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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 10, 1997
BEC GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-14360 13-3868804
State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
Suite B-302, 555 Theodore Fremd Avenue, Rye, New York 10580
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (914) 967-9400
Not Applicable
(Former name or former address, if changed since last report.)
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ITEM 2. Acquisition or Disposition of Assets
On July 10, 1997, BEC Group, Inc. (the "Company") acquired all
of the issued and outstanding share capital of Holding B.F., a corporation
governed by the laws of France ("Bolle France"), pursuant to terms of the
Amended and Restated Share Purchase Agreement (the "Share Purchase Agreement"),
dated July 9, 1997, by and among the Company, its wholly-owned subsidiary Bolle
Inc., a Delaware corporation ("Bolle"), on the one hand, and Mr. Robert Bolle,
Mr. Maurice Bolle, Mr. Franck Bolle, Mrs. Patricia Bolle Passaquay, Ms.
Brigitte Bolle and Ms. Christelle Roche (collectively, the "Sellers") on the
other hand. Pursuant to the terms of the Share Purchase Agreement, Bolle
acquired from the Sellers all of the issued and outstanding share capital of
Bolle France, in exchange for approximately $53 Million, consisting of the
following (collectively, the "Consideration"): (a) One Hundred Seventy-Nine
Million, Eight Hundred Thousand French Francs (FRF 179,800,000) in cash (the
"Cash Consideration") (b) Warrants to the Sellers to purchase an aggregate of
up to 2,130,000 shares of Common Stock of the Company at an exercise price of
$3.10 per share, subject to adjustment and assuming that the spin-off of ORC
Technologies, Inc. has occurred on or prior to the exercise date, pursuant to
the terms of the Warrant Agreement (the "Warrant Agreement"), dated as of July
9, 1997, by and among the Company and each of the Sellers; (c) Ten Thousand
(10,000) shares of Series A Preferred Stock of the Company having a value of
approximately Fifty-Five Million French Francs (FRF 55,000,000) issued pursuant
to the terms of the Certificate of Designations of Series A Preferred Stock of
the Company (the "BEC Certificate of Designation"); (d) One Hundred (100)
shares of common stock of Bolle, being the equivalent of 5% of the issued and
outstanding shares of common stock of Bolle; (e) Sixty-Four Thousand One
Hundred Twenty (64,120) shares of Series A Preferred Stock of Bolle having a
value of approximately Sixty Four Million One Hundred Twenty Thousand French
Francs (FRF 64,120,000) issued pursuant to the terms of the Certificate of
Designations of Series A Preferred Stock of Bolle (the "Bolle Certificate of
Designations").
The amount of the Consideration paid by the Company to the
Sellers was determined through arms-length negotiation of the parties. Bolle
France's principal assets, generally, include (i) the Bolle(R) brand design,
and manufacturing and certain distribution interests including, world wide
rights to the Bolle(R) brand, (ii) contract rights relating to the distribution
of Bolle France products, and (iii) miscellaneous equipment. The Company
intends to use Bolle France's assets in substantially the same manner as
previously used. Bolle France is a manufacturer, marketer and distributor of
premium sunglasses, sports shields, safety glasses and other eyewear products.
On July 10, 1997, the Company borrowed approximately an
additional $32 Million, for the purpose of paying the Cash Consideration and
transaction expenses in connection with the purchase of Bolle France, pursuant
to the terms of the Credit Agreement (as defined below).
The foregoing description of the Share Purchase Agreement,
the Warrant Agreement, the BEC Certificate of Designation and the Bolle
Certificate of Designations and the transactions contemplated thereby are not
intended to be complete and are qualified in their entirety by the complete
text
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of such documents, copies of which are attached to this Form 8-K as exhibits,
and are incorporated herein by reference.
ITEM 5. OTHER EVENTS
On July 10, 1997, BEC Group, Inc., as Borrower, entered into
an Amended and Restated Credit Agreement (the "Credit Agreement"), dated as of
July 10, 1997, among the Company and NationsBank, National Association, Bank of
Boston Connecticut, Caisse Nationale de Credit Agricole, European American Bank,
Imperial Bank, National City Bank of Kentucky, and the other financial
institutions from time to time parties thereto (collectively, the Lenders), and
NationsBank, National Association, as Agent (the "Agent"), pursuant to the terms
of which, the Lenders made available to the Borrower credit facilities (the
"Credit Facility") in the maximum aggregate principal amount at any time
outstanding of $70 million, which includes a Tranche A Term Loan Facility in the
principal amount of $15 million, (ii) a Tranche B Term Loan Facility in the
French Franc equivalent amount equal to $15 million and (iii) a Revolving Credit
Facility (the "Revolving Credit Facility") in the maximum aggregate principal
amount any time outstanding of $40 million, including a letter of credit
subfacility of up to $5 million and a $25 million sublimit for French Franc
borrowings. The Credit Facility will be used by the Company (i) for working
capital, (ii) to finance capital expenditures permitted thereunder, (iii) to
finance the acquisition of Bolle France and other permitted acquisitions and (v)
for other lawful general corporate purposes, with certain exceptions.
Each of ORC Technologies, Inc. ("ORC"), ORC Management, Inc.,
Bolle Inc., and Bolle America, Inc. (collectively, the "Guarantors") have
executed an Amended and Restated Guaranty Agreement in favor of the Agent for
the benefit of each of the Lenders, guaranteeing the payment of the obligations
(the "Obligations") of the Company to the Lenders under the Credit Agreement.
The Company and the Guarantors have granted to the Lenders a security interest
in, among other things, their accounts, inventory, receivables, equipment,
contracts, leases and all general intangibles as security for the Obligations
pursuant to the terms of an Amended and Restated Security Agreement, dated as
of July 10, 1997, among the Company, each of the Guarantors and the Agent for
the benefit of each of the Lenders. As further security for such Obligations,
(i) the Company and each of the Guarantors have granted to the Lenders a
security interest in their intellectual property rights pursuant to the terms
of an Amended and Restated Intellectual Property Security Agreement, dated as
of July 10, 1997, among the Company, each of the Guarantors and the Agent for
the benefit of each of the Lenders, (ii) the Company has entered into a
Collateral Assignment of the Option Agreement pursuant to which the Company
assigned to the Agent its rights and interests under the Option Agreement
between the Company and Lantis Eyewear Corporation, (iii) the Company caused
ORC to deliver a Deed of Trust relating to the Company's Azusa, California
facility to the Agent for the benefit of each of the Lenders and (iv) the
Company pledged to the Lenders (a) all of the capital stock of each direct and
indirect domestic subsidiary of the Company pursuant to the terms of an Amended
and Restated Stock Pledge Agreement, dated as of July 10, 1997
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among the Company, the Guarantors and the Agent for the benefit of each of the
Lenders, (b) all of the capital stock of Eyecare Products Plc owned by the
Company, and (c) 65% of the voting stock and 100% of the now voting capital
stock of each foreign subsidiary owned directly by the Company and certain
domestic subsidiaries of the Company.
Pursuant to the terms of the Credit Agreement, the Company may
borrow and repay under the Revolving Credit Facility until April 30, 2002,
subject to the terms and conditions of the Credit Agreement. The Revolving
Credit Facility terminates and all amounts outstanding thereafter are due and
payable on April 30, 2002. The Tranch A Term Loan Facility and the Tranch B Term
Loan Facility (collectively the "Term Loan Facility") are subject to repayment
in accordance with the amortization schedules set forth in the Credit Agreement,
with the final payment of all amounts outstanding, together with accrued
interest thereon, being due and payable on March 31, 2002. The Term Loan
Facilities were made available in a single drawing at the closing of the
transactions contemplated by the Credit Agreement, pursuant to the terms and
conditions of the Credit Agreement. The Credit Agreement also requires the
Company to make certain mandatory prepayments and allows the Company the ability
to make optional prepayments.
Loans made under the Revolving Credit Facility and the Term
Loan Facilities will bear interest (a) in the case of United States dollar
denominated borrowings, at a rate equal to either (i) Libor plus an applicable
margin or (ii) the higher of NationsBank, National Association's prime rate or
the federal funds rate plus .5% or (b) in the case of French Franc denominated
borrowings, at the French Franc Libor rate plus an applicable margin calculated
pursuant to the terms of the Credit Agreement.
The foregoing description of the Credit Agreement and the
transactions contemplated thereby are not intended to be complete and are
qualified in entirety by the complete text of such Credit Agreement, copies are
which are attached to this Form 8-K as an Exhibit, and is incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements, pro forma financial
information and exhibits shall be filed as part of this Current Report on Form
8-K.
(a) Financial statements of business acquired.
It is impracticable at this time for the Company to
provide the financial statements of Bolle France
required to be provided by Rule 3-05(b) of Regulation
S-X. The Company hereby undertakes to file such
required financial statements as soon as practicable,
but in no event later than sixty
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(60) days following the date on which this report on
Form 8-K is required to be filed.
(b) Pro forma financial information.
It is impracticable at this time for the Company to
provide the pro forma financial information required
to be provided pursuant to Article 11 of Regulation
S-X. The Company hereby undertakes to file such
required financial statements as soon as practicable,
but in no event later than sixty (60) days following
the date on which this report on Form 8-K is required
to be filed.
(c) Exhibits.
The following Exhibits are hereby filed as part of this
Current Report on Form 8-K.
Exhibit Description
3.1 Certificate of Designations of the Series A Preferred Stock of
BEC Group, Inc.
10.1 Amended and Restated Share Purchase Agreement, dated July 9,
1997, by and among BEC Group, Inc. and Bolle Inc., on the one
hand, and Mr. Robert Bolle, Mr. Maurice Bolle, Mr. Franck
Bolle, Mrs. Patricia Bolle Passaquay, Ms. Brigitte Bolle and
Mrs. Christelle Roche (collectively, the "Sellers").
10.2 Warrant Agreement, dated as of July 9, 1997, by and among the
Company and each of the Sellers.
10.3 Amended and Restated Credit Agreement, dated as of July 10,
1997, among BEC Group, Inc., as Borrower, and NationsBank
National Association, Bank of Boston Connecticut, Caisse
Nationale de Credit Agricole, European American Bank, Imperial
Bank, National City Bank of Kentucky, and the other financial
institutions from time to time parties thereto, as Lenders,
and NationsBank, National Association, as Agent.
10.4 Certificate of Designations of the Series A Preferred Stock of
Bolle Inc.
The Company hereby agrees to furnish supplementally a copy of
any omitted schedules or exhibits to the above-described
agreements to the Commission upon request.
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SIGNATURES.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 24, 1997
BEC GROUP, INC.
By: /s/ Martin E. Franklin
----------------------------------------
Name: Martin E. Franklin
Title: Chairman and Chief Executive
Officer
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CERTIFICATE OF DESIGNATIONS
OF THE
SERIES A PREFERRED STOCK
OF BEC GROUP, INC.
-----------------------------------
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
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The undersigned, Peter H. Trembath, does hereby certify as
follows:
FIRST: That he is the duly elected and acting Secretary
of BEC Group, Inc., a Delaware corporation (the "corporation").
SECOND: That the following resolution was duly adopted
by the Board of Directors of the corporation:
RESOLVED, that pursuant to authority conferred upon the Board
of Directors of the corporation in accordance with the General Corporation Law
of the State of Delaware and the provisions of the Restated Certificate of
Incorporation of the corporation (the "Restated Certificate"), there is hereby
created a new series of preferred stock of the corporation, which shall be
designated "Series A Preferred Stock" and shall consist of Ten Thousand (10,000)
shares, and have the powers, designations, preferences and relative,
participating, and other rights of the shares of such series, and the
qualifications, limitations and restrictions thereof, as set forth below.
SECTION 1. Dividends.
(a) The holders of the Series A Preferred Stock, shall
be entitled to accrue cumulative cash dividends, whether or not declared by the
Board of Directors of the corporation, at the dividend rate per annum as set
forth in Section 1(b) below and no more, on each share of Series A Preferred
Stock, payable semi-annually on June 30 and December 31 of each year commencing
December 31, 1997, such dividends shall be cumulative, so that if at any time
dividends per semi-annum at the applicable dividend rate, on each share, shall
not have been declared and paid, or set apart for payment, for all preceding
dividend periods, the deficiency shall be declared and paid, or set apart for
payment,
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before any dividends shall be declared and paid, or set apart for payment, on
the common stock (the "Common Stock") of the corporation.
(b) The dividend rate (the "Dividend Rate") for the
Series A Preferred Stock shall be at the per annum rate of:
(i) 5% of the Liquidation Preference per share
per annum during the period commencing on the date of issuance of shares of the
Series A Preferred Stock through December 31, 1997;
(ii) 6% of the Liquidation Preference per share
per annum during the period commencing January 1, 1998 through June 30, 1998;
(iii) 7% of the Liquidation Preference per share
per annum during the period commencing July 1, 1998 through December 31, 1998;
(iv) 8% of the Liquidation Preference per share
per annum during the period commencing January 1, 1999 through June 30, 1999;
(v) 9% of the Liquidation Preference per share
per annum during the period commencing July 1, 1999 through December 31, 1999;
and
(vi) 10% of the Liquidation Preference per share
per annum commencing January 1, 2000 and thereafter until the Series A Preferred
Stock shall have been redeemed.
(c) Any unpaid dividends (whether declared or accruing) on
Series A Preferred Stock will bear interest at the applicable Dividend Rate
commencing from the date that such dividend has accrued up to and including
the date on which such dividend is paid. Holders of Series A Preferred Stock
will not receive any dividends other than the preferred dividends provided for
in this Section 1, and will not participate with the common stock in the
payment of dividends.
(d) Subject to the provisions of this Section 1(d), the
corporation will use its commercially reasonable efforts in good faith to
declare and pay accrued dividends on the shares of Series A Preferred Stock as
set forth in this Section 1. The corporation shall only declare or pay any
dividends on the Series A Preferred Stock out of funds legally available
therefor and to the extent that the corporation is permitted to declare or pay
such dividends under the terms and conditions of its senior indebtedness
existing as of the date of the closing of the Share Purchase
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Agreement (the "Share Purchase Agreement") dated June 4, 1997, as amended, among
BEC Group, Inc., Bolle Inc. and the Sellers therein named (the "Senior
Indebtedness").
SECTION 2. Rights on Liquidation. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
corporation (any such event being hereinafter referred to as a "Liquidation"),
before any distribution of assets of the corporation shall be made to or set
apart for the holders of Common Stock, the holders of Series A Preferred Stock
shall be entitled to receive payment out of such assets of the corporation in an
amount equal to Five Thousand Five Hundred French Francs (FF5,500) per share of
Series A Preferred Stock (such amount being referred to as the "Liquidation
Preference" for the Series A Preferred Stock), plus any accumulated and unpaid
dividends thereon (whether or not earned or declared) on the Series A Preferred
Stock. If the assets of the corporation available for distribution to the
holders of Convertible Preferred Stock shall not be sufficient to make in full
the payment herein required, such assets shall be distributed pro-rata among the
holders of Series A Preferred Stock based on the aggregate Liquidation
Preference of the shares of Series A Preferred Stock held by each such holder.
If the assets of the corporation available for distribution to the holders of
Series A Preferred Stock shall exceed the distribution required to be made to
the holders of Series A Preferred Stock as herein described, such excess assets
shall be distributed pro-rata among the holders of Common Stock and the holders
of Series A Preferred stock shall not participate in any such excess
distribution.
SECTION 3. Conversion. The holders of any share of Series A
Preferred Stock shall not have the right to convert any such shares into shares
of Common Stock of the corporation.
SECTION 4. Redemption.
(a) Optional Redemption. (i) Cash Redemption.
Following notice pursuant to Section 4(c)(ii) hereof given to all holders of
Series A Preferred Stock during the period (the "Redemption Period") so long as
shares of Series A Preferred Stock are outstanding, the corporation may at the
option of the Board of Directors of the corporation, redeem, out of funds
legally available therefor, in whole or in part the shares of Series A Preferred
Stock. The corporation shall effect any such redemption by paying in cash (the
"Cash Redemption") for each such share to be redeemed an amount equal to the
Liquidation Preference, per share, plus any accumulated and unpaid dividends
thereon (whether or not earned or declared) on such shares to the Redemption
Date (as hereinafter defined) (such total amounts are hereinafter referred to as
the "Redemption Price").
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(ii) Debt Redemption. Following notice pursuant
to Section 4(c)(iii) below hereof given to all holders of Series A Preferred
Stock during the period (the "Debt Redemption Period") commencing January 1,
1998 and so long as shares of Series A Preferred Stock are outstanding, the
corporation may, at the option of the Board of Directors of the corporation,
redeem in whole or in part the shares of Series A Preferred Stock. The
corporation shall effect any such redemption (the "Debt Redemption") by issuing
to the holders of the Series A Preferred Stock a subordinated debt instrument
(the "Subordinated Debt"). Except as otherwise provided in Section 4(e) below,
the Subordinated Debt shall contain substantially the same powers, designations,
preferences and relative, participating, or other rights, and qualifications,
limitations and restrictions as the Series A Preferred Stock including, but not
limited to, mandatory redemption and Cash Redemption rights, Liquidation rights
and the protections provided in Section 6 hereof.
(b) Mandatory Redemption. Notwithstanding anything
contained herein to the contrary, the corporation shall redeem, out of funds
legally available therefor, the Series A Preferred Stock (if not previously
redeemed) pursuant to the terms of Section 4 herein following notice pursuant to
Section 4(c)(ii) hereof given to all holders of Series A Preferred Stock, upon
the earlier occurrence of (i) on the earlier of (A) the third anniversary date
from the issuance of the Series A Preferred Stock if redemption is then
permitted under the terms and conditions of the corporation's Senior
Indebtedness, (B) such later date as redemption is first permitted under the
terms and conditions of the corporation's Senior Indebtedness; or (ii) the
closing of any equity financing by the corporation, but only to the extent of
the net cash proceeds of such financing by the corporation and no more
than the Redemption Price of the then outstanding shares of Series A Preferred
Stock, and provided further, that such redemption would not violate any of the
terms and conditions of the corporation's Senior Indebtedness; (iii) a Change of
Control (as defined in the agreements relating to the corporation's Senior
Indebtedness), which has resulted in the corporation's payment in full of all
amounts due with respect to its Senior Indebtedness; or (iv) the Spin-Off (as
defined in the Warrant Agreement among the corporation and certain of the
holders of the Series A Preferred Stock). Subject to the provisions of this
Section 4(b), the corporation will use its commercially reasonable efforts in
good faith to redeem the Series A Preferred Stock when required to be redeemed
pursuant to the terms of this Section 4(b). The corporation shall effect any
such Cash Redemption by paying in cash for each such share to be redeemed an
amount equal to the Liquidation Preference, per share, plus any accumulated and
unpaid dividends thereon (whether or not earned or declared) on such shares to
the Redemption Date.
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(c) Redemption Procedures. (i) General. In the event
of any redemption pursuant hereto, the corporation shall effect such redemption
as follows. The number of shares subject to redemption shall be allocated pro
rata among the holders of outstanding shares of Series A Preferred Stock based
upon the number of shares held by each such holder.
(ii) Cash Redemption Procedures. During the
Redemption Period, and at least 10 days prior to the date fixed for any
redemption of Series A Preferred Stock pursuant to Section 4(a)(i) above (the
"Redemption Date"), written notice shall be sent to each holder of record of
Series A Preferred Stock to be redeemed, notifying such holder of the redemption
to be effected, specifying the Redemption Date, the Redemption Price, the place
at which payment may be obtained and calling upon such holder to surrender to
the corporation, in the manner and at the place designated, his certificate or
certificates representing the shares to be redeemed (the "Redemption Notice").
On or after the Redemption Date, each holder of Series A Preferred Stock to be
redeemed shall surrender to the corporation the certificate or certificates
representing such shares, in the manner and at the place designated in the
Redemption Notice, and thereupon the Redemption Price of such shares shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
cancelled. In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(iii) Debt Redemption Procedures. During the
Debt Redemption Period, and at least 10 days prior to the date fixed for any
redemption of Series A Preferred Stock pursuant to Section 4(a)(ii) above (the
"Debt Redemption Date"), written notice shall be sent to each holder of record
of Series A Preferred Stock, notifying such holder of the redemption to be
effected, specifying the Debt Redemption Date, and calling upon such holder to
surrender to the corporation, in the manner and at the place designated, his
certificate or certificates representing the shares to be redeemed (the "Debt
Redemption Notice"). On or after the Debt Redemption Date, each holder of Series
A Preferred Stock to be redeemed shall surrender to the corporation the
certificate or certificates representing such shares, in the manner and at the
place designated in the Debt Redemption Notice, and thereupon the Subordinated
Debt instrument shall be delivered to the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
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(iv) From and after the close of business on the
Redemption Date or the Debt Redemption Date, as the case may be, unless there
shall have been a default in payment of the Redemption Price or issuance of the
Subordinated Debt instrument, as the case may be, all rights of the holders of
the shares of Series A Preferred Stock designated for redemption as holders of
Series A Preferred Stock (except the right to receive the Redemption Price
without interest or the Subordinated Debt instrument, as the case may be, upon
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
corporation or be deemed to be outstanding for any purpose whatsoever.
(d) Status of Redeemed or Purchased Shares. Any shares
of the Series A Preferred Stock at any time purchased, redeemed or otherwise
acquired by the corporation shall not be reissued and shall be retired.
(e) Gross-Up Factor. In the event of any Debt
Redemption pursuant to Section 4(a)(ii) above, the interest rates from time to
time payable on such Subordinated Debt shall be equal to the Dividend Rates in
effect from time to time per Section 1(b) increased by a factor based upon the
amount directly attributable to the corporation's tax savings expected to be
received from the corporation's deduction of interest payments in respect of the
Subordinated Debt in computing the corporation's taxable income in respect of
each year that the Subordinated Debt is outstanding (the "Gross Up Factor"). The
determinations required to be made under this Section 4(e), including whether
and when a Gross-Up Factor is required and the amount of such Gross-Up Factor
and the marginal combined Federal, state and local income tax rate and other
assumptions to be utilized in arriving at such determination, shall be made by
the corporation's independent auditors (the "Accounting Firm"), which shall
provide detailed supporting calculations both to the corporation and the holders
of the Subordinated Debt within ninety (90) days after the corporation's year
end. All fees and expenses of the Accounting Firm shall be born solely by the
corporation. Any Gross-Up Factor, as determined pursuant to this Section 4(e),
shall accrue for the benefit to the holders of the Subordinated Debt as of the
relevant dates set forth in such Section 1(b) and all accrued interest and Gross
Up Factor shall accumulate and be paid in accordance with Section 1, including
(without limitation) the provisions of Section 1(c). Any determination by the
Accounting Firm shall be binding upon the corporation and the holders of the
Subordinated Debt.
SECTION 5. Voting Rights. The holders of the Series A
Preferred Stock shall not be entitled to vote except as to matters
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in respect of which they shall at the time be indefeasibly vested by statute
with such right.
SECTION 6. Protective Provisions. (a) So long as any shares of
Series A Preferred Stock are outstanding, the corporation shall not, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least 90% of the then outstanding shares of Series A Preferred
Stock:
(i) alter or change the rights, preferences or
privileges of the shares of Series A Preferred Stock so as to affect adversely
the shares of such series;
(ii) declare or pay a dividend or otherwise make
a distribution on any security issued by the corporation which is junior to the
Series A Preferred Stock with respect to dividends or upon liquidation (other
than dividends or distributions payable in Common Stock or other securities or
rights convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock of the corporation), except with
respect to the Spin-Off.
(iii) the corporation shall not enter into any
agreements that prohibit the corporation from declaring or paying dividends
hereunder or redeeming the Series A Preferred Stock or the Subordinated Debt, as
the case may be, other than those existing as of the date of the closing of the
transactions contemplated by the Share Purchase Agreement.
(iv) the corporation shall not issue any class
or series of Preferred Stock that ranks Senior to or pari passu with the Series
A Preferred Stock with respect to dividend, redemption or liquidation rights.
(b) in the event that the corporation does not redeem
the Series A Preferred Stock for cash in full on or before the third anniversary
date from the issuance of the Series A Preferred Stock, the corporation shall be
prohibited from issuing or incurring any Indebtedness for Money Borrowed (as
defined below) which ranks senior to or pari passu with the Series A Preferred
Stock, other than senior bank indebtedness (including Senior Indebtedness) not
to exceed $70 million in the aggregate, until the corporation redeems for cash
in full the Series A Preferred Stock. For purposes of this Section 6(iv),
Indebtedness for Money Borrowed shall mean all indebtedness in respect of money
borrowed, evidenced by a promissory note, bond, debenture or similar written
obligation for the payment of money, other than trade payables, capital leases,
the deferred purchase price of any property or asset, conditional sales or
similar title retention agreements incurred in the ordinary course of business.
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SECTION 7. Transferability. The holders of shares of the
Series A Preferred Stock are entitled to transfer shares of the Series A
Preferred Stock, subject to strict compliance with all applicable laws.
IN WITNESS WHEREOF, BEC Group, Inc. has caused this
Certificate of Designations of the Series A Preferred Stock to be signed by
Peter H. Trembath, its Secretary, this 9th day of July, 1997.
BEC GROUP, INC.
By: /s/ Peter H. Trembath
-----------------------------
Name: Peter H. Trembath
Title: Secretary
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AMENDED AND RESTATED SHARE PURCHASE AGREEMENT
This Amended and Restated Share Purchase Agreement is made and entered into on
July 9, 1997, with effect as of June 4, 1997 and amends and restates in its
entirety the Share Purchase Agreement dated as of June 4, 1997 by and among the
undersigned parties.
AMONG THE UNDERSIGNED:
Mr. Robert Bolle, a French citizen, residing at 58 route de Marchon, 01100
Oyonnax;
Mr. Maurice Bolle, a French citizen, residing at 13 rue Balland, 01100 Oyonnax;
Mr. Franck Bolle, a French citizen, residing at 4 boulevard Dupuy, 01100
Oyonnax;
Mrs. Patricia Bolle Passaquay, a French citizen, residing at 6 rue du General de
Gaulle, 01100 Arbent;
Ms. Brigitte Bolle, 25 bis, boulevard de la Saussaye, 92200 Neuilly-sur-Seine;
and
Mrs. Christelle Roche, 2 rue Macretet, 01100 Arbent,
Hereinafter collectively referred to as the "Sellers",
ON THE ONE HAND,
AND:
Bolle Inc., a corporation governed by the laws of the state of Delaware, United
States of America, having its registered office at 555 Theodore Fremd Avenue,
Suite B-302, Rye, New York 10580 USA, represented by Ian Ashken, duly empowered
for the purposes hereof,
Hereinafter referred to as the "Purchaser",
AND:
BEC Group, Inc., a corporation governed by the laws of the state of Delaware,
United States of America, having its registered office at 555 Theodore Fremd
Avenue, Suite B-302, Rye, New York 10580 USA, represented by Ian Ashken, duly
empowered for the purposes hereof,
Hereinafter referred to as the "Parent Company",
ON THE OTHER HAND.
<PAGE> 2
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(The Sellers, the Purchaser and the Parent Company are hereinafter referred to
collectively as the "Parties" and individually as a "Party").
WHEREAS:
The Sellers own the entire issued share capital (i.e., 39,600 shares,
hereinafter the "Shares") of Holding B.F., a corporation ("societe anonyme")
governed by the laws of France, having its registered office at Les Leches
Rouges, 39360 Viry, France, registered with the Commercial and Companies
Registry of Lons Le Saunier under the number B 393 634 852, and whose capital is
FRF 39,600,000 (hereinafter "Holding").
The Holding in turn will hold at Closing:
- - Two thousand, four hundred ninety-nine (2,499) shares out of a total of
two thousand, five hundred shares (2,500) shares (with the remaining
one (1) share being held by RM Plastiques) in Etablissements Bolle, a
societe en nom collectif, governed by the laws of France having its
registered office at 1148 avenue General Andrea, 01100 Arbent, France,
registered with the Commercial and Companies Registry of Bourg en
Bresse under the number B 755 200 441, and whose capital is FRF
125,000, each share having a par value of FRF 50 (hereinafter the
"Company"). The Company's principal activity is the manufacture and
sale of optical products;
- - One thousand five hundred ninety-nine (1,599) shares out of a total of
one thousand, six hundred (1,600) shares (with the remaining one (1)
share being held by Bolle Protection) of Bolle Production SARL, a
societe a responsabilite limitee, governed by the laws of France having
its registered office at 6 rue de Truchebanatte, 01100 Arbent,
registered with the Commercial and Companies Registry of Bourg en
Bresse under the number B 766 200 232, and whose equity capital is FRF
480,000, each share having a par value of FRF 300 (hereinafter "Bolle
Production");
- - One thousand, nine hundred ninety-nine (1,999) shares out of a total of
two thousand (2,000) shares (with the remaining one (1) share being
held by Bolle Protection) of RM Plastiques, a societe a responsabilite
limitee, governed by the laws of France having its registered office at
6 rue de Truchebanatte, 01100 Arbent, registered with the Commercial
and Companies Registry of Bourg en Bresse under the number B 311 811
251, and whose equity capital is FRF 250,000, each share having a par
value of FRF 1,250 (hereinafter "RM Plastiques");
- - Two thousand, five hundred (2,500) shares out of a total of five
thousand (5,000) shares (with the remaining two thousand, five hundred
(2,500) shares being held by the Company) of Bolle Protection, a
societe a responsabilite limitee, governed by the laws of France having
its registered office at 161, rue Alexis Perroncel, 69100 Villeurbanne,
registered with the Commercial and Companies Registry of Lyon under the
number B 325 330 322, and whose equity capital is FRF 1,000,000, each
share having a par value of FRF
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200, such shareholding representing 50% of the entire share capital of
such company (hereinafter "Bolle Protection");
- - 100% of the issued share capital (i.e., 2,000 shares) of Bolle
Nederland B.V., a limited liability company governed by the laws of the
Netherlands, having its registered office at Lindtsedijk 22A, 3336LE
Zwijndrecht, and whose authorized share capital is gilder 200,000, with
an issued share capital of 40,000 gilder, each share having a par value
of 100 gilder (hereinafter "Bolle BV");
The Company shall hold at Closing:
- - Two thousand, five hundred (2,500) shares of Bolle Protection, as
defined hereabove, such shareholding representing 50% of the entire
share capital of such company;
- - 51% of the issued share capital (i.e., 510 of 1,000 shares) of Bolle
Sunglasses Limited, a limited liability company governed by the laws of
England having its registered office at 9, Warwick Court, Gray's Inn,
London WC1R 5DJ, and whose authorized share capital is pound sterling
1,000, each share having a par value of pound sterling 1 (hereinafter
"Bolle Sunglasses");
- - 51% of the issued share capital (i.e., 5,100 of 10,000 shares) of Bolle
Canada Inc. a corporation governed by the laws of the Province of
Ontario having its registered office at 106 Adelaide Street West, Suite
300, Toronto, Ontario, and whose share capital is 10,000 Canadian
dollars, each share having a par value of Canadian $ 1 (hereinafter
"Bolle Canada");
- - 71,250 shares of Real Bolle Brazil, a limited liability company
governed by the laws of Brazil, having its registered office at Rua
Amaro Caval Heiro 158, Sao Paolo, Brazil, registered under the number
CGC 61.572.004;
The foregoing companies in which Holding or the Company owns an equity interest
are collectively referred to as the "Subsidiaries". Holding, the Company and the
Subsidiaries are collectively referred to as the "Bolle Group".
The Purchaser is a wholly owned subsidiary of the Parent Company.
The Parent Company, through Bolle America Inc., is presently the distributor in
the United States of the Company's products.
The Parties, Holding and the Company entered into a Letter of Intent dated
February 21, 1997 which outlined their mutual intentions with respect to the
acquisition by the Purchaser of all the Shares.
The Purchaser now intends to purchase and the Sellers intend to sell all of the
Shares subject to the terms and conditions contained herein.
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NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE 1 DEFINITIONS
"AFFILIATE" means, with respect to any specified person, a person that directly,
or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, the person specified.
"AGREEMENT" means this agreement including all recitals, schedules and exhibits
hereto.
"BEC CERTIFICATE OF DESIGNATIONS" means the certificate of designations for
10,000 shares of Series A Preferred Stock in the Parent Company attached as
ANNEX 3.1.3 hereto.
"BOLLE CANADA" shall have the meaning provided in the recitals to this
Agreement.
"BOLLE DIFFUSION" shall mean Bolle Diffusion France, a societe a responsabilite
limitee governed by the laws of France having its registered office at 37, rue
Moulin des Bruyeres, 92400 Courbevoie, registered with the Commercial and
Companies Registry of Nanterre under the number B 339 577 496, with a registered
share capital of FRF 250,000, each share having a par value of FRF 100.
"BOLLE INC. CERTIFICATE OF DESIGNATIONS" means the certificate of designations
for [...] shares of Series A Preferred Stock in Bolle Inc. attached in ANNEX
3.1.5 hereto.
"BOLLE FRANCE" shall mean each of Holding and the French Subsidiaries as
hereinafter defined.
"BOLLE GROUP" shall have the meaning provided in the recitals to this Agreement.
"BOLLE BV" shall have the meaning provided in the recitals to this Agreement.
"BOLLE PRODUCTION" shall have the meaning provided in the recitals to this
Agreement.
"BOLLE PROTECTION" shall have the meaning provided in the recitals to this
Agreement.
"BOLLE SUNGLASSES" shall have the meaning provided in the recitals to this
Agreement.
"BUSINESS" means the business of manufacturing, selling and distributing optical
products, including, without limitation, eyeglasses, optical frames, sunglasses
and safety glasses and other optical products and accessories as currently
carried on by Bolle France.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or the days on which
the banks are closed as required or authorized by law to be closed in France or
in the USA.
"CLOSING" means the completion of all transactions contemplated under this
Agreement, which
<PAGE> 5
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shall take place on the Closing Date at Baker & McKenzie, 32, avenue Kleber,
75116 Paris, France or at such other location as the parties may mutually agree.
"CLOSING DATE" has the meaning as defined in Article 5.1 hereafter.
"COMMON STOCK" has the meaning as set out in Article 3.1.4.
"COMPANY" has the meaning specified in the recitals to this Agreement.
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement signed between
the Sellers and the Parent Company on August 28, 1996.
"DATA ROOM LIST" shall have the meaning provided in Article 7.2.4.
"DEFERRED PAYMENT PREFERRED STOCK" shall have the meaning provided in Article
3.1.5.
"DEPOSIT" has the meaning provided in Article 5.3.1.
"EMPLOYMENT AGREEMENTS" have the meaning specified in the Article 4.3.1.
"ENVIRONMENTAL LAW" means any law, regulation, order, judgment or decree
relating to the protection of the environment (including air, noise, odor,
ground water, surface water, water, soil and natural resources) or to the use,
storage, handling, release or disposal of hazardous or toxic substances as in
force in France or in any Departement or Region in France in which the Company
or a French Subsidiary is located and as is in effect on the Closing Date.
"FINANCIAL STATEMENTS" shall have the meaning provided in Article 6.10.
"FRENCH SUBSIDIARIES" means the Company, Bolle Production, Bolle Protection, and
RM Plastiques.
"FRF" means French Francs.
"FRENCH GAAP" means the prevailing generally accepted accounting principles
applicable in France.
"GOVERNMENTAL AUTHORITY" means any United States or French, federal, state or
local or any governmental, regulatory or administrative authority, agency or any
court tribunal or judicial or arbitral body.
"HOLDING" has the meaning provided in the recitals.
"HOLDING FINANCIAL STATEMENTS" shall have the meaning provided in Article 6.10.
"INDEMNIFYING PARTY" shall have the meaning provided in Article 9.4.
<PAGE> 6
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"INDEMNIFIED PARTY" shall have the meaning provided in Article 9.4.
"INTELLECTUAL PROPERTY" means patents, trademarks, trade names, copyrights,
logos, registered designs and models registered in any jurisdiction.
"JUDGMENTS" means any judgments, orders, rulings or awards of any court,
arbitrator or other judicial authority or any governmental, administrative or
regulatory authority.
"LAWS" means any laws, rules or regulations of any governmental, administrative
or regulatory authority including, without limitation, the applicable laws of
France and of any region and departement of France in which a Bolle France
facility is located or in which any of Bolle France conducts the Business.
"LETTER OF INTENT" has the meaning provided in the recitals.
"MATERIAL ADVERSE EFFECT" means, in connection with the Bolle Group, any
circumstance, change, event, transaction, loss, failure, effect or other
occurrence (other than those relating to or affecting the economy generally or
the optical products market in particular), which when taken as a whole,
significantly and adversely impacts on the assets, financial condition,
operations or operating results of the Bolle Group.
"MATERIAL ORAL CONTRACTS" shall have the meaning provided in Article 6.17.
"MATERIAL WRITTEN CONTRACTS" shall have the meaning provided in Article 6.17.
"NET CASH" shall have the meaning provided in Article 3.4 (i).
"PARENT COMPANY" has the meaning provided in the first paragraph of this
Agreement.
"PARTY/PARTIES" shall have the meaning provided in the first paragraph of this
Agreement.
"PERMITS" means any permits, authorizations, approvals, registrations and
licenses required by applicable Laws for the carrying on of the Business or
necessary under any applicable town and country planning legislation for the
existing use of any of the properties currently leased or owned by Bolle France
necessary to the Business, and/or for the construction of any building or works,
carried out in the past or currently in progress, by any of Bolle France.
"PREFERRED STOCK" shall have the meaning provided in the BEC Certificate of
Designations.
"PROCEEDING" means any action, suit, claim or legal, administrative, arbitration
or other alternative dispute resolution proceeding or investigation
(collectively "Proceedings").
"PROPERTY SALE AGREEMENT" shall mean the conditional agreement for the sale of
real property located in Arbent which is the subject of the construction lease
attached in ANNEX 3.3, executed as of the date hereof and attached in ANNEX
5.2.7.
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7
"PROPERTY PRICE" shall have the meaning provided in Article 3.3.
"PURCHASE PRICE" has the meaning specified in Article 3.1.
"PURCHASER" has the meaning provided in the first paragraph of this Agreement.
"RELATED AGREEMENTS" shall mean the Employment Agreements, the Deed of Sale, the
Warrant Agreement, the BEC Certificate of Designations and the Bolle Inc.
Certificate of Designations.
"REAL BOLLE BRAZIL" has the meaning provided in the recitals.
"RM PLASTIQUES" has the meaning provided in the recitals.
"REPRESENTATIONS AND WARRANTIES" shall mean those representations and warranties
in Article 6.
"SEC DOCUMENTS" shall have the meaning as defined in Article 8.3.
"SEC REPORTS" shall have the meaning as defined in Article 8.3.
"SELLERS" shall have the meaning provided in the first paragraph of this
Agreement.
"SHARES" shall have the meaning provided in the recitals.
"SPIN-OFF" shall have the meaning as provided in Article 8.2 (b) of the Warrant
Agreement.
"SUBSIDIARY/IES" shall have the meaning provided in the recitals.
"TAX OR TAXATION" shall include, but is not limited to, corporation tax, income
tax, capital gains tax, capital transfer tax, capital acquisitions tax, general
sales tax, property tax, equalization tax, business tax, value added tax,
dividend or any other withholding tax, salary and payroll taxes, franchise
taxes, use or occupancy taxes, social contributions, including social security
contributions, customs and other import duties, excise duties, gift tax,
inheritance tax, stamp duty, capital duty, registration tax or transfer tax, any
estimated or advance payments related thereto and all civil or criminal
penalties, charges, surcharges and interest relating to any claim for Taxation
or resulting from a failure to comply with the provisions of any enactment
relating to Taxation.
"US$" means US dollars.
"WARRANT AGREEMENT" shall have the meaning provided in Article 3.1.2.
"WARRANTS" shall have the meaning provided in Article 3.1.2.
<PAGE> 8
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ARTICLE 2 SALE OF THE SHARES
Subject to the terms and conditions contained in this Agreement, the Sellers
hereby agree to sell and deliver to the Purchaser, who irrevocably agrees to
purchase, the Shares.
ARTICLE 3 CONSIDERATION
3.1 The sale of the Shares is granted and accepted in consideration of a
total price (hereinafter referred to as the "Purchase Price") as
defined herebelow:
3.1.1 One hundred seventy-nine million, eight hundred thousand
French Francs, (FRF 179,800,000) and;
3.1.2 Warrants to the Sellers for 2,130,000 shares of common stock
of the Parent Company (the "Warrants") in accordance with a
warrant agreement substantially in the form attached as ANNEX
3.1.2 hereto ("the Warrant Agreement") and;
3.1.3 10,000 shares of Series A Preferred Stock in the Parent
Company for a value of Fifty-five million French Francs (FRF
55,000,000) issued pursuant to the terms of the BEC
Certificate of Designations ("the Preferred Stock") and;
3.1.4 One hundred (100) shares of common stock of Bolle Inc., being
the equivalent of 5% of the issued and outstanding share
capital of Bolle Inc. at Closing (the "Common Stock");
3.1.5 Sixty-four thousand, one hundred and twenty (64,120) shares of
Series A Preferred Stock in Bolle Inc. for a value of
sixty-four million, one hundred twenty thousand French Francs
(FRF 64,120,000), or eleven million, fifty-five thousand, one
hundred and seventy-two US dollars ( US $ 11,055,172), the US
dollar equivalent (the "Deferred Payment Preferred Stock")
issued pursuant to the terms of the Bolle Inc. Certificate of
Designations.
3.2 The payment of the Purchase Price shall be made in the following
manner:
3.2.1 One hundred seventy-nine million, eight hundred thousand
French Francs, (FRF 179,800,000), less Sellers' financial and
legal advisors expenses which have not been paid directly by
Sellers, and less the Deposit, shall be paid to the Sellers in
cash at Closing by wire transfer to the Sellers' account
number previously provided to Purchaser;
3.2.2 The issue of the Warrants pursuant to and having the rights
set out in the Warrant Agreement;
3.2.3 The issue of the Preferred Stock pursuant to and having the
rights set out in the BEC Certificate of Designations;
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3.2.4 The issue of the Common Stock;
3.2.5 The issue of the Deferred Payment Preferred Stock pursuant to
and having the rights set out in the Bolle Inc. Certificate of
Designations.
3.3 In addition to the Purchase Price, the Purchaser or a French affiliate
thereof, shall cause the Company to pay at Closing, subject to
satisfaction of the conditions in the Property Sale Agreement, a net
price, with no reductions, of two million, five hundred thousand French
Francs (FRF 2,500,000), being the price for the real property in Arbent
(the "Property Price"), which is subject to the construction lease
dated December 19, 1991 as shown in ANNEX 3.3. Such sum shall be paid
to MaTtre Clerc, the Notary appointed by the Purchaser, who shall be
responsible for distributing immediately after Closing such sum pro
rata to the owners of the above mentioned property. The Purchaser shall
be responsible for all notarial and registration fees and registration
taxes (including stamp duties) related to such purchase.
3.4 [The Sellers undertake not to dispose of any of the Common Stock for a
period of three (3) years from the Closing Date, except in the case of
transactions involving all of the shareholders of Bolle Inc. on a pro
rata basis. The Parent Company guarantees that such Common Stock
including any additional shares of Common Stock of Bolle Inc. hereafter
acquired by Sellers by virtue of stock splits or similar events, if
any, shall have an aggregate value of U.S. $ 3,301,500 by the third
anniversary of the Closing Date ("the Minimum Value"). On the third
anniversary of the Closing Date, should the closing market price of the
Bolle Inc. common stock or, in the event that the Bolle Inc. common
stock is not publicly traded on such date, the fair market value
thereof as determined by an independent third party expert named by the
Parties, be less than the aggregate U.S. $ 3,301,500, the Parent
Company shall immediately pay the Sellers in cash or freely tradeable
stock of Parent Company's common stock, at Parent Company's option, the
difference between the actual value of the Common Stock and the Minimum
Value.]
ARTICLE 4 CONDITIONS PRECEDENT
4.1 Conditions to Purchaser's Obligations
The Purchaser's obligations required to be performed by it at Closing,
shall be subject to the following conditions precedent being all
satisfied or waived in writing by the Purchaser on or before the
Closing Date (provided that any such waiver shall also be deemed a
waiver of any claim by the Purchaser for damages or any other remedy,
whether pursuant to Article 9 hereof or otherwise, as a result of the
failure to satisfy such condition, including any breach of
Representation or Warranty or breach of agreement constituting such
failure):
4.1.1 The Representations and Warranties of the Sellers contained in
Article 6 shall be accurate in all material respects as of the
date hereof and as of the Closing Date
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as though restated on and as of such date (except in the case
of any representation or warranty that by its terms is made as
of a date specified, therein, which shall be accurate in all
material respects as of such date);
4.1.2 The Sellers shall have performed and complied with all
agreements required by this Agreement to be performed or
complied with by them prior to or at the Closing as listed in
Articles 4.1, 4.3, and 5.2.
4.1.3 The book net assets of the Bolle Group as of December 31, 1996
shall be no less than fifty million French Francs (FRF
50,000,000).
4.1.4 There has been no Material Adverse Effect on Bolle France
between January 1, 1997 and the Closing Date and Bolle France
shall have operated its businesses respectively in the
ordinary course, consistent with its past practices, having
made no material changes to its business and accounting
practices concerning working capital during such period.
Notwithstanding the above, during such period :
(a) It is understood that the Company no longer has any
interest in Societe Nouvelle Machurat as a result of a
capital reduction for FRF 125,000 as provided in the
Shareholders Meeting minutes attached hereto as ANNEX
4.1.4(a).
(b) The Sellers shall be permitted to reorganize the
ownership of the Subsidiaries, for purposes of the
Closing in accordance with this Agreement, under the
terms of EXHIBIT 6.25 as concerns the French
Subsidiaries, and shall keep the Purchaser informed
thereof.
(c) The Purchaser is aware that the sales of Bolle France
for the first four months of 1997 are lower than
during the equivalent period in 1996 as provided in
ANNEX 4.1.4(c).
None of the facts provided in 4.1.4 (a) - (c) hereabove shall
be considered as a reason to not proceed with the Closing.
4.1.5 There will have been no distributions by Bolle France to the
Sellers as from May 29, 1997, whether in the form of
dividends, bonuses or otherwise except as provided in Article
3.4 or Article 4.2.5.
4.1.6 The Parent Company shall have received the Holding Financial
Statements for the year ended December 31, 1996 prior to
Closing which are unqualified and consolidated. Accounts shall
be prepared by management of Holding and audited by Price
Waterhouse. The Parent Company, or one of its affiliates,
shall pay all expenses related to the Holding Financial
Statements and shall provide a copy thereof to the Sellers
upon receipt thereof.
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4.2 Conditions to Sellers' Obligations
The Sellers' obligations required to be performed by them at Closing,
shall be subject to the following conditions precedent being all
satisfied or waived in writing by the Sellers on or before the Closing
Date (provided that any such waiver shall also be deemed a waiver of
any claim by the Sellers for damages or any other remedy as a result of
the failure to satisfy such condition, including any breach of
representation or warranty or breach of agreement constituting such
failure):
4.2.1 The representations and warranties of the Purchaser and the
Parent Company contained in Articles 7 and 8 respectively
shall be accurate in all material respects as of the date
hereof and as of the Closing Date.
4.2.2 The Purchaser and the Parent Company shall have materially
performed and complied with all agreements required by this
Agreement to be performed or complied with by them prior to or
at the Closing;
4.2.3 The Parent Company shall have delivered the Warrants to the
Sellers substantially in the form provided in the Warrant
Agreement;
4.2.4 The Parent Company shall have delivered the Series A Preferred
Stock in the Parent Company as reflected in the BEC
Certificate of Designations as well as the duly filed BEC
Certificate of Designations to the Sellers;
4.2.5 Bolle Inc. shall have delivered the Series A Preferred Stock
in Bolle Inc. as reflected in the Bolle Inc. Certificate of
Designations as well as the duly filed Bolle Inc. Certificate
of Designations to the Sellers;
4.2.6 The payment to each of Mr. Maurice Bolle, Mr. Franck Bolle and
Mrs. Patricia Bolle Passaquay as compensation for their
employment for the period of January 1, 1997 to June 30, 1997,
of 50% of their annual salaries as defined in their respective
Employment Agreements less any payment for employment for such
period which has already been received by each of the above
mentioned Sellers;
4.2.7 Approval of the acquisition of Holding by the board of
directors, and if applicable by the shareholders, of the
Parent Company and the Purchaser shall have been received;
4.2.8 Approval of the issuance of the Warrants and of the terms of
the Warrant Agreement by the board of directors, and if
applicable by the shareholders of the Parent Company, as well
as by any Governmental Authorities, shall have been received;
4.2.9 Approval of the issuance of (i) the Preferred Stock and the
BEC Certificate of Designations and (ii) the Deferred Payment
Preferred Stock, the Common Stock
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and the Bolle Inc. Certificate of Designations, and of the
terms thereof by the board of directors, and if applicable by
the shareholders of the Purchaser and the Parent Company
respectively, as well as by any Governmental Authorities,
shall have been received.
4.2.10 Sellers shall have approved the Holding Financial Statements.
4.2.11 The Purchaser shall have delivered the Common Stock to the
Sellers.
4.3 Conditions to Purchaser's and Sellers' Obligations
The Parties' obligations required to be performed by them at Closing,
shall be subject to the following conditions precedent being all
satisfied on or before the Closing Date :
4.3.1 The applicable Parties shall have entered into the Warrant
Agreement, the BEC Certificate of Designations and the Bolle
Inc. Certificate of Designations, and caused the following
agreements, collectively the "Employment Agreements", to have
been entered into:
(a) the consultancy agreement between Maurice Bolle and
the Company substantially in the form as attached in
ANNEX 4.3.1(a) hereto;
(b) the employment agreement between Patricia Bolle
Passaquay and the Company, substantially in the form
as attached in ANNEX 4.3.1(b) hereto;
(c) the employment agreement between Franck Bolle and the
Company, substantially in the form as attached in
ANNEX 4.3.1(c) hereto;
(d) the employment agreement between Brigitte Bolle and
Bolle Diffusion substantially in the form as attached
in ANNEX 4.3.1(d) hereto;
(e) the employment agreement between Jean-Pierre
Passaquay and the Company, substantially in the form
as attached in ANNEX 4.3.1(e) hereto.
4.3.2 At Closing, Purchaser shall enter into a mutually satisfactory
agreement with Brigitte Bolle concerning the transfer of Bolle
Diffusion, reflecting the term sheet attached in ANNEX 4.3.2
hereto.
4.3.3 The Parties shall have agreed on the modifications required to
be made to the Parent Company's stock option plan, or a
subplan thereof, in order for it to qualify under French tax
and labor laws.
4.3.4 All necessary approvals of any Governmental Authority for the
operations provided herein shall have been received prior to
the Closing Date.
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4.3.5 The Purchaser shall have sufficient funds to finance the
Purchase Price.
ARTICLE 5 CLOSING DATE
5.1 The Parties have agreed that the transfer of the ownership of the
Shares in favor of the Purchaser shall take place as soon as possible,
but in no case later than July 21, 1997 (the "Closing Date").
5.2 On the Closing Date, the following documents shall be delivered by the
Sellers to the Purchaser:
5.2.1 the ordre de mouvement (share transfer form) relating to the
Shares, duly signed and made out in favor of the Purchaser;
5.2.2 those letters of resignation of the Directors of Bolle France,
required by the Purchaser effective as of the Closing Date.
5.2.3 a copy, certified as true and exact, of the minutes of the
board of directors' meetings of Bolle France each
respectively, calling for ordinary general meetings to take
place on the Closing Date to acknowledge the resignation of
the Directors and to appoint the persons designated by the
Purchaser as new Directors of Bolle France each respectively;
5.2.4 the corporate registers of Bolle France including the share
transfer registers, the registers of minutes of meetings of
the Boards of Directors and of general meetings of
shareholders, the attendance registers for the meetings of the
Boards of Directors and the attendance sheets for general
meetings of shareholders, and the shareholder accounts all of
which shall be accurate as of the Closing Date; and
5.2.5 A deed of sale executed by the owners of the property referred
to in Article 3.3 hereabove in a form reasonably satisfactory
to the Parties and their respective notaries.
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5.3 On the Closing Date, the following documents shall be delivered by the
Purchaser and the Parent Company to the Sellers:
5.3.1 a certificate from the Parent Company and the Purchaser
confirming their acceptance that the deposit provided by the
Parent Company to the Sellers upon signature of the Letter of
Intent (the "Deposit") be applied to the Purchase Price.
5.3.2 a copy, certified as a true and exact by the President of
Purchaser of the minutes of the meeting of the board of
directors of Purchaser approving the acquisition of Holding;
5.3.3 a copy, certified as a true and exact by the President of the
Parent Company of the minutes of the meeting of the board of
directors of the Parent Company approving the acquisition of
Holding and the issuing of the Warrants, in accordance with
the Warrant Agreement, the Preferred Stock and the Certificate
of Designations.
5.3.4 A copy, certified as true and exact by the President of the
Purchaser of the minutes of the meeting of the board of
directors of the Purchaser, approving the issuance of the
Common Stock, the Deferred Payment Preferred Stock and the
Bolle Inc. Certificate of Designations.
5.3.5 the deed of sale referred to in Article 5.2.5, executed by
Purchaser or one of its affiliates.
5.3.6 copy of the wire transfer order referred to in Article 3.2.1.
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As of the date hereof and as of the Closing Date (with amendments hereto to the
extent necessary), the Sellers make the representations and give the warranties
set forth below. Each Representation and Warranty listed in this Article 6 shall
be construed as a separate representation and warranty and is given subject to
the corresponding exceptions and disclosures of the Sellers in this Agreement
and the corresponding Exhibits hereto. It is hereby acknowledged by the Parties
that the Purchaser has entered into this Agreement in reliance on the
representations made and warranties given by the Sellers as embodied in the
Representations and Warranties contained in this Article 6.
6.1 Corporate Existence, Capitalization, Ownership and Business of Holding
6.1.1 Holding is a societe anonyme organized and existing under the
laws of France having its registered office at Les Leches
Rouges, 39360 Viry, France, registered with the Commercial and
Companies Registry of Lons Le Saunier under the number B 393
634 852. At signature, Holding's share capital is FRF
39,600,000, each share having a par value of FRF 1,000. At
Closing, Holding's share capital
<PAGE> 15
15
shall be FRF 53,600,000. The Holding has all the necessary
corporate power and authority to carry on its business. All of
the Shares are owned by the Sellers in the amounts and
percentages set forth in EXHIBIT 6.1.1 hereto.
6.1.2 A certified true copy of the statuts (by-laws) of Holding is
attached as EXHIBIT 6.1.2 hereto. The extract (extrait K-bis)
from the Commercial and Companies Registry of Lons Le Saunier
with respect to Holding attached hereto as EXHIBIT 6.1.2 is
true and correct.
6.1.3 The Holding is not in a state of insolvency nor in suspension
of payments and is not subject to a judicial reorganization or
judicial liquidation proceedings under French law.
6.1.4 The Sellers have full and valid title to the Shares, the
totality of which represents the entire issued share capital
of Holding. The Shares have been issued and fully paid up and
are free and clear of liens, claims and encumbrances or other
rights in respect thereto of any other person. There are no
outstanding subscription rights, options, conversion rights,
warrants, pre-emptive rights or other agreements providing for
the purchase, issue or sale of any interests in the capital of
the Holding.
6.2 Corporate Existence, Capitalization and Ownership of the Company
6.2.1 The Company is a societe en nom collectif organized and
existing under the laws of France, having its registered
office at 1148 avenue General Andrea, 01100 Arbent, France,
registered with the Commercial and Companies Registry of Bourg
en Bresse under the number B 755 200 441, and whose capital is
FRF 125,000, each share having a par value of FRF 50.
6.2.2 A certified true copy of the statuts (by-laws) of the Company
is attached as EXHIBIT 6.2.2 hereto. The extract (extrait
K-bis) from the Commercial and Companies Registry of Bourg en
Bresse with respect to the Company attached hereto as EXHIBIT
6.2.2 is true and correct.
6.2.3 The Company is not in a state of insolvency nor in suspension
of payments and is not subject to a judicial reorganization or
judicial liquidation proceedings under French law.
6.2.4 At Closing, the Holding will have full and valid title to
2,499 shares in the Company, representing 99.99% of the entire
issued share capital thereof and RM Plastiques shall have full
and valid title to one share in the Company, together
representing the entire share capital of the Company. The
Company shares have been issued and fully paid up and are free
and clear of liens, claims and encumbrances or other rights in
respect thereto of any other person. There are no outstanding
subscription rights, options, conversion rights, warrants,
pre-emptive
<PAGE> 16
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rights or other agreements providing for the purchase, issue
or sale of any interests in the capital of the Company.
6.3 Corporate Existence, Capitalization and Ownership of Bolle Production
6.3.1 Bolle Production is a societe a responsabilite limitee
organized and existing under the laws of France, having its
registered office at 6 rue de Truchebanatte, 01100 Arbent,
registered with the Commercial and Companies Registry of Bourg
en Bresse under the number B 766 200 232, and whose equity
capital is FRF 480,000, each share having a par value of FRF
300.
6.3.2 A certified true copy of the statuts (by-laws) of Bolle
Production is attached as EXHIBIT 6.3.2 hereto. The extract
(extrait K-bis) from the Commercial and Companies Registry of
Bourg en Bresse with respect to Bolle Production attached
hereto as EXHIBIT 6.3.2 is true and correct.
6.3.3 Bolle Production is not in a state of insolvency nor in
suspension of payments and is not subject to a judicial
reorganization or judicial liquidation proceedings under
French law.
6.3.4 At signature of this Agreement, the Company has full and valid
title to 1,100 shares in Bolle Production, representing 68.75%
of the entire issued share capital thereof. Bolle Production
shares have been issued and fully paid up and are free and
clear of liens, claims and encumbrances or other rights in
respect thereto of any other person. At Closing, the Holding
shall have full and valid title to 1,599 shares in Bolle
Production and Bolle Protection shall have full and valid
title to one share, together representing 100% of the entire
issued share capital of Bolle Production, and there shall be
no outstanding subscription rights, options, conversion
rights, warrants, pre-emptive rights or other agreements
providing for the purchase, issue or sale of any interests in
the capital of Bolle Production.
6.4 Corporate Existence, Capitalization and Ownership of RM Plastiques
6.4.1 RM Plastiques is a societe a responsabilite limitee, organized
and existing under the laws of France, having its registered
office at 6 rue de Truchebanatte, 01100 Arbent, registered
with the Commercial and Companies Registry of Bourg en Bresse
under the number B 311 811 251, and whose equity capital is
FRF 250,000, each share having a par value of FRF 125.
6.4.2 A certified true copy of the statuts (by-laws) of RM
Plastiques is attached as EXHIBIT 6.4.2 hereto. The extract
(extrait K-bis) from the Commercial and Companies Registry of
Bourg en Bresse with respect to RM Plastiques attached hereto
as EXHIBIT 6.4.2 is true and correct.
6.4.3 RM Plastiques is not in a state of insolvency nor in
suspension of payments and is
<PAGE> 17
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not subject to a judicial reorganization or judicial
liquidation proceedings under French law.
6.4.4 At signature of this Agreement, Robert Bolle and Maurice Bolle
each hold 1000 shares in RM Plastiques, representing 100% of
the entire issued share capital thereof. At Closing, the
Holding shall have full and valid title to 1999 shares in RM
Plastiques, and Bolle Protection shall have full and valid
title to one share, together representing 100% of the entire
issued share capital thereof. RM Plastiques' shares have been
issued and fully paid up and are free and clear of liens,
claims and encumbrances or other rights in respect thereto of
any other person and there are no outstanding subscription
rights, options, conversion rights, warrants, pre-emptive
rights or other agreements providing for the purchase, issue
or sale of any interests in the capital of RM Plastiques.
6.5 Corporate Existence, Capitalization and Ownership of Bolle Protection
6.5.1 Bolle Protection is a societe a responsabilite limitee
organized and existing under the laws of France, having its
registered office at 161, rue Alexis Perroncel, 69100
Villeurbanne, registered with the Commercial and Companies
Registry of Lyon under the number B 325 330 322, and whose
equity capital is FRF 1,000,000, each share having a par value
of FRF 200.
6.5.2 A certified true copy of the statuts (by-laws) of Bolle
Protection is attached as EXHIBIT 6.5.2 hereto. The extract
(extrait K-bis) from the Commercial and Companies Registry of
Lyon with respect to Bolle Protection attached hereto as
EXHIBIT 6.5.2 is true and correct.
6.5.3 Bolle Protection is not in a state of insolvency nor in
suspension of payments and is not subject to a judicial
reorganization or judicial liquidation proceedings under
French law.
6.5.4 Upon signature of this Agreement, the Company has full and
valid title to 2,500 shares in Bolle Protection, representing
50% of the entire issued share capital thereof . The Holding
has full and valid title to 1,900 shares and Maurice Bolle,
Franck Bolle and Patricia Bolle Passaquay each have 200
shares. Upon Closing, the Company shall have full and valid
title to 2,500 shares in Bolle Protection and the Holding
shall have full and valid title to 2,500 shares in Bolle
Protection, representing together the entire issued share
capital of Bolle Protection. The Bolle Protection shares have
been issued and fully paid up and are free and clear of liens,
claims and encumbrances or other rights in respect thereto of
any other person. There are no outstanding subscription
rights, options, conversion rights, warrants, pre-emptive
rights or other agreements providing for the purchase, issue
or sale of any interests in the capital of Bolle Protection.
6.6 Corporate Existence, Capitalization and Ownership of Bolle BV
<PAGE> 18
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6.6.1 Bolle BV is a limited liability company organized and existing
under the laws of the Netherlands, having its registered
office at Lindtsedijk 22A, 3336LE Zwijndrecht, and whose
authorized share capital is 200,000 gilder, with an issued
share capital of 40,000 gilder, each share having a par value
of 100 gilder.
6.6.2 A certified true copy of the by-laws of Bolle BV is attached
as EXHIBIT 6.6.2 hereto. The extract from the Commercial and
Companies Registry with respect to Bolle BV attached hereto as
EXHIBIT 6.6.2 is true and correct.
6.6.3 Bolle BV is not in a state of insolvency nor in suspension of
payments and is not subject to a judicial reorganization or
judicial liquidation proceedings under Dutch law.
6.7 Ownership of Bolle Sunglasses Shares
The Company has full and valid title to 510 shares in Bolle Sunglasses,
representing 51% of the entire issued share capital thereof. The Bolle
Sunglasses shares owned by the Company have been issued and fully paid
up and are free and clear of liens, claims and encumbrances or other
rights in respect thereto of any other person.
6.8 Ownership of Bolle Canada Shares
The Company has full and valid title to 5,100 shares in Bolle Canada,
representing 51% of the entire issued share capital thereof. The Bolle
Canada shares owned by the Company have been issued and fully paid up
and are free and clear of liens, claims and encumbrances or other
rights in respect thereto of any other person.
6.9 Ownership of Bolle Brazil Shares
The Company has full and valid title to 71,250 shares in Bolle Brazil.
The Bolle Brazil shares owned by the Company have been issued and fully
paid up and are free and clear of liens, claims and encumbrances or
other rights in respect thereto of any other person.
6.10 Financial Statements
6.10.1 Attached hereto as EXHIBIT 6.10.1 are the unaudited profit and
loss accounts and the balance sheets and the corresponding
notes (annexes) of Holding as of April 30, 1997 and of each of
the Company and the French Subsidiaries as of December 31,
1996 (the "Financial Statements").
6.10.2 At Closing, EXHIBIT 6.10.2 will contain the audited
consolidated accounts of the Holding as of December 31, 1996
(the "Holding Financial Statements"), prepared and audited in
accordance with Article 4.1.6.
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6.10.3 The Financial Statements fairly and accurately reflect the
assets, liabilities and results of operations of the company
or companies to which they relate as of April 30, 1997 or
December 31, 1996, as stated in 6.10.1 hereabove, and have
been prepared and established in a consistent manner and in
accordance with past practice.
6.10.4 The Holding Financial Statements shall at Closing fairly and
accurately reflect the assets, liabilities and results of
operations of the company or companies to which they relate as
of December 31, 1996, and shall have been prepared and
established in accordance with French GAAP.
6.10.5 Except as shall have been disclosed or reserved against in the
Holding Financial Statements or the Financial Statements,
there are no liabilities of Bolle France secured or unsecured,
contingent or absolute, taken as a whole, other than
liabilities that would not have a Material Adverse Effect. The
Sellers, have not been notified in writing of the existence of
any threatened liabilities in the other Subsidiaries.
6.10.6 If any adjustments are made in the Holding Financial
Statements compared to the information provided in the
Financial Statements, the Purchaser and the Parent Company
hereby agree not to bring a claim under Article 9 hereto for
and in the amount of any such adjustment.
6.11 Ownership of Assets
Each of Bolle France has good and valid title to all its assets
(including real estate, if any) listed on its balance sheet as at April
30, 1997 as concerns Holding and December 31, 1996, as concerns the
Company and the French Subsidiaries, and/or acquired since January 1,
1997, subject, in the case of movable assets, to normal operations of
management, administration and use made prior to the Closing Date,
except as set forth in EXHIBIT 6.11.
6.12 Compliance with Legal Requirements
6.12.1 Except as provided in EXHIBIT 6.12.1(a), Bolle France has not
been notified by Government Authorities in the last three
years of non-compliance with applicable Laws and to the best
of Sellers' knowledge, no such notification is expected.
Except as set forth in EXHIBIT 6.12.1(b) hereto and except for
instances of non- compliance that would not have a Material
Adverse Effect, Bolle France is currently conducting its
respective businesses in compliance with all applicable Laws,
Judgments and Permits.
6.12.2 Except as set forth in EXHIBIT 6.12.2 hereto and except for
any Permit of which the failure to possess would not have a
Material Adverse Effect, Bolle France possesses all Permits
necessary to conduct its respective operations as they are
<PAGE> 20
20
currently being conducted and all such Permits are in full
force and effect.
Nothing in the representation and warranty set out in this
Article 6.12 is intended to address any compliance issue that
is the specific subject of any other representation and
warranty set forth in this Article 6 (such as compliance with
applicable Environmental Law).
6.13 Management of Bolle France up until the Closing Date
6.13.1 Subject to Article 6.13.2 below, there has been no Material
Adverse Effect between January 1, 1997 and the Closing Date.
6.13.2 Since January 1, 1997 and up until the Closing Date, each of
Bolle France companies have only carried out ordinary
operations falling within the scope of its respective
customary business activities and, in particular, have not
performed any disposal or acquisition of tangible or
intangible fixed assets, other than those necessary for their
normal and ordinary management, except as listed in Article
4.1.4, Annex 4.1.4 or as provided in EXHIBIT 6.13.2.
6.14 Authority Relative to this Agreement
6.14.1 The execution, delivery and performance of this Agreement by
the Sellers and the consummation of the transactions
contemplated herein do not and will not as of Closing conflict
with or result in any violation or breach or any default under
any Law, or the by-laws including breach of any of the
conditions necessary for the Permits except where such breach
would not have a Material Adverse Effect.
6.14.2 The Sellers have the full power and authority to enter into
this Agreement and to consummate the transactions contemplated
hereby.
6.15 Intellectual Property
6.15.1 Set forth in EXHIBIT 6.15.1 hereto is the list (including
where applicable the country of registration) of all the
Intellectual Property that is owned by the Company or the
Sellers except for such Intellectual Property that is to be
retained by the Sellers as provided in Article 10.2 hereafter.
6.15.2 Except as set forth in EXHIBIT 6.15.2(a), Bolle France has, to
the best of the Sellers knowledge, the right to use such
Intellectual Property and all inventions, processes, designs,
formulae, trade secrets and know-how necessary for the conduct
of the Business as presently conducted or operated without the
payment of any royalty or similar payment. To the best of the
Sellers' knowledge, except as otherwise provided in EXHIBIT
6.15.2(b), none of Bolle France is infringing any Intellectual
Property of any other person and no person is challenging or
infringing the Intellectual Property owned by Bolle France or
Bolle France's right to use the
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Intellectual Property presently used by them in the Business
except as provided in EXHIBIT 6.23 (Disputes).
6.15.3 Except as provided in EXHIBIT 6.15.3(a), the Intellectual
Property set forth in EXHIBIT 6.15.1 is validly registered or
filed pending registration in the name of the Holding or the
Company or the Sellers, as sole proprietor in the
jurisdictions indicated in EXHIBIT 6.15.1. Any Intellectual
Property set forth in EXHIBIT 6.15.1, which is in the Sellers
name except for such Intellectual Property that is to be
retained by the Sellers as provided in Article 10.2 hereafter,
shall be transferred to the Purchaser as soon as possible
after the Closing Date. EXHIBIT 6.15.3(b) provides a letter
concerning the transfer of all proprietary non-registered
copyrights on designs and models owned by the Sellers. To the
best of the Sellers' knowledge, the Intellectual Property is
free from all pledges, liens, claims, options, leases,
disputes, restrictions or other encumbrances. Sellers are not
aware of any proceedings which would result in registration
being lost or invalidated.
6.15.4 Set forth in EXHIBIT 6.15.4(a) hereto is a list of the moulds
that the Company presently owns and set forth in EXHIBIT
6.15.4(b) hereto is a list of the moulds that the Company
presently has in its possession or control but that are owned
by third parties.
6.15.5 Neither Holding nor the Company has granted, to any third
party, the right or license to use any of the Intellectual
Property owned by the Company or the Sellers, nor is either or
them a licensee of any Intellectual Property except as listed
in EXHIBIT 6.15.5 hereto.
6.16 Taxation
6.16.1 Except as set out in EXHIBIT 6.16.1, all Tax returns required
to be filed by Bolle France with the tax authorities of the
appropriate jurisdiction have been filed and all Tax required
to be paid by Bolle France either, in the case of Tax due and
payable prior to the date hereof, has been paid, or, in the
case of Tax due prior but payable after the date hereof, has
been properly reserved against in the Holding Financial
Statements or in the Financial Statements relating to each of
the Holding (as of April 30, 1997) and the Company or the
French Subsidiaries (as of December 31, 1996), except as
concerns any Tax liability relating to earnings or operations
in calendar year 1997.
6.16.2 Except as concerns the audit the Company and the Holding is
presently undergoing concerning the fiscal years 1994, 1995
and possibly 1996, to the best of the Sellers' knowledge,
there are no pending or threatened audits or investigations
relating to Taxes which would result in a liability for Taxes
for which any of Bolle France would be liable.
6.17 Material Contracts
<PAGE> 22
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6.17.1 Set forth in EXHIBIT 6.17.1 hereto is a list of the written
contracts and guarantees in force and effect on the date
hereof connected with the business of Bolle France under which
the obligations of either party thereto are five hundred
thousand French Francs (FRF 500,000) or more in a period of
twelve consecutive (12) months or with more than 6 months
prior notice for termination (the "Material Written
Contracts").
6.17.2 Except as set forth in EXHIBIT 6.17.2 hereto, or as concerns
Material Written Contracts the termination of which would not
have a Material Adverse Effect, the execution, delivery and
performance of this Agreement and the performance of the
covenants contemplated herein do not grant the co-contracting
party the right to terminate such Material Written Contract or
accelerate payment of any debt.
6.17.3 Set forth in EXHIBIT 6.17.3 is a description of the principal
terms of the most significant oral agreements connected with
the business of the Company under which the obligations of
either party thereto are five hundred thousand French Francs
(FRF 500,000) or more in a period of twelve consecutive (12)
months ("the Material Oral Contracts") .
6.18 Products
To the best of the Sellers' knowledge, the products manufactured by the
Company and distributed by Bolle France are in compliance with the
applicable Laws, except where failure to be in compliance would not
have a Material Adverse Effect and except as provided in EXHIBIT
6.18(a) hereto. To the extent that Bolle France distributes the
products directly to third parties other than Subsidiaries in foreign
territories, to the best of the Sellers's knowledge, such products are
in compliance with the applicable local laws, except as provided in
EXHIBIT 6.18(b).
Except for any condition, warranty, representation or obligation
implied by Law, none of Bolle France has given any other condition or
warranty, or made any representation in respect of the quality of goods
or services supplied or agreed to be supplied by it except as provided
in EXHIBIT 6.18(c) hereto.
Except as set forth in EXHIBIT 6.18(d) hereto, there have been no
product recalls, stop sales or withdrawals of defective products of
Bolle France by any of Bolle France since January 1, 1996.
6.19 Insurance Policies
All the insurance policies in force in relation to the Business and
assets of any of Bolle France and subscribed to by any of them, full
and complete copies of which have previously been made available to the
Purchaser (the "Insurance Policies") are listed in EXHIBIT 6.19(a) and
is consistent with past practice. All such policies are currently in
<PAGE> 23
23
effect and all premiums currently due have been paid and no notice of
termination, or intention to terminate such policies have been
received, except as provided in EXHIBIT 6.19(b).
There are no circumstances, including, without limitation, the
execution and performance by the Sellers of this Agreement, which, to
the best of Seller's knowledge, would lead to any liability under the
Insurance Policies being avoided by the insurers or the premium being
increased and there is no claim outstanding under any of the Insurance
Policies nor are the Sellers aware of any circumstances likely to give
rise to a claim except as provided in EXHIBIT 6.19(c) or as
specifically mentioned in EXHIBIT 6.23 (Disputes).
6.20 Leases on Real Property
The list of all leases related to real property used by Bolle France is
attached in EXHIBIT 6.20 hereto. All of such leases are in full force
and effect, and, such leases are in compliance with the applicable Law.
6.21 Labor Agreements and Employee Related Payments
6.21.1 EXHIBIT 6.21.1, provides the list of all of the full-time
employees and part-time employees of the Company and the
French Subsidiaries respectively employ as of April 1, 1997.
EXHIBIT 6.21.1 sets out for each one of them: their date of
birth, date of commencement of employment, job title and
classification, all the elements of their remuneration and all
benefits.
6.21.2 No employees or agents working for the Company or the French
Subsidiaries receive a compensation proportional to profits or
turnover except as concerns the commercial agents and sales
representatives in France and foreign countries compensated
based on their own sales, and except as provided in EXHIBIT
6.21.2.
6.21.3 No group dismissals are currently in progress among their
respective employees.
6.21.4 Neither the Company nor the French Subsidiaries have
experienced any strike, business interruption, labor
disturbance or collective labor controversies (trade union or
work council) of any nature in the last five years, and at the
Closing Date, the Sellers have not been notified of any such
matters.
6.21.5 All social charges on compensation paid to employees which
must be withheld under the law, and all payments to the
relevant authorities have been made.
6.21.6 In the three years up to the Closing Date, neither the Sellers
nor any of Bolle France have received any direct notification,
demand or complaint made by any governmental, administrative,
regulatory authority or agency or any employee or group of
employees requiring the implementation of a profit sharing
scheme and/or the establishment of any employee representative
body (including, without
<PAGE> 24
24
limitation, a workers or health and safety committee) whether
at the level of the Company or any of the French Subsidiaries.
The Sellers have not been notified that any such direct
notification, demand or complaint will be made following
execution of this Agreement and the subsequent change in
control of the Bolle Group.
6.22 Agents and Brokers
Except for the appointment of Rothschild Inc. by the Sellers, neither
the Sellers, nor any of Bolle France have engaged, or caused to be
incurred any liability to any finder, broker or sales agent in
connection with this Agreement or the transactions contemplated hereby.
6.23 Disputes
Except as set forth in EXHIBIT 6.23, there is no Proceeding pending or,
to the best knowledge of the Sellers, threatened, against any of Bolle
France that, if adversely determined would have a Material Adverse
Effect.
6.24 Environment and Safety
Except as set forth in EXHIBIT 6.24 or, where the failure to have the
same or to comply therewith would not have a Material Adverse Effect,
6.24.1 The Company has all Permits required by Environmental Law (and
is in compliance with the terms and conditions thereof);
6.24.2 The Company is not the subject of any court or administrative
order nor has it received notice of any events, conditions or
incidents relating to non-compliance with Environmental Laws
which may give rise to any liabilities thereunder or which may
otherwise form the basis of any claim, action, proceeding or
investigation pursuant thereto;
6.24.3 The Company has filed all reports required to be filed under
the Environmental Laws with any Governmental or other agency
on or before the date hereof;
6.24.4 The plant and machinery used by the Company is in compliance
with French Laws relating to health and safety and in
particular Decree n(degree) 93-40 of January 11, 1993.
6.25 Reorganization of Bolle France
Bolle France has been reorganized in the manner reflected in EXHIBIT
6.25 hereto. Such reorganization was carried out in accordance with the
applicable Laws.
6.26 Investment Intent
<PAGE> 25
25
Each of Sellers is an "accredited investor" as defined in Regulation D
under the Securities Act of 1933. Each of Sellers acknowledge that the
Warrants, the Common Stock, the Preferred Stock and the Deferred
Payment Preferred Stock have not been registered under the Securities
Act of 1933 or any other United States or foreign securities laws and
that they are acquiring the same for their own account and not with a
view to, or for resale in connection with, any distribution of such
Warrants, Common Stock, Preferred Stock or the Deferred Payment
Preferred Stock.
ARTICLE 7 REPRESENTATION AND WARRANTIES BY THE PURCHASER
The Purchaser makes the representations and gives the warranties set forth
below, as of the date hereof and as of the Closing Date.
7.1 Organization and existence
The Purchaser is a corporation duly organized and validly existing
under the laws of the state of Delaware, United States of America.
Purchaser is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified would have a
material adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement.
7.2 Authority Relative to this Agreement
7.2.1 The execution, delivery and performance of this Agreement and
the Related Agreements by the Purchaser and its performance of
the covenants herein contemplated do not and will not conflict
with or result in any violation or breach or any default under
any law, the by-laws or any other obligation of the Purchaser
under any agreement or other instrument to it is a party or by
which it may be bound or affected. There is no litigation or
proceeding involving the Purchaser which could prevent or
hinder their execution and performance under this Agreement.
7.2.2 The Purchaser has the full corporate or individual power,
authority and right to enter into this Agreement and to
consummate the transactions contemplated hereby. The
Purchaser's board of directors and its shareholders have taken
all necessary corporate action to duly authorize the
execution, delivery and performance of this Agreement.
7.2.3 The Purchaser will, prior to Closing Date, have obtained all
requisite consents, approvals, authorizations or regulatory
authority in connection with the execution and performance of
this Agreement and the Related Agreements and the issuance of
the Preferred Stock and the Common Stock by the Purchaser, and
no other consents, approvals, authorizations or regulatory
authorities shall be required to
<PAGE> 26
26
be obtained by the Purchaser, whether at a national or local
level, nor shall any other filing shall be required to be made
by the Purchaser, other than the administrative declaration to
be made with the French Direction du Tresor.
7.2.4 The Purchaser acknowledges that itself and its advisers have
already had access to the senior management and the industrial
sites of Bolle France as well as to all the documents
concerning Holding, the Company and the Subsidiaries, as
listed in the "Data Room List" attached as EXHIBIT 7.2.4
hereto. The Purchaser has such knowledge of Bolle France as it
deems necessary to enter into this Agreement. In particular,
the Purchaser is not relying on any representations and
warranties of the Sellers except those set forth in Article 6
above.
7.3 Common Stock
At Closing, the Common Stock shall be duly authorized, validly issued,
fully paid, free of preemptive rights and no personal liability will
attach to the ownership thereof, and will constitute valid and legally
binding obligations of the Purchaser.
7.4 Deferred Payment Preferred Stock/Bolle Inc. Certificate of Designations
As of the Closing, the Deferred Payment Preferred Stock shall have been
duly authorized for issuance and will be validly issued and delivered
to the Sellers and fully paid and non-assessable and free of preemptive
rights. No personal liability will attach to the ownership thereof.
The Bolle Inc. Certificate of Designations has been duly filed with the
appropriate Government Authorities.
ARTICLE 8 REPRESENTATION AND WARRANTIES BY THE PARENT COMPANY
The Parent Company makes the representations and gives the warranties set forth
below, as of the date hereof and as of the Closing Date.
8.1 Organization and existence
The Parent Company is a corporation duly organized and validly existing
under the laws of the state of Delaware, United States of America and
qualified to do business therein.
8.2 Authority Relative to this Agreement
8.2.1 The execution, delivery and performance of this Agreement and
the Related Agreements by the Parent Company and its
performance of the covenants herein contemplated do not and
will not conflict with or result in any violation or breach or
any default under any law, the by-laws or any other obligation
of the Parent
<PAGE> 27
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Company under any agreement or other instrument to it is a
party or by which it may be bound or affected. There is no
litigation or proceeding involving the Parent Company which
could prevent or hinder their execution and performance under
this Agreement.
8.2.2 The Parent Company has the full corporate power, authority and
right to enter into this Agreement and the Related Agreements
and to consummate the transactions contemplated hereby and
thereby. The Parent Company's board of directors and its
shareholders have taken all necessary corporate action to duly
authorize the execution, delivery and performance of this
Agreement and the Related Agreements.
8.2.3 The Parent Company will, prior to Closing Date, have obtained
all requisite consents, approvals, authorizations or
regulatory authority in connection with the execution and
performance of this Agreement and the Related Agreements by
the Parent Company, and the issuance of the Warrants and the
Preferred Stock, and no other consents, approvals,
authorizations or regulatory authorities shall be required to
be obtained by the Parent Company, whether at a national or
local level, nor any other filing shall be required to be made
by the Parent Company, other than the administrative
declaration to be made with the French Direction du Tresor.
8.2.4 The Parent Company acknowledges that itself and its advisers
have already had access to the management and the industrial
sites of Bolle France as well as to all the documents
concerning Holding, the Company and the Subsidiaries as listed
in the "Data Room List" attached as EXHIBIT 7.2.4 hereto. The
Parent Company has such knowledge of Bolle France as it deems
necessary to enter into this Agreement and the Related
Agreements. In particular, the Parent Company is not relying
on any representations and warranties of the Sellers except
those set forth in Article 6 above.
8.3 SEC Reports
The Parent Company has timely filed all forms, reports and documents
(collectively, "SEC Documents") with the Securities and Exchange
Commission of the United States of America ("SEC") required to be filed
by it pursuant to the United States Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "Securities
Act"), and the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the
"Exchange Act") (collectively, the "SEC Reports"), all of which have
complied, at the time filed, in all material respects with all
applicable requirements of the Securities Act and Exchange Act, as
applicable. None of such SEC Reports, at the time filed, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
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8.4 Warrants
The Warrants have been duly authorized and, when issued and delivered
pursuant to this Agreement and the Warrant Agreement, will have been
duly executed, issued and delivered and will constitute valid and
legally binding obligations of the Parent Company enforceable in
accordance with their terms. The shares of common stock of the Parent
Company issuable upon exercise of the Warrants have been reserved for
issuance upon exercise of the Warrants and when issued in accordance
with the terms of the Warrants will be duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights and no
personal liability will attach to the ownership thereof.
8.5 Preferred Stock/BEC Certificate of Designations
As of the Closing, the Preferred Stock shall have been duly authorized
for issuance and will be validly issued and delivered to the Sellers
and fully paid and non-assessable and free of preemptive rights. No
personal liability will attach to the ownership thereof.
The BEC Certificate of Designations has been duly filed with the
appropriate Government Authorities.
8.6 No Material Adverse Change
Since the date of the balance sheet included in the Parent Company's
most recently filed SEC Documents, the Parent Company has conducted its
business in the ordinary course and there has not occurred: (a) any
material adverse change in the financial condition, liabilities, assets
or business of the Parent Company, (b) any amendment or change in the
Certificate of Incorporation or Bylaws; or (c) any damage to,
destruction, or loss of any assets of the Parent Company, (whether or
not covered by insurance) that materially and adversely affects the
financial condition or business of the Parent Company.
8.7 Litigation
There is no action, suit, proceeding, claim, arbitration or
investigation pending, or as to which the Parent Company has knowledge,
against the Parent Company which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions
contemplated by this Agreement or the Related Agreements or that would
result in a material adverse change in the business, assets (including
intangible assets), financial condition, prospects or results of
operations of the Parent Company.
8.8 Compliance with Laws
The Parent Company has complied in all material respects with, is not
in material violation of, and has not received any notices of violation
with respect to, any foreign, U.S. federal, state or local statutes,
law or regulation.
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ARTICLE 9 INDEMNIFICATION BY THE SELLERS
9.1 Indemnification by Sellers
9.1.1 Subject to the limitations herebelow, the Sellers shall fully
reimburse and indemnify the Purchaser for any expense, damage,
loss or liability, arising from any breach of any
Representation or Warranty, commitment or undertaking made by
the Sellers contained herein or in any Exhibit hereto
(including all reasonably incurred related expenses. Such
indemnification shall occur as follows:
(a) In the event of any expense, damage, loss or liability
being sustained or incurred by the Purchaser as a
result of breach of the Representations and Warranties
contained herein or in any Exhibit hereto, and not
resulting in an Additional Liability (as defined
below), the Sellers shall pay to the Purchaser,
damages equal to the expense, damage, loss or
liability suffered by the Purchaser as a result of
such breach.
(b) In the event of any expense, damage, loss or liability
borne or to be borne by any of Bolle France
(hereinafter collectively referred to as "Additional
Liabilities") arising out of an event, transaction,
occurrence or claim relating to the period prior to
the Closing Date, which was not disclosed pursuant
hereto or recorded by Bolle France in their respective
Financial Statements prior to the Closing Date, or
reserved in the Financial Statements, the Sellers
shall pay to the Purchaser the full amount of such
Additional Liabilities on the dates on which such
amounts actually suffered become due and payable by
the Company or such French Subsidiary.
9.1.2 From and after the Closing, the right to indemnification
provided for in this Section 9.1 shall be Purchaser's
exclusive remedy for any breach of a Representation or
Warranty, commitment or undertaking, except as provided in
Articles 10.4.5 and 12.4.
9.1.3 The liability of any Seller under 9.1.1 shall be limited to
that proportion of any indemnification that may be due as is
equal to the proportion that the Shares owned by such Seller
bears to the total number of shares of Holding on the date
hereof. In the case that a particular Representation or
Warranty, commitment or undertaking is made by only one or a
group of specified Sellers, then only such Seller or Sellers
shall be responsible for indemnifying the Purchaser for a
breach related thereto.
9.2 Indemnification by Purchaser and the Parent Company
9.2.1 The Purchaser and the Parent Company shall fully reimburse and
indemnify the Sellers for any expense, damage, loss or
liability, arising from any breach of any
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representation or warranty, commitment or undertaking made by
the Purchaser or the Parent Company contained herein or in any
Exhibit hereto (including all reasonably incurred related
expenses.
9.2.2 Except for Purchaser's obligations as concerns claims in
respect of breach of the representations and warranties
contained in Articles 7.1 and 8.1, the Purchaser shall have no
obligation unless the aggregate claim amount for the indemnity
under this Article 9 shall exceed 1% of the Purchase Price,
taking all claims together, and the Purchaser shall be liable
only for sums exceeding this amount. Individual claims of one
hundred fifty thousand French Francs (FRF 150,000) shall not
be taken into account in calculating the aggregate claim, and
the Purchaser shall have no liability therefor unless the
aggregate amount of such claims amounts to more than 600,000
FRF. In no event shall the total amount payable by the
Purchaser pursuant to this Article 9 exceed 30% of the portion
of the Purchase Price, excluding the Warrants, which has been
received in cash including such net cash received from the
exercise of the Warrants.
9.2.3 From and after the Closing, the right to indemnification
provided for in this Section 9 shall be the Sellers' exclusive
remedy for any such material breach of representation or
warranty, covenant or agreement.
9.3 Limitations
The indemnification contained in this Article 9 is subject to the
following limitations:
9.3.1 A claim shall not be made with respect to that part of a
liability or a loss that has its cause or origin in, or with
respect to any part of a liability or a loss that is increased
by, a change in the accounting principles or methods as such
have been consistently applied in the Financial Statements or
applied in the Holding Financial Statements prior to the
Closing Date, for example, the application of U.S. accounting
principles, or a change post-Closing in the laws or
regulations applicable to Holding, the Company, the
Subsidiaries or the Purchaser.
9.3.2 Liabilities or losses which are tax deductible from the
results of Holding, the Company or the Subsidiary, or the
Purchaser, respectively, shall be taken into account for their
amount reduced by the net tax saving resulting from the
deduction of the loss or liability when used for the benefit
of Holding, the Company or the Subsidiaries, or the Purchaser,
respectively, during the guarantee period as provided in
Article 9.3.9 herebelow.
9.3.3 For Tax matters, liabilities or losses as described in
Articles 6.16 and 6.21, that only result in a charge being
deferred (for instance, but without being limited to the
following, a reassessment by the relevant authorities of
depreciation allowances or reserves) will not be taken into
account, except for penalties or interest for late payment,
and any corresponding additional financing cost, incurred by
Bolle France or the Purchaser.
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9.3.4 Any liability incurred by any of Bolle France shall be set off
against a decrease in the amount of the liabilities, resulting
from the recapturing of reserves and/or provisions ("reprise
de provisions") booked in the Financial Statements or the
Holding Financial Statements relating to events having their
origin prior to the Closing Date provided that no recapturing
of reserves and/or provisions shall be allowed if such
recapture has its cause or origin in or is increased by, a
change in the accounting principles or methods from the
principles or methods applied in the Financial Statements or
the Holding Financial Statements prior to the Closing Date.
9.3.5 Except for the Sellers' obligations as concerns claims in
respect of breach of the Representations and Warranties
contained in Articles 6.1, 6.2, 6.3, 6.4, and 6.5 hereabove
which shall not be limited as provided hereafter in this
Article 9.3.5, the Sellers shall have no obligation unless the
aggregate claim amount for the indemnity under this Article 9
shall exceed 1% of the Purchase Price, taking all claims
together, and the Sellers shall be liable only for sums
exceeding this amount. Individual claims of less than one
hundred fifty thousand French Francs (FRF 150,000) shall not
be taken into account in calculating the aggregate claim, and
the Sellers shall have no liability therefor unless the
aggregate of such claims amounts to more than 600,000 F. In no
event shall the total amount payable by the Sellers pursuant
to this Article 9 exceed 30% of the portion of the Purchase
Price, excluding the Warrants, which has been received in cash
including such net cash received from the exercise of the
Warrants. If a claim has only been partially paid by Sellers
due to the fact that the Purchase Price has not yet been
totally paid in cash to the Sellers and should additional
portions of the Purchase Price be received in cash after the
partial payment of such claim the following shall apply: the
remaining portion of the claim shall be paid out of the
subsequent cash received by the Sellers, as long as such
remaining portion of the claim together with all other claims
pursuant to this Article 9 remain within the total limit of
the 30% of the portion of the Purchase Price received in cash,
as provided hereabove.
9.3.6 Notwithstanding Article 9.3.5 hereabove, the Sellers hereby
agree to indemnify the Purchaser in full against any liability
for Tax due by Bolle France in respect of the period up to the
Closing Date, except as concerns any Tax liability related to
the earnings or operations in calendar year 1997 insofar as
such Tax has not been paid or is not fully provided for in the
Holding Financial Statements; it being expressly agreed that
the reserve of 5.050 million FRF, as detailed in the Holding
Financial Statements Note 9, shall be excluded for the
purposes of determining the Sellers indemnification obligation
hereunder.
9.3.7 The Sellers shall have no liability as concerns any claims
which directly originate in or have been increased by a fault
or negligent act of Bolle America.
9.3.8 A claim shall not be enforceable against the Sellers, if legal
proceedings related thereto are not begun within six (6)
months after the Sellers have been notified by
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the Purchaser in writing, nor if the claim would not have
arisen but for an omission or act of the Purchaser after
Closing, other than one required to be taken pursuant to laws
or regulations applicable as of Closing, or due to regulations
or laws which came into effect after Closing.
9.3.9 The liability of the Sellers under the indemnification in this
Article 9 shall expire for all undeclared claims and/or
undeclared potential claims hereunder on the second
anniversary of the Closing Date, except that liability of the
Sellers under the indemnification in this Article 9 shall
expire for all environmental claims and/or undeclared
potential environmental claims hereunder on the third
anniversary of the Closing Date and all undeclared claims
and/or undeclared potential claims for additional liabilities
relating to Taxes shall expire when the statute of limitations
has run on such additional liabilities (but no later than
December 31, 2004).
9.3.10 Any indemnification payment required by this Article 9 shall
be reduced by the amount of any benefit attributable to any
Tax refund or reduction (including any Tax credit), insurance
payment or other third-party indemnification payment actually
received by Holding, the Company or the Subsidiaries, less any
litigation and other costs related to collection of such
amounts. In the event that an indemnification payment is made
by the Sellers and the Holding, the Company or the
Subsidiaries thereafter receives an insurance or
indemnification payment, the Purchaser shall pay over to the
Sellers the amounts so collected, less any litigation and
other costs related to collection of such amounts.
9.4 Notification of Breach/Third Party Claims
9.4.1 The Purchaser shall notify the Sellers within 45 calendar days
from becoming aware of any event which is likely to constitute
a claim under this Agreement provided, however, that if the
Purchaser does not respect such notice period, as long as the
Sellers are notified within the period provided in Article
9.3.9 hereabove, it shall continue to benefit fully from the
indemnification provided for hereunder, and shall indemnify
the Sellers for any increased loss, that the Sellers have
suffered as a result of the non-respect of such notice period.
9.4.2 In the event of a claim by a third party which may give rise
to an obligation of one party ("the Indemnifying Party") to
pay an indemnity to the other party ("the Indemnified Party")
(or to effect a settlement in relation thereto), the
Indemnified Party hereby agrees that the Indemnifying Party
(and its insurers) shall be given the opportunity at its own
expense to challenge, defend or settle such claim(s), provided
that the Indemnified Party may participate in such procedure
at any time. To this end, the Indemnified Party shall place
all registers and files concerning any claim at the disposal
of the Indemnifying Party, their attorneys and chartered
accountants. The Parties further undertake to provide each
other with all assistance which could reasonably be required
in connection with the defense of such claims.
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ARTICLE 10 COVENANTS
The Parties agree that the following activities will be carried out in
the manner stated below.
10.1 Commissions
Except as concerns legal and accounting services, the Parties
acknowledge that, except for Rothschild Inc. on behalf of the Sellers,
no person, firm or corporation has been employed or retained to
represent either party in the transactions contemplated by this
Agreement. The fees associated with the services provided by Rothschild
Inc. and the Sellers' legal and accounting services shall be borne
exclusively by the Sellers and not charged to the Holding or the
Company.
10.2 Retained Intellectual Property Rights
10.2.1 The Intellectual Property owned by the Bolle Group or the
Sellers, as listed in EXHIBIT 6.15.1 or mentioned in EXHIBIT
6.15.2(A), will be included in the Bolle Group at Closing,
excluding those trademarks that represent the following
classes or products:
(a) Soaps, perfumery, essential oils, cosmetics, hair
lotions, dentifrices (toothpaste), which corresponds
to certain products included in International Class 3;
(b) Combs, and brushes which corresponds to certain
products included in International Class 21;
(c) Games, toys and playthings, which corresponds to
certain products included in International Class 28;
(d) Tobacco, smoking articles, matches included in
International Class 34 provided, however, that the
Sellers shall not make or use any registration in this
class that would jeopardize the use by the Bolle Group
of its Intellectual Property pursuant to provisions of
applicable laws.
10.2.2 Trademarks concerning the above mentioned products shall be
transferred to the Sellers at Closing or as soon as possible
thereafter and after Closing, the Purchaser, and the Parent
Company, shall not and shall cause the Bolle Group not to
register trademarks using the "Bolle" name in such classes for
the above mentioned products. The Sellers shall be responsible
for all procedures relating to the registration of such
transfers and shall pay all costs, duties and expenses
relating to the registration of such transfers.
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10.2.3 In countries where the international classification mentioned
above is not used, the Sellers shall retain the exclusive
right to register the "Bolle" name in the equivalent of such
classes for the above mentioned products. In countries where
it is not possible to register only for a portion of a
particular class of products, the Purchaser or the Parent
Company shall register trademarks using the "Bolle" name in a
particular class, at the request of the Sellers, but provide
the Sellers with a royalty free, exclusive, perpetual right to
use such trademarks for the above mentioned products. The
Sellers shall pay all related third-party costs concerning
such registration.
10.3 Insurance
The Purchaser shall be responsible for assuring that all insurance
policies which terminate upon Closing have been replaced with
equivalent policies which take effect upon Closing.
10.4 Non-Competition/Non-Solicitation
Each of the individual Sellers listed in 10.4.3 herebelow severally
undertakes to the Purchaser to comply with the non-competition and
non-solicitation obligations provided in 10.4.1 and 10.4.2 for the
period specifically provided for such individual Seller in Article
10.4.3 herebelow:
10.4.1 Not to, directly or indirectly, either as individuals nor
under the veil of a company, manage or carry on or otherwise
conduct a business or invest in a business or other entity in
competition with the Business however, (i) the fulfilment by
Maurice Bolle, Patricia Bolle Passaquay, Franck Bolle and
Brigitte Bolle of their obligations under their respective
Employment Agreements, for so long as such person is employed
by the Company or any Subsidiary or any company otherwise
affiliated with the Company, and (ii) the holding by them of
the Warrants shall not be considered to be a breach of the
terms of this Section 10.4.1. However, the Purchaser
acknowledges and accepts that until Closing, Maurice and
Robert Bolle will remain members of the board of directors of
the Groupe RG and Franck Bolle is a member of the board of
directors of Moderne Optic. Each of them undertakes to resign
from such positions prior to Closing.
10.4.2 Not to directly or indirectly hire or offer to hire any
person, who, during the period of 12 months prior to the
Closing Date was an employee of any of Bolle France occupying
a senior managerial position.
10.4.3 The non-competition obligation in 10.4.1 and 10.4.2 hereabove
shall apply to each Seller listed herebelow from Closing for
the period here provided:
(a) For Franck Bolle, Patricia Bolle Passaquay and
Christelle Roche, for four (4) years following
Closing;
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(b) For Maurice Bolle and Robert Bolle, for three (3)
years following Closing;
(c) For Brigitte Bolle for two (2) years following
Closing.
10.4.4 Should Maurice Bolle, Patricia Bolle, Franck Bolle or Brigitte
Bolle be dismissed from their employment with the Company for
any reason other than for gross or wilful misconduct ("faute
grave ou lourde"), then the above mentioned non-competition
obligation shall immediately cease to apply as concerns such
person.
10.4.5 The restrictions and obligations set forth in 10.4.1 and
10.4.2 above are considered fair and reasonable by the
Parties. Each of the individual Sellers acknowledges that the
Purchaser and the Company would be harmed and that monetary
damages would not provide an adequate remedy in the event of
breach of the provisions of 10.4.1 and 10.4.2. Accordingly,
each of the individual Sellers agrees that, in addition to any
other remedies available to the Purchaser and/or the Company,
the Purchaser and/or the Company shall be entitled to seek the
appropriate injunctive relief to secure enforcement of these
provisions.
ARTICLE 11 TERMINATION
11.1 Grounds for Termination
This Agreement may be terminated at any time prior to the Closing Date:
11.1.1 By the written agreement of each of Purchaser, the Parent
Company and the Sellers;
11.1.2 By either Purchaser, the Parent Company or the Sellers if the
Closing shall not have occurred on or prior to July 21, 1997,
unless such eventuality shall be due to the breach by the
party seeking to terminate this Agreement of any of the
representations, warranties, covenants or agreements herein to
be performed or observed by such party prior thereto.
11.2 Effect of Termination
11.2.1 The Deposit will not be refunded to the Parent Company if the
Parent Company withdraws from the Closing, unless the Parent
Company provides written proof that such failure to proceed
results from:
(a) differences corresponding to a loss of value of Bolle
France of more than Fifteen million French Francs (FRF
15,000,000), between signature hereof and the Closing
Date;
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(b) that the business has not been run consistently with
past practice and there has been a material adverse
change in the business between January 1, 1997 and the
Closing, except as provided in Article 4.1.4 and Annex
4.1.4, Article 6.13 and the Exhibit thereto, or
(c) that there are material undisclosed off balance sheet
liabilities, except as specifically listed in an
exhibit herein.
11.2.2 If the Sellers withdraw from the transaction without cause,
then up to three hundred thousand U.S. dollars (US $ 300,000),
all taxes included, of the Parent Company's legal and
accounting due diligence expenses will be reimbursed, subject
to appropriate documentation of such expenses, in addition to
the return of the Deposit without delay. For the purposes of
this Agreement, cause for withdrawal shall include, but not be
limited to, the inability of the Parties, after good faith
discussions, consistent with normal business practice, to
agree on the terms of the Agreement and the Related
Agreements.
11.2.3 Except as provided in Articles 11.2.1 and 11.2.2 hereabove, if
this Agreement is terminated as permitted under Section 11.1,
such termination shall be without liability to any party to
this Agreement or any Affiliate, shareholder, director,
officer or representative of such party, except for liability
arising from a wilful breach of this Agreement.
ARTICLE 12 CONFIDENTIALITY
12.1 Each of the Purchaser and the Parent Company hereby undertakes and
agrees not to, and agrees to cause its directors, officers, employees
and agents not to use or reveal to any third party the information
contained in the Data Room as well as any trade secret, know how,
process, technique, list of customers or other confidential
information, including sponsorship agreements, with respect to Holding,
the Company, or the Subsidiaries, in conformity with the terms of the
Confidentiality Agreement and Article 5 (d) of the Letter of Intent.
12.2 Except in the ordinary course of their employment or engagement with
the Bolle Group and except as required by Law, each of the Sellers
hereby undertakes and agrees not to disclose to third parties any
non-public, confidential or proprietary information concerning Bolle
France including commercial, financial, technical and/or legal data and
information, business secrets, and know-how, concerning the products,
the organization, the development strategy, customer lists, commercial
partners or more generally the current business of Bolle France.
12.3 Subject to any applicable legal requirements to the contrary (and in
particular the requirements of the New York Stock Exchange, on which
the Purchaser's ultimate parent company is listed) and which have been
notified in advance to the Sellers:
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12.3.1 the Purchaser and the Sellers hereby undertake to hold in
confidence and not to disclose to third parties (except to
professional advisors of the Parties hereto), without the
prior written consent of the other, the terms and conditions
of the transaction contemplated hereby, and
12.3.2 all announcements by or on behalf of the Parties hereto
relating to the transaction contemplated hereby shall be in
terms to be agreed by the Parties.
12.4 The restrictions and obligations set forth in 12.1, 12.2, and 12.3
above are considered fair and reasonable by the Parties. Each Party
acknowledges that the other Parties would be harmed and that monetary
damages would not provide an adequate remedy in the event of breach of
the provisions of 12.1, 12.2, and 12.3. Accordingly, each Party agrees
that, in addition to any other remedies available to the other Parties,
such other Parties shall be entitled to seek the appropriate injunctive
relief to secure enforcement of these provisions.
12.5 If for any reason, the transaction contemplated hereby does not occur,
the rights and liabilities of the Parties pursuant to Articles 12.1 and
12.3 shall remain binding upon the Parties.
ARTICLE 13 GUARANTEE BY THE PARENT COMPANY
13.1 In consideration of the sale of the Shares and the property described
in Article 3.3 herein by Sellers to Purchaser, the Parent Company
hereby irrevocably guarantees to the Sellers, their successors and
permitted assigns, as primary obligor (jointly and severally with
Purchaser) the full, complete and prompt performance of each and every
obligation of Purchaser to the Sellers under this Agreement.
13.2 The guarantee set forth in Article 13.1 is a continuing security and
shall remain in full force and effect until all moneys now or hereafter
payable by and all obligations and liabilities of Purchaser have been
satisfied in full notwithstanding the liquidation, administration or
other incapacity or any change in the constitution of Purchaser.
13.3 The guarantee set forth in Article 13.1 is in addition to and shall not
merge with or otherwise prejudice or affect any other right or remedy,
guarantee or indemnity provided for under this Agreement or by law and
may be enforced notwithstanding the same.
ARTICLE 14 GOVERNING LAW, JURISDICTION
14.1 This Agreement, including, but not limited to, the validity,
interpretation, performance, effects, derivatives and consequences
thereof, will be governed by the laws of the French Republic (excluding
its conflicts of law principles).
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14.2 The Parties agree to use their best efforts in order to reach an
amicable agreement with respect to all disagreements which might arise
from the application of this Agreement. All disputes arising under this
Agreement which are not settled amicably as specified above within a
sixty (60) day period shall be finally settled under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce
by one or more arbitrators appointed in accordance with said rules. The
arbitration shall take place in Geneva Switzerland. The appointed
arbitrators shall be fluent in French and in English.
ARTICLE 15 MISCELLANEOUS
15.1 Notices
Any notification or communication pursuant to this Agreement shall be
made by registered letter with return receipt requested, or by
facsimile transmission confirmed by registered letter with return
receipt requested, or by hand against signature of a duplicate of the
notification by a duly authorized person, addressed in the case of the
Purchaser as follows:
Bolle Inc.
555 Theodore Fremd Avenue
Suite B-302
Rye, New York 10580
USA
Attention: Mr. Martin E. Franklin
Facsimile No.: (1) (914) 967-9405
and
BEC Group, Inc.
555 Theodore Fremd Avenue
Suite B-302
Rye, New York 10580
USA
Facsimile No.: (1) (914) 967-9405
with copy to:
Nicolas Sokolow
Sokolow, Dunaud Mercadier & Carreras
100 blvd Malesherbes
75017 Paris France
Facsimile No.: (33)(1) 44 40 45 08
and addressed in the case of the Sellers:
To each Seller individually at the addresses provided in the recitals
hereabove.
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with copy to :
Jean-Francois Bretonniere
Baker & McKenzie
32 avenue Kleber
75116 Paris France
Facsimile No.: (33)(1) 44 17 45 75
or any other address that may be communicated in writing by either of
the Parties to the other Party at least five days before the mailing of
such notification or communication.
15.2 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns. Any successors to
the Sellers shall be liable for the respective obligations of the
Sellers hereunder.
15.3 Waivers
No change in, addition to, or waiver of the terms and provisions of
this Agreement shall be binding unless approved in writing by the
Parties. Neither any disclosure pursuant or subsequent to this
Agreement and the Exhibits hereto, nor any waiver by any Party on any
occasion of any of the terms and conditions of these representations
and warranties, shall be deemed to constitute a waiver by such Party of
such term or conditions (or of any other term or condition) on any
other occasion.
15.4 Assignment
This Agreement may not be assigned in whole or in part by any of the
Parties without the prior written consent of the other Parties hereto,
which consent shall not be unreasonably withheld. It is expressly
agreed that Purchaser may, notwithstanding and without prejudice to its
continuing obligations hereunder, substitute a 100% directly or
indirectly owned affiliate for purposes of the acquisition of the
Shares at Closing. Purchaser shall, however, remain jointly and
severally liable for all the obligations of any affiliate to which it
may assign this Agreement. Should an affiliate to which this Agreement
has been assigned under the terms of this Article 15.4, cease to be an
affiliate of the assignor, then, prior to so ceasing, this Agreement
shall be re-assigned to the original assignor or one of its majority
owned affiliates.
15.5 Exhibits
All exhibits and schedules hereto form an integral part of this
Agreement.
<PAGE> 40
40
15.6 Headings
The descriptive words or phrases at the head of the various Articles
herein are inserted only as a convenience and for reference and are in
no way intended to in any way define, limit or describe the scope or
intent of the particular Article to which they refer.
15.7 Severability
If at any time any part, any article, or any part of such article of
this Agreement is adjudged invalid, unenforceable or illegal by any
court, public authority, governmental department or agency, or other
forum, such adjudication shall not effect the remaining portions of
this Agreement, and this Agreement shall be construed as if such
invalid, enforceable or illegal provision had never been contained
herein.
15.8 Integration
This Agreement supersedes any and all prior agreements and
understandings among the Parties, whether written or oral with respect
to the subject matter hereof and thereof. This Agreement and the
Related Agreements set forth the entire agreement and understanding
among the Parties as to the subject matter hereof and thereof.
15.9 Expenses and Duties
Whether or not the transactions contemplated by this Agreement are
consummated, except as otherwise expressly provided herein, each of the
Parties shall bear all the expenses and costs incurred by it in
connection with this Agreement and the transactions contemplated
herein, including, but not limited to, the fees and disbursements of
any counsel, independent accountant or any other person or any other
representative whose services have been used by such Party. All
registration duties and stamp taxes arising as a result of the
execution of this Agreement and the consummation of the transaction
contemplated hereby shall be borne by the Purchaser.
For purposes of registration duties only, the Parties shall enter into
a brief deed of transfer in the form attached in ANNEX 15.9.
15.10 Third Party Rights
The provisions of this Agreement are intended solely for the benefit of
the Parties hereto and do not confer any third party beneficiary rights
to any other person.
<PAGE> 41
41
15.11 Amendments
No amendment to this Agreement shall have any effect whatsoever unless
it results from a written amendment, signed by the Parties.
15.12 Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall
constitute a single instrument.
Executed in _________
this 9th day of July 1997
In ... originals
BOLLE, INC.
By: /s/ Ian Ashken
-----------------------------
Name: Ian Ashken
Title: Executive Vice President
BEC GROUP, INC.
By: /s/ Ian Ashken
-----------------------------
Name: Ian Ashken
Title: Executive Vice President
By: /s/ Maurice Bolle
-----------------------------
Maurice Bolle
By: /s/ Robert Bolle
-----------------------------
Robert Bolle
<PAGE> 42
42
By: /s/ Franck Bolle
-----------------------------
Franck Bolle
By: /s/ Patricia Bolle Passaquay
-----------------------------
Patricia Bolle Passaquay
By: /s/ Brigitte Bolle
-----------------------------
Brigitte Bolle
By: /s/ Christelle Roche
-----------------------------
Christelle Roche
<PAGE> 1
WARRANT AGREEMENT
This WARRANT AGREEMENT (the "Agreement") dated as of July 9, 1997
is made by and among BEC Group, Inc., a Delaware corporation having its
executive offices at 555 Theodore Fremd Avenue, Suite B-302, Rye, New York,
10580 USA (the "Company") and Maurice Bolle, Robert Bolle, Franck Bolle,
Patricia Bolle Passaquay, Brigitte Bolle and Christelle Roche, each having a
business address of Rue Tacon, BP 139, Oyomax, 01104 France (collectively, the
"Warrantholders").
In connection with the acquisition by Bolle Inc., a Delaware
corporation that is wholly owned by the Company, of the all of the issued and
outstanding shares of capital stock of Holding B.F., which shall include all the
issued and outstanding shares of capital stock of SNC Bolle (the "Acquisition")
and as partial consideration for the Acquisition, the Company hereby agrees to
issue to the Warrantholders, Stock Purchase Warrants, as hereinafter described
(the "Warrants"), to purchase an aggregate of 2,130,000 shares, subject to
adjustment as provided for herein (the "Shares") of common stock, par value $.01
per share of the Company (the "Common Stock"). Notwithstanding any other
provision of this Agreement to the contrary, the Warrantholders acknowledge and
agree for themselves and all transferees or pledgees of the Warrants and the
Shares, that (i) no modification, amendment, adjustment or alteration shall be
made to the terms of this Agreement or the Warrants in connection with the
effectuation by the Company of the Spin-off (defined below in Section 8.2(b) of
this Agreement) and (ii) the Warrantholders shall not be entitled to receive any
portion of any dividend declared on the Common Stock to effectuate the Spin-off.
The number of Shares that each Warrantholder's Warrant shall obtain upon
exercise in full of such Warrant is set forth in Schedule 1 to this Agreement.
The Warrants shall be issued on the date of the closing of the Acquisition (the
"Closing Date").
In consideration of the foregoing and for the purpose of defining
the terms and provisions of the Warrants and the respective rights and
obligations thereunder, the Company and the Warrantholders, for value received,
hereby agree as follows:
SECTION 1. TRANSFERABILITY AND FORM OF WARRANTS.
1.1. Registration. The Warrants shall be numbered and shall be
registered on the books of the Company when issued.
1.2. Transfer. The Warrants shall be transferable only on the books
of the Company maintained at its principal office in Rye, New York, USA or
wherever its principal executive offices may then be located upon delivery
thereof duly endorsed by the Warrantholder or by its duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver a new Warrant to the person entitled thereto. Subject to the
limitations set forth in Section 1.3 below, the Warrants may be sold,
transferred or otherwise disposed of by the Warrantholders at any time during
the period commencing at 9:00 a.m. New York City Time on July ___, 1999 (the
"Exercisability Date") and ending at 5:00 p.m. New York City Time on
<PAGE> 2
July ___, 2001 (the "Termination Date"); provided, however, that the Warrants
may be pledged at any time after the Closing Date, subject to compliance with
all applicable laws.
1.3. Limitations on Transfer of the Warrants. The Warrants may not
be sold, transferred, or otherwise disposed of by the Warrantholders in the
absence of registration of the Warrant under the Securities Act of 1933, as
amended (the "Securities Act"), and state securities laws, or an exemption
therefrom. A Warrant shall be divided or combined, upon request to the Company,
by the Warrantholder, into a certificate or certificates representing the right
to purchase the same, aggregate number of Shares purchasable under the Warrant.
Unless the context indicates otherwise, the term "Warrantholder" shall include
any transferee or transferees of the Warrants pursuant to this subsection 1.3,
and the term "Warrant" shall include any and all warrants outstanding pursuant
to this Agreement, including those evidenced by a certificate or certificates
issued upon division, exchange, substitution or transfer pursuant to this
Agreement.
1.4. Form of Warrants.
(a) The text of the Warrants and the form of election to purchase
Shares shall be substantially as set forth in Exhibit A attached hereto.
The price per Share and the number of Shares issuable upon exercise of the
Warrant are subject to adjustment upon the occurrence of certain events,
all as hereinafter provided. The Warrants shall be executed on behalf of
the Company by its President or a Vice President.
(b) A Warrant bearing the signature of an individual who was at any
time the proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office
prior to the delivery of such Warrant or did not hold such office on the
date of this Agreement.
(c) The Warrant shall be dated as of the date of signature thereof
by the Company either upon initial issuance or upon division, exchange,
substitution or transfer.
1.5. Legend on Warrants and Share Certificates. The Warrants
and each certificate for Shares initially issued upon exercise of the
Warrants, shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAW. SUCH SECURITIES MAY
NOT BE SOLD, ASSIGNED, TRANSFERRED, EXCHANGED, MORTGAGED, PLEDGED OR
OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE
SECURITIES ACT AND STATE SECURITIES LAWS."
Any Warrant or certificate issued at anytime in exchange or substitution for any
Warrant or certificate bearing such legend shall also bear the above legend
unless, in the opinion of Willkie
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<PAGE> 3
Farr & Gallagher or such other counsel as shall be reasonably approved by the
Company, the securities represented thereby need no longer be subject to such
restrictions.
SECTION 2. EXCHANGE OF WARRANT CERTIFICATE.
Any Warrant certificate may be exchanged without expense to the
Warrantholder (other than for the payment of any taxes associated with such
exchange) for another Warrant certificate or certificates entitling the
Warrantholder to purchase a like aggregate number of Shares as the Warrant
certificate or certificates surrendered then entitling such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant certificate shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, the certificate evidencing the Warrant to be so exchanged.
Thereupon, the Company shall execute and deliver to the person entitled thereto
a new Warrant certificate as so requested.
SECTION 3. TERM OF WARRANTS; EXERCISE OF WARRANTS.
Subject to the terms of this Agreement, a Warrantholder shall have
the right, at any time during the period commencing on the Exercisability Date
and ending on the Termination Date, to purchase from the Company up to the
number of Shares which the Warrantholder may at the time be entitled to purchase
pursuant to this Agreement, upon surrender to the Company, at its principal
office in Rye, New York, USA, of the certificate evidencing the Warrant to be
exercised, together with the purchase form on the reverse thereof duly filled in
and signed, and upon payment to the Company of the Warrant Price (as defined in
and determined in accordance with the provisions of Sections 7 and 8 hereof),
for the number of Shares with respect to which such Warrant is then exercised.
Except as otherwise provided in this Agreement, payment of the aggregate Warrant
Price shall be made in cash, by cashier's check or by wire transfer.
Notwithstanding any other provision of this Agreement to the contrary, no
Warrant shall be exercised, in whole or in part, for an amount of Shares that is
less than 50,000 or the remaining Shares that such Warrantholder is then able to
purchase upon exercise of the Warrant.
Upon such surrender of the Warrant and payment of such Warrant Price
as aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch (and, in any event, no later than 10 business days from the
date of such surrender and payment) to or upon the written order of the
Warrantholder and in such name or names as the Warrantholder may designate
certificate or certificates for the number of full Shares so purchased upon the
exercise of the Warrant, together with cash, as provided in Section 9 hereof
with respect to any fractional Shares otherwise issuable upon such surrender and
the cash, property and other securities to which the Warrantholder is entitled
pursuant to the provisions of Section 8. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of such Shares as of the close of
business on the date of the surrender of the Warrant and payment of the Warrant
Price, as aforesaid, notwithstanding that the certificates representing such
Shares shall not actually have been delivered or that the stock and warrant
transfer books of the Company shall then be closed. A Warrant shall be
exercisable, at the election of the Warrantholder, either in full or from time
to time in part and, in the event that the certificate evidencing the Warrant is
exercised with respect to less than all of the Shares
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<PAGE> 4
specified therein at any time prior to the Termination Date, a new certificate
evidencing the remaining Warrant shall be issued by the Company.
Notwithstanding anything herein to the contrary, the Warrantholders
may, at their option, at any time during the period commencing on the
Exercisability Date and ending on the Termination Date, exchange the Warrants,
in whole or in part (a "Warrant Exchange"), into the number of Shares determined
in accordance with this paragraph, by surrendering the certificate evidencing
the Warrant to be exchanged at the principal executive office of the Company or
at the office of its stock transfer agent, accompanied by a notice stating such
Warrantholder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Warrantholder requests that such Warrant
Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall take place
on the date specified in the Notice of Exchange or, if later, the date the
Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the Shares issuable upon such Warrant Exchange and, if
applicable, a new Warrant certificate of like tenor evidencing the balance of
the Shares remaining subject to this Agreement, shall be issued as of the
Exchange Date and delivered to the Warrantholder within 10 business days
following the Exchange Date. In connection with any Warrant Exchange, this
Agreement shall represent the right to subscribe for and acquire the number of
Shares (rounded to the next highest integer) equal to (i) the number of Shares
specified by the Warrantholder in its Notice of Exchange (the "Total Number")
less (ii) the number of Shares equal to the quotient obtained by dividing (A)
the product of the Total Number and the existing Warrant Price by (B) the
Current Market Price (as defined in Section 8.1) of a share of Common Stock as
at the Exchange Date.
SECTION 4. PAYMENT OF TAXES.
The Company shall pay all U.S. documentary stamp taxes, if any,
attributable to the initial issuance of the Shares; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable with
respect to any secondary transfer of the Warrant or the Shares.
SECTION 5. MUTILATED OR MISSING WARRANT.
In case the certificate or certificates evidencing a Warrant shall
be mutilated, lost, stolen or destroyed, the Company shall, at the request of
the Warrantholder, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated certificate or certificates, or in lieu of and
substitution for the certificate or certificates lost, stolen or destroyed, a
new Warrant certificate or certificates of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence satisfactory to
the Company of such mutilation, loss, theft or destruction of such Warrant and
of a bond of indemnity, if requested, also satisfactory in form and amount at
the applicant's cost. Applicants for such substitute Warrant certificate shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
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<PAGE> 5
SECTION 6. RESERVATION OF SHARES OF CAPITAL STOCK.
There has been reserved, and the Company shall at all times keep
reserved so long as the Warrants remains outstanding, out of its authorized
Common Stock, such number of shares of Common Stock as shall be subject to
purchase under the Warrants. Every transfer agent for the Common Stock and other
securities of the Company issuable upon the exercise of the Warrants shall be
irrevocably authorized and directed at all times to reserve such number of
authorized shares and other securities as shall be requisite for such purpose.
The Company shall keep a copy of this Agreement on file with every transfer
agent for the Common Stock and other securities of the Company issuable upon the
exercise of the Warrants. The Company shall supply such transfer agent with duly
executed stock and other certificates for such purpose and shall provide or
otherwise make available any cash which may be payable as provided in Sections 8
and 9 hereof.
SECTION 7. WARRANT PRICE.
The price per Share (the "Warrant Price") at which Shares shall be
purchasable upon the exercise of the Warrants shall be $3.10 per Share, subject
to adjustment pursuant to Section 8 hereof. The Warrantholders acknowledge that
the Warrant Price has been determined assuming that the Spin-off (as defined in
Section 8.2(b)) has occurred on or prior to the Exercisability Date. Should the
Spin-off not have occurred on or prior to the Exercisability Date, the Warrant
Price shall be increased to reflect the value of the Company as of the
Exercisability Date. The amount of the increase to the Warrant Price shall be
determined based upon the value of the Company as of the Exercisability Date and
determined pursuant to a fairness opinion obtained from an independent
investment bank selected by the Warrantholders and reasonably acceptable to the
Company. The Company agrees to pay all expenses associated with obtaining the
fairness opinion contemplated by this Section 7.
SECTION 8. ADJUSTMENTS.
8.1. Definition of Current Market Price. For purposes of this
Section 8, the term "Current Market Price" shall mean, on any date specified
herein, (i) if the Common Stock is listed on any national securities exchange or
the Nasdaq National Market, the average of the last reported sales price (or the
average of the quoted closing bid and asked prices if there shall have been no
sales) of the Common Stock on such exchange or the Nasdaq National Market (as
the case may be) for a period of 20 trading days prior to such date, or (ii) if
the Common Stock is not so listed, on the basis of the average of the mean of
the last quoted bid and asked prices for the Common Stock for each day in the 20
trading day period prior to such date, as reported by Nasdaq, or its successor,
or (iii) if the Common Stock is not so listed and if there are no such closing
bid and asked prices, on the basis of the fair market value per share as
reasonably determined in good faith by the Board of Directors of the Company,
but not less than the book value thereof as of the most recent fiscal year of
the Company.
8.2. Adjustment of Warrant Price and Number of Shares. The number
and kind of securities purchasable upon the exercise of the Warrants and the
Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
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<PAGE> 6
(a) Adjustments.
(i) In case the Company shall (A) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (B)
subdivide its outstanding Common Stock, (C) combine its outstanding
Common Stock into a smaller number of shares of Common Stock or (D)
issue by reclassification of its Common Stock other securities of
the Company, the number of Shares purchasable upon exercise of the
Warrant immediately prior thereto shall be adjusted so that each
Warrantholder shall be entitled to receive, upon exercise of its
Warrant, the kind and number of Shares or other securities of the
Company which it would have owned or would have been entitled to
receive after the happening of any of the events described above had
its Warrant been exercised immediately prior to the happening of
such event or any record date with respect thereto. Any adjustment
made pursuant to this paragraph (i) shall become effective
immediately after the effective date of such event and such
adjustment shall be retroactive to the record date, if any, for such
event.
(ii) Except in respect of transactions described in paragraph
(i) above, in case the Company shall sell or issue Common Stock or
rights, options, warrants or convertible securities (or rights,
options or warrants to purchase convertible securities) containing
the right to subscribe for or purchase shares of Common Stock
(collectively, "Rights"), and the sale or issuance price per share
of Common Stock (or in the case of any Rights, the sum of the
consideration paid or payable for any such Right entitling the
holder thereof to acquire one share of Common Stock and such
additional consideration paid or payable upon exercise or conversion
of any such Right to acquire one share of Common Stock) is less than
the Current Market Price as determined as of the date of such sale
or issuance, then the number of Shares purchasable upon exercise of
each Warrant shall be increased by dividing such number of Shares by
a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares which the aggregate
of the offering price of the total number of shares so offered for
subscription or purchase or subject to such Rights or (or the
aggregate conversion price of the convertible securities so offered
for subscription or purchase) would purchase at such Current Market
Price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares so offered for
subscription or purchase or subject to such Rights or (or into which
the convertible securities so offered for subscription or purchase
are convertible), such increase to become effective immediately
after the opening of business on the day following the date fixed
for such determination. For the purposes of such adjustments, the
Common Stock which the holders of any such Rights shall be entitled
to subscribe for or purchase shall be deemed to be
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<PAGE> 7
outstanding as of the date of determination of stockholders entitled
to receive such Rights or the date of issuance of such Rights. If at
the end of the period during which such Rights are exercisable not
all such Rights shall have been exercised, the adjusted number of
Shares shall be immediately readjusted to what it would have been
based on the number of additional shares of Common Stock actually
issued. In addition, for purposes of this subsection (ii), the
number of shares of Common Stock outstanding shall not include
shares of Common Stock held in the treasury of the Company.
(iii) Except in respect of transactions described in paragraph
(i) above, in case the Company shall declare, order, pay or make a
dividend or other distribution (including, without limitation, any
distribution of cash, other or additional stock or other securities
or property or options), by way of dividend or spin-off,
reclassification, recapitalization or similar corporate
rearrangement or otherwise, but excluding dividends described in
Section 8.2(b) hereof on the Common Stock, then in each case the
number of Shares thereafter purchasable upon the exercise of each
Warrant shall be determined by multiplying (A) the number of Shares
theretofore purchasable upon exercise of the Warrant by (B) a
fraction, of which the numerator shall be the then Current Market
Price on the record date for the determination of stockholders
entitled to receive such dividend or other distribution, and of
which the denominator shall be such Current Market Price on such
date minus the amount of such dividend or distribution applicable to
one share of Common Stock. The Board of Directors of the Company
shall determine the amount of such dividend or distribution
allocable to one share of Common Stock and such determination, if
reasonable and based upon the Board of Directors' good faith
business judgment, shall be binding upon the Warrantholders. Such
adjustment shall be made whenever any such distribution is made and
shall become effective on the date of distribution retroactive to
the record date for the determination of stockholders entitled to
receive such distribution.
(iv) Except with respect to transactions described in
paragraph (vi) hereof, no adjustment in the number of Shares
purchasable hereunder shall be required unless (A) such adjustment
would require an increase or decrease of at least point seven-five
percent (0.75%) in the number of Shares then purchasable upon the
exercise of the Warrants, or (B) a notice of a Warrantholder's
election to purchase has been received by the Company with respect
to the exercise of the balance of the Shares purchasable pursuant to
such Warrant (prior to such required adjustment); provided, however,
that any adjustments which by reason of this paragraph (iv) are not
required to be made immediately shall be carried forward and taken
into account in any subsequent adjustment. In calculating any
adjustment hereunder, the Warrant Price shall be calculated to the
nearest
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<PAGE> 8
.001 of a cent and the number of Shares purchasable hereunder shall
be calculated to the nearest .001 of a share.
(v) Whenever the number of Shares purchasable upon the
exercise of the Warrant is adjusted as herein provided (other than
as provided by paragraph (vi)), the Warrant Price payable upon
exercise of the Warrant shall also be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of
which the numerator shall be the number of Shares purchasable upon
the exercise of the Warrant immediately prior to such adjustment,
and of which the denominator shall be the number of Shares so
purchasable immediately after such adjustment.
(vi) In the event that as of the effective date of the
Spin-off (as such term is defined in Section 8.2(b)) all of the
Company's 8% Convertible Subordinated Notes due 2002 that were
originally issued on May 3, 1996 (the "Originally Issued Convertible
Notes") have not been converted into shares of Common Stock, the
Warrant Price then in effect immediately prior such effective date
shall be decreased to an amount determined by the results of the
following formula:
65,000,000 / (21,000,000 + X),
where "X" equals the positive difference only between (i) the
aggregate number of shares of Common Stock that are issuable to the
holders of the Originally Issued Convertible Notes after the
effective date of the Spin-off and (ii) 3,658,386.
(vii) For the purpose of this section 8.2(a), the term "Common
Stock" shall mean (A) the class of stock designated as the Common
Stock of the Company at the date of this Agreement or (B) any other
class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes
in par value, or from no par value to par value. In the event that
at any time, as a result of an adjustment made pursuant to this
Section 8 the Warrantholders shall become entitled to purchase any
securities of the Company other than Common Stock, the Company shall
duly reserve such securities for issuance and thereafter the number
of such other securities so purchasable upon exercise of a Warrant
and the Warrant Price of such securities shall be subject to the
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Shares contained in this Section 8.
If the consideration provided for in any Right or the additional
consideration, if any, payable upon the conversion or exchange of any
Right shall be reduced, or the rate at which any Right is exercisable or
convertible into or exchangeable for shares of Common Stock shall be
increased, at any time under or by reason of provisions with respect
thereto
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<PAGE> 9
designed to protect against dilution, then, effective concurrently with
each such change, the Warrant Price then in effect shall first be adjusted
to eliminate the effects (if any) of the issuance (or deemed issuance) of
such Right on the Warrant Price and then readjusted as if such Right had
been issued on the date of such change with the terms in effect after such
change, but only if as a result of such adjustment the Warrant Price then
in effect hereunder is thereby reduced.
(b) No Adjustment for Dividends. Except as provided in Section
8.2(a), no adjustment with respect to any ordinary dividends (made out of
current earnings) on shares of Common Stock shall be made during the term
of the Warrants or upon the exercise of a Warrant. Notwithstanding any
provision of this Agreement, no adjustment shall be made with respect to
the dividend associated with the Spin-off. For purposes of this Agreement,
the "Spin-off" shall mean the distribution by the Company to its current
stockholders of all assets and liabilities (other than assets and
liabilities relating to the Acquisition or to Bolle America, Inc. or as
otherwise agreed by the parties hereto, which the Company shall continue
to hold directly or through ownership of all of the outstanding capital
stock of Bolle Inc. after the Closing Date) recorded on the Company's
balance sheet as of the effective date of such distribution.
(c) Preservation of Purchase Rights Upon Reclassification,
Consolidation, etc. In case of any consolidation or merger of the Company
with or into another entity as a result of which the holders of Common
Stock become holders of other shares or securities of the Company or of
another entity or person, or such holders receive cash or other assets, or
in case of any sale or conveyance to another person of the property,
assets or business of the Company as an entirety or substantially as an
entirety, the Company or such successor or purchasing entity or person, as
the case may be, shall execute with the Warrantholders an agreement that
the Warrantholders shall have the right thereafter upon payment of the
Warrant Price in effect immediately prior to such action to purchase upon
exercise of their respective Warrants the kind and amount of Shares and
other securities and property which it would have owned or have been
entitled to receive after the happening of such consolidation, merger,
sale or conveyance had its Warrant been exercised immediately prior to
such action and (ii) that the Warrants shall continue in full force and
effect notwithstanding the consummation of such transaction and that such
person or entity shall assume the obligations of the Company hereunder.
The agreements referred to in this Section 8.2(c) shall provide for
adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in the other provisions in this Section 8.
The provisions of this Section 8.2(c) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
8.3. Statement on Warrants. Irrespective of any adjustment in the
Warrant Price or the number or kind of Shares purchasable upon the exercise of a
Warrant, a Warrant certificate or certificates therefore or thereafter issued
may continue to express the same price and number and kind of shares as are
stated in a Warrant initially issuable pursuant to this Agreement.
8.4. Notice of Adjustment. Whenever the Warrant Price shall be
adjusted pursuant to this Section 8, the Company shall forthwith file at each
office designated for the
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<PAGE> 10
exercise of the Warrants, a statement, signed by the Chairman of the Board, the
President, any Vice President or Treasurer of the Company, showing in reasonable
detail the facts requiring such adjustment and the Warrant Price that will be
effective after such adjustment. Each such statement shall be made available at
all reasonable times for inspection by any Warrantholder. The Company shall also
cause a notice setting forth any such adjustments to be sent by mail, first
class, postage prepaid, to each Warrantholder.
8.5. Notice of Certain Events. If at any time after the Closing
Date:
(a) the Company shall pay any dividend upon its Common Stock or make
any distribution to the holders of its Common Stock;
(b) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other
Rights;
(c) the Company shall offer any other Rights to the holders of its
Common Stock;
(d) there shall be any capital reorganization, or reclassification
of the capital stock of the Company or any of its subsidiaries, or
consolidation or merger of the Company with or into any other corporation
or entity, or consolidation or merger of any other corporation or entity
with or into the Company, or the sale, lease, conveyance, exchange or
transfer of all or substantially all of the property or assets of the
Company to any other corporation or entity; or
(e) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give notice to the
Warrantholders of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution, subscription or other
rights, or (y) the date (or, if not then known, a reasonable approximation
thereof by the Company) on which such reorganization, reclassification,
consolidation, merger, sale, lease, conveyance, exchange, transfer, dissolution,
liquidation or winding up shall take place, as the case may be. Such notice
shall also specify (or, if not then known, reasonably approximate) the date as
of which the holders of Common Stock of record shall be paid or shall receive
such dividend, distribution, subscription or other rights, or shall be entitled
to exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, lease,
conveyance, exchange, transfer, dissolution, liquidation or winding up, as the
case may be. Such notice shall be given at the time notice thereof (if any) is
given to the holders of Common Stock and, in any event, not later than 20 days
prior to the date specified in clause (x) or (y) of this subparagraph, as the
case may be. Such notice shall also state that the action in question or the
record date is subject to the effectiveness of a registration statement under
the Securities Act of 1933, as amended, or to a favorable vote of stockholders,
if either is required.
8.6. Reservation. The Company shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full number of
shares of Common Stock
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<PAGE> 11
deliverable upon the exercise of the Warrants and shall take all such action and
obtain all such permits or orders as may be necessary to enable the Company
lawfully to issue such Common Stock upon the exercise of the Warrants.
SECTION 9. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Shares on the
exercise of the Warrants. If any fraction of a Share would, except for the
provisions of this Section 9, be issuable on the exercise of the Warrants (or
specified portions thereof), the Company shall pay an amount in cash equal to
the Current Market Price as determined pursuant to Section 8.1 above of such
fractional Share.
SECTION 10. NO RIGHTS AS STOCKHOLDERS.
Nothing contained in this Agreement or in the Warrants shall be
construed as conferring upon the Warrantholders or their transferees any rights
as a stockholder of the Company.
SECTION 11. NOTICES.
All notices and other communications under this Agreement shall be
in writing and shall be delivered by hand or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(a) if to the Warrantholders, to each Warrantholder at the address
specified on Schedule 1 to this Agreement with respect to that Warrantholder,
with a copy to Baker & McKenzie, 32 Avenue Kleber 75116, Paris, France, marked
for attention of Jean-Francois Bretonniere, or at such other address as a
Warrantholder may have furnished the Company in writing, or
(b) if to the Company, at 555 Theodore Fremd Avenue, Suite B-302,
Rye, NY 10580, marked for the attention of Martin E. Franklin, Chairman, or at
such other address as it may have furnished in writing to the Warrantholders.
Any notice so addressed shall be deemed to be given: if delivered by
hand, on the date of such delivery; if mailed by courier, on the first business
day following the date of such mailing; and if mailed by registered or certified
mail, on the third business day after the date of such mailing.
SECTION 12. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrantholders shall bind and inure to the benefit
of their respective successors and assigns hereunder.
-11-
<PAGE> 12
SECTION 13. MERGER OR CONSOLIDATION OF THE COMPANY.
The Company shall not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of subsection 8.2(c) are complied with.
SECTION 14. REPRESENTATIONS.
14.1. Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted. The Company is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified will not have a material adverse effect on the
business, properties, assets, condition (financial or otherwise), liabilities or
operations of the Company and its subsidiaries taken as a whole.
14.2. Capitalization of the Company; Title to the Shares.
(a) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, par value $.01 per share and 500,000
shares of preferred stock, $.01 par value. As of March 31, 1997, (i)
17,721,675 shares of Company Common Stock were validly issued and
outstanding, fully paid and nonassessable (with 171,000 shares of Company
Common Stock held in treasury) and (ii) no shares of preferred stock were
issued and outstanding. As of the date hereof, there are no bonds,
debentures, notes or other indebtedness having the right to vote on any
matters on which the Company's stockholders may vote issued or
outstanding. As of March 31, 1997, except for (i) options to acquire
1,757,739 shares and warrants to acquire 250,000 shares of Company Common
Stock, (ii) options outstanding under the Company's Employee Stock
Purchase Plan and (iii) the Warrants contemplated by this Agreement, (iv)
$54,000 aggregate principal amount of 8% Convertible Subordinated Notes
due 2001 (which as of the date hereof are convertible into 2,981 shares of
Common Stock and (v) $21,018,565 aggregate principal amount of 8%
Convertible Subordinated Notes due 2002 (which as of the date hereof are
convertible into 3,658,386 shares of Company Common Stock), there are no
options, warrants, calls or other rights, agreements or commitments
presently outstanding obligating the Company to issue, deliver or sell
shares of its capital stock or debt securities, or obligating the Company
to grant, extend or enter into any such option, warrant, call or other
such right, agreement or commitment.
(b) The Shares will be duly authorized and validly issued, and will
be fully paid and nonassessable and no personal liability will attach to
the ownership thereof. Upon exercise of a Warrant, the Company will
deliver valid and marketable title to the Shares issuable as a result of
such exercise, free and clear of any liens, claims, charges, security
interests, legal or equitable encumbrances, limitations or restrictions.
Except for this
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<PAGE> 13
Agreement, there are no contracts, agreements, understandings,
arrangements or restrictions related to the ownership or voting of the
Warrants or the Shares.
SECTION 15. REGISTRATION RIGHTS
15.1. Registration on Demand.
(a) During the two-year period commencing on the date that a Warrant
is first exercised by any Warrantholder, upon prior written notice (a
"Demand Notice") to the Company from holders representing at least a
majority of the then outstanding Registrable Securities (as defined in
subparagraph (c) below), determined as if the Warrants had been fully
exercised, to the effect that the holders of Registrable Securities desire
to register any of their Registrable Securities under the Securities Act,
the Company shall within 10 business days after receiving any Demand
Notice give notice (the "Company's Notice") to the other holders of
Registrable Securities stating the identity of the holders requesting
registration and the number of Registrable Securities proposed to be sold
thereby, and take appropriate action as promptly as practicable after its
receipt of the Demand Notice to file with the Securities and Exchange
Commission (the "Commission") a registration statement on the appropriate
form covering all Registrable Securities specified in the Demand Notice
and by such other holders (by notice given to the Company within 15 days
after their receipt of the Company's Notice), (ii) use commercially
reasonable efforts to cause such registration statement to become
effective under the Securities Act and (iii) use commercially reasonable
efforts to qualify the Registrable Securities subject to the Demand Notice
for sale in such states as reasonably requested by the holders of a
majority of Registrable Securities to be included in such registration, if
necessary; provided such effort shall not require the Company to qualify
as a foreign corporation or subject itself to taxation in any jurisdiction
where it is not already so qualified or subject. The Company shall be
obligated to effect only one registration pursuant to this Section 15.1.
(b) The holders of the Registrable Securities to be included in any
registration pursuant to this Section 15.1 shall be obligated to pay all
registration expenses (as that term is defined in Section 15.5 hereof) of
such registration whether or not such registration is ever deemed
effective. The Company agrees to use its best efforts to effect any
registration pursuant to this Section 15.1 in a cost effective manner,
consistent with prudent business practices for such registrations.
(c) For purposes of this Agreement, "Registrable Securities" shall
mean, collectively (i) the Shares and (ii) any securities issued or
issuable with respect to the Shares by way of stock dividend, stock split,
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. Registrable Securities
will cease to be such when (i) a registration statement covering such
Registrable Securities has been declared effective, (ii) they shall have
been otherwise transferred, and the Company shall have delivered new
certificates or other evidences of ownership for them not subject to any
stop transfer order or other restriction on transfer and not bearing a
legend restricting transfer in the absence of an effective registration or
an exemption from the registration requirements of the Securities Act and
subsequent disposition of
-13-
<PAGE> 14
them shall not require registration or qualification of them under the
Securities Act or any similar state law then in force, or (iii) they shall
have ceased to be outstanding.
(d) Any registration initiated by the holders of Registrable
Securities as a demand registration pursuant to this Section 15.1 shall
count as a demand registration for purposes of this Section 15.1 when such
registration shall have been filed with the Commission and becomes
effective and in the event such registration statement is withdrawn at the
request of the initialing holder(s) of Registrable Securities prior to its
becoming effective, unless such holder pays all expenses (as defined in
Section 15.5).
(e) Notwithstanding the provisions of Section 15.1(a) of this
Agreement, the Company shall not be required to register Registrable
Securities which, together with any other securities to be included in
such registration, are equivalent to less than 50,000 shares of Common
Stock, subject to equitable adjustment in case the Company shall (A) pay a
dividend in shares of Common Stock or make a distribution in shares of
Common Stock, (B) subdivide its outstanding Common Stock, (C) combine its
outstanding Common Stock into a smaller number of shares of Common Stock
or (D) issue by reclassification of its Common Stock other securities of
the Company.
(f) The Company shall use its best efforts to maintain the
effectiveness of a registration statement filed pursuant to this Section
15.1 for a period of 180 days from its effective date.
(g) The managing underwriter, if any, of any offering of Registrable
Securities contemplated by this Section 15.1 shall be chosen by the
holders of a majority of Registrable Securities included therein, which
managing underwriter shall be reasonably acceptable to the Company.
15.2. Incidental Registration.
(a) If at any time or times after the Exercisability Date, the
Company intends to file a registration statement on Form S-1, S-2 or S-3
(or other appropriate form) for the registration of an offering of equity
securities with the Commission, the Company shall notify each of the
holders of record of Registrable Securities at least 30 days prior to each
such filing of the Company's intention to file such a registration
statement, such notice shall state the number of shares of equity
securities proposed to be registered thereby. If any holder of Registrable
Securities notifies the Company within 30 days after receipt of such
notice from the Company of its desire to have included in such
registration statement any of its Registrable Securities, then the Company
shall cause the Company to include such shares in such registration
statement. The Company shall pay all the "expenses" (as defined in Section
15.5 hereof) of such registration, excluding underwriting discounts and
commissions.
(b) The Company may in its discretion withdraw any registration
statement filed pursuant to this Section 15.2 subsequent to its filing
without liability to the holders of Registrable Securities.
-14-
<PAGE> 15
15.3. Allocations. In the event that any managing underwriter for
any offering described in Section 15.2 above notifies the Company that, in good
faith, it is able to proceed with the proposed offering only with respect to a
smaller number (the "Maximum Number") of securities than the total number of
Registrable Securities proposed to be offered by holders thereof, plus the total
number of securities proposed to be offered by the Company and all others
entitled to registration rights under such registration statement, then the
aggregate number of Registrable Securities that may be included in the proposed
offering by the holders thereof and the total number of securities that may be
included in the proposed offering by all other holders (other than the Company)
including shares in such registration statement shall equal the Maximum Number
less the number of shares proposed to be offered by the Company, such difference
to be allocated first in favor of the holders of Registrable Securities and
thereafter pro rata in accordance with the number of shares proposed to be
offered by each such party.
15.4. Indemnity. In connection with a registration statement filed
with the Commission pursuant to this Section 15, the Company shall provide each
holder of Registrable Securities included in such registration statement, and
each officer and director of any thereof, and each person who controls such
holder within the meaning of Section 15 of the Securities Act, and Section 20 of
the Securities Exchange Act of 1934 (the "Exchange Act"), with indemnification
against any losses, claims, damages or liabilities, reasonable attorneys fees,
costs or expenses and costs and expenses of investigating and defending any such
claims, (collectively "Damages"), joint or several, to which any of them may
become subject under the federal securities laws, or otherwise, in form and
substance as is customarily given to underwriters in an underwritten offering of
securities. Each holder including Registrable Securities in any such
registration statement agrees that it shall indemnify the Company, and each
officer and director thereof, and each person who controls the Company within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act, against any Damages, in form and substance as is customarily given by
underwriters to a corporation in an underwritten public offering of securities;
provided, however, that (i) any such holder shall be liable under this Section
15.4 only to the extent that any such Damages arises out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement in reliance upon and in conformity with
written information furnished by such holder, specifically for use in the
preparation thereof; and (ii) the maximum amount which may be recovered from
such holder shall be limited to the amount of the proceeds received by such
holder from the sale of his/her Registrable Securities pursuant to such
registration statement.
15.5. Expenses. The Company shall bear all expenses, excluding fees
and expenses of counsel for any selling stockholders and excluding underwriting
discounts and commissions, in connection with a registration of Common Stock
pursuant to Section 15.2. As used in this Section 15, "expenses" of a
registration shall mean all expenses required to be disclosed in Part II of the
Form S-1 registration statement, or in a comparable section of any similar form
permitting an underwritten public offering, as well as expenses of underwriters
customarily reimbursed by issuers or selling stockholders, excluding transfer
taxes.
15.6. Rule 144. The Company agrees that it will file in a timely
manner all reports required to be filed by it pursuant to the Securities Act and
the Exchange Act and will take further
-15-
<PAGE> 16
action as and when any holder of Registrable Securities may reasonably request
in order that such holder may effect sales of Registrable Securities pursuant to
Rule 144 under the Securities Act.
SECTION 16. APPLICABLE LAW.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF SAID STATE.
SECTION 17. BENEFITS OF THIS AGREEMENT.
Except as otherwise provided herein, nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and the
Warrantholders any legal or equitable right, remedy or claim under this
Agreement, and this Agreement shall be for the sole and exclusive benefit of the
Company and the Warrantholders.
[Signature page follows]
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<PAGE> 17
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed, all as of the day and year first above written.
BEC GROUP, INC.
/s/ Martin E. Franklin
-------------------------------
By: Martin E. Franklin
Title: Chairman of the Board
/s/ Maurice Bolle
---------------------------------
Maurice Bolle
/s/ Robert Bolle
---------------------------------
Robert Bolle
/s/ Franck Bolle
---------------------------------
Franck Bolle
/s/ Patricia Bolle Passaquay
---------------------------------
Patricia Bolle Passaquay
/s/ Brigitte Bolle
---------------------------------
Brigitte Bolle
/s/ Christelle Roche
---------------------------------
Christelle Roche
-17-
<PAGE> 18
SCHEDULE 1
Name and Address
of Warrantholder No. of Shares
- ---------------- -------------
Mr. Maurice Bolle
13 rue Balland
01100 Oyonnax, France...................................... 224,715
Mr. Robert Bolle
58 route de Marchon
01100 Oyonnax, France...................................... 224,715
Mr. Franck Bolle
4 boulevard Dupuy
01100 Oyonnax, France...................................... 420,675
Mrs. Patricia Bolle Passaquay
6 rue General De Gaulle
01100 Arbant, France....................................... 420,675
Ms. Brigitte Bolle
25 bis boulevard de la Saussaye
92200 Neuilly-sur-Seine, France............................ 419,610
Mrs. Christelle Roche
2 rue Macrete
01100 Arbent, France....................................... 419,610
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<PAGE> 19
EXHIBIT A
WARRANT No._____
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, EXCHANGED, MORTGAGED, PLEDGED OR OTHERWISE DISPOSED OF OR
ENCUMBERED WITHOUT COMPLIANCE WITH THE SECURITIES ACT AND STATE SECURITIES
LAWS."
WARRANT TO PURCHASE UP TO ____________ SHARES
OF COMMON STOCK OF
BEC GROUP, INC. PAR VALUE $.01 PER SHARE
Exercisable commencing July ___, 1999;
Void after July ___, 2001.
THIS CERTIFIES that, for value received, ___________________________________
("Holder"), or registered assigns, is entitled, subject to the terms and
conditions set forth in this Warrant, to purchase from BEC Group, Inc., a
Delaware corporation (the "Company"), up to ____________ shares of Common Stock,
$.01 par value, of the Company, at any time commencing 9:00 a.m. New York City
time on July ___, 1999 and continuing up to 5 p.m. New York City time on July
___, 2001 at a price per Share of $3.10, per share, such number of Shares and
price per Share being subject to adjustment from time to time as set forth in
the Warrant Agreement referred to below. This Warrant is issued pursuant to a
Warrant Agreement by and among the Company, the Holder and certain other holders
of Warrants, dated as of July ___, 1997 (the "Warrant Agreement"), and is
subject to all the terms thereof, including the limitations on transferability
set forth therein.
This Warrant may be exercised by the holder hereof, in whole or in part (but
not, in certain circumstances, as to a fractional share), by the presentation
and surrender of this Warrant with the form of Election to Purchase duly
executed, at the principal office of the Company (or at such other address as
the Company may designate by notice in writing to the holder hereof at the
address of such holder appearing on the books of the Company), and upon payment
to the Company of the purchase price in cash, by cashier's check or by wire
transfer or by any other means permitted under the terms of the Warrant
Agreement. Notwithstanding the foregoing, this Warrant may not be exercised for
an amount of Shares that is less than 50,000 or the remaining Shares that such
Warrantholder is then able to purchase upon exercise of the Warrant. The Shares
so purchased shall be deemed to be issued to the holder hereof as the record
owner of such Shares as of the close of business on the date on which this
Warrant shall have been surrendered
A-1
<PAGE> 20
and payment made for such Shares. Certificates for the Shares so purchased shall
be delivered or mailed to the holder promptly after this Warrant shall have been
so exercised, and, unless this Warrant has expired or has been exercised in
full, a new Warrant identical in form but representing the number of Shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the holder hereof.
Nothing contained herein shall be construed to confer upon the holder of this
Warrant, as such, any of the rights of a stockholder of the Company.
Dated: ______________
BEC GROUP, INC.
By:_____________________________
[Title]
A-2
<PAGE> 21
BEC GROUP, INC.
ELECTION TO PURCHASE
BEC Group, Inc.:
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant for, and to purchase thereunder,
_________________________________ Shares provided for therein, and requests that
certificates for the Shares be issued in the name of:
________________________________________________________________________________
(Please Print Name, Address and Social Security Number)
and, if said number of Shares shall not be the total number of Shares
purchasable hereunder, that a new Warrant certificate for the balance of the
Shares purchasable under the within Warrant certificate be registered in the
name of the undersigned Warrantholder or his/her Assignee as below indicated and
delivered to the address stated below:
Dated: ____________, 19__
Name of Warrantholder or
Assignee (Please Print):______________________________________
Address:______________________________________________________
Signature:____________________________________________
Signature Guaranteed: Note: The above signature must
correspond with the name as written
upon the face of this Warrant
certificate in every particular,
without alteration or enlargement or
any change whatever, unless this
Warrant has been assigned.
A-3
<PAGE> 22
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(Name and Address of Assignee must be Printed or Typewritten)
the within Warrant, hereby irrevocably constituting and appointing
___________________________ Attorney to transfer said Warrant on the books of
the Company, with full power of substitution in the premises.
Dated: __________________, 19__
__________________________________________
Signature of Registered Holder
Signature Guaranteed: Note: The signature of this assignment
must correspond with the name as it
appears upon the face of the within
Warrant certificate in every particular,
without alteration or enlargement or any
change whatever.
A-4
<PAGE> 1
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
Among
BEC GROUP, INC.,
as Borrower,
and
NATIONSBANK, NATIONAL ASSOCIATION,
BANK OF BOSTON CONNECTICUT,
CAISSE NATIONALE DE CREDIT AGRICOLE,
EUROPEAN AMERICAN BANK,
IMPERIAL BANK
NATIONAL CITY BANK OF KENTUCKY,
and
THE OTHER FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO,
as Lenders,
and
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent.
Dated as of July 10,1997
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
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SECTION 1.1 Amendment and Restatement.......................................... 2
SECTION 1.2 Definitions........................................................ 2
SECTION 1.3 Rules of Interpretation............................................ 32
ARTICLE II
The Term Loans
SECTION 2.1 Tranche A Term Loan................................................ 33
SECTION 2.2 Tranche B Term Loan................................................ 33
SECTION 2.3 Payment of Principal............................................... 34
SECTION 2.4 Payment of Interest................................................ 35
SECTION 2.5 Manner of Payment.................................................. 36
SECTION 2.6 Optional Prepayments............................................... 36
SECTION 2.7 Mandatory Prepayments. ........................................... 37
SECTION 2.8 Borrower's Account................................................. 39
SECTION 2.9 Term Notes......................................................... 39
SECTION 2.10 Interest Periods................................................... 39
SECTION 2.11 Conversions and Elections of Subsequent Interest Periods........... 39
SECTION 2.12 Pro Rata Payments.................................................. 40
SECTION 2.13 Use of Proceeds.................................................... 40
ARTICLE III
REVOLVING LOANS
SECTION 3.1 Revolving Loans.................................................... 40
SECTION 3.2 Advances and Rate Selection........................................ 42
SECTION 3.3 Payment of Interest................................................ 44
SECTION 3.4 Payment of Principal............................................... 44
SECTION 3.5 Manner of Payment.................................................. 45
SECTION 3.6 Voluntary Commitment Reductions.................................... 46
SECTION 3.7 Increase and Decrease in Amounts................................... 46
SECTION 3.8 Borrower's Account................................................. 46
SECTION 3.9 Notes.............................................................. 46
SECTION 3.10 Pro Rata Payments.................................................. 46
SECTION 3.11 Conversions and Elections of Subsequent Interest Periods........... 47
SECTION 3.12 Unused Fee......................................................... 47
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SECTION 3.13 Additional Fees.................................................... 48
SECTION 3.14 Deficiency Advances................................................ 48
SECTION 3.15 Use of Proceeds.................................................... 48
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1 Letters of Credit.................................................. 48
SECTION 4.2 Reimbursement...................................................... 49
SECTION 4.3 Letter of Credit Fee............................................... 52
SECTION 4.4 Administrative Fees................................................ 52
ARTICLE V
CHANGE IN CIRCUMSTANCES
SECTION 5.1 Increased Cost and Reduced Return.................................. 52
SECTION 5.2 Limitation on Types of Loans....................................... 54
SECTION 5.3 Illegality......................................................... 54
SECTION 5.4 Treatment of Affected Loans........................................ 55
SECTION 5.5 Compensation....................................................... 55
SECTION 5.6 Taxes.............................................................. 55
ARTICLE VI
SECURITY
SECTION 6.1 Security Interest.................................................. 57
SECTION 6.2 Stock Pledge. .................................................... 58
SECTION 6.3 Guaranty........................................................... 58
SECTION 6.4 Lease Assignments.................................................. 58
SECTION 6.5 Deed of Trust...................................................... 58
SECTION 6.6 Intellectual Property.............................................. 58
SECTION 6.7 Intercompany Note Assignment....................................... 59
SECTION 6.8 Further Assurances................................................. 59
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1 Effectiveness; Conditions to Advances and Issuance of Letters of
Credit............................................................. 59
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SECTION 7.2 Conditions of All Advances and Issuances of Letters of Credit after
the Closing Date...................................................... 64
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.1 Organization and Authority............................................ 67
SECTION 8.2 Loan Documents........................................................ 67
SECTION 8.3 Solvency.............................................................. 68
SECTION 8.4 Subsidiaries and Stockholders......................................... 68
SECTION 8.5 Ownership Interests................................................... 68
SECTION 8.6 Financial Condition................................................... 68
SECTION 8.7 Title to Properties................................................... 69
SECTION 8.8 Taxes................................................................. 69
SECTION 8.9 Other Agreements...................................................... 69
SECTION 8.10 Litigation............................................................ 70
SECTION 8.11 Margin Stock.......................................................... 70
SECTION 8.12 Investment Company.................................................... 70
SECTION 8.13 Intellectual Property................................................. 70
SECTION 8.14 No Untrue Statement................................................... 71
SECTION 8.15 No Consents, Etc...................................................... 71
SECTION 8.16 Employee Benefit Plans................................................ 71
SECTION 8.17 No Default............................................................ 72
SECTION 8.18 Environmental Matters................................................. 72
SECTION 8.19 Employment Matters.................................................... 72
SECTION 8.20 Bolle Acquisition..................................................... 73
ARTICLE IX
AFFIRMATIVE COVENANTS
SECTION 9.1 Financial Reports, Etc................................................ 73
SECTION 9.2 Maintain Properties................................................... 75
SECTION 9.3 Existence, Qualification, Etc......................................... 75
SECTION 9.4 Regulations and Taxes................................................. 75
SECTION 9.5 Insurance............................................................. 75
SECTION 9.6 True Books............................................................ 76
SECTION 9.7 Right of Inspection................................................... 76
SECTION 9.8 Observe all Laws...................................................... 76
SECTION 9.9 Covenants Extending to Subsidiaries................................... 76
SECTION 9.10 Officer's Knowledge of Default........................................ 76
SECTION 9.11 Suits or Other Proceedings............................................ 76
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----
<S> <C>
SECTION 9.12 Notice of Discharge of Hazardous Material or Environmental
Complaint............................................................. 77
SECTION 9.13 Environmental Compliance.............................................. 77
SECTION 9.14 Indemnification....................................................... 77
SECTION 9.15 Further Assurances.................................................... 77
SECTION 9.16 Employee Benefit Plans................................................ 78
SECTION 9.17 Termination Events.................................................... 78
SECTION 9.18 ERISA Notices......................................................... 78
SECTION 9.19 Continued Operations.................................................. 78
SECTION 9.20 Use of Proceeds....................................................... 78
SECTION 9.21 New Subsidiaries...................................................... 79
SECTION 9.22 Hedging Obligations................................................... 80
SECTION 9.23 Post Closing Valuation................................................ 80
ARTICLE X
NEGATIVE COVENANTS
SECTION 10.1 Indebtedness.......................................................... 80
SECTION 10.2 Liens................................................................. 82
SECTION 10.3 Investments; Acquisitions............................................. 83
SECTION 10.4 Merger or Transfer of Assets.......................................... 83
SECTION 10.5 Transactions with Affiliates.......................................... 84
SECTION 10.6 Compliance with ERISA................................................. 84
SECTION 10.7 Fiscal Year........................................................... 85
SECTION 10.8 Dissolution, etc...................................................... 85
SECTION 10.9 Hedging Obligations................................................... 85
SECTION 10.10 Dividends, Redemptions and Other Payments............................. 85
SECTION 10.11 Defaults Under Other Agreements....................................... 86
SECTION 10.12 Compensation; Reimbursement of Expenses............................... 86
SECTION 10.13 Change in Accountants................................................. 86
SECTION 10.14 Limitations on Sales and Leasebacks................................... 86
SECTION 10.15 Negative Pledge Clauses............................................... 87
SECTION 10.16 Change in Control..................................................... 87
SECTION 10.17 Intellectual Property................................................. 87
SECTION 10.18 Preferred Stock....................................................... 87
SECTION 10.19 Licenses.............................................................. 87
ARTICLE XI
FINANCIAL COVENANTS
SECTION 11.1 Consolidated Fixed Charge Ratio....................................... 88
SECTION 11.2 Consolidated Leverage Ratio........................................... 88
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 11.3 Consolidated Net Worth................................................. 88
ARTICLE XII
EVENTS OF DEFAULT
SECTION 12.1 Events of Default...................................................... 88
SECTION 12.2 Agent to Act........................................................... 91
SECTION 12.3 Cumulative Rights...................................................... 92
SECTION 12.4 No Waiver.............................................................. 92
SECTION 12.5 Allocation of Proceeds................................................. 92
ARTICLE XIII
THE AGENT
SECTION 13.1 Appointment, Powers, and Immunities.................................... 93
SECTION 13.2 Reliance by Agent...................................................... 93
SECTION 13.3 Defaults............................................................... 94
SECTION 13.4 Rights as Lender....................................................... 94
SECTION 13.5 Indemnification........................................................ 94
SECTION 13.6 Non-Reliance on Agent and Other Lenders................................ 95
SECTION 13.7 Resignation of Agent................................................... 95
SECTION 13.8 Sharing of Payments, etc............................................... 95
SECTION 13.9 Fees................................................................... 96
ARTICLE XIV
ASSIGNMENTS AND PARTICIPATIONS
SECTION 14.1 Assignments and Participations. ...................................... 96
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 Notices................................................................ 98
SECTION 15.2 Setoff................................................................. 99
SECTION 15.3 Survival............................................................... 99
SECTION 15.4 Expenses............................................................... 100
SECTION 15.5 Amendments............................................................. 100
SECTION 15.6 Counterparts........................................................... 101
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 15.7 Termination........................................................... 101
SECTION 15.8 Indemnification....................................................... 101
SECTION 15.9 Headings and References............................................... 102
SECTION 15.10 Severability.......................................................... 102
SECTION 15.11 Entire Agreement...................................................... 102
SECTION 15.12 Agreement Controls.................................................... 103
SECTION 15.13 Usury Savings Clause.................................................. 103
SECTION 15.14 Governing Law; Waivers................................................ 103
SECTION 15.15 Judgment Currency..................................................... 104
SECTION 15.16 Economic and Monetary Union in the European Community................. 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 Note..................................................... I-1-1
EXHIBIT I-2 Form of Term Note..................................................... I-2-1
EXHIBIT J Form of Revolving Note................................................ J-1
EXHIBIT K-1 Form of LC Account Agreement.......................................... K-1-1
EXHIBIT K-2 Form of Cash Collateral Account....................................... K-2-1
EXHIBIT L Form of Security Agreement............................................ L-1
EXHIBIT M Form of Intellectual Property
Security Agreement.................................................... 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
EXHIBIT R Form of Collateral Assignment of License Agreement.................... R-1
EXHIBIT S Form of Intercompany Notes Assignment................................. S-1
EXHIBIT T Form of Intercompany Note............................................. T-1
EXHIBIT U Form of Subordination Agreement....................................... U-1
</TABLE>
vi
<PAGE> 8
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") made as
of this 10th day of July, 1997 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, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States
of America ("NationsBank"), in its capacity as agent for the Lenders (in such
capacity, and any successor appointed in accordance with the terms of Section
13.7 hereof, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties to that
certain Credit Agreement dated as of April 3, 1996, as amended pursuant to that
certain Amendment No. 1 to Credit Agreement dated as of June 17, 1996, as
further amended pursuant to that certain Amendment No. 2 to Credit Agreement
dated as of October 31, 1996 and as further amended pursuant to that certain
Amendment No. 3 to Credit Agreement dated as of December 30, 1996 (as amended,
the "Existing Credit Agreement"), and the other Loan Documents (as defined in
the Existing Credit Agreement); and
WHEREAS, the Agent on behalf of the Lenders and certain Subsidiaries of
the Borrower have entered into that certain Release and Termination Agreement
dated as of December 12, 1996 pursuant to which the Subsidiaries party thereto
were released from their obligations as Guarantors under the Existing Credit
Agreement and certain security agreements and other Loan Documents (as defined
in the Existing Credit Agreement) were terminated;
WHEREAS, the Borrower, the Lenders and the Agent desire to enter into
this Agreement in order to amend and restate in its entirety the Existing Credit
Agreement and continue to make available to the Borrower hereunder credit
facilities in the maximum aggregate principal amount at any time outstanding of
$70,000,000, which shall include a Tranche A Term Loan Facility in the principal
amount of $15,000,000, a Tranche B Term Loan Facility in the principal FF
Equivalent Amount equal to $15,000,000 and a Revolving Credit Facility in the
maximum aggregate principal amount at any time outstanding of $40,000,000,
including a letter of credit subfacility of up to $5,000,000.
WHEREAS, the Lenders are willing to make all such facilities available
to the Borrower and amend and restate the Existing Credit Agreement in its
entirety 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:
<PAGE> 9
ARTICLE I
DEFINITIONS
SECTION 1.1 AMENDMENT AND RESTATEMENT. The Borrower, the Agent and the
Lenders hereby agree that upon the effectiveness of this Agreement, the terms
and provisions of the Existing Credit Agreement shall be and hereby are amended
and restated in their entirety by the terms and provisions of this Agreement and
such terms and provisions of the Existing Credit Agreement shall be superseded
by this Agreement, except as expressly provided herein.
Notwithstanding the amendment and restatement of the Existing Credit
Agreement by this Agreement, the Borrower shall continue to be liable to the
Agent and each Lender with respect to its agreements under the Existing Credit
Agreement to indemnify and hold harmless the Agent and each Lender from and
against all claims, demands, liabilities, damages, losses, costs, charges and
expenses to which the Agent or any Lender may be subject arising in connection
with the Existing Credit Agreement in accordance with the terms thereof.
Notwithstanding the amendment and restatement of the Existing Credit Agreement
by this Agreement, all of the indebtedness, liabilities and obligations owing by
the Borrower under the Existing Credit Agreement shall continue to be secured by
the "Collateral" as defined in the Existing Credit Agreement and Borrower
acknowledges and agrees that the "Collateral" as defined in the Existing Credit
Agreement remains subject to a security interest in favor of the Agent for the
ratable benefit of the Lenders and to secure the liabilities of Borrower
re-evidenced by this Agreement and the other Loan Documents. This Agreement is
given as a substitution of, and not as a payment of, the obligations of Borrower
under the Existing Credit Agreement and is not intended to constitute a novation
of the Existing Credit Agreement. Upon the effectiveness of this Agreement, all
amounts outstanding under the Existing Credit Agreement shall constitute
Advances under the Revolving Credit Facility hereunder, in each case accruing
interest (a) with respect to Eurodollar Loans under the Existing Credit
Agreement, at the Eurodollar Rate hereunder and (b) with respect to Base Rate
Loans under the Existing Credit Agreement, at the Base Rate hereunder. The
parties hereto agree that all Eurodollar Rate Loans outstanding under the
Existing Credit Agreement on the Closing Date shall continue as Eurodollar Rate
Loans hereunder without the requirement that any compensation be paid to the
Lenders pursuant to Section 5.5 hereof. The parties hereto further agree that
all Letters of Credit issued under the Existing Credit Agreement, as described
on Schedule 2 hereto, and outstanding on the Closing Date shall continue as
Letters of Credit hereunder and shall constitute Letters of Credit Outstandings
hereunder.
Notwithstanding any other amendment and restatement of the Security
Instruments under the Existing Credit Agreement, the parties hereto agree that
each of the Security Instruments delivered in connection with the Existing
Credit Agreement are hereby amended so that each reference to the "Credit
Agreement" or the Loan Documents (as defined in the Existing Credit Agreement)
shall mean the Credit Agreement and the Loan Documents hereunder.
SECTION 1.2 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:
2
<PAGE> 10
"AAi Preferred Stock" means 100 shares of Series A Redeemable
Non-Voting Preferred Stock, par value $1.00 per share, of Foster Grant
Holdings, Inc. owned by the Borrower;
"Acquisition" means the acquisition (i) of 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, such
equity interest, or (ii) in a single or series of related transactions,
of assets of another Person for which the Cost of Acquisition equals or
exceeds five percent (5%) 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;
"Additional Cash" shall have the meaning given to such term in
Section 7.1(d)(i) hereof;
"Advance" means (a) the advance of the Term Loans and (b) any
borrowing under the Revolving Credit Facility consisting of a Base Rate
Revolving Loan or a Eurodollar Rate Revolving Loan, as the case may be;
"Advance Date Exchange Rate" means, (a) with respect to the
Tranche B Term Loan, the Spot Rate of Exchange on the Closing Date and
(b) with respect to FF Revolving Loans, the Spot Rate of Exchange on
(i) the date of the initial Advance of a FF Revolving Loan, and (ii)
the Fixed Rate Revolving Loan Valuation Date, in the case of Fixed Rate
Revolving Loans;
"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
3
<PAGE> 11
Lender shall be increased or decreased to reflect any assignments to or
by such Lender effected in accordance with Section 14.1 hereof;
"Applicable Currency" means, as to any particular Loan,
Dollars or French Francs, as designated (in the case of Loans and
Advances) in the Borrowing Notice applicable to such Loan;
"Applicable Lending Office" means, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or of an
affiliate of such Lender) designated for such Type of Loan on the
signature pages hereof or such other office of such Lender (or an
affiliate of such Lender) as such Lender may from time to time specify
to the Agent and the Borrower by written notice in accordance with the
terms hereof as the office by which its Loans of such Type are to be
made and maintained;
"Applicable Margin" and "Applicable Unused Fee" means that
percent per annum set forth in the table below, which shall be (A)
determined as of each Determination Date based upon the computations
set forth in the compliance certificates delivered to the Agent
pursuant to Sections 9.1(a)(ii) and 9.1(b)(ii) 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 9.1(a) and
9.1(b) hereof (the "Compliance Date") and (B) applicable to all Fixed
Rate Loans made, renewed or converted, Letters of Credit outstanding
and any Unused Fee due and payable, on or after the most recent
Compliance Date to occur based upon the Consolidated Leverage Ratio for
the Four-Quarter-Period then ended, as specified below:
<TABLE>
<CAPTION>
Consolidated Leverage Ratio Applicable Margin Applicable Unused Fee
--------------------------- ----------------- ---------------------
<S> <C> <C>
Greater than 3.00 to 1.00 1.625% 0.375%
Less than or equal to 3.00 to 1.00 1.375% 0.300%
but greater than 2.50 to 2.00
Less than or equal to 2.50 to 1.00 1.125% 0.250%
but greater than 2.00 to 1.00
Less than or equal to 2.00 to 1.00 0.875% 0.225%
but greater than 1.25 to 1.00
Less than or equal to 1.25 to 1.00 0.625% 0.200%
</TABLE>
; provided, however, the Consolidated Leverage Ratio shall be deemed to
be 3.00 to 1.00 for the purposes of calculating the Applicable Margin
and Applicable Unused Fee hereunder from the Closing Date to the
Compliance Date immediately following September 30, 1997.
"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;
4
<PAGE> 12
"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, excluding cash and cash
equivalents, 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;
"Azusa Deed of Trust" means that certain Deed of Trust,
Leasehold Deed of Trust, Security Agreement, Fixture Financing
Statement, Assignment of Leases and Rents and Financing Statement
executed and delivered by ORC for the benefit of the Agent and the
Lenders relating to the Azusa Property, as from time to time amended,
supplemented or replaced;
"Azusa Property" means that certain real property of ORC and
all improvements thereon located in Azusa, California;
"Base Rate" means the per annum rate of interest equal to the
greater of (a) the Prime Rate or (b) the Federal Funds Rate plus
one-half of one percent (0.5%). Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or Federal Funds
Rate;
"Base Rate Loan" means any Base Rate Revolving Loan and any
Base Rate Segment;
"Base Rate Revolving Loan" means any Revolving Loan for which
the rate of interest is determined by reference to the Base Rate;
"Base Rate Segment" means any Segment of the Tranche A Term
Loan for which the rate of interest is determined by reference to the
Base Rate;
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body);
5
<PAGE> 13
"Bolle" means Bolle Inc., a Delaware corporation;
"Bolle Acquisition" means the acquisition by Bolle or its
Affiliate of all of the issued and outstanding capital shares of Bolle
France pursuant to the Share Purchase Agreement for an aggregate
purchase price not to exceed $60,000,000;
"Bolle America" means Bolle America, Inc., a Delaware
corporation;
"Bolle France" means Holding B.F., a corporation governed by
the laws of France;
"Bolle SNC" means Etablissements Bolle, a societe en nom
collectif governed by the laws of France;
"Borrower's Account" means demand deposit account number
1295027966 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 the Advance under the Term Loan
Facility or an Advance under the Revolving Credit Facility, in the form
attached hereto as Exhibit D and incorporated herein by reference;
"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,
(ii) with respect to any Eurodollar Rate Loan, any day which is a
Business Day, as described in clause (i) 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 and (iii) with respect to
any FF LIBOR Rate Loan, any day which is a Business Day, as described
in clause (i) above, and on which the relevant international finance
markets are open for the transaction of business contemplated by this
Agreement in Paris, France, 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 permitted under the
Loan Documents as evidenced in writing and submitted to the Agent
together with any 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
6
<PAGE> 14
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;
"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;
"Cash Collateral Account Agreement" means a Cash Collateral
Account Agreement in the form of Exhibit K-2 between the Borrower and
the Agent;
"Change in Consolidated Working Capital" means, with respect
to any determination thereof as at the end of any Fiscal Year of the
Borrower, the result obtained, expressed as a positive or negative
number as appropriate, by subtracting from Consolidated Working Capital
as at such date the amount of Consolidated Working Capital as at the
end of the immediately preceding Fiscal Year of the Borrower;
"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 Security
Instruments;
"Collateral Assignment of Option Agreement" means that certain
Collateral Assignment dated as of the Closing Date by the Borrower in
favor of the Agent and acknowledged and consented to by The Lantis
Corporation, pursuant to which the Borrower has assigned all of its
rights and interests under the Option Agreement to the Agent for the
benefit of the Lenders;
"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 this Section 1.2;
7
<PAGE> 15
"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;
"Consolidated Current Assets" means cash and all other assets
of the Borrower and its Subsidiaries which would be classified as a
current asset as determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Current Liabilities" means all liabilities of
the Borrower and its Subsidiaries which would be classified as a
current liability as determined on a consolidated basis in accordance
with GAAP applied on a Consistent Basis.
"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, less the amount of any change during the immediately
preceding Fiscal Year resulting from the evaluation as required by GAAP
of the Borrower's investment in Eyecare Products or in the Sterling
Note 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,
calculated through and including the fiscal quarter ending June 30,
1998 on a pro forma basis giving effect to the Bolle Acquisition, the
ratio of (i) Consolidated EBITDA for such period less Capital
Expenditures for such period 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 interest
expense incurred with respect to the Subordinated Debt but not payable
in cash, during such period, (ii) the principal amount of Consolidated
Funded Indebtedness (other than Subordinated Indebtedness) due and
payable during such period, (iii) all cash dividends and other cash
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 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)
8
<PAGE> 16
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, (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 Leverage Ratio" means, as of the date of
computation thereof, calculated through and including the fiscal
quarter ending June 30, 1998 on a pro forma basis giving effect to the
Bolle Acquisition, the ratio of (i) Consolidated Funded Indebtedness
(as determined as at such date) minus Subordinated Indebtedness (as
determined as at such date) minus the FG Mortgage Debt (as determined
at such date) to (ii) Consolidated EBITDA (for the Four-Quarter Period
ending on (or most recently prior to) such date).
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries (including payments received by the Borrower and its
Subsidiaries of (i) interest income, and (ii) dividends and
distributions made in the ordinary course of their businesses by
Persons in which investment is permitted pursuant to this Agreement and
not related to an extraordinary event) less all operating and
non-operating expenses (not related to extraordinary events) of the
Borrower and its Subsidiaries including taxes on income, all determined
on a consolidated basis in accordance with GAAP applied on a Consistent
Basis; but (A) excluding (for all purposes other than (x) compliance
with Section 11.3 hereof and (y) the computation of Consolidated EBITDA
utilized to determine Excess Cash Flow) in such calculation (1) the
amount of any material net gains on the sale, conversion or other
disposition of capital assets (other than the common stock of Eyecare
Products or the Sterling Note), (2) the amount of any material net
gains on the acquisition, retirement, sale or other disposition of
capital stock and other securities of the Borrower or its Subsidiaries,
(3) the amount of any material net gains on the collection of proceeds
of life insurance policies, (4) any write-up of any asset, and (5) any
other net gain of an extraordinary nature and (B) excluding (for all
purposes other than compliance with Section 11.3 hereof) all proceeds
of the sale of the AAi Preferred Stock, all as determined in accordance
with GAAP applied on a Consistent Basis;
"Consolidated Net Worth" means at any time as of which the
amount thereof is to be determined, calculated through and including
the fiscal quarter ending June 30, 1998 on a pro forma basis giving
effect to the Bolle Acquisition, 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
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<PAGE> 17
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 Pretax Income" means, for any period of
computation thereof, Consolidated Net Income plus all taxes on income
of the Borrower and its domestic Subsidiaries, all determined on a
consolidated basis 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 domestic Subsidiaries as determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis;
"Consolidated Working Capital" means, as of any date on which
the amount thereof is to be determined, the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"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 except with respect to the calculation
of Contingent Obligations as required under the definition of
"Solvent," 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;
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(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 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;
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Sections 2.11 or 3.11 hereof of a Fixed Rate
Loan of one Type as a Fixed Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to Section 2.11 or 3.11 or Article V of one Type of
Loan into another Type of Loan.
"Core Business" means, with respect to the Borrower and its
Subsidiaries, the business of (i) manufacturing, subcontracting,
selling, distributing and marketing sunglasses, sport related eyewear,
military and industrial protective eyewear and nonprescription
eyeglasses (including frames, accessories and other parts thereof),
(ii) manufacturing and distributing high intensity illumination systems
and related products for industrial, medical and cinematic uses and
specialized photo exposure systems and related products used in the
production of circuit boards, microcircuits, flexible circuits, flat
panel displays and other applications where microchips are used and
(iii) the manufacturing and distribution of electro-formed products,
glass optics and spectral coatings, whether within or outside of the
United States of America;
"Cost of Acquisition" means, with respect to any Acquisition,
as at the date of consummation of any such Acquisition, the sum of the
following (without duplication): (i) the value of the capital stock,
warrants or options to acquire capital stock of the 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 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
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<PAGE> 19
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;
"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 (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate, (ii) with respect to each FF LIBOR
Rate Loan, a rate of two percent (2%) above the FF LIBOR Rate
applicable to such Loan, (iii) with respect to Base Rate Loans, at a
rate of interest per annum which shall be two percent (2%) above the
Base Rate, and (iv) in any case, the maximum rate permitted by law, if
lower;
"Deferred Payment Preferred Stock" means the Series A
Preferred Stock with a face value of FF 64,120,000 issued pursuant to
Sections 3.1.5 and 3.2.4 of the Share Purchase Agreement and generally
described in Section 3.4 of the Share Purchase Agreement which is being
issued by Bolle in connection with the Bolle Acquisition and contains
such terms as are set forth in a Certificate of Designations by Bolle
filed with the Secretary of State of Delaware on or before the Closing
Date;
"Determination Date" means the last day of each fiscal quarter
of the Borrower;
"Disbursing Bank" means any banking institution approved by
the Agent located within France;
"Dollar Equivalent Amount" means, on any date, the amount of
Dollars into which a French Franc amount would be converted based on
the Spot Rate of Exchange on such date;
"Dollar Loan" means the Tranche A Term Loan and any Dollar
Revolving Loan;
"Dollar Revolving Loan" means any Revolving Loan denominated
in Dollars;
"Dollar Segment" means any Tranche A Segment;
"Dollar Value" means (a) with respect to any Dollar Revolving
Loan and the Tranche A Term Loan, the Dollar amount of such Loan, (b)
with respect to any FF Revolving Loan and the Tranche B Term Loan, the
Dollar Equivalent Amount of such Loan, and (c) with respect to any
Letter of Credit, the Dollar amount of all Letter of
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<PAGE> 20
Credit Outstandings attributable to such Letter of Credit, all as
recorded in the Agent's records pursuant to Section 2.2(d) and 3.1(b)
hereof;
"Dollars" and the symbol "$" mean dollars constituting legal
tender for the payment of public and private debts in the United
States;
"Eligible Assignee" means (i) a Lender; (ii) an affiliate of a
Lender; and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 12.1 hereof, the
Borrower, such approval not to be unreasonably withheld or delayed by
the Borrower; provided, however, that (a) if such Person is a foreign
entity, it must have a zero rate of withholding and (b) neither the
Borrower nor an affiliate of the Borrower shall qualify as an Eligible
Assignee;
"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;
(v) Repurchase Agreements;
(vi) Municipal Obligations;
"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;
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<PAGE> 21
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, any environmental matters or conditions, environmental
protection or conservation, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended; the Superfund Amendments and Reauthorization Act of
1986, as amended; the Resource Conservation and Recovery Act, as
amended; the Toxic Substances Control Act, as amended; the Clean Air
Act, as amended; the Clean Water Act, as amended; together with all
regulations promulgated thereunder, 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 (i) any Equity Offering that
does not result in any Net Proceeds to the Borrower or any Subsidiary
and (ii) any issuance of equity securities in connection with the
exercise of stock options granted to, or purchase of restricted stock
by, eligible participants under the Stock Option Plans;
"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 - Reserve Requirement
"Eurodollar Rate Loan" means any Eurodollar Rate Revolving
Loan and any Eurodollar Rate Segment;
"Eurodollar Rate Revolving Loan" means any Revolving Loan that
bears interest at the Eurodollar Rate;
"Eurodollar Rate Segment" means a Segment of the Tranche A
Term Loan bearing interest or to bear interest at the Eurodollar Rate.
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<PAGE> 22
"Event of Default" means any of the occurrences set forth as
such in Section 12.1 hereof;
"Excess Cash Flow" means, with respect to the Borrower and its
Subsidiaries for any Fiscal Year, the difference of (i) Consolidated
EBITDA for such period (including therein any net gain or loss, as
applicable, of an extraordinary nature otherwise excluded from the
calculation thereof in the definition of "Consolidated Net Income")
minus (ii) the sum of (A) the Change in Consolidated Working Capital as
at the end of such Fiscal Year, provided any positive Change in
Consolidated Working Capital shall not exceed $3,500,000 for any Fiscal
Year, plus (B) the sum of (I) Capital Expenditures, (II) Consolidated
Interest Expense, (III) required principal payments on Consolidated
Funded Indebtedness and optional prepayments of the Term Loan and (IV)
taxes on income accrued during such period, (V) all cash paid as part
of the Cost of Acquisition for any Permitted Acquisition and (VI) the
proceeds of the sale or disposition of the Texas Property, the AAi
Preferred Stock and, to the extent such proceeds are subject to the
prepayment provisions of Section 2.7(d)(i) hereof, the shares of
capital stock of Eyecare Products;
"Existing Credit Agreement" has the meaning given to such term
in the recitals hereto;
"Eyecare Products" means Eyecare Products Plc, a public
liability company incorporated in England (Registration Number
2158452);
"Facilities" means the Term Loan Facility, the Revolving
Credit Facility and the Letter of Credit Facility;
"Facility Termination Date" means such date as all of the
following shall have occurred: (a) the Borrower shall have permanently
terminated the Revolving Credit Facility by payment in full of all
Revolving Credit Outstandings and Letter of Credit Outstandings,
together with all accrued and unpaid interest thereon, except for such
issued and undrawn Letters of Credit as have been fully cash
collateralized in a manner consistent with the terms of Section
12.1(l)(B), (b) the Borrower shall have paid all Term Loan Outstandings
in full, together with all accrued and unpaid interest thereon, (c) all
Swap Agreements shall have been terminated, expired or cash
collateralized, (d) all Term Loan Commitments, Revolving Credit
Commitments and Letter of Credit Commitments shall have terminated or
expired and (e) the Borrower shall have fully, finally and irrevocably
paid and satisfied in full all Obligations (other than Obligations
consisting of continuing indemnities and other contingent Obligations
of the Borrower or any Guarantor that may be owing to the Lenders
pursuant to the Loan Documents and expressly survive termination of
this Agreement);
"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
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<PAGE> 23
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;
"FF Equivalent Amount" means, on any date, the amount of
French Francs into which a Dollar amount would be converted based on
the applicable Spot Rate of Exchange on such date.
"FF LIBOR Rate" means the interest rate per annum calculated
according to the following formula:
FF Interbank Offered Rate Applicable
LIBOR Rate = ----------------------- + Margin
1 - Reserve Requirement
"FF LIBOR Rate Loans" means any FF LIBOR Rate Revolving Loans
and any FF Segment;
"FF LIBOR Rate Revolving Loans" means any Revolving Loan that
bears interest at the FF LIBOR Rate;
"FF Loan" means the Tranche B Term Loan and any FF Revolving
Loan;
"FF Revolving Loan" means any Revolving Loan denominated in
French Francs;
"FF Revolving Loan Outstandings" means, as of any date of
determination, the aggregate principal amount of all FF Revolving Loans
then outstanding;
"FF Revolving Loan Valuation Date" has the meaning ascribed to
such term in Section 3.1(b) hereof;
"FF Segment" means any Tranche B Segment;
"FG Mortgage Debt" means all Indebtedness of ORC Management
Corporation secured by that certain Deed of Trust and Security
Agreement dated as of March 31, 1995 by Foster Grant Group, L.P. in
favor of Wells Fargo (Texas), N.A., successor by merger to First
Interstate Bank of Texas, N.A., as amended;
"Fiscal Year" means the twelve (12) month period ended
December 31 of each calendar year;
"Fixed Rate Loan" means any Fixed Rate Revolving Loan and any
Fixed Rate Segment;
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<PAGE> 24
"Fixed Rate Revolving Loan" means any Eurodollar Rate
Revolving Loan and any FF LIBOR Rate Revolving Loan;
"Fixed Rate Segment" means any Eurodollar Rate Segment and any
FF LIBOR Rate Segment;
"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;
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower taken together as one accounting
period;
"French GAAP" those generally accepted accounting principles
which from time to time have substantive authoritative support in
France and are applicable in the circumstances as of the date of
delivery of any applicable financial statements hereunder;
"French Francs" or "FF" means the official currency of France;
"GAAP" or "Generally Accepted Accounting Principles" 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 ORC, ORC Management, Bolle, Bolle America,
and any other Material Subsidiary now existing or hereafter created or
acquired;
"Guaranty" means collectively each Guaranty Agreement executed
by ORC, ORC Management, Bolle, Bolle America or 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
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<PAGE> 25
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 and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials and lead), the generation, handling,
storage, transportation, disposal, treatment, release, discharge or
emission of which is subject to any Environmental Law;
"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, currency 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;
"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 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 conditional sales or similar title retention agreements);
"Intellectual Property Assignments" means those certain
Assignments of Patents, Trademarks, Copyrights and Licenses in the form
attached to the Intellectual Property Security Agreement as Exhibit A,
to be filed upon acceleration of the Obligations hereunder, as from
time to time amended, supplemented or replaced;
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<PAGE> 26
"Intellectual Property Security Agreement" means collectively
each Intellectual Property Security Agreement executed by the Borrower
or 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 respective obligations hereunder and under the
Guaranty, as applicable, substantially in the form of Exhibit M
attached hereto and incorporated herein by reference, as from time to
time amended, supplemented or replaced;
"Interbank Offered Rate" means,
(i) for any Eurodollar Rate Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate
Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not available,
the term "Interbank Offered Rate" shall mean, for any
Eurodollar Rate Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Reuters Screen LIBO Page as the
London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days
prior to the first day of such Interest period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%);
and
(ii) for any FF LIBOR Rate Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate
Page 3740 (or any successor page) as the London interbank
offered rate for deposits in French Francs at approximately
11:00 a.m. (London time) two (2) Business Days prior to the
first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not
available, the term "Interbank Offered Rate" shall mean, for
any FF LIBOR Rate Loan, the rate determined by the Agent in
its reasonable sole discretion;
"Intercompany Notes" means those notes from time to time
evidencing Indebtedness owed to the Borrower or any domestic Subsidiary
of the Borrower from any foreign Subsidiary in an aggregate amount not
in excess of $40,000,000, substantially in the form of Exhibit T
hereto;
"Intercompany Note Assignment" means that certain Collateral
Assignment of Intercompany Notes between the Borrower, certain
Subsidiaries and the Agent for the benefit of the Lenders dated as of
the date hereof in the form of Exhibit S hereto and incorporated herein
by reference;
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"Interest Period" for each Fixed Rate Loan means a period
commencing on the date such Fixed Rate Loan is made or converted and
each subsequent period commencing on the last day of the immediately
preceding Interest Period for such Fixed 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 Interest Period for such Loan shall be deemed to be one
month;
(B) if an Interest Period for a Fixed Rate Loan would
end on a day which is not a Business Day such Interest Period
shall be extended to the next 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;
(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 Fixed 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 9.21
hereof, substantially in the form of Exhibit P hereto and incorporated
herein by reference;
"LC Account Agreement" means the LC Account Agreement dated as
of the date hereof between the Borrower and the Agent in the form of
Exhibit K-1 hereto, as amended, supplemented or replaced from time to
time;
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"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 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;
"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 IV 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 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 IV 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;
"License Agreement" means that certain Distributorship
Agreement dated December 15, 1992, as amended thereafter and amended as
of the date hereof by that certain Amendment to Distributorship
Agreement, each between Bolle America and Bolle SNC pursuant to which
Bolle America has received a worldwide unrestricted, non-exclusive
license to all of the trademarks, copyrights and patents of Bolle
France, which license agreement permits the assignment thereof to the
Agent for the benefit of the Lenders and each of its further assignees
pursuant to the License Assignment and has a scheduled expiration or
termination date occurring on or after the scheduled Facility
Termination Date;
"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" or "Loans" means any of the Revolving Loans or the Term
Loans;
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"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;
"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;
"Material Subsidiary" means any direct or indirect domestic
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 domestic Subsidiaries of the Borrower that together with the
Borrower 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 domestic
Subsidiaries satisfies such threshold, then those Subsidiaries so
determined to be "Material Subsidiaries" shall be specified by the
Borrower;
"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 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;
"NCMI" means NationsBanc Capital Markets, Inc. and its
successors.
"Net Proceeds" (a) from any Equity 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
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consequence of such issuance; and (b) from any Asset Disposition or
option exercised under the Option Agreement 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) with
respect to an Asset Disposition only, 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
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;
"Option Agreement" means that certain Option Agreement dated
November 14, 1996 between the Borrower and The Lantis Corporation, as
amended from time to time;
"ORC" means ORC Technologies, Inc., a Delaware corporation;
"ORC Management" means ORC Management Corporation, a Delaware
corporation;
"Outstandings" means, at any time of determination, the sum of
the Term Loan Outstandings, the Revolving Credit Outstandings and the
Letter of Credit Outstandings;
"Participation" means, with respect to any Lender (other than
Issuing Bank), the extension of credit 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;
"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 Acquisition" means the Bolle Acquisition, the
Related Bolle Acquisitions and each other Acquisition beyond the normal
course of business effected with the consent and approval of the board
of directors or other applicable governing body
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<PAGE> 31
of the Person being acquired, and with the duly obtained approval of
such shareholders or other holders of equity interest as such Person
may be required to obtain, 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 a line or lines of business
that are part of the Core Business or complimentary to the Core
Business as then conducted by the Borrower and its Subsidiaries, (iii)
pro forma historical financial statements as of the end of the most
recent month for the trailing twelve month period 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 Article XI hereof after giving effect to such Acquisition, (iv)
the aggregate Cost of Acquisition (excluding the value of any capital
stock given as part of the Cost of Acquisition) with respect to any
Acquisitions consummated (A) during any Fiscal Year shall not exceed
$3,000,000, and (B) during the term of this Agreement shall not exceed
$5,000,000 (v) in the event the Person so acquired is not a Subsidiary,
the Borrower's strategic plan includes additional permitted investment
in such Person sufficient for it to become a Subsidiary and (vi) any
Advance to finance an Acquisition otherwise qualifying as a Permitted
Acquisition hereunder shall be in compliance with Section 3.15 hereof;
"Permitted Indebtedness" has the meaning assigned to such term
in Section 10.1 hereof;
"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 Stock" means (a) all of the capital stock other than
the Seller Shares and related rights and interests of each direct and
indirect domestic Subsidiary, (b) all of the capital stock and related
rights and interests of Eyecare Products Plc owned by the Borrower, and
(c) 65% of the Voting Stock and 100% of the nonvoting capital stock and
related interests and rights of each foreign Subsidiary owned directly
by the Borrower or any domestic Subsidiary, in each case now or
hereafter pledged by the Borrower and certain Subsidiaries pursuant to
the Stock Pledge Agreement;
"Preferred Stock" means, collectively, (i) the Deferred
Payment Preferred Stock and (ii) the Series A Preferred Stock, which is
being issued by the Borrower in connection with the Bolle Acquisition
and contains such terms as are set forth in the Certificate of
Designations of the Series A Preferred Stock of BEC Group, Inc. filed
with the Secretary of State of Delaware on or before the Closing Date;
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"Prime Rate" means the per annum rate of interest established
from time to time by NationsBank as its prime rate, which rate may not
be the lowest rate of interest charged by NationsBank to its customers;
"Principal Office" means the office of the Agent at
NationsBank, National Association, Independence Center, 15th Floor, NC1
001-15-04, Charlotte, North Carolina 28255, Attention: Agency Services,
or such other office and address as the Agent may from time to time
designate in writing;
"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;
"Related Bolle Acquisitions" means the contemplated
acquisitions of substantially all of the capital stock or assets of
Bill Bass Optical Pty Ltd., Parhurst Oaks Ltd., Bolle Asia Ltd., Bolle
Sunglass Ltd. UK and Bolle (UK) Ltd. which shall occur on or prior to
December 31, 1998 pursuant to documentation acceptable in form and
substance to the Agent and the Lenders;
"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;
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating in excess of 50%
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)
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the aggregate principal amount of such Lender's Applicable Commitment
Percentage of Revolving Credit Outstandings plus (iii) 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 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;
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) by member banks of the
Federal Reserve System against, in the case of Fixed Rate Loans,
"Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement
shall reflect any other reserves required to be maintained by such
member banks with respect to (i) any category of liabilities which
includes deposits by reference to which any Fixed Rate is to be
determined or (ii) any category of extensions of credit or other assets
which include Fixed Rate Loans. Fixed Rate 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. Fixed Rate Loans shall be adjusted automatically on and as of
the effective date of any change in the Reserve Requirement.
"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
each 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 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 amount of all Revolving Loans
then outstanding;
"Revolving Credit Termination Date" means the earliest to
occur of (i) April 30, 2002, or (ii) such earlier date of termination
of the Lenders' obligations pursuant to
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Section 12.1 hereof 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 thereunder
(including the discharge of all obligations of the Issuing Bank and the
Lenders with respect to Letters of Credit and Participations) pursuant
to Section 3.6 hereof;
"Revolving Loan" means a Loan made under the Revolving Credit
Facility pursuant to Section 3.1 hereof;
"S&P" means Standard & Poor's Rating Group, a division of the
McGraw Hill Company, Inc.;
"Security Agreement" means, collectively (or individually as
the context may indicate), (i) the Security Agreement dated as of the
date hereof by the Borrower and each Guarantor to the Agent, and (ii)
any additional Security Agreement delivered to the Agent pursuant to
Section 9.21 hereof, in each case, substantially in the form attached
hereto as Exhibit L, 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 Azusa Deed of Trust, the Collateral Assignment of Option Agreement,
the Lease Assignments, the Intellectual Property Assignments, the
Intercompany Note Assignment, the Subordination Agreement 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;
"Seller Shares" means up to 5% of the total outstanding common
stock of Bolle conveyed to the selling shareholders in connection with
the Bolle Acquisition;
"Segment" means a portion of the Term Loans (a) with respect
to which a particular interest rate is (or is proposed to be)
applicable and (b) borrowed in either Dollars or French Francs;
"Share Purchase Agreement" means that certain Share Purchase
Agreement dated June 4, 1997 between Bolle, the Borrower and certain
individual shareholders of Bolle France, as amended on or prior to and
in effect on the Closing Date;
"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;
"Solvent" means, when used with respect to any Person, that at
the time of determination:
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(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;
"Spot Rate of Exchange" means (i) in determining the Dollar
Equivalent Amount of a French Franc amount as of any date, the spot
exchange rate determined by the Agent in accordance with its usual
procedures for the purchase by the Agent of Dollars with French Francs
at approximately 10:00 A.M. on the Business Day that is two (2)
Business Days prior to such date, and (ii) in determining the FF
Equivalent Amount of a Dollar amount on any date, the spot exchange
rate as determined by the Agent in accordance with its usual procedures
for the purchase by the Agent of French Francs with Dollars at
approximately 10:00 A.M. on the Business Day that is two (2) Business
Days prior to such date;
"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;
"Sterling Note" means the Convertible Callable Subordinated
Debenture due September 15, 2015 issued by Sterling Vision, Inc.
("Sterling") having a book value of approximately $1,800,000 which is
convertible into shares of common stock of Sterling;
"Stock Option Plans" means, collectively, the BEC Group, Inc.
1996 Stock Incentive Plan and the BEC Group, Inc. 1996 Employee Stock
Purchase Plan;
"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 hereof, in each case, substantially in the form attached
hereto as Exhibit G, as such Stock Pledge Agreement may be amended,
supplemented or replaced from time to time;
"Subordination Agreement" means that certain Subordination
Agreement dated as of the date hereof between the Agent, the Borrower
and certain Subsidiaries now or hereafter a party thereto,
substantially in the form attached hereto as Exhibit U, as such
Subordination Agreement may be amended, supplemented or replaced from
time to time;
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"Subordinated Indebtedness" means all Indebtedness evidenced
by the 8% Convertible Subordinated Notes due 2002 issued by the
Borrower, and all other Indebtedness that is subordinated to the
Facilities under its own terms or under any separate agreement of
subordination, in each case upon terms satisfactory to the Agent;
"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 or controlled 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 Hedging Obligations;
"Tavister" means Tavister Limited, a company incorporated in
England and Wales (Reg. No. 3381752);
"Term Loans" means the Tranche A Term Loan and the Tranche B
Term Loan;
"Term Loan Commitment" means, with respect to each Lender, the
sum of the Tranche A Term Loan Commitment and the Tranche B Term Loan
Commitment of such Lender;
"Term Loan Facility" means the facility described in Article
II providing for a Tranche A Term Loan and a Tranche B Term Loan to the
Borrower by the Lenders in the aggregate principal amount of the Total
Term Loan Commitment;
"Term Loan Outstandings" means, as of any date of
determination, the sum of the Tranche A Term Loan Outstandings and the
Tranche B Term Loan Outstandings;
"Term Loan Termination Date" means (i) April 1, 2002 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 Loan Valuation Date" has the meaning ascribed to such
term in Section 2.2(d) hereof;
"Term Notes" means the Tranche A Term Notes and the Tranche B
Term Notes;
"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
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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;
"Texas Property" means certain real property of the Borrower
and all improvements thereon located in Dallas, Texas;
"Total Credit Commitment" means the sum of the Total Term Loan
Commitment, and the Total Revolving Credit Commitment;
"Total FF Loan Commitment" means FF 236,520,000, such amount
being the FF Equivalent Amount on the Closing Date of $40,000,000;
"Total Letter of Credit Commitment" means $5,000,000;
"Total Revolving Credit Commitment" means $40,000,000, as
reduced from time to time in accordance with Sections 3.6 and 3.7
hereof;
"Total Term Loan Commitment" means the sum of the Total
Tranche A Term Loan Commitment and the Total Tranche B Term Loan
Commitment;
"Total Tranche A Term Loan Commitment" means, with respect to
the Lenders as a whole, a principal amount equal to $15,000,000
available in Dollars;
"Total Tranche B Term Loan Commitment" means, with respect to
the Lenders as a whole, a principal amount equal to FF 88,695,000, such
amount being the FF Equivalent Amount on the Closing Date of
$15,000,000 available in French Francs;
"Tranche A Segment" means any Segment of the Tranche A Term
Loan;
"Tranche A Term Loan" means the loan made pursuant to the
Tranche A Term Loan Facility in accordance with Article II;
"Tranche A Term Loan Commitment" means, with respect to each
Lender, the obligation of such Lender as set forth in Section 2.1
hereof to make the Tranche A Term Loan to the Borrower in a principal
amount equal to such Lender's Applicable
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Commitment Percentage of the Total Tranche A Term Loan Commitment as
set forth on Exhibit A;
"Tranche A Term Loan Facility" means the facility described in
Article II providing for the Tranche A Term Loan to the Borrower by the
Lenders in the principal amount of the Tranche A Term Loan Commitment;
"Tranche A Term Loan Outstandings" means, as of any date of
determination, the principal amount of the Tranche A Term Loan then
outstanding;
"Tranche A Term Notes" means, collectively, the promissory
notes of the Borrower evidencing the Tranche A Term Loan executed and
delivered to the Lenders as provided in Section 2.9 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;
"Tranche B Segment" means any Segment of the Tranche B Term
Loan;
"Tranche B Term Loan" means the loan made pursuant to the
Tranche B Term Loan Facility in accordance with Article II;
"Tranche B Term Loan Commitment" means, with respect to each
Lender, the obligation of such Lender as set forth in Section 2.2
hereof to make the Tranche B Term Loan to the Borrower in a principal
amount equal to such Lender's Applicable Commitment Percentage of the
Total Tranche B Term Loan Commitment as set forth on Exhibit A;
"Tranche B Term Loan Facility" means the facility described in
Article II providing for the Tranche B Term Loan to the Borrower by the
Lenders in the principal amount of the Total Tranche B Term Loan
Commitment;
"Tranche B Term Loan Outstandings" means, as of any date of
determination, the principal amount of the Tranche B Term Loan then
outstanding;
"Tranche B Term Notes" means, collectively, the promissory
notes of the Borrower evidencing the Tranche B Term Loan executed and
delivered to the Lenders as provided in Section 2.9 substantially in
the form of Exhibit I-2, with appropriate insertions as to amounts,
dates and names of Lenders as the same may be amended, supplemented or
replaced from time to time;
"Type" shall mean any type of Loan or Segment bearing interest
at a specified rate (i.e., Base Rate Loan, Base Rate Segment, FF LIBOR
Rate Loan, FF LIBOR Rate Segment, Eurodollar Rate Loan or Eurodollar
Rate Segment).
"UCC" means the Uniform Commercial Code of the State of New
York, as amended or supplemented from time to time.
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"Unused Fee" has the meaning assigned to such term in Section
3.13(a) hereof;
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
SECTION 1.3 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 II
THE TERM LOANS
SECTION 2.1 TRANCHE A TERM LOAN.
(a) Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make an Advance of the Tranche A Term
Loan on the Closing Date on a pro rata basis determined by the Tranche
A Term Loan Commitment of each Lender. The Tranche A Term Loan shall be
available in a single draw at Closing. The principal amount of each
Tranche A Segment outstanding hereunder from time to time shall bear
interest, at the Borrower's election, at an interest rate per annum at
the Base Rate or the Eurodollar Rate; provided, however, that (i) no
Eurodollar Rate Segment shall have an Interest Period that extends
beyond the Term Loan Termination Date, (ii) each Eurodollar Rate
Segment shall be in the minimum amount of $500,000 and, if greater, an
integral multiple of $50,000 and (iii) the principal amount of 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 Tranche A Term Loan
repaid or prepaid by the Borrower may be reborrowed hereunder, and no
Advance of Tranche A Term Loan shall be made by any Lender after the
Closing Date.
(b) As early as practicable on the Closing Date, each Lender
shall, pursuant to the terms and subject to the conditions of this
Agreement, make the amount of the Tranche A Term Loan to be made by it,
determined in accordance with Section 2.1(a) hereof, 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 immediately
available Dollars. 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 2.2 TRANCHE B TERM LOAN.
(a) Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make an Advance of the Tranche B Term
Loan on the Closing Date on a pro rata basis determined by the Tranche
B Term Loan Commitment of each Lender. The Tranche B Term Loan shall be
available in a single draw at Closing. The principal amount of each
Segment of the Tranche B Term Loan outstanding hereunder from time to
time shall bear interest at the FF LIBOR Rate; provided, however, that
(i) no Tranche B Segment shall have an Interest Period that extends
beyond the Term Loan Termination Date, (ii) each Tranche B Segment
shall be in the minimum FF Equivalent Amount of $500,000 and, if
greater, an integral multiple of the FF Equivalent Amount of $50,000
and (iii) the principal amount of each Tranche B 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 Tranche B Term Loan repaid or prepaid by the
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<PAGE> 41
Borrower may be reborrowed hereunder, and no Advance of Tranche B Term
Loan shall be made by any Lender after the Closing Date.
(b) As early as practicable on the Closing Date, each Lender
shall, pursuant to the terms and subject to the conditions of this
Agreement, make the amount of the Tranche B Term Loan to be made by it,
determined in accordance with Section 2.2(a) hereof, available to the
Borrower in French Francs at the Disbursing Bank, to the account of the
Agent with the Disbursing Bank. The amount so received by the
Disbursing Bank shall, subject to the terms and conditions of this
Agreement and upon instruction from the Agent to the Disbursing Bank on
or before 10:00 A.M. on the date of such Advance, be made available to
the Borrower by delivery of the proceeds thereof to the Borrower's
Account with the Disbursing Bank or otherwise as shall be directed by
the Authorized Representative and reasonably acceptable to the Agent.
(c) The principal amount outstanding of the Tranche B Term
Loan shall be recorded by the Agent in French Francs which recorded
amount shall be reduced from time to time by the amount of any
principal payments with respect to the Tranche B Term Loan.
(d) On the date of any Continuation of a Tranche B Segment
pursuant to Section 2.11 hereof and, with respect to any Tranche B
Segment having an Interest Period longer than three months, at the end
of each three-month period following the first day of such Interest
Period (each a "Term Loan Valuation Date"), the Agent shall determine
and record the amount of Tranche B Term Loan Outstandings. If the
aggregate amount of all Tranche B Term Loan Outstandings and FF
Revolving Loan Outstandings exceeds the Total FF Loan Commitment, the
Borrower shall, within two Business Days of written notice thereof from
the Agent, repay (a "Term Loan Rate Adjustment Payment") the portion of
the Tranche B Term Loan or FF Revolving Loans, at the Borrower's
election, necessary to ensure that the amount of all Tranche B Term
Loan Outstandings and FF Revolving Loan Outstandings does not exceed
such Total FF Loan Commitment. Such Term Loan Rate Adjustment Payment
shall be accompanied by payment of all amounts due pursuant to Section
5.5 hereof as a result of such Term Loan Rate Adjustment Payment. The
Agent shall maintain records sufficient to identify the outstanding
principal amount and Dollar Value of each Tranche B Segment.
SECTION 2.3 PAYMENT OF PRINCIPAL. Subject to mandatory and optional
prepayments provided for in Sections 2.6 and 2.7 hereof, the principal amount of
the Term Loans shall be repaid in the Dollar amounts of the Tranche A Term Loan
or French Franc amounts of the Tranche B Term Loan, as applicable, and on the
dates set forth below in the Applicable Currency; and the entire amount of Term
Loan Outstandings shall be due and payable in full on the Term Loan Termination
Date:
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<TABLE>
<CAPTION>
Due Date Tranche A Tranche B
-------- --------- ---------
<S> <C> <C>
July 1, 1998 $ 500,000 FF 2,956,500.00
October 1, 1998 $ 500,000 FF 2,956,500.00
January 1, 1999 $ 500,000 FF 2,956,500.00
April 1, 1999 $ 500,000 FF 2,956,500.00
July 1, 1999 $ 750,000 FF 4,434,750.00
October 1, 1999 $ 750,000 FF 4,434,750.00
January 1, 2000 $ 750,000 FF 4,434,750.00
April 1, 2000 $ 750,000 FF 4,434,750.00
July 1, 2000 $1,250,000 FF 4,434,750.00
October 1, 2000 $1,250,000 FF 7,391,250.00
January 1, 2001 $1,250,000 FF 7,391,250.00
April 1, 2001 $1,250,000 FF 7,391,250.00
July 1, 2001 $1,250,000 FF 7,391,250.00
October 1, 2001 $1,250,000 FF 7,391,250.00
January 1, 2002 $1,250,000 FF 7,391,250.00
April 1, 2002 $1,250,000 FF 10,347,750.02
</TABLE>
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 Continued or be otherwise due (i) in the case of the
Tranche A Term Loan, at the then applicable Base Rate for Base Rate
Segments or applicable Eurodollar Rate for Eurodollar Rate Segments, 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, such payments to be made in
Dollars, and (ii) in the case of the Tranche B Term Loan, at the
applicable FF LIBOR Rate, such payments to be made in French Francs;
provided, however, that if any amount shall not be paid when due (at
maturity, by acceleration or otherwise) or if any other Event of
Default shall have occurred and be continuing hereunder, all amounts
outstanding hereunder shall bear interest thereafter at the Default
Rate from the date such Event of Default occurred until the date such
Event of Default is cured or waived.
(b) Interest on the outstanding principal balance of the Term
Loans shall be computed on the basis of a year of 360 days and
calculated for the actual number of days elapsed. Interest on the Term
Loans shall be paid (i) quarterly in arrears on the last Business Day
of each March, June, September and December commencing September 1997,
with respect to each Base Rate Segment, (ii) on the last day of the
applicable Interest Period for each Fixed Rate Segment and, for any
Fixed Rate Segment 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.
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SECTION 2.5 MANNER OF PAYMENT.
(a) Each payment of principal (including any mandatory or
optional prepayment), interest and fees, and any other amount required
to be paid to the Lenders with respect to the Term Loans, shall be made
to the Agent at the Principal Office for the account of each Lender in
Dollars in the case of Tranche A Term Loans and in French Francs in the
case of Tranche B Term Loans 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 Dollar Value 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 (i) in Dollars in the case of the Tranche
A Term Loan or in French Francs in the case of the Tranche B Term Loan,
(ii) in immediately available funds and (iii) prior to 2:30 P.M. on the
date such payment is due 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 are paid in the Applicable Currency and
become available funds. Any non-conforming payment which conforms to
clauses (i) and (ii) above shall be deemed received by the Agent on the
next Business Day. Any non-conforming payment may constitute or become
a Default or Event of Default. The Agent shall give prompt written
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 Default Rate
(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, the Eurodollar Rate or the FF LIBOR 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
Loans 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 of a Base Rate Segment or a Fixed 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 $500,000 (or the FF Equivalent Amount with respect
to Tranche B Term Loan) or any
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integral multiple of $50,000 (or the FF Equivalent Amount with respect to
Tranche B Term Loan) in excess thereof (or in the entire remaining principal
balance of the applicable 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 Fixed 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 5.5 hereof.
SECTION 2.7 MANDATORY PREPAYMENTS. In addition to the required payments
of principal of the Term Loans set forth in Section 2.3 hereof and any optional
payments of principal of the Term Loans effected under Section 2.6 hereof, the
Borrower shall make the following required prepayments, each such payment to be
made to the Agent for the benefit of the Lenders within the time period
specified below and with respect to any prepayment of the Tranche B Term Loan,
in the FF Equivalent Amount of the amount due:
(a) Asset Dispositions. The Borrower shall make, or shall
cause each applicable Subsidiary to make, a prepayment from the Net
Proceeds of any Asset Disposition resulting in Net Proceeds which (i)
exceed $200,000 for any single or series of related transactions or
(ii) when aggregated with all other Net Proceeds from Asset
Dispositions received during any Fiscal Year exceed $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. Notwithstanding the
foregoing, however, there shall be excluded from the calculation of the
Net Proceeds for any payment required under this Section 2.7(a) (A)
100% of the Net Proceeds from any disposition of the Texas Property and
(B) 50% of the Net Proceeds from any disposition of the AAi Preferred
Stock;
(b) Equity Offerings. In the event that the Consolidated
Leverage Ratio exceeds 2.25 to 1.00 for the most recently ended
Four-Quarter Period preceding any Equity Offering, the Borrower shall
make a prepayment from the Net Proceeds of such Equity Offering in an
amount equal to the lesser of (i) 100% of such Net Proceeds or (ii) the
amount of such Net Proceeds which would result in a Consolidated
Leverage Ratio equal to 2.25 to 1.00 after giving pro forma effect to
such prepayment for such Four-Quarter Period. Each such prepayment
shall be made within five (5) Business Days of receipt of such Net
Proceeds and upon not less than three (3) Business Days' written notice
to the Agent, which notice shall include a certificate of an Authorized
Representative setting forth in reasonable detail the calculations
utilized in computing the amount of Net Proceeds. Notwithstanding the
foregoing, however, any payment required under this Section 2.7(b)
shall not be required to the extent that any Net Proceeds of an Equity
Offering are used to repay or redeem all or a portion of the Preferred
Stock;
(c) Intercompany Notes. In the event that the Consolidated
Leverage Ratio exceeds 2.25 to 1.00 for the most recently ended
Four-Quarter Period preceding any principal repayment of the
Intercompany Notes, the Borrower shall make a prepayment
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in an amount equal to the lesser of (i) 100% of any principal repayment
made on the Intercompany Notes after such Four-Quarter Period or (ii)
the amount of such repayment after such Four-Quarter Period made on the
Intercompany Notes which would result in a Consolidated Leverage Ratio
equal to 2.25 to 1.00 after giving pro forma effect to such prepayment
for such Four-Quarter Period. Each such prepayment shall be made within
five (5) Business Days of receipt of such repayment and upon not less
than three (3) Business Days' written notice to the Agent.
(d) Option Proceeds; Excess Cash Flow.
(i) The Borrower shall make a prepayment from the Net
Proceeds of any exercise of an option granted under the Option
Agreement 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.
(ii) In the event that (a) the first option under the
Option Agreement is not exercised on or prior to December 15,
1997 or Net Proceeds from the first option under the Option
Agreement are less than $2,000,000, the Borrower shall make a
prepayment on September 15, 1998 in the amount equal to fifty
percent (50%) of the Borrower's Excess Cash Flow for the
Four-Quarter Period ending on June 30, 1998, and (b) the
second option under the Option Agreement is not exercised on
or prior to October 15, 1998 or Net Proceeds from the second
option under the Option Agreement are less than $2,000,000,
the Borrower shall make a prepayment on September 15, 1999 in
the amount equal to fifty percent (50%) of the Borrower's
Excess Cash Flow for the Four-Quarter Period ending on June
30, 1999. Each such prepayment shall include a certificate of
an Authorized Representative setting forth in reasonable
detail the calculations utilized in computing the Net Proceeds
from the Option Agreement and Excess Cash Flow.
All mandatory prepayments made pursuant to Section 2.7(a), (b) or (d) hereof
shall be applied pro rata to the scheduled installments of principal remaining
outstanding under the Term Loans pursuant to Section 2.3 hereof (as adjusted to
give effect to any prior payments or prepayments of principal) in inverse order
of maturity and any mandatory prepayment made pursuant to Section 2.7(c) hereof
shall be applied to scheduled installments of principal remaining outstanding
under the Term Loans pursuant to Section 2.3 hereof (as adjusted to give effect
to any prior payments or prepayments of principal) in order of maturity. If as a
result of the making of any payment required to be made pursuant to this Section
2.7 the Borrower would incur costs pursuant to Section 5.5 hereof in excess of
$5,000, it may deposit the amount of such payment with the Agent, for the
benefit of the Lenders, in a cash collateral account with and in the name of the
Agent established for such purpose pursuant to the terms of a Cash Collateral
Account Agreement, as to which the Agent shall have exclusive control, until the
end of the applicable Interest Period at which time such payment shall
automatically be made. Any prepayment of a Fixed Rate Loan pursuant to this
Section 2.7 other than on the last day of an Interest Period which is not
subject
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to escrow pursuant to the immediately preceding sentence shall be accompanied by
the additional payment, if any, required by Section 5.5 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.
(a) The Tranche A Term Loan shall be evidenced by the Tranche
A Term Notes payable to the order of each Lender in the respective
amount of its Tranche A Term Loan Commitment, which Tranche A 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.
(b) The Tranche B Term Loan shall be evidenced by the Tranche
B Term Notes payable to the order of each Lender in the respective
amount of its Tranche B Term Loan Commitment, which Tranche B 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 Loans shall be, at the option
of the Borrower specified in the applicable Borrowing Notice or an Interest Rate
Selection Notice, comprised of either Fixed Rate Segments or Base Rate Segments.
Fixed Rate Segments and Base Rate Segments may be outstanding at the same time,
provided, however, there shall not be outstanding at any one time Fixed Rate
Loans and Fixed 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 Fixed Rate Segment by the time
prescribed by Section 2.11 hereof, the Borrower shall be deemed to have elected
(a) with respect to any Tranche A Segment, to convert such Segment to (or
Continue such Segment as) a Base Rate Segment or (b) with respect to any Tranche
B Segment, to Continue such Segment with an Interest Period of one month, in any
case until the Borrower notifies the Agent in accordance with Section 2.11
hereof.
SECTION 2.11 CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS.
(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, the Borrower may 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) 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 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 Fixed
Rate Segment to begin on the last day of the then current
Interest Period for such Fixed Rate Segment; and
(ii) convert any Base Rate Segment of the Tranche A
Term Loan 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 and FF LIBOR Rate Loans set
forth in the definition of "Interest Period" herein and in Sections 2.1 and 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 Tranche A
Term Loan shall be made to the Agent for the account of the Lenders pro rata
based on their Applicable Commitment Percentages of the Total Tranche A Term
Loan Commitment, (b) each payment on account of the principal of and interest on
the Tranche B Term Loan shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages of the Total
Tranche B Term Loan Commitment, (c) 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 (d)
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 Loans hereunder
shall be used by the Borrower (i) for working capital, (ii) to finance capital
expenditures permitted hereunder, (iii) to finance the Bolle Acquisition, (iv)
to finance the Related Bolle Acquisitions and (v) for other lawful corporate
purposes.
ARTICLE III
REVOLVING LOANS
SECTION 3.1 REVOLVING LOANS.
(a) Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances of Dollar
Revolving Loans in Dollars or FF Revolving Loans in French Francs (as
specified in the respective Borrowing Notice) to the Borrower under the
Revolving Credit Facility from time to time from the Closing Date until
the Revolving Credit Termination Date on a pro rata basis as to the
total borrowing requested by the Borrower on any day determined by such
Lender's Applicable Commitment Percentage up to but not exceeding a
Dollar Value equal to the Revolving Credit Commitment of such Lender;
provided, however, that the Lenders will not be
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required and shall have no obligation to make any Advance under the
Revolving Credit Facility (i) so long as any condition set forth in
Section 7.2 hereof is not satisfied or (ii) if the Agent has
accelerated the maturity of any of the Notes as a result of an Event of
Default; provided, further, however, that immediately after giving
effect to each such Advance, (A) the Dollar Value of all Revolving
Credit Outstandings plus the Dollar Value of Letter of Credit
Outstandings shall not exceed the Total Revolving Credit Commitment,
(B) the Dollar Value of all Outstandings shall not exceed the Total
Credit Commitment and (C) if such Advance is a FF Revolving Loan, the
amount of FF Revolving Loan Outstandings plus Tranche B Term Loan
Outstandings shall not exceed the Total FF Loan Commitment. 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 (y) no Fixed Rate Revolving Loan shall be made
which has an Interest Period that extends beyond the Revolving Credit
Termination Date and (z) each Fixed Rate Revolving Loan may, subject to
the provisions of Section 5.5, be repaid only on the last day of the
Interest Period with respect thereto.
(b) Records and Valuation. The principal amount of any Advance
of a Dollar Revolving Loan shall be recorded in the Agent's records in
Dollars and the principal amount of any Advance of a FF Revolving Loan
shall be recorded in the Agent's records in French Francs and such
recorded amount shall be reduced from time to time by the amount of any
principal payments with respect to such Advance. On the date of any
Continuation of a FF LIBOR Rate Loan pursuant to Section 3.11 hereof
and, with respect to any FF Revolving Loan having an Interest Period
longer than three months, at the end of each three-month period
following the first day of such Interest Period (each a "FF Revolving
Loan Valuation Date"), the Agent shall determine and record the Dollar
Value of all Revolving Credit Outstandings. If (A) the aggregate amount
of all FF Revolving Loan Outstandings and Tranche B Term Loan
Outstandings exceeds the Total FF Loan Commitment or (B) the Dollar
Value of all Revolving Credit Outstandings plus the Dollar Value of all
Letter of Credit Outstandings exceeds the Total Revolving Credit
Commitment, the Borrower shall, within two Business Days of written
notice thereof from the Agent, repay (a "Revolving Loan Rate Adjustment
Payment") the portion of FF Revolving Loans or, at the election of the
Borrower in the case of clause (A) above, the Tranche B Term Loan
necessary to ensure that the aggregate amount of all FF Revolving Loan
Outstandings and Tranche B Term Loan Outstandings does not exceed the
Total FF Loan Commitment and that the Dollar Value of all Revolving
Credit Outstandings plus the Dollar Value of all Letter of Credit
Outstandings does not exceed the Total Revolving Credit Commitment.
Such Revolving Loan Rate Adjustment Payment shall be accompanied by
payment of all amounts due pursuant to Section 5.5 hereof as a result
of such Revolving Loan Rate Adjustment Payment. The Agent shall
maintain records sufficient to identify the outstanding principal
amount and Dollar Value of all Revolving Credit Outstandings.
(c) Amounts. Each Revolving Loan made, Converted or Continued,
unless made in accordance with Section 3.2(f) hereof, shall be (i) in
the case of Dollar Revolving Loans, in a principal amount of at least
$500,000, and, if greater than $500,000, an
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integral multiple of $50,000, and (ii) in the case of FF Revolving
Loans, in a principal amount of the FF Equivalent Amount of at least
$500,000, and if greater than $500,000, the FF Equivalent Amount of an
integral multiple of $50,000.
SECTION 3.2 ADVANCES AND RATE SELECTION.
(a) An Authorized Representative shall give the Agent (a)
irrevocable telephonic notice of each Fixed Rate Revolving Loan,
whether representing an additional Advance hereunder or the conversion
of borrowings hereunder from Base Rate Revolving Loans to Eurodollar
Rate Revolving Loans or the election of a subsequent Interest Period
for any Fixed Rate Revolving 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 Revolving Loan representing an additional
Advance hereunder or the conversion of borrowings hereunder from
Eurodollar Rate Revolving 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 Applicable Currency, the
type of Loan (Base Rate or Fixed Rate), the date of the Advance and, if
a Fixed Rate Revolving 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
confirmation shall not affect the validity of such telephonic notice.
(b) Notice of receipt of such Borrowing Notice or Interest
Rate Selection Notice, as the case may be, together with the amount of
each Lender's portion of an Advance requested thereunder, shall be
provided by the Agent to each Lender by telefacsimile transmission with
reasonable promptness, but (provided the Agent shall have received such
notice by 10:30 A.M.) not later than 12:00 P.M. on the same day as the
Agent's receipt of such notice.
(c) In the case of Advances of Dollar Revolving Loans, not
later than 2:00 P.M. on the date specified for each borrowing under
this Section 3.2, each Lender shall, pursuant to the terms and subject
to the conditions of this Agreement, make the amount of the Advance or
Advances to be made by it on such day available by wire transfer to the
Agent in the amount of its pro rata share, determined according to such
Lender's Applicable Commitment Percentage of each Dollar Revolving Loan
to be made on such day. Such wire transfer shall be directed to the
Agent at the Principal Office and shall be in the form of Dollars
constituting immediately available funds. 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 and
reasonably acceptable to the Agent.
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(d) In the case of Advances of FF Revolving Loans, not later
than 10:00 A.M. on the date specified for each Advance, each Lender
shall, pursuant to the terms and subject to the conditions of this
Agreement, make each FF Revolving Loan to be made by it on such day
available to the Borrower in French Francs at the Disbursing Bank, to
the account of the Agent with the Disbursing Bank. The amount so
received by the Disbursing Bank shall, subject to the terms and
conditions of this Agreement and upon instruction from the Agent to the
Disbursing Bank on or before 10:00 A.M. on the date of such Advance, be
made available to the Borrower by delivery of the proceeds thereof to
the Borrower's account with the Disbursing Bank.
(e) The Borrower shall have the option to elect the duration
of the initial and any subsequent Interest Periods and to convert the
Revolving Loans in accordance with Section 3.11 hereof. Fixed Rate
Revolving Loans and Base Rate Revolving Loans may be outstanding at the
same time, provided, however, there shall not be outstanding at any one
time Fixed Rate Loans and Fixed Rate Segments having more than ten (10)
Interest Periods. 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 3.11 hereof, the Borrower shall be deemed to have
elected (i) with respect to any Dollar Revolving Loan, to Convert to or
Continue such Dollar Revolving Loan as a Base Rate Loan or (ii) with
respect to any FF Revolving Loan, to Continue such FF Revolving Loan
with an Interest Period of one month, in any case until the Borrower
otherwise notifies the Agent in accordance herewith and with Section
3.11 hereof.
(f) 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 in Dollars 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 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 in Dollars 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 3.11 hereof.
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SECTION 3.3 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 Revolving 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 (i) in the case of Dollar Revolving Loans,
at the Eurodollar Rate or the Base Rate, as elected by the Borrower in
the applicable Borrowing Notice of Interest Rate Selection notice or as
deemed elected by the Borrower or otherwise applicable to such
Revolving Loan as provided herein, such payment to be made in Dollars,
and (ii) in the case of FF Revolving Loans, at the applicable FF LIBOR
Rate, such payments to be made in French Francs; provided, however,
that if any amount shall not be paid when due (at maturity, by
acceleration or otherwise) or if any other Event of Default shall have
occurred and be continuing hereunder, all amounts outstanding hereunder
shall bear interest thereafter at the Default Rate from the date such
Event of Default occurred until the date such Event of Default is cured
or waived.
(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) with respect to Base Rate Revolving
Loans, quarterly in arrears on the last Business Day of each March,
June, September and December commencing September 1997, (ii) with
respect to Fixed Rate Revolving Loans, on the last day of the
applicable Interest Period for each Fixed Rate Revolving Loan and for
any Fixed Rate Revolving 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) upon
payment in full of the principal amount of such Revolving Loan.
SECTION 3.4 PAYMENT OF PRINCIPAL.
(a) 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 as otherwise
expressly provided herein, in the Applicable Currency in which such
amount was borrowed. The principal amount of Base Rate Revolving Loans
may be prepaid in whole or in part at any time without premium or
penalty. The principal amount of Fixed Rate Revolving 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 5.5 hereof.
(b) 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 any payment of a Fixed
Rate Revolving Loan prior to 10:30 A.M. at least three (3) Business
Days prior to the date such payment is to be made and of any payment of
a Base Rate Revolving 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
3.2(a) hereof with respect to
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Advances and the selection of interest rates. Such notice shall specify
(a) the date the payment will be made, (B) the amount of such repayment
and (C) the Loan to which such payment relates. All prepayments made by
the Borrower shall be in the minimum amount of $500,000 (or the FF
Equivalent Amount with respect to FF Revolving Loans) or an integral
multiple of $50,000 (or the FF Equivalent Amount with respect to FF
Revolving Loans) in excess thereof, or such other amount as necessary
to comply with this Section 3.4 or with the covenants set forth in
Article XI hereof or the remaining principal amount outstanding, if
less than such amounts.
SECTION 3.5 MANNER OF PAYMENT.
(a) Each payment of principal (including any mandatory or
optional prepayment), interest and fees, and other amounts required to
be paid to the Lenders with respect to the Revolving Loans, shall be
made to the Agent at the Principal Office, for the account of each
Lender's applicable Lending Office, in Dollars in the case of Dollar
Revolving Loans and in French Francs in the case of FF Revolving Loans,
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
Dollar Value 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 (i) in Dollars in the case of
Dollar Revolving Loans and in French Francs in the case of FF Revolving
Loans, (ii) in immediately available funds and (iii) prior to 2:30 P.M.
on the date payment is due 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 are paid in the Applicable Currency and
become available funds. Any non-conforming payment which conforms to
clauses (i) and (ii) above shall be deemed received by the Agent on the
next Business Day. Any non-conforming payment 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 Default Rate after the
occurrence and during the continuance of an Event of Default (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, the Eurodollar Rate, or the FF LIBOR 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
Revolving 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
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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 3.6 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 Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business
Day, telephonic notice (confirmed in writing) of any such reduction. Each such
reduction shall be in the amount of $2,000,000 (or the FF Equivalent Amount with
respect to FF Revolving Loans) or an integral multiple of $500,000 (or the FF
Equivalent Amount with respect to FF Revolving Loans) 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 Fixed Rate Revolving 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 5.5 hereof. Each reduction of
the 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 3.6 to the extent that the sum
of the Dollar Value 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 (including the payment of all Term
Loan Outstandings and 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 15.8 hereof, which shall survive any such termination).
SECTION 3.7 INCREASE AND DECREASE IN AMOUNTS. The amount of the
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 3.4 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 continuously
maintain the Borrower's Account until the Revolving Credit Termination Date.
SECTION 3.9 NOTES. Revolving Loans made by each Lender shall be
evidenced by a Revolving 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 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 3.12 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 3.11 CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS.
(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, the Borrower may convert all or a part of Eurodollar Rate
Revolving Loans to Base Rate Revolving Loans on the last day of the
Interest Period for such Eurodollar Rate Revolving Loans; and
(b) Provided that no Default or Event of Default shall have
occurred and be continuing, the Borrower may 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 Fixed Rate Revolving Loans to begin on the last day
of the current Interest Period for such Fixed Rate Revolving
Loans; or
(ii) convert Base Rate Revolving Loans to Eurodollar
Rate Revolving Loans on any Business Day.
Each election and conversion pursuant to this Section 3.11 shall be
subject to the limitations on Eurodollar Rate Loans and FF LIBOR Rate Loans set
forth in the definition of "Interest Period" herein and in Sections 3.1, 3.2 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 3.12 UNUSED FEE. For the period beginning on the Closing 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 Unused Fee multiplied by the average
daily amount by which Total Revolving Credit Commitment exceeds the sum of the
Dollar Value of all Revolving Credit Outstandings and all Letter of Credit
Outstandings 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 September 1997 to and on the 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.
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SECTION 3.13 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.
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 Revolving Credit Facility shall be
used by the Borrower (i) for working capital, (ii) to finance capital
expenditures (excluding Acquisitions) permitted hereunder, (iii) to finance the
Bolle Acquisition, (iv) to finance the Related Bolle Acquisitions and the
proposed Acquisition disclosed to the Agent and the Lenders prior to the Closing
Date collectively by an Advance or series of Advances in an aggregate amount not
to exceed $10,000,000 and (v) for other lawful general corporate purposes
(excluding Acquisitions).
ARTICLE IV
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
reasonably 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,
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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 3.2(d) hereof, such amounts shall be paid
pursuant to Advances under the Revolving Credit Facility. 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 under
the Revolving Credit Facility. 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 under the Revolving Credit Facility 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 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 under the
Revolving Credit Facility 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 3.2 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 III, 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
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Percentage of any Reimbursement Obligation, all as described
in and pursuant to Section 3.2(d).
(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 3.2(f), shall promptly pay to the Agent
for the account of Issuing Bank, prior to the applicable time
set forth in Section 3.2(f) for the making of an Advance by
such Lender, 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 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 7.2
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
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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 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 15.8 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 the Facility
Termination Date.
(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 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;
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(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, (a) 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 September 1997, a fee (i) 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 and (ii) 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, and (b) for the Issuing Bank, 0.125% per annum based on
the aggregate amount available to be drawn on each outstanding Letter of Credit.
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.
ARTICLE V
CHANGE IN CIRCUMSTANCES
SECTION 5.1 INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank, or
comparable agency:
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(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with respect to any
Fixed Rate Loans, its Note, or its obligation to make Fixed Rate Loans,
or change the basis of taxation of any amounts payable to such Lender
(or its Applicable Lending Office) under this Agreement or its Note in
respect of any Fixed Rate Loans (other than franchise taxes and taxes
imposed on the overall income of such Lender by the jurisdiction in
which such Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment or similar requirement (other than
the Reserve Requirement utilized in the determination of the Eurodollar
Rate or the FF LIBOR Rate) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or
commitments of, such Lender (or its Applicable Lending Office),
including the Revolving Credit Commitment and Term Loan Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Fixed Rate Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Agreement or its Note
with respect to any Fixed Rate Loans, then the Borrower shall pay to such Lender
on demand such amount or amounts as will compensate such Lender for such
increased cost or reduction. If any Lender requests compensation by the Borrower
under this Section 5.1(a) the Borrower may, by notice to such Lender (with a
copy to the Agent), suspend the obligation of such Lender to make or Continue
Loans of the Type with respect to which such compensation is requested, or to
Convert Loans of any other Type into Loans of such Type, until the event or
condition giving rise to such request ceases to be in effect (in which case the
provisions of Section 5.4 shall be applicable); provided that such suspension
shall not affect the right of such Lender to receive the compensation so
requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender on an
after-tax basis for such reduction.
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(c) Each Lender shall promptly notify the Borrower and the Agent in
writing of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Lender to compensation pursuant to this Section 5.1 and
will designate a different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the judgment of such Lender, be otherwise disadvantageous to it. Any Lender
claiming compensation under this Section 5.1 shall furnish to the Borrower and
the Agent a statement setting forth the additional amount or amounts to be paid
to it hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
SECTION 5.2 LIMITATION ON TYPES OF LOANS. If on or prior to the first
day of any Interest Period for any Fixed Rate Loan:
(a) the Agent reasonably determines (which determination shall
be conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Interbank Offered Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall
be conclusive) and notify the Agent that the Eurodollar Rate or FF
LIBOR Rate will not adequately and fairly reflect the cost to the
Lenders of funding such Fixed Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt written notice thereof specifying
the relevant Type of Loans and the relevant amounts or periods, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Loans of such Type, Continue Loans of such Type, or to Convert
Loans of any other Type into Loans of such Type and the Borrower shall, on the
last day of the then current Interest Period for each outstanding Loan of the
affected Type, (i) with respect to FF LIBOR Rate Loans, repay such Loan and (ii)
with respect to Eurodollar Rate Loans, either prepay such Loan or Convert such
Loan into another Type of Loan in accordance with the terms of this Agreement.
SECTION 5.3 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund any Fixed Rate Loans
hereunder, then such Lender shall promptly notify the Borrower thereof and (a)
such Lender's obligation to make or Continue Eurodollar Rate Loans and to
Convert other Types of Loans into Eurodollar Rate Loans shall be terminated
until such time as such Lender may again make, maintain, and fund Eurodollar
Rate Loans (in which case the provisions of Section 5.4 shall be applicable) and
(b) such Lender's obligation to make or Continue FF LIBOR Rate Loans shall be
suspended and the Borrower shall repay to such Lender all outstanding FF LIBOR
Rate Loans owed to such Lender, together with interest accrued thereon and
amounts required under Section 5.5 hereof, either on the last day of the
Interest Period thereof, if such Lender may lawfully continue to maintain such
FF LIBOR Rate Loans to such day, or immediately, if such Lender may not lawfully
continue to maintain such FF LIBOR Rate Loans.
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SECTION 5.4 TREATMENT OF AFFECTED LOANS. If the obligation of any
Lender to make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any
other Type into, Eurodollar Rate Loans shall be suspended pursuant to Section
5.1 or 5.3 hereof (Loans of such Type being herein called "Affected Loans" and
such Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 5.3 hereof, on such earlier date as such Lender
may specify in writing to the Borrower with a copy to the Agent) and, unless and
until such Lender gives written notice as provided below that the circumstances
specified in Section 5.1 or 5.3 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Lender that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 5.1 or 5.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 5.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.
SECTION 5.5 COMPENSATION. Upon the request of any Lender, the Borrower
shall pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Fixed Rate
Loan for any reason (including, without limitation, the acceleration of
the Loans pursuant to Section 12.1) on a date other than the last day
of the Interest Period for such Loan; or
(b) any failure by a Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
Article VII to be satisfied) to borrow, Convert, Continue, or prepay a
Fixed Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this
Agreement.
SECTION 5.6 TAXES. (a) Any and all payments by the Borrower to or for
the account of any Lender or the Agent hereunder or under any other Loan
Document shall be made
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free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any political
subdivision thereof, other than to the extent such income or franchise tax is
imposed solely as a result of the activities of the Agent or a Lender pursuant
to or in respect of this Agreement or any of the other Loan Documents (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to as "Taxes"). If a Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
under this Agreement or any other Loan Document to any Lender or the Agent, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 5.6) such Lender or the Agent receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Borrower
shall make such deductions, (iii) such Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law, and (iv) such Borrower shall furnish to the Agent, at its
address referred to in Section 15.1, the original or a certified copy of a
receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 5.6) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which eliminates
withholding tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States, (ii) Internal Revenue Service Form W-8 or W-9,
as appropriate, or any successor form prescribed by the Internal Revenue
Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Lender is entitled to an
exemption from tax on payments pursuant to this Agreement or any of the other
Loan Documents.
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(e) For any period with respect to which a Lender has failed to provide
the Borrower and the Agent with the appropriate form pursuant to Section 5.6(d)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 5.6(a) or
5.6(b) with respect to Taxes imposed by the United States; provided, however,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 5.6, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
applicable Borrower shall furnish to the Agent the original or a certified copy
of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 5.6 shall survive the Facility Termination Date.
ARTICLE VI
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 Material Subsidiary to, on or before the Closing Date deliver to the Agent,
in form and substance reasonably acceptable to the Agent, the Security
Agreement, the Intellectual Property Security Agreements, the Lease Assignments,
the Landlord Waivers, the Intellectual Property Assignments, the Collateral
Assignment of Option Agreement, the License Assignment, the Intercompany Note
Assignment, 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 Permitted Liens, and do all things necessary in the opinion of the Agent
and its counsel to grant and continue 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. (a) As security for the full and timely
payment and performance of (i) all Obligations now existing or hereafter
arising, and (ii) certain Guarantors' obligations under the Guaranty, the
Borrower and each Subsidiary owning any Pledged Stock 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
such Pledged Stock and such stock powers duly executed in blank as may be
required by the Agent in accordance with the terms hereof and thereof. In
addition to any Stock Pledge Agreement required to be delivered pursuant to
Section 9.21 hereof, the Borrower and each Subsidiary hereby agree to pledge to
the Agent for the benefit of the Lenders 100% of the capital stock and related
interests and rights of any domestic Subsidiary hereafter acquired or created
and 65% of the Voting Stock and 100% of the non-voting common stock and related
interests and rights of any foreign Subsidiary owned by the Borrower or any
domestic Subsidiary hereafter acquired or created and, in each case, to deliver
to the Agent a Stock Pledge Agreement substantially in the form of Exhibit G
hereto within thirty (30) days of the acquisition or creation of such
Subsidiary.
SECTION 6.3 GUARANTY. To guarantee the full and timely payment and
performance of all Obligations now existing or hereafter arising, the Borrower
shall cause the Guaranty to be delivered by each Material Subsidiary, in form
and substance reasonably acceptable to the Agent, on or before the Closing Date.
The Borrower hereby agrees to cause a Guaranty to be delivered by any hereafter
acquired or created Material Subsidiary or upon any previously existing Person
becoming a Material Subsidiary pursuant to the terms of Section 9.21 hereof.
SECTION 6.4 LEASE ASSIGNMENTS. As security for the full and timely
payment and performance of (a) all Obligations now existing or hereafter
arising, and (b) the Guarantors' obligations under the Guaranty, the Borrower
and each Material Subsidiary 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 Closing Date and thereafter as any material
leased facility arises.
SECTION 6.5 DEED OF TRUST. As security for the full and timely payment
and performance of all Obligations now existing or hereafter arising, the
Borrower shall cause to be delivered the Azusa Deed of Trust to the Agent on the
Closing Date, in form and substance reasonably acceptable to the Agent.
SECTION 6.6 INTELLECTUAL PROPERTY. As security for the full and timely
payment and performance of all Obligations now existing or hereafter arising,
the Borrower and each domestic Subsidiary owning any material patents, patent
applications, trademarks, trademark registrations and applications therefor,
copyrights, copyright registrations and applications therefore or any other
material intellectual property, shall deliver to the Agent for the benefit of
the Lenders the License Assignment, the Intellectual Property Security
Agreements and the Intellectual Property Assignments and opinions of counsel to
the Borrower in France as to the validity and enforceability of the License
Agreement and the absence of any material tax, fee or other restriction on the
licensing of the intellectual property subject to the License Agreement, in form
and substance acceptable to the Agent and the Lenders.
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In addition to any Intellectual Property Security Agreement required to be
delivered pursuant to Section 9.21 hereof, the Borrower hereby agrees to pledge,
or cause to be pledged, all intellectual property interests and licenses
hereafter acquired or created and owned by the Borrower or any applicable
domestic Subsidiary within thirty (30) days of the acquisition or creation of
such intellectual property or license.
SECTION 6.7 INTERCOMPANY NOTE ASSIGNMENT. As security for the full and
timely payment and performance of all Obligations now existing or hereafter
arising, the Borrower shall deliver the Intercompany Note Assignment to the
Agent for the benefit of the Lenders. The Borrower hereby agrees to assign, or
cause to be assigned, all Intercompany Notes.
SECTION 6.8 FURTHER ASSURANCES. At the request of the Agent, the
Borrower will, and will cause each Material Subsidiary to, 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 VII
CONDITIONS PRECEDENT
SECTION 7.1 EFFECTIVENESS; CONDITIONS TO ADVANCES AND ISSUANCE OF
LETTERS OF CREDIT. The effectiveness of this Agreement and the obligation of the
Lenders to make the Term Loans and to make the Advances of the Revolving Loans
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 Closing
Date, in form and substance satisfactory to the Agent and Lenders, the
following:
(i) executed originals of this Agreement and each of
the other Loan Documents, together with all schedules and
exhibits thereto;
(ii) favorable written opinions of counsel to the
Borrower and the Guarantors (including opinions of local U.S.
counsel, local counsel in the United Kingdom and France (with
respect to the License Agreement only) and special U.S.
intellectual property counsel as to issues relating to the
Collateral) 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 set forth in Exhibit N attached hereto and
incorporated herein by reference;
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(iii) resolutions of the board of directors or other
appropriate governing body (or of the appropriate committee
thereof) of the Borrower, certified by its vice president,
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;
(iv) resolutions of the board of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Guarantor, certified by its secretary,
assistant secretary, vice president or other appropriate
officer as of the Closing Date approving and adopting the Loan
Documents to be executed on behalf of such 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, assistant secretary, vice
president or other appropriate officer of the Borrower;
(vi) specimen signatures of officers of each
Guarantor executing the Loan Documents on behalf of such
Guarantor, certified by the secretary, assistant secretary,
vice president or other appropriate officer of such Guarantor;
(vii) certificate of the Borrower and each Guarantor
under the Existing Credit Agreement as to the absence of any
change to and the continued effectiveness of the bylaws and
certificate of incorporation of each of the Borrower and the
Guarantors delivered to the Agent in connection with the
closing of the Existing Credit Agreement and certified copies
of the charter documents and bylaws of each Guarantor not a
party to a Subsidiary Guaranty under the Existing Credit
Agreement;
(viii) 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;
(ix) with respect to the Borrower and each Guarantor,
appropriate certificates of qualification to 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 would
reasonably be expected to result in a Material Adverse Effect;
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(x) stock certificates representing all of the shares
of Pledged Stock with undated stock powers executed in blank
for each certificate;
(xi) original Intercompany Notes with undated
endorsements executed in blank for each Intercompany Note;
(xii) commitments for policies insuring title to the
Azusa Property with such endorsements as may be reasonably
requested by the Agent;
(xiii) copies of title exceptions with respect to the
Azusa Property, acceptable in form and substance to the Agent;
(xiv) current as-built surveys of the Azusa Property
and surveyor's affidavits;
(xv) flood certificates and evidence of flood
insurance for any Mortgaged Property in a federally designated
flood zone;
(xvi) Borrower's affidavit for the Mortgaged
Property;
(xvii) notice of appointment of the initial
Authorized Representative of the Borrower in the form of
Exhibit C hereto;
(xviii) certificate of an Authorized Representative
dated the Closing Date demonstrating compliance with the
financial covenants contained in Article XI hereof, all as of
the immediately preceding Determination Date, substantially in
the form of Exhibit O attached hereto;
(xix) evidence of insurance required by the Loan
Documents other than policies for director and officer
indemnification insurance and immaterial policies issued to
Subsidiaries;
(xx) environmental information with respect to the
owned real property of the Borrower and its Subsidiaries, as
reasonably requested by the Agent;
(xxi) Landlord Waivers and Lease Assignments for each
of the Borrower's or any Subsidiary's leased facilities;
(xxii) a copy of the License Agreement certified as
true and correct by an Authorized Representative;
(xxiii) 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
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basis giving effect to the Bolle Acquisition and the
transactions contemplated thereby;
(xxiv) financial statements of Bolle France for the
fiscal year 1996, including balance sheets, income and cash
flow statements prepared in conformity with French GAAP and
certified by independent public accountants of recognized
national standing with an unqualified opinion;
(xxv) tax returns of Bolle France for the two
immediately preceding fiscal years;
(xxvi) a Borrowing Notice or Interest Rate Selection
Notice;
(xxvii) all fees payable by the Borrower on the
Closing Date to the Agent, Issuing Bank and the Lenders;
(xxviii) UCC-1 Financing Statements, duly executed by
the Borrower and each of the Guarantors and in proper 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;
(xxix) a certificate of an officer of the Borrower
reasonably satisfactory to the Agent and the Lenders as to the
matters set forth in Section 7.1(b) below;
(xxx) 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 following shall have occurred or be true:
(i) The Agent and NCMI shall have completed all due
diligence with respect to the Borrower and its Subsidiaries in
scope and determination satisfactory to NationsBank and NCMI
in their sole discretion;
(ii) There shall not be any action, suit,
investigation or proceeding pending or threatened in any court
or before any arbitrator or governmental instrumentality that
would reasonably be expected to have a Material Adverse Effect
on the financings or any other transactions contemplated
hereby, the Borrower or its business or operations, Bolle
France, or the Bolle Acquisition;
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(iii) The Borrower shall be in compliance with all
existing financial and material contractual obligations before
and, immediately after giving effect to the financings and
other transactions contemplated hereby;
(iv) The Borrower, its domestic 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 transactions
contemplated hereby without the occurrence of any 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 the Borrower or
any Guarantor or (C) any agreement, document or instrument to
which any of the Borrower or any domestic 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
would 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 making of the Term Loan or the
Revolving Loans, or other transactions contemplated hereby,
and no law or regulation shall be applicable which would
reasonably be expected to have a Material Adverse Effect;
(c) In the good faith judgment of the Agent and the Lenders:
(i) Other than as set forth on Schedule 7.1(c), there
shall not have occurred a material adverse change in the
business, assets, revenues, operations, or condition
(financial or otherwise) of the Borrower and its Subsidiaries
taken as a whole since December 31, 1996 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 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 reports received by the Agent
with respect to the Borrower and the reasonableness and
accuracy of all financial projections shall be reasonably
satisfactory.
(d) In the sole discretion of the Agent and NCMI, with respect
to the Bolle Acquisition:
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(i) the total cash consideration shall not be greater
than the Total Term Loan Commitment plus $4,000,000 (the
"Additional Cash") which shall be available under the
Revolving Credit Facility;
(ii) there shall not have occurred any change in the
business, assets, condition (financial or otherwise) or cash
flow of Bolle France or in the facts and information relating
to Bolle France that would reasonably be expected to have a
material adverse effect;
(iii) the Bolle Acquisition shall not have a Material
Adverse Effect on the Borrower and its Subsidiaries;
(iv) all conditions precedent to the consummation of
the Bolle Acquisition as set forth in the Share Purchase
Agreement have been satisfied (other than the tender of cash
consideration) and not waived without the approval of the
Agent including all consents and approvals of third parties
and upon the tendering of the cash proceeds from the Term Loan
Facility and the Additional Cash, the Bolle Acquisition will
be effective;
(v) the Agent and the Lenders shall have been
authorized to rely on the opinions of counsel to the Borrower
and Bolle France as to all matters contained in such opinions
regarding the Bolle Acquisition;
(vi) the Agent shall have received a copy of the
fully executed Share Purchase Agreement and all other related
documents, instruments and agreements requested by the Agent
certified as true and complete by an Authorized
Representative;
(vii) the Agent and NCMI shall have completed all due
diligence deemed necessary with respect to the business,
operations, financial conditions and prospects of Bolle
France.
(viii) the terms of the Preferred Stock and any other
securities issued or consideration tendered or liability
assumed by the Borrower in connection with the Bolle
Acquisition shall be acceptable;
(e) the Agent shall have received a Certificate of an officer
of the Borrower as to the occurrence or truth of each of items (a)
above.
SECTION 7.2 CONDITIONS OF ALL ADVANCES AND ISSUANCES OF LETTERS OF
CREDIT AFTER THE CLOSING DATE. The obligations of the Lenders to make any
Advance or to Convert or Continue the interest rates thereof pursuant to
Sections 2.10 or 3.11 (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, on or
subsequent to the Closing Date are subject to the satisfaction of the following
conditions:
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(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 VIII 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
reasonably acceptable to Issuing Bank together with such other
instruments and documents as it shall reasonably request;
(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, the sum of the Dollar Value of all Revolving Credit
Outstandings and all Letter of Credit Outstandings shall not exceed the
Total Revolving Credit Commitment, the sum of all FF Revolving Credit
Outstandings and Tranche B Term Loan Outstandings shall not exceed the
Total FF Loan Commitment, and the Dollar Value of each Lender's
Applicable Commitment Percentage of Revolving Loans and Participations
shall not exceed its Revolving Credit Commitment.
(g) in addition to the requirements of Section 10.3 hereof, in
the event the proceeds of such Advance under the Revolving Credit
Facility are to be used to finance an Acquisition, the Agent and each
Lender shall have received not less than fifteen (15) Business Days
prior to the date such Advance is to be made:
(i) historical audited financial statements of the
Person to be acquired (or, if audited statements of such
Person have not been prepared prior to such Acquisition in its
normal course of business, the financial statements of such
Person that have been prepared) for its two (2) most recently
completed fiscal years, including consolidated balance sheets
as of the end of each such
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year and related consolidated statements of operations, and,
if available, cash flows and shareholders' equity for each
such year; provided, however, that in the case of certain
asset acquisitions for which there are no corresponding
financial statements, this clause (i) will not apply;
(ii) a consolidated pro forma balance sheet of the
Borrower and its Subsidiaries and related pro forma
consolidated statement of operations, in each case giving
effect to such Acquisition, as of the end of the most recently
completed Fiscal Year and in form and substance reasonably
acceptable to the Agent;
(iii) consolidated financial projections on a pro
forma basis for the Borrower and its Subsidiaries giving
effect to such Acquisition for the three-year period
immediately following the consummation of such Acquisition, in
form and substance reasonably acceptable to the Agent;
provided, 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; and
(iv) a certificate of an Authorized Representative as
to the absence of any Default or Event of Default and
demonstrating compliance with Article IX of this Agreement, in
each case for the most recently ended fiscal quarter after
giving effect to such Acquisition on a pro forma basis;
and in the event the Required Lenders shall fail to give written notice
to the Borrower of any objection to the form or substance of such
financial statements and certificate within ten (10) Business Days
following receipt thereof, the same shall be deemed acceptable to the
Agent and the Lenders. In addition, the Agent and the Lenders shall
receive copies of the principal documents relating to such Acquisition,
to the extent the same are available, together with the financial
information described in clauses (i) through (iv) above or as soon
thereafter as practicable.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
All Subsidiaries acquired in connection with the Bolle Acquisition and
as to which the representations and warranties referenced in Section 8.20 hereof
are applicable shall be deemed excluded from the meaning of the terms
"Subsidiary" and "Subsidiaries" for the purposes of making the representations
and warranties contained in this Article VIII (other than Section 8.20 hereof)
on the Closing Date only. Such Subsidiaries shall be included in the meanings of
such terms at all time after the Closing Date that the representations and
warranties contained in this Article VIII are given.
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The Borrower represents and warrants (which representations and
warranties shall survive the delivery of the documents mentioned herein and the
making of Loans and issuance of Letters of Credit) with respect to itself and to
its Subsidiaries as follows:
SECTION 8.1 ORGANIZATION AND AUTHORITY.
(a) The Borrower and each Subsidiary is a corporation duly
organized and validly existing under the laws of the jurisdiction of
its incorporation;
(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;
(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, and, with respect to the
Intellectual Property Security Agreement, upon filing and satisfaction
of the express conditions to effectiveness therein, 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
action (including any required shareholder action) 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 which violation
would reasonably be expected to have a Material Adverse Effect, (ii)
any order of any court or other agency of government binding on the
Borrower or such Guarantor, or their respective
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properties, or (iii) the charter documents, documents of organization
or governance or bylaws of the Borrower or such Guarantor;
(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, agreement or other instrument to which the Borrower or such
Guarantor is a party or by which its properties or assets are bound;
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 the Borrower or such Guarantor except Permitted
Liens and any Liens in favor of the Agent and the Lenders created by
the Loan Documents;
SECTION 8.3 SOLVENCY. The 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 of each class of capital stock issued and
outstanding of each such Subsidiary and the number and/or percentage of
outstanding shares (including options, warrants and other rights to acquire any
interest) of each such class of capital stock owned by the Borrower or by any
such Subsidiary; the outstanding shares 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
it is listed as owning in Schedule 8.4, free and clear of any Lien other than
Permitted Liens;
SECTION 8.5 OWNERSHIP INTERESTS. The 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 the
audited consolidated and unaudited consolidating balance sheets of the
Borrower and its Subsidiaries as at December 31, 1996, and the notes
thereto and the related audited consolidated and unaudited
consolidating statements of operations, cash flows, and shareholders'
equity for the Fiscal Years then ended as examined and certified by
Price Waterhouse, L.L.P. and unaudited interim consolidated financial
statements of the Borrower and its Subsidiaries consisting of a
consolidated balance sheet and related consolidated statement of
operations and cash flows, without notes, for and as of the three-month
period ended March 31, 1997. Except as set forth therein, such
financial statements (including the notes thereto) present fairly the
consolidated financial
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condition of the Borrower and its Subsidiaries, as of the end of such
Fiscal Year and three-month period and results of their operations and
the changes in shareholders' equity for such Fiscal Year and
three-month period, all in conformity with GAAP applied on a Consistent
Basis;
(b) Except as set forth on Schedule 7.1(c), since December 31,
1996, there has not occurred any event which has had or would
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, 1996, except as set forth in Schedule
8.6 or Schedule 8.10 attached hereto, or as permitted under Section
10.1 hereof, 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 other than Outstandings hereunder;
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) Permitted Liens, (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 (other than for the
Azusa Property) that could not reasonably be expected to have a Material Adverse
Effect;
SECTION 8.8 TAXES. 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, other than those returns the failure of which to
file could not 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 would reasonably be expected to have a Material
Adverse Effect; or
(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
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any applicable grace period would reasonably be expected to have, a
Material Adverse Effect;
SECTION 8.10 LITIGATION. Except as set forth on Schedule 8.10, 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 would 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 INTELLECTUAL PROPERTY. The Borrower and its Subsidiaries
own or have the right to use, under valid license agreements or 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 (the "Intellectual Property"), all such
Intellectual Property being identified on Schedule 8.13 hereto, 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.
All material, patents, licenses, franchises, trademarks, trademark rights, trade
names, trade secrets and copyrights of Bolle SNC are listed on the schedules to
the Share Purchase Agreement and are subject to the License Agreement.
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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. 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 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 or any Subsidiary as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by, this Agreement or the other Loan Documents,
including, without limitation, the Bolle Acquisition, 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 Closing 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 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
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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; and
(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.
SECTION 8.18 ENVIRONMENTAL MATTERS. Except as listed on Schedule 8.18,
the Borrower and each Subsidiary is in compliance in all material respects with
all applicable Environmental Laws and has been issued and currently maintains
all required federal, state and local permits, licenses, certificates and
approvals. Neither the Borrower nor any Subsidiary has been notified of any
pending or threatened action, suit, proceeding or investigation, and neither the
Borrower nor any Subsidiary is aware of any facts, which (a) calls into
question, or would reasonably be expected to call into question, compliance by
the Borrower or any Subsidiary with any Environmental Laws, (b) seeks, or would
reasonably be expected to form the basis of a meritorious proceeding to seek, to
suspend, revoke or terminate any license, permit or approval necessary for the
operation of the Borrower's or any Subsidiary's business or facilities, or (c)
seeks to cause, or would reasonably be expected to form the basis of a
meritorious proceeding to cause, any property of the Borrower or any Subsidiary
to be subject to any restrictions on ownership, use, occupancy or
transferability under any Environmental Law, any of which would reasonably be
expected to have a Material Adverse Effect.
SECTION 8.19 EMPLOYMENT MATTERS. Except as set forth on Schedule 8.19,
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, except where noncompliance could not 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
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proceeding or investigation in respect of such matters an adverse ruling or
determination in which would reasonably be expected to have a Material Adverse
Effect.
SECTION 8.20 BOLLE ACQUISITION. On the Closing Date, each of the
representations and warranties contained in Article 6 of the Share Purchase
Agreement, including all Exhibits referenced therein and all definitions of
defined terms referenced therein, are incorporated herein by reference and given
by the Borrower as of the Closing Date, provided that (a) representations and
warranties given "at signature" or "upon signature" of the Share Purchase
Agreement shall be excluded from this Section 8.20, (b) each reference to the
"Seller" therein shall be deemed a reference to the Borrower (or Bolle with
respect to matters of stock ownership of Holding B.F. or its subsidiaries), and
(c) each of the representations and warranties contained in Section 6.22 and
6.26 of the Share Purchase Agreement and the exception language contained in
Section 6.15.1 shall be excluded from this Section 8.20.
ARTICLE IX
AFFIRMATIVE COVENANTS
Until the occurrence of the Facility Termination Date, unless the
Required Lenders shall otherwise consent in writing, the Borrower will and will
cause each Guarantor, as applicable, to:
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 audited
consolidated and unaudited consolidating balance sheets of the Borrower
and its Subsidiaries, with the notes thereto, and the related audited
consolidated and unaudited 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 (except
for the consolidating unaudited financial statements with respect to
Bolle France, as to which French GAAP shall apply) and containing, with
respect to the audited 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
XI of this Agreement, which certificate shall be in the form attached
hereto as Exhibit O and incorporated herein by reference;
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(b) as soon as practical and in any event within 60 days after
the end of each fiscal quarter beginning with the fiscal quarter ended
June 30, 1997, 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) 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;
(d) 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 later of the scheduled Revolving Credit
Termination Date and the scheduled Term Loan 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;
(e) 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 (iii) any management letter or
other report submitted to the Borrower or any of its
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Subsidiaries by independent accountants in connection with any annual,
interim or special audit of the Borrower or any of its Subsidiaries;
and
(f) 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 are 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 XIV 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 would 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 would 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 constitute
Collateral or a Lien on any other property, except Permitted Liens and any of
the foregoing being contested in good faith by appropriate proceedings
diligently conducted and against which adequate reserves have been established.
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
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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, canceled 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 if there has occurred and continues to exist a Default
or an Event of Default, and at the requesting Lender's expense 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 the non-observance of which or
non-compliance with which would reasonably be expected to have a Material
Adverse Effect and obtain and maintain all material licenses, permits,
certifications and approvals, as are required for the conduct of the business of
the Borrower or any Material 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.
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 in
respect of all such proceedings and processes 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.
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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 any 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 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, the occurrence of the Facility
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.
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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 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
the 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 Core Business or a line or lines of
business complimentary to the Core Business and (b) to preserve, protect and
maintain free from Liens (other than Permitted Liens) 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.
SECTION 9.20 USE OF PROCEEDS. Use the proceeds of the Loans solely for
the purposes specified in Section 2.13 or 3.15 hereof.
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SECTION 9.21 NEW SUBSIDIARIES.
(a) In the event of the acquisition or creation of any
Subsidiary, cause to be delivered to the Agent for the benefit of the
Lenders a Stock Pledge Agreement with respect to the capital stock of
such Subsidiary substantially in the form of Exhibit G hereto within
twenty (20) Business Days of the acquisition or creation of a
Subsidiary; provided, however, that if such Subsidiary is a foreign
Subsidiary such pledge of capital stock shall only be required if the
owner thereof is the Borrower or a domestic Subsidiary;
(b) 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 indicated to be delivered by such
Material Subsidiary within twenty (20) Business Days of the acquisition
or creation of a Material Subsidiary or, with respect to an existing
Person becoming a Material Subsidiary, within twenty (20) 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:
(i) a Guaranty executed by such Material Subsidiary,
substantially in the form of Exhibit E attached hereto;
(ii) a Stock Pledge Agreement with respect to the
capital stock of such Material Subsidiary substantially in the
form of Exhibit G hereto; provided, however, that if such
Material Subsidiary is a foreign Material Subsidiary such
pledge of capital stock shall only be required if the owner
thereof is the Borrower or a domestic Subsidiary;
(iii) a Security Agreement executed by such Material
Subsidiary, substantially in the form of Exhibit J attached
hereto;
(iv) if applicable, Landlord Waivers, Lease
Assignments and an Intellectual Property Security Agreement
executed by such Material Subsidiary, substantially in the
form of Exhibit K attached hereto;
(v) 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; and
(vi) 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
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organizational documents, bylaw or by applicable laws, of the
shareholders), of such Material Subsidiary authorizing the
actions and the execution and delivery and performance of such
Guaranty, Security Agreement, Stock Pledge Agreement,
Intellectual Property Security Agreement or other agreement
required under this Section 9.21 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,
and, if applicable, Intellectual Property Security Agreement.
SECTION 9.22 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.
SECTION 9.23 POST CLOSING VALUATION. Deliver, or cause to be delivered,
to the Agent and the Lenders not less than 90 days after closing a written
report containing the valuation, conducted by an independent firm of national
recognition or otherwise acceptable to the Agent, of the Bolle tradename and
trademark worldwide, such valuation to be conducted and reported in form and
substance acceptable to the Agent.
ARTICLE X
NEGATIVE COVENANTS
Until the occurrence of the Facility Termination Date, 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 the following (collectively, the "Permitted
Indebtedness"):
(a) Indebtedness set forth in Schedule 10.1 attached hereto
and incorporated herein by reference 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 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;
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(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) Indebtedness consisting of 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 or, if not so
determined by the Borrower to be more economically advantageous,
replaced by an Advance hereunder within 30 days of such Acquisition,
and (ii) immediately after such acquisition, no Default or Event of
Default has occurred or is continuing;
(h) additional unsecured 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;
(i) Subordinated Indebtedness of up to $10,000,000 the Net
Proceeds of which are used exclusively to redeem the Preferred Stock
(other than the Deferred Payment Preferred Stock), provided such
Subordinated Indebtedness provides for an interest rate no greater than
the rate at which dividends are payable with respect to the Preferred
Stock and otherwise contains terms of repayment, maturity and other
material terms substantially identical to the terms of the Preferred
Stock; and
(j) unsecured Indebtedness evidenced by the Intercompany Notes
and with respect to which the payee thereunder shall have entered into
and be subject to the Subordination Agreement and the Intercompany Note
Assignment.
Notwithstanding the foregoing, none of the Indebtedness described in clauses
(a), (b), (d), (f), (g) or (i) above shall be permitted to be incurred by Bolle
France or Tavister, and in the event
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that any Indebtedness is incurred by Bolle France or Tavister, such Indebtedness
shall not constitute "Permitted Indebtedness" hereunder.
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(e)(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% nor more than 100% 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 who are not subject to a
Landlord Waiver 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, encroachments, variations and zoning and other
restrictions, charges or encumbrances (whether or not recorded), which
do not interfere with the ordinary conduct of the
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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 would reasonably be expected to have a Material Adverse
Effect; and
(g) Liens on real property securing Indebtedness permitted
under Section 10.1(a), (b), (e) or (g) hereof (subject to compliance
with subsection (c) above in connection with purchase money
Indebtedness).
Notwithstanding the foregoing, none of the Liens described in clauses (c), (e),
(f) or (g) shall be permitted to attach or relate to the Azusa Property and such
Liens, to the extent they arise, shall not constitute "Permitted Liens"
hereunder; and none of the Liens described in clauses (a) through (g) above
shall be permitted to attach or relate to assets of Bolle France or Tavister and
in the event any Liens attach to assets of Bolle France or Tavister, such Liens
shall not constitute "Permitted Liens" hereunder.
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:
(a) invest in Eligible Securities;
(b) maintain investments existing as of the date hereof and as
set forth in Schedules 8.4 and 8.5 attached hereto;
(c) accept and maintain accounts receivable arising and trade
credit granted in the ordinary course of business and retain 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) make and maintain loans and advances to and investments in
Subsidiaries which are Guarantors;
(e) consummate Permitted Acquisitions and Mergers permitted
under Section 10.4(a) hereof;
(f) make and maintain other loans, advances and investments in
an aggregate principal amount at any time outstanding not to exceed
$1,000,000.
SECTION 10.4 MERGER OR TRANSFER OF ASSETS. (a) Except as set forth in
Schedule 10.4 hereto, consolidate with or merge into any other Person, or permit
any other Person to merge into it; provided, however, (i) any Subsidiary may
merge or transfer all or any part of its assets into or consolidate with the
Borrower or any Subsidiary directly or indirectly wholly owned by the Borrower,
(ii) any Subsidiary may merge into another Person that is not a Subsidiary
whereby such other Person is the surviving corporation provided that such other
Person complies with all the requirements of Section 9.21 as if it is a newly
acquired Subsidiary
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and that such merger would be a Permitted Acquisition but for the Subsidiary not
being the surviving corporation and (iii) the Borrower or any Subsidiary may
make a Permitted Acquisition.
(b) Sell, lease, transfer or otherwise dispose of any assets, including
without limitation any of the capital stock or asset of Bolle, other than (i)
dispositions of inventory in the ordinary course of business, (ii) dispositions
of equipment which, in the aggregate during any Fiscal Year, have a fair market
value or book value, whichever is less, of $250,000 or less which is not
replaced by equipment having at least equivalent value, (iii) dispositions of
equipment which is replaced with equipment of like kind, function and value,
provided the replacement equipment shall be acquired prior to or substantially
contemporaneously with any disposition of the Equipment that is to be replaced,
and the replacement equipment shall be free and clear of Liens other than
Permitted Liens, (iv) dispositions of other assets which, in the aggregate
during any fiscal year, have a fair market value or book value, whichever is
less, of $250,000 or less, (v) sale or disposition of (A) the Texas Property,
(B) the AAi Preferred Stock and (C) the shares of capital stock of Eyecare
Products, and (vi) any Equity Offering of authorized but unissued equity
securities the Net Proceeds of which are subject to the terms of Section 2.7(b)
hereof except as otherwise provided therein.
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.
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;
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(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 Law 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 each other or into a Borrower
permitted pursuant to Section 10.4 hereof.
SECTION 10.9 HEDGING OBLIGATIONS. Incur any Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to
Hedging Obligations, except for Hedging Obligations (a) related to protection
against fluctuations in currency exchange rates in an aggregate notional amount
to be agreed upon by the Agent and the Borrower and (b) arising under Swap
Agreements agreed to in accordance with Section 9.22 hereof; provided, however,
in no event shall Hedging Obligations be incurred for speculative or investment
purposes.
SECTION 10.10 DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS. (a) Declare or
pay any cash dividends or make any other payment or distribution on account of
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, including, without limitation, the Preferred Stock, or on any shares
of the Deferred Payment Preferred Stock, now or hereafter outstanding, or (b)
purchase, redeem (whether mandatory or optional redemption) or otherwise retire
any such shares (including, without limitation, shares of the Preferred Stock)
or interests in consideration of cash or any debt instrument (whether or not
subordinated) ("Restricted
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Debt") or shares of capital stock issued by 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 Debt or Restricted Stock, or
agree to do any of the foregoing, other than (i) conversion of any of the
Borrower's securities into Common Stock which are so convertible in accordance
with their terms and (ii) dividends payable by any Subsidiary to another
Subsidiary or to the Borrower. Notwithstanding the foregoing, (A) upon the
written consent of all of the Lenders, none of the restrictions in this Section
10.10 with respect to any of the Preferred Stock shall be applicable and (B) the
Deferred Payment Preferred Stock may be redeemed in accordance with its terms,
provided that (I) at such time of redemption, or as a result of such redemption,
a Default or Event of Default has not occurred or would not occur, as
applicable, and (II) an Advance can be made under the Revolving Credit Facility
without the waiver of any condition precedent thereto to finance the entire
amount of such redemption and, giving pro forma and actual effect to such
Advance, the Total Revolving Credit Commitment shall exceed Revolving Credit
Outstandings by not less than $2,000,000.
SECTION 10.11 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
(other than with respect to leasehold interests subject to a Lease Assignment),
individually or collectively, would reasonably be expected to result in a
Material Adverse Effect.
SECTION 10.12 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 10.13 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 10.14 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
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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 (g) 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 10.15 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 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.
SECTION 10.16 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, (a) 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 Voting Stock of any class of the Borrower having voting rights
in the election of directors or (b) 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 after the date hereof and not
by reason of disposition of shares of such class by Martin E. Franklin.
SECTION 10.17 INTELLECTUAL PROPERTY. Except as set forth in Section
10.19 hereof, cause or permit any of the licenses, trademarks, patents,
copyrights, the License Agreement and other intellectual property of the
Borrower or its Subsidiaries to be sub-licensed, assigned or transferred or
subject to distributorship arrangements, other than to the Agent for the benefit
of the Lenders hereunder or, with respect to sub-licenses only, to manufacturers
and distributors of Inventory in the ordinary course of business as currently
conducted.
SECTION 10.18 PREFERRED STOCK. Amend, supplement, revise, or otherwise
alter in any manner any Certificate of Designation in effect on the Closing Date
with respect to any class of Preferred Stock.
SECTION 10.19 LICENSES. Other than as set forth on Schedule 10.19
hereof, grant, establish, create or permit to exist any license of, or
distributorship arrangement of, any of the intellectual property now existing or
hereafter arising which is subject to the License Agreement or otherwise
material to the business of the Borrower or any subsidiary except for (i) such
licenses granted for the limited purpose of conducting sales or marketing
promotions in the ordinary course of business of existing or new products for a
reasonable, limited time period, (ii) such licenses approved by the Required
Lenders in writing prior to the granting thereof within 30 days after request
therefor, such approval not to be unreasonably withheld, and (iii) such licenses
granted to any Material Subsidiary party to the Intellectual Property
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Security Agreement who has delivered an appropriate Intellectual Property
Assignment executed in blank with respect to such license.
ARTICLE XI
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 the Consolidated Fixed Charge Ratio to
be less than 1.50 to 1.00.
SECTION 11.2 CONSOLIDATED LEVERAGE RATIO. Permit at any time during any
Four-Quarter Period of the Borrower ending during the periods set forth below,
the Consolidated Leverage Ratio at the end of each Four-Quarter Period during
such period to be equal to or less than the ratio set forth opposite such period
set forth below:
Closing Date through December 31, 1998 3.25 to 1.00
January 1, 1999 and thereafter 3.00 to 1.00
SECTION 11.3 CONSOLIDATED NET WORTH. Permit at any time Consolidated
Net Worth to be less than $14,651,000, such amount to be increased as at the
first day of each Fiscal Year, beginning with the Fiscal Year ending December
31, 1998, by an amount equal to (a) fifty percent (50%) of Consolidated Net
Income during the immediately preceding Fiscal Year, plus (b) one hundred
percent (100%) of the Net Proceeds of any Equity Offering consummated during the
immediately preceding Fiscal Year; less (c) the amount of any change during the
immediately preceding Fiscal Year resulting from the evaluation as required by
GAAP of the Borrower's investment in Eyecare Products or in the Sterling Note;
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.
ARTICLE XII
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
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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 II or III 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 9.10, 9.11, 9.12, 9.18 or
Articles X or XI hereof; or
(d) if (i) 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 (ii) 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 (iii) 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, invalid or unenforceable or otherwise cease to be in full
force and effect for any reason whatsoever other than the occurrence of
the Facility Termination Date; or (iv) the Borrower or any Subsidiary
shall assert the invalidity or unenforceability of any of the Loan
Documents or (v) any event or condition shall exist which would
reasonably be likely to have a material adverse effect on (A) the
ability of the Borrower or any Guarantor to pay or perform its
obligations, liabilities or indebtedness under any Loan Document or (B)
the material rights, powers or remedies of any Lender under any Loan
Document or the validity, legality or enforceability thereof; or
(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
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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 in any material
respect when 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 approving a petition filed against the Borrower or
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 sixty (60) days; or
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(j) if the Borrower or any Guarantor shall suspend all or any
part of its operations and such suspension would 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 Hedging Obligations thereunder; or
(l) if any default permitting the termination thereof shall
occur and be continuing under the License Agreement or if there shall
be any amendment or modification thereof in any manner materially
adverse to the interests of the Agent and the Lenders thereunder or if
the License Agreement shall terminate for any reason or the rights of
the Borrower thereunder shall be encumbered, assigned or sublicensed
(other than sublicenses to Guarantors) or transferred in any manner.
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 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 an LC
Account Agreement in the form of Exhibit R hereto; and
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(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.
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
3.14 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;
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(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 Borrower or otherwise as may be required by applicable
law.
ARTICLE XIII
THE AGENT
SECTION 13.1 APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 13.5 and
the first sentence of Section 13.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made
in or in connection with any Loan Document or any certificate or other
document referred to or provided for in, or received by any of them
under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or
any other document referred to or provided for therein or for any
failure by the Borrower or any other Person to perform any of its
obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Loan Party or the satisfaction of any
condition or to inspect the property (including the books and records)
of the Borrower or any of its Subsidiaries or affiliates;
(d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted
to be taken by it under or in connection with any Loan Document, except
for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
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SECTION 13.2 RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telefacsimile)
believed by it to be genuine and correct and to have been signed, sent or made
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel for any Loan Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until the Agent receives and accepts an Assignment and Acceptance executed
in accordance with Section 13.1 hereof. As to any matters not expressly provided
for by this Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding on all of the Lenders; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Loan Document or applicable law or unless 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 any such action.
SECTION 13.3 DEFAULTS. The Agent shall not be deemed to have knowledge
or notice of the occurrence of a Default or Event of Default unless the Agent
has received written notice thereof (i) from the Borrower or (ii) from a Lender
specifying 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 of the
occurrence of a Default or Event of Default, the Agent shall give prompt notice
thereof to the Lenders. The Agent shall (subject to Section 13.2 hereof) take
such action with respect to such Default or Event of Default as shall reasonably
be 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
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders.
SECTION 13.4 RIGHTS AS LENDER. With respect to its Term Loan Commitment
and Revolving Credit Commitment and the Loans made by it, NationsBank (and any
successor acting as Agent) in its capacity as a Lender hereunder shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not acting as the Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. NationsBank (and any successor acting as Agent) and its
affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with the
Borrower or any of its Subsidiaries or affiliates as if it were not acting as
Agent, and NationsBank (and any successor acting as Agent) and its affiliates
may accept fees and other consideration from the Borrower or any of its
Subsidiaries or affiliates for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
SECTION 13.5 INDEMNIFICATION. The Lenders agree to indemnify the Agent
(to the extent not reimbursed under Section 15.8 hereof, but without limiting
the obligations
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of the Borrower under such Section) ratably in accordance with their respective
Revolving Credit Commitments and Term Loan Commitments, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys' fees), or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against the
Agent (including by any Lender) in any way relating to or arising out of any
Loan Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Loan Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under Section 15.8, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements contained
in this Section 13.5 shall survive payment in full of the Loans and all other
amounts payable under this Agreement.
SECTION 13.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its Subsidiaries
and decision to enter into this Agreement and 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 analysis and decisions in taking or not taking action under the Loan
Documents. Except for notices, reports, and other documents and information
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 or affiliates that may come
into the possession of the Agent or any of its affiliates.
SECTION 13.7 RESIGNATION OF AGENT. The Agent may resign at any time by
giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent which shall be a
commercial bank organized under the laws of the United States of America having
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor, such successor shall
thereupon succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article XIII shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
SECTION 13.8 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 V) which results in its
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receiving more than its pro rata share of the aggregate payments with respect to
all of the Obligations (other than any payment expressly provided hereunder to
be distributed on other than a pro rata basis and payments pursuant to Article
V), 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 13.8 the term "pro rata" shall be determined with respect to the
Term Loan Commitment and Revolving Credit Commitment of each Lender and with
respect to the Total Credit Commitments after subtraction in each case of
amounts, if any, by which any such Lender has not funded its share of the
outstanding Loans and Obligations. 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 13.8 shall be rescinded to the extent of such
recovery, without interest. The Borrowers 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.
SECTION 13.9 FEES. The Borrower agrees to pay to the Agent, for its
individual account, an annual Agent's fee as from time to time agreed to by the
Borrower and the Agent in writing.
ARTICLE XIV
ASSIGNMENTS AND PARTICIPATIONS
SECTION 14.1 ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may assign
to one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Loans, its Notes, and its Term Loan Commitment and Revolving Credit Commitment);
provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this Agreement,
any such partial assignment shall be in an amount at least equal to $5,000,000
or an integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under this
Agreement and the Note;
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(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance, together with any
Note subject to such assignment and a processing fee of $3,500; and
(v) an assignment (other than an assignment of 100% of its
interest) by NationsBank shall not include any portion of the obligation to
issue Letters of Credit.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 5.6.
(b) The Agent shall maintain at its address referred to in Section 15.1
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Revolving Credit Commitment and Term Loan Commitment of, and principal amount of
the Loans owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, the Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit B hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Term Loan Commitment and Revolving Credit Commitment and its
Loans); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such participations shall be in a minimum
amount of $2,500,000 and shall include an allocable portion of such Lender's
Participations, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iv) the participant
shall be entitled to the benefit of the yield protection provisions contained in
Article V and the right of set-off contained in Section 15.2, and (v) the
Borrowers shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
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Borrowers relating to its Loans and its Note and to approve any amendment,
modification, or waiver of any provision of this Agreement (other than
amendments, modifications, or waivers requiring approval of all the Lenders as
set forth in Section 15.5 hereof.)
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its Loans and
its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any operating circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(f) Any Lender may furnish any information concerning the Borrower or
any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants).
ARTICLE XV
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
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(b) if to the Agent:
NationsBank, National Association
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
with a copy to:
NationsBank, National Association
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention:Ms. Patricia G. McCormack, Senior Vice President
Telephone: (212) 407-5373
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. Upon the occurrence and during the continuance of
any Event of Default, each Lender (and each of its affiliates) is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender (or any of its affiliates) to or for the credit or the
account of the Borrower against any and all of the Obligations of the Borrower
now or hereafter existing under this Agreement and the Note held by such Lender,
irrespective of whether such Lender shall have made any demand under this
Agreement or such Note and although such Obligations may be unmatured. Each
Lender agrees promptly to notify the Borrower after any such set-off and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section 15.2 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) that such
Lender may have.
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 until the Facility Termination Date, unless continuing thereafter in
accordance with their terms. 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
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and the other Loan Documents shall 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 reasonable 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 each of 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 counsel of the Agent and of each Lender and any payments in
indemnification (other than, with respect to any Lender, payments of
indemnification arising directly as a result of the gross negligence or willful
misconduct of such 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. Any provision of this Agreement or any other
Loan Document may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Borrowers and the Required Lenders (and, if
Article XI or the rights or duties of the Agent are affected thereby, by the
Agent); provided that no such amendment or waiver shall, unless signed by all
the Lenders, (i) increase the Revolving Credit Commitments or Term Loan
Commitments of the Lenders, (ii) reduce the principal of or rate of interest on
any Loan or any fees or other amounts payable hereunder, (iii) postpone any date
fixed for the payment of any scheduled installment of principal of or interest
on any Loan or any fees or other amounts payable hereunder or for termination of
any Term Loan Commitment or Revolving Credit Commitment, (iv) change the
percentage of the Term Loan Commitments or the Revolving Credit Commitments or
of the unpaid principal amount of the Notes, or the number of Lenders, which
shall be required for the Lenders or any of them to take any action under this
Section 15.5 or any other provision of this Agreement, (v) release any Guarantor
or any Liens in favor of the Agent or the Lenders covering any material portion
of the Collateral or (vi) change the provisions of Section 2.7 hereof and this
Section 15.5; and provided, further, that no such amendment or waiver that
affects the rights, privileges or obligations of the Issuing Bank as issuer of
Letters of Credit, shall be effective unless signed in writing by the Issuing
Bank;
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has obtained the written consent of the
Required Lenders. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand
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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. 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 Facility Termination Date shall have occurred unless such rights
continue thereafter in accordance with their terms. 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 the Facility Termination Date shall have
occurred unless such rights continue thereafter in accordance with their terms
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 execution hereof until the Facility Termination Date 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.
(a) 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
(irrespective of whether any such Indemnified Party is a party to the
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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. This
Section 15.8 supersedes any prior agreements of the parties as to
indemnification or limits on liability and the provisions hereof shall survive
repayment of the Obligations, the occurrence of the Facility Termination Date
and the expiration or termination of this Agreement. The Borrower agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to it, any of its Subsidiaries, any Guarantor, or
any security holders or creditors thereof arising out of, related to or in
connection with the transactions contemplated herein, except to the extent that
such liability is found in a final non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct; provided, however, in no event shall any
Indemnified Party be liable for punitive, consequential, indirect or special
damages, as opposed to direct damages.
(b) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 15.8 shall survive the payment in full of the Loans and all other
amounts payable under this Agreement.
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. 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.
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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.
(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
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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.
SECTION 15.15 JUDGMENT CURRENCY. The Borrower, the Agent and each
Lender hereby agree that if, in the event that a judgment is given in relation
to any sum due to the Agent or any Lender hereunder, and such judgment is given
in a currency (the "Judgment Currency") other than that in which such sum was
originally denominated (the "Original Currency"), the Borrower agrees to
indemnify the Agent or such Lender, as the case may be, to the extent that such
amount of the Original Currency which could have been purchased by the Agent in
accordance with normal banking procedures on the Business Day following receipt
of such sum is less than the sum which could have been so purchased by the Agent
had such purchase been made on the day on which such judgment was given or, if
such day is not a Business Day, on the Business Day immediately preceding such
judgment, and if the amount so purchased exceeds the amount which could have
been so purchased had such purchase been made on the day on which such judgment
was given, or if such day is not a Business Day, on the Business Day immediately
preceding such judgment, the Agent or the applicable Lenders agree to remit such
excess to the Borrower. The agreements in this Section 15.15 shall survive
payment of the Obligations.
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SECTION 15.16 ECONOMIC AND MONETARY UNION IN THE EUROPEAN COMMUNITY.
(a) The parties confirm that, except as agreed to by all
parties hereto in writing, the occurrence or non-occurrence of an event
associated with economic and monetary union in the European Community
will not have the effect of altering any term of, or discharging or
excusing performance under, this Agreement, any other Loan Document,
any Security Instrument, any Loan or transaction contemplated by any of
the foregoing, nor give a party the right to unilaterally alter or
terminate this Agreement, any other Loan Document, any Security
Instrument, any Loan or transaction contemplated by any of the
foregoing or give rise to an Event of Default or otherwise be the basis
for the effective designation of the Revolving Credit Termination Date
or the Facility Termination Date.
"An event associated with economic and monetary union in the European
Community" includes, without limitation, each (and any combination) of the
following:
(i) the introduction of, changeover to or operation
of a single or unified European currency (whether known as the
euro or otherwise) ("Eurocurrency");
(ii) the fixing of conversion rates between a member
state's currency and the Eurocurrency or between the
currencies of member states;
(iii) the introduction of Eurocurrency as lawful
currency in a member state;
(iv) the withdrawal from legal tender of any currency
that, before the introduction of Eurocurrency, was lawful
currency in one of the member states; and
(v) the disappearance or replacement of a relevant
price source for the Eurocurrency or the national currency of
any member state, or the failure of the agreed sponsor (or a
successor sponsor) to publish or display a relevant rate,
index, price, page or screen.
[Signatures on following pages.]
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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:/s/ Desiree DeStefano
-----------------------------
Name: Desiree DeStefano
---------------------------
Title: VP of Finance
--------------------------
AGENT:
NATIONSBANK, NATIONAL
ASSOCIATION, as Agent for the
Lenders
By:/s/ Peter C. Hall
-----------------------------
Name: Peter C. Hall
---------------------------
Title: Vice President
--------------------------
CREDIT AGREEMENT
Signature Page 1 of 7
<PAGE> 114
LENDERS:
NATIONSBANK, NATIONAL
ASSOCIATION
By:/s/ Peter C. Hall
-----------------------------
Name: Peter C. Hall
---------------------------
Title: Vice President
--------------------------
Lending Office:
NationsBank, National Association
Independence Center
NC1 001-15-04, 15th Floor
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-3917
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association
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 7
<PAGE> 115
EUROPEAN AMERICAN BANK
By: /s/ Brian A. Foster
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
Attention: Commercial Loans Dept.
CREDIT AGREEMENT
Signature Page 3 of 7
<PAGE> 116
NATIONAL CITY BANK OF KENTUCKY
By:/s/ Todd Ethington
----------------------------
Name: Todd Ethington
--------------------------
Title: Vice President
-------------------------
Lending Office:
101 South 5th Street
Louisville, Kentucky 40202
Attention: Etta Moore
Commercial Loan Operations
Telephone: (502) 581-6788
Telefacsimile: (502) 581-4079
Wire Transfer Instructions:
National City Bank of Kentucky
101 South 5th Street
Louisville, Kentucky 40202
ABA No.: 083-000-056
Reference: BEC Group, Inc.
Attention: Etta Moore
Commercial Loan Operations
CREDIT AGREEMENT
Signature Page 4 of 7
<PAGE> 117
BANK OF BOSTON CONNECTICUT
By:/s/ Richard J. Klouda
----------------------------
Name: Richard J. Klouda
--------------------------
Title: Director
-------------------------
Lending Office:
One Landmark Square
Stamford, Connecticut 06901
Attention: Jennifer Edwards
Telephone: (203) 973-1940
Telefacsimile: (203) 967-8169
Wire Transfer Instructions:
Bank of Boston Connecticut
One Hundred Pearl Street
Hartford, Connecticut 06103
ABA No.: 011100805
Reference: 13KBCT Zero Balance Account
Account No.:551-74538
Attention: Jeff Seabron
CREDIT AGREEMENT
Signature Page 5 of 7
<PAGE> 118
CAISSE NATIONALE DE CREDIT
AGRICOLE
By:/s/ Craig Welch
----------------------------
Name: Craig Welch
Title: First Vice President
Lending Office:
55 East Monroe Street, Suite 4700
Chicago, Illinois 60603
Attention: Stacey Mannion
Telephone: (312) 917-7560
Telefacsimile: (312-372-4421
Wire Transfer Instructions:
Morgan Guaranty Trust Co.
New York, New York
ABA No.: 021000238
Reference: BEC Group, Inc.
Account No.:63000205
Attention: Stacey Mannion
CREDIT AGREEMENT
Signature Page 6 of 7
<PAGE> 119
IMPERIAL BANK
By:/s/ Ray Vadalma
----------------------------
Name: RAY VADALMA
--------------------------
Title: SENIOR VICE PRESIDENT
-------------------------
Lending Office:
9920 South La Cienega Boulevard, 14th Floor
Inglewood, California 90301
Attention: Mr. Jamie Harney
Telephone: (310) 417-5721
Telefacsimile: (310) 417-5997
Wire Transfer Instructions:
Imperial Bank
ABA No.: 122201444
Reference: BEC Group, Inc.
Account No.: 2405-100-540
Attention: LPIG #2405
CREDIT AGREEMENT
Signature Page 7 of 7
<PAGE> 1
CERTIFICATE OF DESIGNATIONS
OF THE
SERIES A PREFERRED STOCK
OF BOLLE INC.
-----------------------------------
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
-----------------------------------
The undersigned, Peter H. Trembath, does hereby certify as
follows:
FIRST: That he is the duly elected and acting Secretary of
Bolle Inc., a Delaware corporation (the "corporation").
SECOND: That the following resolution was duly adopted by the
Board of Directors of the corporation:
RESOLVED, that pursuant to authority conferred upon the Board
of Directors of the corporation in accordance with the General Corporation Law
of the State of Delaware and the provisions of the Certificate of Incorporation
of the corporation (the "Certificate"), there is hereby created a new series of
preferred stock of the corporation, which shall be designated "Series A
Preferred Stock" and shall consist of Sixty Four Thousand One Hundred Twenty
(64,120) shares, and have the powers, designations, preferences and relative,
participating, and other rights of the shares of such series, and the
qualifications, limitations and restrictions thereof, as set forth below.
SECTION 1. Dividends. The holders of the Series A Preferred
Stock shall not be entitled to dividends.
SECTION 2. Rights on Liquidation. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
corporation (any such event being hereinafter referred to as a "Liquidation"),
before any distribution of assets of the corporation shall be made to or set
apart for the holders of Common Stock, the holders of Series A Preferred Stock
shall be entitled to receive payment out of such assets of the corporation in an
amount equal to the greater of (i) One Thousand French Francs (FF1,000) per
share of Series A Preferred Stock or (ii) the French Franc equivalent of US
$172.41 per share of Series A Preferred Stock (such greater amount being
referred to as the "Liquidation Preference" for the Series A Preferred Stock).
If the assets of the corporation available for distribution to the holders of
the Series A Preferred Stock shall not be sufficient to make in full the payment
herein required, such assets shall be distributed pro-rata among the holders of
Series A Preferred Stock based on the aggregate Liquidation Preference of the
shares of Series A
<PAGE> 2
Preferred Stock held by each such holder. If the assets of the corporation
available for distribution to the holders of Series A Preferred Stock shall
exceed the distribution required to be made to the holders of Series A Preferred
Stock as herein described, such excess assets shall be distributed pro-rata
among the holders of Common Stock and the holders of Series A Preferred Stock
shall not participate in any such excess distribution in their capacity as
holders of Series A Preferred Stock.
SECTION 3. Conversion. The holders of any share of Series A
Preferred Stock shall not have the right to convert any such shares into shares
of Common Stock of the corporation.
SECTION 4. Redemption.
(a) Optional Redemption. Following notice pursuant to
Section 4(c) hereof given to all holders of Series A Preferred Stock during the
period that shares of Series A Preferred Stock are outstanding (the "Redemption
Period"), the corporation may at the option of the Board of Directors of the
corporation, redeem, out of funds legally available therefor, in whole or in
part the shares of Series A Preferred Stock. The corporation shall effect any
such redemption by paying in cash for each such share to be redeemed an amount
equal to the Liquidation Preference, per share, on such shares being redeemed on
the Redemption Date (as hereinafter defined) (such per share amount is
hereinafter referred to as the "Redemption Amount").
(b) Mandatory Redemption. (i) Subject to the terms of
the Senior Indebtedness (as defined below), on the third anniversary date from
the issuance of the Series A Preferred Stock, the corporation shall redeem, out
of funds legally available therefor, all of the shares of the Series A Preferred
Stock (if not previously redeemed) at the Redemption Amount per share pursuant
to the terms of this Section 4 following notice pursuant to Section 4(c) hereof
given to all holders of Series A Preferred Stock.
(ii) Notwithstanding anything to the
contrary contained herein, in the event that the corporation's EBITDA (as
defined below) exceeds US$18,400,000 for the year ended December 31, 1998 and
BEC Group, Inc. will be in compliance with the terms of BEC Group, Inc.'s senior
indebtedness existing as of the date of closing of the Share Purchase Agreement,
dated June 4, 1997, as amended, among BEC Group, Inc., Bolle Inc. and the
sellers therein named (the "Senior Indebtedness") after taking into account the
redemption pursuant to the terms of this Section 4(b)(ii), to the extent that
BEC Group, Inc. will have at least US$2,000,000 available to borrow pursuant to
the terms of the Senior Indebtedness after taking into account such redemption,
the corporation shall redeem, out of funds legally available therefor, the
shares of the Series A Preferred Stock (if not previously redeemed) at the
Redemption Amount per share pursuant to the terms of this Section 4 herein
following notice given within ten days after the Determination Date (as defined
below) in respect of the year ended December 31, 1998 pursuant to Section 4(c)
hereof given
2
<PAGE> 3
to all holders of Series A Preferred Stock. The determination of EBITDA required
to be made under this Section 4, shall be made by the corporation within ninety
days following the corporation's year end (the "Determination Date").
(iii) Notwithstanding anything to the
contrary contained herein, in the event that the corporation's EBITDA exceeds
US$24,700,000 for the year ended December 31, 1999 and BEC Group, Inc. will be
in compliance with the terms of the Senior Indebtedness after taking into
account the redemption pursuant to the terms of this Section 4(b)(iii), to the
extent that BEC Group, Inc. will have at least US$2,000,000 available to borrow
pursuant to the terms of the Senior Indebtedness after taking into account such
redemption, the corporation shall redeem, out of funds legally available
therefor, the shares of the Series A Preferred Stock (if not previously
redeemed) at the Redemption Amount per share pursuant to the terms of this
Section 4 herein following notice given within ten days after the Determination
Date in respect of year ended December 31, 1999 pursuant to Section 4(c) hereof
given to all holders of Series A Preferred Stock.
(iv) For purposes of this Section 4,
"EBITDA" means, with respect to the corporation 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 on a consistent basis.
(c) Redemption Procedures. In the event of any
redemption pursuant hereto, the corporation shall effect such redemption as
described below. During the Redemption Period, and at least 10 days prior to the
date fixed for any redemption of Series A Preferred Stock pursuant to Section
4(a) or 4(b) above (the "Redemption Date"), written notice shall be sent to each
holder of record of Series A Preferred Stock to be redeemed, notifying such
holder of the redemption to be effected, specifying the Redemption Date, the
Redemption Amount, the place at which payment may be obtained and calling upon
such holder to surrender to the corporation, in the manner and at the place
designated, his certificate or certificates representing the shares to be
redeemed (the "Redemption Notice"). On or after the Redemption Date, each holder
of Series A Preferred Stock to be redeemed shall surrender to the corporation
the certificate or certificates representing such shares, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Amount of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be cancelled. In the event less than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares.
3
<PAGE> 4
(d) Status of Redeemed or Purchased Shares. Any
shares of the Series A Preferred Stock at any time purchased, redeemed or
otherwise acquired by the corporation shall not be reissued and shall be
retired.
(e) Sale of Business. In the event that the
corporation does not give notice on or before the third anniversary date from
the issuance of the Series A Preferred Stock, that it will redeem the Series A
Preferred Stock in full pursuant to the provisions of Section 4(c) hereof, the
holders of more than 90% of the Series A Preferred Stock shall have the right,
until the Series A Preferred Stock has been redeemed, (i) subject to the terms
of the Stock Pledge Agreement entered into by BEC Group, Inc. in connection with
the Senior Indebtedness, to appoint a majority of the members of the Board of
Directors of the corporation, so long as the corporation is privately or closely
held, and (ii) subject to the terms and provisions of the Senior Indebtedness,
to cause the corporation to use commercially reasonable efforts to either obtain
cash in order to redeem in full the Series A Preferred Stock or to effect a
commercially reasonable sale of the corporation's assets or the merger,
consolidation or other reorganization of the corporation as soon as reasonably
practicable thereafter.
SECTION 5. Voting Rights. Subject to the provisions of Section
4(c)(i) hereof, the holders of the Series A Preferred Stock shall not be
entitled to vote except as to matters in respect of which they shall at the time
be indefeasibly vested by statute with such right.
SECTION 6. Protective Provisions. So long as any shares of
Series A Preferred Stock are outstanding, the corporation shall not, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least 90% of the then outstanding shares of Series A Preferred
Stock:
(i) alter or change the rights, preferences
or privileges of the shares of Series A Preferred Stock so as to affect
adversely the shares of such series; and
(ii) the corporation shall not issue any
class or series of Preferred Stock that ranks Senior to or pari passu with the
Series A Preferred Stock with respect to dividend, redemption or liquidation
rights.
SECTION 7. TRANSFERABILITY. The holders of shares of the
Series A Preferred Stock are entitled to transfer shares of the Series A
Preferred Stock to any of the other holders of shares of Series A Preferred
Stock, subject to strict compliance with all applicable laws.
4
<PAGE> 5
IN WITNESS WHEREOF, Bolle Inc. has caused this Certificate of
Designations of the Series A Preferred Stock to be signed by Peter H. Trembath,
its Secretary, this 9th day of July, 1997.
BOLLE INC.
By: /s/ Peter H. Trembath
------------------------------
Name: Peter H. Trembath
Title: Secretary
5
