership;
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower taken together as one accounting
period;
"Fully Satisfied" means, with respect to the Obligations as of
any date, that on or before such date, (i) the principal of and
interest accrued to such date on the Loans as evidenced by the Notes
and any outstanding Reimbursement Obligations shall have been paid in
full in cash, (ii) the aggregate then undrawn and unexpired amount of
any then outstanding Letters of Credit shall have been cash
collateralized, (iii) all Swap Agreements shall have been terminated
or all obligations thereunder of the Borrower shall have been cash
collateralized, (iv) all fees, expenses and other amounts then due and
payable which constitute Obligations shall have been paid in full in
cash, and (v) the Revolving Credit Commitment shall have expired or
been terminated;
14
<PAGE> 22
"Funding Date" means the date on which the conditions set
forth in Section 7.2 hereof have been satisfied or waived;
"GAAP" means those generally accepted principles of accounting
set forth in pronouncements of the Financial Accounting Standards
Board, the Accounting Principles Board, the American Institute of
Certified Public Accountants or which have other substantial
authoritative support and are applicable in the circumstances as of
the date of a report, as such principles are from time to time
supplemented and amended, subject to compliance at all times with
Section 1.2 hereof;
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America;
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, agency or instrumentality or political subdivision
thereof or any entity or officer exercising executive, legislative or
judicial, regulatory or administrative functions of or pertaining to
any government or any court, in each case whether a state of the
United States, the United States or foreign nation, state, province or
other governmental instrumentality;
"Guarantor" means any Material Subsidiary now or hereafter
party to a Guaranty including the Corporate Guarantors and the LP
Guarantor;
"Guaranty" means collectively each Guaranty Agreement executed
by a Material Subsidiary of the Borrower (whether of even date
herewith or delivered after the Closing Date pursuant to Section 9.21
hereof and whether executed individually or jointly and severally with
other Subsidiaries) in favor of the Agent guaranteeing in whole or in
part the payment of the Obligations, substantially in the form of
Exhibit E attached hereto and incorporated herein by reference, as
from time to time amended, supplemented or replaced;
"Hazardous Material" means any material (including, without
limitation, petroleum products, lead-based paint and
asbestos-containing materials) that is defined or regulated as a
hazardous or toxic waste, substance or material under any
Environmental Law, or any material the generation, handling, storage,
disposal, treatment or emission of which is subject to any
Environmental Law;
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<PAGE> 23
"Indebtedness" of a Person shall mean, without duplication,
(i) all Indebtedness for Money Borrowed, (ii) obligations of such
Person arising under acceptance facilities, (iii) the undrawn face
amount of, and unpaid reimbursement obligations in respect of, all
letters of credit issued for the account of such Person, (iv) all
obligations of such Person upon which interest charges are customarily
paid, other than trade payables incurred in the ordinary course of
business, operating leases and taxes, (v) all obligations of such
Person under conditional sale or other title retention agreements
relating to property purchased by such Person (even though the rights
and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (vi)
all executory obligations of such Person in respect of Rate Hedging
Obligations and (vii) all Contingent Obligations in respect of
Indebtedness of other Persons;
"Indebtedness for Money Borrowed" means for any Person all
indebtedness in respect of money borrowed, including without
limitation all Capital Leases and the deferred purchase price of any
property or asset, evidenced by a promissory note, bond, debenture or
similar written obligation for the payment of money, other than trade
payables incurred in the ordinary course of business (including, but
not limited to, all Subordinated Debt, the TIA Debt, and all
conditional sales or similar title retention agreements);
"Indemnification Agreement" means that certain Indemnification
Agreement dated as of February 11, 1996, as amended as of the Closing
Date, among the Merger Parties;
"Indenture" means that certain Indenture dated on or about the
Funding Date between IBJ Schroder Bank & Trust Company, as Trustee and
the Borrower;
"Intellectual Property Security Agreement" means collectively
each Intellectual Property Security Agreement executed by a Material
Subsidiary of the Borrower (whether of even date herewith or delivered
after the Closing Date pursuant to Section 9.21 hereof and whether
executed individually or jointly and severally with other
Subsidiaries) in favor of the Agent to collaterally secure payment and
performance of its obligations under the Guaranty, substantially in
the form of Exhibit K attached hereto and incorporated herein by
reference, as from time to time amended, modified or supplemented;
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the average
(rounded upward to the nearest one-sixteenth (1/16) of one percent)
per annum rate of interest
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<PAGE> 24
determined by the office of the Agent then determining such rate (each
such determination to be conclusive and binding) as of 11:00 A.M.
Charlotte, North Carolina time two Business Days prior to the first
day of such Interest Period, as the effective rate at which deposits
in immediately available funds in Dollars are being, have been, or
would be offered or quoted by the Agent to major banks in the
applicable interbank market for Eurodollar deposits at any time during
the Business Day which is the second Business Day immediately
preceding the first day of such Interest Period, for a term comparable
to such Interest Period and in the amount of the Eurodollar Rate Loan.
If no such offers or quotes are generally available for such amount,
then the Agent shall be entitled to determine the Eurodollar Rate by
estimating in its reasonable judgment the per annum rate (as described
above) that would be applicable if such quote or offers were generally
available;
"Interest Period" for each Eurodollar Rate Loan means a period
commencing on the date such Eurodollar Rate Loan is made or converted
and each subsequent period commencing on the last day of the
immediately preceding Interest Period for such Eurodollar Rate Loan,
and ending, at the Borrower's option, on the date one, two, three or
six months thereafter as notified to the Agent by the Authorized
Representative three (3) Business Days prior to the beginning of such
Interest Period; provided, that,
(A) if the Authorized Representative fails to
notify the Agent of the length of an Interest Period three (3)
Business Days prior to the first day of such Interest Period,
the Loan for which such Interest Period was to be determined
shall be deemed to be a Base Rate Loan;
(B) if an Interest Period for a Eurodollar Rate
Loan would end on a day which is not a Business Day such
Interest Period shall be extended to the next Eurodollar
Business Day (unless such extension would cause the applicable
Interest Period to end in the succeeding calendar month, in
which case such Interest Period shall end on the next
preceding Business Day);
(C) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(D) no Interest Period shall extend past the
Revolving Credit Termination Date or the Term Loan Termination
Date;
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<PAGE> 25
(E) on any day, with respect to all Loans, there
shall be not more than ten (10) Interest Periods in effect;
"Interest Rate Selection Notice" means the notice delivered by
an Authorized Representative in connection with the election of a
subsequent interest period for any Eurodollar Rate Loan or the
conversion of any Eurodollar Rate Loan into a Base Rate Loan or the
conversion of any Base Rate Loan into a Eurodollar Rate Loan, in the
form of Exhibit F attached hereto and incorporated herein by
reference;
"Issuing Bank" means NationsBank, or any successor or
replacement bank, as issuer of Letters of Credit in accordance with
Article 4 hereof;
"Landlord Waivers" means, collectively, each of the Landlord
Waivers delivered by the landlord of each material facility leased by
the Borrower and any Guarantor listed on Schedule 1 hereto or arising
after the Closing Date and delivered by the Borrower and the
Guarantors, as applicable, pursuant to Article VI or Section
9.21hereof, substantially in the form of Exhibit P hereto and
incorporated herein by reference;
"Lease Assignments" means, collectively, each Collateral
Assignment of Lease assigning to the Agent each material facility
lease of the Borrower and any Guarantor listed on Schedule 1 hereto or
entered into after the Closing Date and delivered by the Borrower and
the Guarantors, as applicable, pursuant to Article VI or Section 9.21
hereof to collaterally secure the Borrower's Obligations and the
Guarantors' Obligations under the Guaranty, substantially in the form
of Exhibit Q hereto and incorporated herein by reference;
"Lending Office" means, as to each Lender, the Lending Office
of such Lender designated on the signature pages hereof or in an
Assignment and Acceptance or such other office of such Lender (or of
an affiliate of such Lender) as such Lender may from time to time
specify to the Authorized Representative and the Agent as the office
by which its Loans are to be made and maintained;
"Letter of Credit" means any Standby Letter of Credit or
Commercial Letter of Credit issued by Issuing Bank for the account of
the Borrower as described in Article 4 hereof;
"Letter of Credit Commitment" means with respect to each
Lender, the obligation of such Lender to acquire Participations up to
an aggregate stated amount at any one
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<PAGE> 26
time outstanding equal to such Lender's Applicable Commitment
Percentage of the Total Letter of Credit Commitment as the same may be
increased or decreased from time to time pursuant to this Agreement;
"Letter of Credit Facility" means the facilities described in
Article 4 hereof providing for the issuance by Issuing Bank for the
account of the Borrower of Letters of Credit in an aggregate stated
amount at any time outstanding not exceeding the Total Letter of
Credit Commitment;
"Letter of Credit Outstandings" means all undrawn amounts of
Letters of Credit plus Reimbursement Obligations;
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and its
Subsidiaries shall be deemed to be the owners of any property which
either of them have acquired or hold subject to a conditional sale
agreement, financing lease, or other arrangement pursuant to which
title to the property has been retained by or vested in some other
Person for security purposes;
"Loan to Value Ratio" with respect to any real property means
the ratio the numerator of which is the sum of all Indebtedness for
Money Borrowed secured by a Lien on such real property and the
denominator of which is the most recently appraised fair value of such
real property;
"Loan" or "Loans" means any of the Revolving Loans or the Term
Loan;
"Loan Documents" means this Agreement, the Notes, the
Guaranty, the Security Instruments, the Lease Assignments, the
Landlord Waivers and all other instruments and documents now or
hereafter executed or delivered to and in favor of any Lender or the
Agent in connection with the Loans or the Letters of Credit made,
issued or created under this Agreement, all as from time to time
amended, supplemented or replaced;
"LP Guarantor" means Foster Grant LP;
19
<PAGE> 27
"Material Adverse Effect" means a material adverse effect on
the business, properties, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries on a consolidated
basis or, in matters relating to ERISA, of the Borrower and its ERISA
Affiliates taken as a whole;
"Material Subsidiary" means any direct or indirect Subsidiary
of the Borrower which (i) has total assets equal to or greater than 5%
of Consolidated Total Assets (calculated as of the most recent fiscal
period with respect to which the Agent shall have received financial
statements required to be delivered pursuant to Sections 9.1(a) or (b)
(or if prior to delivery of any financial statements pursuant to such
Sections, then calculated with respect to the Fiscal Year end
financial statements referenced in Section 8.6 hereof) (the "Required
Financial Information")) or (ii) has pretax income equal to or greater
than 5% of Consolidated Pretax Income (each calculated for the most
recent period for which the Agent has received the Required Financial
Information); provided, however, that notwithstanding the foregoing,
the term "Material Subsidiaries" shall mean Subsidiaries of the
Borrower that together have assets equal to not less than 95% of
Consolidated Total Assets (calculated as described above) and net
income of not less than 95% of Consolidated Pretax Income (calculated
as described above); provided further that if more than one
combination of Subsidiaries satisfies such threshold, then those
Subsidiaries so determined to be "Material Subsidiaries" shall be
specified by the Borrower;
"Merger Agreement" means the Agreement and Plan of Merger
dated as of February 11, 1996 between the Merger Parties;
"Merger Parties" means Essilor International, S.A., a French
limited liability entity, Essilor of America, Inc., a Delaware
corporation, Essilor Acquisition Corporation, a Delaware corporation,
Benson, the Borrower and Omega Opco, Inc., a Delaware corporation;
"Moody's" means Moody's Investors Service, Inc.;
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) years;
"Municipal Obligations" means general obligations issued by,
and supported by the full taxing authority of, any state of the United
States of America or of any municipal corporation or other public body
organized under
20
<PAGE> 28
the laws of any such state which are rated, in their capacity as
issuer of general obligations, in the highest investment rating
category by both S&P and Moody's;
"Net Proceeds" (a) from any Equity Offering or Debt Offering
means cash payments received by the Borrower therefrom as and when
received, net of all legal, accounting, banking and underwriting fees
and expenses, commissions, discounts and other issuance expenses
incurred in connection therewith and all taxes required to be paid or
accrued as a consequence of such issuance; and (b) from any Asset
Disposition means cash payments received by the Borrower therefrom
(including any cash payments received pursuant to any note or other
debt security received in connection with any Asset Disposition) as
and when received, net of (i) all legal fees and expenses and other
fees and expenses paid to third parties and incurred in connection
therewith, (ii) all taxes required to be paid or accrued as a
consequence of such sale and (iii) amounts applied to repayment of
Indebtedness (other than the Obligations) secured by a Lien on the
asset or property disposed.
"Notes" means, collectively, the Term Notes and the Revolving
Credit Notes;
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) the
Reimbursement Obligations, (iii) all liabilities of Borrower to any
Lender which arise under a Swap Agreement, and (iv) the payment and
performance of all other obligations, liabilities and Indebtedness of
the Borrower to the Lenders or the Agent hereunder, under any one or
more of the other Loan Documents or otherwise with respect to the
Loans;
"Opti-Ray" means Opti-Ray, Inc. a New York Corporation;
"O-Ray" means O-Ray Holdings, Inc., a Delaware corporation and
limited partner of Foster Grant LP;
"ORC" means Optical Radiation Corporation, a Delaware
corporation;
"ORC Caribe" means ORC Caribe, Inc., a California corporation;
"Outstandings" means, at any time of determination, the sum of
the Term Loan Outstandings, the Revolving Credit Outstandings and
Letter of Credit Outstandings;
"Participation" means, with respect to any Lender (other than
Issuing Bank), the extension of credit
21
<PAGE> 29
represented by the participation of such Lender hereunder in the
liability of Issuing Bank in respect of a Letter of Credit issued by
Issuing Bank in accordance with the terms hereof;
"Partnership Interest Assignment" means that certain
Collateral Assignment of Partnership Interests between Bonneau
General, Bonneau Holdings, O-Ray and the Agent assigning all of the
general and limited partnership interests in Foster Grant LP as
collateral security for the payment and performance of the obligations
of such Subsidiaries under the Guaranty, substantially in the Form of
Exhibit L hereto and incorporated herein by reference, as such
agreement is from time to time amended, modified or supplemented;
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto;
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of
ERISA or Section 412 of the Code and which is, or was since October
16, 1992, maintained for employees of the Borrower or any ERISA
Affiliate;
"Permitted Liens" has the meaning assigned to such term in
Section 10.2 hereof;
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a
government or agency or political subdivision thereof;
"Pledged Subsidiary Stock" means all of the capital stock of
each direct and indirect domestic Material Subsidiary and 66 2/3% of
each foreign Material Subsidiary now or hereafter pledged by the
Borrower and certain Subsidiaries pursuant to the Stock Pledge
Agreement;
"Prime Rate" means the rate of interest per annum announced
publicly by NationsBank as its prime rate from time to time. The
Prime Rate is not necessarily the best or the lowest rate of interest
offered by NationsBank;
"Principal Office" means the office of the Agent at
NationsBank, N.A., Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Dana Weir, Agency
Services, or such other office and address as the Agent may from time
to time designate;
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<PAGE> 30
"Rate Hedging Obligations" means any and all obligations of
the Borrower, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's commodities, assets, liabilities or
exchange transactions, including, but not limited to,
Dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or
collar protection agreements, forward rate currency or interest rate
options, puts, warrants and those commonly known as interest rate
"swap" agreements, and forward commodity price options, puts, warrants
and those commonly known as commodity "swap" agreements; and (ii) any
and all cancellations, buybacks, reversals, terminations or
assignments of any of the foregoing;
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time;
"Regulatory Change" means any change in, or the adoption or
making of new, United States Federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States Federal or
state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy,
whether or not having the force of law, whether or not failure to
comply therewith would be unlawful;
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse Issuing Bank and the Lenders to the extent of their
respective Participations (including by the receipt by Issuing Bank of
proceeds of Loans pursuant to Section 4.2 hereof) for amounts
theretofore paid by Issuing Bank pursuant to a drawing under such
Letter of Credit;
"Repurchase Agreement" means a repurchase agreement entered
into with (i) any financial institution whose debt obligations are
rated "A" by either of S&P or Moody's or whose commercial paper is
rated "A-1" by S&P or "P-1" by Moody's, or (ii) any Lender;
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<PAGE> 31
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating at least 51% of
the aggregate Credit Exposures of all the Lenders on such date. For
purposes of the preceding sentence, the amount of the "Credit
Exposure" of each Lender shall be equal at all times (a) other than
following the occurrence and during the continuance of an Event of
Default, to the sum of its Revolving Credit Commitment and Term Loan
Commitment, and (b) following the occurrence and during the
continuance of an Event of Default, to the sum of (i) the amount of
such Lender's Applicable Commitment Percentage of Term Loan
Outstandings plus (ii) the aggregate principal amount of such Lender's
Applicable Commitment Percentage of Revolving Credit Outstandings plus
(iii) the aggregate unutilized amount of such Lender's Revolving
Credit Commitment plus (iv) the amount of such Lender's Applicable
Commitment Percentage of Letter of Credit Outstandings; provided that,
for the purpose of this definition only, (x) if any Lender shall have
failed to fund its Applicable Commitment Percentage of any Advance,
the Term Loan Commitment or Revolving Credit Commitment, as
applicable, of such Lender shall be deemed reduced by the amount it so
failed to fund for so long as such failure shall continue and such
Lender's Credit Exposure attributable to such failure shall be deemed
held by any Lender making more than its Applicable Commitment
Percentage of such Advance to the extent it covers such failure, and
(y) if any Lender shall have failed to pay to the Issuing Bank upon
demand its Applicable Commitment Percentage of any drawing under any
Letter of Credit resulting in an outstanding Reimbursement Obligation,
such Lender's Credit Exposure attributable to such Letter of Credit
Outstandings shall be deemed to be held by Issuing Bank;
"Revolving Credit Commitment" means with respect to each
Lender, the obligation of such Lender to make Revolving Loans to the
Borrower and to purchase Participations up to an aggregate principal
amount at any time outstanding equal to the amount set forth opposite
such Lender's name on Exhibit A hereto as the same may be increased or
decreased from time to time pursuant to this Agreement;
"Revolving Credit Facility" means the facility described in
Article III hereof providing for Revolving Loans to the Borrower by
the Lenders in an aggregate principal amount equal to (i) the Total
Revolving Credit Commitment, less (ii) the aggregate principal amount
of Letter of Credit Outstandings;
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal Indebtedness of Borrower on all
Revolving Loans then outstanding;
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<PAGE> 32
"Revolving Credit Termination Date" means the earliest to
occur of (i) the fifth anniversary of the Closing Date hereof, or (ii)
such earlier date of termination of the Lenders' obligations pursuant
to Section 12.1hereof upon the occurrence of an Event of Default, or
(iii) such date as the Borrower may permanently terminate the
Revolving Credit Facility by payment in full of all Obligations
(including the discharge of all Obligations of Issuing Bank and the
Lenders with respect to Letters of Credit and Participations) pursuant
to Sections 3.5or 3.6 hereof;
"Revolving Loan" means a Loan made under the Revolving Credit
Facility pursuant to Section 3.1 hereof;
"Revolving Notes" means, collectively, the promissory notes of
the Borrower evidencing Revolving Loans executed and delivered to the
Lenders as provided in Section 3.9 hereof substantially in the form
attached hereto as Exhibit I-2 and incorporated herein by reference,
with appropriate insertions as to amounts, dates and names of Lenders,
as the same may be amended, supplemented or replaced from time to
time;
"S&P" means Standard & Poor's Corporation;
"Security Agreement" means, collectively (or individually as
the context may indicate), (i) the Security Agreement dated as of the
date hereof by the Borrower to the Agent, and (ii) any additional
Security Agreement delivered to the Agent pursuant to Section 9.21, in
each case, substantially in the form attached hereto as Exhibit J, as
such Security Agreement may be amended, supplemented or replaced from
time to time.
"Security Instruments" means the Security Agreement, the
Intellectual Property Security Agreement, the Stock Pledge Agreement,
the Partnership Interest Assignment and all other documents and
agreements executed and delivered in connection herewith granting to
the Lenders Liens on any assets of the Borrower or any Guarantor
collaterally to secure payment and performance of the Obligations and
obligations under the Guaranty;
"Segment" means a portion of the Term Loan (or all thereof)
with respect to which a particular interest rate is (or is proposed to
be) applicable.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is not a Multi-employer Plan;
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<PAGE> 33
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including, without limitation, Contingent Obligations; and
(ii) it is then able and expects to be able to
pay its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted;
"Spinoff and Merger" means the spinoff, merger and related
transactions as described in the Registration Statement of the
Borrower on Form 10 as filed with the Securities and Exchange
Commission on February 14, 1996, as amended, and the Registration
Statement of the Borrower on Form S-1 as filed with the Securities and
Exchange Commission on April 3, 1996, as amended and effective as of
the Funding Date, and conducted pursuant to the Merger Agreement, the
Spinoff Agreement and related documents;
"Spinoff and Merger Documents" means the Spinoff Agreement,
the Merger Agreement and the Indemnification Agreement;
"Spinoff Agreement" means that certain Spinoff Agreement dated
on or about the Funding Date between the Borrower and Benson;
"Standby Letter of Credit" means an irrevocable standby letter
of credit issued hereunder for the account of the Borrower or any of
its Subsidiaries, provided that the expiry date of a Standby Letter of
Credit shall not be later than twelve (12) months subsequent to the
date of issuance thereof;
"Stock Pledge Agreement" means, collectively (or individually
as the context may indicate), that certain Stock Pledge Agreement
dated as of the date hereof between the Borrower, certain Guarantors
and the Agent for the benefit of the Agent and the Lenders, and (ii)
any additional Stock Pledge Agreement delivered to the Agent pursuant
to Section 9.21, in each case, substantially in the form attached
hereto as Exhibit G, as such Pledge Agreement may be amended,
supplemented or replaced from time to time.
"Subordinated Debt" means the Borrower's 8% Convertible
Subordinated Notes due 2002 issued in the original principal
26
<PAGE> 34
amount of up to $22,000,000 to IBJ Schroder Bank & Trust Company
pursuant to the Indenture;
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding stock having ordinary voting power or
more than 50% of all equity interests is owned directly or indirectly
by the Borrower or by one or more of the Borrower's Subsidiaries at or
after the Closing Date;
"Swap Agreement" means one or more agreements between the
Borrower and a Lender, on terms mutually acceptable to such Borrower
and such Lender with respect to Indebtedness evidenced by the Notes,
which agreements create Rate Hedging Obligations;
"Term Loan" means the loan made pursuant to the Term Loan
Facility in accordance with Article II.
"Term Loan Commitment" means, with respect to each Lender, the
obligation of such Lender to make the Term Loan to the Borrower in a
principal amount equal to such Lender's Applicable Commitment
Percentage of the Total Term Loan Commitment as set forth on Exhibit
A.
"Term Loan Facility" means the facility described in Article
II providing for a Term Loan to the Borrower by the Lenders in the
principal amount of the Total Term Loan Commitment.
"Term Loan Outstandings" means, as of any date of
determination, the principal amount of the Term Loan then outstanding
and all interest accrued thereon.
"Term Loan Termination Date" means (i) the fifth anniversary
of the Closing Date or (ii) such earlier date of termination of
Lenders' obligations pursuant to Section 12.1 upon the occurrence of
an Event of Default, or (iii) such date as the Borrower may
voluntarily or by mandatory prepayment permanently terminate the Term
Loan Facility by payment in full of all Obligations incurred in
connection with the Term Loan pursuant to Sections 2.6 or 2.7 hereof.
"Term Notes" means, collectively, the promissory notes of the
Borrower evidencing the Term Loan executed and delivered to the
Lenders as provided in Section 3.9 substantially in the form of
Exhibit I-1, with appropriate insertions as to amounts, dates and
names of Lenders as the same may be amended, supplemented or replaced
from time to time.
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<PAGE> 35
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder; or (b)
the withdrawal of the Borrower or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA or was deemed such under
Section 4068(f) of ERISA; or (c) the termination of a Pension Plan,
the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section
4041 of ERISA; or (d) the institution of proceedings to terminate a
Pension Plan by the PBGC; or (e) any other event or condition which
would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan; or (f) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan; or (g) the
imposition of a Lien pursuant to Section 412 of the Code or Section
302 of ERISA; or (h) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Section
4241 or Section 4245 of ERISA, respectively; or (i) any event or
condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by the PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA;
"TIA Debt" means the Indebtedness of Optical Radiation to
Teachers Insurance and Annuity Association of America in the original
principal amount of $15,000,000 as evidenced by that certain Deed of
Trust Note dated May 15, 1989;
"Total Credit Commitment" means the sum of the Total Term Loan
Commitment and the Total Revolving Credit Commitment;
"Total Letter of Credit Commitment" means an amount equal to
$5,000,000;
"Total Revolving Credit Commitment" means an amount equal to
$30,000,000, as reduced from time to time in accordance with Sections
3.8 and 3.9 hereof;
"Total Term Loan Commitment" means a principal amount equal to
$20,000,000;
"UCC" means the Uniform Commercial Code of the State of New
York, as amended or supplemented from time to time.
"Unused Fee" has the meaning assigned to such term in Section
3.13(a) hereof;
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SECTION 1.2 RULES OF INTERPRETATION.
(a) All accounting terms not specifically defined herein
shall have the meanings assigned to such terms and shall be
interpreted in accordance with GAAP applied on a Consistent Basis;
(b) Each term defined in Article 1 or 9 of the UCC shall have
the meaning given therein unless otherwise defined herein, except to
the extent that the Uniform Commercial Code of another jurisdiction is
controlling, in which case such terms shall have the meaning given in
the Uniform Commercial Code of the applicable jurisdiction;
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof;
(d) Except as otherwise expressly provided, references herein
to articles, sections, paragraphs, clauses, annexes, appendices,
exhibits and schedules are references to articles, sections,
paragraphs, clauses, annexes, appendices, exhibits and schedules in or
to this Agreement;
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of
such defined term, and all references to the masculine gender shall
include reference to the feminine or neuter gender, and vice versa, as
the context may require;
(f) When used herein or in any other Loan Document, words
such as "hereunder", "hereto", "hereof" and "herein" and other words
of like import shall, unless the context clearly indicates to the
contrary, refer to the whole of the applicable document and not to any
particular article, section, subsection, paragraph or clause thereof;
(g) References to "including" means including without limiting
the generality of any description preceding such term;
(h) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
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ARTICLE 2
THE TERM LOAN
SECTION 2.1 TERM LOAN.
(a) Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make the Advance of the
Term Loan to the Borrower on the Closing Date on a pro rata basis
determined by the Term Loan Commitment of such Lender. The principal
amount of each Segment of the Term Loan outstanding hereunder from
time to time shall bear interest, at the Borrower's election, at an
interest rate per annum equal to the Base Rate or the Eurodollar Rate;
provided, however, that (x) no Eurodollar Rate Segment shall have an
Interest Period that extends beyond the Term Loan Termination Date,
(y) each Eurodollar Rate Segment shall be in the minimum amount of
$1,000,000 and if greater, an integral multiple of $100,000, and (z)
each Eurodollar Rate Segment may, subject to the provisions of
Sections 2.3, 2.6 and 2.7 hereof, be repaid only on the last day of
the Interest Period with respect thereto. No amount of the Term Loan
repaid or prepaid by the Borrower may be reborrowed hereunder, and no
subsequent Advance of Term Loan amounts shall be made by any Lender
after the initial Advance.
(b) Interest and fees relating to the Term Loan shall be
computed on the basis of a year of 360 days and calculated for the
actual number of days elapsed.
SECTION 2.2 TERM LOAN ADVANCE. As early as practicable, but not
later than 1:00 P.M., on the Closing Date, each Lender shall, pursuant to the
terms and subject to the conditions of this Agreement, make the amount,
determined in accordance with Section 2.1(a), of the Term Loan Advance to be
made by it on such day available by wire transfer to the Agent. Such wire
transfer shall be directed to the Agent at the Principal Office and shall be in
the form of Dollars immediately available. The amount so received by the Agent
shall, subject to the terms and conditions of this Agreement, be made available
to the Borrower by delivery of the proceeds thereof to the Borrower's Account
or otherwise as shall be directed by the Authorized Representative and
reasonably acceptable to the Agent.
SECTION 2.3 PAYMENT OF PRINCIPAL. The principal amount of the
Term Loan shall be repaid in fifteen (15) equal consecutive quarterly
installments of $1,250,000 beginning June 30, 1997 with a final sixteenth
(16th) installment in the amount of all remaining unpaid principal due on the
fifth anniversary of the Funding Date; provided, however, that the entire
amount of Term Loan Outstandings shall be due and payable in full on the Term
Loan Termination Date.
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SECTION 2.4 PAYMENT OF INTEREST.
(a) The Borrower shall pay interest to the Agent at the
Principal Office for the account of each Lender on the outstanding and
unpaid principal amount of each Term Loan made by such Lender for the
period commencing on the date of such Term Loan until (but not
including) the end of the applicable Interest Period or the date such
Term Loan shall be due at the Eurodollar Rate or the Base Rate, as
elected by the Borrower in the applicable Borrowing Notice or Interest
Rate Selection Notice or as deemed elected by the Borrower or
otherwise applicable to such Loan as provided herein; provided,
however, that if any amount shall not be paid when due (at maturity,
by acceleration or otherwise), all amounts outstanding hereunder shall
bear interest thereafter (i) in the case of a Eurodollar Rate Loan, at
a rate of interest per annum which shall be two percent (2%) above the
Eurodollar Rate for such Eurodollar Rate Loan until (but not
including) the end of the Interest Period during which such payment
was due, and thereafter at the Default Rate, and (ii) in the case of a
Base Rate Loan, at the Default Rate, from the date such amount was due
and payable until the date such amount is paid in full.
(b) Interest on the outstanding principal balance of each
Term Loan shall be computed on the basis of a year of 360 days and
calculated for the actual number of days elapsed. Interest on each
Term Loan shall be paid (i) quarterly in arrears on the last Business
Day of each March, June, September and December commencing June 1996,
on each Base Rate Loan, (ii) on the last day of the applicable
Interest Period for each Eurodollar Rate Loan and, for any Eurodollar
Rate Loan having an Interest Period extending beyond three (3) months,
also on the date occurring every three (3) months after the
commencement of such Interest Period, and (iii) on the Term Loan
Termination Date.
SECTION 2.5 MANNER OF PAYMENT.
(a) Each payment of principal (including any prepayment)
and payment of interest and fees, and any other amount required to be
paid to the Lenders with respect to the Term Loan, shall be made to
the Agent at the Principal Office for the account of each Lender in
Dollars in immediately available funds on or before 2:30 P.M. on the
date such payment is due. The Agent may, but shall not be obligated
to, debit the amount of any such payment which is not made by such
time from any one or more ordinary deposit accounts of the Borrower
with the Agent.
(b) The Agent shall deem any payment made by or on behalf
of the Borrower that is not made both (i) in Dollars in immediately
available funds and (ii) prior to 2:30 P.M.
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on the date such payment is to be made to be a non-conforming payment.
Any such non-conforming payment shall not be deemed to be received by
the Agent until the time such funds become available funds. Any
non-conforming payment (other than a non-conforming payment that
subsequently satisfies clauses (i) and (ii) above) may constitute or
become a Default or Event of Default. The Agent shall give prompt
notice to the Authorized Representative and each of the Lenders
(confirmed in writing) if any payment (other than a prepayment) is
non-conforming. Interest shall continue to accrue on any principal
as to which a non-conforming payment is made until such funds become
available funds (but in no event less than the period from the date of
such payment to the next succeeding Business Day) at the respective
rates of interest per annum specified in Section 2.4(a) with respect
to late payments of interest (other than with respect to
non-conforming prepayments, with respect to which interest shall
continue to accrue on any principal as to which such non-conforming
payment is made until such funds become available funds at the Base
Rate or the Eurodollar Rate, as applicable) from the date such amount
was due and payable until the date such amount is paid in full.
(c) In the event that any payment hereunder or under the
Term Notes becomes due and payable on a day other than a Business Day,
then such due date shall be extended to the next succeeding Business
Day unless provided otherwise under clause (ii) or (iii) of the
definition of "Interest Period"; provided, however, that interest
shall continue to accrue during the period of any such extension; and
provided further, however, that in no event shall any such due date be
extended beyond the Term Loan Termination Date.
SECTION 2.6 OPTIONAL PREPAYMENTS. The Borrower may prepay the
Term Loan in whole or in part from time to time on any Business Day, without
penalty or premium, upon not less than three (3) Business Days' prior written
notice (effective upon receipt) to the Agent, which notice shall be
irrevocable. Any prepayment, whether a Base Rate Segment or a Eurodollar Rate
Segment, shall be made at a prepayment price equal to (i) the amount of
principal to be prepaid, plus (ii) all accrued and unpaid interest on the
amount so prepaid, to the date of prepayment. All prepayments under this
Section 2.6 shall be made in the minimum principal amount of $3,000,000 or any
integral multiple of $1,000,000 in excess thereof (or in the entire remaining
principal balance of the Term Loan), and all such prepayments of principal
shall be applied to installments of principal in order of their maturity. No
such prepayment shall result in the payment of any Eurodollar Rate Segment
other than on the last day of the Interest Period of such Segment unless such
prepayment is accompanied by amounts due, if any, under Section 5.4 hereof.
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SECTION 2.7 MANDATORY PREPAYMENTS. In addition to the required
payments of principal of the Term Loan set forth in Section 2.3 hereof and any
optional payments of principal of the Term Loan effected under Section 2.6
hereof, the Borrower shall make the following required prepayments of the Term
Loan, each such payment to be made to the Agent for the benefit of the Lenders
within the time period specified below:
(a) Asset Dispositions. The Borrower shall make, or
shall cause each applicable Subsidiary to make, a prepayment from the
Net Proceeds of any Asset Disposition resulting in Net Proceeds which
(i) exceed $200,000 for any single or series of related transactions
or (ii) when aggregated with all other Net Proceeds from Asset
Dispositions received during the term of this Agreement exceed
$500,000, in each case, in an amount equal to one hundred percent
(100%) of such Net Proceeds in excess of such threshold amounts. Each
such prepayment shall be made within five (5) Business Days of receipt
of such Net Proceeds and upon not less than three (3) Business Days'
written notice to the Agent, which notice shall include a certificate
of an Authorized Representative setting forth in reasonable detail the
calculations utilized in computing the amount of Net Proceeds.
(b) Equity Offerings. In the event that the ratio of
Consolidated Funded Indebtedness to Consolidated EBITDA exceeds 2.75
to 1.00 on the most recent Determination Date preceding any Equity
Offering, the Borrower shall make a prepayment from the Net Proceeds
of such Equity Offering in an amount equal to 100% of such Net
Proceeds. Each such prepayment shall be made within five (5) Business
Days of receipt of such Net Proceeds and upon not less than three (3)
Business Days' written notice to the Agent, which notice shall include
a certificate of an Authorized Representative setting forth in
reasonable detail the calculations utilized in computing the amount of
Net Proceeds;
(c) Debt Offerings. The Borrower shall make a prepayment
from the Net Proceeds of all Debt Offerings in an amount equal to 100%
of such Net Proceeds. Each such prepayment shall be made within five
(5) Business Days of receipt of such Net Proceeds and upon not less
than three (3) Business Days' written notice to the Agent, which
notice shall include a certificate of an Authorized Representative
setting forth in reasonable detail the calculations utilized in
computing the amount of Net Proceeds;
All mandatory prepayments made pursuant to this Section 2.7 shall be applied to
the scheduled installments of principal remaining outstanding under the Term
Loan pursuant to Section 2.3 hereof (as adjusted to give effect to any prior
payments or prepayments of principal) in inverse order of maturity. The excess
of any mandatory prepayment remaining after payment in full of the Term
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Loan Facility shall be applied as a permanent reduction of the Revolving Credit
Commitment pursuant to Section 3.6 hereof. Any prepayment of a Eurodollar Rate
Segment pursuant to this Section 2.7 other than on the last day of an Interest
Period shall be accompanied by the additional payment, if any, required by
Section 5.4 hereof.
SECTION 2.8 BORROWER'S ACCOUNT. The Borrower shall, until the
Term Loan Termination Date, continuously maintain the Borrower's Account for
the purposes herein contemplated.
SECTION 2.9 TERM NOTES. The portion of the Term Loan made by
each Lender shall be evidenced by the Term Note payable to the order of such
Lender in the respective amount of its Term Loan Commitment, which Term Notes
shall be dated the Closing Date or a later date pursuant to an Assignment and
Acceptance and shall be duly completed, executed and delivered by the Borrower.
SECTION 2.10 INTEREST PERIODS. The Term Loan shall be, at the option
of the Borrower specified in the applicable Borrowing Notice or an Interest
Rate Selection Notice, comprised of either Eurodollar Rate Segments or Base
Rate Segments. Eurodollar Rate Segments and Base Rate Segments may be
outstanding at the same time, provided, however, there shall not be outstanding
at any one time Eurodollar Rate Loans (including Revolving Loans) and
Eurodollar Rate Segments having more than ten (10) different Interest Periods.
If the Agent does not receive an Interest Rate Selection Notice giving notice
of election of the duration of an Interest Period or of conversion of any
Segment to or continuation of a Segment as a Eurodollar Rate Segment by the
time prescribed by Section 2.11 hereof, the Borrower shall be deemed to have
elected to convert such Segment to (or continue such Segment as) a Base Rate
Segment until the Borrower notifies the Agent in accordance with Section 2.11
hereof.
SECTION 2.11 CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST
PERIODS. Provided that no Default or Event of Default shall have occurred and
be continuing and subject to the limitations set forth below, the Borrower may:
(a) upon delivery of a properly completed Interest Rate
Selection Notice to the Agent on or before 10:30 A.M. on any Business
Day, convert any Eurodollar Rate Segment to a Base Rate Segment on the
last day of the Interest Period for such Eurodollar Rate Segment; and
(b) upon delivery of a properly completed Interest Rate
Selection Notice to the Agent on or before 10:30 A.M. on the date that
is three (3) Business Days prior to the date of such conversion:
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(i) elect a subsequent Interest Period
for any Eurodollar Rate Segment to begin on the last day of
the then current Interest Period for such Eurodollar Rate
Segment; and
(ii) convert any Base Rate Segment to a
Eurodollar Rate Segment on any Business Day.
Each election and conversion pursuant to this Section 2.11 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in Sections 2.1, 2.10 and Article V hereof.
All such continuations or conversions of Segments shall be effected pro rata
based on the Applicable Commitment Percentages of the Lenders.
SECTION 2.12 PRO RATA PAYMENTS. Except as otherwise provided herein,
(a) each payment on account of the principal of and interest on the Term Loan
shall be made to the Agent for the account of the Lenders pro rata based on
their Applicable Commitment Percentages, (b) all payments to be made by the
Borrower for the account of each of the Lenders on account of principal,
interest and fees, shall be made without diminution, set-off, recoupment or
counterclaim, and (c) the Agent will promptly distribute to the Lenders in
immediately available funds payments received in fully collected, immediately
available funds from the Borrower.
SECTION 2.13 USE OF PROCEEDS. The proceeds of the Term Loan
hereunder shall be used by the Borrower exclusively (a) to refinance certain
accounts payable and other Indebtedness transferred to the Borrower in
connection with the Spinoff and Merger and (b) for working capital and general
corporate purposes, including Acquisitions permitted under Section 10.3 hereof.
ARTICLE 3
REVOLVING LOANS
SECTION 3.1 THE REVOLVING LOANS.
(a) Commitment. Subject to the terms and conditions of
this Agreement, each Lender severally agrees to make Advances under
the Revolving Credit Facility to the Borrower from time to time on a
pro rata basis as to the total borrowing requested by the Borrower on
any day determined by its Applicable Commitment Percentage up to but
not exceeding the Revolving Credit Commitment of such Lender;
provided, however, that the Lenders will not be required and shall
have no obligation to make any Advance under the Revolving Credit
Facility (A) so long as any condition set forth in Section 7.2 hereof
is not satisfied or (B) if the Agent has
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accelerated the maturity of the Revolving Notes as a result of an
Event of Default. Within such limits, the Borrower may borrow, repay
and reborrow hereunder, on a Business Day, from the Closing Date
until, but (as to borrowings and reborrowings) not including, the
Revolving Credit Termination Date; provided, however, that (A) no
Eurodollar Rate Loan shall be made which has an Interest Period that
extends beyond the Revolving Credit Termination Date and (B) each
Eurodollar Rate Loan may, subject to the provisions of Section 3.12,
be repaid only on the last day of the Interest Period with respect
thereto.
(b) Amounts. Except as otherwise permitted by the
Lenders from time to time, the sum of all Revolving Credit
Outstandings and Letter of Credit Outstandings shall not exceed at any
time an amount equal to the Total Revolving Credit Commitment. Each
Revolving Loan made, converted or continued, unless made in accordance
with Sections 3.1(c)(iv) or 3.17(c) hereof, shall be in a principal
amount of at least $500,000, and, if greater than $500,000, an
integral multiple of $500,000.
(c) Advances and Rate Selection.
(i) An Authorized Representative shall give the
Agent (A) irrevocable telephonic notice of each Eurodollar
Rate Loan, whether representing an additional Advance
hereunder or the conversion of borrowings hereunder from Base
Rate Loans to Eurodollar Rate Loans or the election of a
subsequent Interest Period for any Eurodollar Rate Loan, prior
to 10:30 A.M. at least three (3) Business Days prior to the
day such Advance is to be made or such Loan is to be converted
or continued; and (B) irrevocable telephonic notice of each
Base Rate Loan representing an additional Advance hereunder or
the conversion of borrowings hereunder from Eurodollar Rate
Loans to Base Rate Loans prior to 10:30 A.M. on the day such
Advance is to be made or such Loan is to be converted. Each
such notice, which shall be effective upon receipt by the
Agent, shall specify the amount of the Advance, the type of
Loan (Base Rate or Eurodollar Rate ), the date of the Advance
and, if a Eurodollar Rate Loan, the Interest Period to be used
in the computation of interest. The Authorized Representative
shall provide the Agent written confirmation of each such
telephonic notice no later than 12:00 noon on the same day
received by telefacsimile transmission in the form of a
Borrowing Notice for additional Advances, or in the form of an
Interest Rate Selection Notice for the selection or conversion
of interest rates for outstanding Revolving Loans, in each
case with appropriate insertions, but failure to provide such
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confirmation shall not affect the validity of such telephonic
notice. The Borrower shall have the option to elect the
duration of subsequent Interest Periods and to convert the
Revolving Loans in accordance with Section 3.12 hereof. If
the Agent does not receive a notice of election of duration of
an Interest Period or to convert by the time prescribed hereby
and by Section 3.12 hereof, the Borrower shall be deemed to
have elected to convert to or continue such Revolving Loan as
a Base Rate Loan until the Borrower otherwise notifies the
Agent in accordance herewith and with Section 3.12 hereof.
(ii) Notice of receipt of each Borrowing Notice
and Interest Selection Notice shall be provided by the Agent
by telephone or telefacsimile to each Lender with reasonable
promptness, but not later than 1:00 P.M. on the same day as
Agent's receipt of such notice. The Agent shall provide each
Lender written confirmation of such telephonic notice by
telefacsimile transmission, but failure to provide such notice
shall not affect the validity of such telephonic notice.
(iii) Not later than 2:30 P.M. on the date
specified for each Advance of a Revolving Loan, each Lender
shall, pursuant to the terms and subject to the conditions of
this Agreement, make the amount of the Revolving Loan or Loans
to be made by it on such day available to the Agent by
depositing or transferring the proceeds thereof in immediately
available funds at the Principal Office. The amount so
received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the
Borrower by delivery of the proceeds thereof to the Borrower's
Account or otherwise as shall be directed in the applicable
Borrowing Notice by the Authorized Representative.
(iv) Notwithstanding the foregoing, if a drawing
is made under any Letter of Credit prior to the Revolving
Credit Termination Date, notice of such drawing and resulting
Reimbursement Obligation shall be provided promptly by Issuing
Bank to the Agent and the Agent shall provide notice to each
Lender and the Borrower by telephone. If such notice to the
Lenders of a drawing under any Letter of Credit is given by
the Agent at or before 1:00 p.m. on any Business Day, the
Borrower shall be deemed to have requested, and each Lender
shall, pursuant to the conditions of this Agreement, make an
Advance as a Base Rate Loan under the Revolving Credit
Facility in the amount of such Lender's Applicable Commitment
Percentage of such Reimbursement Obligation and shall pay such
amount to
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the Agent for the account of Issuing Bank at the Principal
Office in Dollars and in immediately available funds before
2:30 P.M. on the same Business Day. If notice to the Lenders
is given by the Agent after 1:00 P.M. on any Business Day, the
Borrower shall be deemed to have requested, and each Lender
shall, pursuant to the terms and subject to the conditions of
this Agreement, make an Advance as a Base Rate Loan under the
Revolving Credit Facility in the amount of such Lender's
Applicable Commitment Percentage of such Reimbursement
Obligation and shall pay such amount to the Agent for the
account of Issuing Bank at the Principal Office in Dollars and
in immediately available funds before 12:00 noon on the next
following Business Day. Such Base Rate Loan shall continue
unless and until the Borrower converts such Base Rate Loan in
accordance with the terms of Section 3.12 hereof.
SECTION 3.2 PAYMENT OF INTEREST.
(a) The Borrower shall pay interest to the Agent at the
Principal Office for the account of each Lender on the outstanding and
unpaid principal amount of each Loan made by such Lender for the
period commencing on the date of such Revolving Loan until (but not
including) the end of the applicable Interest Period or the date such
Revolving Loan shall be due at the Eurodollar Rate or the Base Rate,
as elected by the Borrower in the applicable Borrowing Notice or
Interest Rate Selection Notice or as deemed elected by the Borrower or
otherwise applicable to such Loan as provided herein; provided,
however, that if any amount shall not be paid when due (at maturity,
by acceleration or otherwise), all amounts outstanding hereunder shall
bear interest thereafter (i) in the case of a Eurodollar Rate Loan, at
a rate of interest per annum which shall be two percent (2%) above the
Eurodollar Rate for such Eurodollar Rate Loan until (but not
including) the end of the Interest Period during which such payment
was due, and thereafter at the Default Rate, and (ii) in the case of a
Base Rate Loan, at the Default Rate, from the date such amount was due
and payable until the date such amount is paid in full.
(b) Interest on the outstanding principal balance of each
Revolving Loan shall be computed on the basis of a year of 360 days
and calculated for the actual number of days elapsed. Interest on
each Revolving Loan shall be paid (i) quarterly in arrears on the last
Business Day of each March, June, September and December commencing
June 1995, on each Base Rate Loan, (ii) on the last day of the
applicable Interest Period for each Eurodollar Rate Loan and, for any
Eurodollar Rate Loan having an Interest Period extending beyond three
(3) months, also on the date occurring every
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three (3) months after the commencement of such Interest Period, and
(iii) upon payment in full of the principal amount of such Revolving
Loan.
SECTION 3.3 PAYMENT OF PRINCIPAL. The principal amount of all
Revolving Credit Outstandings shall be due and payable to the Agent for the
benefit of each Lender in full on the Revolving Credit Termination Date or
earlier as herein expressly provided. The principal amount of Base Rate Loans
may be prepaid in whole or in part at any time without premium or penalty. The
principal amount of Eurodollar Rate Loans may only be prepaid at the end of the
applicable Interest Period, unless the Borrower shall pay to the Agent for the
account of the Lenders the amount, if any, required under Section 5.4 hereof.
In the event any payment of principal is made prior to the Revolving Credit
Termination Date, an Authorized Representative shall give the Agent irrevocable
telephonic notice of such payment of (i) a Eurodollar Rate Loan prior to 10:30
A.M. at least three (3) Business Days prior to the date such payment is to be
made and (ii) a Base Rate Loan prior to 10:30 A.M. on the day such payment is
to be made. Written confirmation of each notice shall be provided to the Agent
in accordance with the terms therefor set forth in Section 3.1(c)(i) hereof
with respect to Advances and the selection of interest rates. In the event
that at any time the sum of all Revolving Credit Outstandings and Letter of
Credit Outstandings exceeds the Total Revolving Credit Commitment, a principal
amount of the Revolving Credit Outstandings equal to such excess shall be due
and payable immediately. All prepayments made by the Borrower shall be in the
amount of $500,000 or an integral multiple of $500,000 in excess thereof, or
such other amount as necessary to comply with this Section 3.3 or with the
covenants set forth in Article 10 hereof.
SECTION 3.4 MANNER OF PAYMENT.
(a) Each payment of principal (including any prepayment)
and payment of interest shall be made to the Agent at the Principal
Office, for the account of each Lender's applicable Lending Office, in
Dollars and in immediately available funds before 2:30 P.M. on the
date such payment is due. The Agent may, but shall not be obligated
to, debit the amount of any such payment which is not made by such
time from any one or more ordinary deposit accounts, if any, of the
Borrower with the Agent.
(b) The Agent shall deem any payment by or on behalf of
the Borrower hereunder that is not made both (i) in Dollars and in
immediately available funds and (ii) prior to 2:30 P.M. on the date
payment is due to be a non-conforming payment. Any such payment shall
not be deemed to be received by the Agent until the time such funds
become available funds. Any non-conforming payment (other than a
non-conforming prepayment that subsequently satisfies both
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clauses (i) and (ii) above) may constitute or become a Default or
Event of Default. The Agent shall give prompt notice to the
Authorized Representative and each of the Lenders (confirmed in
writing) if any payment (other than a prepayment) is non-conforming.
Interest shall continue to accrue on any principal as to which a
non-conforming payment is made until such funds become available funds
(but in no event less than the period from the date of such payment to
the next succeeding Business Day) at the respective rates of interest
per annum specified in Section 3.2(a) hereof with respect to late
payments of interest (other than with respect to non-conforming
prepayments, with respect to which interest shall continue to accrue
on any principal as to which such non-conforming payment is made until
such funds become available funds at the Base Rate or the Eurodollar
Rate, as applicable) from the date such amount was due and payable
until the date such amount is paid in full.
(c) In the event that any payment hereunder or under the
Notes becomes due and payable on a day other than a Business Day, then
such due date shall be extended to the next succeeding Business Day
unless provided otherwise under clause (B) of the definition of
"Interest Period;" provided that interest shall continue to accrue
during the period of any such extension; and provided further,
however, that in no event shall any such due date be extended beyond
the Revolving Credit Termination Date.
SECTION 3.5 VOLUNTARY COMMITMENT REDUCTIONS. The Borrower shall have
the right from time to time (but not more frequently than once during any
fiscal quarter of the Borrower), upon not less than five (5) Business Days
written notice from an Authorized Representative to the Agent, to reduce the
Total Revolving Credit Commitment. The Agent shall give each Lender, within
one (1) Business Day, telephonic notice (confirmed in writing) of such
reduction. Each such reduction shall be in the amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and shall permanently reduce
the Total Revolving Credit Commitment and the Revolving Credit Commitment of
each Lender pro rata. No such reduction shall be permitted that results in the
payment of any Eurodollar Rate Loan other than on the last day of the Interest
Period of such Loan unless such prepayment is accompanied by amounts due, if
any, under Section 5.4 hereof. Each reduction of the Total Revolving Credit
Commitment shall be accompanied by payment of the principal amount of the
Revolving Credit Outstandings to be so reduced pursuant to the notice delivered
in accordance with this Section 3.5 to the extent that the sum of all Revolving
Credit Outstandings and Letter of Credit Outstandings exceeds the Total
Revolving Credit Commitment after giving effect to such reduction, together
with accrued and unpaid interest on the amounts prepaid. A reduction of the
Total Revolving Credit Commitment to zero and payment by the Borrower of all
Obligations
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(including the discharge of all obligations of Issuing Bank and the Lenders
with respect to Letters of Credit and Participations) shall, subject to the
terms and conditions of Section 15.7 hereof, be deemed a cancellation and
termination of this Agreement (other than with respect to Sections 4.2(g),
9.14, 13.7, 15.4 and 15.9 hereof, which shall survive any such termination).
SECTION 3.6 INTENTIONALLY OMITTED.
SECTION 3.7 INCREASE AND DECREASE IN AMOUNTS. The amount of the
Total Revolving Credit Commitment which shall be available to the Borrower
shall be reduced by the aggregate amount of all Revolving Credit Outstandings
and Letter of Credit Outstandings and shall be reinstated (subject to Sections
3.5 and 3.6 hereof) as such Revolving Credit Outstandings and Letter of Credit
Outstandings are reduced.
SECTION 3.8 BORROWER'S ACCOUNT. The Borrower shall until the
Revolving Credit Termination Date continuously maintain the Borrower's Account
for the purposes herein contemplated.
SECTION 3.9 REVOLVING NOTES. Revolving Loans made by each Lender
shall be evidenced by the Revolving Credit Note payable to the order of such
Lender in the amount of its Applicable Commitment Percentage of the Total
Revolving Credit Commitment, which Revolving Notes shall be dated the Closing
Date or such later date pursuant to an Assignment and Acceptance and shall be
duly completed, executed and delivered by the Borrower.
SECTION 3.10 INTEREST PERIODS. The Revolving Loans shall, at the
option of the Borrower specified in the applicable Borrowing Notice or an
Interest Rate Selection Notice, bear interest at either the Eurodollar Rate or
the Base Rate. There shall not be outstanding at any one time Eurodollar Rate
Loans (including Term Loan Segments) having more than ten (10) different
Interest Periods. With respect to Revolving Loans bearing interest at the
Eurodollar Rate, if the Agent does not receive an Interest Rate Selection
Notice giving notice of election of the duration of an Interest Period or of
conversion of any Revolving Loan to or continuation of a Eurodollar Loan as a
Eurodollar Rate Loan by the time prescribed by Section 3.12 hereof, the
Borrower shall be deemed to have elected to convert such Revolving Loan to (or
continue such Revolving Loan as) a Base Rate Loan until the Borrower notifies
the Agent in accordance with Section 3.12 hereof.
SECTION 3.11 PRO RATA PAYMENTS. Except as otherwise provided herein,
each payment and prepayment on account of the principal of and interest on the
Revolving Loans and the fees described in Section 3.13 hereof shall be made to
the Agent for the account of the Lenders in the aggregate amount payable to the
Lenders pro rata based on their Applicable Commitment
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Percentages. All payments to be made by the Borrower for the account of each
of the Lenders on account of principal, interest and fees shall be made without
set-off or counterclaim. The Agent will promptly distribute such payments
received to the Lenders as provided for herein.
SECTION 3.12 CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST
PERIODS. Provided that no Default or Event of Default shall have occurred and
be continuing and subject to the limitations set forth below, the Borrower may:
(a) upon delivery of a properly completed Interest Rate
Selection Notice to the Agent on or before 10:30 A.M. on any Business
Day convert all or a part of Eurodollar Rate Loans to Base Rate Loans
on the last day of the Interest Period for such Eurodollar Rate Loans;
and
(b) upon delivery of a properly completed Interest Rate
Selection Notice to the Agent on or before 10:30 A.M. on the date that
is three (3) Business Days prior to the date of a conversion:
(i) elect a subsequent Interest Period for all or
a portion of Eurodollar Rate Loans to begin on the last day of
the current Interest Period for such Eurodollar Rate Loans; or
(ii) convert Base Rate Loans to Eurodollar Rate
Loans on any Business Day.
Each election and conversion pursuant to this Section 3.12 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in Sections 3.1, 3.7 and Article V hereof. All
such continuations or conversions of Loans shall be effected pro rata based on
the Applicable Commitment Percentages of the Lenders.
SECTION 3.13 UNUSED FEE AND UPFRONT FEE.
(a) For the period beginning on the Funding Date and
ending on the Revolving Credit Termination Date, the Borrower agrees
to pay to the Agent, for the pro rata benefit of the Lenders based on
their Applicable Commitment Percentages, a quarterly unused fee (the
"Unused Fee") equal in amount to the product of the Applicable Margin
for calculating the Unused Fee multiplied by the average daily amount
by which Total Revolving Credit Commitment exceeds the sum of the
outstanding principal amount of all Revolving Loans and the
outstanding stated amount of all issued and undrawn Letters of Credit
for such period. Payments of the Unused Fee shall be due in arrears
on the last Business Day of each March, June, September and December
for the three month period then ended beginning June 1996 to and on
the
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Revolving Credit Termination Date. Notwithstanding the foregoing, so
long as any Lender fails to make available any portion of its
Revolving Credit Commitment when requested, such Lender shall not be
entitled to receive payment of its pro rata share of the Unused Fee
until such Lender shall make available such portion. The Unused Fee
shall be calculated on the basis of a year of 360 days for the actual
number of days elapsed.
(b) The Borrower agrees to pay to the Agent, for the
benefit of each Lender, a fee on the Closing Date (the "Upfront Fee")
in the amounts set forth on Exhibit M attached hereto and incorporated
herein by reference.
SECTION 3.14 DEFICIENCY ADVANCES. No Lender shall be responsible for
any default of any other Lender (a "defaulting Lender") in respect of such
other Lender's obligation to make any Loan hereunder nor shall the Revolving
Credit Commitment of any Lender hereunder be increased as a result of such
default of any other Lender. Without limiting the generality of the foregoing,
in the event any Lender shall fail to advance funds to the Borrower as herein
provided, any other Lender (an "advancing Lender") may in its discretion, but
shall not be obligated to, advance under its Revolving Credit Commitment all or
any portion of such amount or amounts (each, a "deficiency advance") and shall
thereafter be entitled to payments of principal of and interest on such
deficiency advance in the same manner and at the same interest rate or rates to
which such defaulting Lender would have been entitled had it made such advance
under its applicable Revolving Credit Commitment; provided that, upon payment
to the advancing Lender from the defaulting Lender of the entire outstanding
amount of each such deficiency advance, together with accrued and unpaid
interest thereon, from the most recent date or dates interest was paid to the
advancing Lender by the Borrower on each Loan comprising the deficiency advance
at the interest rate per annum for overnight borrowing by the advancing Lender
from the Federal Reserve Bank, then such payment shall be credited against the
applicable Revolving Credit Commitment of the advancing Lender in full payment
of such deficiency advance and the Borrower shall be deemed to have borrowed
the amount of such deficiency advance from the defaulting Lender as of the most
recent date or dates, as the case may be, upon which any payments of interest
were made by the Borrower thereon.
SECTION 3.15 USE OF PROCEEDS. The Letter of Credit Facility will be
used to issue Letters of Credit, including substitute Standby Letters of Credit
to replace existing standby letters of credit and the proceeds of the Loans
made pursuant to the Revolving Credit Facility shall be used by the Borrower
exclusively (a) to refinance certain accounts payable and other Indebtedness
transferred to the Borrower in connection with the Spinoff and Merger and (b)
for working capital and general corporate purposes, including Acquisitions
permitted under
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Section 10.3 hereof; provided, however, such proceeds shall in no event be used
to prepay any portion of the Subordinated Debt or the TIA Debt except as
provided in Section 10.11 hereof.
SECTION 3.16 ADDITIONAL FEES. In addition to any fees described
above, the Borrower agrees to pay to the Agent and Issuing Bank such other fees
as may be agreed to in a separate writing or writings.
ARTICLE 4
LETTERS OF CREDIT
SECTION 4.1 LETTERS OF CREDIT. Issuing Bank agrees, subject to the
terms and conditions of this Agreement, upon request and for the account of
Borrower, to issue from time to time Letters of Credit upon delivery to Issuing
Bank of an Application and Agreement for Letter of Credit in form and content
acceptable to Issuing Bank; provided, that the Letter of Credit Outstandings
shall not exceed the Total Letter of Credit Commitment. No Letter of Credit
shall be issued by Issuing Bank with an expiry date or payment date occurring
subsequent to the fifth Business Day preceding the Revolving Credit Termination
Date. Issuing Bank shall not be required to issue any Letter of Credit if,
immediately after giving effect thereto, the sum of all Revolving Credit
Outstandings and Letter of Credit Outstandings would exceed the Total Revolving
Credit Commitment; provided that the Letters of Credit previously issued may
remain outstanding until their respective expiry dates.
SECTION 4.2 REIMBURSEMENT.
(a) The Borrower hereby unconditionally agrees
immediately to pay to Issuing Bank on demand at the Principal Office
all amounts required to pay all drafts drawn and honored under Letters
of Credit and all reasonable expenses incurred by Issuing Bank in
connection with Letters of Credit and in any event and without demand
to place in possession of Issuing Bank sufficient funds to pay all
debts and liabilities arising under any Letter of Credit; provided
that to the extent permitted by Section 3.1(c)(iv) hereof, such
amounts shall be paid pursuant to Advances. The Borrower's obligation
to pay Issuing Bank under this Section 4.2, and Issuing Bank's right
to receive such payment, shall be absolute and unconditional and shall
not be affected by any circumstance whatsoever, including without
limitation the unavailability of any Advance. Issuing Bank shall give
the Borrower prompt written notice of any request for a draw under a
Letter of Credit. In the event an Advance is not available, Issuing
Bank may charge any account the Borrower may have with it for any and
all amounts Issuing Bank pays under a Letter of Credit, plus charges
and reasonable
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expenses as from time to time agreed to by Issuing Bank and the
Borrower. The Borrower agrees to pay Issuing Bank interest on any
amounts paid by the Issuing Bank in connection with drafts drawn and
honored under Letters of Credit when due hereunder, and which is not
paid pursuant to Advances as herein contemplated, at the Default Rate
from the date of such drawing to the date such amount is paid in full.
(b) In accordance with the provisions of Section 3.1(c)
hereof, Issuing Bank shall notify the Agent and the Borrower of any
drawing under any Letter of Credit as promptly as practicable
following the receipt by Issuing Bank of such drawing.
(c) Each Lender (other than Issuing Bank) shall
automatically acquire on the date of issuance thereof a Participation
in the liability of Issuing Bank in respect of each Letter of Credit
in an amount equal to such Lender's Applicable Commitment Percentage
of such liability, and to the extent that the Borrower is obligated to
pay Issuing Bank under Section 4.2(a) hereof, each Lender (other than
Issuing Bank) thereby shall, as hereinafter described, absolutely,
unconditionally and irrevocably assume, and shall be unconditionally
obligated to pay to Issuing Bank, its Applicable Commitment Percentage
of the liability of Issuing Bank under such Letter of Credit.
(i) Prior to the Revolving Credit Termination
Date, each Lender (other than Issuing Bank) shall, subject to
the terms and conditions of Article 3, make a Revolving Loan
bearing interest at the Base Rate to the Borrower by paying to
the Agent for the account of Issuing Bank at the Principal
Office in Dollars and in immediately available funds an amount
equal to its Applicable Commitment Percentage of any
Reimbursement Obligation, all as described in and pursuant to
Section 3.1(c).
(ii) With respect to drawings under any Letter of
Credit for which a Revolving Loan is not made as set forth in
clause (i) above, each Lender (other than Issuing Bank) upon
receipt from the Agent of notice of a drawing in the manner
described in Section 3.1(c), shall promptly pay to the Agent
for the account of Issuing Bank, prior to the applicable time
set forth in Section 3.1(c), its Applicable Commitment
Percentage of such drawing. Simultaneously with the making of
each such payment by a Lender to the Agent for the account of
Issuing Bank, such Lender shall, automatically and without any
further action on the part of Issuing Bank or such Lender,
acquire a Participation in an amount equal to such payment
(excluding the portion thereof
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constituting interest) in the related Reimbursement
Obligation of the Borrower.
(iii) Each Lender's obligation to make payment to
the Agent for the account of Issuing Bank pursuant to this
Section 4.2(c), and the right of Issuing Bank to receive the
same, shall be made without any offset, abatement, withholding
or reduction whatsoever. If any Lender is obligated to pay
but does not pay amounts to the Agent for the account of the
Issuing Bank in full upon such request as required by this
Section 4.2(c), such Lender shall, on demand, pay to the Agent
for the account of Issuing Bank interest on the unpaid amount
for each day during the period commencing on the date of
notice given to such Lender pursuant to Section 4.2(c) hereof
until such Lender pays such amount to the Agent for the
account of Issuing Bank in full at the interest rate per annum
for overnight borrowings by Issuing Bank from the Federal
Reserve Bank.
(iv) In the event the Lenders have purchased
Participations in any Reimbursement Obligation as set forth in
clause (ii) above, then at any time payment of such
Reimbursement Obligation, in whole or in part, is received by
Issuing Bank from the Borrower, Issuing Bank shall pay to each
Lender an amount equal to its Applicable Commitment Percentage
of such payment from the Borrower.
(d) Promptly following the end of each calendar month,
Issuing Bank shall deliver to the Agent, and the Agent shall deliver
to each Lender, a notice describing the aggregate undrawn amount of
all Letters of Credit at the end of such month. Upon the request of
any Lender from time to time, Issuing Bank shall deliver to the Agent,
and the Agent shall deliver to such Lender, any other information
reasonably requested by such Lender with respect to Letter of Credit
Outstandings.
(e) The issuance by Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Section
7.1 hereof, be subject to the conditions that such Letter of Credit be
in such form and contain such terms as shall be reasonably
satisfactory to Issuing Bank consistent with the then current
practices and procedures of Issuing Bank with respect to similar
letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of
Credit as Issuing Bank shall have reasonably requested consistent with
such practices and procedures. All Letters of Credit shall be issued
pursuant to and subject to the Uniform Customs and Practice for
Documentary Credits, 1993
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revision, International Chamber of Commerce Publication No. 500 and
all subsequent amendments and revisions thereto.
(f) The Borrower agrees that Issuing Bank may, in its
sole discretion, accept or pay, as complying with the terms of any
Letter of Credit, any drafts or other documents otherwise in order
which may be signed or issued by an administrator, executor, trustee
in bankruptcy, debtor in possession, assignee for the benefit of
creditors, liquidator, receiver, attorney in fact or other legal
representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(g) Without duplication of Section 14.7 hereof, the
Borrower hereby agrees to defend, indemnify and hold harmless Issuing
Bank, each other Lender and the Agent from and against any and all
claims and damages, losses, liabilities, reasonable costs and expenses
which Issuing Bank, such other Lender or the Agent may incur (or which
may be claimed against Issuing Bank, such other Lender or the Agent)
by any Person by reason of or in connection with the issuance or
transfer of or payment or failure to pay under any Letter of Credit;
provided that the Borrower shall not be required to indemnify Issuing
Bank, any other Lender or the Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent,
caused by the willful misconduct or gross negligence of the party to
be indemnified. The provisions of this Section 4.2(g) shall survive
repayment of the Obligations, the occurrence of the Revolving Credit
Termination Date and expiration or termination of this Agreement.
(h) Without limiting Borrower's rights as set forth in
Section 4.2(g) above, the obligation of the Borrower to immediately
reimburse the Agent for drawings made under Letters of Credit shall be
absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement and such
Letters of Credit and the related Applications and Agreements for
Letters of Credit, notwithstanding the following circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, the obligation supported by the Letter of
Credit or any other agreement or instrument relating thereto
(collectively, the "Related Documents");
(ii) any amendment or waiver of or any consent to
or departure from all or any of the Related Documents;
(iii) the existence of any claim, setoff, defense
or other rights which the Borrower may have at any time
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against any beneficiary or any transferee of a Letter of
Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), Agent, Lenders or any other
Person, whether in connection with the Loan Documents, the
Related Documents or any unrelated transaction;
(iv) any breach of contract or other dispute
between the Borrower and any beneficiary or any transferee of
a Letter of Credit (or any persons or entities for whom such
beneficiary or any such transferee may be acting), Agent,
Lenders or any other Person;
(v) any draft, statement or any other document
presented under the Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever; or
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or
agreed to by Agent, with or without notice to or approval by
the Borrower in respect of any of Borrower's Obligations under
this Agreement.
SECTION 4.3 LETTER OF CREDIT FEE. The Borrower agrees to pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, quarterly in arrears on the last Business Day of each
March, June, September and December, beginning June 1996, a fee (a) for each
Standby Letter of Credit, equal to the product of the average daily amount
available to be drawn on such Letter of Credit during such three month period
multiplied by the Applicable Margin with respect thereto and (b) for each
Commercial Letter of Credit, equal to the product of the stated amount of such
Commercial Letter of Credit outstanding during any portion of such three month
period multiplied by the Applicable Margin with respect thereto. Such fees
shall be calculated on the basis of a year of 360 days for the actual number of
days during which Letters of Credit are outstanding.
SECTION 4.4 ADMINISTRATIVE FEES. The Borrower shall pay to Issuing
Bank such administrative fee and other fees, if any, in connection with the
Letters of Credit in such amounts and at such times as Issuing Bank and the
Borrower shall agree from time to time.
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ARTICLE 5
YIELD PROTECTION AND ILLEGALITY
SECTION 5.1 ADDITIONAL COSTS.
(a) The Borrower shall promptly pay to the Agent for the
account of a Lender from time to time, without duplication, such
amounts as such Lender may reasonably determine to be necessary to
compensate it for any costs incurred by such Lender attributable to
its making or maintaining any Loan or its obligation to make any
Loans, or the issuance or maintenance by Issuing Bank of or any other
Lender's Participation in any Letter of Credit issued hereunder, or
any reduction in any amount receivable by such Lender under this
Agreement, the Notes or the Letters of Credit in respect of any of
such Loans or such obligation or the Letters of Credit, including
reductions in the rate of return on a Lender's capital (such increases
in costs and reductions in amounts receivable and returns being herein
called "Additional Costs"), resulting from any Regulatory Change which
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or the Notes in respect of any of such
Loans or Letters of Credit (other than taxes imposed on or measured by
the income, revenues or assets of any Lender); or (ii) imposes or
modifies any reserve, special deposit, or similar requirements
relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Lender (other than any
such reserve, deposit or requirement reflected in the Eurodollar Rate
computed in accordance with the definition of such term set forth in
Section 1.1 hereof); or (iii) has or would have the effect of reducing
the rate of return on capital of any such Lender to a level below that
which the Lender could have achieved but for such Regulatory Change
(taking into consideration such Lender's policies, or policies of the
parent corporation of such Lender, with respect to capital adequacy);
or (iv) imposes any other condition not set forth in clauses (i), (ii)
or (iii) above which adversely affects the amounts which would have
been received by the Agent or the Lenders, but for such Regulatory
Change, under this Agreement or the Notes or in connection with or as
a result of the issuance or maintenance of, or any Lender's
Participation in, the Letters of Credit. Each Lender will notify the
Authorized Representative and the Agent of any event occurring after
the Closing Date which would entitle it to compensation pursuant to
this Section 5.1(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation.
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(b) Without limiting the effect of the foregoing
provisions of this Section 5.1, in the event that, by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based
on or measured by the excess above a specified level of the amount of
a category of deposits or other liabilities of the Lender which
includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of any Lender which
includes Eurodollar Rate Loans or (ii) becomes subject to restrictions
on the amount of such a category of liabilities or assets which it may
hold, then, if such Lender so elects by notice to the Agent (which
shall promptly deliver such notice to the other Lenders), the
obligation hereunder of such Lender to make and continue, and to
convert Base Rate Loans into, Eurodollar Rate Loans that are the
subject of such restrictions shall be suspended until the date such
Regulatory Change ceases to be in effect and the Borrower shall, on
the last day(s) of the then current Interest Period(s) for outstanding
Eurodollar Rate Loans convert such Eurodollar Rate Loans of such
affected Lender into Base Rate Loans; provided, however, that the
suspension of such obligation and the conversion of any Eurodollar
Rate Loans into Base Rate Loans shall apply only to any Lender who is
affected by such restrictions and who has provided such notice to the
other Lenders, and the obligation of the other Lenders to make, and to
convert Base Rate Loans into, Eurodollar Rate Loans shall not be
affected by such restrictions. In the event that the obligation of
some, but not all of the Lenders to make, or to convert Base Rate
Loans into, Eurodollar Rate Loans is suspended, then any request by
the Borrower during the pendency of such suspension for a
Eurodollar Rate Loan shall be deemed a request for such Eurodollar
Rate Loan from the Lender(s) not subject to such suspension and for a
Base Rate Loan from the Lender(s) who are subject to such suspension,
in each case in the respective amounts based on the Lenders' respective
Applicable Commitment Percentages.
(c) Reasonable determinations by any Lender for purposes
of this Section 5.1 of the effect of any Regulatory Change on its
costs of making or maintaining, or being committed to make, Loans or
by Issuing Bank as issuer of any Letter of Credit of the effect of any
Regulatory Change on its costs in connection with the issuance or
maintenance of, or any other Lender's Participation in, any Letter of
Credit issued hereunder, or on amounts receivable by any Lender in
respect of Loans or Letters of Credit, and of the additional amounts
required to compensate the Lender in respect of any Additional Costs,
shall be made taking into account such Lender's policies, or the
policies of the parent corporation of such Lender, as to the
allocation of capital, costs and other items and shall be conclusive
absent manifest error.
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The Lender requesting such compensation shall furnish to the
Authorized Representative and the Agent an explanation of the
Regulatory Change and calculations, in reasonable detail, setting
forth such Lender's determination of any such Additional Costs.
SECTION 5.2 SUSPENSION OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any Eurodollar Rate Loan for any Interest Period, the Agent determines (which
determination shall be conclusive absent manifest error) that:
(a) quotations of interest rates for the relevant
deposits referred to in the definition of Eurodollar Rate in Section
1.1 hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining the rate of interest
for such Eurodollar Rate Loan as provided in this Agreement; or
(b) the relevant rates of interest referred to in the
definition of "Interbank Offered Rate" in Section 1.1 hereof upon the
basis of which the Eurodollar Rate for such Interest Period is to be
determined do not adequately reflect the cost to the Lenders of making
or maintaining such Eurodollar Rate Loan for such Interest Period;
then the Agent shall give the Authorized Representative prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make Eurodollar Rate Loans that are subject to such condition, or
to convert Loans into Eurodollar Rate Loans, and the Borrower shall on the last
day(s) of the then current Interest Period(s) for outstanding Eurodollar Rate
Loans convert such Eurodollar Rate Loans into Base Rate Loans. The Agent shall
give the Authorized Representative notice describing any event or condition
described in this Section 5.2 promptly following the determination by the Agent
that the availability of Eurodollar Rate Loans is, or is to be, suspended as a
result thereof.
SECTION 5.3 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender to honor its
obligation to make or maintain Eurodollar Rate Loans hereunder, then such
Lender shall promptly notify the Borrower thereof (with a copy to the Agent)
and such Lender's obligation to make or continue Eurodollar Rate Loans, or
convert Base Rate Loans into Eurodollar Rate Loans, shall be suspended until
such time as such Lender may again make and maintain Eurodollar Rate Loans, and
such Lender's outstanding Eurodollar Rate Loans shall be converted into Base
Rate Loans in accordance with Sections 2.11 and 3.12 hereof. In the event that
the obligation of some, but not all of the Lenders to make, or to convert Base
Rate Loans into, Eurodollar Rate Loans is suspended, then any request by the
Borrower during the pendency of such suspension for a Eurodollar Rate Loan
shall be deemed a request for such Eurodollar Rate Loan from the Lender(s) not
subject to such
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suspension and for a Base Rate Loan from the Lender(s) who are subject to such
suspension, in each case in the respective amounts based on the Lenders'
respective Applicable Commitment Percentages.
SECTION 5.4 COMPENSATION. The Borrower shall promptly pay to the
Agent for each Lender, upon the request of such Lender communicated by the
Agent to the Borrower, such amount or amounts as shall be sufficient (in the
reasonable determination of such Lender) to compensate it for any loss, cost or
expense incurred by it as a result of any of the following (each a "Breakage
Event"):
(a) any payment, prepayment or conversion of a Eurodollar
Rate Loan on a date other than the last day of the Interest Period for
such Eurodollar Rate Loan, including without limitation any conversion
required pursuant to Section 5.1; or
(b) any failure by the Borrower to borrow a Eurodollar
Rate Loan or convert a Base Rate Loan into a Eurodollar Rate Loan on
the date for such borrowing or conversion specified in the relevant
Borrowing Notice or Interest Rate Selection Notice under Sections 2.1
or 3.1 hereof;
such compensation to include, without limitation, an amount equal to the
excess, if any, of the amount of interest which would have accrued on the
principal amount of such Loan for the period from the date of such Breakage
Event to the last day of the then current Interest Period for such Loan (or, in
the case of a failure to borrow or convert, the Interest Period for such Loan
which would have commenced on the date scheduled for such borrowing or
conversion) at (i) the applicable rate of interest for such Eurodollar Rate
Loan on the first day of such Interest Period over (ii) the Interbank Offered
Rate as reasonably determined by such Lender as of the date of such Breakage
Event for Dollar deposits of amounts comparable to such principal amount and
maturities comparable to such period. Such compensation shall also take into
account, in the event the Borrower fails to convert a Base Rate Loan into a
Eurodollar Rate Loan after delivering the relevant Interest Rate Selection
Notice therefor and continues such Base Rate Loan, or in the event the Borrower
converts a Eurodollar Rate Loan to a Base Rate Loan other than on the last day
of the relevant Interest Period, the amount of interest earned by such Lender
at the Base Rate for such number of days as the Base Rate Loan remains
outstanding during the Interest Period which would have commenced on the date
scheduled for such conversion or the Interest Period for the Eurodollar Rate
Loan so converted. A good faith determination of a Lender as to the amounts
payable pursuant to this Section 5.4 shall be conclusive absent manifest error.
The Lender requesting
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compensation under this Section 5.4 shall furnish to the Authorized
Representative and the Agent calculations in reasonable detail setting forth
such Lender's determination of the amount of such compensation.
SECTION 5.5 ALTERNATE INTEREST RATE. In the event any Lender
suspends the making of any Eurodollar Rate Loan pursuant to Sections 5.1, 5.2
or 5.4 hereof (a "Restricted Lender"), the Restricted Lender's Applicable
Commitment Percentage of any Eurodollar Rate Loan shall bear interest at the
Base Rate until the Restricted Lender once again makes available the applicable
Eurodollar Rate Loan. Notwithstanding the provisions of Sections 2.4 or 3.4
hereof, interest shall be payable to the Restricted Lender at the time and in
the manner paid to those Lenders making available Eurodollar Rate Loans.
SECTION 5.6 TAXES.
(a) All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall
be made free and clear of and without deduction for any present or
future excise, stamp or other taxes, fees, duties, levies, imposts,
charges, deductions, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding (i)
franchise taxes, (ii) any taxes (other than withholding taxes) that
would not be imposed but for a connection between a Lender or the
Agent and the jurisdiction imposing such taxes (other than a
connection arising solely by virtue of the activities of such Lender
or the Agent pursuant to or in respect of this Agreement or any other
Loan Document), (iii) any taxes which become payable as a result of a
failure by any Person to comply with its obligations set forth in
Sections 5.6(b) hereof or which would not have been imposed but for
(A) a sale, assignment, grant of a participation, or any other
transfer or disposition of any interest in this Agreement or any other
Loan Document or (B) a change by a Lender of the Lending Office of
such Lender designated on the signature pages herein or in an
Assignment and Acceptance, and (iv) any taxes imposed on or measured
by any Lender's assets, net income, receipts or branch profits (such
non-excluded items being collectively called "Taxes"). In the event
that any withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Borrower shall:
(i) pay directly to the relevant authority the
full amount required to be so withheld or deducted;
(ii) if requested by the Agent, promptly forward
to the Agent an official receipt or other documentation
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reasonably satisfactory to the Agent evidencing such payment
to such authority; and
(iii) pay to the Agent for the account of the
Lenders such additional amount or amounts as is necessary to
ensure that the net amount actually received by each Lender
will equal the full amount such Lender would have received had
no such withholding or deduction been required.
(b) Prior to the date that any Lender or participant
organized under the laws of a jurisdiction outside the United States
becomes a party hereto, such Person shall deliver to the Borrower and
the Agent such certificates, documents or other evidence, as required
by the Code, properly completed, currently effective and duly executed
by such Lender or participant establishing that such payment is (i)
not subject to United States Federal backup withholding tax and (ii)
not subject to United States Federal withholding tax under the Code
because such payment is either effectively connected with the conduct
by such Lender or participant of a trade or business in the United
States or totally exempt from United States Federal withholding tax by
reason of the application of the provisions of a treaty to which the
United States is a party or such Lender is otherwise exempt.
(c) If the Borrower fails to pay any Taxes when due to
the appropriate taxing authority or fails to remit to the Agent, for
the account of the respective Lender, the required receipts or other
required documentary evidence, the Borrower shall indemnify the
Lenders for any incremental Taxes, interest or penalties that may
become payable by any Lender as a result of any such failure. For
purposes of this Section 5.6, a distribution hereunder by the Agent or
any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
ARTICLE 6
SECURITY
SECTION 6.1 SECURITY INTEREST. As security for the full and timely
payment and performance of all Obligations, the Borrower shall, and shall cause
each Guarantor to, on or before the Closing Date do all things necessary in the
opinion of the Agent and its counsel to grant to the Agent for the benefit of
the Lenders a first priority security interest, duly perfected with respect to
Collateral governed by the UCC, in all Collateral subject to no prior Lien or
other encumbrance or restriction on transfer (other than restrictions on
transfer imposed by applicable securities laws and Permitted Liens).
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SECTION 6.2 STOCK PLEDGE. As security for the full and timely
payment and performance of (a) all Obligations now existing or hereafter
arising, and (b) certain Guarantor's obligations under the Guaranty, the
Borrower and each Guarantor owning any capital stock of any other Subsidiary
shall on or before the Closing Date deliver to the Agent, in form and substance
reasonably acceptable to the Agent, the Stock Pledge Agreement together with
certificates representing the Pledged Subsidiary Stock and such stock powers
duly executed in blank as may be required by the Agent in accordance with the
terms hereof and thereof.
SECTION 6.3 GUARANTY.
(a) To guarantee the full and timely payment and
performance of all Obligations now existing or hereafter arising, the
Borrower and each Material Subsidiary shall cause to be delivered to
the Agent, in form and substance reasonably acceptable to the Agent,
on or before the Closing Date, the Guaranty.
(b) As security for the full and timely payment and
performance of the Guaranty, the Borrower and the Guarantors shall
cause to be delivered to the Agent, in form and substance reasonably
acceptable to the Agent, on or before the Closing Date the
Intellectual Property Security Agreements, the Partnership Interest
Assignments, the Lease Assignments, the Landlord Waivers, the
Intellectual Property Assignments, and such duly executed and filed
Uniform Commercial Code financing statements sufficient to grant to
the Agent a valid, duly perfected security interest in the Collateral
described therein, subject to no prior Liens other than Liens
described in Section 10.2 hereof.
SECTION 6.4 PLEDGE OF INTERCOMPANY NOTES. As security for the full
and timely payment of all Obligations and performance of the Guaranty, the
Borrower and each Subsidiary shall on the Closing Date deliver to the Agent for
the benefit of the Lenders a Note Assignment Agreement with respect to one or
more promissory notes evidencing any Indebtedness incurred on or after the
Closing Date owing by any Subsidiary to the Borrower or another Subsidiary.
SECTION 6.5 LEASE ASSIGNMENTS. As security for the full and timely
payment and performance of (a) all Obligations now existing or hereafter
arising, and (b) the Guarantor's obligations under the Guaranty, the Borrower
and each Guarantor shall deliver to the Agent, in form and substance reasonably
acceptable to the Agent, the Lease Assignments. The Lease Assignments shall be
delivered on or before the Funding Date and thereafter as any material leased
facility arises.
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SECTION 6.6 FURTHER ASSURANCES. At the request of the Agent, the
Borrower will execute by its duly authorized officers, alone or with the Agent,
any certificate, instrument, statement or document and will procure any such
certificate, instrument, statement or document (and pay all connected costs)
which the Agent reasonably deems necessary to create or preserve the Liens (and
the perfection and priority thereof) of the Agent for the benefit of the
Lenders contemplated hereby and by the other Loan Documents.
ARTICLE 7
CONDITIONS PRECEDENT
SECTION 7.1 CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement, subject to Section 7.2 hereof, shall occur upon satisfaction of the
following conditions precedent:
(a) the Agent shall have received on or before the
Closing Date, in form and substance satisfactory to the Agent and
Lenders, executed originals of each of this Agreement, and each of the
other Loan Documents, other than the Notes and the Lease Assignments,
together with all schedules and exhibits thereto;
(b) Each of the following shall have occurred or be
true:
(i) There shall not be any action, suit,
investigation or proceeding pending or threatened in any court
or before any arbitrator or governmental instrumentality that
could reasonably be expected to have a material adverse effect
on the Spinoff and Merger, the financings contemplated thereby
(including the Facilities) or any other transaction
contemplated hereby or the Borrower or its business,
operations or prospects;
(ii) The Borrower shall be in compliance with all
existing financial and material contractual obligations before
and, on a pro forma basis, immediately after giving effect to
the Spinoff and Merger, the financings contemplated thereby
(including the Facilities) and any other transactions
contemplated hereby;
(iii) The Borrower, its Subsidiaries and any other
Guarantor shall have received all government, shareholder and
third-party approvals, consents and waivers, and shall have
made or given all necessary filings and notices, as shall be
required to consummate the Spinoff and Merger and the
transactions contemplated hereby without the occurrence of any
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default under, conflict with or violation of (A) any
applicable law, rule, regulation, order or decree of any court
or other Governmental Authority or arbitral authority, (B) any
charter or other organizational document or bylaws of any
party to Spinoff Agreement or the Merger Agreement or (C) any
agreement, document or instrument to which any of the Borrower
or any Subsidiary or any other Guarantor is a party or by
which any of them or their properties is bound, if such
default, conflict or violation could reasonably be expected to
result in a Material Adverse Effect; and all applicable
waiting periods shall have expired without any action being
taken or threatened in writing by any authority that could
restrain, prevent or impose any material adverse conditions on
the Spinoff and Merger, the making of the Term Loan or the
Revolving Loans, or other transactions contemplated hereby,
and no law or regulation shall be applicable which in the
reasonable judgment of the Agent could have such effect;
(iv) The Spinoff and Merger Documents shall not
have been materially altered, amended or otherwise revised or
supplemented from the form thereof so approved by the Agent
and the Lenders, or any material condition therein waived,
without the prior written consent of the Agent and the
Lenders;
(v) After giving pro forma effect to the Spinoff
and Merger, the Borrower shall have committed capital and
financings adequate to meet the ongoing financial needs of the
Borrower and its Subsidiaries, and in any event the Borrower
shall have at least $5,000,000 of borrowings available under
the Revolving Credit Facility;
(c) In the good faith judgment of the Agent and the
Lenders:
(i) There shall not have occurred a material
adverse change in the business, assets, revenues, operations,
condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole since December
31, 1995 or in the assumptions, facts or information contained
in the financial statements, budgets, projections or pro forma
balance sheets most recently delivered to the Agent by the
Borrower;
(ii) There shall not have occurred and be
continuing a material adverse change in the market for
syndicated credit facilities similar in nature to the
Facilities or a material disruption of, or a material
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adverse change in, financial, banking or capital market
conditions, in each case as determined by the Agent in its
reasonable discretion; and
(iii) All financial and solvency reports received
by the Agent with respect to the Borrower and the
reasonableness and accuracy of all financial projections shall
be reasonably satisfactory.
SECTION 7.2 CONDITIONS TO INITIAL ADVANCE AND ISSUANCE OF LETTERS OF
CREDIT. The obligation of the Lenders to make the Advance of the Term Loan and
the initial Advance of the Revolving Loan and of Issuing Bank to issue the
Letters of Credit is subject to the satisfaction of the following conditions
precedent:
(a) the Agent shall have received on or before the
Funding Date, in form and substance satisfactory to the Agent and
Lenders, the following:
(i) favorable written opinions of counsel to the
Borrower and the Guarantors dated the Closing Date, addressed
to the Agent and the Lenders and reasonably satisfactory to
Smith Helms Mulliss & Moore, L.L.P., special counsel to the
Agent, substantially in the forms of Exhibit N attached hereto
and incorporated herein by reference;
(ii) resolutions of the board of directors or
other appropriate governing body (or of the appropriate
committee thereof) of the Borrower, certified by its secretary
or assistant secretary or other appropriate officer as of the
Closing Date, appointing the initial Authorized Representative
and approving and adopting the Loan Documents to be executed
by such Person, and authorizing the execution, delivery and
performance thereof;
(iii) resolutions of the board of directors or
other appropriate governing body (or of the appropriate
committee thereof) of each Corporate Guarantor, certified by
its secretary or assistant secretary or other appropriate
officer as of the Closing Date approving and adopting the Loan
Documents to be executed on behalf of such Corporate Guarantor
and authorizing the execution, delivery and performance
thereof;
(iv) resolutions of the board of directors or
other appropriate governing body (or of the appropriate
committee thereof) of the general partner of the LP Guarantor,
certified by its secretary or assistant secretary or other
appropriate officer as of the
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Closing Date approving and adopting the Loan Documents to be
executed on behalf of such general partner and LP Guarantor
and authorizing the execution, delivery and performance
thereof;
(v) specimen signatures of officers of the
Borrower executing the Loan Documents on behalf of the
Borrower, certified by the secretary or assistant secretary or
other appropriate officer of the Borrower;
(vi) specimen signatures of officers of each
Corporate Guarantor executing the Loan Documents on behalf of
such Corporate Guarantor, certified by the secretary or
assistant secretary or other appropriate officer of such
Corporate Guarantor;
(vii) specimen signatures of officers of the
general partner of the LP Guarantor executing the Loan
Documents on behalf of such general partner and LP Guarantor,
certified by the secretary or assistant secretary or other
appropriate officer of the general partner of the LP
Guarantor;
(viii) the certificate of incorporation of each of
the Borrower, the Corporate Guarantors and the general partner
of the LP Guarantor certified as of a recent date by the
Secretary of State or other appropriate Governmental Authority
of its jurisdiction of incorporation;
(ix) the Limited Partnership Agreement of the LP
Guarantor certified as true and correct and in effect by its
general partner;
(x) the Certificate of Limited Partnership of the
LP Guarantor certified as of a recent date by the Secretary of
State or other appropriate Governmental Authority of its
jurisdiction of incorporation;
(xi) the by-laws of each of the Borrower, the
Corporate Guarantors and the general partner of the LP
Guarantor certified as of the Closing Date as true and correct
by its secretary or assistant secretary;
(xii) with respect to the Borrower and each
Guarantor, certificates issued as of a recent date by the
Secretary of State or other appropriate Governmental Authority
of its jurisdiction of incorporation as to its due existence
and good standing therein;
(xiii) with respect to the Borrower and each
Guarantor, appropriate certificates of qualification to
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do business, good standing and, where appropriate, authority
to conduct business under assumed name, issued as of a recent
date by the Secretary of State or other appropriate
Governmental Authority of each jurisdiction in which the
failure to be qualified to do business or authorized so to
conduct business could result in a Material Adverse Effect;
(xiv) notice of appointment of the initial
Authorized Representative of the Borrower in the form of
Exhibit C hereto;
(xv) certificate of an Authorized Representative
dated the Closing Date demonstrating compliance with the
financial covenants contained in Article 11 hereof, all as of
the immediately preceding Determination Date, substantially in
the form of Exhibit O attached hereto;
(xvi) evidence of insurance required by the Loan
Documents other than policies for director and officer
indemnification insurance and immaterial policies issued to
Subsidiaries;
(xvii) environmental information with respect to the
owned real property of the Borrower and its Subsidiaries, as
reasonably requested by the Agent;
(xviii) Landlord Waivers for each of the Borrower's
or any Subsidiary's leased facilities;
(xix) certified copies of all documents evidencing
the Subordinated Debt, the subordination terms of which are
acceptable, and all other terms of which are reasonably
acceptable, to the Agent and the Lenders;
(xx) executed originals of the Notes and the
Lease Assignments;
(xxi) financial statements of the Borrower and its
Subsidiaries required to be delivered pursuant to Section 8.6
hereof and a pro forma balance sheet as at the Closing Date of
the Borrower and its Subsidiaries on a consolidated basis
giving effect to Spinoff and Merger and the transactions
contemplated hereby;
(xxii) an initial Borrowing Notice;
(xxiii) all fees payable by the Borrower on the
Closing Date to the Agent, Issuing Bank and the Lenders;
(xxiv) UCC-1 Financing Statements, duly executed by
the Borrower and each of the Guarantors and in proper
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form for filing, for all locations required by applicable law
to perfect the lien of the Agent and the Lenders under the
Security Agreement as a first priority lien as to items of
Collateral in which a security interest may be perfected by
the filing of financing statements;
(xxv) Application and Agreement for each
Replacement Letter of Credit, together with copies of such
Replacement Letters of Credit;
(xxvi) a report in sufficient detail prepared by the
Borrower as to the Borrower and its Subsidiaries being Solvent
after giving effect to the Spinoff and Merger; and
(xxvii) evidence reasonably satisfactory to the Agent
and the Lenders as to the matters set forth in Section 7.2(c)
below;
(xxviii) certified copies of the Spinoff and Merger
Documents, the Asset Purchase Agreement regarding the sale of
assets of the Orcolite division of ORC, and the Agreement for
Conversion and Exchange of Notes regarding the existing 8%
Convertible Subordinated Notes due 2002 of Benson (the "Benson
Notes");
(xxix) a certificate delivered by the chief
financial officer of Benson as to the status of certain
matters regarding the Benson Notes and outstanding stock
options of Benson as of the Funding Date;
(xxx) certified copies of Benson's effective
registration statement on Form 10 or Form S-1, as applicable,
and proxy statement regarding the Spinoff and Merger;
(xxxi) reliance letters addressed to the Lenders and
the Agent regarding the opinions of counsel, if any, delivered
in connection with the Spinoff and Merger;
(xxxii) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby.
(b) Each of the conditions set forth in Section 7.1(a),
(b) and (c) hereof shall have been satisfied, have occurred, be true,
and remain in effect, as of the Funding Date;
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(c) All conditions precedent to the consummation of the
Spinoff and Merger, other than the funding provided under this
Agreement, shall have been satisfied;
(d) the amount of Subordinated Debt outstanding shall be
reasonably acceptable to the Lenders;
(e) the Agent shall have received a Certificate of the
Chief Executive Officer of the Borrower as to the occurrence or truth
of each of items (a) through (d) above; and
(f) the Agent and the Lenders shall have received on or
before April 11, 1996 all schedules to this Agreement and the other
Loan Documents in form and substance satisfactory to the Agent and
each of the Lenders.
SECTION 7.3 CONDITIONS OF ALL ADVANCES AND ISSUANCES OF LETTERS OF
CREDIT. The obligations of the Lenders to make any Advance or to convert or
continue the interest rates thereof pursuant to Sections 2.11 or 3.12 (other
than any conversion required by Sections 5.1, 5.2 or 5.3 hereof), and of
Issuing Bank to issue Letters of Credit hereunder, subsequent to the Closing
Date are subject to the satisfaction of the following conditions:
(a) the Agent shall have received a notice of such
borrowing or request as required by Section 3.1 hereof;
(b) the representations and warranties of the Borrower
set forth in Article 8 hereof and in each of the other Loan Documents
shall be true and correct in all material respects on and as of the
date of such Advance, conversion, continuation or issuance of such
Letters of Credit, as the case may be, with the same effect as though
such representations and warranties had been made on and as of such
date, except (i) to the extent that such representations and
warranties expressly relate to an earlier date, (ii) that the
representations and warranties set forth in Section 8.4 and 8.5 shall
be deemed to include and take into account any merger or consolidation
permitted under Section 10.4 hereof or otherwise permitted in
accordance with the terms hereof, and (iii) that the financial
statements referred to in Section 8.6(a) shall be deemed to be those
financial statements most recently delivered to the Agent and the
Lenders pursuant to Section 9.1 hereof;
(c) in the case of the issuance of a Letter of Credit,
Borrower shall have executed and delivered to Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to Issuing Bank together with such other instruments and
documents as it shall reasonably request;
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(d) at the time of each such Advance, conversion,
continuation or issuance of each Letter of Credit, as the case may be,
no Default or Event of Default shall have occurred and be continuing;
(e) immediately after issuing any Letter of Credit, the
aggregate Letter of Credit Outstandings shall not exceed the Total
Letter of Credit Commitment; and
(f) immediately after giving effect to any Revolving Loan
or Letter of Credit, (i) the sum of all Revolving Credit Outstandings
and all Letter of Credit Outstandings shall not exceed the Total
Revolving Credit Commitment, (ii) the sum of all Revolving Credit
Outstandings, Letter of Credit Outstandings and Term Loan Outstandings
shall not exceed the Total Credit Commitment, and (iii) each Lender's
Applicable Commitment Percentage of Revolving Loans and Participations
shall not exceed its Revolving Credit Commitment.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery
of the documents mentioned herein and the making of Loans and issuance of
Letters of Credit), that:
SECTION 8.1 ORGANIZATION AND AUTHORITY.
(a) the Borrower and each corporate Subsidiary is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation or creation, and each partnership
Subsidiary is a limited partnership duly formed and validly existing
under the laws of the State of Delaware;
(b) the Borrower and each Subsidiary (i) has the
requisite power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in
the Loan Documents, and (ii) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material
Adverse Effect;
(c) the Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
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(d) each Guarantor has the power and authority to
execute, deliver and perform the Guaranty and the Security Agreement
and to execute, deliver and perform each of the other Loan Documents
to which it is a party; and
(e) when executed and delivered, each of the Loan
Documents to which the Borrower or any Guarantor is a party will be
the legal, valid and binding obligation or agreement, as the case may
be, of the Borrower and such Guarantor, as applicable, enforceable
against it in accordance with its respective terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity which may limit the availability of remedies (whether in a
proceeding at law or in equity);
SECTION 8.2 LOAN DOCUMENTS. The execution, delivery and performance
by the Borrower and each Guarantor of each of the Loan Documents to which it is
a party:
(a) have been duly authorized by all requisite corporate
or partnership action, as applicable (including any required
shareholder or partner approval) of the Borrower or such Guarantor, as
applicable, required for the lawful execution, delivery and
performance thereof;
(b) do not violate any provisions of (i) any law, rule or
regulation applicable to the Borrower or such Guarantor, (ii) any
order of any court or other agency of government binding on the
Borrower or such Guarantor, or their respective properties, or (iii)
the charter documents, documents of organization or governance or
bylaws of Borrower or such Guarantor, in each case in clauses (i) and
(ii) hereof, which violation could reasonably be expected to have a
Material Adverse Effect;
(c) will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with notice or
lapse of time, or both, would constitute an event of default, under
any indenture (including the Indenture), agreement or other instrument
to which Borrower or such Guarantor is a party or by which its
properties or assets are bound which conflict, breach or event of
default could reasonably be expected to have a Material Adverse
Effect; and
(d) will not result in the creation or imposition of any
Lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of Borrower or such Guarantor except any Liens in
favor of the Agent and the Lenders created by the Loan Documents;
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SECTION 8.3 SOLVENCY. Borrower and each Guarantor are Solvent after
giving effect to the transactions contemplated by this Agreement and the other
Loan Documents;
SECTION 8.4 SUBSIDIARIES AND STOCKHOLDERS. Borrower has no
Subsidiaries other than those Persons listed as Subsidiaries in Schedule 8.4
hereto, as the same may be hereafter amended; Schedule 8.4, as the same may be
hereafter amended, states the authorized and issued capitalization of each
Subsidiary listed thereon, the number of shares or other equity interests of
each class of capital stock or interest issued and outstanding of each such
Subsidiary and the number and/or percentage of outstanding shares or other
equity interest (including options, warrants and other rights to acquire any
interest) of each such class of capital stock or equity interest owned by the
Borrower or by any such Subsidiary; the outstanding shares or other equity
interests of each such Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable; and the Borrower and each such Subsidiary
owns beneficially and of record all the shares and other interests it is listed
as owning in Schedule 8.4, free and clear of any Lien other than Permitted
Liens described in Section 10.2 hereof;
SECTION 8.5 OWNERSHIP INTERESTS. Borrower owns no interest in any
other Person (excluding Subsidiaries) other than the Persons listed in Schedule
8.5 hereto, as the same may be hereafter amended;
SECTION 8.6 FINANCIAL CONDITION.
(a) The Borrower has heretofore furnished to the Agent
(i) the pro forma consolidated balance sheet of the Borrower and its
Subsidiaries which balance sheet is based upon the audited
consolidated balance sheet of Benson and its Subsidiaries as at
December 31, 1995 and the notes thereto and the related consolidated
statements of operations, cash flows, and shareholders' equity for the
fiscal year then ended as examined and certified by Price Waterhouse,
L.L.P. and (ii) the pro forma consolidated balance sheet of the
Borrower and its Subsidiaries based upon the most current draft read
by Price Waterhouse, L.L.P. in connection with its annual audit of the
consolidated balance sheet of Benson and its Subsidiaries as at
December 31, 1995 and the notes thereto and the related consolidated
statements of operations, cash flows and shareholders' equity for the
fiscal year then ended. Except as set forth therein, such pro forma
financial statements (including the notes thereto) present fairly the
consolidated financial condition of the Borrower and its Subsidiaries,
as of the end of such Fiscal Year and results of their operations and
the changes in shareholders' equity for such Fiscal Year, all in
conformity with GAAP applied on a Consistent Basis;
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(b) since December 31, 1995, there has not occurred any
event which has had or could reasonably be expected to have a Material
Adverse Effect, and the businesses, properties and operations of the
Borrower and its Subsidiaries, considered as a whole, have not been
materially adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workers, flood,
embargo or act of God;
(c) since December 31, 1995, except as set forth hereof
in the pro forma financial statements referred to in Section 8.6(a) or
in Schedule 8.6 or Schedule 8.10 attached hereto, or as permitted
under Section 10.1hereof, neither the Borrower nor any Subsidiary has
incurred, other than in the ordinary course of business, any material
Indebtedness or Contingent Obligations that remain outstanding or
unsatisfied;
SECTION 8.7 TITLE TO PROPERTIES. The Borrower and its Material
Subsidiaries have title to all their respective owned real and personal
properties, subject to no transfer restrictions or Liens of any kind, except
for (i) the transfer restrictions and Liens described in Schedule 8.7 attached
hereto, (ii) Liens permitted under Section 10.2 hereof, (iii) with respect to
any personal property that constitutes a security, transfer restrictions
imposed under Federal and state securities laws and regulations, and (iv) the
lack of title or the presence of such transfer restrictions that could not
reasonably be expected to have a Material Adverse Effect;
SECTION 8.8 TAXES. Except as set forth in Schedule 8.8 attached
hereto, the Borrower and its Subsidiaries have filed or caused to be filed all
Federal, state, local and foreign tax returns which are required to be filed by
them and which the failure to file could reasonably be expected to have a
Material Adverse Effect and, except for taxes and assessments being contested
in good faith by appropriate proceedings diligently conducted and against which
reserves satisfactory to the Borrower's independent certified public
accountants have been established, have paid or caused to be paid all taxes as
shown on said returns or on any assessment received by them, to the extent that
such taxes have become due unless the failure to pay the same could not
reasonably be expected to have a Material Adverse Effect;
SECTION 8.9 OTHER AGREEMENTS. Neither the Borrower nor any
Subsidiary is:
(a) a party to any judgment, order or decree or subject
to restrictions which could reasonably be expected to have a Material
Adverse Effect; or
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(b) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which the Borrower or any
Subsidiary is a party, which default has, or if not remedied within
any applicable grace period could reasonably be expected to have, a
Material Adverse Effect;
SECTION 8.10 LITIGATION. Except as set forth in Schedule 8.10
attached hereto, there is no action, suit or proceeding at law or in equity or
by or before any governmental instrumentality or agency or arbitral body
pending, or, to the knowledge of the Borrower, threatened by or against the
Borrower or any Subsidiary or affecting the Borrower or any Subsidiary or any
properties or rights of the Borrower or any Subsidiary, which could reasonably
be expected to have a Material Adverse Effect;
SECTION 8.11 MARGIN STOCK. Neither the Borrower nor any Subsidiary
owns any "margin stock" as such term is defined in Regulation U, as amended (12
C.F.R. Part 221), of the Board. The proceeds of the borrowings made pursuant
to Articles 2 and 3 hereof will be used by the Borrower and its Subsidiaries
only for the purposes set forth in Sections 2.13 and 3.15 hereof. None of such
proceeds will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry margin stock or
for any other purpose which might constitute any of the Loans under this
Agreement a "purpose credit" within the meaning of said Regulation U or
Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting on its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange
Act of 1934, as amended, or the Securities Act of 1933, as amended, or any
state securities laws, in each case as in effect on the date hereof;
SECTION 8.12 INVESTMENT COMPANY. Neither the Borrower nor any
Subsidiary is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C.
Section 80a-1, et seq.). The application of the proceeds of the Loans and
repayment thereof by the Borrower and the performance by the Borrower of the
transactions contemplated by this Agreement will not violate any provision of
said Act, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder, in each case as in effect on the date hereof;
SECTION 8.13 PATENTS, ETC. Except as set forth in Schedule 8.13
attached hereto, the Borrower and its Subsidiaries own or have the right to
use, under valid license agreements or
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otherwise, all material patents, licenses, franchises, trademarks, trademark
rights, trade names, trade name rights, trade secrets and copyrights necessary
to the conduct of their businesses as now conducted, without known conflict
with any patent, license, franchise, trademark, trade secrets and confidential
commercial or proprietary information, trade name, copyright, rights to trade
secrets or other proprietary rights of any other Person. Each Subsidiary
owning any Collateral as defined in the Intellectual Property Security
Agreement is a party to the Intellectual Property Security Agreement and the
Borrower does not own any such Collateral;
SECTION 8.14 NO UNTRUE STATEMENT. Neither this Agreement nor any
other Loan Document or certificate or document executed and delivered by or on
behalf of the Borrower or any Guarantor in accordance with or pursuant to any
Loan Document contains any misrepresentation or untrue statement of material
fact or omits to state a material fact necessary, in light of the circumstances
under which such representation or statement was made, in order to make any
such representation or statement contained herein or therein not misleading in
any material respect;
SECTION 8.15 NO CONSENTS, ETC. Except as set forth in Schedule 8.15
attached hereto, neither the respective businesses or properties of the
Borrower or any Subsidiary, nor any relationship between the Borrower or any
Subsidiary and any other Person, nor the execution, delivery and performance of
the Loan Documents and the transactions contemplated hereby, nor the execution
delivery and performance of the Spinoff Agreement or the Merger Agreement or
the transactions contemplated thereby is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
Governmental Authority or other authority or any other Person on the part of
the Borrower, any Subsidiary or Benson as a condition to the execution,
delivery and performance of, or consummation of the transactions contemplated
by, this Agreement, the other Loan Documents or by the Spinoff and Merger, or
if so, such consent, approval, authorization, filing, registration or
qualification has been obtained or effected, or shall have been obtained or
effected prior to the Funding Date, as the case may be;
SECTION 8.16 EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule
8.16 hereof:
(a) Neither the Borrower nor any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Employee
Benefit Plans other than those identified on Schedule 8.16 attached
hereto;
(b) The Borrower and each ERISA Affiliate is in
compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder and in compliance with all
Foreign Benefit Laws with respect to all
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Employee Benefit Plans except where failure to comply would not result
in a Material Adverse Effect and except for any required amendments
for which the remedial amendment period as defined in Section 401(b)
of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and
each trust related to such plan has been determined to be exempt under
Section 501(a) of the Code. No material liability has been incurred
by the Borrower or any ERISA Affiliate which remains unsatisfied for
any taxes or penalties with respect to any Employee Benefit Plan or
any Multiemployer Plan;
(c) No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been incurred (without regard to any waiver granted under Section 412
of the Code), nor has any funding waiver from the IRS been received or
requested with respect to any Pension Plan, nor has the Borrower or
any ERISA Affiliate failed to make any contributions or to pay any
amounts due and owing as required by Section 412 of the Code, Section
302 of ERISA or the terms of any Pension Plan prior to the due dates
of such contributions under Section 412 of the Code or Section 302 of
ERISA, nor has there been any event requiring any disclosure under
Section 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA with respect to any
Pension Plan;
(d) Neither the Borrower nor any ERISA Affiliate has:
(A) engaged in a nonexempt prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code, (B) incurred any liability
to the PBGC which remains outstanding other than the payment of
premiums and there are no premium payments which are due and unpaid,
(C) failed to make a required contribution or payment to a
Multiemployer Plan or (D) failed to make a required installment or
other required payment under Section 412 of the Code;
(e) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan;
(f) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower after
due inquiry, is threatened concerning or involving any Employee
Benefit Plan;
SECTION 8.17 NO DEFAULT. As of the date hereof, there does not exist
any Default or Event of Default hereunder;
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SECTION 8.18 ENVIRONMENTAL MATTERS. Other than as set forth on
Schedule 8.18 hereof, (a) the Borrower and each Subsidiary is in compliance in
all material respects with all Environmental Laws, (b) neither the Borrower nor
any Subsidiary has received notice of any violation or notice of regulatory
requirements or has been notified of any threatened or pending action, suit,
proceeding or investigation which calls into question compliance by the
Borrower or any Subsidiary with any Environmental Laws or suggests that any
Borrower or Subsidiary is a potentially responsible party with regard to any
release or threatened release of a Hazardous Material, or which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
operation of any facility of the Borrower or any Subsidiary or for the
generation, handling, storage, treatment or disposal of any Hazardous Material,
which could reasonably be expected to have a Material Adverse Effect and (c)
there are no conditions at any property owned or leased by the Borrower or any
Subsidiary, including underground storage tanks, that present a risk of a
release of any Hazardous Material, or which could reasonably be expected to
call into question compliance by the Borrower or any Subsidiary with any
Environmental Laws, which noncompliance could reasonably be expected to
adversely impact the property or have a Material Adverse Effect;
SECTION 8.19 EMPLOYMENT MATTERS. Except as disclosed on Schedule
8.19 hereto, the Borrower and all Subsidiaries are in compliance with all
applicable laws, rules and regulations pertaining to labor or employment
matters, including without limitation those pertaining to wages, hours,
occupational safety and taxation, the noncompliance with which could reasonably
be expected to have a Material Adverse Effect, and there is neither pending
nor, to the knowledge of the Borrower, any threatened litigation,
administrative proceeding or investigation in respect of such matters an
adverse ruling or determination in which could reasonably be expected to have a
Material Adverse Effect.
SECTION 8.20 SPINOFF AND MERGER. As of the Funding Date, the Spinoff
and Merger shall have been consummated in accordance with the terms of the
Spinoff Agreement and the Merger Agreement.
ARTICLE 9
AFFIRMATIVE COVENANTS
Until the Obligations have been Fully Satisfied in accordance with the
terms hereof, unless the Required Lenders shall otherwise consent in writing,
the Borrower will:
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SECTION 9.1 FINANCIAL REPORTS, ETC.
(a) As soon as practical and in any event within 105 days
after the end of each Fiscal Year after the Closing Date, deliver or
cause to be delivered to the Agent and each Lender (i) the
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries, with the notes thereto, and the related consolidated and
consolidating statements of earnings, cash flow, and shareholders'
equity and the notes thereto, for such Fiscal Year, setting forth in
the case of the consolidated statements comparative financial
statements for the preceding Fiscal Year, all prepared in accordance
with GAAP applied on a Consistent Basis and containing, with respect
to the consolidated financial reports, opinions of Price Waterhouse,
or other such independent certified public accountants selected by the
Borrower and approved by the Agent, which approval shall not be
unreasonably withheld, which are unqualified and without an exception
not acceptable to the Agent; and (ii) a certificate of an Authorized
Representative as to the absence of any Default or Event of Default
and demonstrating compliance with Article 11 of this Agreement, which
certificate shall be in the form attached hereto as Exhibit O and
incorporated herein by reference;
(b) as soon as practical and in any event within 50 days
after the end of each fiscal quarter beginning with the fiscal quarter
ended June 30, 1996, deliver to the Agent and each Lender (i) the
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such fiscal quarter, and the related
consolidated and consolidating statements of earnings, cash flow, and
shareholders' equity for such fiscal quarter and for the period from
the beginning of the Fiscal Year through the end of such fiscal
quarter, accompanied by a certificate of an Authorized Representative
to the effect that such financial statements present fairly the
financial position of the Borrower and its Subsidiaries as of the end
of such fiscal quarter and the results of their operations and the
changes in shareholders equity for such fiscal quarter, in conformity
with the standards set forth in Section 8.6(a) with respect to interim
financials, and (ii) a certificate of an Authorized Representative as
to the absence of any Default or Event of Default and containing
computations for such quarter comparable to that required pursuant to
Section 9.1(a)(ii);
(c) as soon as practical and in any event within 50 days
after the end of the fiscal quarters ended March 31, 1996, June 30,
1996, September 30, 1996, December 31, 1996 and March 31,1997, deliver
to the Agent and each Lender (i) pro forma consolidated and
consolidating statements of earnings, cash flow, and shareholders'
equity for the Four-
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Quarter Period ending on the last day of such fiscal quarter,
accompanied by a certificate of an Authorized Representative to the
effect that such statements of earnings present fairly the pro forma
earnings and income of the Borrower and its Subsidiaries for such
Four-Quarter Period, in conformity with the standards set forth in
Section 8.6(a) with respect to interim financials, and (ii) a
certificate of an Authorized Representative as to the absence of any
Default or Event of Default and containing computations for such
quarter comparable to that required pursuant to Section 9.1(a)(ii);
(d) upon the request of the Required Lenders and at the
expense of the Lenders unless an Event of Default has occurred and is
continuing, deliver to the Agent and each Lender a letter from the
Borrower's accountants specified in Section 9.1(a)(i) hereof stating
that, in performing the audit necessary to render an opinion on the
financial statements delivered under Section 9.1(a)(i), they obtained
no knowledge of any Default or Event of Default by the Borrower in the
fulfillment of the terms and provisions of this Agreement insofar as
they relate to financial matters (which at the date of such statement
remains uncured); and if the accountants have obtained knowledge of
such Default or Event of Default, a statement specifying the nature
and period of existence thereof;
(e) not later than the last Business Day of each Fiscal
Year, deliver to the Agent and each Lender consolidated financial
projections for the Borrower and its Subsidiaries for the period from
the beginning of the next Fiscal Year to the Scheduled Revolving
Credit Termination Date, prepared on an annual basis and in accordance
with GAAP applied on a Consistent Basis; provided, however, that
projections for the Fiscal Year immediately following delivery of such
projections shall be prepared on a quarterly basis; provided further,
however, that in no event shall delivery of such projections
constitute a representation or warranty of the Borrower that its
consolidated financial results for, and consolidated financial
condition at the end of, the period for which such projections were
prepared shall meet or exceed such projections;
(f) promptly upon their becoming available to the
Borrower, the Borrower shall deliver to the Agent and each Lender a
copy of (i) all regular or special reports or effective registration
statements which the Borrower or any Subsidiary shall file from and
after the date hereof with the Securities and Exchange Commission (or
any successor thereto) or any securities exchange, (ii) any proxy
statement distributed by the Borrower to its shareholders, bondholders
or the financial community in general, and
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(iii) any management letter or other report submitted to the Borrower
or any of its Subsidiaries by independent accountants in connection
with any annual, interim or special audit of the Borrower or any of
its Subsidiaries; and
(g) promptly, from time to time, deliver or cause to be
delivered to the Agent and each Lender such other information
regarding Borrower's and each Subsidiary's operations, business
affairs and financial condition as the Agent or such Lender may
reasonably request (the Agent and the Lenders being hereby authorized
to deliver a copy of any such financial information delivered
hereunder to the Lenders (or any affiliate of any Lender) or to the
Agent to any regulatory authority having jurisdiction over any of the
Lenders pursuant to any written request therefor, or, subject to
Article 14 hereof, to any other Person who shall acquire or consider
the acquisition of a participation interest in or assignment of any
Loan or Letter of Credit permitted by this Agreement).
SECTION 9.2 MAINTAIN PROPERTIES. Maintain all properties necessary
to its operations in good working order and condition (ordinary wear and tear
excepted) and make all needed repairs, replacements and renewals as are
necessary to conduct its business in accordance with customary business
practices.
SECTION 9.3 EXISTENCE, QUALIFICATION, ETC. Do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence and all material rights and franchises, trade names, trademarks and
permits, except to the extent conveyed in connection with a transaction
permitted under Section 10.4 hereof, and maintain its license or qualification
to do business as a foreign corporation and good standing in each jurisdiction
in which its ownership or lease of property or the nature of its business makes
such license or qualification necessary and in which failure to maintain such
license, qualification and good standing could reasonably be expected to result
in a Material Adverse Effect.
SECTION 9.4 REGULATIONS AND TAXES. Comply with all statutes and
governmental regulations if noncompliance therewith could reasonably be
expected to have a Material Adverse Effect and pay all taxes, assessments,
governmental charges, claims for labor, supplies, rent and any other obligation
which, if unpaid, might become a Lien against any of its properties that could
reasonably be expected to have a Material Adverse Effect except any of the
foregoing being contested in good faith by appropriate proceedings diligently
conducted and against which adequate reserves have been established.
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SECTION 9.5 INSURANCE. (a) Keep all of its insurable properties
adequately insured at all times with responsible insurance carriers against
loss or damage by fire and other hazards as are customarily insured against by
similar businesses owning such properties similarly situated, (b) maintain
general public liability insurance at all times with responsible insurance
carriers against liability on account of damage to persons and property having
such limits, deductibles, exclusions and co-insurance and other provisions
providing no less coverage than that specified in Schedule 9.5 attached hereto,
such insurance policies to be in form reasonably satisfactory to the Agent, (c)
maintain insurance under all applicable workers' compensation laws (or in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes) and (d) maintain all insurance required under the
Security Instruments. Each of the policies of insurance described in this
Section 9.5 shall provide that the insurer shall give the Agent not less than
thirty (30) days' prior written notice before any such policy shall lapse or be
terminated, cancelled or materially amended.
SECTION 9.6 TRUE BOOKS. Keep true books of record and account in
which full, true and correct entries shall be made of all of its dealings and
transactions in accordance with customary business practices, and set up on its
books such reserves as may be required by GAAP with respect to doubtful
accounts and all taxes, assessments, charges, levies and claims and with
respect to its business in general, and include such reserves in interim as
well as year-end financial statements.
SECTION 9.7 RIGHT OF INSPECTION. Permit any Person designated by any
Lender or the Agent, at the Borrower's expense with respect to any Person
designated by the Agent or if there has occurred and continues to exist a
Default or an Event of Default, and at the requesting Lender's request in all
other circumstances, to visit and inspect any of the properties, corporate
books and financial reports of the Borrower and its Subsidiaries, and to
discuss their respective affairs, finances and accounts with their principal
officers and independent certified public accountants, all at reasonable times,
at reasonable intervals and with reasonable prior notice.
SECTION 9.8 OBSERVE ALL LAWS. Conform to and duly observe in all
material respects all laws, rules and regulations and all other valid
requirements of any Governmental Authority with respect to the conduct of its
business and applicable to the Borrower or any Subsidiary.
SECTION 9.9 COVENANTS EXTENDING TO SUBSIDIARIES. Without
duplication, cause each of its Subsidiaries to do with respect to itself, its
business and its assets, each of the things required of the Borrower in
Sections 9.2 through 9.8, inclusive.
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SECTION 9.10 OFFICER'S KNOWLEDGE OF DEFAULT. Upon any Authorized
Representative or executive officer of the Borrower obtaining knowledge of any
Default or Event of Default hereunder or under any other obligation of the
Borrower or any Subsidiary, promptly deliver to the Agent written notice
thereof, the period of existence thereof, and what action the Borrower proposes
to take with respect thereto.
SECTION 9.11 SUITS OR OTHER PROCEEDINGS. Upon any Authorized
Representative or executive officer of the Borrower obtaining knowledge of any
litigation or other proceedings being instituted against the Borrower or any
Subsidiary, or any attachment, levy, execution or other process being
instituted against any assets of the Borrower or any Subsidiary, in an
aggregate amount greater than $500,000 not otherwise covered by insurance,
promptly deliver to the Agent written notice thereof stating the nature and
status of such litigation, dispute, proceeding, levy, execution or other
process.
SECTION 9.12 NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR
ENVIRONMENTAL COMPLAINT. Promptly provide to the Agent true, accurate and
complete copies of any and all letters, notices, complaints, orders,
directives, claims, or citations received by the Borrower or any Subsidiary
relating to any (a) violation or alleged violation by the Borrower or any
Subsidiary of any applicable Environmental Laws; (b) release or threatened
release into the environment by the Borrower or any Subsidiary, or by any
Person handling, transporting or disposing of any Hazardous Material on behalf
of the Borrower or any Subsidiary, or at any facility or property owned or
leased or operated by the Borrower or a Subsidiary, of any Hazardous Material,
except where occurring legally; or (c) liability or alleged liability of the
Borrower or any Subsidiary for the costs of cleaning up, removing, remediating
or responding to a release of Hazardous Materials.
SECTION 9.13 ENVIRONMENTAL COMPLIANCE. If the Borrower or any
Subsidiary shall receive any letter, notice, complaint, order, directive, claim
or citation alleging that the Borrower or and Subsidiary has violated any
Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower
shall, within the time period permitted and to the extent required by the
applicable Environmental Law or the Governmental Authority responsible for
enforcing such Environmental Law, remove or remedy, or cause the applicable
Subsidiary to remove or remedy, such violation or release or satisfy such
liability unless, and only during the period that, the applicability of the
Environmental Law, the fact of such violation or liability or what is required
to remove or remedy such violation is being contested by the Borrower or the
applicable Subsidiary by
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appropriate proceedings diligently conducted and all reserves with respect
thereto as may be required under GAAP, if any, have been made.
SECTION 9.14 INDEMNIFICATION. The Borrower hereby agrees to defend,
indemnify and hold the Agent and the Lenders, and their respective officers,
directors, employees and agents, harmless from and against any and all claims,
losses, penalties, liabilities, damages and expenses (including, without
limitation, assessment and cleanup costs and reasonable attorneys',
consultants' and other experts' fees and disbursements) arising directly or
indirectly from, out of or by reason of (a) the violation of any Environmental
Law by the Borrower or any Subsidiary or with respect to any property owned,
operated or leased by the Borrower or any Subsidiary or (b) the handling,
storage, treatment, emission or disposal of any Hazardous Material by or on
behalf of the Borrower or any Subsidiary on or with respect to property owned
or leased or operated by the Borrower or any Subsidiary. The provisions of
this Section 9.14 shall survive repayment of the Obligations, occurrence of the
Revolving Credit Termination Date and expiration or termination of this
Agreement.
SECTION 9.15 FURTHER ASSURANCES. At the Borrower's cost and expense
upon request of the Agent, or at the Lenders' cost and expense upon request of
the Required Lenders, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
agreements, financing and continuation statements, and do and cause to be done
such further acts that may be reasonably necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the provisions
and purposes of this Agreement and the other Loan Documents.
SECTION 9.16 EMPLOYEE BENEFIT PLANS. With reasonable promptness, and
in any event within thirty (30) days, the Borrower will give notice of and/or
deliver to Agent copies of (A) the establishment of any new Employee Benefit
Plan, the commencement of contributions to any plan to which the Borrower or
any of its ERISA Affiliates was not previously contributing or any increase in
the benefits of any existing Employee Benefit Plan, (B) each funding waiver
request filed with respect to any Employee Benefit Plan and all communications
received or sent by the Borrower or any ERISA Affiliate with respect to such
request and (C) the failure of the Borrower or any ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA or Section 412 of
the Code by the due date.
SECTION 9.17 TERMINATION EVENTS. Promptly and in any event within
ten (10) days of becoming aware of the occurrence of or forthcoming occurrence
of any (a) Termination Event or (b) "prohibited transaction," as such term is
defined in Section 406 of ERISA or Section 4975 of the Code, in connection with
any
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Pension Plan or any trust created thereunder, the Borrower will deliver to
Agent a notice specifying the nature thereof, what action the Borrower has
taken, is taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto.
SECTION 9.18 ERISA NOTICES. With reasonable promptness but in any
event within ten (10) days for purposes of clauses (a), (b) and (c), the
Borrower will deliver to the Agent copies of (a) any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401(a) of the Code, (b)
all notices received by the Borrower or any ERISA Affiliate of the PBGC's
intent to terminate any Pension Plan or to have a trustee appointed to
administer any Pension Plan, (c) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by the Borrower or any ERISA Affiliate
with the Internal Revenue Service with respect to each Pension Plan and (d) all
notices received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA. The Borrower will notify the Agent in
writing within two (2) Business Days of any Borrower obtaining knowledge or
reason to know that the Borrower or any ERISA Affiliate has filed or intends to
file a notice of intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA.
SECTION 9.19 CONTINUED OPERATIONS. Continue at all times (a) to
conduct its business and engage principally in the same or complementary line
or lines of business substantially as heretofore conducted (which with respect
to the Borrower means not to conduct any operating activities, of a Core
Business or otherwise, except pursuant to Section 10.4 hereof) and (b)
preserve, protect and maintain free from Liens (other than Liens permitted
under Section 10.2 hereof) its material patents, copyrights, licenses,
trademarks, trademark rights, trade names, trade name rights, trade secrets and
know-how necessary or useful in the conduct of its operations except to the
extent failure to preserve, protect and maintain the same free from Liens could
not reasonably be expected to have a Material Adverse Effect.
SECTION 9.20 USE OF PROCEEDS. Use the proceeds of the Loans solely
for the purposes specified in Section 2.11 or 3.12 hereof.
SECTION 9.21 NEW SUBSIDIARIES. In the event of the acquisition or
creation of any Material Subsidiary, or upon any previously existing Person
becoming a Material Subsidiary, cause to be delivered to the Agent for the
benefit of the Lenders each of the following within ten (10)
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Business Days of the acquisition or creation of a Material Subsidiary or, with
respect to an existing Person becoming a Material Subsidiary, within ten (10)
Business Days of delivery of financial statements pursuant to Section 9.1(a) or
(b) hereof with respect to the fiscal quarter of the Borrower during which such
Person acquired such assets or achieved such net income as to become a Material
Subsidiary:
(a) a Guaranty executed by such Material Subsidiary,
substantially in the form of Exhibit E attached hereto;
(b) a Subsidiary Stock Pledge Agreement with respect to
the capital stock of such Material Subsidiary substantially in the
form of Exhibit G hereto;
(c) a Security Agreement executed by such Material
Subsidiary, substantially in the form of Exhibit J attached hereto;
(d) if applicable, an Intellectual Property Security
Agreement executed by such Material Subsidiary, substantially in the
form of Exhibit K attached hereto;
(e) if such Material Subsidiary owns any real property
which has a Loan to Value Ratio of .50 to 1.00 or less and the ratio
of Consolidated Funded Indebtedness to Consolidated EBITDA of the
Borrower as of the most recent Determination Date is greater than 2.50
to 1.00, a mortgage executed by such Material Subsidiary in the form
of Exhibit H hereto (a "Mortgage");
(f) if such Material Subsidiary owns any real property
which has a Loan to Value Ratio of .50 to 1.00 or less and the ratio
of Consolidated Funded Indebtedness to Consolidated EBITDA of the
Borrower as of the most recent Determination Date is equal to or less
than 2.50 to 1.00, an agreement in form and substance satisfactory to
the Agent prohibiting such Material Subsidiary from granting any liens
or encumbrances on such real property;
(g) an opinion of counsel to such Material Subsidiary
dated as of the date of delivery of the other documents required to be
delivered pursuant to this Section 9.21 and addressed to the Agent and
the Lenders, in form and substance identical to the opinion of counsel
delivered pursuant to Section 7.1 hereof with respect to any Guarantor
on the Closing Date);
(h) current copies of the charter or other organizational
documents, any bylaws of such Material Subsidiary, minutes of duly
called and conducted meetings (or duly effected consent actions) of
the Board of Directors, or appropriate committees thereof (and, if
required by such charter or other organizational documents, bylaws) or
by applicable laws, of the shareholders) of such Material Subsidiary
authorizing the actions and the
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execution and delivery and performance of such Guaranty, Security
Agreement and Intellectual Property Security Agreement and evidence
satisfactory to the Agent (confirmation of the receipt of which will
be provided by the Agent to the Lenders) that such Material Subsidiary
is Solvent as of such date after giving effect to such Guaranty,
Security Agreement, Stock Pledge Agreement, Intellectual Property
Security Agreement and, if applicable, Mortgage.
SECTION 9.22 RATE HEDGING OBLIGATIONS. Enter into Swap Agreements in
an aggregate notional amount reasonably agreed to by the Borrower and the Agent
provided that such Swap Agreements are available on terms and conditions
reasonably acceptable to the Borrower.
ARTICLE 10
NEGATIVE COVENANTS
Until the Obligations have been Fully Satisfied in accordance with the
terms hereof, unless the Required Lenders shall otherwise consent in writing,
the Borrower will not, nor will it permit any Subsidiary to:
SECTION 10.1 INDEBTEDNESS. Incur, create, assume or permit to exist
any Indebtedness of the Borrower and its Subsidiaries determined on a
consolidated basis, howsoever evidenced, except:
(a) Indebtedness set forth in Schedule 10.1 attached
hereto and incorporated herein by reference (which may include
Indebtedness listed on the pro forma balance sheets of the Borrower
delivered heretofore and referenced in Section 8.6(a)(i) and (ii)
("pro forma Indebtedness") which shall become actual Indebtedness of
the Borrower upon the consummation of the Spinoff and Merger on the
Funding Date ("actual Indebtedness"), which actual Indebtedness shall
be identified in a revised Schedule 10.1 to be prepared and
distributed to the Agent and the Lenders not later than the
thirty-fifth (35th) day following the end of the month during which
the Spinoff and Merger are consummated and the aggregate principal
amount of such actual Indebtedness shall not exceed 101% of the
aggregate principal amount of pro forma Indebtedness) and any
extension, renewal or refinancing thereof that does not increase the
principal amount thereof or interest rate payable thereon from that
existing immediately prior to such extension, renewal or refinancing;
provided, none of the instruments and agreements evidencing or
governing such Indebtedness shall be amended, modified or supplemented
after the Closing Date to change any terms of subordination, repayment
or rights of conversion, put, exchange or other rights from such terms
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and rights as in effect on the Closing Date; provided further, that the
rate of interest payable thereon may change but in no event shall be
greater than the interest rate generally available at the date of such
amendment, modification or supplement from money center or regional
commercial banks to companies of creditworthiness similar to that of
the Borrower;
(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) Indebtedness consisting of Rate Hedging Obligations
permitted under Section 10.9 hereof;
(d) the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business;
(e) (i) purchase money Indebtedness and (ii) Indebtedness
incurred with respect to financing of Capital Expenditures,
collectively under both clause (i) and (ii) not to exceed an aggregate
outstanding amount at any time of $3,000,000;
(f) Indebtedness of any Guarantor owing to the Borrower
or another Guarantor and Indebtedness of the Borrower owing to any
Guarantor;
(g) Indebtedness of Subsidiaries acquired after the
Closing Date, provided that (i) such Indebtedness (A) is recorded in
the financial books and records of such Subsidiary prior to such
acquisition, (B) was not incurred by such Subsidiary in anticipation
of such acquisition, (C) is non-recourse to the Borrower and each
Guarantor and not subsequently assumed by the Borrower or any
Guarantor, and (D) is incurred upon terms determined by the Borrower
in its good faith business judgment to be more economically
advantageous to the Borrower than the terms of an Advance hereunder,
and (ii) immediately after such acquisition, no Default or Event of
Default has occurred or is continuing;
(h) additional Indebtedness incurred during any Fiscal
Year in an aggregate outstanding principal amount not to exceed
$1,000,000; provided, however, any such permitted additional
Indebtedness not incurred during any Fiscal Year may not be incurred
during any subsequent Fiscal Year; and
(i) Indebtedness of Persons that are the subject of an
Acquisition by the Borrower or a Subsidiary, but do not themselves
constitute Subsidiaries, in an aggregate outstanding principal amount
not to exceed $10,000,000 at any time.
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SECTION 10.2 LIENS. Incur, create or permit to exist any pledge,
Lien, charge or other encumbrance of any nature whatsoever with respect to any
property or assets now owned or hereafter acquired by the Borrower or any of
its Subsidiaries, including without limitation any capital stock of the
Borrower or any of its Subsidiaries, other than any of the following
(collectively, the "Permitted Liens"):
(a) Liens existing as of the date hereof and as set forth
in Schedule 8.7 attached hereto, provided, however, that any such Lien
that is released after the date hereof may not thereafter re-attach or
otherwise become permitted by this Section 10.2(a);
(b) Liens imposed by law for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which
are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP;
(c) Liens in respect of purchase money Indebtedness
permitted to be incurred pursuant to Section 10.1(f)(i) hereof in
connection with the acquisition of certain tangible property; provided
that (A) the original principal balance of the Indebtedness secured by
such Lien constitutes not less than 80% of the purchase price of the
property acquired and (B) such Lien extends only to the property
acquired with the proceeds of the Indebtedness so secured;
(d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP;
(e) Liens incurred or deposits made in the ordinary
course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(f) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants,
consents, reservations,
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encroachments, variations and zoning and other restrictions, charges
or encumbrances (whether or not recorded), which do not interfere with
the ordinary conduct of the business of the Borrower or any Subsidiary
and do not impair the use of the property to which they attach to the
extent that such interference or impairment could reasonably be
expected to have a Material Adverse Effect; and
(g) Liens on real property securing Indebtedness
permitted under Section 10.1 hereof (subject to compliance with
subsection (c) above in connection with purchase money Indebtedness).
SECTION 10.3 INVESTMENTS; ACQUISITIONS. Make any Acquisition or
otherwise purchase, own, invest in or otherwise acquire, directly or
indirectly, any stock or other securities, or make or permit to exist any
interest whatsoever in any other Person or permit to exist any loans or
advances to any Person, except that Borrower and its Subsidiaries may maintain
investments or invest in:
(a) Eligible Securities;
(b) investments existing as of the date hereof and as set
forth in Schedules 8.4 and 8.5 attached hereto;
(c) accounts receivable arising and trade credit granted
in the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss;
(d) loans and advances to and investments in Subsidiaries
which are Guarantors;
(e) other loans, advances and investments in an aggregate
principal amount at any time outstanding not to exceed $1,000,000.
Notwithstanding the foregoing, the Borrower and its Subsidiaries may make
Acquisitions so long as: (i) immediately prior to and immediately after the
consummation of such Acquisition, no Default or Event of Default has occurred
and is continuing, (ii) substantially all of the sales and operating profits
generated by such Person (or assets) so acquired or invested are derived from
the same line or lines of business as then conducted by the Borrower and its
Subsidiaries, (iii) pro forma historical financial statements as of the end of
the most recently completed Fiscal Year giving effect to such Acquisition are
delivered to the Agent not less than five (5) Business Days prior to the
consummation of such Acquisition, together with a certificate of an Authorized
Representative demonstrating compliance with
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Article 11 hereof after giving effect to such Acquisition, (iv) the Cost of
Acquisition with respect to any Acquisition entered into during the term of
this Agreement shall not exceed $10,000,000 and the amount advanced hereunder
to finance such Acquisition in whole or in part shall not exceed $2,500,000,
(v) the aggregate amount of all Costs of Acquisitions shall not exceed
$20,000,000 during the term of this Agreement, and (vi) in the event the Person
so acquired is not a Subsidiary, the Borrower's strategic plan includes
additional investment in such Person sufficient for it to become a Subsidiary.
SECTION 10.4 MERGER OR CONSOLIDATION. Except as set forth in
Schedule 10.4 hereto, (a) consolidate with or merge into any other Person, or
(b) permit any other Person to merge into it, or (c) liquidate, wind-up or
dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales in the ordinary course of
business); provided, however, any Subsidiary of the Borrower may merge or
transfer all or substantially all of its assets into or consolidate with the
Borrower or any wholly owned Subsidiary of the Borrower, and any Person may
merge with the Borrower if the Borrower shall be the survivor thereof and such
merger shall not cause, create or result in the occurrence of any Default or
Event of Default hereunder; provided further, however, that in any such event
involving the Borrower, the Borrower shall comply with Section 9.21(c), (d),
(e) and (f) as if the Borrower were a Material Subsidiary.
SECTION 10.5 TRANSACTIONS WITH AFFILIATES. Other than
transactions permitted under Sections 10.3 and 10.4 hereof, and except as set
forth on Schedule 10.5 hereto, enter into any transaction after the Closing
Date, including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of the Borrower, except (a) that such Persons may render services to the
Borrower or its Subsidiaries for compensation at the same rates generally paid
by Persons engaged in the same or similar businesses for the same or similar
services, (b) that the Borrower or any Subsidiary may render services to such
Persons for compensation at the same rates generally charged by the Borrower or
such Subsidiary and (c) in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's (or any Subsidiary's) business
consistent with past practice of the Borrower and its Subsidiaries and upon
fair and reasonable terms no less favorable to the Borrower (or any Subsidiary)
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate.
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SECTION 10.6 COMPLIANCE WITH ERISA. With respect to any Pension
Plan, Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which
would result in a liability to the Borrower or any ERISA Affiliate in
excess of $500,000;
(b) permit the present value of all benefit liabilities
under all Pension Plans (except as provided below) to exceed the
current value of the assets of such Pension Plans allocable to such
benefit liabilities (the "Excess Liabilities Value") by more than
$500,000;
(c) permit any accumulated funding deficiency in excess
of $500,000 (as defined in Section 302 of ERISA and Section 412 of the
Code) with respect to any Pension Plan, whether or not waived;
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto which results in or is likely to
result in a liability in excess of $500,000; or
(e) engage, or permit any Borrower or any ERISA Affiliate
to engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to
Section 502(i) of ERISA or a tax pursuant to Section 4975 of the Code
in excess of $500,000 may be imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer
Plan which liability or increase, individually or together with all
similar liabilities and increases, is in excess of $500,000; or
(g) fail, or permit the Borrower or any ERISA Affiliate
to fail, to establish, maintain and operate each Employee Benefit
Plan in compliance in all material respects with the provisions of
ERISA, the Code, all applicable Foreign Benefit Loans and all other
applicable laws and the regulations and interpretations thereof.
SECTION 10.7 FISCAL YEAR. Change its Fiscal Year.
SECTION 10.8 DISSOLUTION, ETC. Wind up, liquidate or dissolve
(voluntarily or involuntarily) or commence or suffer any proceedings seeking
any such winding up, liquidation or dissolution, except in connection with the
merger or consolidation of Subsidiaries into
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each other or into a Borrower permitted pursuant to Section 10.4 hereof.
SECTION 10.9 RATE HEDGING OBLIGATIONS. Incur any Rate Hedging
Obligations or enter into any agreements, arrangements, devices or instruments
relating to Rate Hedging Obligations, except pursuant to Swap Agreements agreed
to in accordance with Section 9.22 hereof.
SECTION 10.10 DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS. Declare or
pay any cash dividends or make any other payment or distribution on account of
(a) its capital stock (other than dividends payable in the ordinary course of
business solely in Common Stock) on any shares of stock of any class of the
Borrower, now or hereafter outstanding, or (b) any of its general or limited
partnership interest, as applicable, or purchase, redeem or otherwise retire
any such shares or interests in consideration of cash or capital stock of any
Subsidiary of the Borrower ("Restricted Stock"), or apply or set apart any of
their assets therefor or make any other distribution (by redemption of capital
or otherwise) in respect of any such shares in consideration of cash or
Restricted Stock, or agree to do any of the foregoing, other than (i) in
connection with the Merger and Spinoff, (ii) conversion of any of the
Borrower's securities into Common Stock which are so convertible in accordance
with their terms and (iii) dividends payable by any Subsidiary to another
Subsidiary or to the Borrower; provided, however, that after giving effect to
any dividend permitted under this Section 10.10, no Default or Event of Default
shall exist.
SECTION 10.11 SUBORDINATED DEBT AND TIA DEBT.
(a) Prepay any amounts owing with respect to the TIA Debt
or pay any amounts owing with respect to the Subordinated Debt;
provided, however, that (i) the Subordinated Debt may be refinanced in
compliance with Sections 3.15 and 10.1(a) hereof with terms of
subordination no less favorable to the Lenders than exist on the
Closing Date with respect to the Subordinated Debt as set forth in the
Indenture, (ii) in the event any of the Subordinated Debt is converted
at any time after the Closing Date into capital stock of the Borrower
in accordance with the terms of the Indenture on the Closing Date and,
after any such conversion, more than ninety percent (90%) of the
aggregate principal amount of Subordinated Debt outstanding at the
Closing Date, but less than all of the Subordinated Debt, has been so
converted since the Closing Date, the Borrower may at any time
thereafter redeem in accordance with the terms of the Indenture on the
Closing Date such Subordinated Debt remaining outstanding subject to
compliance with Section 3.15 hereof and (iii) the Borrower may prepay
up to $5,000,000 in principal amount of the TIA Debt if the Borrower
shall have at least $12,500,000 of availability under the Revolving
Credit Facility at the time of and immediately following such
prepayment.
(b) Materially amend the subordination provisions of or
terminate (other than in connection with the full and
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final payment of the Subordinated Debt) any document related to the
Subordinated Debt without the prior written consent of the Required
Lenders.
SECTION 10.12 DEFAULTS UNDER OTHER AGREEMENTS. Permit any landlord,
mortgagee, trustee under deed of trust or lienholder to lawfully declare a
default under any lease, mortgage, deed of trust or lien instrument on real
estate owned or leased by the Borrower or any Guarantor or permit any landlord
to lawfully terminate, prior to the expiration of its term, any leasehold
interest of the Borrower or any Guarantor, and any such default or termination,
individually or collectively, could reasonably be expected to result in a
Material Adverse Effect.
SECTION 10.13 COMPENSATION; REIMBURSEMENT OF EXPENSES.
(a) Pay any salary, fees, and other direct and indirect
remuneration and compensation to any of its directors and executive
officers in an amount in excess of those amounts paid to directors and
executive officers of comparable companies engaged in the same general
type of business and in similar financial condition.
(b) Reimburse any stockholder, officer, director,
employee or agent of the Borrower or any Guarantor for any expenses
incurred by such Person other than reasonable expenses incurred for or
on behalf of the Borrower or any Guarantor in the ordinary course of
business.
SECTION 10.14 CHANGE IN ACCOUNTANTS. Change its
independent public accountants to any Person other than Price Waterhouse,
L.L.P., Deloitte & Touche, L.L.P., KPMG Peat Marwick, L.L.P., Arthur Andersen &
Co., L.L.P., Coopers & Lybrand, L.L.P. or Ernst & Young, L.L.P.
SECTION 10.15 LIMITATIONS ON SALES AND LEASEBACKS. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Guarantor of real or personal property which has been or is to be sold or
transferred by the Borrower or any Guarantor to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or any
Guarantor, unless such arrangement is with respect to real property on which a
Lien is attached as permitted under Section 10.2(a), (c) or (h) prior to such
arrangement and such Lien was not attached in a related transaction or series
of related transactions or in anticipation of such arrangement.
SECTION 10.16 NEGATIVE PLEDGE CLAUSES. Enter into any agreement with
any Person other than the Agent and the Lenders pursuant to this Agreement or
any other Loan Documents which prohibits or limits the ability of any of the
Borrower or any
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Guarantor to create, incur, assume or suffer to exist any lien, security
interest or encumbrance upon any of its property, assets or revenues, whether
now owned or hereafter acquired, provided that the Borrower and any Guarantor
may enter into such an agreement in connection with (a) property subject to any
lien, security interest or encumbrance permitted by this Agreement and not
released after the date hereof, when such prohibition or limitation is by its
terms effective only against the assets subject to such lien, security interest
or encumbrance and (b) liens, security interests or encumbrances on the real
property, fixtures and equipment relating to the Foster Grant Facility.
SECTION 10.17 CHANGE IN CONTROL. Permit, or become a party to or
the subject of any agreement, transaction or related series of transactions
pursuant to or as a result of which, (i) any Person or group of Persons, other
than Martin E. Franklin, acting in concert, acquires voting control, directly
or indirectly, whether by tender offer or in one or more negotiated block or
market transactions, of more than twenty-five percent (25%) of the shares of
the issued and outstanding capital stock of any class of the Borrower having
voting rights in the election of directors or (ii) Martin E. Franklin shall
control, directly or indirectly, less than five percent (5%) of the shares of
the issued and outstanding capital stock of any class of the Borrower having
such rights, unless such decrease in control shall occur as a result of an
increase in the total number of shares outstanding of such class and not by
reason of disposition of shares of such class by Martin E. Franklin.
ARTICLE 11
FINANCIAL COVENANTS
Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, the Borrower and its
Subsidiaries on a consolidated basis will not:
SECTION 11.1 CONSOLIDATED FIXED CHARGE RATIO. Permit at any time
during any Four-Quarter Period of the Borrower ending during the periods set
forth below the Consolidated Fixed Charge Ratio to be less than the ratio set
forth opposite the respective periods set forth below:
<TABLE>
<CAPTION>
Period Ratio
------- -----
<S> <C>
Closing Date through June 30, 1997 1.50 to 1.00
July 1, 1997 through June 30, 1998 1.25 to 1.00
July 1, 1998 and thereafter 1.50 to 1.00
</TABLE>
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SECTION 11.2 CONSOLIDATED FUNDED INDEBTEDNESS TO CONSOLIDATED EBITDA.
Permit at any time during any Four- Quarter Period of the Borrower ending
during the periods set forth below, the ratio of Consolidated Funded
Indebtedness at the end of such Four-Quarter Period to Consolidated EBITDA for
such Four-Quarter Period to be equal to or greater than the ratio set forth
opposite the respective periods set forth below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through June 30, 1997 3.50 to 1.00
July 1, 1997 through September 30, 1999 3.25 to 1.00
October 1, 1999 and thereafter 3.00 to 1.00
</TABLE>
SECTION 11.3 CONSOLIDATED NET WORTH. Permit at any time Consolidated
Net Worth to be less than an amount equal to Consolidated Net Worth on the
Closing Date less $9,000,000, such amount to be increased as at the first day
of each Fiscal Year, beginning with the Fiscal Year ending December 31, 1997,
by fifty percent (50%) of (a) Consolidated Net Income for the immediately
preceding Fiscal Year and (b) the Net Proceeds of any Equity Offering
consummated during the immediately preceding fiscal year; provided, however, in
no event shall the Consolidated Net Worth requirement be decreased as a result
of a net loss of the Borrower and its Subsidiaries (i.e., negative Consolidated
Net Income) for any Fiscal Year. Any increase calculated pursuant hereto shall
be determined based upon financial statements delivered in accordance with
Section 9.1(a) hereof; provided, however such increase shall be deemed
effective as of the first day of the Fiscal Year in which such financial
statements are delivered.
SECTION 11.4 CAPITAL EXPENDITURES. Make or become committed to make
(a) Capital Expenditures with respect to Displays which exceed $10,000,000 in
the aggregate in any Fiscal Year of the Borrower and (b) Capital Expenditures
with respect to any asset other than Displays which exceed $5,000,000 in the
aggregate in any Fiscal Year of the Borrower (all on a noncumulative basis,
with the effect that amounts not expended in any Fiscal Year may not be carried
forward to a subsequent period; provided, however, in no event shall the sum of
all Capital Expenditures (for all assets, including Displays) otherwise
permitted under clause (a) or (b) exceed the aggregate amount of $25,000,000
for any period of two consecutive Fiscal Years).
SECTION 11.5 SPECIAL CALCULATIONS. Notwithstanding anything in this
Agreement to the contrary, prior to June 30, 1997 all calculations of
Consolidated EBITDA and Consolidated Net Income shall be based upon the pro
forma financial information delivered to the Agent pursuant to Section 9.1(c)
hereof.
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ARTICLE 12
EVENTS OF DEFAULT
SECTION 12.1 EVENTS OF DEFAULT. If any one or more of the following
events (herein called "Events of Default") shall occur for any reason
whatsoever (and whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) a default shall be made in the due and punctual
payment of the principal of any Loan or Reimbursement Obligation, when
and as the same shall be due and payable whether pursuant to any
provision of Articles 2 or 3 hereof, at maturity, by acceleration or
otherwise; or
(b) a default shall be made in the due and punctual
payment of any amount of interest on any Loan or of any fees or other
amounts payable to the Lenders, the Agent or Issuing Bank under the
Loan Documents on the date on which the same shall be due and payable;
or
(c) a default shall be made in the performance or
observance of any covenant set forth in Sections 9.11, 9.12, 9.18 or
Articles 10 or 11 hereof; or
(d) a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for thirty (30) or more days after the earlier of receipt of
notice of such default by the Authorized Representative from the Agent
or the Borrower becomes aware of such default, or if a default shall
be made in the performance or observance of, or shall occur under, any
covenant, agreement or provision contained in any of the other Loan
Documents (beyond the applicable grace period, if any, contained
therein) or in any instrument or document evidencing or creating any
obligation, guaranty, or Lien in favor of the Agent or the Lenders or
delivered to the Agent or the Lenders in connection with or pursuant
to this Agreement or any of the Obligations, or if any Loan Document
ceases to be in full force and effect, or if without the written
consent of the Agent, this Agreement or any other Loan Document shall
be disaffirmed or shall terminate, be terminable or be terminated or
become void or unenforceable for any reason whatsoever; or
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(e) a default shall occur, which is not waived, (i) in
the payment of any principal, interest, premium or other amounts with
respect to any Indebtedness (other than the Obligations) of the
Borrower or of any Subsidiary, in an amount not less than $1,000,000
in the aggregate outstanding, or (ii) in the performance, observance
or fulfillment of any term or covenant contained in any agreement or
instrument under or pursuant to which any such Indebtedness may have
been issued, created, assumed, guaranteed or secured by the Borrower
or any Subsidiary, and such default shall continue for more than the
period of grace, if any, therein specified, or if such default shall
permit the holder of any such Indebtedness to accelerate the maturity
thereof; or
(f) if any material representation, warranty or other
statement of fact contained herein or any other Loan Document or in
any writing, certificate, report or statement at any time furnished to
the Agent or any Lender by or on behalf of the Borrower or any
Guarantor pursuant to or in connection with this Agreement or the
other Loan Documents, or otherwise, shall be false or misleading when
given or made or deemed given or made; or
(g) if the Borrower or any Guarantor shall be unable to
pay its debts generally as they become due; file a petition to take
advantage of any insolvency, reorganization, bankruptcy, receivership
or similar law, domestic or foreign; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of
a receiver, trustee, liquidator or conservator of itself or of the
whole or any substantial part of its property; file a petition or
answer seeking reorganization or arrangement or similar relief under
the Federal bankruptcy laws or any other applicable law or statute,
Federal, state or foreign; or
(h) if a court of competent jurisdiction shall enter an
order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Guarantor or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against the Borrower or
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any Guarantor seeking reorganization or arrangement or similar relief
under the Federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state or foreign
country, province or other political subdivision, which petition is not
dismissed within sixty (60) days; or if, under the provisions of any
other law for the relief or aid of debtors, a court of competent
jurisdiction shall assume custody or control of the Borrower or any
Guarantor or of the whole or any substantial part of its properties,
which control is not relinquished within sixty (60) days; or if there
is commenced against the Borrower or any Guarantor any proceeding or
petition seeking reorganization, arrangement or similar relief under
the Federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state or foreign country, province
or other political subdivision which proceeding or petition remains
undismissed for a period of sixty (60) days; or if the Borrower or any
Guarantor takes any action to indicate its consent to or approval of
any such proceeding or petition; or
(i) if (i) any judgment where the amount not covered by
insurance (or the amount as to which the insurer denies liability) is
in excess of $1,000,000 is rendered against the Borrower or any
Guarantor, or (ii) there is any attachment, injunction or execution
against any of the Borrower's or any Guarantor's properties for any
amount in excess of $1,000,000; and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged,
unbonded or undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Guarantor shall suspend all or
any part of its operations and such suspension could reasonably be
expected to have a Material Adverse Effect; or
(k) if the Borrower or any Subsidiary shall default in
the payment of principal, interest, premium or other amounts under any
Swap Agreement and such breach shall continue beyond any grace period,
if any, relating thereto pursuant to its terms, or the Borrower or any
Subsidiary shall disaffirm or seek to disaffirm any Swap Agreement or
any of its Rate Hedging Obligations thereunder; or
(l) if the Borrower shall default in the performance of
any material obligation to be performed by it under the Spinoff
Agreement or the Merger Agreement or if any such agreement or the
Spinoff and Merger shall be found by a court of competent jurisdiction
to be invalid, unenforceable or illegal in any respect;
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be
taken: (i) the Agent may, and at the direction of the
Required Lenders shall, declare any obligation of the Lenders
to make further Loans or issue Letters of Credit terminated,
whereupon the obligation of each Lender to make further Loans
and of Issuing Bank to
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issue Letters of Credit hereunder shall terminate immediately,
and (ii) the Agent shall at the direction of the Required
Lenders, at their option, declare by notice to the Borrower
any or all of the Obligations to be immediately due and
payable, and the same, including all interest accrued thereon
and all other Obligations of the Borrower to the Agent and the
Lenders, shall forthwith become immediately due and payable
without presentment, demand, protest, notice or other
formality of any kind, all of which are hereby expressly
waived, anything contained herein or in any instrument
evidencing the Obligations to the contrary notwithstanding;
provided, however, that notwithstanding the above, if there
shall occur an Event of Default under clause (g) or (h) above,
then the obligation of the Lenders to make Advances and issue
Letters of Credit hereunder shall automatically terminate and
any and all of the Obligations shall be immediately due and
payable without the necessity of any action by the Agent or
the Required Lenders or notice to the Agent or the Lenders;
(B) The Borrower shall, upon demand of the Agent
or the Required Lenders, deposit cash with the Agent in an
amount equal to the amount of any Letter of Credit
Outstandings, as collateral security for the repayment of any
future drawings or payments under such Letters of Credit, and
such amounts shall be held by the Agent pursuant to the terms
of the applicable Application and Agreement for Letter of
Credit; and
(C) the Agent and the Lenders shall have all of
the rights and remedies available under the Loan Documents or
under any applicable law.
SECTION 12.2 AGENT TO ACT. In case any one or more Events of Default
shall occur and not have been waived, the Agent may, and at the direction of
the Required Lenders shall, proceed to protect and enforce their rights or
remedies either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant, agreement or other provision contained
herein or in any other Loan Document, or to enforce the payment of the
Obligations or any other legal or equitable right or remedy.
SECTION 12.3 CUMULATIVE RIGHTS. No right or remedy herein conferred
upon the Lenders or the Agent is intended to be exclusive of any other rights
or remedies contained herein or in any other Loan Document, and every such
right or remedy shall be cumulative and shall be in addition to every other
such right or remedy contained herein and therein or now or hereafter existing
at law or in equity or by statute, or otherwise.
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SECTION 12.4 NO WAIVER. No course of dealing between the Borrower
and any Lender or the Agent or any failure or delay on the part of any Lender
or the Agent in exercising any rights or remedies under any Loan Document or
otherwise available to it shall operate as a waiver of any rights or remedies
and no single or partial exercise of any rights or remedies shall operate as a
waiver or preclude the exercise of any other rights or remedies hereunder or of
the same right or remedy on a future occasion.
SECTION 12.5 ALLOCATION OF PROCEEDS. If an Event of Default has
occurred and not been waived, and the maturity of the Notes has been
accelerated pursuant to this Article 12, all payments received by the Agent
hereunder, in respect of any principal of or interest on the Obligations or any
other amounts payable by the Borrower hereunder shall be applied by the Agent
in the following order:
(a) amounts due to Issuing Bank and the Lenders pursuant
to Sections 3.13, 4.3, 9.14, 15.4 and 15.8 hereof;
(b) amounts due to (A) Issuing Bank pursuant to Section
4.4 hereof, and (B) to Issuing Bank and/or the Agent pursuant to
Section 3.16 hereof;
(c) payments of interest on Loans and Reimbursement
Obligations;
(d) payments of principal on Loans and Reimbursement
Obligations;
(e) payment of cash amounts to the Agent in respect of
Letters of Credit Outstandings pursuant to Section 4.2(a) and 12.1(B)
hereof;
(f) payment of Obligations owed a Lender or Lenders
pursuant to Swap Agreements;
(g) payments of all other amounts due under this
Agreement, if any, to be applied for the ratable benefit of the
Lenders; and
(h) any surplus remaining after application as provided
for herein, to the Borrowers or otherwise as may be required by
applicable law.
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ARTICLE 13
THE AGENT
SECTION 13.1 APPOINTMENT. Each Lender (including Issuing Bank in its
capacity as issuer of the Letters of Credit) hereby irrevocably designates and
appoints NationsBank as the Agent of the Lenders under this Agreement, and,
subject to Section 15.5 hereof, each of the Lenders hereby irrevocably
authorizes NationsBank as the Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers as are expressly delegated to the Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. The Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any of the
Lenders, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Agent.
SECTION 13.2 ATTORNEYS-IN-FACT. The Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible to the Lenders for the negligence,
gross negligence or willful misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 13.3 LIMITATION ON LIABILITY. Neither the Agent nor any of
its officers, directors, employees, agents or attorneys-in-fact shall be liable
to the Lenders for any action lawfully taken or omitted to be taken by it or
them under or in connection with this Agreement except for its or their own
gross negligence or willful misconduct. Neither the Agent nor any of its
affiliates shall be responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
of its Subsidiaries, or any officer or representative thereof contained in this
Agreement or in any of the other Loan Documents, or in any certificate, report,
statement or other document referred to or provided for in or received by the
Agent under or in connection with this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any of the other Loan Documents, or for any failure of the Borrower to perform
its obligations thereunder, or for any recitals, statements, representations or
warranties made, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any collateral. The Agent shall not be under
any obligation to any of the Lenders to ascertain or to inquire as to the
observance or performance of any of the terms,
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covenants or conditions of this Agreement or any of the other Loan Documents on
the part of the Borrower or to inspect the properties, books or records of the
Borrower or its Subsidiaries.
SECTION 13.4 RELIANCE. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy
or telex message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons or upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless an
Assignment and Acceptance shall have been filed with and accepted by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement unless it shall first receive advice or concurrence of the
Lenders or the Required Lenders as provided in this Agreement and it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all present and future holders of the Notes.
SECTION 13.5 NOTICE OF DEFAULT. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender, the Authorized
Representative or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default." In the event that the Agent receives such a notice, the Agent shall
promptly give notice thereof to the Lenders and the Borrower. The Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 13.6 NO REPRESENTATIONS. Each Lender expressly acknowledges
that neither the Agent nor any of its affiliates has made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has,
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independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the financial condition,
creditworthiness, affairs, status and nature of the Borrower and its
Subsidiaries and made its own decision to enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon
the Agent 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
analysis, appraisals and decisions in taking or not taking action under this
Agreement and to make such investigation as it deems necessary to inform itself
as to the status and affairs, financial or otherwise, of the Borrower and its
Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of
the Borrower or any of its Subsidiaries which may come into the possession of
the Agent or any of its affiliates.
SECTION 13.7 INDEMNIFICATION. The Lenders agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting any obligations of the Borrower or any Subsidiary so to do),
including its employees, directors, officers and agents, ratably according to
the respective principal amount of the Notes and Participations held by them
(or, if no Notes or Participations are outstanding, ratably in accordance with
their respective Applicable Commitment Percentages as then in effect) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time (including, without limitation at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent, including its employees, directors, officers and agents, in
any way relating to or arising out of this Agreement or any other document
contemplated by or referred to herein or the transactions contemplated hereby
or any action taken or omitted by the Agent under or in connection with any of
the foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. The agreements in this Section 13.7
shall survive the final payment in full of the Obligations and the termination
of this Agreement.
SECTION 13.8 LENDER. NationsBank and its affiliates may make loans
to, accept deposits from and generally engage in any kind of business with the
Borrower and its Subsidiaries as though it were not the Agent hereunder. With
respect to its Loans made
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or renewed by it and any Note issued to it, NationsBank shall have the same
rights and powers under this Agreement as any Lender and may exercise the same
as though it were not the Agent, and the terms "Lender" and "Lenders" shall,
unless the context otherwise indicates, include NationsBank in its individual
capacity.
SECTION 13.9 RESIGNATION. If the Agent shall resign as Agent under
this Agreement, then the Required Lenders may appoint, with the consent, so
long as there shall not have occurred and be continuing a Default or Event of
Default, of the Borrower, which consent shall not be unreasonably withheld, a
successor Agent for the Lenders, which successor Agent shall be a commercial
bank organized under the laws of the United States or any state thereof, having
a combined surplus and capital of not less than $250,000,000, whereupon such
successor Agent shall succeed to the rights, powers and duties of the former
Agent and the obligations of the former Agent shall be terminated and
cancelled, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement; provided, however, that the
former Agent's resignation shall not become effective until such successor
Agent has been appointed and has succeeded of record to all right, title and
interest in any collateral held by the Agent; provided, further, that if the
Required Lenders and, if applicable, the Borrower cannot agree as to a
successor Agent within ninety (90) days after such resignation, the Agent shall
appoint a successor Agent which satisfies the criteria set forth above in this
Section 13.9 for a successor Agent and the parties hereto agree to execute
whatever documents are necessary to effect such action under this Agreement or
any other document executed pursuant to this Agreement; provided, however, that
in such event all provisions of this Agreement and the Loan Documents shall
remain in full force and effect. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article 13 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
SECTION 13.10 SHARING OF PAYMENTS, ETC. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, set-off,
counterclaim or otherwise, obtain payment with respect to its Obligations
(other than pursuant to Article 5) which results in its receiving more than its
pro rata share of the aggregate payments with respect to all of the Obligations
(other than any payment pursuant to Article 5) then (A) such Lender shall be
deemed to have simultaneously purchased from the other Lenders a share in their
Obligations so that the amount of the Obligations held by each of the Lenders
shall be pro rata and (B) such other adjustments shall be made from time to
time as shall be equitable to insure that the Lenders share such payments
ratably; provided, however, that for purposes of this Section 13.10 the term
"pro rata" shall be determined with respect to the
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Term Loan Commitment and the Revolving Credit Commitment of each Lender and to
the Total Revolving Credit Commitment after subtraction in each case of
amounts, if any, by which any such Lender has not funded its share of the
outstanding Term Loan, Revolving Loans and Participations, as the case may be.
If all or any portion of any such excess payment is thereafter recovered from
the Lender which received the same, the purchase provided in this Section 13.10
shall be rescinded to the extent of such recovery, without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that each
Lender so purchasing a portion of the other Lenders' Obligations may exercise
all rights of payment (including, without limitation, all rights of set-off,
banker's lien or counterclaim) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
ARTICLE 14
ASSIGNMENTS AND PARTICIPATIONS
SECTION 14.1 ASSIGNMENTS.
(a) At any time after the Closing Date each Lender may,
with the prior consent of the Agent and the Borrower, which consents
shall not be unreasonably withheld, assign to one or more banks or
financial institutions all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion
of any Note payable to its order); provided, that (i) each such
assignment shall be of a constant, and not a varying, percentage of
all of the assigning Lender's rights and obligations (including the
Term Loan, Revolving Loans and Participations) under this Agreement,
(ii) for each assignment involving the issuance and transfer of a
Note, the assigning Lender shall execute an Assignment and Acceptance
and the Borrower hereby consents to execute a replacement Note or
Notes to give effect to the assignment, (iii) the minimum Term Loan
Commitment and Revolving Credit Commitment which shall be assigned is
$5,000,000 (together with which the assigning Lender's applicable
portion of Participations and the Letter of Credit Commitment shall
also be assigned) unless the entire Term Loan Commitment and Revolving
Credit Commitment of a Lender shall be assigned; (iv) such assignee
shall have an office located in the United States, (v) an assignment
(other than an assignment of 100% of its interest) by Issuing Bank
shall not include any portion of the obligation to issue Letters of
Credit, and (vi) no consent of the Borrower or Agent shall be required
in connection with any assignment by a Lender to an affiliate thereof
or to another Lender. Upon such execution, delivery, approval and
acceptance, from and after
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the effective date specified in each Assignment and Acceptance, (A)
the assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder or under such Note have been
assigned or negotiated to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and
a holder of such Notes and (B) the assignor thereunder shall, to the
extent that rights and obligations hereunder or under such Notes have
been assigned or negotiated by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from that portion of
its obligations under this Agreement applicable to the rights so
assigned. Any Lender who makes an assignment shall pay to the Agent a
one-time administrative fee of $3,000.
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as
follows: (i) the assignment made under such Assignment and Acceptance
is made under such Assignment and Acceptance without recourse; (ii)
such assigning Lender makes no representation or warranty and assumes
no responsibility with respect to 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 any Loan
Document or any other instrument or document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements most
recently delivered pursuant to Section 8.6 or Section 9.1, as the case
may be, and such other Loan Documents and other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the
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; (v) such assignee appoints and authorizes
the Agent to take such action as Agent on its behalf and to exercise
such powers under this Agreement, the Notes and the other Loan
Documents as are delegated to the Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender and a
holder of such Notes.
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(c) The Agent shall maintain at its address referred to
herein a copy of each Assignment and Acceptance delivered to and
accepted by it.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender, the Agent shall give prompt notice
thereof to Borrower.
(e) Nothing herein shall prohibit any Lender from
pledging or assigning any Note to any Federal Reserve Bank in
accordance with applicable law.
(f) If, pursuant to this Section 14.1, any interest in
this Agreement or any Note is transferred to any assignee Lender which
is organized under the laws of any jurisdiction other than the United
States or any state thereof, the assigning Lender shall cause such
assignee Lender, concurrently with the effectiveness of such transfer,
(i) to represent to the assigning Lender (for the benefit of the
assigning Lender, the Agent and the Borrower) that under applicable
law and treaties no taxes will be required to be withheld by the
Agent, the Borrower or the assigning Lender with respect to any
payments to be made to such assignee Lender in respect of the Loans
and (ii) to furnish to the assigning Lender, the Agent and the
Borrower such certificates, documents and other evidence as required
to comply with Section 5.6(b) hereof, and the assignee Lender shall
comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption.
SECTION 14.2 PARTICIPATIONS. Each Lender may sell participations at
its expense to one or more banks or other entities as to all or a portion of
its rights and obligations under this Agreement; provided, that (i) such
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) such Lender shall remain the holder of
any Notes issued to it for the purpose of this Agreement, (iv) such
participations shall be in a minimum amount of $2,500,000 and shall include an
allocable portion of such Lender's Participations, and (v) Borrower, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and with regard to any and all payments to be made under this
Agreement; provided, that the participation agreement between a Lender and its
participants may provide that such Lender will obtain the approval of such
participant prior to such Lender's agreeing to any amendment or waiver of any
provisions of this Agreement which would (A) extend the maturity of any Note,
(B) reduce the interest rate hereunder, or (C) increase the Term Loan
Commitment or the Revolving Credit
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Commitment of the Lender granting the participation therein other than as
permitted by Section 3.7, and (vi) the sale of any such participations which
require Borrower to file a registration statement with the United States
Securities and Exchange Commission or under the securities regulations or laws
of any state shall not be permitted.
ARTICLE 15
GENERAL PROVISIONS
SECTION 15.1 NOTICES. All notices shall be in writing, except as to
telephonic notices expressly permitted or required herein, and written notices
shall be delivered by hand delivery, telefacsimile, overnight courier or
certified or registered mail. Any notice shall be conclusively deemed to have
been received by any party hereto and be effective on the day on which
delivered to such party (against (except as to telephonic or telefacsimile
notice) receipt therefor or, in the case of telex, verification by return) at
the address set forth below or such other address as such party shall specify
to the other parties in writing, or if sent prepaid by certified or registered
mail return receipt requested on the third Business Day after the day on which
mailed, addressed to such party at said address:
(a) if to the Borrower:
BEC Group, Inc.
555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Mr. Ian G. H. Ashken
Telephone: (914) 967-9400
Telefacsimile: (914) 967-9405
with copies to:
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attention: Robert L. Lawrence, Esq.
Telephone: (212) 541-6222
Telefacsimile: (212) 245-3009
(b) if to the Agent:
NationsBank, N.A.
Independence Center, NC1 001-15-04
15th Floor
Charlotte, North Carolina 28255
Attention: Dana Weir, Agency Services
Telephone: (704) 388-3917
Telefacsimile: (704) 386-9923
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with a copy to:
NationsBank, N.A.
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher C. Browder, Senior Vice
President
Telephone: (212) 407-5332
Telefacsimile: (212) 751-6909
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance.
SECTION 15.2 SETOFF. The Borrower agrees that the Agent and each
Lender shall have a Lien for all the Obligations of the Borrower upon all
deposits or deposit accounts, of any kind, or any interest in any deposits or
deposit accounts thereof, now or hereafter pledged, mortgaged, transferred or
assigned to the Agent or such Lender or otherwise in the possession or control
of the Agent or such Lender (other than for safekeeping) for any purpose for
the account or benefit of the Borrower and including any balance of any deposit
account or of any credit of the Borrower with the Agent or such Lender, whether
now existing or hereafter established, hereby authorizing the Agent and each
Lender at any time or times with or without prior notice to apply such balances
or any part thereof to such of the Obligations of the Borrower to the Lenders
then past due and in such amounts as they may elect, and whether or not the
collateral or the responsibility of other Persons primarily, secondarily or
otherwise liable may be deemed adequate. Any Lender so applying such balances
shall give notice of such application to the Borrower on the same day as, but
not prior to, such application. For the purposes of this paragraph, all
remittances and property shall be deemed to be in the possession of the Agent
or such Lender as soon as the same may be put in transit to it by mail or
carrier or by other bailee.
SECTION 15.3 SURVIVAL. All covenants, agreements, representations
and warranties made herein shall survive the making by the Lenders of the Loans
and the expiration of the Letters of Credit and the execution and delivery to
the Lenders of this Agreement and the Notes and shall continue in full force
and effect so long as any of the Obligations remain outstanding or any Lender
has any commitment hereunder. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and permitted assigns of such party and all covenants, provisions and
agreements by or on behalf of the Borrower which are contained in this
Agreement, the Notes and the other Loan Documents shall
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inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.
SECTION 15.4 EXPENSES. The Borrower agrees (a) to pay or reimburse
the Agent for all its out-of-pocket costs and expenses incurred in connection
with the preparation, negotiation and execution of, and any amendment,
supplement or modification to, this Agreement or any of the other Loan
Documents, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements
of counsel to the Agent, (b) to pay or reimburse the Agent and the Lenders for
all their reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement and the other
Loan Documents, including without limitation, the reasonable fees and
disbursements of their counsel and any payments in indemnification (other than
payments of indemnification arising directly as a result of the action or
omission of any Lender) or otherwise payable by the Lenders to the Agent
pursuant to the Loan Documents and (c) to pay, indemnify and hold the Agent and
the Lenders harmless from any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any failure to pay or delay in
paying, documentary, stamp, excise and other similar taxes, if any, which may
be payable or determined to be payable in connection with the execution and
delivery of this Agreement or any other Loan Documents, or consummation of any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Agreement or any other Loan Documents.
SECTION 15.5 AMENDMENTS. No amendment, modification or waiver of any
provision of this Agreement or any of the Loan Documents and no consent by the
Lenders to any departure therefrom by the Borrower shall be effective unless
such amendment, modification, waiver or consent shall be in writing and signed
by the Borrower and the Agent, but only upon having received the prior written
consent of the Required Lenders, and the same shall then be effective only for
the period and on the conditions and for the specific instances and purposes
specified in such writing; provided, however, that, no such amendment,
modification, waiver or consent that:
(a) changes, extends or waives any provision of Section
13.10 or this Section 15.5, the amount of or the due date of any
scheduled installment of or the rate of interest or determination of
any fee payable on or in connection with any Obligation, changes the
definition of Required Lenders, which permits an assignment by
Borrower of its Obligations hereunder, which releases any material
Guarantor or any material amount of all of the Collateral, which
reduces the required consent of Lenders provided hereunder, which
extends the Term Loan Termination Date or the Revolving
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Credit Termination Date or which increases or decreases the Term Loan
Commitment or the Revolving Credit Commitment or the Letter of Credit
Commitment of any Lender or which waives any condition to the making
of any Loan shall be effective unless in writing and signed by each of
the Lenders; or
(b) affects the rights, privileges, immunities or
indemnities of the Agent shall be effective unless in writing and
signed by the Agent.
No notice to or demand on the Borrower in any case shall entitle the Borrower
to any other or further notice or demand in similar or other circumstances,
except as otherwise expressly provided herein. No delay or omission on any
Lender's or the Agent's part in exercising any right, remedy or option shall
operate as a waiver of such or any other right, remedy or option or of any
Default or Event of Default.
SECTION 15.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one copy of this Agreement
containing all original, fully-executed counterpart signature pages.
SECTION 15.7 TERMINATION.
(a) This Agreement, the Notes and each of the Loan
Documents shall be terminated, ipso facto, in the event the Spinoff
and Merger are not consummated on or before June 30, 1996.
(b) The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation
of the Borrower, the Lenders or the Agent, arising prior to the
effective date of such termination, and the provisions hereof shall
continue to be fully operative until all transactions entered into or
rights created or obligations incurred prior to such termination have
been fully disposed of, concluded or liquidated and the Obligations
arising prior to or after such termination have been Fully Satisfied.
The rights granted to the Agent for the benefit of the Lenders
hereunder and under the other Loan Documents shall continue in full
force and effect, notwithstanding the termination of this Agreement,
until all of the Obligations have been Fully Satisfied or the Borrower
has furnished the Lenders and the Agent with an indemnification
satisfactory to the Agent and each Lender with respect thereto. All
representations, warranties, covenants, waivers and agreements
contained herein shall survive termination hereof until payment in
full of the
104
<PAGE> 112
Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment pursuant to the Loan
Documents of all or any part of the Obligations, any Lender is for any
reason compelled to surrender such payment to any Person because such
payment is determined to be void or voidable as a preference,
impermissible setoff, a diversion of trust funds or for any other
reason, this Agreement shall continue in full force and the Borrower
shall be liable to, and shall indemnify and hold such Lender harmless
for, the amount of such payment surrendered until such Lender shall
have been finally and irrevocably paid in full. The provisions of the
foregoing sentence shall be and remain effective notwithstanding any
contrary action which may have been taken by the Lenders in reliance
upon such payment, and any such contrary action so taken shall be
without prejudice to the Lenders' rights under this Agreement and shall
be deemed to have been conditioned upon such payment having become
final and irrevocable.
SECTION 15.8 INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Agent and each Lender and the extension of
the Term Loan Commitments, the Revolving Credit Commitments and the Letter of
Credit Commitments, the Borrower hereby indemnifies, exonerates and holds the
Agent and each Lender and each of their respective officers, directors,
employees and agents (collectively, the "Indemnified Parties") free and
harmless from and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action
for which indemnification hereunder is sought), including reasonable attorneys'
fees and disbursements (collectively, the "Indemnified Liabilities"), incurred
by the Indemnified Parties or any of them as a result of, or arising out of,
any of the Loan Documents or the matters contemplated therein, or relating to
any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan or supported by any Letter of Credit,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the gross negligence or willful
misconduct of such Indemnified Party, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
SECTION 15.9 HEADINGS AND REFERENCES. The headings of the Articles
and Sections of this Agreement are inserted for convenience of reference only
and are not intended to be a part of, or to affect the meaning or
interpretation of this Agreement.
105
<PAGE> 113
Words such as "hereof", "hereunder", "herein" and words of similar import shall
refer to this Agreement in its entirety and not to any particular Section or
provisions hereof, unless so expressly specified. As used herein, the singular
shall include the plural, and the masculine shall include the feminine or a
neutral gender, and vice versa, whenever the context requires.
SECTION 15.10 SEVERABILITY. If any provision of this Agreement or
the other Loan Documents shall be determined to be illegal or invalid as to one
or more of the parties hereto, then such provision shall remain in effect with
respect to all parties, if any, as to whom such provision is neither illegal
nor invalid, and in any event all other provisions hereof shall remain
effective and binding on the parties hereto.
SECTION 15.11 ENTIRE AGREEMENT. This Agreement, together with the
other Loan Documents, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all previous proposals,
negotiations, representations, commitments and other communications between or
among the parties, both oral and written, with respect thereto.
SECTION 15.12 AGREEMENT CONTROLS. In the event that any term of any
of the Loan Documents other than this Agreement conflicts with any term of this
Agreement, the terms and provisions of this Agreement shall control.
SECTION 15.13 USURY SAVINGS CLAUSE. Anything in this Agreement or
the Notes to the contrary notwithstanding, the obligation of the Borrower to
make payments of interest shall be subject to the limitation that payments of
interest shall not be required to be made to the extent that a Lender's receipt
thereof would not be permissible under the law or laws applicable to it
limiting rates of interest which may be charged or collected by it. Any such
amount of interest which is not paid as a result of the limitation referred to
in the preceding sentence shall be carried forward and paid by the Borrower to
such Lender on the earliest date or dates on which any interest is payable
under this Agreement and on which the receipt thereof is permissible under the
laws applicable to such Lender limiting rates of interest which may be charged
or collected by such Lender. Such payment shall be made as additional interest
for the month preceding such interest payment date. Such deferred payments
shall not bear interest.
SECTION 15.14 GOVERNING LAW; WAIVERS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
106
<PAGE> 114
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE
OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE
ON SUCH PARTY BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO
THE ADDRESS OF EACH PARTY PROVIDED BY SECTION 15.1 HEREOF, OR BY ANY
OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN
EFFECT IN THE STATE OF NEW YORK.
(d) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF
SHALL PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY PARTY OR ANY PARTY'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED
BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER,
BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY
HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY AND HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
[Signatures on following pages.]
107
<PAGE> 115
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
BORROWER:
--------
BEC GROUP, INC.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
AGENT:
-----
NATIONSBANK, N.A., as Agent for the Lenders
By:
-----------------------------------------
Name: Christopher C. Browder
Title: Senior Vice President
CREDIT AGREEMENT
Signature Page 1 of 4
<PAGE> 116
LENDERS:
-------
NATIONSBANK, N.A.
By:
------------------------------------------
Name: Christopher C. Browder
Title: Senior Vice President
Lending Office:
NationsBank, N.A.
Independence Center
NC1 001-15-04
15th Floor
Charlotte, North Carolina 28255
Attention: Dana Weir,
Agency Services
Telephone: (704) 388-3917
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, N.A.
Charlotte, North Carolina 28255
ABA No.: 053000196
Reference: BEC Group, Inc.
Account No.: 136621-22506
Attention: Corporate Credit Support
CREDIT AGREEMENT
Signature Page 2 of 4
<PAGE> 117
EUROPEAN AMERICAN BANK
By:
---------------------------------------
Name: Brian A. Foster
Title: Vice President
Lending Office:
European American Bank
335 Madison Avenue
17th Floor
New York, New York 10017
Attention: Angie M. Marrano,
Administrative Assistant
Telephone: (212) 503-2553
Telefacsimile: (212) 503-2667
Wire Transfer Instructions:
European American Bank
One EAB Plaza
Uniondale, New York 11555
ABA No.: 021 001 486
Reference: BEC Group, Inc.
Account No.: K890222220
CREDIT AGREEMENT
Signature Page 3 of 4
<PAGE> 118
NATIONAL CITY BANK, KENTUCKY
By:
-----------------------------------------
Name: Don R. Pullen
Title: Vice President
Lending Office:
National City Bank, Kentucky
101 South Fifth Street
Louisville, Kentucky 40202
P.O. Box 36000 (40233)
Attention: Don R. Pullen
Southern Banking,
31-T 07 D
Telephone: (502) 581-6352
Telefacsimile: (502) 581-5122
Wire Transfer Instructions:
National City Bank, Kentucky
ABA No.: 083-000-056
Reference: BEC Group, Inc.
Account No.: ___________
Attention: Mary Vincent,
Commercial Loan Ops.
Telephone: (502) 581-7769
CREDIT AGREEMENT
Signature Page 4 of 4
<PAGE> 119
EXHIBIT A
APPLICABLE COMMITMENT PERCENTAGES
<TABLE>
<CAPTION>
Revolving Total
Term Loan Credit Credit
Lender Commitment Commitment Commitment
- ------ ----------- ------------ -----------
<S> <C> <C> <C>
NationsBank, N.A. $10,000,000 $15,000,000 $25,000,000
National City Bank, $ 6,000,000 $ 9,000,000 $15,000,000
Kentucky
European American Bank $ 4,000,000 $ 6,000,000 $10,000,000
Total Credit Commitment
of all Lenders $50,000,000
</TABLE>
A-1
<PAGE> 120
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
DATED _______________, 19____
Reference is made to the Credit Agreement dated as of April 3, 1996
(the "Agreement") among BEC Group, Inc. (the "Borrower"), the Lenders (as
defined in the Agreement), and NationsBank, N.A., as Agent for the Lenders
("Agent"), whereby the Lenders have agreed to make certain term loan, revolving
credit and letter of credit facilities available to the Borrower (the "Credit
Agreement"). Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein with the same meanings.
________________________(the "Assignor") and _________________________
_______________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE, a
_______% 1 interest in and to all of the Assignor's rights and obligations
under each of the Agreements as of the Effective Date (as defined below),
including, without limitation, such percentage interest in the Loans owing to,
and Participations held by, the Assignor on the Effective Date, and the Notes
held by the Assignor.
2. The Assignor (i) represents and warrants that, as of the date
hereof, the aggregate outstanding principal amounts of the Loans owing to it
(without giving effect to assignments thereof which have not yet become
effective) are as follows: (A) $_____________ of the Term Loan, (B)
$__________ of Revolving Loans, (C) the aggregate principal amount of Letters
of Credit in which it is deemed to have a Participation under the Credit
Agreement is $__________; (ii) represents and warrants that it is the legal and
beneficial owner of the interests being assigned by it hereunder and that such
interests are free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreements or any of the Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Agreements or any of
the Loan Documents or any other instrument or document furnished pursuant
thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the
____________________
1 Specify percentage in not less than 9 decimal points.
B-1
<PAGE> 121
performance or observance by the Borrower of any of its obligations under the
Agreements or any of the Loan Documents or any other instrument or document
furnished pursuant thereto and (v) attaches the Notes referred to in paragraph
1 above and requests that the Agent exchange such Notes for (A) two Term Notes
dated _____________, 19__, one in the principal amount of $________________
payable to the order of the Assignor, and one in the principal amount of
$________________ payable to the order of the Assignee, (B) two Revolving Notes
dated _____________, 19__, one in the principal amount of $________________
payable to the order of the Assignor, and one in the principal amount of
$________________ payable to the order of the Assignee.
3. The Assignee (i) confirms that it has received a copy of the
Agreements, together with copies of the financial statements referred to in
Section 9.1 thereof, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor, 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 the
Agreements; (iii) appoints and authorizes the Agent to take such actions on its
behalf and to exercise such powers under the Loan Documents as are delegated to
the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Agreements are required
to be performed by the Lender; and (v) specifies as its address for notices the
office set forth beneath its name on the signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_____________________________ (the "Effective Date"). Following the execution
of this Assignment and Acceptance, it will be delivered to the Agent for
acceptance and recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date,
(i) the Assignee shall be a party to each of the Agreements and, to the extent
provided in 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 provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under each of the Agreements.
6. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments under the Agreements and
Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal,
B-2
<PAGE> 122
interest, commitment fees and letter of credit fees with respect thereto) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments under the Agreements and the Notes for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with, the laws of the State of New York.
[NAME OF ASSIGNOR]
By:
----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
Notice Address:
-------------------------------------------
-------------------------------------------
After the Effective Date:
------------------------ $
Outstanding Term Loan: ----------------------------------
Outstanding Revolving Loans $
----------------------------------
Outstanding Participations in
Letter of Credit Outstandings: $
----------------------------------
[NAME OF ASSIGNEE]
By:
----------------------------------------
Name:
---------------------------------
Title:
---------------------------------
Notice Address/Lending Office:
-------------------------------------------
-------------------------------------------
Wire transfer Instructions:
-------------------------------------------
-------------------------------------------
After the Effective Date:
------------------------ $
Outstanding Term Loan: ----------------------------------
Outstanding Revolving Loans $
----------------------------------
Outstanding Participations in
Letter of Credit Outstandings: $
----------------------------------
Accepted this ____ day of _______, 19___
NationsBank, N.A., as Agent
By:
----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Consented to:
B-3
<PAGE> 123
BEC Group, Inc.
By:
--------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
B-4
<PAGE> 124
EXHIBIT C
FORM OF NOTICE OF APPOINTMENT (OR REVOCATION)
OF AUTHORIZED REPRESENTATIVE
Reference is hereby made to the Credit Agreement dated as of April 3,
1996 (the "Agreement") among BEC Group, Inc. (the "Borrower"), the Lenders (as
defined in the Agreement), and NationsBank, N.A., as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
Appointment. The Borrower hereby nominates, constitutes and appoints
each individual named below as an Authorized Representative under the Loan
Documents, and hereby represents and warrants that (i) set forth opposite each
such individual's name is a true and correct statement of such individual's
office (to which such individual has been duly elected or appointed), a genuine
specimen signature of such individual and an address for the giving of notice,
and (ii) each such individual has been duly authorized by the Borrower to act
as Authorized Representative under the Loan Documents:
<TABLE>
<CAPTION>
Name and Address Office Specimen Signature
<S> <C> <C>
- ----------------- ------------------- --------------------
- -----------------
- -----------------
- ----------------- ------------------- --------------------
- -----------------
- -----------------
- ----------------- ------------------- --------------------
- -----------------
- -----------------
</TABLE>
Revocation. Borrower hereby revokes (effective upon receipt hereof by
the Agent) the prior appointment of ________________ as an Authorized
Representative.
This the ___ day of __________________, 19__.
BEC Group, Inc.
By:
--------------------------------------------
Name:
----------------------------------
Title:
---------------------------------
C-1
<PAGE> 125
EXHIBIT D
FORM OF BORROWING NOTICE
To: NationsBank, N.A.,
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Telefacsimile: (704) 386-9923
Attention: Dana Weir, Agency Services
Reference is hereby made to the Credit Agreement dated as of April 3,
1996 (the "Agreement") among BEC Group, Inc. (the "Borrower"), the Lenders (as
defined in the Agreement), and NationsBank, N.A., as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby confirms its
prior notice of borrowing given to the Agent by telephone at __________ __.m.
on ____________, 19__ to the effect that Revolving Loans of the type and amount
set forth below be made on the date indicated:
<TABLE>
<CAPTION>
Type of Loan Interest Aggregate Date of
(check one) Period(1) Amount(2) Loan(3)
------------ --------- --------- -------
<S> <C> <C> <C>
Base Rate
Loan _____
Eurodollar Rate
Loan _____
</TABLE>
- -----------------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $500,000 or a multiple of $500,000 in excess thereof for all
Revolving Loans.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan; may
be same Business Day in case of a Base Rate Loan.
The Borrower hereby requests that the proceeds of Revolving Loans
described in this Borrowing Notice be made available to the Borrower as
follows: [INSERT TRANSMITTAL INSTRUCTIONS].
D-1
<PAGE> 126
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after
giving effect to the borrowing described herein; and
2. All the representations and warranties set forth in Article 8
of the Agreement and in the Loan Documents (other than those expressly stated
to refer to a particular date) are true and correct as of the date hereof
except that (a) the representations and warranties set forth in Sections 8.4
and 8.5 of the Agreement shall be deemed to include and take into account any
merger or consolidation permitted under Section 10.4 of the Agreement and
references therein to Schedules 8.4 and 8.5 shall be deemed to refer to such
Schedules as amended by Supplemental Schedules 8.4 and 8.5 attached hereto, and
(b) the reference to the financial statements in Section 8.6 of the Agreement
are to those financial statements most recently delivered to you pursuant to
Section 9.1 of the Agreement; and
3. After giving effect to Loans requested hereby, the sum of all
Revolving Credit Outstandings and Letter of Credit Outstandings will not exceed
the Total Revolving Credit Commitment.
BEC Group, Inc.
BY:
--------------------------------------
Authorized Representative
D-2
<PAGE> 127
Supplemental Schedule 8.4
Subsidiaries
Schedule 8.4 of the Agreement shall be amended hereby as follows (if no
amendment of Schedule 8.4 is necessary, indicate "Not Applicable"):
D-3
<PAGE> 128
Supplemental Schedule 8.5
Investments in Other Persons
Schedule 8.5 of the Agreement shall be amended hereby as follows (if no
amendment of Schedule 8.5 is necessary, indicate "Not Applicable"):
D-4
<PAGE> 129
EXHIBIT E
FORM OF GUARANTY AGREEMENT
E-1
<PAGE> 130
EXHIBIT F
FORM OF INTEREST RATE SELECTION NOTICE
To: NationsBank, N.A.,
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Telefacsimile: (704) 386-9923
Attention: Dana Weir, Agency Services
Reference is hereby made to the Credit Agreement dated as of April 3,
1996 (the "Credit Agreement") among BEC Group, Inc. (the "Borrower"), each of
the Lenders (as defined in the Agreement) and NationsBank, N.A., as Agent for
the Lenders ("Agent"). Capitalized terms used but not defined herein shall
have the respective meanings therefor set forth in the Credit Agreement.
The Borrower through its Authorized Representative hereby confirms its
prior notice of a selection of a type of Loan and Interest Period given to the
Agent by telephone at __________ __.m. on _________________, 199__ to the
following effect in respect of Loans:
TERM LOAN SEGMENT
<TABLE>
<CAPTION>
Type of Loan Interest Effective
(Check One) Period(1) Amount(2) Date(3)
----------- ------ ------ ------
<S> <C> <C> <C>
Eurodollar Rate
Loan _____
Base Rate Loan _____
REVOLVING LOANS
</TABLE>
<TABLE>
<CAPTION>
Type of Loan Interest Effective
(Check One) Period(1) Amount(2) Date(3)
----------- ------ ------ ---------
<S> <C> <C> <C>
Eurodollar Rate
Loan _____
Base Rate Loan _____
</TABLE>
- -------------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $500,000 or a multiple of $500,000 in excess thereof.
F-1
<PAGE> 131
(3) At least three (3) Business Days after date of telephonic
notice if a Eurodollar Rate Loan; may be same Business Day in
case of a Base Rate Loan.
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after
giving effect to the borrowing described herein; and
2. All the representations and warranties set forth in Article 8
of the Agreement and in the Loan Documents (other than those expressly stated
to refer to a particular date) are true and correct as of the date hereof
except that (a) the representations and warranties set forth in Sections 8.4
and 8.5 of the Agreement shall be deemed to include and take into account any
merger or consolidation permitted under Section 10.4 of the Agreement and
references therein to Schedules 8.4 and 8.5 shall be deemed to refer to such
Schedules as amended by Supplemental Schedules 8.4 and 8.5 attached hereto and
(b) the reference to the financial statements in Section 8.6 of the Agreement
are to those financial statements most recently delivered to you pursuant to
Section 9.1 of the Agreement; and
3. After giving effect to Loans requested hereby, the sum of all
Revolving Credit Outstandings and Letter of Credit Outstandings will not exceed
the Total Revolving Credit Commitments.
BEC Group, Inc.
BY:
-------------------------------------
Authorized Representative
F-2
<PAGE> 132
Supplemental Schedule 8.4
Subsidiaries
Schedule 8.4of the Agreement shall be amended hereby as follows (if no
amendment to Schedule 8.4 is necessary, indicate "Not Applicable"):
F-3
<PAGE> 133
Supplemental Schedule 8.5
Investments in Other Persons
Schedule 8.5of the Agreement shall be amended hereby as follows (if no
amendment of Schedule 8.5 is necessary, indicate "Not Applicable"):
F-4
<PAGE> 134
EXHIBIT G
FORM OF STOCK PLEDGE AGREEMENT
G-1
<PAGE> 135
EXHIBIT H
FORM OF MORTGAGE
H-1
<PAGE> 136
EXHIBIT I-1
FORM OF TERM LOAN NOTE
PROMISSORY NOTE
(Term Loan)
(1)
- ------------------
--------------, ------------
March __, 1996
FOR VALUE RECEIVED, BEC GROUP, INC., a Delaware corporation having its
principal place of business located in Rye, New York (the "Borrower"), hereby
promises to pay to the order of
___________________________________________________2 (the "Lender"), in its
individual capacity, at the office of NationsBank, N.A., as agent for the
Lenders (the "Agent"), located at Independence Center, 101 North Tryon Street,
Charlotte, North Carolina 28255 (or at such other place or places as the Agent
may designate) at the times set forth in the Credit Agreement dated as of April
3, 1996 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent (as amended and supplemented and in
effect from time to time, the "Credit Agreement"; all capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Credit Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of
[_________________________________]3 DOLLARS ($__________)1 or, if less than
such principal amount, the aggregate unpaid principal amount of the Term Loan
made by the Lender to the Borrower pursuant to the Credit Agreement, on the
Term Loan Termination Date or such earlier date as may be required pursuant to
the terms of the Credit Agreement, and to pay interest from the date hereof on
the unpaid principal amount hereof, in like money, at said office, on the dates
and at the rates provided in Article II of the Credit Agreement. All or any
portion of the principal amount of such Loans may be prepaid as provided in the
Credit Agreement.
- -------------------------------
1 Insert Lender's Term Loan Commitment in Arabic numerals.
2 Insert name of Lender in capital letters.
3 Insert Lender's Term Loan Credit Commitment in words.
I-1-1
<PAGE> 137
This Note is one of the Term Notes in the aggregate principal amount
of $20,000,000 referred to in the Credit Agreement and is issued pursuant to
and entitled to the benefits and security of the Credit Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions upon which the Loans evidenced hereby were or are made and are to be
repaid. This Note is subject to certain restrictions on transfer or assignment
as provided in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of
Revolving Loans upon the terms and conditions specified therein.
If payment of all sums due hereunder is accelerated under the terms of
the Credit Agreement or under the terms of the other Loan Documents executed in
connection with the Credit Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on
demand at the rates per annum set forth in Article II of the Credit Agreement,
or the maximum rate permitted under applicable law, if lower, until such
principal and interest have been paid in full. Further, in the event of such
acceleration, this Note, and all other indebtedness of the Borrower to the
Lender shall become immediately due and payable, without presentation, demand,
protest or notice of any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees and
disbursements, and interest thereon at the rates set forth above.
Interest hereunder shall be computed on the basis of a 360-day year
for the actual number of days in the interest period.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law the benefits of all provisions of law
for stay or delay of execution or sale of property or other satisfaction of
judgment against any of them on account of liability hereon until judgment be
obtained and execution issues against any other of them and returned satisfied
or until it can be shown that the maker or any other party hereto had no
property available for the satisfaction of the debt evidenced by this
instrument, or until any other proceedings can be had against any of them, and
also their right, if any, to require the holder hereof to hold as security for
this Note any collateral deposited by any of said Persons as security.
Protest,
I-1-2
<PAGE> 138
notice of protest, notice of dishonor, dishonor, demand or any other formality
are hereby waived by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
BEC GROUP, INC.
ATTEST: By:
--------------------------------
By: Name:
----------------------------- ------------------------------
Secretary Title:
------------- -----------------------------
[SEAL]
I-1-3
<PAGE> 139
EXHIBIT I-2
FORM OF REVOLVING CREDIT NOTE
PROMISSORY NOTE
(Revolving Loans)
_______________1
__________, __________
March __, 1996
FOR VALUE RECEIVED, BEC GROUP, INC., a Delaware corporation having its
principal place of business located in Rye, New York (the "Borrower"), hereby
promises to pay to the order of
___________________________________________________2 (the "Lender"), in its
individual capacity, at the office of NationsBank, N.A., as agent for the
Lenders (the "Agent"), located at Independence Center, 101 North Tryon Street,
Charlotte, North Carolina 28255 (or at such other place or places as the Agent
may designate) at the times set forth in the Credit Agreement dated as of April
3, 1996 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent (as amended and supplemented and in
effect from time to time, the "Credit Agreement"; all capitalized terms not
otherwise defined herein shall have the respective meanings set forth in the
Credit Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of
[_________________________________]3 DOLLARS ($__________)1 or, if less than
such principal amount, the aggregate unpaid principal amount of all Revolving
Loans made by the Lender to the Borrower pursuant to the Credit Agreement on
the Revolving Credit Termination Date or such earlier date as may be required
pursuant to the terms of the Credit Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates provided in Article II of the Credit
Agreement. All or any portion of the principal amount of such Loans may be
prepaid as provided in the Credit Agreement.
- -------------------------------
1 Insert Lender's Revolving Credit Commitment in Arabic numerals.
2 Insert name of Lender in capital letters.
3 Insert Lender's Revolving Credit Commitment in words.
I-2-1
<PAGE> 140
This Note is one of the Revolving Notes in the aggregate principal
amount of $30,000,000 referred to in the Credit Agreement and is issued
pursuant to and entitled to the benefits and security of the Credit Agreement
to which reference is hereby made for a more complete statement of the terms
and conditions upon which the Loans evidenced hereby were or are made and are
to be repaid. This Note is subject to certain restrictions on transfer or
assignment as provided in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of
Revolving Loans upon the terms and conditions specified therein.
If payment of all sums due hereunder is accelerated under the terms of
the Credit Agreement or under the terms of the other Loan Documents executed in
connection with the Credit Agreement, the then remaining principal amount and
accrued but unpaid interest shall bear interest which shall be payable on
demand at the rates per annum set forth in Article II of the Credit Agreement,
or the maximum rate permitted under applicable law, if lower, until such
principal and interest have been paid in full. Further, in the event of such
acceleration, this Note, and all other indebtedness of the Borrower to the
Lender shall become immediately due and payable, without presentation, demand,
protest or notice of any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees and
disbursements, and interest thereon at the rates set forth above.
Interest hereunder shall be computed on the basis of a 360-day year
for the actual number of days in the interest period.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby
waive to the full extent permitted by law the benefits of all provisions of law
for stay or delay of execution or sale of property or other satisfaction of
judgment against any of them on account of liability hereon until judgment be
obtained and execution issues against any other of them and returned satisfied
or until it can be shown that the maker or any other party hereto had no
property available for the satisfaction of the debt evidenced by this
instrument, or until any other proceedings can be had against any of them, and
also their right, if any, to require the holder hereof to hold as security for
this Note any collateral deposited by any of said Persons as security.
Protest,
I-2-2
<PAGE> 141
notice of protest, notice of dishonor, dishonor, demand or any other formality
are hereby waived by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
BEC GROUP, INC.
ATTEST: By:
--------------------------------
By: Name:
----------------------------- ------------------------------
Secretary Title:
------------- -----------------------------
[SEAL]
I-2-3
<PAGE> 142
EXHIBIT J
FORM OF SECURITY AGREEMENT
J-1
<PAGE> 143
EXHIBIT K
FORM OF INTELLECTUAL PROPERTY
SECURITY AGREEMENT
K-1
<PAGE> 144
EXHIBIT L
FORM OF PARTNERSHIP INTEREST
ASSIGNMENT AGREEMENT
L-1
<PAGE> 145
EXHIBIT M
UPFRONT FEES
The Upfront Fee payable by the Borrower on the Closing Date to the
Agent for the benefit of each Lender shall be equal to the sum of such Lender's
Term Loan Commitment and Revolving Credit Commitment under the Agreement as in
effect on the Closing Date multiplied by the Upfront Fee Percentage set forth
below:
Sum of Term Loan Commitment and
Revolving Credit Commitment Upfront Fee Percentage
less than $15,000,000 .30%
equal to or greater than .40%
$15,000,000
M-1
<PAGE> 146
EXHIBIT N
FORMS OF OPINIONS OF COUNSEL TO THE BORROWER
AND THE GUARANTORS
[Copy of Opinion delivered at Closing is attached]
N-1
<PAGE> 147
EXHIBIT O
FORM OF COMPLIANCE CERTIFICATE
As of __________, 19__
NationsBank, N.A., as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Telefacsimile: (704) 386-9923
Attention: Ms. Dana Weir, Agency Services
Reference is hereby made to the Credit Agreement (Facility A) dated as
of April 3, 1996 (the "Credit Agreement") among BEC Group, Inc. (the
"Borrower"), the Lenders (as defined in the Credit Agreement) and NationsBank,
N.A., as Agent for the Lenders ("Agent") under the Credit Agreement.
Capitalized terms used but not defined herein shall have the respective
meanings therefor set forth in the Credit Agreement. The undersigned, a duly
authorized and acting Authorized Representative, hereby certifies to you as of
the date set forth above (the "Fiscal Quarter End") as follows:
1. Calculations:
A. Compliance with Section 11.1: Consolidated Fixed Charge Ratio
<TABLE>
<S> <C> <C> <C>
1. Consolidated EBITDA (sum of a, b,
c and d: $
----------
a. Consolidated Net Income $
----------------
b. Consolidated Interest Expense $
----------------
c. Tax on Income $
----------------
d. Depreciation and amortization $
----------------
2. Capital Expenditures $
----------
3. Capital expenditures for Displays
in excess of $6,000,000 during
such period (without duplication
of Item 2) $
----------
4. Depreciation of Displays for
for which the aggregate amount of
capital expenditures exceeded
$6,000,000 during such period $
----------
5. Difference of Item 1 less the sum
of Items 2, 3 and 4 $
----------
</TABLE>
O-1
<PAGE> 148
<TABLE>
<S> <C> <C> <C>
4. Consolidated Fixed Charges
(sum of a, b, c, d and e) $
---------------
a. Consolidated Interest Expense $
----------------
b. Principal amount of Consoli-
dated Funded Indebtedness
due and payable during
period $
----------------
c. Dividends and distributions
paid during such period $
----------------
d. all payments under Capital
Leases made during such
period $
----------------
e. all state and Federal taxes
paid in cash during such
period $
----------------
5. Ratio of Item 3 to Item 4 to 1.00
--------
</TABLE>
REQUIRED: FOR THE FOUR QUARTER PERIOD ENDING AT THE FISCAL QUARTER
END DURING THE PERIOD SET FORTH BELOW, THE CONSOLIDATED FIXED CHARGE
RATIO SHALL NOT BE LESS THAN THE RATIO SET FORTH OPPOSITE SUCH PERIOD:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through June 30, 1997 1.50 to 1.00
July 1, 1997 through June 30, 1998 1.25 to 1.00
July 1, 1998 and thereafter 1.50 to 1.00
</TABLE>
B. Compliance with Section 11.2: Consolidated Funded
Indebtedness to Consolidated EBITDA
<TABLE>
<S> <C> <C> <C>
1. Consolidated Funded Indebtedness $
----------
2. Consolidated EBITDA (sum of a, b,
c and d): $
----------
a. Consolidated Net Income $
----------------
b. Consolidated Interest Expense $
----------------
c. Tax on Income $
----------------
d. Depreciation and amortization $
----------------
3. Ratio of Item 1 to Item 2 to 1.00
--------
</TABLE>
REQUIRED: FOR THE FOUR-QUARTER PERIOD ENDING AT THE FISCAL QUARTER
END DURING THE PERIODS SET FORTH BELOW, THE RATIO OF CONSOLIDATED
FUNDED INDEBTEDNESS TO CONSOLIDATED EBITDA FOR SUCH FOUR-QUARTER
PERIOD SHALL NOT BE EQUAL TO OR GREATER THAN THE RATIO SET FORTH
OPPOSITE SUCH PERIOD:
O-2
<PAGE> 149
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date through June 30, 1997 3.50 to 1.00
July 1, 1997 through September 30,
1999 3.25 to 1.00
October 1, 1999 and thereafter 3.00 to 1.00
C. Consolidated Net Worth $
----------------
</TABLE>
REQUIRED: CONSOLIDATED NET WORTH MUST BE AT LEAST AN AMOUNT EQUAL TO
CONSOLIDATED NET WORTH ON THE CLOSING DATE LESS $9,000,000, AND WILL
BE INCREASED AS OF THE FIRST DAY OF EACH FISCAL YEAR, BEGINNING WITH
THE FISCAL YEAR ENDING DECEMBER 31, 1997 BY FIFTY PERCENT (50%) OF (A)
CONSOLIDATED NET INCOME FOR THE IMMEDIATELY PRECEDING FISCAL YEAR AND
(B) THE [NET PROCEEDS] OF ANY EQUITY OFFERING CONSUMMATED DURING THE
IMMEDIATELY PRECEDING FISCAL YEAR; HOWEVER, IN NO EVENT SHALL THE
CONSOLIDATED NET WORTH REQUIREMENT BE DECREASED AS A RESULT OF A NET
LOSS OF THE BORROWER AND ITS SUBSIDIARIES (I.E., NEGATIVE CONSOLIDATED
NET INCOME) FOR ANY FISCAL YEAR.
<TABLE>
<S> <C> <C>
a. Initial Consolidated Net $
Worth -------------
b. Consolidated Net Income
for preceding Fiscal Year $
(beginning FY 1996) -------------
$
c. Multiply Line (b.) by 50% -------------
$
d. Add Lines (a.) and (c.) -------------
e. Consolidated Net Worth $
Requirement preceding year -------------
f. New Consolidated Net Worth
Requirement (larger of Lines $
e and f) -------------
</TABLE>
2. No Default
A. During the fiscal quarter ended as of the date set forth
above, (a) no Default or Event of Default specified in Article
12 of the Credit Agreement has occurred or (b) the following
Default or Event of Default has occurred:
----------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
O-3
<PAGE> 150
B. The Borrower proposes to take the following action with
respect to any such Default or Event of Default described
above:
---------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
(Note, if no Default or Event of Default has
occurred, insert "Not Applicable").
The undersigned Authorized Officer hereby certifies that the
information set forth above is true, correct and complete as of the date
hereof.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 19___.
BEC Group, Inc.
---------------------------------
Authorized Officer
O-4
<PAGE> 151
EXHIBIT P
FORM OF LANDLORD WAIVER
P-1
<PAGE> 152
EXHIBIT Q
FORM OF LEASE ASSIGNMENT
Q-1
<PAGE> 153
Schedule 1
Material Leased Facilities
Sch-1
<PAGE> 154
Schedule 8.4
Subsidiaries
Sch-2
<PAGE> 155
Schedule 8.5
Ownership Interests
Sch-3
<PAGE> 156
Schedule 8.6
Contingent Liabilities
Sch-4
<PAGE> 157
Schedule 8.7
Liens
Sch-5
<PAGE> 158
Schedule 8.8
Tax Matters
Sch-6
<PAGE> 159
Schedule 8.10
Litigation
Sch-7
<PAGE> 160
Schedule 8.13
Intellectual Property
Sch-8
<PAGE> 161
Schedule 8.15
Consents
Sch-9
<PAGE> 162
Schedule 8.16
Employee Benefit Plans
Sch-10
<PAGE> 163
Schedule 8.18
Environmental Matters
Sch-11
<PAGE> 164
Schedule 8.19
Employment Matters
Sch-12
<PAGE> 165
Schedule 9.5
Insurance
Sch-13
<PAGE> 166
Schedule 10.1
Existing Indebtedness
Sch-14
<PAGE> 167
Schedule 10.4
Mergers and Consolidations
Sch-15
<PAGE> 168
Schedule 10.5
Transactions with Affiliates
Sch-16
<PAGE> 169
EXHIBIT 10.6(a)
SUBSIDIARY GUARANTY AGREEMENT
THIS SUBSIDIARY GUARANTY AGREEMENT (the "Guaranty Agreement" or the
"Guaranty"), dated as of April 3, 1996, is made by EACH OF THE UNDERSIGNED
DIRECT OR INDIRECT SUBSIDIARIES OF THE BORROWER (each a "Guarantor" and
collectively the "Guarantors") to NATIONSBANK, N.A., a national banking
association, as Agent (the "Agent") for each of the lenders now or hereafter
party to the Credit Agreement (as defined below) (each a "Lender" and
collectively the "Lenders").
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide to BEC
Group, Inc. (the "Borrower") certain term loan, revolving credit and letter of
credit facilities pursuant to the terms of that certain Credit Agreement among
the Borrower, the Agent and the Lenders dated as of April 3, 1996 (as from time
to time amended, supplemented or replaced, the "Credit Agreement"); and
WHEREAS, the Guarantors are wholly-owned direct or indirect
subsidiaries of the Borrower; and
WHEREAS, the Guarantors will materially benefit from the loans and
advances made and to be made, and the letters of credit issued and to be
issued, under the Credit Agreement, and the Guarantors are willing to enter
into this Guaranty to provide an inducement for the Lenders and the Agent to
make loans and advances, and to issue letters of credit, thereunder;
NOW, THEREFORE, in order to induce the Lenders and the Agent to enter
into the Credit Agreement and to make loans and advances to the Borrower, and
to issue letters of credit for the account of the Borrower, thereunder, and in
consideration of the mutual covenants and agreements contained herein, each
Guarantor agrees as follows:
1. DEFINITIONS. All capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. GUARANTY. Each Guarantor hereby jointly and severally,
unconditionally, absolutely, continually and irrevocably guarantees to the
Agent and the Lenders the payment and performance in full of the Borrower's
Liabilities (as defined below). For all purposes of this Guaranty Agreement,
"Borrower's Liabilities" means: (a) the Borrower's prompt payment in full,
when due or declared due and at all such times, of all Obligations and all
other amounts pursuant to the terms of the Credit Agreement, the Notes, and all
other Loan Documents executed in connection with the Credit Agreement
heretofore, now or at any time or times hereafter owing, arising, due or
payable from the Borrower to the Lenders, including without limitation
principal, interest, premium or fee (including, but not
<PAGE> 170
limited to, loan fees and attorneys' fees and expenses); and (b) the Borrower's
prompt, full and faithful performance, observance and discharge of each and
every agreement, undertaking, covenant and provision to be performed, observed
or discharged by the Borrower under the Credit Agreement and all other Loan
Documents executed in connection therewith. The Guarantors' obligations to the
Agent and the Lenders under this Guaranty Agreement are hereinafter
collectively referred to as the "Guarantors' Obligations"; provided, however,
that the liability of each Guarantor individually, with respect to the
Guarantors' Obligations shall not exceed at any time the Maximum Amount (as
hereinafter defined). The "Maximum Amount" means 95% of (i) the fair salable
value of the assets of a Guarantor as of the date hereof minus (ii) the total
liabilities of such Guarantor (including contingent liabilities, but excluding
liabilities of such Guarantor under this Guaranty and any other Loan Documents
executed by such Guarantor) as of the date hereof; provided further, however,
that if the calculation of the Maximum Amount in the manner provided above as
of the date payment is required of such Guarantor pursuant to this Guaranty
would result in a greater positive number, then the Maximum Amount shall be
deemed to be such greater positive number.
Each Guarantor agrees that it is jointly and severally, directly and
primarily liable for the Borrower's Liabilities.
3. PAYMENT. If the Borrower shall default in payment or
performance of any Borrower's Liabilities, whether principal, interest,
premium, fee (including, but not limited to, loan fees and attorneys' fees and
expenses), or otherwise, when and as the same shall become due, whether
according to the terms of the Credit Agreement, by acceleration, or otherwise,
or upon the occurrence of any Default or Event of Default under the Credit
Agreement that has not been cured or waived, then any or all of the Guarantors
will, upon demand thereof by the Agent or its successors or assigns as of the
date of the Agent's demand, fully pay to the Agent, for the benefit of the
Lenders, subject to any restriction set forth in Section 2 hereof, an amount
equal to all Guarantors' Obligations then due and owing.
4. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and
not of collection. The Guarantors' Obligations under this Guaranty Agreement
shall be absolute and unconditional irrespective of the validity, legality or
enforceability of the Credit Agreement, the Notes or any other Loan Document or
any other guaranty of the Borrower's Liabilities, and shall not be affected by
any action taken under the Credit Agreement, the Notes or any other Loan
Document, any other guaranty of the Borrower's Liabilities, or any other
agreement between the Agent or the Lenders and the Borrower or any other
person, in the exercise of any right or power therein conferred, or by any
failure or omission to enforce any right conferred thereby, or by any waiver of
any
2
<PAGE> 171
covenant or condition therein provided, or by any acceleration of the maturity
of any of the Borrower's Liabilities, or by the release or other disposal of
any security for any of the Borrower's Liabilities, or by the dissolution of
the Borrower or the combination or consolidation of the Borrower into or with
another entity or any transfer or disposition of any assets of the Borrower or
by any extension or renewal of the Credit Agreement, any of the Notes or any
other Loan Document, in whole or in part, or by any modification, alteration,
amendment or addition of or to the Credit Agreement, any of the Notes or any
other Loan Document, any other guaranty of the Borrower's Liabilities, or any
other agreement between the Agent or the Lenders and the Borrower or any other
Person, or by any other circumstance whatsoever (with or without notice to or
knowledge of any Guarantor) which may or might in any manner or to any extent
vary the risks of such Guarantor, or might otherwise constitute a legal or
equitable discharge of a surety or a guarantor; it being the purpose and intent
of the parties hereto that this Guaranty Agreement and the Guarantors'
Obligations hereunder shall be absolute and unconditional under any and all
circumstances and shall not be discharged except by payment as herein provided.
5. CURRENCY AND FUNDS OF PAYMENT. Each Guarantor hereby
guarantees that the Guarantors' Obligations will be paid in lawful currency of
the United States of America and in immediately available funds, regardless of
any law, regulation or decree now or hereafter in effect that might in any
manner affect the Borrower's Liabilities, or the rights of the Agent or any
Lender with respect thereto as against the Borrower, or cause or permit to be
invoked any alteration in the time, amount or manner of payment by the Borrower
of any or all of the Borrower's Liabilities.
6. EVENTS OF DEFAULT. In the event that (a) a Guarantor shall
file a petition to take advantage of any insolvency statute; (b) a Guarantor
shall commence or suffer to exist a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole or
substantially all of its property; (c) a Guarantor shall file a petition or
answer seeking reorganization or arrangement or similar relief under the
Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state or similar law of any other country; (d) a court
of competent jurisdiction shall enter an order, judgment or decree appointing a
custodian, receiver, trustee, liquidator or conservator of a Guarantor or of
the whole or substantially all of its properties, or approve a petition filed
against a Guarantor seeking reorganization or arrangement or similar relief
under the Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state or similar law of any other country, or
if, under the provisions of any other law for the relief or aid of debtors, a
court of competent jurisdiction shall assume custody or control of a Guarantor
or of the whole or substantially all of its properties and such order,
judgment, decree, approval or assumption remains unstayed or undismissed for a
period of sixty (60) consecutive days; (e) there is commenced against a
Guarantor any proceeding or petition seeking reorganization, arrangement or
similar relief under the Federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state, which proceeding or
petition remains unstayed or undismissed for
3
<PAGE> 172
a period of sixty (60) consecutive days; (f) there shall occur an Event of
Default under the Credit Agreement; or (g) any default shall occur in the
payment of amounts due hereunder (each of the foregoing an "Event of Default"
hereunder); then notwithstanding any collateral that the Lenders may possess
from Borrower or such Guarantor or any other guarantor of the Borrower's
Liabilities, or any other party, at the Agent's election and without notice
thereof or demand therefor, so long as such Event of Default shall be
continuing, the Guarantors' Obligations shall immediately become due and
payable.
7. SUITS. Each Guarantor from time to time shall pay to the
Agent for the benefit of the Lenders, on demand, at the Agent's place of
business set forth in the Credit Agreement, the Guarantors' Obligations as they
become or are declared due, and in the event such payment is not made
forthwith, the Agent or the Lenders or any of them may proceed to suit against
such Guarantor. At the Agent's election, one or more and successive or
concurrent suits may be brought hereon by the Agent against any Guarantor,
whether or not suit has been commenced against the Borrower, any other
Guarantor or any other guarantor of the Borrower's Liabilities, or any other
Person and whether or not the Agent or any Lender has taken or failed to take
any other action to collect all or any portion of the Borrower's Liabilities.
8. SET-OFF AND WAIVER. Each Guarantor waives any right to assert
against the Agent and the Lenders as a defense, counterclaim, set-off or cross
claim, any defense (legal or equitable) or other claim which each Guarantor may
now or at any time hereafter have against the Borrower, the Agent or the
Lenders, without waiving any additional defenses, set-offs, counterclaims or
other claims otherwise available to such Guarantor. If at any time hereafter
the Agent or any Lender employs counsel for advice or other representation to
enforce the Guarantors' Obligations that arise out of an Event of Default,
then, in any of the foregoing events, all of the reasonable attorneys' fees
arising from such services and all expenses, costs and charges in any way or
respect arising in connection therewith or relating thereto shall be paid by
such Guarantor to the Agent, for the benefit of the Lenders, on demand.
4
<PAGE> 173
9. WAIVER; SUBROGATION.
(a) Each Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's acceptance of this Guaranty Agreement; (ii) the
Lenders' heretofore, now or from time to time hereafter loaning monies or
giving or extending credit to or for the benefit of the Borrower, whether
pursuant to the Credit Agreement or the Notes or any amendments, modifications,
or supplements thereto, or replacements or extensions thereof; (iii) the Agent,
the Lenders or the Borrower heretofore, now or at any time hereafter,
obtaining, amending, substituting for, releasing, waiving or modifying the
Credit Agreement, the Notes or any other Loan Documents; (iv) presentment,
demand, default, non-payment, partial payment and protest; (v) the Agent or the
Lenders heretofore, now or at any time hereafter granting to the Borrower (or
any other party liable to the Lenders on account of the Borrower's Liabilities)
any indulgence or extensions of time of payment of the Borrower's Liabilities;
and (vi) the Agent or the Lenders heretofore, now or at any time hereafter
accepting from the Borrower or any other person, any partial payment or
payments on account of the Borrower's Liabilities or any collateral securing
the payment thereof or the Agent settling, subordinating, compromising,
discharging or releasing the same. Each Guarantor agrees that the Agent and
each Lender may heretofore, now or at any time hereafter do any or all of the
foregoing in such manner, upon such terms and at such times as the Agent and
each Lender, in its sole and absolute discretion, deems advisable, without in
any way or respect impairing, affecting, reducing or releasing such Guarantor
from the Guarantors' Obligations, and each Guarantor hereby consents to each
and all of the foregoing events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance by
such Guarantor of the Guarantors' Obligations under this Guaranty Agreement may
be enforced by the Agent on behalf of the Lenders upon demand by the Agent to
such Guarantor without the Agent being required, such Guarantor expressly
waiving any right it may have to require the Agent, to (i) prosecute collection
or seek to enforce or resort to any remedies against the Borrower or any other
Guarantor or any other guarantor of the Borrower's Liabilities, IT BEING
EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY SUCH GUARANTOR THAT DEMAND
UNDER THIS GUARANTY AGREEMENT MAY BE MADE BY THE AGENT, AND THE PROVISIONS
HEREOF ENFORCED BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF
DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT, or (ii) seek to
enforce or resort to any remedies with respect to any security interests, Liens
or encumbrances granted to the Agent by the Borrower, any other Guarantor or
any other Person on account of the Borrower's Liabilities or any guaranty
thereof. Neither the Agent nor any Lender shall have any obligation to protect,
secure or insure any of the foregoing security interests, Liens or encumbrances
on the properties or interests in properties subject thereto. The Guarantors'
Obligations shall in no way be impaired,
5
<PAGE> 174
affected, reduced, or released by reason of the Agent's or any Lender's failure
or delay to do or take any of the acts, actions or things described in this
Guaranty including, without limiting the generality of the foregoing, those
acts, actions and things described in this Section 9.
(c) Each Guarantor further agrees with respect to this Guaranty
that such Guarantor shall have no right of subrogation, reimbursement or
indemnity, nor any right of recourse to security for the Borrower's Liabilities
until such time as all of the Borrower's Obligations are Fully Satisfied.
10. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall
be effective as of the date of the initial Advance under the Credit Agreement
and shall continue in full force and effect until the Borrower's Obligations
are Fully Satisfied. The Agent shall give each Guarantor written notice of
such termination in accordance with Section 17 hereof. This Guaranty Agreement
shall be binding upon and inure to the benefit of each Guarantor, the Agent and
the Lenders and their respective successors and assigns. Notwithstanding the
foregoing, no Guarantor may, without the prior written consent of the Agent,
assign any rights, powers, duties or obligations hereunder. Any claim or
claims that the Agent and the Lenders may at any time hereafter have against a
Guarantor under this Guaranty Agreement may be asserted by the Agent or any
Lender by written notice directed to such Guarantor.
11. REPRESENTATIONS AND WARRANTIES. Each Guarantor warrants and
represents to the Agent for the benefit of the Lenders that it is duly
authorized to execute, deliver and perform this Guaranty Agreement, that this
Guaranty Agreement is legal, valid, binding and enforceable against such
Guarantor in accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles; and that such Guarantor's execution, delivery and performance of
this Guaranty Agreement do not violate or constitute a breach of its
certificate of incorporation or other documents of corporate governance or any
agreement to which such Guarantor is a party, or any applicable laws, in each
case, which violation or breach could reasonably be expected to have a Material
Adverse Effect.
12. EXPENSES. Each Guarantor agrees to be liable for the payment
of all reasonable fees and expenses, including attorney's fees, incurred by the
Agent in connection with the enforcement of this Guaranty Agreement.
6
<PAGE> 175
13. REINSTATEMENT. Each Guarantor agrees that this Guaranty
Agreement shall continue to be effective or be reinstated, as the case may be,
at any time payment received by the Agent under the Credit Agreement or this
Guaranty Agreement is rescinded or must be restored for any reason.
14. COUNTERPARTS. This Guaranty Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
constitute one and the same instrument.
15. RELIANCE. Each Guarantor represents and warrants to the
Agent, for the benefit of the Agent and the Lenders, that: (a) such Guarantor
has adequate means to obtain from Borrower, on a continuing basis, information
concerning Borrower and Borrower's financial condition and affairs and has full
and complete access to Borrower's books and records; (b) such Guarantor is not
relying on the Agent or any Lender, its or their employees, agents or other
representatives, to provide such information, now or in the future; (c) such
Guarantor is executing this Guaranty Agreement freely and deliberately, and
understands the obligations and financial risk undertaken by providing this
Guaranty; (d) such Guarantor has relied solely on the Guarantor's own
independent investigation, appraisal and analysis of Borrower and Borrower's
financial condition and affairs in deciding to provide this Guaranty and is
fully aware of the same; and (e) such Guarantor has not depended or relied on
the Agent or any Lender, its or their employees, agents or representatives, for
any information whatsoever concerning Borrower or Borrower's financial
condition and affairs or other matters material to such Guarantor's decision to
provide this Guaranty or for any counselling, guidance, or special
consideration or any promise therefor with respect to such decision. Each
Guarantor agrees that neither the Agent nor any Lender has any duty or
responsibility whatsoever, now or in the future, to provide to such Guarantor
any information concerning Borrower or Borrower's financial condition and
affairs, other than as expressly provided herein, and that, if such Guarantor
receives any such information from the Agent or any Lender, its or their
employees, agents or other representatives, such Guarantor will independently
verify the information and will not rely on the Agent or any Lender, its or
their employees, agents or other representatives, with respect to such
information.
16. TERMINATION. This Guaranty Agreement and all obligations of
the Guarantors hereunder shall terminate without delivery of any instrument or
performance of any act by any party on the date when all of the Borrower's
Obligations have been Fully Satisfied.
17. NOTICE. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of
7
<PAGE> 176
telephonic notice or notice by telecopy (where the receipt of such message is
verified by return) expressly provided for hereunder, when received at such
telephone or telecopy number as may from time to time be specified in written
notice to the other parties hereto or otherwise received), or if sent prepaid
by certified or registered mail return receipt requested on the third Business
Day after the day on which mailed, or if sent prepaid by a national overnight
courier service, on the first Business Day after the day on which delivered to
such service against receipt therefor, addressed to such party at said address:
(a) if to the Borrower c/o BEC Group, Inc.
or any Guarantor: 555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Mr. Ian G.H. Ashken
Telephone: (914) 967-9400
Telecopy: (914) 967-9405
with a copy to: Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attention: Robert L. Lawrence, Esq.
Telephone: (212) 541-6222
Telecopy: (212) 245-3009
(b) if to the Agent: NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Dana Weir, Agency Services
Telephone: (704) 388-3917
Telecopy: (704) 386-9923
with a copy to: NationsBank, N.A.
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher C. Browder,
Senior Vice President
Telephone: (212) 407-5332
Telecopy: (212) 751-6909
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 17.
18. GOVERNING LAW.
(A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
8
<PAGE> 177
(B) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE
OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(C) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE
BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) AND IN ACCORDANCE WITH SECTION 17
HEREOF OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.
(D) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF
SHALL PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF
SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE,
MAY BE AVAILABLE TO IT.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY
HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
9
<PAGE> 178
IN WITNESS WHEREOF, the parties have duly executed this Guaranty
Agreement on the day and year first written above.
GUARANTORS:
BEC GROUP, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BEC DISTRIBUTION, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THE BONNEAU COMPANY
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BONNEAU GENERAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
BONNEAU HOLDINGS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
OPTI-RAY, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
O-RAY HOLDINGS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
SUBSIDIARY GUARANTY AGREEMENT
Signature Page 1 of 2
<PAGE> 179
BOLLE AMERICA, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
OPTICAL RADIATION CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ORC CARIBE
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
FOSTER GRANT GROUP, L.P.
By: BONNEAU GENERAL, INC., a general
partner
BONNEAU HOLDINGS, INC., a limited
partner
O-RAY HOLDINGS, INC., a limited
partner
By:
----------------------------------
Name:
---------------------------------
Title:
-------------------------------
AGENT:
NATIONSBANK, N.A., as Agent for the Lenders
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
SUBSIDIARY GUARANTY AGREEMENT
Signature Page 2 of 2
<PAGE> 180
EXHIBIT 10.6(b)
ASSIGNMENT OF PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
THIS ASSIGNMENT OF PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES (this
"Agreement") is made as of this ___ day of _______, ____ by EACH OF THE
UNDERSIGNED (each a "Grantor"), to NATIONSBANK, N.A., a national banking
association, as Agent (the "Agent") for each of the lenders (the "Lenders" and
collectively with the Agent, the "Secured Parties") now or hereafter party to
the Credit Agreement (as defined below). All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
the Credit Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide to the
parent corporation of each Grantor, BEC Group, Inc. (the "Borrower"), certain
term loan, revolving credit and letter of credit facilities pursuant to the
terms of that certain Credit Agreement among the Borrower, the Agent and the
Lenders dated as of April 3, 1996 (as from time to time amended, supplemented
or replaced, the "Credit Agreement"); and
WHEREAS, each Grantor is a wholly-owned direct or indirect Subsidiary
of the Borrower and will materially benefit from the loans and advances made
and to be made, and the letters of credit issued and to be issued, under the
Credit Agreement; and
WHEREAS, each Grantor has entered into a Guaranty Agreement (the
"Guaranty Agreement") dated as of April 3, 1996 pursuant to which each
Guarantor has guaranteed payment and performance of the Borrower's Obligations
under the Credit Agreement; and
WHEREAS, each Grantor has entered into an Intellectual Property
Security Agreement (the "IP Security Agreement") dated as of April 3, 1996
pursuant to which each Grantor has granted to the Agent for the benefit of the
Lenders a security interest in the Marks, Copyrights, Licenses and Patents
defined below in order to secured its obligations under the Guaranty Agreement;
and
WHEREAS, each Grantor (a) has adopted and used and is using the
trademarks and service marks (the "Marks") identified on Annex I hereto, and is
the owner of the registrations of and pending registration applications for
such Marks in the United States Patent and Trademark Office identified on Annex
I hereto (b) is the owner of and uses the copyrights, copyright registrations
and pending registration applications set forth on Annex II hereto (the
"Copyrights"), (c) is a party to and has rights under the licenses and license
agreements listed on Annex III hereto (the "Licenses") and (d) is the owner of
and uses the patents, patent registrations and pending registration
applications set forth on Annex IV hereto (the "Patents" and together with the
Marks, the Copyrights and the Licenses, the "Collateral"); and
<PAGE> 181
WHEREAS, the Agent for the benefit of the Lenders desires to acquire
the Marks, the Copyrights, the Licenses and the Patents and the registrations
thereof and registration applications therefor, as applicable, in connection
with the exercise of its remedies after the occurrence of an Event of Default
and acceleration of the Obligations under the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, each Grantor does hereby assign, sell and transfer unto
the Agent all right, title and interest in and to the Marks, Copyrights,
Licenses and Patents, together with (i) the registrations of and registration
applications therefor, as applicable, (ii) the goodwill of the business
symbolized by and associated with the Marks and the registrations thereof,
(iii) the right to sue and recover for, and the right to profits or damages due
or accrued arising out of or in connection with, any and all past, present or
future infringements or dilution of or damage or injury to the Marks,
Copyrights, Patents or the registrations thereof or such associated goodwill,
and (iv) all rights of each Grantor to enforce all Licenses.
Each Grantor hereby grants to the Agent, for the benefit of the
Lenders, and notice is hereby given that each Grantor has granted to the Agent,
for the benefit of the Lenders and the Agent, a first priority security
interest in the Collateral to secure the payment and performance in full of all
of the obligations of each Grantor under the Guaranty Agreement.
This Assignment is intended to and shall take effect as a sealed
instrument at such time as the Agent shall complete this instrument by signing
its acceptance of this Assignment below.
[Signature page follows.]
2
<PAGE> 182
IN WITNESS WHEREOF, each Grantor, by its duly authorized officer, has
executed this assignment, as an instrument under seal, on this 3rd day of
April, 1996.
BEC GROUP, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
BEC DISTRIBUTION, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
THE BONNEAU COMPANY
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
BONNEAU GENERAL, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
BONNEAU HOLDINGS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
OPTI-RAY, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
ASSIGNMENT OF TRADEMARKS, COPYRIGHTS AND LICENSES
Signature Page 1 of 3
<PAGE> 183
O-RAY HOLDINGS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
BOLLE AMERICA, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
OPTICAL RADIATION CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
ORC CARIBE
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
FOSTER GRANT GROUP, L.P.
By: BONNEAU GENERAL, INC., a general
partner
BONNEAU HOLDINGS, INC., a limited
partner
O-RAY HOLDINGS, INC., a limited
partner
By:
---------------------------
Name:
-------------------------
Title:
------------------------
ASSIGNMENT OF TRADEMARKS, COPYRIGHTS AND LICENSES
Signature Page 2 of 3
<PAGE> 184
The foregoing assignment of the Patents, Trademarks, Copyrights and
Licenses and the registrations thereof and registration applications therefor
by the Assignee and the Agent is hereby accepted as of the 3rd day of April,
1996.
NATIONSBANK, N.A., as Agent for the
Lenders
By:
---------------------------
Name:
-------------------------
Title:
------------------------
ASSIGNMENT OF TRADEMARKS, COPYRIGHTS AND LICENSES
Signature Page 3 of 3
<PAGE> 185
STATE OF NEW YORK )
) ss.
COUNTY OF _________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 3rd day of April, 1996, personally appeared
______________________________________________________ to me known personally,
and who, being by me duly sworn, deposes and says that he is the
________________________________________ of
__________________________________________, and that the foregoing instrument
was signed and sealed on behalf of said corporation by authority of its Board
of Directors, and said _______________________________ acknowledged said
instrument to be the free act and deed of said corporation.
________________________________________
Notary Public
My commission expires:
<PAGE> 186
ANNEX I
Trademark Registrations
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
------------ ---------------- -----------------
[List chronologically in ascending numerical order]
Trademark Pending Applications
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
------------ ---------- -----------
[List chronologically in ascending numerical order]
<PAGE> 187
ANNEX II
Part I
Copyrights Registered with U.S. Copyright Office
------------------------------------------------
Copyright Registration
Title [Author(s)] Number Date
----- ----------- ------ ----
Part II
Copyrights Not Registered
-------------------------
Title [Author(s)]
<PAGE> 188
ANNEX III
Licenses
--------
<PAGE> 189
ANNEX IV
Registrations
United States Patent and Trademark Office
Patent Registration No. Registration Date
------ ---------------- -----------------
[List chronologically in ascending numerical order]
Pending Applications
United States Patent and Trademark Office
Patent Serial No. Filing Date
------ ---------- -----------
[List chronologically in ascending numerical order]
<PAGE> 190
EXHIBIT 10.6(c)
INTELLECTUAL PROPERTY SECURITY AGREEMENT
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "Agreement") is
made this 3rd day of April, 1996 by EACH OF THE UNDERSIGNED DIRECT OR INDIRECT
SUBSIDIARIES OF THE BORROWER (each a "Grantor" and collectively the "Grantors")
in favor of NATIONSBANK, N.A., a national banking association, as Agent (the
"Agent") for each of the lenders now or hereafter party to the Credit Agreement
(as defined below) (the "Lenders" and collectively with the Agent the "Secured
Parties"). All capitalized terms used and not otherwise defined herein shall
have the respective meanings assigned thereto in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide BEC Group,
Inc. (the "Borrower") certain term loan, revolving credit and letter of credit
facilities pursuant to the terms of that certain Credit Agreement among the
Borrower, the Agent and the Lenders dated as of April 3, 1996 (as from time to
time amended, supplemented or replaced, the "Credit Agreement");
WHEREAS, each Grantor has entered into that certain Subsidiary
Guaranty Agreement of even date herewith (the "Subsidiary Guaranty") pursuant
to which it has jointly and severally guaranteed payment and performance of the
Borrower's obligations under the Credit Agreement; and
WHEREAS, each of the Grantors is, directly or indirectly, a
wholly-owned Subsidiary of the Borrower; and
WHEREAS, the Grantors will materially benefit from the Borrower and
the Secured Parties entering into the Credit Agreement, the making of loans and
advances to, and the issuance of letters of credit on behalf of, the Borrower
as contemplated thereby; and
WHEREAS, as collateral security for payment and performance of its
obligations under the Subsidiary Guaranty, each Grantor is willing to grant to
the Agent for the benefit of the Secured Parties a security interest in the
assets described herein; and
WHEREAS, the Secured Parties are unwilling to enter into the Loan
Documents unless the Grantors enter into this Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into
the Loan Documents and in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
SECTION 1. GRANT OF SECURITY. Each Grantor hereby grants and/or
collaterally assigns to the Agent, for the benefit of the Secured Parties, a
security interest in all of the following (collectively, the "Collateral"):
<PAGE> 191
(a) all of such Grantor's right, title and interest,
whether now owned or hereafter acquired, in and to all United States
and foreign patents and patent applications (including without
limitation the patents and patent applications identified on Schedule
I attached hereto and incorporated herein by reference) and including
the right to recover for all past, present and future infringements
thereof and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof,
all improvements thereon, and all other rights of any kind whatsoever
of such Grantor accruing thereunder or pertaining thereto
(collectively, the "Patents");
(b) all of such Grantor's right, title and interest,
whether now owned or hereafter acquired, in and to all United States
and foreign trademarks, trade names, trade dress, service marks,
trademark and service mark registrations, and applications for
trademark or service mark registration and any renewals thereof
(including without limitation each trademark, trade name, trade dress,
registration and application identified in Schedule II attached hereto
and incorporated herein by reference) and including all income,
royalties, damages and payments now and hereafter due and/or payable
with respect thereto (including without limitation damages for past or
future infringements thereof), the right to sue or otherwise recover
for all past, present and future infringements thereof, all rights
corresponding thereto throughout the world (but only such rights as
now exist or may come to exist under applicable local law) and all
other rights of any kind whatsoever of each Grantor accruing
thereunder or pertaining thereto, together in each case with the
goodwill of the business connected with the use of, and symbolized by,
each such trademark and service mark (collectively, the "Trademarks");
(c) all of such Grantor's right, title and interest,
whether now owned or hereafter acquired, in and to all United States
and foreign copyrights and copyright applications (including without
limitation the copyrights and copyright applications identified on
Schedule III attached hereto and incorporated herein by reference) and
including the right to recover for all past, present and future
infringements thereof and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof,
all improvements thereon, and all other rights of any kind whatsoever
of such Grantor accruing thereunder or pertaining thereto
(collectively, the "Copyrights");
(d) All license agreements regarding Patents, Trademarks
or Copyrights with any other party, whether such Grantor is a licensor
or licensee under any such license agreement (including without
limitation the licenses listed on Schedule IV attached hereto and
incorporated herein by
2
<PAGE> 192
reference), and the right to prepare for sale, sell and advertise for
sale, all Inventory (as defined in the Security Agreement) now or
hereafter owned by such Grantor and now or hereafter covered by such
licenses (collectively, the "Licenses")); and
(e) all proceeds of any of the foregoing.
In addition, each Grantor has executed in blank and delivered to the
Agent an assignment of licenses and federally registered patents, trademarks
and copyrights (the "IP Assignment") owned by it, if any, in substantially the
form of Exhibit A hereto. Each Grantor hereby authorizes the Agent to complete
as Assignee and record with the United States Patent and Trademark Office (the
"PTO") and United States Copyright Office (the "Copyright Office") each IP
Assignment upon the occurrence of an Event of Default and acceleration of the
Obligations under the Credit Agreement.
SECTION 2. SECURITY FOR OBLIGATIONS. The security interests granted
under this Agreement (the "Security Interests") by each Grantor secure the
payment of all obligations of such Grantor under, in respect of or in
connection with this Agreement, the Subsidiary Guaranty and each other Loan
Document to which such Grantor is or becomes a party (all such obligations
being the "Secured Obligations").
The Security Interests granted by this Agreement are granted in
conjunction with the security interests granted to the Agent, for the benefit
of the Lenders, in other assets of each Grantor pursuant to the other Loan
Documents.
SECTION 3. COLLATERAL ASSIGNMENT. In addition to, and not in
limitation of, the grant of a security interest in the Patents, Trademarks,
Copyrights and Licenses in Section 1 above, each Grantor hereby grants,
assigns, transfers, conveys and sets over to the Agent, for the benefit of the
Lenders, the Assignor's entire right, title and interest in and to the Patents,
Trademarks, Copyrights and Licenses; provided, that such grant, assignment,
transfer and conveyance shall become effective only at the election of the
Agent after the occurrence of an Event of Default and acceleration of the
Obligations under the Credit Agreement. The Grantor hereby agrees that after
the occurrence of an Event of Default and acceleration of the Obligations under
the Credit Agreement the use by the Agent of any of the Patents, Trademarks,
Copyrights and Licenses shall be without any liability for royalties or other
related charges from the Agent to any Grantor.
SECTION 4. FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the
expense of such Grantor, such Grantor will promptly execute and
deliver all further instruments and documents and take all further
action that may be necessary or desirable, or that the
3
<PAGE> 193
Agent may reasonably request, in order to (i) continue, perfect and
protect any Security Interest granted or purported to be granted
hereby, (ii) perfect the Agent's (for the benefit of the Lenders)
Security Interest in and assign to the Agent, for the benefit of the
Lenders, as security for the repayment and satisfaction of the Secured
Obligations, all Collateral located in any foreign jurisdiction, and
(iii) enable the Agent, for the benefit of the Lenders, to exercise
and enforce its rights and remedies hereunder with respect to any part
of the Collateral. Without limiting the generality of the foregoing,
each Grantor will execute and file (with the appropriate governmental
offices, authorities, agencies and regulatory bodies in the United
States and any applicable foreign jurisdiction) such supplements to
this Agreement and such financing or continuation statements, or
amendments thereto, and such other instruments or notices, including
executed IP Assignment, with the PTO and the Copyright Office, as may
be necessary or desirable, or as the Agent, on behalf of the Lenders,
may reasonably request, in order to perfect and preserve the Security
Interests granted or purported to be granted hereby.
(b) Each Grantor hereby authorizes the Agent, on behalf
of the Lenders, upon the occurrence and during the continuation of an
Event of Default, to file, where permitted by law, one or more
financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of such
Grantor. A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where
permitted by law.
(c) Each Grantor will furnish to the Agent, on behalf of
the Lenders, from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Agent, on behalf of the Lenders,
may reasonably request, all in reasonable detail.
(d) Each Grantor agrees that, should it have or obtain an
ownership interest in any United States or foreign patent or patent
application that is not now identified on Schedule I, any trademark or
trademark application that is not now identified on Schedule II or any
copyright or copyright application that is not now identified on
Schedule III or any license agreement in respect of any patent,
trademark or copyright that is not now identified on Schedule IV: (i)
the provisions of this Agreement shall automatically apply to such
item, and such item shall automatically become part of the Collateral;
and (ii) such Grantor shall, within three months after acquiring or
becoming aware of such ownership interest, (A) give written notice
thereof to the Agent and, (B) with
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respect to material Trademarks, cause such Trademarks to be properly
registered with the PTO, (C) with respect to material copyrights,
cause such copyrights to be registered with the United States
Copyright Office and (D) with respect to patents and patent
applications and trademarks and trademark applications, prepare,
execute and file in the PTO or if appropriate in the equivalent
agencies in any foreign jurisdiction, within the requisite time
period, all documents that are known by such Grantor to be necessary
or that the Agent, on behalf of the Lenders, reasonably requests in
order to perfect the Security Interest of the Agent, on behalf of the
Lenders, therein. Each Grantor authorizes the Agent, on behalf of the
Lenders, to execute and file such a document in the name of such
Grantor if such Grantor fails to do so.
(e) Each Grantor agrees that should any of its
Subsidiaries (other than a corporation which is a party hereto and
whether now or hereafter existing) obtain any ownership interest in
any United States or foreign patent or patent application, trademarks
or trademark application, trademarks, trade names, trade dress,
service marks, trademark and service mark registrations, and
applications for trademark or service mark registration and any
renewals thereof, such Grantor shall either cause such corporation (i)
to become a party to the Subsidiary Guaranty and a party hereto, or
(ii) to transfer and assign all such corporation's ownership interests
therein to such Grantor, whereupon the provisions of subsection (d) of
this Section 8 shall be applicable thereto.
(f) To the extent necessary or economically desirable in
the conduct of its business, each Grantor agrees: (i) to take all
necessary steps in any proceeding before the United States Patent and
Trademark Office or any similar office or agency in any other country
or any political subdivision thereof or in any court, to maintain and
pursue each patent application now or hereafter included in the
Collateral and to maintain each patent, trademark or copyright now or
hereafter included in the Collateral, including the filing of
divisional, continuation, continuation-in-part and substitute
applications, the filing of applications for reissue, renewal or
extensions, the payment of maintenance fees, and the participation in
interference, reexamination, opposition and infringement proceedings;
(ii) to take corresponding steps with respect to material unpatented
inventions on which such Grantor is now or hereafter becomes entitled
to seek protection; (iii) to bear any expenses incurred in connection
with such activities; and (iv) not to abandon any right to file a
material patent application, or abandon any material pending
application with respect to any of the Collateral, without the written
consent of the Agent, which consent shall not be unreasonably
withheld.
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(g) No Grantor shall do any act or omit to do any act
whereby any of the Collateral may become dedicated or abandoned,
except where such dedication or abandonment (i) will not materially
adversely affect the business, condition (financial or otherwise),
operations, performance, or properties of such Grantor individually or
of such Grantor and its Subsidiaries taken as a whole, and (ii) is in
the ordinary course of such Grantor's business. Each Grantor agrees
to notify the Agent promptly and in writing if it learns that any of
the Collateral may become abandoned or dedicated or of any adverse
determination or any development (including without limitation the
institution of any proceeding in the PTO, or in the equivalent
agencies in any foreign jurisdiction, or any court) regarding any
material part of the Collateral.
(h) In the event that any of the Collateral as to which
it has granted the Security Interests is infringed or misappropriated
by a third party, such Grantor shall promptly notify the Agent and
shall, unless such Grantor shall reasonably determine that such
Collateral would not reasonably be likely to, in the aggregate, be of
material economic value to such Grantor, take all reasonable steps to
terminate the infringement or misappropriation, and take such other
actions as such Grantor shall deem appropriate under the circumstances
to protect such Collateral. Any expense incurred in connection with
such activities shall be borne by such Grantor.
(i) Each Grantor agrees (i) to maintain the quality of
any and all products in connection with which the Collateral is used,
consistent with the quality standards established by such Grantor for
said products as of the date of determination, and (ii) to provide the
Agent, on behalf of the Lenders, at least quarterly, with a
certificate of an officer of such Grantor certifying such Grantor's
compliance with the foregoing subsections (a) through (i).
(j) Each Grantor agrees that it will promptly correct any
defect or error that may be discovered in (i) this Agreement, (ii) any
document executed pursuant hereto or (iii) the execution,
acknowledgment or recordation thereof.
(k) Each Grantor shall continue to mark its products
according to statute with the numbers of all appropriate Patents.
SECTION 5. GENERAL REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
(a) It has the unqualified right to enter into this
Agreement and to perform its terms.
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(b) No authorization, consent, approval or other action
by, and no notice to or filing with, any governmental authority or
regulatory body or any other Person is required either (i) for the
grant by such Grantor of the Security Interests granted hereby or for
the execution, delivery or performance of this Agreement by such
Grantor, or (ii) for the perfection of or the exercise by the Agent,
on behalf of the Secured Parties, of its rights and remedies
hereunder, except for the filing of this Agreement with the United
States Patent and Trademark Office and with the equivalent offices in
any foreign jurisdiction with respect to each Trademark, and the
filings required by the Uniform Commercial Code of the State in which
such Grantor maintains its chief executive office, and except to the
extent that the exercise of rights and remedies may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors rights generally or by general
principles of equity.
(c) Set forth on Schedule IV is a list, which is complete
and accurate in all material respects as of the date hereof, of
Licenses of such Grantor necessary for the conduct of its business as
currently conducted or utilized and material in such Grantor's
commercial manufacturing operations or materially used in the selling
or marketing of such Grantor's products, including the expiration date
of such Licenses.
(d) Each License of such Grantor identified on Schedule
IV is validly subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and is, to such Grantor's
knowledge, valid and enforceable. No action or proceeding is pending
or threatened (i) seeking to limit, cancel or question the validity of
the Collateral that would be reasonably likely, in the aggregate, to
be of material economic value or (ii) which, if adversely determined,
would have a material adverse effect on the value of the Collateral
taken as a whole.
(e) It has notified the Agent in writing of all uses of
any Patent, Trademark or Copyright, prior to such Grantor's use, of
which such Grantor is aware, which would in the reasonable judgment of
such Grantor lead to such item becoming invalid or unenforceable,
including prior unauthorized uses by third parties and uses that were
not supported by the goodwill of the business connected with such
item.
(f) It has not granted any release, covenant not to sue,
or non-assertion assurance to any third person, nor allowed any shop
right to arise with respect to any third person, with respect to any
part of the Collateral that would be reasonably likely, in the
aggregate, to be of material economic value.
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(g) Its products have been marked as required by statute
with respect to the Collateral.
(h) The actions contemplated under or in connection with
the Loan Documents will not impair the legal right of such Grantor to
use any of the Collateral.
(i) Except as disclosed to the Lenders in writing prior
to the date of this Agreement, such Grantor has no knowledge of the
existence of any right under any patent, trademark, license agreement,
trade name, trade secret, know-how, confidential research, development
and commercial information, or other proprietary information held by
any other Person that would preclude such Grantor from publishing,
distributing, marketing, selling, or using any product currently made
by it, being made for it or sold or used by it, imported by it or
exported by it, as the case may be, or to use any processes currently
used by it (except, in each case, to the extent that such Grantor has
granted an exclusive license to another Person), or materially
interfere with the ability of such Grantor to carry on its business as
currently carried on, and such Grantor has no knowledge of any claim
to the contrary that is likely to be made.
(j) Such Grantor has used consistent standards of quality
in manufacturing, distribution and marketing of each product sold and
provision of each service provided under any Collateral, and has taken
all steps necessary to ensure that all licensed users of any
Collateral use such consistent standards of quality.
(k) No Subsidiaries and none of such Grantor's
Subsidiaries (except to the extent that such Subsidiaries are also
Grantors hereunder) has an ownership interest in any patents, patent
applications, copyrights, copyright applications, trademark, trade
name, trade dress, service marks, trademark or service mark
registrations or any applications for trademark or service mark
registration.
(l) No claim has been made (and, as to Collateral with
respect to which such Grantor is a licensor, to the knowledge of such
Grantor, no claim has been made against the third party licensee), and
such Grantor has no knowledge of any claim that is likely to be made,
that the use by such Grantor of any Collateral does or may violate the
rights of any Person.
SECTION 6. PATENT REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
(a) It is the sole legal and beneficial owner of the
Patents set forth opposite its name on Schedule I hereto, free and
clear of any Lien, security interest, option, charge,
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pledge, assignment (whether conditional or not), or any other
encumbrance except for the security interests created or permitted by
this Agreement or the Credit Agreement and certain Licenses and
registered user agreements described on Schedule IV or the Permitted
Liens or Liens granted to the predecessor in interest of the Agent
pursuant to the Third Amended and Restated Intellectual Property
Security Agreement dated as of March 6, 1995, which Liens are to be
terminated effective as of the Funding Date ("Existing Bank Liens"),
and no effective financing statement or other instrument similar in
effect covering all or any part of such Collateral, except in
connection with Existing Bank Liens, is on file in any recording
office, except such as may have been filed in favor of the Agent, for
the benefit of the Lenders.
(b) Set forth on Schedule I is a list, which is complete
and accurate in all material respects as of the date hereof, of all of
the Patents owned by such Grantor necessary for the conduct of its
business as currently conducted or utilized and material in such
Grantor's commercial manufacturing operations or materially used in
the selling or marketing of such Grantor's products.
(c) Each Patent of such grantor identified on Schedule I
hereto is subsisting and has not been adjudged unpatentable, invalid
or unenforceable, in whole or in part, to the knowledge of such
Grantor, is patentable, valid and enforceable and each of such Patent
applications has been filed in conformity with applicable rules and
procedures of the United States Patent and Trademark Office and of the
equivalent agencies in each applicable foreign jurisdiction and will
be diligently prosecuted in conformity therewith so as to not
improperly become abandoned.
SECTION 7. TRADEMARK REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
(a) It is the sole, legal and beneficial owner of the
entire right, title and interest in and to the Trademarks purported to
be granted by it hereunder, free and clear of any Lien, security
interest, option, charge, pledge, registered user agreement,
assignment (whether conditional or not), or covenant, or any other
encumbrance, except for the Security Interests created or permitted by
this Agreement or the Credit Agreement and certain Licenses and
registered user agreements described on Schedule IV or Permitted Liens
or Existing Bank Liens. No effective financing statement or other
instrument similar in effect covering all or any part of the
Trademarks purported to be granted by such Grantor hereunder, except
in connection with Existing Bank Liens, is on file in any recording
office, including, without limitation, the United States Patent and
Trademark Office and the equivalent offices
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in any foreign jurisdiction, except such as may have been filed in
favor of the Agent, for the benefit of the Lenders.
(b) Set forth on Schedule II is a list, which is complete
and accurate in all material respects as of the date hereof, of all of
the Trademarks owned by such Grantor necessary for the conduct of its
business as currently conducted or utilized and material in such
Grantor's commercial manufacturing operations or materially used in
the selling or marketing of such Grantor's products.
(c) Each Trademark of such Grantor identified on Schedule
II is validly subsisting and has not been abandoned or adjudged
invalid, unregistrable or unenforceable, in whole or in part, and is,
to such Grantor's knowledge, valid, registrable and enforceable.
SECTION 8. COPYRIGHT REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
(a) It is the sole, legal and beneficial owner of the
entire right, title and interest in and to the Copyrights purported to
be granted by it hereunder, free and clear of any Lien, security
interest, option, charge, pledge, registered user agreement,
assignment (whether conditional or not), or covenant, or any other
encumbrance, except for the Security Interests created or permitted by
this Agreement or the Credit Agreement and certain Licenses and
registered user agreements described on Schedule IV and the Permitted
Liens or Existing Bank Liens. No effective financing statement or
other instrument similar in effect covering all or any part of the
Copyrights purported to be granted by such Grantor hereunder, except
in connection with Existing Bank Liens, is on file in any recording
office, including, without limitation, the United States Patent and
Trademark Office and the equivalent offices in any foreign
jurisdiction, except such as may have been filed in favor of the
Agent, for the benefit of the Lenders.
(b) Set forth on Schedule III is a list, which is
complete and accurate in all material respects as of the date hereof,
of all of the Copyrights owned by such Grantor necessary for the
conduct of its business as currently conducted or utilized and
material in such Grantor's commercial manufacturing operations or
materially used in the selling or marketing of such Grantor's
products.
(c) Each Copyright of such Grantor identified on Schedule
III is validly subsisting and has not been abandoned or adjudged
invalid, unregistrable or unenforceable, in whole or in part, and is,
to such Grantor's knowledge, valid, registrable and enforceable.
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SECTION 9. TRANSFERS AND OTHER LIENS. No Grantor shall:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of, or grant any option with respect to, the
Collateral, except as permitted by the Credit Agreement, except that
any Grantor may license the Collateral (i) in the ordinary course of
such Grantor's business, provided that such license is necessary or
desirable in the conduct of such Grantor's business, or (ii) in
connection with a sale of assets in compliance with the Credit
Agreement, provided that such license shall be on terms reasonably
expected to maximize the gain to such Grantor resulting from the
granting of such license. The Agent, for the benefit of the Lenders,
shall execute any documents that such Grantor may reasonably request
in order to permit the Grantor to exercise its right hereunder to
license the Trademarks, provided that the Agent shall not be required
to do anything that may, in the sole judgment of the Agent, adversely
affect the validity of the Security Interests or the assignment of the
Collateral located in any foreign jurisdiction;
(b) create or suffer to exist any Lien, security interest
or other charge or encumbrance upon or with respect to any of the
Collateral except for the Security Interests created by this Agreement
or other Permitted Liens; or
(c) take any other action in connection with any of the
Collateral that would impair the value of the interest or rights of
such Grantor in the Collateral taken as a whole or that would impair
the interest or rights of the Agent for the benefit of the Lenders.
SECTION 10. AGENT APPOINTED ATTORNEY-IN-FACT. Without limiting any
other provision of this Agreement, upon the occurrence and during the
continuance of an Acceleration Event (as hereinafter defined), each Grantor
hereby irrevocably appoints the Agent, for the benefit of the Lenders, as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Agent's discretion, to take any action and to execute any instrument that the
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a)
above;
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(c) to file any claims or take any action or institute
any proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Agent, for the benefit of the Lenders, with respect to any of
the Collateral; and
(d) to execute, in connection with the sale provided for
in Section 14, any endorsement, assignments, or other instruments of
conveyance or transfer with respect to the Collateral.
For purposes of this Agreement, "Acceleration Event" means that (a) an
Event of Default has occurred and is continuing and (b) the Secured Obligations
have become due and payable (whether by acceleration, at final maturity or
otherwise).
SECTION 11. AGENT MAY PERFORM.
(a) If any Grantor fails to perform any agreement
contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by such Grantor under Section
15(b) to the fullest extent permitted by applicable law.
(b) The Agent or its designated representatives shall
have the right to the extent reasonably requested and upon reasonable
prior notice, at any reasonable time during normal business hours of
such Grantors and from time to time, to inspect the Grantors' premises
and to examine the Grantors' books, records and operations relating to
the Collateral.
SECTION 12. THE AGENT'S DUTIES. The powers conferred on the Agent,
for the benefit of the Lenders, hereunder are solely to protect the interest of
the Secured Parties in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
neither the Agent nor any Lender shall have any duty as to any Collateral or as
to the taking of any necessary steps to preserve rights against other parties
or any other rights pertaining to any Collateral. Each Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which such party accords its own property.
SECTION 13. EVENTS OF DEFAULT. It is understood and agreed that,
with respect to any Grantor, the occurrence of any one or more of the following
shall constitute an "Event of Default" hereunder with respect to such Grantor
and shall entitle the Agent, for the benefit of the Lenders, to take such
actions as are
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elsewhere provided in this Agreement in respect of Events of Default:
(a) an "Event of Default" or "Default" as defined in the
Subsidiary Guaranty shall have occurred and be continuing with respect
to such Grantor; or
(b) such Grantor shall have failed to pay the Agent all
of the Guaranteed Obligations in accordance with, and as defined in,
the Subsidiary Guaranty on the Business Day on which the Agent has
demanded such payment in accordance with the terms of the Subsidiary
Guaranty; or
(c) any material representation or warranty made by such
Grantor herein, in the Subsidiary Guaranty or in any other Loan
Document shall prove to have been false in any material respect when
made; or
(d) any covenant made by such Grantor herein, in the
Subsidiary Guaranty or in any other Loan Document is breached,
violated, or not complied with and not cured, in the case of this
Agreement (other than with respect to any breach or violation of or
non-compliance with Section 4(g) or Section 9 hereof) within 30 days
after notice thereof from the Agent and, in the case of the other Loan
Documents, within any grace period applicable thereto, or if no grace
period is applicable and default thereunder does not result
immediately from such noncompliance, then not cured within 30 days
after notice thereof from the Agent or the Lenders, and results in a
material adverse effect on the Collateral of such Grantor taken as a
whole or its availability or value taken as a whole; provided,
however, any breach or violation of or non-compliance with Section
4(g) or Section 9 hereof shall immediately result in an Event of
Default.
SECTION 14. REMEDIES UPON ACCELERATION EVENT. If an Acceleration
Event shall have occurred and be continuing:
(a) The Agent, for the benefit of the Lenders, may
exercise in respect of the Collateral of any defaulting Grantor, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the Uniform Commercial Code (the "UCC") and also may (i)
exercise any and all rights and remedies of such Grantor under, in
connection with, or otherwise in respect of, such Collateral,
including the completion and filing of the Assignment of Marks, (ii)
require such Grantor to, and each Grantor hereby agrees that it will
at its expense and upon request of the Agent forthwith, assemble all
or part of the documents embodying such Collateral as directed by the
Agent and make it available to the Agent, for the benefit of the
Lenders, at a place to be designated by the Agent that is reasonably
convenient to both
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the Agent and such Grantor, (iii) occupy any premises owned or leased
by such Grantor where documents embodying such Collateral or any part
thereof are assembled for a reasonable period in order to effectuate
the Agent's rights and remedies hereunder or under applicable law,
without obligation to such Grantor in respect of such occupation, (iv)
license such Collateral or any part thereof, and (v) without notice
except as specified below, sell such Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Agent's
offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Agent may deem commercially reasonable.
Each Grantor agrees that at least ten days' notice to such Grantor of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The Agent shall not be obligated to make any sale of the Collateral
regardless of notice of sale having been given. The 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.
(b) All payments received by any defaulting Grantor under
or in connection with any of such Collateral shall be received in
trust for the benefit of the Lenders, shall be segregated from other
funds of such Grantor and shall be immediately paid over to the Agent,
for the benefit of the Lenders, in the same form as so received (with
any necessary endorsement).
(c) All payments made under or in connection with or
otherwise in respect of the Collateral of any defaulting Grantor, and
all cash proceeds received by the Agent in respect of any sale of,
collection from, or other realization upon all or any part of such
Collateral may, in the discretion of the Agent, be held by the Agent,
for the benefit of the Lenders, as collateral for, and then or at any
time thereafter applied (after payment of any amounts payable to the
Agent pursuant to Section 15) for the ratable benefit of the Secured
Parties against all or any part of the Secured Obligations, in such
order as the Agent shall elect. Any surplus of such cash or cash
proceeds held by the Agent, for the benefit of the Lenders, and
remaining after payment in full of all the Secured Obligations shall
be paid over to the respective Grantors or to whosoever may be
lawfully entitled to receive such surplus. Any sale or other
disposition of the Collateral and the possession thereof by the Agent
shall be in compliance with all provisions of applicable law
(including applicable provisions of the UCC).
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SECTION 15. INDEMNITY AND EXPENSES.
(a) Each Grantor agrees to indemnify the Agent, for the
benefit of the Lenders, from and against any and all claims, losses
and liabilities growing out of or resulting from this Agreement that
are incurred by the Agent (including without limitation enforcement of
this Agreement), except claims, losses or liabilities resulting from
the Agent's gross negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the Agent, for
the benefit of the Lenders, the amount of any and all reasonable
expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, that the Agent, for the benefit
of the Lenders, may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of,
or the sale of, collection from or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
the Secured Parties, or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof.
SECTION 16. SECURITY INTEREST ABSOLUTE. All rights of the Secured
Parties in the Security Interests granted hereunder, and each of the Secured
Obligations, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement or any other Loan Document, or any other agreement or
instrument relating thereto;
(b) 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 departure from, the
Credit Agreement or any other Loan Document, including, but not
limited to, (i) an increase or decrease in the Secured Obligations and
(ii) an amendment of any Loan Document to permit the Agent or the
Lenders or any one or more of them to extend further or additional
credit to the Borrower in any form including credit by way of loan,
purchase of assets, guarantee or otherwise, which credit shall
thereupon be and become subject to the Credit Agreement and the other
Loan Documents as a Secured Obligation;
(c) any taking and holding of collateral or guarantees
(including without limitation any collateral pledged as security for
the Secured Obligations under the Security Instruments) for all or any
of the Secured Obligations; or any amendment, alteration, exchange,
substitution, transfer, enforcement, waiver, subordination,
termination or release of any collateral or such guarantees (including
without limitation any collateral pledged as security for the Secured
Obligations under the Security Instruments), or any
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non-perfection of any collateral, or any consent to departure from any
such guaranty (including without limitation any collateral pledged as
security for the Secured Obligations under the Security Instruments);
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the Secured Obligations, or the manner of
sale of any collateral;
(e) any consent by the Secured Parties to the change,
restructure or termination of the corporate structure or existence of
the Borrower or any Grantor and any corresponding restructure of the
Secured Obligations, or any other restructure or refinancing of the
Secured Obligations or any portion thereof;
(f) any modification, compromise, settlement or release
by the Secured Parties, by operation of law or otherwise, collection
or other liquidation of the Secured Obligations or the liability of
the Borrower, any Grantor or any guarantor of the Secured Obligations
(including without limitation any guarantor under the Subsidiary
Guaranty, other than the Grantor against which this Agreement is to be
enforced), or of any collateral for the Secured Obligation (including
without limitation any collateral pledged as security for the Secured
Obligations under the Security Instruments), in whole or in part, and
any refusal of payment by the Agent or any Lender in whole or in part,
from any obligor or guarantor (including without limitation any
guarantor under the Subsidiary Guaranty, other than the Grantor
against which this Agreement is sought to be enforced) in connection
with any of the Secured Obligations, whether or not with notice to, or
further assent by, or any reservation of rights against, any Grantor;
or
(g) any other circumstance (including without limitation
any statute of limitations) that might otherwise constitute a defense
available to, or a discharge of, the Borrower, any guarantor
(including without limitation any guarantor under the Subsidiary
Guaranty) or a Grantor.
The granting of a Security Interest in the Collateral shall continue
to be effective or be reinstated, as the case may be, if at any time any
payment of any of the Secured Obligations is rescinded or must otherwise be
returned by any Secured Party, upon the insolvency, bankruptcy or
reorganization of the Borrower or any Grantor or otherwise, all as though such
payment had not been made.
SECTION 17. WAIVER. Each Grantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Secured Obligations and this Agreement and any requirement that the Secured
Parties protect, secure, perfect or insure any Security Interest or any
Collateral subject thereto or
16
<PAGE> 206
exhaust any right or take any action against any Grantor or any other Person
(including without limitation any guarantor under the Subsidiary Guaranty) or
any collateral securing payment of the Secured Obligations (including without
limitation any collateral pledged as security for the Secured Obligations under
the Security Instruments).
SECTION 18. SUBROGATION. Prior to termination of this Agreement in
accordance with the provisions of Section 21(c), no Grantor will exercise any
rights that it may acquire by way of subrogation under this Agreement. If an
amount shall be paid to such Grantor on account of such subrogation rights at
any time prior to termination of this Agreement in accordance with the
provisions of Section 21(c), such amount shall be held in trust for the benefit
of the Lenders and shall forthwith be paid to the Agent, for the benefit of the
Lenders, to be credited and applied upon the Secured Obligations, whether
matured or unmatured, in accordance with the terms of the Credit Agreement and
the Subsidiary Guaranty.
SECTION 19. AMENDMENTS, ETC.
(a) Except as provided in subsection (b) of this Section
18, no amendment or waiver of any provision of this Agreement nor
consent to any departure by any Grantor therefrom shall in any event
be effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) Upon the execution and delivery by any Person of a
supplement to this Agreement pursuant to which such Person agrees to
become a party hereto (each an "Intellectual Property Security
Agreement Supplement"), (i) such Person or entity shall be referred to
as an "Additional Grantor" and shall be and become a Grantor and each
reference in this Agreement to "Grantor" shall also mean and be a
reference to such Additional Grantor, and (ii) the schedules attached
to each Intellectual Property Security Agreement Supplement shall be
incorporated into and become a part of and supplement Schedules I, II,
III and IV hereto, and the Agent may attach such supplements to such
Schedules, and each reference to such Schedules shall mean and be a
reference to such Schedules as supplemented pursuant hereto.
(c) Any person that executes an Intellectual Property
Security Agreement Supplement shall also execute and deliver such
financing statements and all further instruments and documents and
take all further action that may be necessary or desirable or that the
Agent may reasonably request in order to perfect and protect any
Security Interest purported to be granted thereby.
17
<PAGE> 207
SECTION 20. ADDRESSES FOR NOTICES. Any notice shall be conclusively
deemed to have been received by any party hereto and be effective on the day on
which delivered to such party (against receipt therefor) at the address set
forth below or such other address as such party shall specify to the other
parties in writing, (or, in the case of notice by telecopy (where receipt of
such notice is verified by return), when received at such telecopy number as
may from time to time be specified in written notice to the other parties
hereto or otherwise received) or, if sent prepaid by certified or registered
mail return receipt requested on the third Business Day after the day on which
mailed, or, if sent prepaid by a national overnight courier service, on the
first Business Day after the day on which delivered to such service against
receipt therefor, addressed to such party at said address:
(a) if to any Grantor:
c/o BEC Group, Inc.
555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Mr. Ian G.H. Ashken
Telephone: (914) 967-9400
Telecopy: (914) 967-9405
with a copy to:
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attention: Robert L. Lawrence, Esq.
Telephone: (212) 541-6222
Telecopy: (212) 245-3009
(b) if to the Agent:
NationsBank, N.A.
Independence Center, 15th Floor
1-001-15-04
Charlotte, North Carolina 28255
Attention: Angela Berry, Agency Services
Telephone: (704) 386-8958
Telecopy: (704) 386-9923
with a copy to:
NationsBank, N.A.
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher C. Browder,
Vice President
Telephone: (212) 407-5332
Telecopy: (212) 751-6909
18
<PAGE> 208
SECTION 21. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE
CREDIT AGREEMENT; RELEASE OF COLLATERAL.
(a) This Agreement shall create a continuing Security
Interest in the Collateral and shall (i) remain in full force and
effect until terminated in accordance with the provisions of Section
21(c), (ii) be binding upon each Grantor, its successors and assigns,
provided, however, no Grantor shall make any assignment hereof without
the prior consent of the Agent, and (iii) inure, together with the
rights and remedies of the Secured Parties hereunder, to the benefit
of the Secured Parties and their respective successors, transferees
and assigns. Without limiting the generality of the foregoing clause
(iii), any Lender may assign to one or more Persons, or grant to one
or more Persons participations in or to, all or any part of its rights
and obligations under the Credit Agreement (to the extent permitted by
the Credit Agreement); and to the extent of any such assignment or
participation such other Person shall, to the fullest extent permitted
by law, 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, including Article XIII
thereof (concerning the Agent) and Section 15.1concerning assignments
and participations.
(b) Except as permitted by the Credit Agreement, no
Grantor shall sell, lease, transfer or otherwise dispose of any item
of Collateral during the term of this Agreement without the prior
written consent of the Agent to such sale, lease, transfer or other
disposition.
(c) On the date when the Secured Obligations shall have
been Fully Satisfied, the Collateral shall be automatically released
from the Liens created hereby, all rights to the Collateral shall
automatically revert to the Grantors, and this Agreement and all
obligations of the Grantors hereunder shall terminate without delivery
of any instrument or performance of any act by any party. Upon such
termination of this Agreement, the Agent shall reassign and redeliver
such Collateral then held by or for the Agent and the Lenders and
execute and deliver to each Grantor such documents as it shall
reasonably request to evidence such termination.
SECTION 22. SWAP AGREEMENTS. All obligations of the Borrower under
Swap Agreements shall be deemed to be Secured Obligations secured hereby, and
each Lender or affiliate of a Lender party to any such Swap Agreement shall be
deemed to be a Secured Party hereunder.
SECTION 23. SEVERABILITY. If any term or provision of this Agreement
is or shall become illegal, invalid or unenforceable in any jurisdiction, all
other terms and provisions of this Agreement shall remain legal, valid and
enforceable in such jurisdiction and
19
<PAGE> 209
such illegal, invalid or unenforceable provision shall be legal, valid and
enforceable in any other jurisdiction.
SECTION 24. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
SECTION 25. GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE
OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE
ON SUCH PARTY BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND
COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO
THE ADDRESS OF SUCH PARTY PROVIDED BY SECTION 20, OR BY ANY OTHER
METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN
THE STATE OF NEW YORK.
(d) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF
SHALL PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY PARTY OR ANY PARTY'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED
BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER,
BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT
20
<PAGE> 210
MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH
PARTY HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY AND HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
21
<PAGE> 211
IN WITNESS WHEREOF, the parties have duly executed this Intellectual
Property Security Agreement on the day and year first written above.
GRANTORS:
BEC GROUP, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BEC DISTRIBUTION, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
THE BONNEAU COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BONNEAU GENERAL, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BONNEAU HOLDINGS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT
Signature Page 1 of 3
<PAGE> 212
OPTI-RAY, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
O-RAY HOLDINGS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BOLLE AMERICA, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
OPTICAL RADIATION CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ORC CARIBE
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT
Signature Page 2 of 3
<PAGE> 213
FOSTER GRANT GROUP, L.P.
By: BONNEAU GENERAL, INC., a general
partner
BONNEAU HOLDINGS, INC., a limited
partner
O-RAY HOLDINGS, INC., a limited
partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
AGENT:
NATIONSBANK, N.A., as Agent for the
Lenders
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT
Signature Page 3 of 3
<PAGE> 214
STATE OF NEW YORK )
) ss.
COUNTY OF _________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 3rd day of April, 1996, personally appeared
______________________________________________________ to me known personally,
and who, being by me duly sworn, deposes and says that he is the
________________________________________ of
__________________________________________, and that foregoing instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said _______________________________ acknowledged said
instrument to be the free act and deed of said corporation.
________________________________________
Notary Public
My commission expires: *
<PAGE> 215
SCHEDULE I
PATENTS AND PATENT APPLICATIONS
<PAGE> 216
SCHEDULE II
TRADEMARKS AND TRADEMARK APPLICATIONS
<PAGE> 217
SCHEDULE III
COPYRIGHTS
<PAGE> 218
SCHEDULE IV
LICENSE AGREEMENTS
<PAGE> 219
EXHIBIT A
ASSIGNMENT OF PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
THIS ASSIGNMENT OF PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES (this
"Agreement") is made as of this ___ day of _______, ____ by EACH OF THE
UNDERSIGNED (each a "Grantor"), to NATIONSBANK, N.A., a national banking
association, as Agent (the "Agent") for each of the lenders (the "Lenders" and
collectively with the Agent, the "Secured Parties") now or hereafter party to
the Credit Agreement (as defined below). All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
the Credit Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide to the
parent corporation of each Grantor, BEC Group, Inc. (the "Borrower"), certain
term loan, revolving credit and letter of credit facilities pursuant to the
terms of that certain Credit Agreement among the Borrower, the Agent and the
Lenders dated as of April 3, 1996 (as from time to time amended, supplemented
or replaced, the "Credit Agreement"); and
WHEREAS, each Grantor is a wholly-owned direct or indirect Subsidiary
of the Borrower and will materially benefit from the loans and advances made
and to be made, and the letters of credit issued and to be issued, under the
Credit Agreement; and
WHEREAS, each Grantor has entered into a Guaranty Agreement (the
"Guaranty Agreement") dated as of April 3, 1996 pursuant to which each
Guarantor has guaranteed payment and performance of the Borrower's Obligations
under the Credit Agreement; and
WHEREAS, each Grantor has entered into an Intellectual Property
Security Agreement (the "IP Security Agreement") dated as of April 3, 1996
pursuant to which each Grantor has granted to the Agent for the benefit of the
Lenders a security interest in the Marks, Copyrights, Licenses and Patents
defined below in order to secured its obligations under the Guaranty Agreement;
and
WHEREAS, each Grantor (a) has adopted and used and is using the
trademarks and service marks (the "Marks") identified on Annex I hereto, and is
the owner of the registrations of and pending registration applications for
such Marks in the United States Patent and Trademark Office identified on Annex
I hereto (b) is the owner of and uses the copyrights, copyright registrations
and pending registration applications set forth on Annex II hereto (the
"Copyrights"), (c) is a party to and has rights under the licenses and license
agreements listed on Annex III hereto (the "Licenses") and (d) is the owner of
and uses the patents, patent registrations and pending registration
applications set forth on Annex IV hereto (the "Patents" and together with the
Marks, the Copyrights and the Licenses, the "Collateral"); and
<PAGE> 220
WHEREAS, the Agent for the benefit of the Lenders desires to acquire
the Marks, the Copyrights, the Licenses and the Patents and the registrations
thereof and registration applications therefor, as applicable, in connection
with the exercise of its remedies after the occurrence of an Event of Default
and acceleration of the Obligations under the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, each Grantor does hereby assign, sell and transfer unto
the Agent all right, title and interest in and to the Marks, Copyrights,
Licenses and Patents, together with (i) the registrations of and registration
applications therefor, as applicable, (ii) the goodwill of the business
symbolized by and associated with the Marks and the registrations thereof,
(iii) the right to sue and recover for, and the right to profits or damages due
or accrued arising out of or in connection with, any and all past, present or
future infringements or dilution of or damage or injury to the Marks,
Copyrights, Patents or the registrations thereof or such associated goodwill,
and (iv) all rights of each Grantor to enforce all Licenses.
Each Grantor hereby grants to the Agent, for the benefit of the
Lenders, and notice is hereby given that each Grantor has granted to the Agent,
for the benefit of the Lenders and the Agent, a first priority security
interest in the Collateral to secure the payment and performance in full of all
of the obligations of each Grantor under the Guaranty Agreement.
This Assignment is intended to and shall take effect as a sealed
instrument at such time as the Agent shall complete this instrument by signing
its acceptance of this Assignment below.
[Signature page follows.]
<PAGE> 221
IN WITNESS WHEREOF, each Grantor, by its duly authorized officer, has
executed this assignment, as an instrument under seal, on this 3rd day of
April, 1996.
BEC GROUP, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BEC DISTRIBUTION, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
THE BONNEAU COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BONNEAU GENERAL, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BONNEAU HOLDINGS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
OPTI-RAY, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ASSIGNMENT OF TRADEMARKS, COPYRIGHTS AND LICENSES
Signature Page 1 of 3
<PAGE> 222
O-RAY HOLDINGS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
BOLLE AMERICA, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
OPTICAL RADIATION CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ORC CARIBE
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
FOSTER GRANT GROUP, L.P.
By: BONNEAU GENERAL, INC., a general
partner
BONNEAU HOLDINGS, INC., a limited
partner
O-RAY HOLDINGS, INC., a limited
partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ASSIGNMENT OF TRADEMARKS, COPYRIGHTS AND LICENSES
Signature Page 2 of 3
<PAGE> 223
The foregoing assignment of the Trademarks, Copyrights and Licenses
and the registrations thereof and registration applications therefor by the
Assignee and the Agent is hereby accepted as of the 3rd day of April, 1996.
NATIONSBANK, N.A., as Agent for the
Lenders
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ASSIGNMENT OF TRADEMARKS, COPYRIGHTS AND LICENSES
Signature Page 3 of 3
<PAGE> 224
STATE OF NEW YORK )
) ss.
COUNTY OF _________________________ )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 3rd day of April, 1996, personally appeared
______________________________________________________ to me known personally,
and who, being by me duly sworn, deposes and says that he is the
________________________________________ of
__________________________________________, and that the foregoing instrument
was signed and sealed on behalf of said corporation by authority of its Board
of Directors, and said _______________________________ acknowledged said
instrument to be the free act and deed of said corporation.
________________________________________
Notary Public
My commission expires:
<PAGE> 225
ANNEX I
Trademark Registrations
or United States Patent and Trademark Office
Service Mark Registration No. Registration Date
------------ --------------- -----------------
[List chronologically in ascending numerical order]
Trademark Pending Applications
or United States Patent and Trademark Office
Service Mark Serial No. Filing Date
------------ --------- -----------
[List chronologically in ascending numerical order]
<PAGE> 226
ANNEX II
Part I
Copyrights Registered with U.S. Copyright Office
------------------------------------------------
Copyright Registration
Title [Author(s)] Number Date
----- ----------- ------ ----
Part II
Copyrights Not Registered
-------------------------
Title [Author(s)]
----- -----------
<PAGE> 227
ANNEX III
Licenses
<PAGE> 228
ANNEX IV
Registrations
United States Patent and Trademark Office
Patent Registration No. Registration Date
------ --------------- -----------------
[List chronologically in ascending numerical order]
Pending Applications
United States Patent and Trademark Office
Patent Serial No. Filing Date
------ --------- -----------
[List chronologically in ascending numerical order]
<PAGE> 229
EXHIBIT 10.6(d)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement") is made and entered into
as of this 3rd day of April, 1996 by and between BEC GROUP, INC., a Delaware
corporation (the "Borrower"), EACH OF THE UNDERSIGNED DIRECT OR INDIRECT
SUBSIDIARIES OF THE BORROWER (each a "Pledgor" and collectively with the
Borrower, the "Pledgors") and NATIONSBANK, N.A., a national banking
association, as Agent (the "Agent") for each of the lenders (the "Lenders" and
collectively with the Agent, the "Secured Parties") now or hereafter party to
the Credit Agreements (as defined below). All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide to the
Borrower certain term loan, revolving credit and letter of credit facilities
pursuant to the terms of that certain Credit Agreement among the Borrower, the
Agent and the Lenders dated as of April 3, 1996 (as from time to time amended,
supplemented or replaced, the "Credit Agreement"); and
WHEREAS, each Pledgor desires to pledge and grant to the Secured
Parties to secure the payment and performance of the Borrower's Obligations
under the Credit Agreement and each of the Guarantor's obligations under the
Guaranty Agreement, as applicable, a security interest in all of the issued and
outstanding shares of capital stock of each of its domestic Material
Subsidiaries, and a security interest in 66-2/3% of all of the issued and
outstanding shares of capital stock of each of its foreign Material
Subsidiaries, all as identified on Schedule I hereto (the "Pledged Stock")
(such subsidiaries are hereinafter referred to collectively as the "Material
Subsidiaries"); and
WHEREAS, each Pledgor will materially benefit from the loans and
advances made and to be made, and the letters of credit issued and to be
issued, under the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. PLEDGE OF STOCK; OTHER COLLATERAL.
(a) As collateral security for the payment and performance of all
debts, obligations or liabilities now or hereafter existing, absolute or
contingent, of each Guarantor under the Guaranty Agreement and of all of the
Borrower's Obligations under the Credit Agreement (collectively, the "Secured
Obligations"), and subject to Section 10 hereof, each Pledgor hereby pledges
and collaterally assigns to the Agent for the benefit of the Lenders, and
grants to the Agent for the benefit of the Lenders pursuant to the New York
<PAGE> 230
Uniform Commercial Code (the "UCC") a first priority security interest in
(except for Liens granted to the predecessor in interest of the Agent pursuant
to the Stock Pledge Agreement dated as of March 6, 1995, which liens are to be
terminated effective as of the Funding Date ("Existing Bank Liens"), the
Pledged Stock and all of the following:
(i) all cash, securities, dividends, rights, and
other property at any time and from time to time declared or
distributed in respect of or in exchange for any or all of the Pledged
Stock, other than dividends permitted to be retained by such Pledgor
under the Credit Agreement; and
(ii) all other property hereafter delivered to the
Agent in substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such property
and all cash, securities, interest, dividends, rights, and other
property at any time and from time to time declared or distributed in
respect of or in exchange for any or all of the Pledged Stock.
All such Pledged Stock, certificates, instruments, cash, securities, interest,
dividends, rights and other property referred to in this Section 1, other than
dividends issued in respect of such Pledged Stock that are permitted to be
retained by such Pledgor under the Credit Agreement, are herein collectively
referred to as the "Collateral." All of the Pledged Stock is currently owned
by the respective Pledgors and represented by the stock certificates listed on
Schedule I hereto, which stock certificates, with stock powers duly executed in
blank by Pledgor, are being delivered to the Agent simultaneously herewith.
(b) The Pledgor agrees to deliver all the Collateral to the Agent
at such location as the Agent shall from time to time designate by written
notice pursuant to Section 19 hereof for its custody at all times until
termination of this Agreement, together with such instruments of assignment and
transfer as requested by the Agent.
(c) All advances, charges, costs and expenses, including
reasonable attorneys' fees, incurred or paid by the Agent or any Lender in
exercising any right, power or remedy conferred by this Agreement, or in the
enforcement thereof, shall become a part of the Secured Obligations secured
hereunder and shall be paid to the Agent for the benefit of the Lenders by each
Pledgor immediately upon demand therefor, with interest thereon until paid in
full at the Base Rate.
2. STATUS OF PLEDGED STOCK. Each Pledgor hereby represents and
warrants to the Agent for the benefit of the Lenders that (i) all of the shares
of Pledged Stock are validly issued and outstanding, fully paid and
nonassessable and constitute all the issued and outstanding shares of capital
stock of each of the
2
<PAGE> 231
domestic Material Subsidiaries and constitute 66-2/3% of all of the issued and
outstanding shares of capital stock of each of the foreign Material
Subsidiaries, (ii) each Pledgor is the registered and record and beneficial
owner of its Pledged Stock, free and clear of all Liens, charges, equities,
encumbrances and restrictions on pledge or transfer (other than the pledge
hereunder and applicable restrictions pursuant to federal and state securities
laws, Permitted Liens and Existing Bank Liens), (iii) it has full corporate
power, legal right and lawful authority to execute this Agreement and to
pledge, assign and transfer its Pledged Stock in the manner and form hereof,
and (iv) the pledge, assignment and delivery of its Pledged Stock to the Agent
for the benefit of the Lenders pursuant to this Agreement creates a valid and
perfected first priority security interest in such Pledged Stock (except for
Existing Bank Liens), securing the payment of the Secured Obligations, assuming
continuous and uninterrupted possession thereof by the Agent. Except as
otherwise expressly provided herein or in the Credit Agreement, none of the
Pledged Stock (nor any interest therein or thereto) shall be sold, transferred
or assigned without the Agent's prior written consent, which may be withheld
for any reason. Each Pledgor covenants with the Agent for the benefit of the
Lenders that it shall at all times cause its Pledged Stock to be represented by
the certificates now and hereafter delivered to the Agent in accordance with
Section 1 hereof and that it shall cause each of its Material Subsidiaries not
to issue any capital stock, or securities convertible into capital stock, at
any time during the term of this Agreement other than to the Borrower or
another Guarantor who shall immediately pledge such additional capital stock to
the Agent on substantially identical terms as are contained herein.
3. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) The Agent shall be under no duty or liability with respect to
the collection, protection or preservation of the Collateral, or otherwise,
beyond the use of reasonable care in the custody and preservation thereof while
in its possession.
(b) Each Pledgor agrees to pay when due all taxes, charges, Liens
and assessments against the Collateral, unless being contested in good faith by
appropriate proceedings diligently conducted and against which adequate
reserves have been established in accordance with GAAP applied on a Consistent
Basis. Upon the failure of any Pledgor to so pay or contest such taxes,
charges, Liens or assessments, the Agent at its option may pay or contest any
of them (the Agent having the sole right to determine the legality or validity
and the amount necessary to discharge such taxes, charges, Liens or
assessments).
4. DEFAULT. Should a Pledgor fail to pay the Agent all Secured
Obligations as of the end of the Business Day on which such Secured Obligations
become due and payable and after the expiration of all grace or cure periods,
if any, and all extensions or
3
<PAGE> 232
waivers, if any, and should such failure continue, or should any other Event of
Default set forth in the Credit Agreement occur and be continuing, or should
such Pledgor fail otherwise to comply with the terms hereof (any of the
foregoing an "Event of Default"), the Agent is given full power and authority,
then or at any time thereafter, to sell, assign and deliver or collect the
whole or any part of the Collateral, or any substitute therefor or any addition
thereto, in one or more sales, with or without any previous demands or demand
of performance or, to the extent permitted by law, notice or advertisement, in
such order as the Agent may elect; and any such sale may be made either at
public or private sale at the Agent's place of business or elsewhere, either
for cash or upon credit or for future delivery, at such price as the Agent may
reasonably deem fair; and the Agent may be the purchaser of any or all
Collateral so sold and hold the same thereafter in its own right free from any
claim of a Pledgor or right of redemption. Demands of performance,
advertisements and presence of property and sale and notice of sale are hereby
waived to the extent permissible by law. Any sale hereunder may be conducted
by an auctioneer or any officer or agent of the Agent. Pledgor recognizes that
the Agent may be unable to effect a public sale of the Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state law, and may be otherwise delayed or
adversely affected in effecting any sale by reason of present or future
restrictions thereon imposed by governmental authorities, and that as a
consequence of such prohibitions and restrictions the Agent may be compelled
(i) to resort to one or more private sales to a restricted group of purchasers
who will be obliged to agree, among other things, to acquire the stock for
their own account, for investment and not with a view to the distribution or
resale thereof, or (ii) to seek regulatory approval of any proposed sale or
sales, or (iii) to limit the amount of Collateral sold to any Person or group.
Each Pledgor agrees and acknowledges that private sales so made may be at
prices and upon terms less favorable to Pledgor than if such Collateral was
sold either at public sales or at private sales not subject to other regulatory
restrictions, and that the Agent has no obligation to delay the sale of any of
the Collateral for the period of time necessary to permit the issuer of such
Collateral to register or otherwise qualify them, even if such issuer would
agree to register or otherwise qualify such Collateral for public sale under
the Securities Act or applicable state law. Each Pledgor further agrees, to
the extent permitted by applicable law, that the use of private sales made
under the foregoing circumstances to dispose of the Collateral shall be deemed
to be dispositions in a commercially reasonable manner. Each Pledgor hereby
acknowledges that a ready market may not exist for the Pledged Stock if they
are not traded on a national securities exchange or quoted on an automated
quotation system and agrees and acknowledges that in such event the Pledged
Stock may be sold for an amount less than a pro rata share of the fair market
value of the issuer's assets minus its liabilities. In addition to the
foregoing, the Secured Parties may exercise such other rights and remedies as
may be available
4
<PAGE> 233
under the Loan Documents, at law (including without limitation the UCC) or in
equity.
5. PROCEEDS OF SALE. The proceeds of the sale of any of the
Collateral and all sums received or collected from or on account of such
Collateral shall be applied to the payment of expenses incurred or paid by the
Agent in connection with any sale, transfer or delivery of the Collateral, to
the payment of any other costs, charges, reasonable attorneys' fees or expenses
mentioned herein, and to the payment of the Secured Obligations or any part
thereof, all in such order and manner as the Agent may determine and as
permitted by applicable law and regulation. The Agent shall, upon satisfaction
in full of all such Secured Obligations, pay any balance to Pledgors.
6. PRESENTMENTS, ETC. The Agent shall not be under any duty or
obligation whatsoever to make or give any presentments, demands for
performances, notices of nonperformance, protests, notice of protest or notice
of dishonor in connection with any obligations or evidences of indebtedness
held thereby as collateral, or in connection with any obligations or evidences
of indebtedness which constitute in whole or in part the Secured Obligations
secured hereunder.
7. ATTORNEY-IN-FACT. Each Pledgor hereby appoints the Agent as
such Pledgor's attorney-in-fact for the purposes of carrying out the provisions
of this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest; provided, that the
Agent shall have and may exercise rights under this power of attorney only upon
the occurrence and during the continuance of a Default or an Event of Default.
Without limiting the generality of the foregoing, upon the occurrence and
during the continuance of a Default or an Event of Default, the Agent shall
have the right and power to receive, endorse and collect all checks and other
orders for the payment of money made payable to such Pledgor representing any
dividend, interest payment, principal payment or other distribution payable or
distributable in respect to the Collateral or any part thereof and to give full
discharge for the same.
8. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured
Parties, and all obligations of the Pledgors hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or
instrument relating to any of the Secured Obligations;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document
5
<PAGE> 234
or any other agreement or instrument relating to any of the Secured
Obligations;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured
Obligations; or
(d) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, any Pledgor in
respect of the Secured Obligations or of this Agreement.
9. WAIVER BY A PLEDGOR. Each Pledgor waives (to the extent
permitted by applicable law) any right to require any Secured Party or any
other obligee of the Secured Obligations to (a) proceed against any Person or
entity, (b) proceed against or exhaust any collateral, or (c) pursue any other
remedy in its power; and waives (to the extent permitted by applicable law) any
defense arising by reason of any disability or other defense of any other
Person, or by reason of the cessation from any cause whatsoever of the
liability of any other Person or entity. Until all Secured Obligations shall
have been Fully Satisfied, no Pledgor shall have the right of subrogation, and
each Pledgor waives any right to enforce any remedy which any Secured Party or
any other obligee of the Secured Obligations now has or may hereafter have
against any other Person and waives (to the extent permitted by applicable law)
any benefit of and any right to participate in any collateral or security
whatsoever now or hereafter held by the Agent for the benefit of the Lenders.
Each Pledgor authorizes any Secured Party and any other obligee of the Secured
Obligations without notice (except notice required by applicable law) or demand
and without affecting its liability hereunder or under the Loan Documents from
time to time to: (i) take and hold security, other than the Collateral herein
described, for the payment of such Secured Obligations or any part thereof, and
exchange, enforce, waive and release the Collateral herein described or any
part thereof or any such other security; and (ii) apply such Collateral or
other security and direct the order or manner of sale thereof as such Secured
Party or obligee in its discretion may determine.
The Agent may at any time deliver (without representation, recourse or
warranty) the Collateral or any part thereof to a Pledgor and the receipt
thereof by such Pledgor shall be a complete and full acquittance for the
Collateral so delivered, and the Secured Parties shall thereafter be discharged
from any liability or responsibility therefor.
10. DIVIDENDS AND VOTING RIGHTS.
(a) All dividends and other distributions with respect to any of the
Pledged Stock shall be subject to the pledge hereunder except for dividends
permitted to be retained by such Pledgor under
6
<PAGE> 235
the Credit Agreement. So long as no Default or Event of Default shall have
occurred and be continuing, any such dividends may be retained by such Pledgor
free from any Liens hereunder. Following the occurrence and during the
continuance of any Default or Event of Default, all dividends shall be promptly
delivered to the Agent (together, if the Agent shall request, with stock powers
or instruments of assignment duly executed in blank affixed to any capital
stock or other negotiable document or instrument so distributed) to be held,
released or disposed of by it hereunder or, at the option of the Agent, to be
applied to the Secured Obligations hereby secured as they become due.
(b) So long as no Default or Event of Default shall have occurred
and be continuing, the registration of the Collateral in the name of a Pledgor
shall not be changed and such Pledgor shall be entitled to exercise all voting
and other rights and powers pertaining to the Collateral for all purposes not
inconsistent with the terms hereof.
(c) Upon the occurrence and during the continuance of any Default
or Event of Default, at the option of the Agent, all rights of a Pledgor to
receive and retain dividends upon the Collateral shall cease and shall
thereupon be vested in the Agent for the benefit of the Lenders.
(d) Upon the occurrence and during the continuance of any Default
or Event of Default, at the option of the Agent, all rights of a Pledgor to
exercise the voting or consensual rights and powers which it is authorized to
exercise pursuant to subsection (b) above shall cease and the Agent may
thereupon (but shall not be obligated to), at its request, cause such
Collateral to be registered in the name of the Agent or its nominee or agent
for the benefit of the Lenders and/or exercise such voting or consensual rights
and powers as appertain to ownership of such Collateral, and to that end each
Pledgor hereby appoints the Agent as its proxy, with full power of
substitution, to vote and exercise all other rights as a shareholder with
respect to such Pledged Stock hereunder upon the occurrence and during the
continuance of any Default or Event of Default, which proxy is coupled with an
interest and is irrevocable prior to termination of this Agreement, and each
Pledgor hereby agrees to provide such further proxies as the Agent may request;
provided, however, that the Agent in its discretion may from time to time
refrain from exercising, and shall not be obligated to exercise, any such
voting or consensual rights or such proxy.
11. POWER OF SALE. Until all Secured Obligations shall have been
Fully Satisfied, the power of sale and other rights, powers and remedies
granted to the Agent for the benefit of the Lenders hereunder shall continue to
exist and may be exercised by the Agent at any time and from time to time
irrespective of the fact that any such Secured Obligations or any part thereof
may have become barred by any statute of limitations or that the liability of a
Pledgor may have ceased.
7
<PAGE> 236
12. OTHER RIGHTS. The rights, powers and remedies given to the
Agent for the benefit of the Lenders by this Agreement shall be in addition to
all rights, powers and remedies given to any Secured Party by virtue of any
statute or rule of law. Any forbearance or failure or delay by the Agent in
exercising any right, power or remedy hereunder shall not be deemed to be a
waiver of such right, power or remedy, and any single or partial exercise of
any right, power or remedy hereunder shall not preclude the further exercise
thereof; and every right, power and remedy of the Secured Parties shall
continue in full force and effect until such right, power or remedy is
specifically waived by the Required Lenders by an instrument in writing.
13. FURTHER ASSURANCES. Each Pledgor agrees at its own expense to
do such further acts and things, and to execute and deliver such additional
conveyances, assignments, financing statements, agreements and instruments, as
the Agent may at any time reasonably request in connection with the
administration or enforcement of this Agreement or related to the Collateral or
any part thereof or in order better to assure and confirm unto the Agent its
rights, powers and remedies for the benefit of the Lenders hereunder. Each
Pledgor hereby consents and agrees that the issuers of or obligors in respect
of the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of the Agent, on behalf of the Lenders, to
exercise its rights hereunder with respect to the Collateral, notwithstanding
any other notice or direction to the contrary heretofore or hereafter given by
such Pledgor or any other Person to any of such issuers or obligors.
14. BINDING AGREEMENT; ASSIGNMENT. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that no Pledgor shall be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Agent as Collateral under this Agreement. All
references herein to the Agent shall include any successor thereof, each Lender
and any other obligees from time to time of the Obligations.
15. SEVERABILITY. In case any Lien, security interest or other
right of any Secured Party or any provision hereof shall be held to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other Lien, security interest or other right granted hereby or
provision hereof.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
8
<PAGE> 237
17. TERMINATION. This Agreement and all obligations of a Pledgor
hereunder shall terminate without delivery of any instrument or performance of
any act by any party on the date when all of the Secured Obligations have been
Fully Satisfied. Upon such termination of this Agreement, the Agent shall, at
the sole expense of the Pledgors, deliver to each Pledgor the certificates
evidencing their Pledged Stock (and any other property received as a dividend
or distribution or otherwise in respect of such Pledged Stock), together with
any cash then constituting the Collateral, not then sold or otherwise disposed
of in accordance with the provisions hereof and take such further actions as
may be necessary to effect the same.
18. INDEMNIFICATION. Each Pledgor hereby covenants and agrees to
pay, indemnify, and hold the Agent and each Lender harmless from and against
any and all other out-of-pocket liabilities, costs, expenses or disbursements
of any kind or nature whatsoever arising in connection with any claim or
litigation by any Person resulting from the execution, delivery, enforcement,
performance and administration of this Agreement or the Loan Documents, or the
transactions contemplated hereby or thereby, or in any respect relating to the
Collateral or any transaction pursuant to which such Pledgor has incurred any
Secured Obligation (all the foregoing, collectively, the "indemnified
liabilities"); provided, however, that the Pledgor shall have no obligation
hereunder with respect to indemnified liabilities arising from the willful
misconduct or gross negligence of the Agent or any Lender. The agreements in
this subsection shall survive repayment of all Secured Obligations and
termination or expiration of this Agreement.
19. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy (where the receipt of
such message is verified by return) expressly provided for hereunder, when
received at such telephone or telecopy number as may from time to time be
specified in written notice to the other parties hereto or otherwise received),
or if sent prepaid by certified or registered mail return receipt requested on
the third Business Day after the day on which mailed, or if sent prepaid by a
national overnight courier service, on the first Business Day after the day on
which delivered to such service against receipt therefor, addressed to such
party at said address:
(a) if to any Pledgor:
c/o BEC Group, Inc.
555 Theodore Fremd Avenue, Suite B-302
Rye, New York 10580
Attention: Mr. Ian G.H. Ashken
9
<PAGE> 238
Telephone: (914) 967-9400
Telecopy: (914) 967-9405
with a copy to:
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attention: Robert L. Lawrence, Esq.
Telephone: (212) 541-6222
Telecopy: (212) 245-3009
(b) if to the Agent:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Dana Weir, Agency Services
Telephone: (704) 388-3917
Telecopy: (704) 386-9923
with a copy to:
NationsBank, N.A.
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher C. Browder,
Senior Vice President
Telephone: (212) 407-5332
Telecopy: (212) 751-6909
20. GOVERNING LAW; WAIVERS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE
OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
10
<PAGE> 239
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE
BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY
PROVIDED IN SECTION 15.1 OF THE CREDIT AGREEMENT OR BY ANY OTHER
METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN
THE STATE OF NEW YORK.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF
SHALL PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF
SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE,
MAY BE AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY
HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
11
<PAGE> 240
IN WITNESS WHEREOF, the parties have duly executed this Pledge
Agreement on the day and year first written above.
PLEDGORS:
BEC GROUP, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
THE BONNEAU COMPANY
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
OPTI-RAY, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
BOLLE AMERICA, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
OPTICAL RADIATION CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PLEDGE AGREEMENT
Signature Page 1 OF 3
<PAGE> 241
FOSTER GRANT GROUP, L.P.
By: BONNEAU GENERAL, INC., a general
partner
BONNEAU HOLDINGS, INC., a limited
partner
O-RAY HOLDINGS, INC., a limited
partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
PLEDGE AGREEMENT
Signature Page 2 OF 3
<PAGE> 242
AGENT:
NATIONSBANK, N.A., as Agent for the
Lenders
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
PLEDGE AGREEMENT
Signature Page 3 OF 3
<PAGE> 243
SCHEDULE I
<TABLE>
<CAPTION>
No. of No. of No. of No. of Certificate
Shares Shares Shares Shares Nos. for
Name of Subsidiary Class of Stock Authorized Issued Outstanding Pledged Pledged Shares
- ------------------ -------------- ---------- ------ ----------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 244
EXHIBIT 10.6(e)
COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS
THIS COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS (the "Agreement")
is made and entered into as of this 3rd day of April, 1996 by and between
BONNEAU GENERAL, INC., a Delaware corporation ("Bonneau General"), BONNEAU
HOLDINGS, INC., a Delaware corporation ("Bonneau Holdings") and O-RAY HOLDINGS,
INC., a Delaware corporation ("O-Ray") (individually, a "Pledgor" and
collectively, the "Pledgors"), and NATIONSBANK, N.A., a national banking
association, as Agent (the "Agent") for each of the lenders (the "Lenders" and
collectively with the Agent, the "Secured Parties") now or hereafter party to
the Credit Agreement (as defined below). All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide to BEC
Group, Inc., a Delaware corporation of which the Pledgors are indirect wholly
owned Subsidiaries (the "Borrower"), certain term loan, revolving credit and
letter of credit facilities pursuant to the terms of that certain Credit
Agreement among the Borrower, the Agent and the Lenders dated as of April 3,
1996 (as from time to time amended, supplemented or replaced, the "Credit
Agreement"); and
WHEREAS, each Pledgor is an indirect wholly owned Subsidiary of the
Borrower and will materially benefit from the Borrower, the Agent and the
Lenders entering into the Credit Agreement and the making of loans and advances
to, and the issuance of letters of credit on behalf of, the Borrower
contemplated thereby; and
WHEREAS, each Pledgor has entered into a Guaranty Agreement (the
"Guaranty Agreement") of even date herewith pursuant to which it has jointly
and severally guaranteed payment and performance of the Borrower's Obligations
under the Credit Agreement; and
WHEREAS, as collateral security for payment and performance of its
obligations under the Guaranty Agreement, each Pledgor is willing to
collaterally assign and pledge to, and grant to the Agent for the benefit of
the Lenders a security interest in, all general and limited partnership
interests, as applicable, and all other equity interests now or hereafter
owned, of record or beneficially, by each of the Pledgors in Foster Grant
Group, L.P. (the "Partnership") (collectively, the "Partnership Interests");
and
WHEREAS, the Secured Parties are unwilling to enter into the Loan
Documents unless each Pledgor enters into this Agreement;
NOW, THEREFORE, in order to induce the Lenders to enter into the Loan
Documents and in consideration of the premises and the
<PAGE> 245
mutual covenants contained herein, the parties hereto agree as follows:
1. COLLATERAL ASSIGNMENT AND PLEDGE OF PARTNERSHIP INTERESTS;
OTHER COLLATERAL.
(a) As collateral security for the payment and performance of all
debts, obligations or liabilities now or hereafter existing, absolute or
contingent, of each Pledgor to the Secured Parties incurred pursuant to the
Guaranty Agreement and to the other Loan Documents and pursuant to the terms
hereof (collectively, the "Obligations"), and subject to Section 10 hereof,
each Pledgor hereby collaterally assigns and pledges to the Agent for the
benefit of the Lenders, and grants to the Agent for the benefit of the Lenders
pursuant to the New York Uniform Commercial Code (the "UCC") a first priority
security interest in (except for liens granted to the predecessor in interest
of the Agent pursuant to the Collateral Assignment of Partnership Interest
dated as of March 6, 1995, which liens are to be terminated effective as of the
Funding Date ("Existing Bank Liens")), the Partnership Interests and all of the
following:
(i) all cash, securities, rights (including
without limitation any and all rights to subscribe to additional
Partnership Interests), and other property at any time and from time
to time declared or distributed in respect of or in exchange for any
or all of the Partnership Interests, other than such as are permitted
to be retained by the Pledgors under the Credit Agreement; and
(ii) all other property hereafter delivered to the
Agent in substitution for or in addition to any of the foregoing and
all certificates and instruments representing or evidencing any
Partnership Interests or such other property.
All such Partnership Interests, certificates, instruments, cash, securities,
interest, distributions, rights and other property referred to in this Section
1, other than distributions that are permitted to be retained by the Pledgors
under the Credit Agreement, are herein collectively referred to as the
"Collateral." All of the Partnership Interests currently owned by the Pledgors
are listed on Schedule I hereto.
(b) Each Pledgor agrees to deliver all the Collateral to the Agent
at such location as the Agent shall from time to time designate by written
notice pursuant to Section 20 hereof for its custody at all times until
termination of this Agreement, together with such instruments of assignment and
transfer as requested by the Agent.
(c) All advances, charges, costs and expenses, including
reasonable attorneys' fees, incurred or paid by the Agent or any Lender in
exercising any right, power or remedy conferred by this
2
<PAGE> 246
Agreement, or in the enforcement thereof, shall become a part of the
Obligations secured hereunder and shall be paid to the Agent for the benefit of
the Lenders by the Pledgors immediately upon demand therefor, with interest
thereon until paid in full at the Base Rate.
2. STATUS OF PARTNERSHIP INTERESTS. Each Pledgor hereby
represents and warrants to the Secured Parties that the Partnership Interests
are validly issued and outstanding, that such Pledgor is the registered and
absolute record and beneficial owner of the Partnership Interests, free and
clear of all liens, charges, equities, encumbrances and restrictions on pledge
or transfer thereof (other than the pledge hereunder and applicable
restrictions under federal and state securities laws and except for Existing
Bank Liens), that it has the full power and authority to pledge the Partnership
Interests to the Secured Parties pursuant to this Agreement, and that the
Partnership Interests constitute all of the equity interests or securities of
the Partnership now owned, beneficially or of record, by such Pledgor. Except
as otherwise expressly provided herein or in the Credit Agreement, none of the
Partnership Interests (nor any interest therein or thereto) shall be sold,
transferred or assigned without the Agent's prior written consent, which may be
withheld for any reason so long as this Agreement is in effect. Each Pledgor
covenants with the Lenders that it shall at all times cause the Partnership
Interests to be and remain uncertificated, and in the event, notwithstanding
the foregoing, the Partnership Interests or any of them are certificated, to
deliver such certificates promptly to the Agent together with such instruments
of assignment and transfer duly executed in blank by such Pledgor as the Agent
shall request.
3. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) The Agent shall be under no duty or liability with respect to
the collection, protection or preservation of the Collateral, or otherwise,
beyond the use of reasonable care in the custody and preservation thereof while
in its possession.
(b) Each Pledgor agrees to pay when due all taxes, charges, Liens
and assessments against the Collateral, unless being contested in good faith by
appropriate proceedings diligently conducted and against which adequate
reserves have been established in accordance with GAAP applied on a Consistent
Basis. Upon the failure of such Pledgor to so pay or contest such taxes,
charges, Liens or assessments, the Agent at its option may pay or contest any
of them (the Agent having the sole right to determine the legality or validity
and the amount necessary to discharge such taxes, charges, Liens or
assessments).
3
<PAGE> 247
4. DEFAULT. SHOULD ANY PLEDGOR FAIL TO PAY THE AGENT ALL
OBLIGATIONS AS OF THE END OF THE BUSINESS DAY ON WHICH SUCH OBLIGATIONS BECOME
DUE AND PAYABLE AND AFTER THE EXPIRATION OF ALL GRACE OR CURE PERIODS, IF ANY,
AND ALL EXTENSIONS OR WAIVERS, IF ANY, AND SHOULD SUCH FAILURE CONTINUE, or
should any other Event of Default set forth in the Guaranty Agreement occur and
be continuing, or should any Pledgor fail otherwise to comply with the terms
hereof (any of the foregoing an "Event of Default"), the Agent is given full
power and authority, then or at any time thereafter, to sell, assign and
deliver or collect the whole or any part of the Collateral, or any substitute
therefor or any addition thereto, in one or more sales, with or without any
previous demands or demand of performance or, to the extent permitted by law,
notice or advertisement, in such order as the Agent may elect; and any such
sale may be made either at public or private sale at the Agent's place of
business or elsewhere, either for cash or upon credit or for future delivery,
at such price as the Agent may reasonably deem fair; and the Agent may be the
purchaser of any or all Collateral so sold and hold the same thereafter in its
own right free from any claim of any Pledgor or right of redemption. Demands
of performance, advertisements and presence of property and sale and notice of
sale are hereby waived to the extent permissible by law. Any sale hereunder
may be conducted by an auctioneer or any officer or agent of the Agent. Each
Pledgor recognizes that the Agent may be unable to effect a public sale of the
Collateral by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "Securities Act"), and applicable state law, and may be
otherwise delayed or adversely affected in effecting any sale by reason of
present or future restrictions thereon imposed by governmental authorities, and
that as a consequence of such prohibitions and restrictions the Agent may be
compelled (i) to resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire the
stock for their own account, for investment and not with a view to the
distribution or resale thereof, or (ii) to seek regulatory approval of any
proposed sale or sales, or (iii) to limit the amount of Collateral sold to any
Person or group. Each Pledgor agrees and acknowledges that private sales so
made may be at prices and upon terms less favorable to such Pledgor than if
such Collateral was sold either at public sales or at private sales not subject
to other regulatory restrictions, and that the Agent has no obligation to delay
the sale of any of the Collateral for the period of time necessary to permit
the issuer of such Collateral to register or otherwise qualify them, even if
such issuer would agree to register or otherwise qualify such Collateral for
public sale under the Securities Act or applicable state law. Each Pledgor
further agrees, to the extent permitted by applicable law, that the use of
private sales made under the foregoing circumstances to dispose of the
Collateral shall be deemed to be dispositions in a commercially reasonable
manner. Each Pledgor hereby acknowledges that a ready market does not exist
for the Partnership Interests and agrees and acknowledges that the Partnership
Interests may be sold for an
4
<PAGE> 248
amount less than a pro rata share of the fair market value of the Partnership's
assets minus its liabilities. In addition to the foregoing, the Secured
Parties may exercise such other rights and remedies as may be available under
the Loan Documents, at law (including without limitation the UCC) or in equity.
5. PROCEEDS OF SALE. The proceeds of the sale of any of the
Collateral and all sums received or collected from or on account of such
Collateral shall be applied to the payment of expenses incurred or paid by the
Agent in connection with any sale, transfer or delivery of the Collateral, to
the payment of any other costs, charges, reasonable attorneys' fees or expenses
mentioned herein, and to the payment of the Obligations or any part thereof,
all in such order and manner as the Agent may determine and as permitted by
applicable law and regulation. The Agent shall, upon satisfaction in full of
all such Obligations, pay any balance to the Pledgors.
6. PRESENTMENTS, ETC. The Agent shall not be under any duty or
obligation whatsoever to make or give any presentments, demands for
performances, notices of nonperformance, protests, notice of protest or notice
of dishonor in connection with any obligations or evidences of indebtedness
held thereby as collateral, or in connection with any obligations or evidences
of indebtedness which constitute in whole or in part the Obligations secured
hereunder.
7. ATTORNEY-IN-FACT. Each Pledgor hereby appoints the Agent as
such Pledgor's attorney-in-fact for the purposes of carrying out the provisions
of this Agreement and taking any action and executing any instrument which the
Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest; provided, that the
Agent shall have and may exercise rights under this power of attorney only upon
the occurrence and during the continuance of an Event of Default. Without
limiting the generality of the foregoing, upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the right and power to
receive, endorse and collect all checks and other orders for the payment of
money made payable to any Pledgor representing any interest payment, principal
payment or other distribution payable or distributable in respect to the
Collateral or any part thereof and to give full discharge for the same.
8. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured
Parties, and all obligations of the Pledgors hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or
instrument relating to any of the Obligations;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or
5
<PAGE> 249
any other amendment or waiver of or any consent to any departure from
the Credit Agreement, any other Loan Document or any other agreement
or instrument relating to any of the Obligations;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations; or
(d) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, the Pledgor in
respect of the Obligations or of this Agreement.
9. WAIVER BY PLEDGOR. Each Pledgor waives (to the extent
permitted by applicable law) any right to require any Secured Party or any
other obligee of the Obligations to (a) proceed against any Person or
entity, (b) proceed against or exhaust any collateral, or (c) pursue any other
remedy in its power; and waives (to the extent permitted by applicable law) any
defense arising by reason of any disability or other defense of any other
Person, or by reason of the cessation from any cause whatsoever of the
liability of any other Person or entity. Until all Obligations shall have been
Fully Satisfied, each Pledgor shall have no right of subrogation, and each
Pledgor waives any right to enforce any remedy which any Secured Party or any
other obligee of the Obligations now has or may hereafter have against any
other Person and waives (to the extent permitted by applicable law) any benefit
of and any right to participate in any collateral or security whatsoever now or
hereafter held by the Agent for the benefit of the Lenders. Each Pledgor
authorizes any Secured Party and any other obligee of the Obligations without
notice (except notice required by applicable law) or demand and without
affecting its liability hereunder or under the Loan Documents from time to time
to: (i) take and hold security, other than the Collateral herein described, for
the payment of such Obligations or any part thereof, and exchange, enforce,
waive and release the Collateral herein described or any part thereof or any
such other security; and (ii) apply such Collateral or other security and
direct the order or manner of sale thereof as such Secured Party or obligee in
its discretion may determine.
The Agent may at any time deliver (without representation, recourse or
warranty) the Collateral or any part thereof to any Pledgor and the receipt
thereof by the Pledgor shall be a complete and full acquittance for the
Collateral so delivered, and the Secured Parties shall thereafter be discharged
from any liability or responsibility therefor.
10. DIVIDENDS AND VOTING RIGHTS.
(a) All distributions with respect to the Partnership Interests shall
be subject to the pledge hereunder, except for
6
<PAGE> 250
distributions that are permitted to be retained by the Pledgors under the
Credit Agreement. So long as no Event of Default shall have occurred and be
continuing, any such distributions permitted to be retained under the Credit
Agreement may be retained by Pledgors free from any Liens hereunder. Following
the occurrence and during the continuance of any Event of Default, all
distributions shall be promptly delivered to the Agent (together, if the Agent
shall request, with stock powers or instruments of assignment duly executed in
blank affixed to any certificate of partnership interest or other security or
negotiable document or instrument so distributed) to be held, released or
disposed of by it hereunder or, at the option of the Agent, to be applied to
the Obligations hereby secured as they become due.
(b) So long as no Event of Default shall have occurred and be
continuing, the registration of the Collateral in the name of the Pledgors
shall not be changed and the Pledgors shall be entitled to exercise all voting
and other rights and powers pertaining to the Collateral for all purposes not
inconsistent with the terms hereof.
(c) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of each of the Pledgors to
receive and retain distributions upon the Collateral shall cease and shall
thereupon be vested in the Agent for the benefit of the Lenders.
(d) Upon the occurrence and during the continuance of any Event of
Default, at the option of the Agent, all rights of each of the Pledgors to
exercise the voting or consensual rights and powers which it is authorized to
exercise pursuant to subsection (b) above shall cease and the Agent may
thereupon (but shall not be obligated to), at its request, cause such
Collateral to be registered in the name of the Agent or its nominee or agent
for the benefit of the Lenders and/or exercise such voting or consensual rights
and powers as appertain to ownership of such Collateral, and to that end each
Pledgor hereby appoints the Agent as its proxy, with full power of
substitution, to vote and exercise all other rights as a holder with respect to
the Partnership Interests and as a partner, either general or limited, as
applicable, of the Partnership upon the occurrence and during the continuance
of any Event of Default, which proxy is coupled with an interest and is
irrevocable prior to termination of this Agreement, and each Pledgor hereby
agrees to provide such further proxies as the Agent may request consistent with
the terms hereof; provided, however, that the Agent in its discretion may from
time to time refrain from exercising, and shall not be obligated to exercise,
any such voting or consensual rights or such proxy.
11. POWER OF SALE. Until all Obligations shall have been Fully
Satisfied, the power of sale and other rights, powers and remedies granted to
the Agent for the benefit of the Lenders hereunder shall continue to exist and
may be exercised by the Agent
7
<PAGE> 251
at any time and from time to time irrespective of the fact that any such
Obligations or any part thereof may have become barred by any statute of
limitations or that the liability of any Pledgor may have ceased.
12. OTHER RIGHTS. The rights, powers and remedies given to the
Agent for the benefit of the Lenders by this Agreement shall be in addition to
all rights, powers and remedies given to any Secured Party by virtue of any
statute or rule of law. Any forbearance or failure or delay by the Agent in
exercising any right, power or remedy hereunder shall not be deemed to be a
waiver of such right, power or remedy, and any single or partial exercise of
any right, power or remedy hereunder shall not preclude the further exercise
thereof; and every right, power and remedy of the Secured Parties shall
continue in full force and effect until such right, power or remedy is
specifically waived by the Required Lenders by an instrument in writing.
13. FURTHER ASSURANCES. Each Pledgor agrees at its own expense to
do such further acts and things, and to execute and deliver such additional
conveyances, assignments, financing statements, agreements and instruments, as
the Agent may at any time reasonably request in connection with the
administration or enforcement of this Agreement or related to the Collateral or
any part thereof or in order better to assure and confirm unto the Agent its
rights, powers and remedies for the benefit of the Lenders hereunder. Each
Pledgor hereby consents and agrees that the issuers of or obligors in respect
of the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of the Agent, on behalf of the Lenders, to
exercise its rights hereunder with respect to the Collateral, notwithstanding
any other notice or direction to the contrary heretofore or hereafter given by
such Pledgor or any other Person to any of such issuers or obligors.
14. BINDING AGREEMENT; ASSIGNMENT. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto, and to their respective successors and assigns, except
that no Pledgor shall be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or otherwise pledge, encumber
or grant any option with respect to the Collateral, or any part thereof, or any
cash or property held by the Agent as Collateral under this Agreement. All
references herein to the Agent shall include any successor thereof, each Lender
and any other obligees from time to time of the Obligations.
15. SEVERABILITY. In case any Lien, security interest or other
right of any Secured Party or any provision hereof shall be held to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect any other Lien, security interest or other right granted hereby or
provision hereof.
8
<PAGE> 252
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
17. TERMINATION. This Agreement and all obligations of the Pledgor
hereunder shall terminate without delivery of any instrument or performance of
any act by any party on the date when all of the Obligations have been Fully
Satisfied. Upon such termination of this Agreement, the Agent shall, at the
sole expense of the Pledgors, deliver to the Pledgors any property received as
a distribution or otherwise in respect of the Partnership Interests, together
with any cash then constituting the Collateral, not then sold or otherwise
disposed of in accordance with the provisions hereof and take such further
actions as may be necessary to effect the same.
18. INDEMNIFICATION. Each Pledgor hereby covenants and agrees to
pay, indemnify, and hold the Agent and each Lender harmless from and against
any and all other out-of-pocket liabilities, costs, expenses or disbursements
of any kind or nature whatsoever arising in connection with any claim or
litigation by any Person resulting from the execution, delivery, enforcement,
performance and administration of this Agreement or the Loan Documents, or the
transactions contemplated hereby or thereby, or in any respect relating to the
Collateral or any transaction pursuant to which such Pledgor has incurred any
Obligation (all the foregoing, collectively, the "indemnified liabilities");
provided, however, that such Pledgor shall have no obligation hereunder with
respect to indemnified liabilities arising from the willful misconduct or gross
negligence of the Agent or any Lender. The agreements in this subsection shall
survive repayment of all Obligations and termination or expiration of this
Agreement.
19. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements shall be deemed to be Obligations secured hereby, and each Lender or
affiliate of a Lender party to any such Swap Agreement shall be deemed to be a
Secured Party hereunder.
20. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy (where the receipt of
such message is verified by return) expressly provided for hereunder, when
received at such telephone or telecopy number as may from time to time be
specified in written notice to the other parties hereto or otherwise received),
or if sent prepaid by certified or registered mail return receipt requested on
the third Business Day after the day on which mailed, or if sent prepaid by a
national overnight courier service, on the first Business Day after the day on
which delivered to such service against receipt therefor, addressed to such
party at said address:
9
<PAGE> 253
(a) if to any Pledgor:
c/o BEC Group, Inc.
555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Mr. Ian G.H. Ashken
Telephone: (914) 967-9400
Telecopy: (914) 967-9405
with a copy to:
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attention: Robert L. Lawrence, Esq.
Telephone: (212) 541-6222
Telecopy: (212) 245-3009
(b) if to the Agent:
NationsBank, N.A.
Independence Center, NC1-001-15-04
15th Floor
Charlotte, North Carolina 28255
Attention: Dana Weir, Agency Services
Telephone: (704) 388-3917
Telecopy: (704) 386-9923
with a copy to:
NationsBank, N.A.
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher C. Browder, Vice
President
Telephone: (212) 407-5332
Telecopy: (212) 751-6909
21. REGISTRATION OF PLEDGE. Bonneau General, as the general
partner of the Partnership, is and acts as the registrar of the Partnership for
all purposes of the registration of ownership and transfers of interests in the
Partnership Interests (the "Registrar"). The registration records of the
Partnership maintained by and in the possession of the Registrar (the
"Registration Books") are the only records maintained to evidence the ownership
and transfer of ownership or other interests, including security interests, in
the Partnership Interests. There is no registration of record or to the
knowledge of any Pledgor any claim with respect thereto, of any lien, security
interest or other encumbrance or other interest or restriction of transfer on
the Partnership Interests, other than the pledge and security interest in favor
of the Secured Parties. The security interest granted in,
10
<PAGE> 254
and pledge and collateral assignment of, the Partnership Interests hereby in
favor of the Secured Parties has been duly entered in the registration books
maintained for such purpose by the Registrar and the Registrar has delivered to
the Agent its Certificate, in the form of Exhibit A hereto, of even date
herewith to such effect. The Registrar shall not cause, suffer or permit to
occur any transfer of record of the Partnership Interests or any interest
therein except in accordance with the prior written consent of the Agent. Upon
receipt of written notice by the Agent that an Event of Default has occurred
and that all or any part of the Partnership Interests or any interest therein
have been sold, assigned or otherwise disposed of by the Secured Parties in
accordance with the terms of this Agreement, and identifying the assignee(s)
and interest(s) assigned, the Registrar shall forthwith cause the Partnership
Interests to be reregistered as appropriate to duly reflect of record such
transfers. The Registrar shall not resign or retire or permit its removal
except upon circumstances where the successor registrar shall provide to the
Agent its written irrevocable acknowledgement of and covenant to comply with
the terms of this Section 21.
22. GOVERNING LAW; WAIVERS.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(B) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE
OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(C) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE
BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY
PROVIDED IN SECTION 15.1 OF THE CREDIT AGREEMENT OR BY ANY OTHER
METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN
THE STATE OF NEW YORK.
(D) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF
SHALL PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
11
<PAGE> 255
OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY
OR ANY OF SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO
THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION,
EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH
COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR
HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE,
MAY BE AVAILABLE TO IT.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY
HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
[SIGNATURE PAGE FOLLOWS.]
12
<PAGE> 256
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first written above.
BONNEAU GENERAL, INC.
By:
----------------------------------
Name:
------------------------------
Title:
-----------------------------
BONNEAU HOLDINGS, INC.
By:
----------------------------------
Name:
------------------------------
Title:
-----------------------------
O-RAY HOLDINGS, INC.
By:
----------------------------------
Name:
------------------------------
Title:
-----------------------------
COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS
Signature Page 1 of 2
<PAGE> 257
NATIONSBANK, N.A., as Agent for the
Lenders
By:
----------------------------------
Name:
------------------------------
Title:
-----------------------------
COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS
Signature Page 2 of 2
<PAGE> 258
SCHEDULE I
<TABLE>
<CAPTION>
Class or Type Partnership Partnership
Name of of Partnership Interests Interests
Subsidiary Interests Outstanding Pledged
---------- --------- ----------- -------
<S> <C> <C> <C>
O-RAY L.P. 100% 35%
BONNEAU L.P. 100% 64%
HOLDINGS
BONNEAU G.P. 100% 1%
GENERAL
</TABLE>
<PAGE> 259
RECEIPT AND CERTIFICATE OF REGISTRAR
The undersigned hereby certifies, acknowledges and agrees as follows
to and with NationsBank, N.A., as Agent, in connection with that certain
Collateral Assignment of Partnership Interests of even date herewith between
Bonneau General, Inc., Bonneau Holdings, Inc., O-Ray Holdings, Inc. and the
Agent (the "Agent"). All capitalized terms not defined herein shall have the
definitions therein set forth.
1. The undersigned is the duly authorized and acting Registrar and as
such has sole custody of and is solely responsible for the Registration Books.
2. The Pledgors are all of the general and limited partners of the
Partnership and their interests in the Partnership (the "Partnership
Interests") are reflected as such on the Registration Books. As of the date
hereof, Schedule 1 hereto sets forth the Partnership Interests being all
interests of all partners, general, special and limited, in the Partnership.
3. The undersigned, by execution of this Certificate, acknowledges
receipt of irrevocable instructions and direction from the Pledgors,
acknowledged and agreed to by the Partnership, (i) to register on the
Registration Books the lien in favor of the Secured Parties upon the
Partnership Interests as a first priority security interest therein (the
"Registered Lien"), and (ii) to otherwise fully comply with the other
provisions herein contained. The execution of this Certificate by the Pledgors
and the Partnership shall constitute such irrevocable instructions and
direction.
4. The Registered Lien on the Partnership Interests has been duly
registered of record on the Registration Books. There is no registration of
record of, or to the knowledge of the Registrar any claim with respect to, any
lien or other interest or restriction of transfer on the Partnership Interests,
other than Existing Bank Liens and the Registered Lien.
5. The Registrar will not cause, suffer or permit to occur any
transfer of record of (i) the Partnership Interests or any interest therein, or
(ii) any other interest in the Partnership the effect of which transfer would
be to lessen the percentage interest in the Partnership of the Partnership
Interests as specified in paragraph 2 above, except in accordance with the
prior written consent, or as provided below at the direction, of the Agent.
6. Upon receipt of written notice from the Agent that an Event of
Default has occurred and that all or any part of the Partnership Interests or
any interest therein has been sold, assigned or otherwise transferred by such
holder pursuant to the Loan Documents, and identifying the assignee or
assignees and the interest or interests assigned, the Registrar shall forthwith
cause the Registration Books to be duly noted to reflect each of such transfers
of record.
<PAGE> 260
7. The Registrar shall not resign or retire or permit its removal
except upon circumstances where the successor Registrar shall provide to the
Agent its written irrevocable acknowledgement of each of the above
undertakings.
This the ___ day of April, 1996.
REGISTRAR:
BONNEAU GENERAL, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
ACKNOWLEDGED AND AGREED TO, THIS THE _____ DAY OF APRIL, 1996
BONNEAU GENERAL, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
BONNEAU HOLDINGS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
O-RAY HOLDINGS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
FOSTER GRANT GROUP, L.P.
By: BONNEAU GENERAL, INC.,
as general partner
By:
---------------------------
Name:
-------------------------
Title:
------------------------
<PAGE> 261
SCHEDULE 1
REGISTERED INTERESTS IN PARTNERSHIP
<PAGE> 262
EXHIBIT 10.6(f)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is made and entered into as
of this 3rd day of April, 1996 by BEC GROUP, INC., a Delaware corporation (the
"Borrower") and EACH OF THE UNDERSIGNED SUBSIDIARIES OF THE BORROWER (each a
"Guarantor" and collectively the "Guarantors" and together with the Borrower,
the "Grantors"), and NATIONSBANK, N.A., a national banking association, as
Agent (the "Agent") for each of the lenders (the "Lenders" and collectively
with the Agent, the "Secured Parties") now or hereafter party to the Credit
Agreement (as defined below). All capitalized terms used but not otherwise
defined herein shall have the respective meanings assigned thereto in the
Credit Agreement (as defined below);
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide to the
Borrower certain term loan, revolving credit and letter of credit facilities
pursuant to the terms of that certain Credit Agreement among the Borrower, the
Agent and the Lenders dated as of April 3, 1996 (as from time to time amended,
supplemented or replaced, the "Credit Agreement"); and
WHEREAS, each Guarantor is a wholly-owned direct or indirect
Subsidiary of the Borrower and will materially benefit from the loans and
advances made and to be made, and the letters of credit issued and to be
issued, under the Credit Agreement, and each Guarantor is willing to enter into
this Agreement to provide an inducement for the Lenders and the Agent to make
loans and advances, and to issue letters of credit, thereunder; and
WHEREAS, the Guarantors have entered into a Guaranty Agreement (the
"Guaranty Agreement") of even date herewith pursuant to which each Guarantor
has guaranteed payment and performance of the Borrower's Obligations under the
Credit Agreement; and
WHEREAS, as collateral security for payment and performance of each
Guarantor's obligations under the Guaranty Agreement and the Borrower's
Obligations under the Credit Agreement, as applicable, each Grantor is willing
to grant to the Agent for the benefit of the Lenders a security interest in
certain of its personal property and assets;
NOW, THEREFORE, in order to induce the Secured Parties to enter into
the Loan Documents and in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST. As collateral security for the
payment and satisfaction of all obligations and liabilities of each Guarantor
under the Guaranty Agreement and all of the Borrower's Obligations under the
Credit Agreement (collectively,
<PAGE> 263
the "Secured Obligations"), each Grantor hereby pledges and collaterally
assigns to the Agent for the benefit of the Lenders and grants to the Agent for
the benefit of the Lenders a continuing first priority security interest in and
to all of the following property of such Grantor (except for liens granted to
the predecessor in interest of the Agent pursuant to the Subsidiary Security
Agreement dated March 6, 1995, which liens are to be terminated effective as of
the Funding Date ("Existing Bank Liens")), whether now owned or existing or
hereafter acquired or arising and wheresoever located:
(a) All accounts, accounts receivable, contracts, notes,
bills, acceptances, choses in action, chattel paper, instruments,
documents and other forms of obligations at any time owing to each
Grantor arising out of goods sold or leased or for services rendered
by such Grantor, the proceeds thereof and all of such Grantor's rights
with respect to any goods represented thereby, whether or not
delivered, goods returned by customers and all rights as an unpaid
vendor or lienor, including rights of stoppage in transit and of
recovering possession by proceedings including replevin and
reclamation, together with all customer lists, books and records,
ledger and account cards, computer tapes, software, disks, printouts
and records, whether now in existence or hereafter created, relating
thereto (collectively referred to hereinafter as "Accounts");
(b) All inventory of each Grantor, including without
limitation, all goods manufactured or acquired for sale or lease, and
any piece goods, raw materials, work in process and finished
merchandise, findings or component materials, and all supplies, goods,
incidentals, office supplies, packaging materials and any and all
items used or consumed in the operation of the business of such
Grantor or which may contribute to the finished product or to the
sale, promotion and shipment thereof, in which such Grantor now or at
any time hereafter may have an interest, whether or not the same is in
transit or in the constructive, actual or exclusive occupancy or
possession of such Grantor or is held by such Grantor or by others for
such Grantor's account (collectively referred to hereinafter as
"Inventory");
(c) All goods of each Grantor, including without
limitation, all machinery, equipment, motor vehicles, parts, supplies,
apparatus, appliances, tools, patterns, molds, dies, blueprints,
fittings, furniture, furnishings, fixtures and articles of tangible
personal property of every description now or hereafter owned by a
Grantor or in which such Grantor may have or may hereafter acquire any
interest, at any location (collectively referred to hereinafter as
"Equipment");
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(d) All general intangibles of each Grantor in which a
Grantor now has or hereafter acquires any rights, including but not
limited to, causes of action, corporate or business records,
inventions, designs, patents, patent applications, trademarks,
trademark registrations and applications therefor, goodwill, trade
names, trade secrets, trade processes, copyrights, copyright
registrations and applications therefor, licenses, permits,
franchises, customer lists, computer programs, all claims under
guaranties, tax refund claims, rights and claims against carriers and
shippers, leases, claims under insurance policies, all rights to
indemnification and all other intangible personal property and
intellectual property of every kind and nature (collectively referred
to hereinafter as "General Intangibles");
(e) All rights now or hereafter accruing to each Grantor
under contracts, leases, agreements or other instruments to perform
services, to hold and use land and facilities, and to enforce all
rights thereunder (collectively referred to hereinafter as "Contract
Rights");
(f) All books and records relating to any of the
Collateral (as hereinafter defined) (including without limitation,
customer data, credit files, computer programs, printouts, and other
computer materials and records of each Grantor pertaining to any of
the foregoing); and
(g) All accessions to, substitutions for and all
replacements, products and proceeds of the foregoing, including
without limitation proceeds of insurance policies insuring the
Collateral (as hereinafter defined).
All of the property and interests in property described in subsections
(a) through (g) and all other property and interests in personal property which
shall, from time to time, secure the Secured Obligations are herein
collectively referred to as the "Collateral."
2. FINANCING STATEMENTS. At the time of execution of this
Agreement, each Grantor shall have furnished the Agent with properly executed
financing statements and assignments as prescribed by the Uniform Commercial
Code as presently in effect in the states where the Collateral is located,
prepared and approved by the Agent in form and number sufficient for filing
wherever required with respect to the Collateral, in order that the Agent, for
the benefit of the Lenders, shall have a duly perfected security interest of
record in the Collateral, to the extent a security interest in such Collateral
can be perfected by filing a financing statement, following the filing of such
financing statements with the appropriate local and state governmental
authorities, subject only to Permitted Liens and Existing Bank Liens. Each
Grantor shall execute as reasonably required by the Agent any additional
financing statements or other documents to
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effect the same, together with any necessary continuation statements so long as
this Agreement remains in effect.
3. MAINTENANCE OF SECURITY INTEREST. Each Grantor will, from
time to time, upon the request of the Agent, deliver specific assignments of
Collateral, together with such other instruments and documents, financing
statements, amendments thereto, assignments or other writings as the Agent may
reasonably request to carry out the terms of this Agreement or to protect or
enforce the Agent's security interest in the Collateral.
With respect to any and all Collateral to be secured and conveyed
under this Agreement, each Grantor agrees to do and cause to be done all things
necessary to perfect and keep in full force the security interest granted in
favor of the Agent for the benefit of the Lenders, including, but not limited
to, the prompt payment of all fees and expenses incurred in connection with any
filings made to perfect or continue a security interest in the Collateral in
favor of the Agent for the benefit of the Lenders.
Each Grantor agrees to make appropriate entries upon its financial
statements and books and records disclosing the Agent's (for the benefit of the
Lenders) security interest granted hereunder.
4. RECEIPT OF PAYMENT. In the event an Event of Default shall
occur and be continuing and a Grantor (or any of its affiliates, subsidiaries,
stockholders, directors, officers, employees or agents) shall receive any
proceeds of Collateral consisting of monies, checks, notes, drafts or any other
items of payment, each Grantor shall hold all such items of payment in trust
for the Agent, for the benefit of the Lenders, and as the property of the
Agent, for the benefit of the Lenders, separate from the funds of such Grantor,
and no later than the first Business Day following the receipt thereof, such
Grantor shall cause the same to be forwarded to the Agent for its custody and
possession on behalf of the Lenders as additional Collateral.
5. COLLECTIONS; AGENT'S RIGHT TO NOTIFY ACCOUNT DEBTORS AND TO
ENDORSE A GRANTOR'S NAME. Each Grantor hereby authorizes the Agent, on behalf
of the Lenders, at all times after the occurrence and during the continuation
of an Event of Default (a) to open such Grantor's mail and collect any and all
amounts due to such Grantor from Persons obligated on any Accounts ("Account
Debtors"); (b) to take over such Grantor's post office boxes or make other
arrangements as the Agent, on behalf of the Lenders, deems necessary to receive
such Grantor's mail, including notifying the post office authorities to change
the address for delivery of such Grantor's mail to such address as the Agent,
on behalf of the Lenders, may designate; and (c) to notify any or all Account
Debtors that the Accounts have been assigned to the Agent for the benefit of
the Lenders and that Agent has a security interest therein for the benefit of
the Lenders (provided that the Agent may
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at any time give such notice to an Account Debtor that is a department, agency
or authority of the United States government). Each Grantor at all times after
the occurrence and during the continuation of an Acceleration Event (as
hereinafter defined) irrevocably makes, constitutes and appoints the Agent, for
the benefit of the Lenders, (and all Persons designated by the Agent for that
purpose) as such Grantor's true and lawful attorney (and agent-in-fact) to
endorse such Grantor's name on any checks, notes, drafts or any other payment
relating to and/or proceeds of the Collateral which comes into the Agent's
possession or Agent's control, and deposit the same to the account of the
Agent, for the benefit of the Lenders, on account of the Secured Obligations.
The Agent shall promptly furnish each Grantor with a copy of any such notice
sent with respect to Accounts of such Grantor pursuant to clause (c) of this
Section 5 and each Grantor hereby agrees that any such notice, in the Agent's
sole discretion, may be sent on such Grantor's stationery, in which event such
Grantor shall co-sign such notice with the Agent. For purposes of this
Agreement, "Acceleration Event" means that (a) an Event of Default has occurred
and is continuing and (b) the Secured Obligations have become due and payable
(whether by acceleration, at final maturity or otherwise).
6. COVENANTS. Each Grantor covenants with the Agent that from
and after the date of this Agreement until termination hereof in accordance
with Section 26 hereof:
(a) INSPECTION. The Agent (by any of its officers,
employees and agents), on behalf of the Lenders, shall have the right
to the extent reasonably requested and upon reasonable prior notice,
at any reasonable time or times during such Grantor's usual business
hours, to inspect the Collateral, all records related thereto (and to
make extracts or copies from such records), and the premises upon
which any of the Collateral is located, to discuss such Grantor's
affairs and finances with any Person (other than Account Debtors) and
to verify with any Person other than Account Debtors the amount,
quality, quantity, value and condition of, or any other matter
relating to, the Collateral and, if an Event of Default has occurred
and is continuing, to discuss such Grantor's affairs and finances with
such Grantor's Account Debtors and to verify the amount, quality,
value and condition of, or any other matter relating to, the
Collateral and such Account Debtors. Upon or after the occurrence and
during the continuation of an Acceleration Event, the Agent may at any
time and from time to time employ and maintain on such Grantor's
premises a custodian selected by the Agent who shall have full
authority to do all acts necessary to protect the Agent's (for the
benefit of the Lenders) interest. All expenses incurred by the Agent,
on behalf of the Lenders, by reason of the employment of such
custodian shall be paid by such Grantor, added to the Secured
Obligations and secured by the Collateral.
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(b) ASSIGNMENTS, RECORDS AND SCHEDULES OF ACCOUNTS. Each
Grantor shall keep accurate and complete records of its Accounts
("Account Records") and from time to time at intervals designated by
the Agent such Grantor shall provide the Agent with a schedule of
Accounts in form and substance acceptable to the Agent describing all
Accounts created or acquired by such Grantor ("Schedule of Accounts");
provided, however, that such Grantor's failure to execute and deliver
any such Schedule of Accounts shall not affect or limit the Agent's
security interest or other rights in and to any Accounts for the
benefit of the Lenders. If requested by the Agent, each Grantor shall
furnish the Agent with copies of proof of delivery and other documents
relating to the Accounts so scheduled, including without limitation
repayment histories and present status reports (collectively, "Account
Documents") and such other matter and information relating to the
status of then existing Accounts as the Agent shall request. No
Grantor shall remove any Account Records or Account Documents or
change its chief executive offices from the locations set forth in
Exhibit A hereto without 30 days prior written notice to the Agent as
provided in Section 20 hereof.
(c) NOTICE REGARDING DISPUTED ACCOUNTS. In the event any
amounts due and owing in excess of $250,000 are in dispute between any
Account Debtor and a Grantor (which shall include without limitation
any dispute in which an offset claim or counterclaim may result), such
Grantor shall provide the Agent with written notice thereof as soon as
practicable, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy.
(d) VERIFICATION OF ACCOUNTS. If an Event of Default has
occurred and is continuing, any of the Agent's officers, employees or
agents shall have the right, at any reasonable time or times
hereafter, to verify with Account Debtors the validity, amount or any
other matter relating to any Accounts and, whether or not a Default or
Event of Default has occurred, any of the Agent's officers, employees
or agents shall have the right to verify the same with such Grantor.
(e) CHANGE OF TRADE STYLES. No Grantor shall change,
amend, alter, terminate, or cease using its material trade names or
styles under which it sells Inventory as of the date of this Agreement
("Trade Styles"), or use additional Trade Styles, without giving the
Agent at least 30 days' prior written notice.
(f) SAFEKEEPING OF INVENTORY. Each Grantor shall be
responsible for the safekeeping of its Inventory, and, subject to
Section 16 hereof, in no event shall the Agent have any responsibility
for:
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(i) Any loss or damage to Inventory or
destruction thereof occurring or arising in any manner or
fashion from any cause;
(ii) Any diminution in the value of
Inventory; or
(iii) Any act or default of any carrier,
warehouseman, bailee or forwarding agency thereof or other
Person in any way dealing with or handling Inventory.
(g) RECORDS AND SCHEDULES OF INVENTORY. Each Grantor
shall keep correct and accurate records itemizing and describing the
kind, type, location and quantity of Inventory, its cost therefor and
the selling price of Inventory held for sale, and the daily
withdrawals therefrom and additions thereto, and shall furnish to the
Agent from time to time at reasonable intervals designated by the
Agent, a current schedule of Inventory ("Schedule of Inventory") based
upon its most recent physical inventory and its daily inventory
records. Each Grantor shall conduct a physical inventory, no less
than annually, and shall furnish to the Agent such other documents and
reports as the Agent shall reasonably request with respect to the
Inventory. No Grantor shall, other than in the ordinary course of
business in connection with its sale, remove any material amount of
Inventory from the locations set forth on Exhibit B hereto to a
location not also set forth on Exhibit B hereto, each of such
locations being owned by a Grantor unless otherwise indicated, without
30 days prior written notice to the Agent as provided in Section 20
hereof.
(h) RETURNS OF INVENTORY. If any Account Debtor returns
any Inventory to a Grantor after shipment thereof, and such return
generates a credit in excess of $250,000 in the aggregate on any
Account or Accounts of such Account Debtor, such Grantor shall notify
the Agent of the same as soon as practicable.
(i) EVIDENCE OF OWNERSHIP OF EQUIPMENT. The Grantors, as
soon as practicable following a request therefor by the Agent, shall
deliver to the Agent any and all evidence of ownership of any of the
Equipment (including without limitation certificates of title and
applications for title).
(j) RECORDS AND SCHEDULES OF EQUIPMENT. The Grantors
shall maintain accurate, itemized records itemizing and describing the
kind, type, quality, quantity and value of its Equipment and shall
furnish the Agent upon request with a current schedule containing the
foregoing information, but, other than during the continuance of an
Event of Default, not more often than once per fiscal quarter. No
Grantor shall remove any material portion of the Equipment from the
locations set forth in Exhibit C hereto to a location not also
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set forth on Exhibit C hereto without at least 30 days' prior written
notice to the Agent as provided in Section 20 hereof.
(k) SALE OR MORTGAGE OF EQUIPMENT. Other than in the
ordinary course of business with respect to disposition of obsolescent
Equipment or replacement of Equipment with other Equipment performing
similar functions and having similar or better utility and value, and
except as permitted by the Credit Agreement prior to the occurrence
and continuance of an Event of Default, no Grantor shall sell,
exchange, lease, mortgage, encumber, pledge or otherwise dispose of or
transfer any of the Equipment or any part thereof without the prior
written consent of the Agent.
(l) MAINTENANCE OF EQUIPMENT. Each Grantor shall keep and
maintain its Equipment in good operating condition and repair,
ordinary wear and tear excepted. No Grantor shall permit any such
items to become a fixture to real property (unless such Grantor has
granted the Agent for the benefit of the Lenders a lien on such real
property) or accessions to other personal property.
7. WARRANTIES AND REPRESENTATIONS REGARDING COLLATERAL GENERALLY.
Each Grantor warrants and represents that it is and, except as permitted by the
Credit Agreement, will continue to be the owner of the Collateral hereunder,
now owned and upon the acquisition of the same, free and clear of all Liens,
claims, encumbrances and security interests other than the security interest in
favor of the Agent for the benefit of the Lenders hereunder and Permitted
Liens, and that it will defend such Collateral and any products and proceeds
thereof against all claims and demands of all Persons (other than holders of
Permitted Liens) at any time claiming the same or any interest therein adverse
to the Secured Parties.
8. ACCOUNT WARRANTIES AND REPRESENTATIONS. With respect to its
Accounts, each Grantor warrants and represents to the Agent for the benefit of
the Lenders that the Agent and each Lender may rely on all statements or
representations made by such Grantor on or with respect to any Schedule of
Accounts prepared and delivered by it and that all Account Records and Account
Documents are located and shall be kept only at such Grantor's locations as set
forth on Exhibit A attached hereto and incorporated herein by reference,
provided that any Inventory may be relocated to any other location set forth on
such Exhibit A, or at such other locations as to which such Grantor has
notified the Agent in writing not less than 30 days prior to such relocation,
and, unless otherwise indicated in writing by such Grantor, that:
(a) They are genuine, are in all respects what they
purport to be, are not evidenced by an instrument or document or, if
evidenced by an instrument or document, are only evidenced by one
original instrument or document;
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(b) They cover bona fide sales and deliveries of
Inventory usually dealt in by such Grantor, or the rendition by such
Grantor of services, to an Account Debtor in the ordinary course of
business or as permitted by the Credit Agreement;
(c) The amounts of the face value shown on any Schedule
of Accounts provided to the Agent and/or all invoices and statements
delivered to the Agent, with respect to any Account, are actually
owing to such Grantor and are not contingent for any reason; and there
are no setoffs, discounts, allowances, claims, counterclaims or
disputes of any kind or description in an amount greater than $250,000
in the aggregate, or greater than $50,000 individually, existing or
asserted with respect thereto and such Grantor has not made any
agreement with any Account Debtor thereunder for any deduction
therefrom, except as may be stated in the Schedule of Accounts and
reflected in the calculation of the face value of each respective
invoice related thereto;
(d) Except for conditions generally applicable to such
Grantor's industry and markets, there are no facts, events, or
occurrences known to such Grantor pertaining particularly to any
Accounts which are reasonably expected to materially impair in any way
the validity, collectibility or enforcement of Accounts that would
reasonably be likely, in the aggregate, to be of material economic
value, or in the aggregate materially reduce the amount payable
thereunder from the amount of the invoice face value shown on any
Schedule of Accounts, and on all contracts, invoices and statements
delivered to the Agent, with respect thereto;
(e) The goods or services giving rise thereto are not,
and were not at the time of the sale or performance thereof, subject
to any Lien, claim, encumbrance or security interest, except those of
the Agent for the benefit of the Lenders and those removed or
terminated prior to the date hereof and Permitted Liens;
(f) Its Accounts have not been pledged to any Person
other than to the Agent, for the benefit of the Lenders, under this
Agreement and will be owned by such Grantor free and clear of any
Liens, claims, encumbrances or security interests except Permitted
Liens;
(g) The Agent's security interest therein for the benefit
of the Lenders will not be subject to any offset, deduction,
counterclaim, Lien or other adverse condition, other than Permitted
Liens; and
(h) The location of its chief executive office and any
state in which it (i) has a place of business in only one county of
such state or (ii) resides in such state (within the
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meaning of the applicable Uniform Commercial Code) but does not have
any place of business in such state, is set forth on Exhibit A
attached hereto and incorporated herein by reference and each Grantor
shall deliver to the Agent not less than 30 days written notice prior
to any change of such location or status of places of business or
residency.
9. INVENTORY WARRANTIES AND REPRESENTATIONS. With respect to its
Inventory, each Grantor warrants and represents to the Agent for the benefit of
the Lenders that (a) the Secured Parties may rely on all statements or
representations made by such Grantor on or with respect to any Inventory, (b)
all Inventory, other than Inventory consisting of samples utilized by
salespeople or otherwise having a reasonable value of less than $15,000 in the
aggregate for any location, is located and shall be kept only at such Grantor's
locations as set forth on Exhibit B attached hereto and incorporated herein by
reference, provided that any Inventory may be relocated to any other location
set forth on such Exhibit B, or is Inventory in transit or at such other
locations as to which such Grantor has notified the Agent in writing not less
than 30 days prior to such relocation and has provided to the Agent executed
financing statements for such locations and (c) unless otherwise indicated in
writing by such Grantor:
(i) None of its Inventory is or will be subject to any
Lien, claim, encumbrance or security interest whatsoever, except for
the security interest of the Agent, for the benefit of the Lenders,
hereunder and Permitted Liens;
(ii) No Inventory of such Grantor that would reasonably be
likely, in the aggregate, to be of material economic value is now, and
shall not at any time or times hereafter be, stored with a bailee,
warehouseman, or similar party without the Agent's prior written
consent and, if the Agent gives such consent, such Grantor will
concurrently therewith cause any such bailee, warehouseman, or similar
party to issue and deliver to the Agent, in form and substance
reasonably acceptable to the Agent, warehouse receipts therefor in the
Agent's name and take such other action and be party to such document
as deemed necessary or prudent by the Agent to maintain the security
interest of the Lenders in such Inventory;
(iii) No Inventory is under consignment to any Person, the
value of which, when aggregated with all other Inventory under
consignment of such Grantor and all other Material Subsidiaries, would
exceed $500,000; and
(iv) No Inventory of such Grantor is at or shall be kept
at any location that is leased by such Grantor from any other Person
unless such location and lessee is set forth on Exhibit B hereto and
such lessee waives its rights with respect to such Inventory in form
and substance acceptable to the Agent
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10. EQUIPMENT REPRESENTATIONS AND WARRANTIES. With respect to its
Equipment, each Grantor warrants and represents to the Agent for the benefit of
the Lenders that the Secured Parties may rely on all statements or
representations made by such Grantor on or with respect to any Equipment and
that all Equipment is located and shall be kept only at such Grantor's
locations set forth in Exhibit C hereto or at such other locations as to which
such Grantor has notified the Agent in writing not less than 30 days prior to
such relocation and has provided to the Agent executed financing statements for
such location and, unless otherwise indicated in writing by such Grantor, that:
(a) None of its Equipment is or will be subject to any
Lien, claim, encumbrance or security interest whatsoever, except for
the security interest of the Agent, for the benefit of the Lenders,
hereunder and Permitted Liens;
(b) No Equipment of such Grantor is at or shall be kept
at any location that is leased by such Grantor from any other Person
unless such location and lessee is set forth on Exhibit C hereto and
such lessee waives its rights with respect to such Equipment in form
and substance acceptable to the Agent.
11. CASUALTY AND LIABILITY INSURANCE REQUIRED.
(a) Each Grantor will keep the Collateral continuously
insured against such risks as are customarily insured against by
businesses of like size and type engaged in the same or similar
operations including, without limiting the generality of any other
covenant herein contained:
(i) casualty insurance on the Inventory and the
Equipment in an amount not less than the full insurable value
thereof, against loss or damage by theft, fire and lightning
and other hazards ordinarily included under uniform broad form
standard extended coverage policies, limited only as may be
provided in the standard broad form of extended coverage
endorsement at the time in use in the states in which the
Collateral is located;
(ii) comprehensive general liability insurance
against claims for bodily injury, death or property damage
occurring with or about such Collateral (such coverage to
include provisions waiving subrogation against the Secured
Parties) in amounts as shall be reasonably satisfactory to
Agent;
(iii) liability insurance with respect to the
operation of its facilities under the workers' compensation
laws of the states in which such Collateral is located; and
(iv) business interruption insurance.
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(b) Each insurance policy obtained in satisfaction of the
requirements of Section 11(a) hereof:
(i) may be provided by blanket policies now or
hereafter maintained by each Grantor or its parent companies;
(ii) shall be issued by such insurer (or insurers)
as shall be financially responsible, of recognized standing
and reasonably acceptable to the Agent;
(iii) shall be in such form and have such
provisions (including without limitation the loss payable
clause, the waiver of subrogation clause, the deductible
amount, if any, and the standard mortgagee endorsement
clause), as are generally considered standard provisions for
the type of insurance involved and are reasonably acceptable
in all respects to the Agent;
(iv) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer
without at least 30 days' prior written notice to the Agent,
except for non- payment of premium, in which case such
policies shall provide ten (10) days' prior written notice;
(v) without limiting the generality of the
foregoing, all insurance policies where applicable under
Section 11(a)(i) carried on the Collateral shall name the
Agent, for the benefit of the Lenders, as loss payee and a
party insured thereunder in respect of any claim for payment
in excess of $250,000.
(c) Prior to expiration of any such policy, such Grantor
shall furnish the Agent with evidence satisfactory to the Agent that
the policy or certificate has been renewed or replaced or is no longer
required by this Agreement.
(d) Each Grantor hereby irrevocably makes, constitutes
and appoints the Agent (and all officers, employees or agents
designated by the Agent), for the benefit of the Lenders, effective
upon the occurrence and during the continuance of an Acceleration
Event, as such Grantor's true and lawful attorney (and agent-in-fact)
for the purpose of making, settling and adjusting claims under such
policies of insurance, endorsing the name of such Grantor on any
check, draft, instrument or other item or payment for the proceeds of
such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance.
(e) In the event such Grantor shall fail to maintain, or
fail to cause to be maintained, the full insurance coverage required
hereunder or shall fail to keep any of its Collateral
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in good repair and good operating condition, the Agent may (but shall
be under no obligation to), without waiving or releasing any Secured
Obligation or Event of Default by such Grantor hereunder, contract for
the required policies of insurance and pay the premiums on the same or
make any required repairs, renewals and replacements; and all sums so
disbursed by Agent, including reasonable attorneys' fees, court costs,
expenses and other charges related thereto, shall be payable on demand
by such Grantor to the Agent and shall be additional Secured
Obligations secured by the Collateral.
(f) Each Grantor agrees that to the extent that it shall
not carry insurance required by Section 11(a) hereof, it shall in the
event of any loss or casualty pay promptly to the Agent, for the
benefit of the Lenders, for application in accordance with the
provisions of Section 11(h) hereof, such amount as would have been
received as Net Proceeds (as hereinafter defined) by the Agent, for
the benefit of the Lenders, under the provisions of Section 11(h)
hereof had such insurance been carried to the extent required.
(g) The Net Proceeds of the insurance carried pursuant to
the provisions of Sections 11(a)(ii) and 11(a)(iii) hereof shall be
applied by such Grantor toward extinguishment of the defect or claim
or satisfaction of the liability with respect to which such insurance
proceeds may be paid.
(h) The Net Proceeds of the insurance carried with
respect to the Collateral pursuant to the provisions of Section
11(a)(i) hereof shall be paid to such Grantor and held by such Grantor
in a separate account and applied as follows: (i) as long as no Event
of Default shall have occurred and be continuing, after any loss under
any such insurance and payment of the proceeds of such insurance, each
Grantor shall have a period of 30 days after payment of the insurance
proceeds with respect to such loss to elect to either (x) repair or
replace the Collateral so damaged, (y) deliver such Net Proceeds to
the Agent, for the benefit of the Lenders, as additional Collateral or
(z) apply such Net Proceeds to the acquisition of tangible assets used
or useful in the conduct of the business of such Grantor, subject to
the provisions of this Agreement. If such Grantor elects to repair or
replace the Collateral so damaged, such Grantor agrees the Collateral
shall be repaired to a condition substantially similar to its
condition prior to damage or replaced with Collateral in a condition
substantially similar to the condition of the Collateral so replaced
prior to damage; and (ii) at all times during which an Event of
Default shall have occurred and be continuing, after any loss under
such insurance and payment of the proceeds of such insurance, such
Grantor shall immediately deliver such Net Proceeds to such Agent, for
the benefit of the Lenders, as additional Collateral.
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(i) "Net Proceeds" when used with respect to any
insurance proceeds shall mean the gross proceeds from such proceeds,
award or other amount, less all taxes, fees and expenses (including
attorneys' fees) incurred in the realization thereof.
(j) In case of any material damage to or destruction of
all or any part of the Collateral pledged hereunder by a Grantor, such
Grantor shall give prompt notice thereof to the Agent. Each such
notice shall describe generally the nature and extent of such damage,
destruction, taking, loss, proceeding or negotiations. Each Grantor
is hereby authorized and empowered to adjust or compromise any loss
under any such insurance.
12. EVENTS OF DEFAULT. It is understood and agreed that the
occurrence of any one or more of the following shall constitute an "Event of
Default" hereunder and shall entitle the Agent, for the benefit of the Lenders,
to take such actions as are elsewhere provided in this Agreement in respect of
Events of Default: (a) an "Event of Default" as defined in the Credit Agreement
shall have occurred and be continuing; or (b) a Grantor shall have failed to
pay the Agent, for the benefit of the Lenders, all of the Secured Obligations
owed to it in accordance with the Guaranty Agreement or the Credit Agreement,
as applicable, on the Business Day on which the Agent has demanded such
payment; or (c) any representation or warranty made by a Grantor herein, in the
Credit Agreement in the Guaranty Agreement or in any other existing or future
agreement with any of the Secured Parties shall prove to have been false in any
material respect when made; or (d) any covenant made by a Grantor herein (other
than those covenants contained in Sections 6(a) hereof) or in the Guaranty
Agreement (other than any covenant contained in Section 3 thereof) is breached,
violated, or not complied with and not cured within 30 days after notice
thereof from any of the Secured Parties; provided, however, that any breach,
violation or non-compliance with any covenant contained in Section 6(a) hereof
or Section 3 of the Guaranty Agreement shall immediately result in an Event of
Default; or (e) any covenant made by a Grantor in any other Loan Document or
any future agreement with any of the Secured Parties is breached, violated, or
not complied with and not cured within any grace period applicable thereto, or
if no grace period is applicable and default thereunder does not result
immediately from such noncompliance, then not cured within 30 days after notice
thereof from any of the Secured Parties, and results in a material adverse
change to the Collateral taken as a whole or its value taken as a whole; or (f)
any material uninsured damage to or loss, theft or destruction of any of the
Collateral shall occur.
13. RIGHTS AND REMEDIES UPON ACCELERATION EVENT. Upon and after
an Acceleration Event, the Agent shall have the following rights and remedies
on behalf of the Lenders in addition to any
14
<PAGE> 276
rights and remedies set forth elsewhere in this Agreement, all of which may be
exercised with or without notice to a Grantor:
(a) All of the rights and remedies of a secured party
under the Uniform Commercial Code of the state where such rights and
remedies are asserted, or under other applicable law, all of which
rights and remedies shall be cumulative, and none of which shall be
exclusive, to the extent permitted by law, in addition to any other
rights and remedies contained in this Agreement, the Guaranty
Agreement or any other Loan Document;
(b) The right to foreclose the Liens and security
instruments created under this Agreement by any available judicial
procedure or without judicial process;
(c) The right to (i) enter upon the premises of a Grantor
through self-help and without judicial process, without first
obtaining a final judgment or giving such Grantor notice and
opportunity for a hearing on the validity of the Agent's claim and
without any obligation to pay rent to such Grantor, or any other place
or places where any Collateral is located and kept, and remove the
Collateral therefrom to the premises of the Agent or any agent of the
Agent, for such time as the Agent may desire, in order effectively to
collect or liquidate the Collateral, and/or (ii) require such Grantor
to assemble the Collateral and make it available to the Agent at a
place to be designated by the Agent that is reasonably convenient to
both parties;
(d) The right to (i) demand payment of the Accounts; (ii)
enforce payment of the Accounts, by legal proceedings or otherwise;
(iii) exercise all of a Grantor's rights and remedies with respect to
the collection of the Accounts; (iv) settle, adjust, compromise,
extend or renew the Accounts; (v) settle, adjust or compromise any
legal proceedings brought to collect the Accounts; (vi) if permitted
by applicable law, sell or assign the Accounts upon such terms, for
such amounts and at such time or times as the Agent deems advisable;
(vii) discharge and release the Accounts; (viii) take control, in any
manner, of any item of payment or proceeds referred to in Section 4
above; (ix) prepare, file and sign a Grantor's name on a Proof of
Claim in bankruptcy or similar document against any Account Debtor;
(x) prepare, file and sign a Grantor's name on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection
with the Accounts; (xi) endorse the name of a Grantor upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or
similar document or agreement relating to the Accounts or Inventory;
(xii) use a Grantor's stationery for verifications of the Accounts and
notices thereof to Account Debtors; (xiii) use the information
recorded on or contained in any data processing equipment and computer
15
<PAGE> 277
hardware and software relating to any Collateral to which a Grantor
has access; and (xiv) do all acts and things and execute all documents
necessary, in Agent's sole discretion, to collect the Accounts; and
(e) The right to sell, assign, lease or to otherwise
dispose of all or any Collateral in its then existing condition, or
after any further manufacturing or processing thereof, at public or
private sale or sales, with such notice as may be required by law, in
lots or in bulk, for cash or on credit, with or without
representations and warranties, all as the Agent, in its sole
discretion, may deem advisable. The Agent shall have the right to
conduct such sales on a Grantor's premises or elsewhere and shall have
the right to use a Grantor's premises without charge for such sales
for such time or times as the Agent may see fit. The Agent may, if it
deems it reasonable, postpone or adjourn any sale of the Collateral
from time to time by an announcement at the time and place of such
postponed or adjourned sale, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
Each Grantor agrees that the Agent has no obligation to preserve
rights to the Collateral against prior parties or to marshall any
Collateral for the benefit of any Person. The Agent is hereby granted
a license or other right to use, without charge, each Grantor's
labels, patents, copyrights, rights of use of any name, trade secrets,
trade names, trademarks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any Collateral and a
Grantor's rights under any license and any franchise agreement shall
inure to the Agent's benefit. If any of the Collateral shall require
repairs, maintenance, preparation or the like, or is in process or
other unfinished state, the Agent shall have the right, but shall not
be obligated to perform such repairs, maintenance, preparation,
processing or completion of manufacturing for the purpose of putting
the same in such saleable form as the Agent shall deem appropriate,
but the Agent shall have the right to sell or dispose of the
Collateral without such processing. In addition, each Grantor agrees
that in the event notice is necessary under applicable law, written
notice mailed to such Grantor in the manner specified herein seven (7)
days prior to the date of public sale of any of the Collateral or
prior to the date after which any private sale or other disposition of
the Collateral will be made shall constitute commercially reasonable
notice to such Grantor. All notice is hereby waived with respect to
any of the Collateral which threatens to decline speedily in value or
is of a type customarily sold on a recognized market. The Agent may
purchase all or any part of the Collateral at public or, if permitted
by law, private sale, free from any right of redemption which is
hereby expressly waived by such Grantor and, in lieu of actual payment
of such purchase price, may set off the amount of such
16
<PAGE> 278
price against the Secured Obligations. The net cash proceeds
resulting from the collection, liquidation, sale, lease or other
disposition of the Collateral shall be applied first to the expenses
(including all attorneys' fees) of retaking, holding, storing,
processing and preparing for sale, selling, collecting, liquidating
and the like, and then to the satisfaction of all Secured Obligations.
Any sale or other disposition of the Collateral and the possession
thereof by the Agent shall be in compliance with all provisions of
applicable law (including applicable provisions of the Uniform
Commercial Code). Each Grantor shall be liable to the Agent, for the
benefit of the Lenders, and shall pay to the Agent, for the benefit of
the Lenders, on demand any deficiency which may remain after such
sale, disposition, collection or liquidation of the Collateral. The
Agent shall remit to such Grantor or other Person entitled thereto any
surplus remaining after this Agreement has been terminated in
accordance with Section 26 hereof.
14. ANTI-MARSHALLING PROVISIONS. The right is hereby given by
each Grantor to the Agent, for the benefit of the Lenders, to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Agent without notice to, or the consent, approval or agreement of other
parties and interests, including junior lienors, which releases shall not
impair in any manner the validity of or priority of the Liens and security
interests in the remaining Collateral conferred under such documents, nor
release such Grantor from personal liability for the Secured Obligations hereby
secured. Notwithstanding the existence of any other security interest in the
Collateral held by the Agent, for the benefit of the Lenders, the Agent shall
have the right to determine the order in which any or all of the Collateral
shall be subjected to the remedies provided in this Agreement. The proceeds
realized upon the exercise of the remedies provided herein shall be applied by
the Agent, for the benefit of the Lenders, in the manner herein provided. Each
Grantor hereby waives any and all right to require the marshalling of assets in
connection with the exercise of any of the remedies permitted by applicable law
or provided herein.
15. APPOINTMENT OF AGENT AS A GRANTOR'S LAWFUL ATTORNEY. Without
limitation of any other provision of this Agreement, upon and after an
Acceleration Event, each Grantor irrevocably designates, makes, constitutes and
appoints the Agent(and all Persons designated by the Agent), for the benefit of
the Lenders, as such Grantor's true and lawful attorney (and agent-in-fact) to
take all actions and to do all things required to be taken or done by such
Grantor under this Agreement. All acts of the Agent or its designee taken
pursuant to this Section 15 are hereby ratified and confirmed and the Agent or
its designee shall not be liable for any acts of omission or commission nor for
any error of judgment or mistake of fact or law, other than as a result of its
gross negligence or willful misconduct. This power, being coupled with
17
<PAGE> 279
an interest, is irrevocable by such Grantor until this Agreement has been
terminated in accordance with Section 26 hereof.
16. RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC. The
enumeration of the rights and remedies of the Agent, for the benefit of the
Lenders, set forth in this Agreement is not intended to be exhaustive and the
exercise by any Secured Party of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative, and
shall be in addition to any other right or remedy given hereunder, or under any
other agreement between a Grantor and the Secured Parties or which may now or
hereafter exist in law or in equity or by suit or otherwise. No delay or
failure to take action on the part of any Secured Party in exercising any
right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude other
or further exercise thereof or the exercise of any other right, power or
privilege or shall be construed to be a waiver of any Event of Default. No
waiver by a party hereunder shall be effective unless it is in writing and
signed by the party making such waiver, and then only to the extent
specifically stated in such writing. No course of dealing between a Grantor
and the Agent or the Agent's agents or employees shall be effective to change,
modify or discharge any provision of this Agreement or to constitute a waiver
of any Event of Default. The Agent shall not have any liability for any error,
omission or delay of any kind occurring in the handling or liquidation of the
Collateral or for any damages resulting therefrom, other than as a result of
its gross negligence or willful misconduct.
17. SUPPLEMENTAL DOCUMENTATION. At the Agent's request, each
Grantor shall execute and deliver to the Agent, at any time or times hereafter,
all documents, instruments and other written matter that the Agent may request
to perfect and maintain perfected the Agent's (for the benefit of the Lenders)
security interest in the Collateral, in form and substance acceptable to the
Agent, and pay all charges, expenses and fees the Agent may reasonably incur in
filing any of such documents, and all taxes relating thereto. Each Grantor
agrees that a carbon, photographic, photostatic, or other reproduction of this
Agreement or a financing statement is sufficient as a financing statement and
may be filed by the Agent in any filing office.
18. WAIVERS. In addition to the other waivers contained herein,
each Grantor hereby expressly waives, to the extent permitted by law:
presentment for payment, demand, protest, notice of demand, notice of protest,
notice of default or dishonor, notice of payments and nonpayments and all other
notices and consents to any action taken by the Agent unless expressly required
by this Agreement.
18
<PAGE> 280
19. TRADE NAMES. Each Grantor represents that the only trade
name(s) or style(s) used by such Grantor are as set forth on Exhibit D, next to
the name of such Grantor.
20. NOTICE. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy (where the receipt of
such message is verified by return) expressly provided for hereunder, when
received at such telephone or telecopy number as may from time to time be
specified in written notice to the other parties hereto or otherwise received),
or if sent prepaid by certified or registered mail return receipt requested on
the third Business Day after the day on which mailed, or if sent prepaid by a
national overnight courier service, on the first Business Day after the day on
which delivered to such service against receipt therefor, addressed to such
party at said address:
(a) if to any Grantor: c/o BEC Group, Inc.
555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Mr. Ian G.H. Ashken
Telephone: (914) 967-9400
Telecopy: (914) 967-9405
with a copy to: Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
Attention: Robert L. Lawrence, Esq.
Telephone: (212) 541-6222
Telecopy: (212) 245-3009
(b) if to the Agent: NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Dana Weir, Agency Services
Telephone: (704) 388-3917
Telecopy: (704) 386-9923
with a copy to: NationsBank, N.A.
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: Mr. Christopher C. Browder,
Senior Vice President
Telephone: (212) 407-5332
Telecopy: (212) 751-6909
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 20.
19
<PAGE> 281
21. DEFINITIONS. All terms used herein shall be defined in
accordance with the appropriate definitions appearing in the Uniform Commercial
Code as in effect in New York, and such definitions are hereby incorporated
herein by reference and made a part hereof.
22. ENTIRE AGREEMENT. This Agreement, together with the Credit
Agreement, the Guaranty Agreement and other Loan Documents, constitutes and
expresses the entire understanding between the parties hereto with respect to
the subject matter hereof, and supersedes all prior agreements and
understandings, inducements, commitments or conditions, express or implied,
oral or written, except as herein contained. The express terms hereof control
and supersede any course of performance or usage of the trade inconsistent with
any of the terms hereof. Neither this Agreement nor any portion or provision
hereof may be changed, altered, modified, supplemented, discharged, canceled,
terminated, or amended orally or in any manner other than by an agreement, in
writing signed by the parties hereto.
23. SEVERABILITY. The provisions of this Agreement are
independent of and separable from each other. If any provision hereof shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision hereof, but this Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.
24. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the successors and assigns of each Grantor, and the right, remedies, powers,
and privileges of the Agent hereunder shall inure to the benefit of the
successors and assigns of the Agent; provided, however, that no Grantor shall
make any assignment hereof without the prior written consent of the Agent.
25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
26. TERMINATION; RELEASE. On the date when all of the Secured
Obligations have been Fully Satisfied, this Agreement and all obligations of
each Grantor hereunder shall terminate without delivery of any instrument or
performance of any act by any party, and the Collateral shall automatically be
released from the Liens created by this Agreement and all rights to such
Collateral shall automatically revert to such Grantor. Notwithstanding the
immediately preceding sentence, upon such termination of this Agreement, the
Agent shall reassign and redeliver such Collateral then held by or for the
Agent and execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.
27. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements shall be deemed to be Secured Obligations secured
20
<PAGE> 282
hereby, and each Lender or affiliate of a Lender party to any such Swap
Agreement shall be deemed to be a Secured Party hereunder.
28. GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY EXPRESSLY WAIVES
ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE
VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING,
AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE
BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY
PROVIDED BY SECTION 20 HEREOF, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW
YORK.
(d) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF
SHALL PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY PARTY OR ANY OF SUCH
PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT
PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PARTY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER,
BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY
HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
21
<PAGE> 283
[SIGNATURES ON FOLLOWING PAGES]
22
<PAGE> 284
IN WITNESS WHEREOF, the parties have duly executed this Security
Agreement on the day and year first written above.
GRANTORS:
BEC GROUP, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BEC DISTRIBUTION, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
THE BONNEAU COMPANY
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BONNEAU GENERAL, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BONNEAU HOLDINGS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
OPTI-RAY, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SECURITY AGREEMENT
Signature Page 1 of 2
<PAGE> 285
O-RAY HOLDINGS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BOLLE AMERICA, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
OPTICAL RADIATION CORPORATION
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
ORC CARIBE
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
FOSTER GRANT GROUP, L.P.
By: BONNEAU GENERAL, INC., a general
partner
BONNEAU HOLDINGS, INC., a limited
partner
O-RAY HOLDINGS, INC., a limited
partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
AGENT:
NATIONSBANK, N.A., as Agent for the Lenders
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SECURITY AGREEMENT
Signature Page 2 of 2
<PAGE> 286
EXHIBIT A
Location of Accounts
<PAGE> 287
EXHIBIT B
Location of Inventory
<PAGE> 288
EXHIBIT C
Location of Equipment
<PAGE> 289
EXHIBIT D
Trade Names and Styles
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,560
<SECURITIES> 0
<RECEIVABLES> 36,160
<ALLOWANCES> 0
<INVENTORY> 38,205
<CURRENT-ASSETS> 87,337
<PP&E> 17,307
<DEPRECIATION> 0
<TOTAL-ASSETS> 159,600
<CURRENT-LIABILITIES> 54,335
<BONDS> 59,557
<COMMON> 176
0
0
<OTHER-SE> (75)
<TOTAL-LIABILITY-AND-EQUITY> 159,600
<SALES> 94,315
<TOTAL-REVENUES> 94,315
<CGS> 53,830
<TOTAL-COSTS> 86,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,266
<INCOME-PRETAX> 7,473
<INCOME-TAX> 2,541
<INCOME-CONTINUING> 4,932
<DISCONTINUED> 101,727
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106,659
<EPS-PRIMARY> 6.04
<EPS-DILUTED> 0<F1>
<FN>
<F1>See accompanying notes to consolidated financial statements contained in Part
I, Item 1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996.
</FN>
</TABLE>
