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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 22)
THE UNITED STATES SHOE CORPORATION
(Name of Subject Company)
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LUXOTTICA GROUP S.P.A.
LUXOTTICA ACQUISITION CORP.
(Bidders)
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COMMON SHARES, WITHOUT PAR VALUE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
912605102
(CUSIP Number of Class of Securities)
CLAUDIO DEL VECCHIO
44 HARBOR PARK DRIVE
PORT WASHINGTON, NEW YORK 11050
(516) 484-3800
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
WITH A COPY TO:
JONATHAN GOLDSTEIN
WINSTON & STRAWN
175 WATER STREET
NEW YORK, NEW YORK 10038
(212) 269-2500
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* $1,415,903,300 AMOUNT OF FILING FEE** $283,180.66
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* Pursuant to, and as provided by, Rule 0-11(d), this amount is based upon the
purchase of all of the outstanding Common Shares of the Subject Company and
the associated Rights at $28.00 cash per Share. The Subject Company has
disclosed to the Bidders that, as of April 20, 1995, 46,958,375 Shares and
3,603,900 options to acquire Shares were outstanding, and an additional 5,700
Shares were issuable under one of the Subject Company's stock purchase plans.
** 1/50 of 1% of Transaction Valuation.
X Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $283,180.66
Form or Registration No.: Schedule 14D-1; Amendment No. 20 to Schedule 14D-1
Filing Party: Luxottica Group S.p.A.; Luxottica Acquisition Corp.
Date Filed: March 3, 1995; April 24, 1995
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Page 1 of 7 Pages
The Exhibit Index is located on Page 5
<PAGE>
Luxottica Group S.p.A. and Luxottica Acquisition Corp. hereby amend and
supplement their Tender Offer Statement on Schedule 14D-1, filed on March 3,
1995 (as amended, the "Schedule 14D-1"), with respect to the offer to purchase
all of the outstanding Common Shares, without par value, of The United States
Shoe Corporation, including the associated preference share purchase rights, as
set forth in this Amendment No. 22. Unless otherwise indicated, all capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Schedule 14D-1.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 4 is hereby amended to add the following:
(a)-(b) On May 5, 1995, Parent issued a press release announcing, among
other things, that it had entered into a credit agreement with a syndicate
of financial institutions for a credit facility that provides for borrowings
of up to $1.55 billion (the "Credit Agreement"). Credit Suisse is the agent
for the lenders under the Credit Agreement, and the terms of the Credit
Agreement are consistent with the terms contemplated by the April 19 Commitment
Letter from Credit Suisse. The foregoing description of the Credit Agreement
is qualified in its entirety by reference to the text of the Credit Agreement
filed as Exhibit (b)(3) hereto and incorporated by reference herein.
ITEM 10. ADDITIONAL INFORMATION
Item 10 is hereby amended to add the following:
(e) On May 5, 1995, Parent issued a press release announcing, among other
things, that the Section 831 Meeting convened on Friday, May 5, 1995, had been
adjourned to May 11, 1995. The foregoing description of the press release is
qualified in its entirety by reference to the text of the press release filed
as Exhibit (a)(44) hereto and incorporated by reference herein.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
Item 11 is hereby amended and supplemented by adding the following exhibits:
(a)(44) --Text of Press Release issued by Parent, dated May 5, 1995.
(b)(3) --Credit Agreement, dated as of May 1, 1995 among
Luxottica US Holdings Corp., Various Banks and Credit
Suisse, as Administrative Agent.
2
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
LUXOTTICA GROUP S.P.A.
Dated: May 5, 1995 By: /s/ Claudio Del Vecchio
...............................
Claudio Del Vecchio
Managing Director
LUXOTTICA ACQUISITION CORP.
Dated: May 5, 1995 By: /s/ Claudio Del Vecchio
...............................
Claudio Del Vecchio
President
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
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<C> <S> <C>
(a)(1) --Offer to Purchase, dated March 3, 1995................................... *
(a)(2) --Letter of Transmittal.................................................... *
(a)(3) --Notice of Guaranteed Delivery............................................ *
(a)(4) --Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees....................................... *
(a)(5) --Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees............................................. *
(a)(6) --Guidelines for Certification of Taxpayer Identification Number on
Substitute
Form W-9................................................................. *
(a)(7) --Summary Advertisement as published in The Wall Street Journal on March 3,
1995..................................................................... *
(a)(8) --Text of Press Release issued by Parent dated March 3, 1995............... *
(a)(9) --Preliminary Proxy Statement dated March 6, 1995 of Luxottica Group S.p.A.
and Luxottica Acquisition Corp. for the Special Meeting of Shareholders
under Section 1701.831 of the Ohio Revised Code of The United States Shoe
Corporation, together with the form of Proxy relating thereto, as filed
with the Securities and Exchange Commission on March 6, 1995 and
incorporated herein by reference.
(a)(10) --Preliminary Solicitation Statement dated March 7, 1995 of Luxottica Group
S.p.A. and Luxottica Acquisition Corp. to call a Special Meeting of
Shareholders of The United States Shoe Corporation, together with the
form of Appointment of Designated Agents relating thereto, as filed with
the Securities and Exchange Commission on March 7, 1995 and incorporated
herein by reference.
(a)(11) --Text of Press Release issued by Parent, dated March 9, 1995.............. *
(a)(12) --Acquiring Person Statement of Parent and the Purchaser, dated March 3,
1995, pursuant to Section 1701.831 of the Ohio Revised Code, filed with
the Securities and Exchange Commission March 10, 1995 as definitive
additional material pursuant to Section 14(a) of the Securities Exchange
Act of 1934, as amended, and incorporated herein by reference.
(a)(13) --Text of Press Release issued by Parent, dated March 10, 1995............. *
(a)(14) --Text of Press Release issued by Parent, dated March 10, 1995............. *
(a)(15) --Text of Press Release issued by Parent, dated March 14, 1995............. *
(a)(16) --Text of Press Release issued by Parent, dated March 16, 1995............. *
(a)(17) --Text of Press Release issued by Parent, dated March 17, 1995............. *
(a)(18) --Text of Press Release issued by Parent, dated March 20, 1995............. *
(a)(19) --Text of Press Release issued by Parent, dated March 21, 1995............. *
(a)(20) --Definitive Proxy Statement dated March 21, 1995 of Luxottica Group S.p.A.
and Luxottica Acquisition Corp. for the Special Meeting of Shareholders
under Section 1701.831 of the Ohio Revised Code of The United States Shoe
Corporation, together with the form of proxy relating thereto, as filed
with the Securities and Exchange Commission on March 21, 1995 and
incorporated herein by reference.
(a)(21) --Text of Press Release issued by Parent, dated March 24, 1995............. *
</TABLE>
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* Previously filed.
4
<PAGE>
<TABLE><CAPTION>
EXHIBIT PAGE
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<C> <S> <C>
(a)(22) --Text of Press Release issued by Parent, dated March 30, 1995............. *
(a)(23) --Text of Press Release issued by Parent, dated March 30, 1995............. *
(a)(24) --Letter to the Shareholders of The United States Shoe Corporation dated
March 28, 1995, to accompany the Definitive Proxy Statement dated March
21, 1995 of Luxottica Group S.p.A. and Luxottica Acquisition Corp. for
the Special Meeting of Shareholders under Section 1701.831 of the Ohio
Revised Code, as filed with the Securities and Exchange Commission on
March 29, 1995 and incorporated herein by reference.
(a)(25) --Text of Press Release issued by Parent, dated March 31, 1995............. *
(a)(26) --Text of Press Release issued by Parent, dated April 2, 1995.............. *
(a)(27) --Text of Press Release issued by Parent, dated April 4, 1995.............. *
(a)(28) --Letter to the Shareholders of The United States Shoe Corporation dated
April 12, 1995, delivered in connection with the solicitation of proxies
for the 831 Meeting, including an enclosure describing certain recent
developments, each as filed with the Securities and Exchange Commission
on April 13, 1995 and incorporated herein by reference.
(a)(29) --Text of Press Release issued by Parent, dated April 14, 1995............. *
(a)(30) --Text of Joint Press Release issued by Parent and the Company dated April
16, 1995................................................................. *
(a)(31) --Text of Joint Press Release issued by Parent and the Company dated April
20, 1995................................................................. *
(a)(32) --Text of Joint Press Release issued by Parent and the Company dated April
21, 1995................................................................. *
(a)(33) --Text of Joint Press Release issued by Parent and the Company dated April
21, 1995. ............................................................... *
(a)(34) --Supplement to the Offer to Purchase dated April 24, 1995................. *
(a)(35) --Revised Letter of Transmittal............................................ *
(a)(36) --Revised Notice of Guaranteed Delivery.................................... *
(a)(37) --Revised Letter from Dealer Manager to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees....................................... *
(a)(38) --Revised Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees....................................... *
(a)(39) --Summary Advertisement as published in The Wall Street Journal on April
24, 1995................................................................. *
(a)(40) --Revised Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9...................................................... *
(a)(41) --Text of Joint Press Release issued by Parent and the Company dated April
26, 1995................................................................. *
(a)(42) --Definitive Supplement to the 831 Proxy Statement dated April 25,
1995 of Luxottica Group S.p.A. and Luxottica Acquisition Corp. for
the Special Meeting of Shareholders under Section 1701.831 of the
Ohio Revised Code of The United States Shoe Corporation, together
with the form of Proxy relating thereto, as filed with the
Securities and Exchange Commission on April 26, 1995 and
incorporated herein by reference.
(a)(43) --Form of Voting Instructions for Voting by Telephone to accompany
the Definitive Supplement to the 831 Proxy Statement of Parent and
the Purchaser, dated April 25, 1995, pursuant to Section 1701.831 of
the Ohio Revised Code, filed with the Securities and Exchange
Commission April 26, 1995 as definitive additional material pursuant
to section 14(a) of the Securities Exchange Act of 1934, as amended,
and incorporated herein by reference.
(a)(44) --Text of Press Release issued by Parent, dated May 5, 1995................
(b)(1) --Commitment Letter, dated March 2, 1995, from Credit Suisse............... *
(b)(2) --Commitment Letter, dated April 19, 1995, from Credit Suisse.............. *
(b)(3) --Credit Agreement, dated as of May 1, 1995 among
Luxottica US Holdings Corp., Various Banks and Credit
Suisse, as Administrative Agent. ........................................
</TABLE>
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* Previously filed.
5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
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<C> <S> <C>
(c)(1) --Proposed Confidentiality Agreement among Parent, the Purchaser and the
Company dated as of March 30, 1995 delivered by Parent's Counsel to the
Company on March 31, 1995. .............................................. *
(c)(2) --Executed Confidentiality Agreement among Parent, the Purchaser and the
Company dated March 31, 1995............................................. *
(c)(3) --Agreement and Plan of Merger, dated as of April 21, 1995, among
Avant-Garde, the Purchaser and the Company, including the Guaranty, dated
as of April 21, 1995, of Parent.......................................... *
(c)(4) --Amendment to Agreement and Plan of Merger, dated as of April 26,
1995, among Avant-Garde, the Purchaser and the Company.................... *
(g)(1) --Complaint Seeking Declaratory and Injunctive Relief filed in the United
States District Court for the Southern District of Ohio, Eastern
Division, on March 3, 1995, relating to the Ohio Take-Over Act, the
Preference Share Purchase Rights and the impairment of the voting rights
of certain Shares under Sections 1701.01(CC)(2) and 1701.831 of the Ohio
Revised Code............................................................. *
(g)(2) --First Amended Verified Complaint seeking Declaratory and Injunctive
Relief filed by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, on March 6, 1995, relating
to the Ohio Take-Over Act, the Preference Share Purchase Rights and the
impairment of the voting rights of certain Shares under Sections
1701.01(CC)(2) and 1701.831 of the Ohio Revised Code. ................... *
(g)(3) --Motion for Leave to File a Second Amended Complaint filed on March 10,
1995 by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al. v. The United States Shoe Corporation, et
al. (C-2-95-244)......................................................... *
(g)(4) --Second Amended Verified Complaint seeking Declaratory and Injunctive
Relief filed by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, on March 10, 1995, relating
to the Ohio Take-Over Act, the Preference Share Purchase Rights and the
impairment of the voting rights of certain Shares under Sections
1701.01(CC)(2) and 1701.831 of the Ohio Revised Code..................... *
(g)(5) --Motion of Plaintiff Avant-Garde Optics, Inc. for a Hearing and Order to
Show Cause filed on March 10, 1995 by Avant-Garde Optics, Inc. in the
United States District Court for the Southern District of Ohio, Eastern
Division, in the action entitled Luxottica Group S.p.A., et al. v. The
United States Shoe Corporation, et al. (C-2-95-244)...................... *
(g)(6) --Opinion and Order issued on March 16, 1995 by the United States District
Court for the Southern District of Ohio, Eastern Division, in the action
entitled Luxottica Group S.p.A., et al. v. The United States Shoe
Corporation, et al. (C-2-95-244)......................................... *
(g)(7) --Answer of Defendants The United States Shoe Corporation, Joseph H.
Anderer, Philip E. Beekman, Gilbert Hahn, Jr., Roger L. Howe, Bannus B.
Hudson, Lorrence Kellar, Albert M. Kronick, Thomas Laco, Charles S.
Mechem, Jr., John L. Roy and Phyllis S. Sewell, and Counterclaim of
Defendant The United States Shoe Corporation Against Plantiffs for
Preliminary and Permanent Injunction for False and Misleading Statements
in SEC Filings and Tender Offer Materials, filed on March 22, 1995 by The
United States Shoe Corporation and Named Defendants in the United States
District Court for the Southern District of Ohio, Eastern Division, in
the action entitled Luxottica Group S.p.A., et al. v. The United States
Shoe Corporation, et al. (C-2-95-244).................................... *
</TABLE>
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* Previously filed.
6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
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<C> <S> <C>
(g)(8) --Order issued on March 22, 1995 by the United States District Court for
the Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al. v. The United States Shoe Corporation, et
al. (C-2-95-244)......................................................... *
(g)(9) --Order issued on March 23, 1995 by the United States District Court for
the Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al.v. The United States Shoe Corporation, et
al. (C-2-95-244)......................................................... *
(g)(10) --Order issued on March 23, 1995 by the United States District Court for
the Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al.v. The United States Shoe Corporation, et
al. (C-2-95-244)......................................................... *
(g)(11) --Motion for Leave to File a Third Amended Complaint filed on March 24,
1995 by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al. v. The United States Shoe Corporation, et
al. (C-2-95-244)......................................................... *
(g)(12) --Answer of Defendants The United States Shoe Corporation, Joseph H.
Anderer, Philip E. Beekman, Gilbert Hahn, Jr., Roger L. Howe, Bannus B.
Hudson Lorrence Kellar, Albert M. Kronick, Thomas Laco, Charles S.
Mechem, Jr., John L. Roy and Phyllis S. Sewell, and Amended Counterclaim
of Defendant The United States Shoe Corporation Against Plaintiffs for
Preliminary and Permanent Injunction for False and Misleading Statements
in SEC Filings and Tender Offer Materials, filed on March 29, 1995 by The
United States Shoe Corporation and Named Defendants in the United States
District Court for the Southern District of Ohio, Eastern Division, in
the action entitled Luxottica Group S.p.A., et al. v. The United States
Shoe Corporation, et al. (C-2-95-244).................................... *
(g)(13) --Amended Answer of Defendants The United States Shoe Corporation, Joseph
H. Anderer, Philip E. Beekman, Gilbert Hahn, Jr., Roger L. Howe, Bannus
B. Hudson, Lorrence Kellar, Albert M. Kronick, Thomas Laco, Charles S.
Mechem, Jr., John L. Roy and Phyllis S. Sewell to Third Amended Complaint
and Amended Counterclaim of Defendant The United States Shoe Corporation
Against Plaintiffs for Preliminary and Permanent Injunction for
Misstatements and Omissions in SEC Filings and Tender Offer Materials,
filed on April 6, 1995 by The United States Shoe Corporation and Named
Defendants in the United States District Court for the Southern District
of Ohio, Eastern Division, in the action entitled Luxottica Group S.p.A.,
et al. v. The United States Shoe Corporation, et al. (C-2-95-244)........ *
(g)(14) --Agreed Pre-Hearing Order entered by the District Court on April 7,
1995..................................................................... *
(g)(15) --Reply to Second Amended Counterclaim filed by the Luxottica Plaintiffs on
April 11, 1995 in the District Court..................................... *
(g)(16) --Agreed Order entered by the District Court on April 20, 1995............. *
(g)(17) --Defendants' Third Amended Counterclaim filed on April 17, 1995 by The
United States Shoe Corporation and Named Defendants in the United States
District Court for the Southern District of Ohio, Eastern Division, in
the action entitled Luxottica Group S.p.A., et al. v. The United States
Shoe Corporation, et al. (C-2-95-244).................................... *
(g)(18) --Stipulation of Dismissal of Certain Claims entered in the District
Court on April 25, 1995................................................... *
</TABLE>
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* Previously filed.
7
Exhibit (a)(44)
[LUXOTTICA GROUP LOGO]
FOR IMMEDIATE RELEASE
For more information, contact:
Mark Harnett, MacKenzie Partners, Inc. Information Agent, 212-929-5748
Felicia Vonella, Dewe Rogerson Inc., 212-688-6840
LUXOTTICA GROUP ENTERS INTO $1.55 BILLION
CREDIT FACILITY IN CONNECTION
WITH TENDER OFFER FOR U.S. SHOE
SCHEDULED TO EXPIRE ON MAY 11, 1995
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U.S. SHOE AND LUXOTTICA GROUP ADJOURN
SPECIAL MEETING TO MAY 11, 1995
(Milan, Italy, May 5, 1995) -- Luxottica Group S.p.A. (NYSE:LUX) today
announced that it had entered into a credit agreement with a syndicate
of financial institutions for a credit facility that provides for borrowings
of up to $1.55 billion. Credit Suisse is the agent for the lenders under
the facility. Luxottica confirmed that the terms of the credit facility
are consistent with the previously announced commitment from Credit Suisse,
and that the principal purpose of the facility is to finance the outstanding
tender offer of Luxottica Acquisition Corp., an indirect wholly-owned
subsidiary of Luxottica Group S.p.A., to acquire all outstanding common
shares of U.S. Shoe at a price of $28.00 net per share in cash. Luxottica's
tender offer for U.S. Shoe is scheduled to expire at 5:00 p.m., New York City
time, on Thursday, May 11, 1995 and is anticipated that it will not be further
extended.
The special "831" meeting of shareholders of U.S. Shoe to approve Luxottica's
proposed acquisition of U.S. Shoe under Ohio law was convened today and then
adjourned to 10:00 a.m. on Thursday, May 11, 1995 at U.S. Shoe's corporate
headquarters, One Eastwood Drive, Cincinnati, Ohio. Such approval is a
condition to the consummation of the tender offer. As previously announced,
this adjournment was required to permit distribution, in accordance with
applicable rules of the Securities and Exchange Commission, of additional
proxy materials relating to the meeting which have been mailed to U.S. Shoe
shareholders. Shareholders of record at the close of business on Tuesday,
March 21, 1995 will continue to be entitled to vote at the adjourned meeting.
# # #
Exhibit (b)(3)
[Conformed Copy]
===========================================================
CREDIT AGREEMENT
among
LUXOTTICA U.S. HOLDINGS CORP.,
VARIOUS BANKS,
and
CREDIT SUISSE,
as Administrative Agent
__________________________________
Dated as of May 1, 1995
__________________________________
===========================================================
<PAGE>
TABLE OF CONTENTS
Page
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SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . . . . 6
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . 6
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . 8
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . 11
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . 12
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . 13
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . . . . 16
1.13 Replacement of Banks . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 19
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . 19
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . . 20
2.03 Letter of Credit Requests . . . . . . . . . . . . . . . . . . . 20
2.04 Letter of Credit Participations . . . . . . . . . . . . . . . . 21
2.05 Agreement to Repay Letter of Credit Drawings . . . . . . . . . . 24
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3. Commitment Commission; Fees; Reductions of Commitment . . . . . 26
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.02 Voluntary Termination of Unutilized Commitments . . . . . . . . 27
3.03 Mandatory Reduction of Commitments. . . . . . . . . . . . . . . 28
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . 29
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . 29
(i)
<PAGE>
Page
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4.02 Mandatory Repayments and Commitment Reductions . . . . . . . . . 30
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . 36
4.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5A. Conditions Precedent to Initial Credit Events . . . . . . . . 39
5A.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . . 39
5A.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 39
5A.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . 39
5A.04 Corporate Documents; Proceedings; etc. . . . . . . . . . . . . 40
5A.05 Shareholders' Agreements; Existing Indebtedness Agreements; Tax
Sharing Agreements . . . . . . . . . . . . . . . . . . . . . . 40
5A.06 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . . 41
5A.07 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5A.08 Tender Offer; etc. . . . . . . . . . . . . . . . . . . . . . . 42
5A.09 Avant-Garde Ownership . . . . . . . . . . . . . . . . . . . . . 43
5A.10 Financial Statements; Projections . . . . . . . . . . . . . . . 44
5A.11 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5A.12 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . 44
5A.13 Security Agreement . . . . . . . . . . . . . . . . . . . . . . 44
5A.14 Mortgages; Title Insurance; Surveys . . . . . . . . . . . . . . 45
5A.15 Contribution Agreement . . . . . . . . . . . . . . . . . . . . 46
5A.16 Regulations U and G . . . . . . . . . . . . . . . . . . . . . . 46
5A.17 Solvency Certificate; Environmental Analyses; Insurance
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 47
5A.18 Consent Letter . . . . . . . . . . . . . . . . . . . . . . . . 47
5A.19 Operation of Business . . . . . . . . . . . . . . . . . . . . . 48
5A.20 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5B. Conditions Precedent to Credit Events after the Initial
Borrowing Date and prior to the Merger Borrowing Date . . . . . . . . 48
5B.01 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . . 48
5B.02 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6. Conditions Precedent to Credit Events on or after the Merger
Borrowing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.01 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 49
6.02 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . 50
6.03 Corporate Documents; Proceedings; etc. . . . . . . . . . . . . . 50
(ii)
<PAGE>
Page
----
6.04 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.05 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . . . 51
6.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.07 Merger Documents . . . . . . . . . . . . . . . . . . . . . . . . 52
6.08 Refinancing . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.09 Subsidiaries Guaranty . . . . . . . . . . . . . . . . . . . . . 52
6.10 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . 52
6.11 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . 53
6.12 Contribution Agreement . . . . . . . . . . . . . . . . . . . . . 54
6.13 Consent Letter . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.14 Insurance Certificates . . . . . . . . . . . . . . . . . . . . . 54
6.15 Shareholders' Agreements; Tax Sharing Agreements; Solvency
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7. Conditions Precedent to All Credit Events . . . . . . . . . . . 55
7.01 No Default; Representations and Warranties . . . . . . . . . . . 55
7.02 Notice of Borrowing; Letter of Credit Request . . . . . . . . . 55
7.03 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 56
7.04 Merger Conditions . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8. Representations, Warranties and Agreements . . . . . . . . . . 56
8.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . 57
8.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . 57
8.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.04 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . 58
8.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. . . . . . . . . . . . . . . . . 58
8.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.07 True and Complete Disclosure . . . . . . . . . . . . . . . . . . 60
8.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . 61
8.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . 61
8.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 62
8.11 The Security Documents . . . . . . . . . . . . . . . . . . . . . 63
8.12 Representations and Warranties in Documents . . . . . . . . . . 64
8.13 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.14 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.16 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . 66
(iii)
<PAGE>
Page
----
8.17 Investment Company Act . . . . . . . . . . . . . . . . . . . . . 66
8.18 Public Utility Holding Company Act . . . . . . . . . . . . . . . 66
8.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 66
8.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . 67
8.21 Patents, Licenses, Franchises and Formulas . . . . . . . . . . . 68
8.22 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.23 Offer to Purchase . . . . . . . . . . . . . . . . . . . . . . . 68
8.24 Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.25 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . 70
9.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . 70
9.02 Books, Records and Inspections . . . . . . . . . . . . . . . . . 75
9.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . 75
9.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . . 77
9.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . 77
9.06 Compliance with Environmental Laws . . . . . . . . . . . . . . . 78
9.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . . 80
9.09 Performance of Obligations . . . . . . . . . . . . . . . . . . . 80
9.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . 80
9.11 Additional Mortgages; Title Insurance; Surveys . . . . . . . . . 81
9.12 Additional Security; Further Assurances . . . . . . . . . . . . 82
9.13 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . 83
9.14 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . 83
9.15 Consummation of the Merger and Refinancing . . . . . . . . . . . 84
SECTION 10. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 84
10.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . . 87
10.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 92
10.05 Advances, Investments and Loans . . . . . . . . . . . . . . . . 94
10.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . 96
10.07 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . 97
10.08 Consolidated Interest Coverage Ratio . . . . . . . . . . . . . 99
10.09 Consolidated Fixed Charge Coverage Ratio . . . . . . . . . . . 99
10.10 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . 100
(iv)
<PAGE>
Page
----
10.11 Limitation on Modifications of Indebtedness; Modifications of
Certificate of Incorporation, By-Laws and Certain Other
Agreements; etc. . . . . . . . . . . . . . . . . . . . . . . . 100
10.12 Limitation on Certain Restrictions on Subsidiaries . . . . . . 101
10.13 Limitation on Issuance of Capital Stock . . . . . . . . . . . . 102
10.14 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.15 Limitation on the Creation of Subsidiaries . . . . . . . . . . 102
10.16 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 11. Events of Default . . . . . . . . . . . . . . . . . . . . . . 103
11.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . . 104
11.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.04 Default Under Other Agreements . . . . . . . . . . . . . . . . 104
11.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . 104
11.06 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
11.07 Security Documents . . . . . . . . . . . . . . . . . . . . . . 106
11.08 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
11.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
11.10 Change of Control . . . . . . . . . . . . . . . . . . . . . . . 106
SECTION 12. Definitions and Accounting Terms . . . . . . . . . . . . . . . 107
12.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 107
SECTION 13. The Administrative Agent . . . . . . . . . . . . . . . . . . . 140
13.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 140
13.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . 140
13.03 Lack of Reliance on the Administrative Agent . . . . . . . . . 140
13.04 Certain Rights of the Administrative Agent . . . . . . . . . . 141
13.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
13.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 142
13.07 The Administrative Agent in its Individual Capacities . . . . . 142
13.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
13.09 Resignation by the Administrative Agent . . . . . . . . . . . . 142
SECTION 14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 143
14.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . . 143
14.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . 144
(v)
<PAGE>
Page
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14.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
14.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . 145
14.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . 147
14.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . 148
14.07 Calculations; Computations . . . . . . . . . . . . . . . . . . 148
14.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . 150
14.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 151
14.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . 151
14.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . 151
14.12 Amendment or Waiver; etc. . . . . . . . . . . . . . . . . . . . 151
14.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
14.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . 153
14.15 Register . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
14.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 154
SECTION 15. Treatment of Extensions of Credit for Purposes of Regulation G
and U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
15.01 Treatment for Purposes of Regulations G and U . . . . . . . . . 155
15.02 Allocation of Credit . . . . . . . . . . . . . . . . . . . . . 155
15.03 Allocation of Collateral . . . . . . . . . . . . . . . . . . . 156
15.04 Allocation of Payments . . . . . . . . . . . . . . . . . . . . 157
15.05 Information . . . . . . . . . . . . . . . . . . . . . . . . . . 157
15.06 Assignments; Participations . . . . . . . . . . . . . . . . . . 157
15.07 Individual Bank Responsibility . . . . . . . . . . . . . . . . 158
15.08 Maximum Outstanding Credit . . . . . . . . . . . . . . . . . . 158
15.09 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 158
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Property
SCHEDULE IV Subsidiaries
SCHEDULE V Existing Indebtedness
SCHEDULE VI Insurance
SCHEDULE VII Existing Liens
SCHEDULE VIII Existing Investments
SCHEDULE IX Undisclosed Liabilities
(vi)
<PAGE>
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Term Note
EXHIBIT B-2 Revolving Note
EXHIBIT B-3 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Opinion of Winston & Strawn (Tender Offer)
EXHIBIT E-2 Opinion of Grimaldi E Associati & Clifford Chance (Tender Offer)
EXHIBIT E-3 Opinion of Vorys, Sater, Seymour and Pease (Tender Offer)
EXHIBIT E-4 Opinion of Winston & Strawn (Merger)
EXHIBIT E-5 Opinion of Grimaldi E Associati & Clifford Chance (Merger)
EXHIBIT E-6 Opinion of Vorys, Sater, Seymour and Pease (Merger)
EXHIBIT F Officers' Certificate
EXHIBIT G-1 Subsidiaries Guaranty
EXHIBIT G-2 Parents Guaranty
EXHIBIT H Pledge Agreement
EXHIBIT I Security Agreement
EXHIBIT J Contribution Agreement
EXHIBIT K Solvency Certificate
EXHIBIT L Consent Letter
EXHIBIT M Intercompany Note
EXHIBIT N Subordination Provisions
EXHIBIT O Assignment and Assumption Agreement
EXHIBIT P Special Funding Procedures Letter
(vii)
<PAGE>
CREDIT AGREEMENT, dated as of May 1, 1995, among LUXOTTICA U.S.
HOLDINGS CORP., a Delaware corporation (the "Borrower"), the BANKS party hereto
from time to time, and CREDIT SUISSE, as Administrative Agent (all capitalized
terms used herein and defined in Section 12 are used herein as therein defined).
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrower the respective
credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. (a) Subject to and upon the terms and
---------------
conditions set forth herein, each Bank with a Term Loan Commitment severally
agrees to make a loan or loans (each a "Term Loan" and, collectively, the "Term
Loans") to the Borrower, which Term Loans:
(i) may be incurred by the Borrower (x) on the Initial Borrowing
Date and (y) on the Merger Borrowing Date;
(ii) shall, at the option of the Borrower, be incurred and maintained
as, and/or converted into, Base Rate Loans or Eurodollar Loans, provided
--------
that (x) except as otherwise specifically provided in Section 1.10(b), all
Term Loans comprising the same Borrowing shall at all times be of the same
Type and (y) unless the Administrative Agent has determined that the
Syndication Date has occurred, no more than three Borrowings of Term Loans
to be maintained as Eurodollar Loans may be incurred prior to the 90th day
after the Initial Borrowing Date or, if later, the last day of the Interest
Period applicable to the third Borrowing of Eurodollar Loans referred to in
the succeeding parenthetical (each of which Borrowings of Eurodollar Loans
may only have an Interest Period of one month, and the first of which
Borrowings may only be made on a single date, on or prior to the fifth day
following the Initial Borrowing Date, the second of which
<PAGE>
Borrowings may only be made on the last day of the Interest Period of the
first such Borrowing and the third of which Borrowings may only be made on
the last day of the Interest Period of the second such Borrowing); and
(iii) shall not exceed for any Bank, in initial principal amount for
the Term Loans being made by such Bank on any such Term Loan Borrowing
Date, that amount which equals the Term Loan Commitment of such Bank as in
effect on such Term Loan Borrowing Date (before giving effect to any
reductions thereto on such date pursuant to Section 3.03(b)(i) or (ii) but
after giving effect to any reductions thereto on or prior to such date
pursuant to Section 3.03(b)(iii)).
Once repaid, Term Loans incurred hereunder may not be reborrowed.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a Revolving Loan Commitment severally agrees, at any time and
from time to time on and after the Initial Borrowing Date and prior to the Final
Maturity Date, to make a loan or loans (each a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower, which Revolving Loans:
(i) shall, at the option of the Borrower, be incurred and maintained
as, and/or converted into, Base Rate Loans or Eurodollar Loans, provided
--------
that (x) except as otherwise specifically provided in Section 1.10(b), all
Revolving Loans comprising the same Borrowing shall at all times be of the
same Type and (y) unless the Administrative Agent has determined that the
Syndication Date has occurred, no more than three Borrowings of Revolving
Loans to be maintained as Eurodollar Loans may be incurred prior to the
90th day after the Initial Borrowing Date, or, if later, the last day of
the Interest Period applicable to the third Borrowing of Eurodollar Loans
referred to in the succeeding parenthetical (each of which Borrowings of
Eurodollar Loans may only have an Interest Period of one month, and the
first of which Borrowings may only be made on the same date as the initial
Borrowing of Term Loans that are maintained as Eurodollar Loans, the second
of which Borrowings may only be made on the last day of the Interest Period
of the first such Borrowing and the third of which Borrowings may only be
made on the last day of the Interest Period of the second such Borrowing);
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
-2-
<PAGE>
(iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of (x) such
Bank's Adjusted RL Percentage and (y) the sum of (I) the amount of all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) at such time and (II) the aggre-
gate principal amount of all Swingline Loans (exclusive of Swingline Loans
which are repaid with the proceeds of, and simultaneously with the incur-
rence of, the respective incurrence of Revolving Loans) then outstanding,
equals the Adjusted Available Revolving Loan Commitment of such Bank at
such time;
(iv) shall not exceed for all Banks at any time outstanding prior to
the Merger Borrowing Date that aggregate principal amount which, when added
to (x) the amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time,
(y) the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) then
outstanding and (z) the aggregate principal amount of all Term Loans then
outstanding, exceeds an amount equal to the Maximum Exposure Amount; and
(v) shall not exceed for all Banks at any time outstanding
that aggregate principal amount which, when added to (x) the amount
of all Letter of Credit Outstandings (exclusive of Unpaid Drawings
which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at
such time and (y) the aggregate principal amount of all Swingline
Loans (exclusive of Swingline Loans which are repaid with the
proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) then outstanding, exceeds
an amount equal to the Total Available Revolving Loan Commitment
then in effect.
Notwithstanding anything to the contrary contained in this Agreement, Revolving
Loans shall not be permitted to be incurred on or after the Merger Borrowing
Date unless the full amount of the Total Term Loan Commitment (as originally in
effect pursuant to this Agreement, but after giving effect to any reductions
thereto from time to time pursuant to Sections 3.03(b)(iii) and 4.02(j)) has
been fully utilized through the incurrence of Term Loans pursuant to preceding
Section 1.01(a) in an aggregate amount equal to such Total Term Loan Commitment.
-3-
<PAGE>
(c) Subject to and upon the terms and conditions set forth herein,
the Swingline Bank agrees to make at any time and from time to time after the
Initial Borrowing Date and prior to the Swingline Expiry Date, a loan or loans
(each a "Swingline Loan" and, collectively, the "Swingline Loans") to the
Borrower, which Swingline Loans:
(i) shall be made and maintained as Base Rate Loans;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
(iii) shall not exceed in aggregate principal amount at any time
outstanding prior to the Merger Borrowing Date that aggregate principal
amount which, when added to (x) the amount of all Letter of Credit
Outstandings at such time, (y) the aggregate principal amount of all
Revolving Loans then outstanding and (z) the aggregate principal amount of
all Term Loans then outstanding, exceeds an amount equal to the Maximum
Exposure Amount;
(iv) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of (x) all
Revolving Loans made by Non-Defaulting Banks then outstanding and (y) the
Letter of Credit Outstandings at such time, an amount equal to the Adjusted
Total Available Revolving Loan Commitment at such time (after giving effect
to any changes thereto on such date); and
(v) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount.
The Swingline Bank shall not make any Swingline Loan after receiving a written
notice from the Borrower or the Required Banks stating that a Default or an
Event of Default exists and is continuing until such time as the Swingline Bank
shall have received written notice of (i) rescission of all such notices from
the party or parties originally delivering such notice, (ii) the waiver of such
Default or Event of Default by the Required Banks or (iii) the Administrative
Agent in good faith believes that such Default or Event of Default has ceased to
exist. Notwithstanding anything to the contrary contained in this Agreement,
Swingline Loans shall not be permitted to be incurred on or after the Merger
Borrowing Date unless the full amount of the Total Term Loan Commitment (as
originally in effect pursuant to this Agreement, but after giving effect to any
reductions thereto from time to time pursuant to Sections 3.03(b)(iii) and
4.02(j)) has been fully utilized through the incurrence of
-4-
<PAGE>
Term Loans pursuant to Section 1.01(a) in an aggregate amount equal to such
Total Term Loan Commitment.
(d) On any Business Day, the Swingline Bank may, in its sole discre-
tion, give notice to the Banks that its outstanding Swingline Loans shall be
funded with a Borrowing of Revolving Loans (provided that (x) such notice shall
--------
be deemed to have been automatically given upon the occurrence of a Default or
an Event of Default under Section 11.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 11 and (y) to the extent such
notice is otherwise required to be given, such notice shall be deemed to have
been given on a certain day only if given before 3:00 P.M. (New York time) on
such day), in which case a Borrowing of Revolving Loans constituting Base Rate
Loans (each such Borrowing, a "Mandatory Borrowing") shall be made on the
immediately succeeding Business Day by all Banks with a Revolving Loan
Commitment (without giving effect to any reductions thereto pursuant to the last
paragraph of Section 11) pro rata based on each Bank's Adjusted RL Percentage
--- ----
(determined before giving effect to any termination of the Revolving Loan
Commitments pursuant to the last paragraph of Section 11) and the proceeds
thereof shall be applied directly to the Swingline Bank to repay the Swingline
Bank for such outstanding Swingline Loans. Each such Bank hereby irrevocably
agrees to make Revolving Loans upon one Business Day's notice pursuant to each
Mandatory Borrowing in the amount and in the manner specified in the preceding
sentence and on the date specified in writing by the Swingline Bank
notwithstanding (i) the amount of the Mandatory Borrowing may not comply with
the minimum amount for Borrowings otherwise required hereunder, (ii) whether any
conditions specified in Section 7 are then satisfied, (iii) whether a Default or
an Event of Default then exists, (iv) the date of such Mandatory Borrowing and
(v) the amount of the Total Available Revolving Loan Commitment or the Adjusted
Total Available Revolving Loan Commitment at such time. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise required
above (including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower), then each
such Bank hereby agrees that it shall forthwith purchase (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to such purchase)
from the Swingline Bank such participations in the outstanding Swingline Loans
as shall be necessary to cause such Banks to share in such Swingline Loans
ratably based upon their respective Adjusted RL Percentages (determined before
giving effect to any termination of the Revolving Loan Commitments pursuant to
the last paragraph of Section 11), provided that (x) all interest payable on the
--------
Swingline Loans shall be for the account of the Swingline Bank until the date as
of which the respective participation is required to be purchased and, to the
extent attributable to the purchased
-5-
<PAGE>
participation, shall be payable to the participant from and after such date and
(y) at the time any purchase of participations pursuant to this sentence is
actually made, the purchasing Bank shall be required to pay the Swingline Bank
interest on the principal amount of participation purchased for each day from
and including the day upon which the Mandatory Borrowing would otherwise have
occurred to but excluding the date of payment for such participation, at the
overnight Federal Funds Rate for the first three days and at the rate otherwise
applicable to Revolving Loans maintained as Base Rate Loans hereunder for each
day thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
--------------------------------
amount of each Borrowing of Term Loans shall not be less than $50,000,000;
provided, to the extent that the amount of the Total Term Loan Commitment on the
Merger Borrowing Date (before giving effect to the incurrence of Term Loans on
such date) is less than $50,000,000, Term Loans may be incurred on such date in
the amount of the Total Term Loan Commitment then in effect, provided, further,
--------
that at any time on or after the Merger Borrowing Date the Borrower shall be
permitted to incur (including by way of conversion pursuant to Section 1.06) and
maintain a single Borrowing of Term Loans which are maintained as Eurodollar
Loans at any time in an aggregate principal amount not less than $25,000,000
(but only if no Borrowing of Term Loans of less than $50,000,000 is outstanding
pursuant to the immediately preceding proviso) . The aggregate principal amount
of each Borrowing of Revolving Loans shall be not less than $10,000,000,
provided that (i) Mandatory Borrowings shall be made in the amounts required by
- --------
Section 1.01(d) and (ii) Borrowings of Revolving Loans which are maintained as
Base Rate Loans and the proceeds of which are to be used for the purposes
described in clause (ii) of the penultimate sentence of Section 2.05(a) shall
not be subject to such minimum borrowing amount. The aggregate principal amount
of each Borrowing of Swingline Loans shall not be less than $1,000,000. More
than one Borrowing may occur on the same date, but at no time shall there be
outstanding more than 12 Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
-------------------
incur Loans hereunder (excluding incurrences of Swingline Loans and Mandatory
Borrowings), it shall give the Administrative Agent at its Notice Office at
least one Business Day's prior written (or telephonic notice promptly confirmed
in writing) notice of each Base Rate Loan and at least three Business Days'
prior written (or telephonic notice promptly confirmed in writing) notice of
each Eurodollar Loan to be incurred hereunder, provided that any such notice
--------
shall be deemed to have been given on a certain day only if given before 11:00
A.M. (New York time) on such day. Each such written notice or written
confirmation of telephonic notice (each a "Notice of Borrowing"), except as
otherwise expressly provided in Section 1.10,
-6-
<PAGE>
shall be irrevocable and shall be given by the Borrower in the form of Exhibit
A, appropriately completed to specify the aggregate principal amount of the
Loans to be made pursuant to such Borrowing, the date of such Borrowing (which
shall be a Business Day), whether the Loans being made pursuant to such
Borrowing shall constitute Term Loans or Revolving Loans and whether the Loans
being made pursuant to such Borrowing are to be initially maintained as Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest
Period to be applicable thereto. The Administrative Agent shall promptly give
each Bank which is required to make Loans of the Tranche specified in the
respective Notice of Borrowing, notice of such proposed Borrowing, of such
Bank's proportionate share thereof and of the other matters required by the im-
mediately preceding sentence to be specified in the Notice of Borrowing.
(b)(i) Whenever the Borrower desires to incur Swingline Loans
hereunder, it shall give the Swingline Bank not later than 12:00 Noon (New York
time) on the date that a Swingline Loan is to be incurred, written notice or
telephonic notice promptly confirmed in writing of each Swingline Loan to be
incurred hereunder. Each such notice shall be irrevocable and specify in each
case (A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be incurred pursuant to
such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(d), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 1.01(d).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing of Loans, the Adminis-
trative Agent or the Swingline Bank, as the case may be, may act without
liability upon the basis of telephonic notice of such Borrowing, believed by the
Administrative Agent or the Swingline Bank, as the case may be, in good faith to
be from the Chairman of the Board, the Chief Financial Officer, the President,
or the Controller of the Borrower (or any other officer of the Borrower desig-
nated in writing to the Administrative Agent and the Swingline Bank by the
Chairman of the Board, the Chief Financial Officer or the President as being
authorized to give such notices under this Agreement) prior to receipt of
written confirmation. In each such case, the Borrower hereby waives the right
to dispute the Administrative Agent's and the Swingline Bank's record of the
terms of such telephonic notice of such Borrowing of Loans.
-7-
<PAGE>
1.04 Disbursement of Funds. Except as otherwise specifically pro-
---------------------
vided in the immediately succeeding sentence, no later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 3:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not
later than 12:00 Noon (New York time) on the date specified in Section 1.01(d)),
each Bank with a Commitment of the respective Tranche will make available its
pro rata portion (determined in accordance with Section 1.07) of each such Bor-
- --- ----
rowing requested to be made on such date (or in the case of Swingline Loans, the
Swingline Bank shall make available the full amount thereof). Arrangements may
be made satisfactory to the Borrower, the Administrative Agent and each Bank
whereby the funding of the initial Term Loans by the Banks to the Administrative
Agent shall be made in advance of the Initial Borrowing Date, provided that in
any event, each Bank shall have made arrangements satisfactory to the Borrower,
the Administrative Agent and the Banks (pursuant to the Special Funding
Procedures Letter or otherwise) whereby the funding of the initial Term Loans by
the Banks to the Administrative Agent shall be made in advance of the initial
Borrowing and not later than 12:01 A.M. (New York time) on the Initial Borrowing
Date. All such amounts shall be made available in Dollars and in immediately
available funds at the Payment Office of the Administrative Agent, and the
Administrative Agent will make available to the Borrower at the Payment Office
the aggregate of the amounts so made available by the Banks. Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Administrative
Agent such Bank's portion of any Borrowing to be made on such date, the
Administrative Agent may assume that such Bank has made such amount available to
the Administrative Agent on such date of Borrowing and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Bank, the Administrative Agent
shall be entitled to recover such corresponding amount on demand from such Bank.
If such Bank does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover on demand from such Bank or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative Agent to the
Borrower until the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if recovered from such
Bank, at the overnight Federal Funds Rate and (ii) if recovered from the
Borrower, the rate of interest applicable to the respective Borrowing, as deter-
mined pursuant to
-8-
<PAGE>
Section 1.08. Nothing in this Section 1.04 shall be deemed to relieve any Bank
from its obligation to make Loans hereunder or to prejudice any rights which the
Borrower may have against any Bank as a result of any failure by such Bank to
make Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
-----
and interest on, the Loans made by each Bank shall be evidenced (i) if Term
Loans, by a promissory note duly executed and delivered by the Borrower sub-
stantially in the form of Exhibit B-1, with blanks appropriately completed in
conformity herewith (each a "Term Note" and, collectively, the "Term Notes"),
(ii) if Revolving Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-2, with blanks appropriately
completed in conformity herewith (each a "Revolving Note" and, collectively, the
"Revolving Notes") and (iii) if Swingline Loans, by a promissory note duly exe-
cuted and delivered by the Borrower substantially in the form of Exhibit B-3,
with blanks appropriately completed in conformity herewith (the "Swingline
Note").
(b) The Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank and be dated the Initial
Borrowing Date, (iii) be in a stated principal amount equal to the Term Loan
Commitment of such Bank as in effect on the Initial Borrowing Date (and before
giving effect to any reductions thereto as a result of the making of Term Loans
by such Bank on such date) and be payable in the principal amount of Term Loans
evidenced thereby from time to time, (iv) mature on the Final Maturity Date, (v)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to mandatory repayment as provided in Section 4.02 and
(vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
(c) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank and be dated the Initial
Borrowing Date, (iii) be in a stated principal amount equal to the Revolving
Loan Commitment of such Bank and be payable in the principal amount of the
Revolving Loans evidenced thereby from time to time, (iv) mature on the Final
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(d) The Swingline Note issued to the Swingline Bank shall (i) be exe-
cuted by the Borrower, (ii) be payable to the order of the Swingline Bank and be
-9-
<PAGE>
dated the Initial Borrowing Date, (iii) be in a stated principal amount equal to
the Maximum Swingline Amount and be payable in the principal amount of the
Swingline Loans evidenced thereby from time to time, (iv) mature on the
Swingline Expiry Date, (v) bear interest as provided in the appropriate clause
of Section 1.08 in respect of the Base Rate Loans evidenced thereby, (vi) be
subject to mandatory repayment as provided in Section 4.02 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation or endorsement shall not affect the Borrower's
obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert, on
-----------
any Business Day occurring on or after the Initial Borrowing Date, all or a por-
tion equal to at least (x) in the case of a conversion of Term Loans,
$50,000,000 (or $25,000,000 to the extent permitted by the second proviso of the
first sentence of Section 1.02) and (y) in the case of a conversion of Revolving
Loans, $10,000,000 of the outstanding principal amount of Loans (other than
Swingline Loans, which may not be converted pursuant to this Section 1.06) made
pursuant to one or more Borrowings (so long as of the same Tranche) of one Type
of Loan into a Borrowing (of the same Tranche) of another Type of Loan; pro-
----
vided, that (i) except as otherwise provided in Section 1.10(b), Eurodollar
- -----
Loans may be converted into Base Rate Loans only on the last day of an Interest
Period applicable to the Loans being converted and no such partial conversion of
Eurodollar Loans shall reduce the outstanding principal amount of such
Eurodollar Loans made pursuant to a single Borrowing to less than (x)
$50,000,000 (or $25,000,000 to the extent permitted by the second proviso of the
first sentence of Section 1.02) in the case of Term Loans, and (y) $10,000,000
in the case of Revolving Loans, (ii) Base Rate Loans may only be converted into
Eurodollar Loans if no Default or Event of Default is in existence on the date
of the conversion, (iii) unless the Administrative Agent has determined that the
Syndication Date has occurred, prior to the 90th day after the Initial Borrowing
Date, conversions of Base Rate Loans into Eurodollar Loans may only be made if
any such conversion is effective on the first day of the first, second or third
Interest Period referred to in clause (y) of each of Sections 1.01(a)(ii) and
1.01(b)(i) and so long as such conversion does not result in a greater number of
Borrowings of Eurodollar Loans prior to the 90th day after the Initial Borrowing
Date as are permitted under Sections 1.01(a)(ii) and 1.01(b)(i) and (iv) no
conversion pursuant to this Section 1.06 shall result in a greater number of
-10-
<PAGE>
Borrowings of Eurodollar Loans than is permitted under Section 1.02. Each such
conversion shall be effected by the Borrower by giving the Administrative Agent
at its Notice Office prior to 11:00 A.M. (New York time) at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
(each a "Notice of Conversion") specifying the Loans to be so converted, the
Borrowing(s) pursuant to which such Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans. Upon any such conversion the proceeds
thereof will be deemed to be applied directly on the day of such conversion to
prepay the outstanding principal amount of the Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Term Loans and Revolving
-------------------
Loans under this Agreement shall be incurred from the Banks pro rata on the
--- ----
basis of their Term Loan Commitments or Revolving Loan Commitments, as the case
may be; provided, that all Borrowings of Revolving Loans made pursuant to a
--------
Mandatory Borrowing shall be incurred from the Banks with a Revolving Loan
Commitment pro rata on the basis of their Adjusted RL Percentages. It is
--- ----
understood that no Bank shall be responsible for any default by any other Bank
of its obligation to make Loans hereunder and that each Bank shall be obligated
to make the Loans provided to be made by it hereunder, regardless of the failure
of any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in respect
--------
of the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Base Rate Loan and (ii) the
conversion of such Base Rate Loan to a Eurodollar Loan pursuant to Section 1.06,
at a rate per annum which shall be equal to the sum of the Applicable Margin
plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrower until the earlier of (i) the maturity (whether by
acceleration or otherwise) of such Eurodollar Loan and (ii) the conversion of
such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10,
as applicable, at a rate per annum which shall, during each Interest Period
applicable thereto, be equal to the sum of the Applicable Margin plus the
Eurodollar Rate for such Interest Period.
-11-
<PAGE>
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(i) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
from time to time and (ii) the rate which is 2% in excess of the rate then borne
by such Loans, in each case with such interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, provided that if any Base Rate Loan is converted into a Eurodollar Loan
prior to the respective Quarterly Payment Date, interest on the portion so
converted shall be payable on the date of such conversion, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, on any repayment or prepayment (except volun-
tary prepayments of Revolving Loans and Swingline Loans maintained as Base Rate
Loans where the Total Revolving Loan Commitment has not been, and is not then
being, terminated) (on the amount repaid or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for the respective Interest Period or
Interest Periods and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of Borrowing
----------------
or Notice of Conversion in respect of the making of, or conversion into, any
Eurodollar Loan (in the case of the initial Interest Period applicable thereto)
or on the third Business Day prior to the expiration of an Interest Period
applicable to such Eurodollar Loan (in the case of any subsequent Interest
Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period (each an "Interest
Period") applicable to such Eurodollar Loan, which Interest Period shall, at the
option of the Borrower (but otherwise subject to the provisions of Sections
1.01(a)(ii)(y), 1.01(b)(i)(y) and 1.06(iii)), be a one, two, three or six-month
period or, to the extent approved by all Banks with Loans of the respective
Tranche, a nine-month or twelve-month period; provided, that:
--------
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
-12-
<PAGE>
(ii) the initial Interest Period for any Eurodollar Loan shall commence
on the date of Borrowing of such Eurodollar Loan (including the date of any
conversion thereto from a Loan of a different Type) and each Interest
Period occurring thereafter in respect of such Eurodollar Loan shall
commence on the day on which the next preceding Interest Period applicable
thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end on
the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided, however, that if any Interest Period for
-------- -------
a Eurodollar Loan would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(v) no Interest Period may be selected at any time when a Default or
an Event of Default is then in existence;
(vi) no Interest Period shall be selected which extends beyond the
Final Maturity Date; and
(vii) no Interest Period in respect of any Borrowing of Term Loans shall
be selected which extends beyond any date upon which a mandatory repayment
of such Term Loans will be required to be made under Section 4.02(b) if the
aggregate principal amount of Term Loans which have Interest Periods which
will expire after such date will be in excess of the aggregate principal
amount of Term Loans then outstanding less the aggregate amount of such
required prepayment.
If upon the expiration of any Interest Period applicable to a Bor-
rowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
---------------------------------
Bank shall have determined (which determination shall, absent manifest error, be
final and
-13-
<PAGE>
conclusive and binding upon all parties hereto but, with respect to clause (i)
below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this Agree-
ment in any applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation of payment to any Bank of the principal of or interest on the
Notes or any other amounts payable hereunder (except for changes with
respect to any tax imposed on or measured by the net income or profits of
such Bank pursuant to the laws in which its principal office or applicable
lending office is located or any subdivision thereof or therein), or (B) a
change in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the com-
putation of the Eurodollar Rate and/or (y) other circumstances since the
date of this Agreement affecting the interbank Eurodollar market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z) impracti-
cable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative
-14-
<PAGE>
Agent notifies the Borrower and the Banks that the circumstances giving rise to
such notice by the Administrative Agent no longer exist, and any Notice of Bor-
rowing or Notice of Conversion given by the Borrower with respect to Eurodollar
Loans which have not yet been incurred (including by way of conversion) shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Bank, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such increased costs
or reductions in amounts received or receivable hereunder (a written notice as
to the additional amounts owed to such Bank, showing the basis for the calcula-
tion thereof, submitted to the Borrower by such Bank in good faith shall, absent
manifest error, be final and conclusive and binding on all the parties hereto)
and (z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Section 1.10(b) as promptly as possible and, in any event,
within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the circum-
stances described in Section 1.10(a)(ii) or (iii), the Borrower may (and in the
case of a Eurodollar Loan affected by the circumstances described in Section
1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then being
made initially or pursuant to a conversion, cancel the respective Borrowing by
giving the Administrative Agent telephonic notice (confirmed in writing) on the
same date that the Borrower was notified by the affected Bank or the
Administrative Agent pursuant to Section 1.10(a)(ii) or (iii), or (y) if the
affected Eurodollar Loan is then outstanding, upon at least three Business Days'
written notice to the Administrative Agent, require the affected Bank to convert
such Eurodollar Loan into a Base Rate Loan; provided, that, if more than one
--------
Bank is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time after the Effective Date any Bank determines that
the introduction of or any change in any applicable law or governmental rule,
regulation, order, guideline, directive or request (whether or not having the
force of law) concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency, will have the effect of increasing the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
based on the existence of such Bank's Commitments hereunder or its obligations
hereunder, then the Borrower shall pay to such Bank, upon its written demand
therefor, such additional amounts as shall be required to compensate such Bank
or such other corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank or such other
corporation as a result of such
-15-
<PAGE>
increase of capital. In determining such additional amounts, each Bank will act
reasonably and in good faith and will use averaging and attribution methods
which are reasonable, provided that such Bank's reasonable good faith deter-
--------
mination of compensation owing under this Section 1.10(c) shall, absent manifest
error, be final and conclusive and binding on all the parties hereto. Each
Bank, upon determining that any additional amounts will be payable pursuant to
this Section 1.10(c), will give prompt written notice thereof to the Borrower,
which notice shall show the basis for calculation of such additional amounts,
although the failure to give any such notice shall not release or diminish any
of the Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c).
1.11 Compensation. The Borrower shall compensate each Bank, upon its
------------
written request (which request shall set forth the basis for requesting such
compensation), for all losses, expenses and liabilities (including, without
limitation, any loss, expense or liability incurred by reason of the liquidation
or reemployment of deposits or other funds required by such Bank to fund its
Eurodollar Loans, but excluding any loss of anticipated profit) which such Bank
may sustain: (i) if for any reason (other than a default by such Bank or the
Administrative Agent) a Borrowing of, or conversion from or into, Eurodollar
Loans does not occur on a date specified therefor in a Notice of Borrowing or
Notice of Conversion (whether or not withdrawn by the Borrower or deemed
withdrawn pursuant to Section 1.10(a)); (ii) if any repayment (including any re-
payment made pursuant to Section 4.01 or 4.02 or a result of an acceleration of
the Loans pursuant to Section 11) or conversion of any of its Eurodollar Loans
occurs on a date which is not the last day of an Interest Period with respect
thereto; (iii) if any prepayment of any of its Eurodollar Loans is not made on
any date specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Loans when re-
quired by the terms of this Agreement or any Note held by such Bank or (y) any
election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that upon the occur-
------------------------
rence of any event giving rise to the operation of Section 1.10(a)(ii) or (iii),
Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank, it
will, if requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Bank) to designate another lending office for any
Loans or Letters of Credit affected by such event; provided, that such designa-
--------
tion is made on such terms that such Bank and its lending office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 1.12 shall affect or postpone any of the obligations of the
Borrower or the right of any Bank provided in Sections 1.10, 2.06 and 4.04.
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<PAGE>
1.13 Replacement of Banks. If any Bank (x) becomes a Defaulting
--------------------
Bank, (y) refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as provided in Section 14.12(b) or (z) is owed increased costs
under Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section
4.04 in a material amount in excess of those being generally charged by the
other Banks, the Borrower shall have the right, if no Default or Event of
Default will exist immediately after giving effect to the respective re-
placement, to either replace such Bank (the "Replaced Bank") with one or more
Eligible Transferee or Transferees (collectively, the"Replacement Bank"), none
of whom shall constitute a Defaulting Bank at the time of such replacement and
each of whom shall be reasonably acceptable to the Administrative Agent or, at
the option of the Borrower, to replace only (a) the Revolving Loan Commitment
(and outstandings pursuant thereto) of the Replaced Bank with an identical
Revolving Loan Commitment provided by the Replacement Bank or (b) in the case of
a replacement as provided in Section 14.12(b) where the consent of the respec-
tive Bank is required with respect to less than all Tranches of its Loans or
Commitments, the Commitments and/or outstanding Term Loans of such Bank in
respect of each Tranche where the consent of such Bank would otherwise be
individually required, with identical Commitments and/or Loans of the respective
Tranche provided by the Replacement Bank; provided, that:
--------
(i) at the time of any replacement pursuant to this Section 1.13, the
Replacement Bank shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 14.04(b) (and with all fees payable pursuant
to said Section 14.04(b) to be paid by the Replacement Bank) pursuant to
which the Replacement Bank shall acquire all of the Commitments and out-
standing Loans of, and participations in Letters of Credit by (or, in the
case of the replacement of only (a) the Revolving Loan Commitment, the
Revolving Loan Commitment and outstanding Revolving Loans and
participations in Letter of Credit Outstandings and/or (b) the Term Loan
Commitment, the Term Loan Commitment and outstanding Term Loans), the
Replaced Bank and, in connection therewith, shall pay to (x) the Replaced
Bank in respect thereof an amount equal to the sum of (A) an amount equal
to the principal of, and all accrued interest on, all outstanding Loans (or
of the Loans of the respective Tranche or Tranches being replaced), (B) an
amount equal to all Unpaid Drawings (unless there are no Unpaid Drawings
with respect to the Tranche or Tranches being replaced) that have been
funded by (and not reimbursed to) such Replaced Bank, together with all
then unpaid interest with respect thereto at such time and (C) an amount
equal to all accrued, but theretofore unpaid, Fees owing to the Replaced
Bank (but
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only with respect to the relevant Tranche, in the case of the replacement
of less than all Tranches of Loans then held by the respective Replaced
Bank) pursuant to Section 3.01, (y) except in the case of the replacement
of only the outstanding Term Loans of a Replaced Bank, the respective
Issuing Bank an amount equal to such Replaced Bank's Adjusted RL Percentage
(in each case for this purpose, determined as if the adjustment described
in clause (y) of the immediately succeeding sentence had been made with
respect to such Replaced Bank) of any applicable Unpaid Drawing (which at
such time remains an Unpaid Drawing) of the relevant Tranche with respect
to Letters of Credit issued by such Issuing Bank to the extent such amount
was not theretofore funded by such Replaced Bank and (z) in the case of any
replacement of Revolving Loan Commitments, the Swingline Bank an amount
equal to such Replaced Bank's Adjusted RL Percentage of any Mandatory
Borrowing to the extent such amount was not theretofore funded by such
Replaced Bank; and
(ii) all obligations of the Borrower owing to the Replaced Bank (other
than those (a) specifically described in clause (i) above in respect of
which the assignment purchase price has been, or is concurrently being,
paid or (b) relating to any Tranche of Loans and/or Commitments of the
respective Replaced Bank which will remain outstanding after giving effect
to the respective replacement) shall be paid in full to such Replaced Bank
concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, recordation of the
assignment on the Register by the Administrative Agent pursuant to Section 14.15
and, if so requested by the Replacement Bank, delivery to the Replacement Bank
of the appropriate Note or Notes executed by the Borrower, (x) the Replacement
Bank shall become a Bank hereunder and, unless the respective Replaced Bank
continues to have outstanding Term Loans, a Term Loan Commitment or a Revolving
Loan Commitment hereunder, the Replaced Bank shall cease to constitute a Bank
hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 14.01
and 14.06), which shall survive as to such Replaced Bank and (y) except in the
case of the replacement of only outstanding Term Loans (or Term Loan
Commitments), the Adjusted RL Percentages of the Banks shall be automatically
adjusted at such time to give effect to such replacement.
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SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions set forth herein, the Borrower may request any Issuing Bank to issue,
at any time and from time to time on and after the Initial Borrowing Date and
prior to the Final Maturity Date, for the account of the Borrower, one or more
irrevocable letters of credit denominated in Dollars in a form customarily used
by such Issuing Bank or in such other form as has been approved by such Issuing
Bank (each such letter of credit, a "Letter of Credit") in support of
obligations described in the definitions of Standby Letter of Credit or Trade
Letter of Credit and any other obligations of the Borrower or any of its
Subsidiaries that are reasonably acceptable to the Administrative Agent and such
Issuing Bank and otherwise permitted to exist pursuant to this Agreement without
giving rise to a Default or an Event of Default.
(b) Subject to and upon the terms and conditions set forth herein,
each Issuing Bank agrees, at any time and from time to time on and after the
Initial Borrowing Date and prior to the Final Maturity Date, following its
receipt of the respective Letter of Credit Request, to issue for the account of
the Borrower one or more Letters of Credit in support of such obligations
described in the definitions of Standby Letter of Credit and Trade Letter of
Credit or any other obligations of the Borrower or any of its Subsidiaries that
are reasonably acceptable to the Administrative Agent and such Issuing Bank and
otherwise permitted to exist pursuant to this Agreement without giving rise to a
Default or an Event of Default, provided that (x) Credit Suisse shall not be
--------
required to issue any Trade Letter of Credit unless it shall have specifically
given its prior consent thereto and (y) no Issuing Bank shall be under any
obligation to issue any Letter of Credit of the types described above if at the
time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction
over such Issuing Bank shall prohibit, or request that such Issuing Bank
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon such Issuing Bank with respect to
such Letter of Credit any restriction or reserve or capital requirement
(for which such Issuing Bank is not otherwise compensated) not in effect on
the date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Bank as of the date hereof
and which such Issuing Bank in good faith deems material to it; or
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(ii) such Issuing Bank shall have received notice from the Required
Banks prior to the issuance of such Letter of Credit of the type described
in the penultimate sentence of Section 2.03(b).
Notwithstanding anything to the contrary contained in this Agreement, Letters of
Credit shall not be permitted to be issued after the Merger Borrowing Date
unless the full amount of the Total Term Loan Commitment (as originally in
effect pursuant to this Agreement, but after giving effect to any reductions
thereto from time to time pursuant to Sections 3.03(b)(iii) and 4.02(j)) has
been fully utilized through the incurrence of Term Loans pursuant to Section
1.01(a) in an aggregate amount equal to such Total Term Loan Commitment.
(c) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time would
exceed (x) $100,000,000, (y) at any time prior to the Merger Borrowing Date,
when added to the aggregate principal amount of all Swingline Loans, Revolving
Loans and Term Loans then outstanding, an amount equal to the Maximum Exposure
Amount or (z) when added to the aggregate principal amount of all Revolving
Loans made by Non-Defaulting Banks and then outstanding and Swingline Loans then
outstanding, an amount equal to the Adjusted Total Available Revolving Loan
Commitment at such time and (ii) each Letter of Credit shall by its terms term-
inate or be terminable by the respective Issuing Bank on such date that would
result in all drawings thereunder being funded pursuant to the terms thereof
prior to the earlier of (x) (A) in the case of Standby Letters of Credit, the
date which occurs 12 months after the date of the issuance thereof (although any
such Letter of Credit may be extendable for successive periods of up to 12
months, but not beyond the Final Maturity Date, on terms acceptable to the
respective Issuing Bank) and (B) in the case of Trade Letters of Credit, the
date which occurs six months after the date of the issuance thereof and (y) (A)
in the case of Standby Letters of Credit, the date which is five Business Days
prior to the Final Maturity Date and (B) in the case of Trade Letters of Credit,
the date which is thirty Business Days prior to the Final Maturity Date.
2.02 Minimum Stated Amount. The Stated Amount of each Letter of
---------------------
Credit shall be not less than $100,000 or such lesser amount as is acceptable to
the Issuing Bank issuing such Letter of Credit.
2.03 Letter of Credit Requests. (a) Whenever it desires that a
-------------------------
Letter of Credit be issued, the Borrower shall give the Administrative Agent and
the respective Issuing Bank written notice (or telephonic notice confirmed in
writing)
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thereof prior to 12:00 Noon (New York time) at least five Business Days (or such
shorter period as may be acceptable to the Issuing Bank issuing such Letter of
Credit) prior to the proposed date of issuance (which shall be a Business Day)
which written notice shall be in the form of Exhibit C (each a "Letter of Credit
Request"). Each Letter of Credit Request shall include any other documents as
the respective Issuing Bank customarily requires in connection therewith. The
Administrative Agent shall promptly transmit copies of each Letter of Credit
Request received by it from the Borrower to each Bank.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.01(c). Unless the respective Issuing Bank has received notice from the
Required Banks before it issues a Letter of Credit that one or more of the
conditions specified in Section 7 are not then satisfied, or that the issuance
of such Letter of Credit would violate Section 2.01(c), then such Issuing Bank
may issue the requested Letter of Credit for the account of the Borrower in
accordance with such Issuing Bank's usual and customary practices. Upon its
issuance of, or any amendment to, any Letter of Credit, the respective Issuing
Bank shall promptly notify the Administrative Agent of such issuance or
amendment, which notice shall, if requested by the Administrative Agent, be
accompanied by a copy of the Letter of Credit actually issued or amendment
entered into, as the case may be.
2.04 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by any Issuing Bank of any Letter of Credit, the respective Issuing
Bank shall be deemed to have sold and transferred to each Bank with a Revolving
Loan Commitment, other than the respective Issuing Bank (each such Bank, in its
capacity under this Section 2.04, a "Participant"), and each such Participant
shall be deemed irrevocably and unconditionally to have purchased and received
from such Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Adjusted RL Percentage, in
such Letter of Credit, each drawing made thereunder and the obligations of the
Borrower under this Agreement with respect thereto, and any security therefor or
guaranty pertaining thereto. Upon any change in the Revolving Loan Commitments
or Adjusted RL Percentages of the Banks pursuant to Section 1.13 or 14.04 or as
a result of a Bank Default, it is hereby agreed that, with respect to all
outstanding Letters of Credit and Unpaid Drawings, there shall be an automatic
adjustment to the participations pursuant to this Section 2.04 to reflect the
new Adjusted RL Percentages of the assignor and assignee Bank or of all Banks
with Revolving Loan Commitments, as the case may be.
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(b) In determining whether to pay under any Letter of Credit, no
Issuing Bank shall have any obligation relative to the other Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered by the appropriate Person and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit issued by it if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for such
Issuing Bank any resulting liability to the Borrower or any Bank.
(c) In the event that any Issuing Bank makes any payment under any
Letter of Credit issued by it and the Borrower shall not have reimbursed such
amount in full to the respective Issuing Bank pursuant to Section 2.05(a), the
respective Issuing Bank shall promptly notify the Administrative Agent, which
shall promptly notify each Participant of such failure, and each Participant
shall promptly and unconditionally pay to the Administrative Agent for the
account of such Issuing Bank the amount of such Participant's Adjusted RL
Percentage of such unreimbursed payment in Dollars and in same day funds. If
the Administrative Agent so notifies, prior to 12:00 Noon (New York time) on any
Business Day, any Participant required to fund a payment under a Letter of
Credit, such Participant shall make available to the Administrative Agent at the
Payment Office for the account of the respective Issuing Bank in Dollars such
Participant's Adjusted RL Percentage of the amount of such payment on such
Business Day in same day funds. If and to the extent such Participant shall not
have so made its Adjusted RL Percentage of the amount of such payment available
to the Administrative Agent for the account of the respective Issuing Bank, such
Participant agrees to pay to the Administrative Agent for the account of such
Issuing Bank, forthwith on demand, such amount, together with interest thereon,
for each day from such date until the date such amount is paid to such Issuing
Bank at the overnight Federal Funds Rate. The failure of any Participant to
make available to the Administrative Agent for the account of the respective
Issuing Bank its Adjusted RL Percentage of any payment under any Letter of
Credit shall not relieve any other Participant of its obligation hereunder to
make available to the Administrative Agent for the account of such Issuing Bank
its Adjusted RL Percentage of any Letter of Credit on the date required, as
specified above, but no Participant shall be responsible for the failure of any
other Participant to make available to the Administrative Agent for the account
of such Issuing Bank such other Participant's Adjusted RL Percentage of any such
payment.
(d) Whenever any Issuing Bank receives a payment of a reimbursement
obligation as to which the Administrative Agent has received for the account of
such Issuing Bank any payments from the Participants pursuant to clause
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(c) above, such Issuing Bank shall pay to the Administrative Agent and the
Administrative Agent shall pay to each Participant which has paid its Adjusted
RL Percentage thereof, in Dollars and in same day funds, an amount equal to such
Participant's share (based upon the proportionate aggregate amount originally
funded by such Participant to the aggregate amount funded by all Participants)
of the principal amount of such reimbursement obligation and interest thereon
accruing after the purchase of the respective participations.
(e) Upon the written request of any Participant (which written
request shall be made no more often than once a month for any such Participant),
the relevant Issuing Bank shall furnish to such Participant copies of any Letter
of Credit issued by it and such other documentation as may reasonably be
requested by such Participant.
(f) The obligations of the Participants to make payments to the
Administrative Agent for the account of the relevant Issuing Bank with respect
to Letters of Credit shall be irrevocable and not subject to any qualification
or exception whatsoever and shall be made in accordance with the terms and
conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any of
the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right which
Luxottica Group or any of its Subsidiaries may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, any Participant, or any other Person, whether in con-
nection with this Agreement, any Letter of Credit, the transactions contem-
plated herein or any unrelated transactions (including any underlying
transaction between Luxottica Group or such Subsidiary and the beneficiary
named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Credit Documents; or
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(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
--------------------------------------------
agrees to reimburse the respective Issuing Bank, by making payment to the
Administrative Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by such Issuing Bank under any Letter of Credit
(each such amount, so paid until reimbursed, an "Unpaid Drawing"), immediately
after, and in any event on the date of such payment or disbursement, with inter-
est on the amount so paid or disbursed by such Issuing Bank, to the extent not
reimbursed prior to 11:00 A.M. (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but excluding the
date such Issuing Bank was reimbursed by the Borrower therefor at a rate per
annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Base Rate Loans, provided, however, to the extent such
-------- -------
amounts are not reimbursed prior to 1:00 P.M. (New York time) on the third
Business Day following notice to the Borrower by the Administrative Agent or the
respective Issuing Bank of such payment or disbursement, interest shall
thereafter accrue on the amounts so paid or disbursed by such Issuing Bank (and
until reimbursed by the Borrower) at a rate per annum which shall be the Base
Rate in effect from time to time plus the Applicable Margin for Base Rate Loans
plus 2%, in each such case, with interest to be payable by the Borrower on
demand, it being understood and agreed, however, that (i) the notice referred to
in the immediately preceding proviso shall not be required to be given if a
Default or an Event of Default under Section 11.05 shall have occurred and be
continuing and, in such case, interest shall accrue on and after the third
Business Day after the respective Drawing at the rate provided in the
immediately preceding proviso and (ii) the Borrower shall be entitled to incur a
Borrowing of Revolving Loans to repay any such Unpaid Drawing so long as (w) no
Default or Event of Default under Section 11.05 shall have occurred and be
continuing, (x) the Loans have not theretofore been accelerated pursuant to
Section 11, (y) such Borrowing occurs within five Business Days following notice
to the Borrower by the Administrative Agent or the respective Issuing Bank of
such Drawing and (z) the Final Maturity Date has not occurred. The respective
Issuing Bank shall give the Borrower prompt notice of each Drawing under any
Letter of Credit, provided that the failure to give any such notice shall in no
--------
way affect, impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank with respect to drawings on Letters of
Credit (each a "Drawing") (including interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which any Credit Party may have or have had
against any Bank
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(including in its capacity as issuer of the Letter of Credit or as Participant),
or any nonapplication or misapplication by the beneficiary of the proceeds of
such Drawing, the respective Issuing Bank's only obligation to the Borrower
being to confirm that any documents required to be delivered under such Letter
of Credit appear to have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by any Issuing Bank under or in connection with any
Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for such Issuing Bank any resulting
liability to the Borrower.
2.06 Increased Costs. If at any time after the Effective Date any
---------------
Issuing Bank or any Participant determines that the introduction of or any
change in any applicable law, rule, regulation, order, guideline or request or
in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Issuing Bank or any Participant with any request or directive by any such
authority (whether or not having the force of law), shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against Letters of Credit issued by any Issuing Bank or participated
in by any Participant, or (ii) impose on any Issuing Bank or any Participant any
other conditions relating, directly or indirectly, to this Agreement or any
Letter of Credit; and the result of any of the foregoing is to increase the cost
to any Issuing Bank or any Participant of issuing, maintaining or participating
in any Letter of Credit or reduce the amount of any sum received or receivable
by any Issuing Bank or any Participant hereunder or reduce the rate of return on
its capital with respect to Letters of Credit (except for changes in the rate of
tax on, or determined by reference to, the net income or profits of such Issuing
Bank or such Participant pursuant to the laws of the United States of America,
the jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein), but
without duplication of any amounts payable in respect of Taxes pursuant to
Section 4.04(a), then, upon demand to the Borrower by such Issuing Bank or any
Participant (a copy of which demand shall be sent by such Issuing Bank or such
Participant to the Administrative Agent), the Borrower agrees to pay to such
Issuing Bank or such Participant such additional amount or amounts as will com-
pensate such Issuing Bank or such Participant for such increased cost or
reduction in the amount receivable or reduction on the rate of return on its
capital. Such Issuing Bank or any Participant, upon determining that any add-
itional amounts will be payable pursuant to this Section 2.06, will give prompt
written notice thereof to the Borrower, which notice shall include a certificate
submitted to the Borrower by such Issuing Bank or such Participant (a copy of
which certificate shall be sent by such Issuing Bank or the Participant to the
Administrative Agent), setting forth in reasonable detail the basis
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for the calculation of such additional amount or amounts necessary to compensate
such Issuing Bank or such Participant. The certificate required to be delivered
pursuant to this Section 2.06 shall, if delivered in good faith and absent
manifest error, be final and conclusive and binding on the Borrower.
SECTION 3. Commitment Commission; Fees; Reductions of Commitment.
-----------------------------------------------------
3.01 Fees. (a) The Borrower agrees to pay to the Administrative
----
Agent for distribution to each Non-Defaulting Bank a commitment commission (the
"Commitment Commission") for the period from the Effective Date to and including
the Final Maturity Date (or such earlier date as the Total Commitment shall have
been terminated), computed at a rate for each day equal to the Applicable
Commitment Commission Percentage on the daily average Aggregate Unutilized
Commitment of such Non-Defaulting Bank. Accrued Commitment Commission shall be
due and payable quarterly in arrears on each Quarterly Payment Date and on the
Final Maturity Date or such earlier date upon which the Total Commitment shall
have been terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment (based
on their respective Adjusted RL Percentages) a fee in respect of each Letter of
Credit issued hereunder (the "Letter of Credit Fee"), for the period from and
including the date of issuance of such Letter of Credit to and including the
termination of such Letter of Credit, computed at a rate per annum equal to the
Applicable Margin for Revolving Loans maintained as Eurodollar Loans, as in
effect from time to time, on the daily average Stated Amount of such Letter of
Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the termination of the Total
Revolving Loan Commitment or the first day thereafter upon which no Letters of
Credit remain outstanding.
(c) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, a facing fee in respect of each Letter of Credit issued for its
own account hereunder (the "Facing Fee"), for the period from and including the
date of issuance of such Letter of Credit to and including the termination of
such Letter of Credit, computed at a rate per annum that has been separately
agreed to by the Borrower, the Administrative Agent and such Issuing Bank on the
daily average Stated Amount of such Letter of Credit. Accrued Facing Fees shall
be due and payable quarterly in arrears on each Quarterly Payment Date and upon
the termination
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of the Total Revolving Loan Commitment or the first day thereafter upon which no
Letters of Credit remain outstanding.
(d) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, upon each drawing under, issuance of, or amendment to, any
Letter of Credit, such amount as shall at the time of such event be the admin-
istrative charge which such Issuing Bank is generally imposing in connection
with such occurrence with respect to letters of credit.
(e) The Borrower agrees to pay to the Administrative Agent, for its
own account, such other fees as have been agreed to in writing by the Borrower
and the Administrative Agent.
3.02 Voluntary Termination of Unutilized Commitments. (a) Upon at
-----------------------------------------------
least two Business Days' prior written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Banks), the Borrower shall have the right, at any time or from time
to time prior to the Initial Borrowing Date and after the Merger Borrowing Date,
without premium or penalty, to terminate the Total Unutilized Revolving Loan
Commitment, in whole or in part, in integral multiples of $10,000,000 in the
case of partial reductions; provided, that (i) any reduction to the Total
--------
Unutilized Revolving Loan Commitment prior to the Initial Borrowing Date may
only be made in connection with a termination in full of the Total Commitments,
(ii) each such reduction shall apply proportionately to permanently reduce the
Revolving Loan Commitment of each Bank with such a Commitment and (iii) the
reduction to the Total Unutilized Revolving Loan Commitment shall in no case be
in an amount which would cause the Revolving Loan Commitment of any Bank to be
reduced by an amount which exceeds the remainder of (x) the Unutilized Revolving
Loan Commitment of such Bank as in effect immediately before giving effect to
such reduction minus (y) such Bank's Adjusted RL Percentage of the aggregate
principal amount of Swingline Loans then outstanding. The Borrower shall not
have the right to voluntarily terminate or reduce the Total Term Loan Commitment
except in connection with a termination in full of the Total Commitments prior
to the occurrence of the Initial Borrowing Date, in which event any termination
of the Total Term Loan Commitment shall be effected as otherwise provided above
with respect to terminations of the Total Unutilized Revolving Loan Commitment.
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
14.12(b), the Borrower shall have the right, upon five Business Days' prior
written
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notice to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), to terminate
all of the Revolving Loan Commitment and/or, if prior to the Merger Borrowing
Date, the Term Loan Commitment of such Bank, so long as all Loans, together with
accrued and unpaid interest, Fees and all other amounts, owing to such Bank
(other than amounts owing in respect of Term Loans maintained by such Bank, if
such Term Loans are not being repaid pursuant to Section 14.12(b)) are repaid
concurrently with the effectiveness of such termination (at which time Schedule
I shall be deemed modified to reflect such changed amounts), and at such time,
unless the respective Bank continues to have outstanding Term Loans hereunder,
such Bank shall no longer constitute a "Bank" for purposes of this Agreement,
except with respect to indemnifications under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 14.01 and 14.06), which shall
survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total Commitment
----------------------------------
(and the Term Loan Commitment and the Revolving Loan Commitment of each Bank)
shall terminate in its entirety on (x) July 3, 1995 unless the Initial Borrowing
Date shall have occurred and (y) the 120th day following the Initial Borrowing
Date unless the Merger shall have been consummated in accordance with the terms
of this Agreement on or prior to such date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Term Loan Commitment shall (i) be reduced on
each date on which Term Loans are incurred (after giving effect to the making of
Term Loans on such date), in an amount equal to the aggregate principal amount
of Term Loans incurred on such date, (ii) terminate in its entirety (to the
extent not theretofore terminated) at 11:59 p.m. (New York time) on the Merger
Borrowing Date and (iii) prior to the termination of the Total Term Loan
Commitment, be reduced from time to time to the extent required by Section 4.02.
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment shall be permanently
reduced from time to time to the extent required by Section 4.02.
(d) Each reduction to the Total Term Loan Commitment and the Total
Revolving Loan Commitment pursuant to this Section 3.03 (or pursuant to Section
4.02) shall be applied proportionately to reduce the Term Loan Commitment or the
Revolving Loan Commitment, as the case may be, of each Bank with such a Com-
mitment.
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<PAGE>
SECTION 4. Prepayments; Payments; Taxes.
----------------------------
4.01 Voluntary Prepayments. (a) The Borrower shall have the right
---------------------
to prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent prior to 12:00
Noon (New York time) at its Notice Office (x) at least one Business Day's
prior written notice (or telephonic notice promptly confirmed in writing)
of its intent to prepay Base Rate Loans (or same day notice in the case of
Swingline Loans, provided such notice is given prior to 11:00 A.M. (New
--------
York time)) and (y) at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, whether Term Loans, Revolving Loans or Swingline Loans
shall be prepaid, the amount of such prepayment and the Types of Loans to
be prepaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice the Administrative Agent
shall promptly transmit to each of the Banks;
(ii) each prepayment shall be in an aggregate principal amount of at
least $5,000,000 (or $500,000 in the case of Swingline Loans); provided,
--------
that if any partial prepayment of Eurodollar Loans made pursuant to any
Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than (1) in the case of Term Loans,
$50,000,000 (or $25,000,000 to the extent permitted by the second proviso
of the first sentence of Section 1.02) and (2) in the case of Revolving
Loans, $10,000,000, then such Borrowing shall be converted at the end of
the then current Interest Period into a Borrowing of Base Rate Loans and
any election of an Interest Period with respect thereto given by the
Borrower shall have no force or effect;
(iii) each prepayment in respect of any Loans made pursuant to a Bor-
rowing shall be applied pro rata among such Loans; and
--- ----
(iv) at the Borrower's election in connection with any prepayment of
Revolving Loans pursuant to this Section 4.01, such prepayment shall not be
applied to any Revolving Loan of a Defaulting Bank.
(b) In the event of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks as provided in Section
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<PAGE>
14.12(b), the Borrower shall have the right, upon five Business Days' prior
written notice to the Administrative Agent at its Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks) to repay
all Loans, together with accrued and unpaid interest, Fees, and other amounts
owing to such Bank (or owing to such Bank with respect to each Tranche which
gave rise to the need to obtain such Bank's individual consent) in accordance
with said Section 14.12(b) so long as (A) in the case of the repayment of
Revolving Loans of any Bank pursuant to this clause (b) the Revolving Loan
Commitment of such Bank is terminated concurrently with such repayment (at which
time Schedule I shall be deemed modified to reflect the changed Revolving Loan
Commitments), (B) in the case of the repayment of Term Loans of any Bank
pursuant to this clause (b) the Term Loan Commitment of such Bank (to the extent
not theretofore terminated) is terminated concurrently with such repayment (at
which time Schedule I shall be deemed modified to reflect the changed Term Loan
Commitments) and (C) the consents required by Section 14.12(b) in connection
with the repayment pursuant to this clause (b) have been obtained.
(c) Each prepayment of principal of Term Loans pursuant to this
Section 4.01 (excluding prepayments of Term Loans made pursuant to Section
4.01(b)) shall be applied to reduce the then remaining Scheduled Repayments on a
pro rata basis (based upon the then remaining principal amount of Scheduled
- --- ----
Repayments after giving effect to all prior reductions thereto).
4.02 Mandatory Repayments and Commitment Reductions. (a)(i) On any
----------------------------------------------
day on which the sum of the aggregate outstanding principal amount of the
Revolving Loans made by Non-Defaulting Banks, Swingline Loans and the Letter of
Credit Outstandings exceeds the Adjusted Total Available Revolving Loan
Commitment as then in effect, the Borrower shall prepay on such day principal of
the Swingline Loans and, after the Swingline Loans have been repaid in full,
Revolving Loans of Non-Defaulting Banks in an amount equal to such excess. If,
after giving effect to the prepayment of all outstanding Swingline Loans and all
outstanding Revolving Loans of Non-Defaulting Banks, the aggregate amount of the
Letter of Credit Outstandings exceeds the Adjusted Total Available Revolving
Loan Commitment as then in effect, the Borrower shall pay to the Administrative
Agent at the Payment Office on such day an amount of cash or Cash Equivalents
equal to the amount of such excess, such cash or Cash Equivalents to be held as
security for all obligations of the Borrower to Non-Defaulting Banks hereunder
in a cash collateral account to be established by the Administrative Agent.
(ii) On any day on which the aggregate outstanding principal amount of
the Revolving Loans made by any Defaulting Bank exceeds the Available
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<PAGE>
Revolving Loan Commitment of such Defaulting Bank, the Borrower shall prepay on
such day principal of Revolving Loans of such Defaulting Bank in an amount equal
to such excess.
(iii) On any day prior to the Merger Borrowing Date on which the sum of
the aggregate outstanding principal amount of Term Loans, Revolving Loans,
Swingline Loans and Letter of Credit Outstandings exceeds the Maximum Exposure
Amount, the Borrower shall prepay on such day principal of the Swingline Loans
and, after the Swingline Loans have been repaid in full, Revolving Loans of Non-
Defaulting Banks in an amount equal to such excess.
(b) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
Borrower shall be required to repay that principal amount of Term Loans, to the
extent then outstanding, as is set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01 and 4.02(j),
a "Scheduled Repayment," and each such date, a "Scheduled Repayment Date"):
Scheduled Repayment Date Amount
------------------------ ------
December 31, 1995 $ 25,000,000
March 31, 1996 $ 25,000,000
June 30, 1996 $ 25,000,000
September 30, 1996 $ 25,000,000
Special Scheduled Repayment Date $425,000,000
December 31, 1996 $ 25,000,000
March 31, 1997 $ 25,000,000
June 30, 1997 $ 25,000,000
September 30, 1997 $ 25,000,000
December 31, 1997 $ 25,000,000
March 31, 1998 $ 25,000,000
June 30, 1998 $ 25,000,000
September 30, 1998 $ 25,000,000
December 31, 1998 $ 25,000,000
March 31, 1999 $ 25,000,000
June 30, 1999 $ 30,000,000
September 30, 1999 $ 30,000,000
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<PAGE>
December 31, 1999 $ 30,000,000
March 31, 2000 $ 25,000,000
June 30, 2000 $ 25,000,000
September 30, 2000 $ 25,000,000
December 31, 2000 $ 25,000,000
March 31, 2001 $ 25,000,000
June 30, 2001 $ 10,000,000
In the event that less than the Total Term Loan Commitment is utilized
to finance the Acquisition and to pay the fees and expenses incurred in
connection with the Transaction, the amount not so utilized shall result in each
of the Scheduled Repayments being reduced on a pro rata basis (based upon the
--- ----
then remaining principal amount of such Scheduled Repayments after giving effect
to all prior reductions thereto).
(c) In addition to any other mandatory repayments or commitment re-
ductions pursuant to this Section 4.02, on each date after the Effective Date
upon which Luxottica Group or any of its Subsidiaries receives any proceeds from
capital contributions or any sale or issuance of its equity (including, without
limitation, the issuance of capital stock, or options or warrants to purchase
such capital stock) or from the exercise of options or warrants to purchase such
equity (other than proceeds (i) received from capital contributions to any
Subsidiary of Luxottica Group made by Luxottica Group or any of its Subsidiaries
and (ii) in an aggregate amount not to exceed $10,000,000 in any fiscal year of
Luxottica Group) an amount equal to 100% of the cash proceeds of the respective
capital contribution, sale or issuance (net of underwriting discounts and
commissions and other direct costs associated therewith, including, without
limitation, legal fees and expenses) shall be applied as a mandatory repayment
and/or commitment reduction in accordance with the requirements of Sections
4.02(j) and (k).
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Effective Date
upon which Luxottica Group or any of its Subsidiaries receives any proceeds from
any incurrence by Luxottica Group or any of its Subsidiaries of Indebtedness for
borrowed money (other than Indebtedness for borrowed money permitted to be
incurred pursuant to Section 10.04 as such Section is in effect on the Effective
Date), an amount equal to 100% of the cash proceeds (net of underwriting dis-
counts and commissions and other reasonable costs associated therewith
including, without limitation, legal fees and expenses) of the respective
incurrence of Indebtedness shall
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<PAGE>
be applied as a mandatory repayment and/or commitment reduction in accordance
with the requirements of Sections 4.02(j) and (k).
(e) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Effective Date
upon which Luxottica Group or any of its Subsidiaries (including as Subsidiaries
of Luxottica Group, for purposes of this Section 4.02(e), U.S. Shoe and its
Subsidiaries as if such Persons were Subsidiaries of Luxottica Group at all
times on and after the Effective Date) receives any proceeds from any sale of
assets (other than sales of assets to the extent permitted by Section 10.02
(iii), (iv), (vii), (viii) and (xiv)), an amount equal to 100% of the Net Sale
Proceeds therefrom shall be applied as a mandatory repayment and/or commitment
reduction in accordance with the requirements of Sections 4.02(j) and (k),
provided that (i) the Net Sale Proceeds from the sale of all or any portion of
the Footwear Division or Apparel Division or from any other sale of assets of
U.S. Shoe and its Subsidiaries not excluded pursuant to following clause (ii) of
this proviso, to the extent that any such sale occurs on or after the Effective
Date and prior to the Merger Borrowing Date, shall not be required to be applied
in accordance with the requirements of such Sections 4.02(j) and (k) until two
Business Days after the Merger Borrowing Date, and until such time the Borrower
shall cause U.S. Shoe to deposit and maintain such Net Sale Proceeds in a
segregated account of U.S. Shoe that is maintained with a third party financial
institution in a manner satisfactory to the Administrative Agent (which cash
shall be permitted to be invested in Cash Equivalents with maturities no later
than the Merger Borrowing Date) and (ii) the Net Sale Proceeds from the sale of
any assets (but not including assets comprising all or any material part of the
Footwear Division or Apparel Division), and in no event including any assets
sold, or to be sold, pursuant to the Nine West Agreement) in the ordinary course
of business by U.S. Shoe and its Subsidiaries on and after the Effective Date
and prior to the Initial Borrowing Date shall not be required to be applied in
accordance with the requirements of this Section 4.02(e) if, but only if, the
consent of Luxottica Group or any of its Subsidiaries is not required to be
given pursuant to Section 5.2 of the Merger Agreement in respect of such sale.
(f) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each Excess Cash Payment Date, an amount equal to the
Applicable Excess Cash Flow Recapture Percentage of the Excess Cash Flow for the
relevant Excess Cash Payment Period shall be applied as a mandatory repayment in
accordance with the requirements of Sections 4.02(j) and (k).
(g) In addition to any other mandatory repayments or commitment re-
ductions pursuant to this Section 4.02, within 10 days following each date after
the
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<PAGE>
Effective Date on which Luxottica Group or any of its Subsidiaries receives any
proceeds from any Recovery Event, an amount equal to 100% of the proceeds of
such Recovery Event (net of reasonable costs incurred in connection with such
Recovery Event) shall be applied as a mandatory repayment and/or commitment
reduction in accordance with the requirements of Sections 4.02(j) and (k); pro-
----
vided, that (i) so long as no Default or Event of Default then exists and such
- -----
proceeds are less than $10,000,000, such proceeds shall not be required to be so
applied as provided in such Sections 4.02(j) and (k) and (ii) in the event such
proceeds are equal to or greater than $10,000,000 and so long as no Default or
Event of Default then exists, such proceeds shall not be required to be so
applied on such date to the extent that the Borrower has delivered a certificate
to the Administrative Agent on or prior to such date stating that such proceeds
shall be used to replace or restore any properties or assets in respect of which
such proceeds were paid within a period specified in such certificate not to
exceed 180 days after the date of receipt of such proceeds (which certificate
shall set forth the estimates of the proceeds to be so expended); and provided
--------
further, that if all or any portion of such proceeds not required to be so
- -------
applied pursuant to clause (ii) of the immediately preceding proviso are not so
used within the period specified in the relevant certificate furnished pursuant
to the immediately preceding proviso, such remaining portion not used shall be
applied on the last day of such specified period as a mandatory repayment and/or
commitment reduction in accordance with the requirements of Sections 4.02(j) and
(k).
(h) On the 120th day following the Initial Borrowing Date, unless the
Merger shall have occurred on or prior to such date, the Borrower shall be
required to repay on such date all outstanding Loans.
(i) On the 30th day preceding any anniversary of the Merger Borrowing
Date, if a Clean-Down Period shall not have occurred since the Merger Borrowing
Date or the last anniversary of the Merger Borrowing Date, as applicable, the
Borrower shall repay outstanding Swingline Loans and/or Revolving Loans in an
amount necessary to cause the Total Unutilized Revolving Loan Commitment to be
equal to or greater than $150,000,000 for the entire Clean-Down Period.
(j) Each amount required to be applied by Sections 4.02(c), (d), (e),
(f) and (g) in accordance with this Section 4.02 (j) shall be applied (i) first,
to repay the outstanding principal amount of Term Loans, (ii) second, to the
extent in excess thereof, to reduce the Total Term Loan Commitment, and (iii)
third, to the extent in excess thereof, to reduce the Total Revolving Loan
Commitment (it being understood that in the case of any reduction to the Total
Term Loan Commitment
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<PAGE>
and/or the Total Revolving Loan Commitment as provided in the immediately
preceding clauses (ii) and (iii), the Total Term Loan Commitment and/or the
Total Revolving Loan Commitment shall be reduced by the amount required to be so
applied by such Sections 4.02(c), (d), (e), (f) and (g) but that any cash
received by Luxottica Group or such Subsidiary will be retained by such Person
except to the extent that such cash is otherwise required to be applied as
provided in Section 4.02(a) as a result of any reduction to the Total Revolving
Loan Commitment). The amount of each principal repayment of Term Loans (and the
amount of each reduction to the Total Term Loan Commitment) made as required by
this Section 4.02(j) shall be applied to reduce the then remaining Scheduled
Repayments on a pro rata basis (based upon the then remaining principal amount
--- ----
of Scheduled Repayments after giving effect to all prior reductions thereto),
provided that the Net Sale Proceeds from the sale of all or any portion of U.S.
Shoe's Footwear Division (including the proceeds received from the sale of the
warrants to purchase shares of common stock of Nine West (or the common stock of
Nine West issued upon the exercise of such warrants) as permitted under Section
10.02(xiii)) and Apparel Division shall be applied (i) first, to reduce the
Scheduled Repayment which is due on the Special Scheduled Repayment Date and
(ii) second, to the extent in excess thereof, as provided above in this sentence
without giving effect to this proviso.
(k) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans of the respective Tranche
which are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings of the respective Tranche pursuant to which made,
provided that: (i) repayments of Eurodollar Loans pursuant to this Section 4.02
- --------
may only be made on the last day of an Interest Period applicable thereto unless
all Eurodollar Loans of the respective Tranche with Interest Periods ending on
such date of required repayment and all Base Rate Loans of the respective
Tranche have been paid in full; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than (x) in the case of Term
Loans, $50,000,000 (or $25,000,000 to the extent permitted by the second proviso
of the first sentence of Section 1.02) and (y) in the case of Revolving Loans,
$10,000,000, such Borrowing shall be converted at the end of the then current
Interest Period into a Borrowing of Base Rate Loans; and (iii) each repayment of
any Loans made pursuant to a Borrowing shall be applied pro rata among such
--- ----
Loans. In the absence of a designation by the Borrower as described in the pre-
ceding sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion with a view, but no obligation, to minimize
breakage costs owing under Section 1.11.
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<PAGE>
(l) Notwithstanding anything to the contrary contained in this
Agreement, (i) all then outstanding Swingline Loans shall be repaid in full on
the Swingline Expiry Date and (ii) all other then outstanding Loans shall be
repaid in full on the Final Maturity Date.
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments made under this Agreement or any Note shall be
made to the Administrative Agent for the account of the Bank or Banks entitled
thereto not later than 12:00 Noon (New York time) on the date when due and shall
be made in Dollars in immediately available funds at the Payment Office of the
Administrative Agent. Whenever any payment to be made hereunder or under any
Note shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with re-
spect to payments of principal, interest shall be payable at the applicable rate
during such extension.
4.04 Net Payments. (a) All payments made by the Borrower hereunder
------------
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but exclud-
ing, except as provided in the second succeeding sentence, any tax imposed on or
measured by the net income or profits of a Bank pursuant to the laws of the
jurisdiction in which it is organized or the jurisdiction in which the principal
office or applicable lending office of such Bank is located or any subdivision
thereof or therein) and all interest, penalties or similar liabilities with
respect thereto (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes"). If any
Taxes are so levied or imposed, the Borrower agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in such Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or profits of such Bank pursuant to the laws of
the jurisdiction in which the principal office or applicable lending office of
such Bank is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or applicable
lending office of such Bank is located and for any withholding of income or
similar taxes imposed by the United States of America as such Bank shall
determine are payable by, or
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<PAGE>
withheld from, such Bank in respect of such amounts so paid to or on behalf of
such Bank pursuant to the preceding sentence and in respect of any amounts paid
to or on behalf of such Bank pursuant to this sentence. The Borrower will
furnish to the Administrative Agent within 45 days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Bank, and reimburse such Bank upon its written request, for
the amount of any Taxes so levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Effective Date, or in the case
of a Bank that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.13 or 14.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) except to the extent provided in clause
(iii) of this Section 4.04(b), two accurate and complete original signed copies
of Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments to be made under this Agreement and under any Note,
(ii) if the Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit D (any such certificate, a "Section 4.04(b)(ii) Certificate") and
(y) two accurate and complete original signed copies of Internal Revenue Service
Form W-8 (or successor form) certifying to such Bank's entitlement to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Note or (iii) two
accurate and complete original signed copies of Internal Revenue Service Form
1001 (or a successor form) certifying to such Bank's entitlement to a reduction
in United States withholding tax with respect to payments to be made under this
Agreement and under any Note pursuant to the provisions of an income tax treaty
to which the United States is a party. In addition, each Bank agrees that from
time to time after the Effective Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate in any
material respect, it will deliver to the Borrower and the Administrative Agent
two new accurate and complete original signed copies of Internal Revenue Service
Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as the
case may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Bank to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Agreement and any Note, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to
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<PAGE>
deliver any such Form or Certificate. Notwithstanding anything to the contrary
contained in Section 4.04(a), but subject to Section 14.04(b) and the
immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes to the extent that such Bank has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete exemption from such
deduction or withholding, (y) the Borrower shall not be obligated pursuant to
Section 4.04(a) hereof to gross-up payments to be made to a Bank in respect of
income or similar taxes imposed by the United States if (I) such Bank has not
provided to the Borrower the Internal Revenue Service Forms required to be
provided to the Borrower pursuant to this Section 4.04(b) or (II) in the case of
a payment, other than interest, to a Bank described in clause (ii) above, to the
extent that such forms do not establish a complete exemption from withholding of
such taxes and (z) the Borrower shall not be obligated pursuant to Section
4.04(a) to gross-up payments made to a Bank providing certification under clause
(iii) above in respect of income or similar taxes imposed by the United States
to the extent that the certifications provided under clause (iii) do not provide
a complete exemption from withholding of such taxes on the Effective Date.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 4.04 and except as set forth in Section 14.04(b), the
Borrower agrees to pay additional amounts and to indemnify each Bank in the
manner set forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any amounts
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes after the Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income or similar Taxes.
(c) If any taxes imposed on any Bank are paid or indemnified against
by the Borrower under this Section 4.04, and such Bank (i) receives a refund of
any amount of taxes paid or reimbursed by the Borrower or (ii) after the payment
of or indemnification for such taxes realized a tax benefit (whether by means of
a credit, deduction or otherwise) by reason of the payment of such taxes which
results in a reduction in the taxes due and payable by such Bank, such Bank
shall pay to the Borrower, as the case may be, an amount equal to the reduction
in taxes due and payable by such Bank attributable to such tax benefit or the
amount of such refund; provided, however, that (x) no Bank is under any
-------- -------
obligation to seek a refund of such taxes and (y) any determination as to
whether a Bank has realized a tax benefit
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<PAGE>
(including whether a tax benefit has been realized as a result of an offset of
other taxes due and payable by such Bank) shall be in the sole discretion of
such Bank.
SECTION 5A. Conditions Precedent to Initial Credit Events. The obli-
---------------------------------------------
gation of each Bank to make Loans, and the obligation of each Issuing Bank to
issue Letters of Credit, on the Initial Borrowing Date, is subject at the time
of the making of such Loans or the issuance of such Letters of Credit to the
satisfaction of the following conditions:
5A.01 Execution of Agreement; Notes. On or prior to the Initial
-----------------------------
Borrowing Date, (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Administrative Agent for the account of each of the
Banks the appropriate Term Note and/or Revolving Note executed by the Borrower
and to the Swingline Bank, the Swingline Note executed by the Borrower, in each
case in the amount, maturity and as otherwise provided herein.
5A.02 Officer's Certificate. On the Initial Borrowing Date, the
---------------------
Administrative Agent shall have received a certificate, dated the Initial
Borrowing Date and signed on behalf of the Borrower by the President or any Vice
President of the Borrower, stating that all of the conditions in Sections 5A.06,
5A.07, 5A.08, 5A.09, 5A.19 and 7.01 have been satisfied on such date.
5A.03 Opinions of Counsel. On the Initial Borrowing Date, the
-------------------
Administrative Agent shall have received from (i) Winston & Strawn, United
States counsel to Luxottica Group and its Subsidiaries, an opinion addressed to
the Administrative Agent and each of the Banks and dated the Initial Borrowing
Date covering the matters set forth in Exhibit E-1, (ii) Grimaldi E Associati
and Clifford Chance, Italian counsel to the Parent Guarantors, an opinion
addressed to the Administrative Agent and each of the Banks and dated the
Initial Borrowing Date covering the matters set forth in Exhibit E-2, (iii)
Vorys, Sater, Seymour and Pease, Ohio counsel to Luxottica Group and the
Borrower, an opinion addressed to the Administrative Agent and each of the Banks
and dated the Initial Borrowing Date covering the matters set forth in Exhibit
E-3 and (iv) local and foreign counsel (satisfactory to the Administrative
Agent) legal opinions each of which (x) shall be addressed to the Administrative
Agent and each of the Banks and dated the Initial Borrowing Date, (y) shall be
required to be in form and substance satisfactory to the Administrative Agent
and (z) shall cover the perfection of the security interests granted pursuant to
the Security Documents and such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably request.
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<PAGE>
5A.04 Corporate Documents; Proceedings; etc. (a) On the Initial
--------------------------------------
Borrowing Date, the Administrative Agent shall have received a certificate from
each Parent Guarantor, the Borrower and each Initial Subsidiary Guarantor, each
dated the Initial Borrowing Date, signed by the President or any Vice President
of such Credit Party, and attested to by the Secretary or any Assistant
Secretary or any other authorized officer of such Credit Party, in the form of
Exhibit F with appropriate insertions, together with copies of the certificate
of incorporation and by-laws (or equivalent organizational documents) of such
Credit Party and the resolutions of such Credit Party referred to in such
certificate, and the foregoing shall be required to be reasonably acceptable to
the Administrative Agent.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Documents shall be required to be satisfactory in form and
substance to the Administrative Agent and the Required Banks, and the
Administrative Agent shall have received all information and copies of all
documents and papers, including records of corporate proceedings, governmental
approvals, good standing certificates and bring-down telegrams or facsimiles, if
any, which the Administrative Agent reasonably may have requested in connection
therewith, such documents and papers where appropriate to be certified by proper
corporate or governmental authorities.
5A.05 Shareholders' Agreements; Existing Indebtedness Agreements; Tax
---------------------------------------------------------------
Sharing Agreements. On the Initial Borrowing Date, there shall have been
- ------------------
delivered to the Administrative Agent true and correct copies of (or, in the
case of the Existing Indebtedness Agreements, the same shall have been made
available for the Administrative Agent's review):
(i) all agreements entered into by any Parent Guarantor, the Borrower
or any of its Domestic Subsidiaries governing the terms and relative rights
of its capital stock and any agreements entered into by shareholders relat-
ing to any such entity with respect to its capital stock (collectively, the
"Shareholders' Agreements");
(ii) all agreements evidencing or relating to Indebtedness of Luxottica
Group or any of its Subsidiaries which is to remain outstanding after
giving effect to the incurrence of Loans on the Initial Borrowing Date
(collectively, the "Existing Indebtedness Agreements") if the aggregate
outstanding principal amount thereof exceeds (or upon the utilization of
any unused commitments may exceed) $5,000,000; and
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(iii) all tax sharing, tax allocation and other similar agreements
entered into by Luxottica Group or any of its Subsidiaries (collectively,
the "Tax Sharing Agreements");
all of which Shareholders' Agreements, Existing Indebtedness Agreements and Tax
Sharing Agreements shall be required to be in form and substance satisfactory to
the Administrative Agent and the Required Banks and shall be in full force and
effect on the Initial Borrowing Date, it being understood and agreed, however,
that Luxottica Group and the Borrower shall only be required to provide copies
of any Shareholders' Agreement, Existing Indebtedness Agreements or Tax Sharing
Agreements with respect to U.S. Shoe and its Subsidiaries to the extent that
such agreements have been made available to (or obtained by) Luxottica Group or
the Borrower.
5A.06 Adverse Change, etc. (a) Since March 2, 1995, nothing shall
--------------------
have occurred (and neither the Administrative Agent nor the Banks shall have
become aware of any facts, conditions or other information not previously known)
which the Administrative Agent or the Required Banks shall determine could
reasonably be expected to have a material adverse effect on (i) the rights or
remedies of the Administrative Agent, the Collateral Agent or the Banks, (ii)
the ability of any Credit Party to perform its respective obligations to the
Administrative Agent, the Collateral Agent and the Banks or (iii) the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Luxottica Group and its Subsidiaries (excluding U.S. Shoe and its
Subsidiaries) taken as a whole, the Borrower and its Subsidiaries (excluding
U.S. Shoe and its Subsidiaries) taken as a whole or U.S. Shoe and its
Subsidiaries taken as a whole.
(b) All necessary governmental (domestic and foreign), regulatory
(domestic and foreign) and third party approvals and/or consents in connection
with the Transaction, the transactions contemplated by the Documents and
otherwise referred to herein or therein shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired without any action
being taken by any competent authority which restrains, prevents, or imposes
materially adverse conditions upon, the consummation of the Transaction or the
transactions contemplated by the Documents or otherwise referred to herein or
therein. Additionally, there shall not exist any judgment, order, injunction or
other restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon, or materially delaying, or making economically unfeasible, the
purchase of the Shares pursuant to the Tender Offer, the consummation of the
Acquisition, the Refinancing or the making of the Loans or the issuance of
Letters of Credit.
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<PAGE>
5A.07 Litigation. On the Initial Borrowing Date, no litigation by
----------
any entity (private or governmental) shall be pending or threatened with respect
to the Acquisition, the Refinancing, this Agreement or any documentation
executed in connection herewith or therewith or the transactions contemplated
hereby or thereby (other than certain immaterial litigation brought by several
existing shareholders of U.S. Shoe in connection with the Acquisition, which
litigation, in any event, shall not prohibit or impose material adverse
conditions on, or delay, the consummation of the Tender Offer or the Merger in
accordance with the terms of the respective Documents therefor), or with respect
to any material Indebtedness of Luxottica Group or any of its Subsidiaries which
is to remain outstanding after the Initial Borrowing Date, or which the
Administrative Agent or the Required Banks shall determine could reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Luxottica Group and its Subsidiaries (excluding U.S. Shoe and its
Subsidiaries) taken as a whole, the Borrower and its Subsidiaries (excluding
U.S. Shoe and its Subsidiaries) taken as a whole or U.S. Shoe and its
Subsidiaries taken as a whole.
5A.08 Tender Offer; etc. (a) On or prior to the Initial Borrowing
------------------
Date, there shall have been delivered to the Administrative Agent true and
correct copies of the Tender Offer Documents, which Tender Offer Documents shall
be required to be in form and substance satisfactory to the Administrative Agent
and the Required Banks (including, without limitation, as to the price per share
paid in the Tender Offer and in the Merger, minimum share tender condition,
revocation (or action equivalent thereto) of U.S. Shoe's shareholders' rights
program and any other conditions contained in the Offer to Purchase) and shall
be in full force and effect. All material conditions precedent to the
consummation of the Tender Offer as contained in the Offer to Purchase shall
have been satisfied (and not waived without the consent of the Administrative
Agent and the Required Banks), and any amendment to the Tender Offer Documents
shall be required to be satisfactory in form and substance to the Administrative
Agent and the Required Banks, it being understood and agreed that, for purposes
of this Section 5A.08, all references in each condition precedent in the Offer
to Purchase to the knowledge or awareness of "Parent" or "Purchaser" shall
instead be references to the knowledge or awareness of the Administrative Agent
or the Required Banks.
(b) On the Initial Borrowing Date (and concurrently with the
incurrence of Loans on such date), (i) the Borrower shall have contributed the
proceeds of the Loans incurred by it to Avant-Garde as a cash equity
contribution, and Avant-Garde shall have contributed such proceeds to Bidco as a
cash equity contribution to be utilized by Bidco to consummate the Tender Offer,
(ii) the Tender
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Offer shall have been consummated, (iii) all Shares that have been tendered to
Bidco shall have been validly tendered and not withdrawn and shall be available
for purchase by Bidco in accordance with the terms and conditions set forth in
the Offer to Purchase and (iv) such tendered Shares shall be free and clear of
all Liens and restrictions to purchase imposed by applicable law or otherwise.
After giving effect to the consummation of the purchase of the Shares pursuant
to the Tender Offer, Bidco shall own and control that number of Shares as shall
be necessary to permit Bidco to approve the Merger without the affirmative vote
or approval of any other Person, and there shall be no applicable statute or
other restriction which would prohibit, materially restrict or materially delay
the consummation of the Merger or would be reasonably likely to make the
consummation of the Merger economically unfeasible. In addition, any state
anti-takeover law, if any, regulating the Acquisition shall have been complied
with or shall have been determined by the Administrative Agent and the Required
Banks to be invalid or inapplicable to the Tender Offer and the Merger. At the
time of the consummation of the Tender Offer, neither the fair price provisions
under applicable Ohio law nor the fair price provisions of U.S. Shoe's articles
of incorporation shall require a higher price be paid for Shares in the Merger
than that paid in the Tender Offer, which price, in any event, shall not exceed
that amount set forth in the Offer to Purchase and the Merger Agreement as in
effect on the Effective Date.
(c) On or prior to the Initial Borrowing Date, the Administrative
Agent shall have received true and correct copies of the signed Merger Agreement
and any other Merger Documents that have been entered into on or before such
date, all of which Merger Documents shall be required to be in form and
substance satisfactory to the Administrative Agent and the Required Banks and in
full force and effect.
(d) On or prior to the Initial Borrowing Date, there shall have been
delivered to the Administrative Agent true and correct copies of all Proxy
Materials, if any, and such Proxy Materials shall be required to be in form and
substance satisfactory to the Administrative Agent and the Required Banks.
5A.09 Avant-Garde Ownership. On or prior to the Initial Borrowing
---------------------
Date, the Borrower shall own directly 99.9% of the capital stock of Avant-Garde,
with the remaining .1% of such capital stock to be owned directly by Luxottica
Group, with such ownership to be accomplished pursuant to a transaction required
to be in form and substance satisfactory to the Administrative Agent and the
Required Banks, and the Administrative Agent shall have received true and
correct copies of all documents entered into in connection therewith, which
documents shall
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<PAGE>
be required to be in form and substance satisfactory to the Administrative Agent
and the Required Banks.
5A.10 Financial Statements; Projections. On or prior to the Initial
---------------------------------
Borrowing Date, the Banks shall have received (i) true and correct copies of the
financial statements (including the pro forma income statements) and Projections
--- -----
referred to in Section 8.05(a) and (d), (ii) the consolidated financial
statements for U.S. Shoe for the fiscal year ended January 29, 1994 and the
nine-month period ended October 29, 1994 and (iii) to the extent received by
Luxottica Group or any of its Subsidiaries, the consolidated financial
statements for U.S. Shoe for the fiscal year ended January 28, 1995, and the
financial statements (including the pro forma income statements) and Projections
--- -----
referred to in Section 8.05(a) and (d) shall be required to be in form and
substance satisfactory to the Administrative Agent and the Required Banks.
5A.11 Guaranties. (a) On the Initial Borrowing Date, each Initial
----------
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Guaranty in the form of Exhibit G-1 (as modified, supplemented or amended from
time to time, the "Subsidiaries Guaranty"), and the Subsidiaries Guaranty shall
be in full force and effect.
(b) On the Initial Borrowing Date, the Parent Guarantors shall have
duly authorized, executed and delivered a Guaranty in the form of Exhibit G-2
(as modified, supplemented or amended from time to time, the "Parents
Guaranty"), and the Parents Guaranty shall be in full force and effect, it being
recognized by the Banks that the ability to immediately call on the Parents
Guaranty is limited, in certain circumstances, in accordance with the terms set
forth therein.
5A.12 Pledge Agreement. On the Initial Borrowing Date, each Parent
----------------
Guarantor, the Borrower and each Initial Subsidiary Guarantor shall have duly
authorized, executed and delivered a Pledge Agreement in the form of Exhibit H
(as modified, supplemented or amended from time to time, the "Pledge Agreement")
and shall have delivered to the Collateral Agent, as Pledgee, all the Pledged
Securities, if any (and to the extent certificated), referred to therein then
owned by such Credit Party, (x) endorsed in blank in the case of promissory
notes constituting Pledged Securities and (y) together with executed and undated
stock powers, in the case of capital stock constituting Pledged Securities, and
the Pledge Agreement shall be in full force and effect.
5A.13 Security Agreement. On the Initial Borrowing Date, the
------------------
Borrower and each Initial Subsidiary Guarantor shall have duly authorized, exe-
cuted
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<PAGE>
and delivered a Security Agreement in the form of Exhibit I (as modified,
supplemented or amended from time to time, the "Security Agreement") covering
all of such Credit Party's present and future Security Agreement Collateral,
together with:
(a) proper Financing Statements (Form UCC-1 or the equivalent) fully
executed for filing under the UCC or other appropriate filing offices of
each jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported to
be created by the Security Agreement in such Security Agreement Collateral;
(b) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, listing all effective financing statements that
name Luxottica Group or any of its Subsidiaries (other than U.S. Shoe or
any of its Subsidiaries) as debtor and that are filed in the jurisdictions
referred to in clause (a) above, together with copies of such other
financing statements that name Luxottica Group or any such Subsidiaries as
debtor (none of which financing statements shall cover the Collateral
except to the extent evidencing Permitted Liens or in respect of which the
Collateral Agent shall have received termination statements (Form UCC-3 or
such other termination statements as shall be required by local law) fully
executed for filing);
(c) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by the Security Agreement in such
Security Agreement Collateral; and
(d) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the
security interests purported to be created by the Security Agreement in
such Security Agreement Collateral have been taken;
and the Security Agreement shall be in full force and effect.
5A.14 Mortgages; Title Insurance; Surveys. On the Initial Borrowing
-----------------------------------
Date, the Collateral Agent shall have received:
(a) fully executed counterparts of Mortgages in each case in form and
substance satisfactory to the Administrative Agent, which Mortgages shall
cover such of the Real Property owned by Avant-Garde or any of its
Subsidiaries (other than U.S. Shoe or any of its Subsidiaries) as shall be
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<PAGE>
designated as a Mortgaged Property on Schedule III, together with evidence
that counterparts of such Mortgages have been delivered to the title insur-
ance company insuring the Lien of such Mortgages for recording in all
places to the extent necessary or, in the reasonable opinion of the
Collateral Agent, desirable to effectively create a valid and enforceable
first priority mortgage lien on each such Mortgaged Property (subject only
to Permitted Encumbrances) in favor of the Collateral Agent (or such other
trustee as may be required or desired under local law) for the benefit of
the Secured Creditors;
(b) Mortgage Policies on each Mortgaged Property owned by Avant-
Garde or any of its Subsidiaries (other than U.S. Shoe or any of its
Subsidiaries) issued by title insurers reasonably satisfactory to the
Administrative Agent in amounts satisfactory to the Administrative Agent
assuring the Administrative Agent that the Mortgages on such Mortgaged
Properties are valid and enforceable first priority mortgage liens on the
respective Mortgaged Properties, free and clear of all defects and encum-
brances except Permitted Encumbrances and such Mortgage Policies shall
otherwise be required to be in form and substance satisfactory to the
Administrative Agent and shall include, as appropriate, an endorsement for
future advances under this Agreement and the Notes and for any other matter
that the Administrative Agent in its reasonable discretion may reasonably
request, shall not include an exception for mechanics' liens, and shall
provide for affirmative insurance and such reinsurance as the
Administrative Agent in its discretion may reasonably request; and
(c) a survey in form and substance satisfactory to the Administrative
Agent for each Mortgaged Property owned by Avant-Garde or any of its
Subsidiaries (other than U.S. Shoe or any of its Subsidiaries), certified
by a licensed professional surveyor reasonably satisfactory to the
Administrative Agent.
5A.15 Contribution Agreement. On the Initial Borrowing Date, each
----------------------
Initial Subsidiary Guarantor shall have duly authorized, executed and delivered
a Contribution Agreement in the form of Exhibit J (as modified, supplemented or
amended from time to time, the "Contribution Agreement"), and the Contribution
Agreement shall be in full force and effect.
5A.16 Regulations U and G. On the Initial Borrowing Date, the
-------------------
Borrower shall have delivered to each Bank a duly completed Form U-1 or G-3, as
appropriate, referred to in Regulations U and G. On the Initial Borrowing Date,
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<PAGE>
each Bank shall be able in good faith to complete said Form U-1 or G-3, as the
case may be, showing that Loans may be extended by the Banks in an amount equal
to the sum of the Total Term Loan Commitment and the aggregate principal amount
of Revolving Loans which may be incurred prior to the consummation of the
Merger, and that said Loans comply with the collateral valuation requirements of
Regulations U and G.
5A.17 Solvency Certificate; Environmental Analyses; Insurance
-------------------------------------------------------
Certificates. On the Initial Borrowing Date, the Administrative Agent shall
- ------------
have received:
(i) a solvency certificate addressed to the Administrative Agent and
each of the Banks and dated the Initial Borrowing Date from the chief
financial officer of Luxottica Group, which solvency certificate shall be
in the form of Exhibit K (appropriately completed) and shall set forth the
conclusions that, after giving effect to the Tender Offer and the incur-
rence of all financings contemplated herein, the Parent Guarantors, the
Initial Subsidiary Guarantors and the Borrower (taken as a whole) are not
insolvent and will not be rendered insolvent by the indebtedness incurred
in connection herewith, will not be left with unreasonably small capital
with which to engage in their business and will not have incurred debts
beyond their ability to pay such debts as they mature and become due;
(ii) Phase I environmental assessment reports with respect to the
Mortgaged Property owned by Avant-Garde and with respect to the four
manufacturing facilities of Luxottica Group in Italy, which reports shall
be required to be in scope, form and substance satisfactory to the
Administrative Agent and the Required Banks; and
(iii) evidence of insurance complying with the requirements of Section
9.03 for the business and properties of Luxottica Group and its
Subsidiaries (other than U.S. Shoe and its Subsidiaries), in form and
substance satisfactory to the Administrative Agent, and naming the
Collateral Agent as an additional insured and/or loss payee and stating
that such insurance shall not be cancelled without at least 20 days prior
written notice by the insurer to the Collateral Agent.
5A.18 Consent Letter. On the Initial Borrowing Date, the Administra-
--------------
tive Agent shall have received a letter from CT Corporation System, presently
located at 1633 Broadway, New York, New York 10019, substantially in the form of
Exhibit L, indicating its consent to its appointment by each Credit Party
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as its agent to receive service of process as specified in Section 14.08 and in
the equivalent section in each Guaranty.
5A.19 Operation of Business. (a) Since March 2, 1995, Luxottica
---------------------
Group and its Subsidiaries shall have operated their respective businesses in
the ordinary course and U.S. Shoe and its Subsidiaries shall have operated their
respective businesses in the ordinary course and neither U.S. Shoe nor any of
its Subsidiaries shall have sold any substantial part of any of their three main
operating divisions other than the sale of the Footwear Division and the Apparel
Division on terms acceptable to the Administrative Agent and the Required Banks
(it being understood and agreed that any sale of the Footwear Division pursuant
to the Nine West Agreement (as in effect on the date hereof or as otherwise
modified pursuant to Section 10.11(v)) shall be acceptable), provided that if
the sale of the Footwear Division and/or the Apparel Division is consummated
prior to the Initial Borrowing Date, the Net Sale Proceeds therefrom shall have
been retained by U.S. Shoe and its Subsidiaries and deposited in a segregated
account as provided in Section 4.02(e)). In addition, since March 2, 1995,
there shall have been no material increase in the Existing Indebtedness of U.S.
Shoe and its Subsidiaries.
(b) Neither Luxottica Group nor any of its Subsidiaries shall have
given any consent pursuant to Section 5.2 of the Merger Agreement (other than
pursuant to Section 5.2.15 thereof) unless the giving of any such consent has
been approved in advance by the Administrative Agent and the Required Banks.
5A.20 Fees, etc. On the Initial Borrowing Date, the Borrower shall
----------
have paid to the Administrative Agent and each Bank all costs, fees and expenses
(including, without limitation, legal fees and expenses) payable to the
Administrative Agent and such Bank to the extent then due.
SECTION 5B. Conditions Precedent to Credit Events after the Initial
-------------------------------------------------------
Borrowing Date and prior to the Merger Borrowing Date. The obligation of each
- -----------------------------------------------------
Bank to make Loans, and the obligation of each Issuing Bank to issue Letters of
Credit, after the Initial Borrowing Date and prior to the Merger Borrowing Date,
is subject, at the time of each such Credit Event, to the satisfaction of the
following conditions:
5B.01 Adverse Change, etc. (a) Since March 2, 1995, nothing shall
--------------------
have occurred (and neither the Administrative Agent nor the Banks shall have
become aware of any facts, conditions or other information not previously known)
which the Administrative Agent or the Required Banks shall determine could
reasonably be expected to have a material adverse effect on (i) the rights or
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remedies of the Administrative Agent, the Collateral Agent or the Banks, (ii)
the ability of any Credit Party to perform its respective obligations to the
Administrative Agent, the Collateral Agent and the Banks or (iii) the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Luxottica Group and its Subsidiaries (excluding U.S. Shoe and its
Subsidiaries) taken as a whole, the Borrower and its Subsidiaries (excluding
U.S. Shoe and its Subsidiaries) taken as a whole or U.S. Shoe and its
Subsidiaries taken as a whole.
(b) There shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon, or materially delaying, or making economically unfeasible, the
consummation of the Merger, the Refinancing or the making of the Loans or the
issuance of Letters of Credit.
5B.02 Litigation. No litigation by any entity (private or
----------
governmental) shall be pending or threatened with respect to the Merger, the
Refinancing, this Agreement or any documentation executed in connection herewith
or therewith or the transactions contemplated hereby or thereby (other than
certain immaterial litigation brought by several existing shareholders of U.S.
Shoe in connection with the Acquisition, which litigation, in any event, shall
not prohibit or impose material adverse conditions on, or delay, the
consummation of the Merger in accordance with the terms of the Merger
Documents), or with respect to any material Indebtedness of Luxottica Group or
any of its Subsidiaries which is to remain outstanding after the Merger
Borrowing Date, or which the Administrative Agent or the Required Banks shall
determine could reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Luxottica Group and its Subsidiaries (excluding U.S.
Shoe and its Subsidiaries) taken as a whole, the Borrower and its Subsidiaries
(excluding U.S. Shoe and its Subsidiaries) taken as a whole or U.S. Shoe and its
Subsidiaries taken as a whole.
SECTION 6. Conditions Precedent to Credit Events on or after the
-----------------------------------------------------
Merger Borrowing Date. The obligation of each Bank to make Loans, and the
- ---------------------
obligation of each Issuing Bank to issue Letters of Credit, on or after the
Merger Borrowing Date, is subject to the satisfaction of the following
conditions on the Merger Borrowing Date:
6.01 Officer's Certificate. On the Merger Borrowing Date, the
---------------------
Administrative Agent shall have received a certificate, dated the Merger
Borrowing Date and signed on behalf of the Borrower by the President or any Vice
President
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<PAGE>
of the Borrower, stating that all of the conditions in Sections 6.05, 6.06,
6.07, 6.08 and 7.01 have been satisfied on such date.
6.02 Opinions of Counsel. On the Merger Borrowing Date, the Adminis-
-------------------
trative Agent shall have received from (i) Winston & Strawn, United States
counsel to Luxottica Group and its Subsidiaries, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Merger Borrowing Date
covering the matters set forth in Exhibit E-4, (ii) Grimaldi E Associati and
Clifford Chance, Italian counsel to the Parent Guarantors, an opinion addressed
to the Administrative Agent and each of the Banks and dated the Merger Borrowing
Date covering the matters set forth in Exhibit E-5, (iii) Vorys, Sater, Seymour
and Pease, Ohio counsel to Luxottica Group and the Borrower, an opinion
addressed to the Administrative Agent and each of the Banks and dated the Merger
Borrowing Date covering the matters set forth in Exhibit E-6 and (iv) local and
foreign counsel (satisfactory to the Administrative Agent) legal opinions each
of which (x) shall be addressed to the Administrative Agent and each of the
Banks and dated the Merger Borrowing Date, (y) shall be required to be in form
and substance satisfactory to the Administrative Agent and (z) shall cover the
perfection of the security interests granted pursuant to the Security Documents
in respect of the Collateral owned by U.S. Shoe and its Subsidiaries and such
other matters incident to the transactions contemplated herein as the
Administrative Agent may reasonably request.
6.03 Corporate Documents; Proceedings; etc. (a) On the Merger
--------------------------------------
Borrowing Date, the Administrative Agent shall have received a certificate from
each Additional Subsidiary Guarantor, each dated the Merger Borrowing Date,
signed by the President or any Vice President of such Additional Subsidiary
Guarantor, and attested to by the Secretary or any Assistant Secretary of such
Additional Subsidiary Guarantor, in the form of Exhibit F with appropriate
insertions, together with copies of the certificate of incorporation and by-laws
(or equivalent organizational documents) of such Additional Subsidiary Guarantor
and the resolutions of such Additional Subsidiary Guarantor referred to in such
certificate, and the foregoing shall be required to be reasonably acceptable to
the Administrative Agent.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the Merger Documents shall be required to be satisfactory in form and
substance to the Administrative Agent and the Required Banks, and the
Administrative Agent shall have received all information and copies of all
documents and papers, including records of corporate proceedings, governmental
approvals, good standing certificates and bring-down telegrams or facsimiles, if
any, which the Administrative Agent
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reasonably may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.
6.04 Schedules. To the extent that Schedules III through IX are not
---------
complete on the Initial Borrowing Date as such Schedules relate to U.S. Shoe and
its Subsidiaries, the Borrower shall have delivered to the Banks true and
correct copies of updated versions of such Schedules relating to the operations
of U.S. Shoe and its Subsidiaries, and each such Schedule shall be required to
be in form and substance satisfactory to the Administrative Agent and the
Required Banks.
6.05 Adverse Change, etc. (a) Since March 2, 1995, nothing shall
--------------------
have occurred (and neither the Administrative Agent nor the Banks shall have
become aware of any facts, conditions or other information not previously known)
which the Administrative Agent or the Required Banks shall determine could
reasonably be expected to have a material adverse effect on (i) the rights or
remedies of the Administrative Agent, the Collateral Agent or the Banks, (ii)
the ability of any Credit Party to perform its respective obligations to the
Administrative Agent, the Collateral Agent and the Banks or (iii) the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Luxottica Group and its Subsidiaries (excluding U.S. Shoe and its
Subsidiaries) taken as a whole, the Borrower and its Subsidiaries (excluding
U.S. Shoe and its Subsidiaries) taken as a whole or U.S. Shoe and its
Subsidiaries taken as a whole.
(b) All necessary governmental (domestic and foreign), regulatory
(domestic and foreign) and third party approvals and/or consents in connection
with the Merger and the Refinancing, the transactions contemplated by this
Agreement and the Merger Documents or otherwise referred to herein or therein
shall have been obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by any competent
authority which restrains, prevents, or imposes materially adverse conditions
upon, the consummation of the Merger or the Refinancing or the transactions
contemplated by this Agreement and the Merger Documents or otherwise referred to
herein or therein. Additionally, there shall not exist any judgment, order,
injunction or other restraint issued or filed or a hearing seeking injunctive
relief or other restraint pending or notified prohibiting or imposing materially
adverse conditions upon, or materially delaying, or making economically
unfeasible, the consummation of the Merger, the Refinancing or the making of the
Loans or the issuance of Letters of Credit. The Merger shall have been
consummated in accordance with the terms and conditions of the Merger Documents
and all applicable laws.
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<PAGE>
6.06 Litigation. On the Merger Borrowing Date, no litigation by any
----------
entity (private or governmental) shall be pending or threatened with respect to
the Merger, the Refinancing, this Agreement or any documentation executed in
connection herewith or therewith or the transactions contemplated hereby or
thereby
(other than certain immaterial litigation brought by several existing
shareholders of U.S. Shoe in connection with the Acquisition, which litigation,
in any event, shall not prohibit or impose material adverse conditions on, or
delay, the consummation of the Merger in accordance with the terms of the Merger
Documents), or with respect to any material Indebtedness of Luxottica Group or
any of its Subsidiaries which is to remain outstanding after the Merger
Borrowing Date, or which the Administrative Agent or the Required Banks shall
determine could reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Luxottica Group and its Subsidiaries (excluding U.S.
Shoe and its Subsidiaries) taken as a whole, the Borrower and its Subsidiaries
(excluding U.S. Shoe and its Subsidiaries) taken as a whole or U.S. Shoe and its
Subsidiaries taken as a whole.
6.07 Merger Documents. On or prior to the Merger Borrowing Date,
----------------
there shall have been delivered to the Administrative Agent true and correct
copies of all Merger Documents not delivered to the Administrative Agent on or
prior to the Initial Borrowing Date, which Merger Documents shall be required to
be in form and substance satisfactory to the Administrative Agent and the
Required Banks. All material conditions precedent to the consummation of the
Merger shall have been satisfied (and not waived without the consent of the
Administrative Agent and the Required Banks).
6.08 Refinancing. On or prior to the Merger Borrowing Date, (i) the
-----------
Borrower shall have delivered to the Banks a written plan pursuant to which the
Borrower shall consummate the Refinancing within 120 days following the Merger
Borrowing Date, which plan shall be in form and substance satisfactory to the
Administrative Agent and the Required Banks and (ii) the Borrower shall have
delivered to the Banks true and correct copies of all Existing Indebtedness
Agreements of U.S. Shoe and its Subsidiaries (to the extent not theretofore
delivered pursuant to Section 5A.05), which Existing Indebtedness Agreements, to
the extent relating to any Existing Indebtedness of U.S. Shoe and its
Subsidiaries which does not constitute Indebtedness to be Refinanced, shall be
required to be in form and substance satisfactory to the Administrative Agent
and the Required Banks.
6.09 Subsidiaries Guaranty. On the Merger Borrowing Date, each
---------------------
Additional Subsidiary Guarantor shall have duly authorized, executed and
delivered
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a counterpart of the Subsidiaries Guaranty, and the Subsidiaries Guaranty shall
be in full force and effect.
6.10 Pledge Agreement. On the Merger Borrowing Date, each Additional
----------------
Subsidiary Guarantor shall have duly authorized, executed and delivered a
counterpart of the Pledge Agreement and shall have delivered to the Collateral
Agent, as Pledgee, all the Pledged Securities, if any, referred to therein then
owned by such Additional Subsidiary Guarantor, (x) endorsed in blank in the case
of promissory notes constituting Pledged Securities and (y) together with
executed and undated stock powers, in the case of capital stock constituting
Pledged Securities, and the Pledge Agreement shall be in full force and effect.
6.11 Security Agreement. On the Merger Borrowing Date, each Addi-
------------------
tional Subsidiary Guarantor shall have duly authorized, executed and delivered a
counterpart of the Security Agreement covering all of such Additional Subsidiary
Guarantor's present and future Security Agreement Collateral, together with:
(a) proper Financing Statements (Form UCC-1 or the equivalent) fully
executed for filing under the UCC or other appropriate filing offices of
each jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported to
be created by the Security Agreement in such Security Agreement Collateral;
(b) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, listing all effective financing statements that
name U.S. Shoe or any of its Subsidiaries as debtor and that are filed in
the jurisdictions referred to in clause (a) above, together with copies of
such other financing statements that name U.S. Shoe or any of its
Subsidiaries as debtor (none of which financing statements shall cover the
Collateral except to the extent evidencing Permitted Liens or in respect of
which the Collateral Agent shall have received termination statements (Form
UCC-3 or such other termination statements as shall be required by local
law) fully executed for filing);
(c) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by the Security Agreement in such
Security Agreement Collateral; and
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(d) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the
security interests purported to be created by the Security Agreement in
such Security Agreement Collateral have been taken;
and the Security Agreement shall be in full force and effect.
6.12 Contribution Agreement. On the Merger Borrowing Date, each
----------------------
Additional Subsidiary Guarantor shall have duly authorized, executed and
delivered a counterpart of the Contribution Agreement, and the Contribution
Agreement shall be in full force and effect.
6.13 Consent Letter. On the Merger Borrowing Date, the Administra-
--------------
tive Agent shall have received a letter from CT Corporation System, presently
located at 1633 Broadway, New York, New York 10019, substantially in the form of
Exhibit L, indicating its consent to its appointment by each Additional
Subsidiary Guarantor as its agent to receive service of process as specified in
the Subsidiaries Guaranty.
6.14 Insurance Certificates. On the Merger Borrowing Date, the
----------------------
Administrative Agent shall have received evidence of insurance complying with
the requirements of Section 9.03 for the properties of U.S. Shoe and its
Subsidiaries, in form and substance satisfactory to the Administrative Agent,
and naming the Collateral Agent as an additional insured and/or loss payee and
stating that such insurance shall not be cancelled without at least 20 days
prior written notice by the insurer to the Collateral Agent.
6.15 Shareholders' Agreements; Tax Sharing Agreements; Solvency
----------------------------------------------------------
Certificate. On the Merger Borrowing Date, the Administrative Agent shall have
- -----------
received:
(i) true and correct copies of any Shareholders' Agreements relating
to U.S. Shoe or any of its Subsidiaries to the extent not theretofore
delivered pursuant to Section 5A.05, which Shareholders' Agreements shall
be required to be in form and substance satisfactory to the Required Banks;
(ii) true and correct copies of all Tax Sharing Agreements entered into
by U.S. Shoe or any of its Subsidiaries to the extent not theretofore
delivered pursuant to Section 5A.05, which Tax Sharing Agreements shall be
required to be in form and substance satisfactory to the Required Banks;
and
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(iii) a solvency certificate addressed to the Administrative Agent and
each of the Banks and dated the Merger Borrowing Date from the chief
financial officer of Luxottica Group, which solvency certificate shall be
in the form of Exhibit K (appropriately completed) and shall set forth the
conclusions that, after giving effect to the Merger and the incurrence of
all financing contemplated herein, the Guarantors and the Borrower (taken
as a whole) are not insolvent and will not be rendered insolvent by the
indebtedness incurred in connection herewith, will not be left with
unreasonably small capital with which to engage in their business and will
not have incurred debts beyond their ability to pay such debts as they
mature and become due.
SECTION 7. Conditions Precedent to All Credit Events. The obligation
-----------------------------------------
of each Bank to make Loans (including Loans made on the Initial Borrowing Date,
on the Merger Borrowing Date or at any time after either such date) and the
obligation of each Issuing Bank to issue Letters of Credit, is subject, at the
time of each such Credit Event (except as hereinafter indicated), to the sat-
isfaction of the following conditions:
7.01 No Default; Representations and Warranties. At the time of each
------------------------------------------
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties con-
tained herein or in any other Credit Document shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on the date of the making of such Credit Event (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct in
all material respects only as of such specified date, and it being further
understood and agreed that (x) so long as no Default or Event of Default under
Section 11.05 shall have occurred and be continuing and so long as the Loans
shall not have been accelerated pursuant to Section 11, the Borrower shall be
entitled to request a Borrowing of Revolving Loans the proceeds of which shall
be used solely to repay any Unpaid Drawings then outstanding in accordance with
Section 2.05(a) and (y) any Unpaid Drawing that remains unpaid for five Business
Days or less from the date of the respective Drawing shall not prevent the
Borrowing of any Loans for which a Notice of Borrowing has theretofore been
given so long as no other Default or Event of Default is then in existence).
7.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to
---------------------------------------------
the making of each Loan (other than a Swingline Loan or a Mandatory Borrowing),
the Administrative Agent shall have received a Notice of Borrowing meeting the
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requirements of Section 1.03(a). Prior to the making of each Swingline Loan,
the Swingline Bank shall have received the notice referred to in Section
1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.03.
7.03 Financial Statements. Prior to the making of any Loan, the
--------------------
Required Banks shall not have become aware of any negative facts, conditions or
other information which would reasonably lead the Required Banks to believe that
the information provided in the financial statements delivered pursuant to
Section 5A.10 with respect to U.S. Shoe and its Subsidiaries is not true and
accurate in all material respects and neither the Administrative Agent nor the
Required Banks shall have so informed the Borrower in writing thereof.
7.04 Merger Conditions. At the time of any Credit Event occurring
-----------------
after the consummation of the Merger, all conditions precedent set forth in
Section 6 shall have been satisfied on the date the Merger was so consummated.
The acceptance of the proceeds of each Credit Event shall constitute a
representation and warranty by the Borrower to the Administrative Agent and each
of the Banks that all the conditions specified in Section 5, Section 6 and in
this Section 7 and applicable to such Credit Event exist as of that time (except
to the extent that any of the conditions specified in Section 5 or Section 6 are
required to be satisfactory to or determined by any Bank, the Required Banks
and/or the Administrative Agent). All of the Notes, certificates, legal opin-
ions and other documents and papers referred to in Section 5, Section 6 and in
this Section 7, unless otherwise specified, shall be delivered to the
Administrative Agent at the Notice Office for the account of each of the Banks
and, except for the Notes, in sufficient counterparts for each of the Banks and
shall be in form and substance satisfactory to the Required Banks.
SECTION 8. Representations, Warranties and Agreements. In order to
------------------------------------------
induce the Banks to enter into this Agreement and to make the Loans, and issue
(or participate in) the Letters of Credit as provided herein, the Borrower makes
the following representations, warranties and agreements as to Luxottica Group
and each of its Subsidiaries, all of which shall survive the execution and
delivery of this Agreement and the Notes and the making of the Loans and
issuance of the Letters of Credit, with the occurrence of each Credit Event on
or after the Effective Date being deemed to constitute a representation and
warranty that the matters specified in this Section 8 are true and correct in
all material respects on and as of the Initial
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<PAGE>
Borrowing Date and on the date of each such Credit Event and immediately after
giving effect thereto (it being understood and agreed that (i) any repre-
sentation or warranty which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of such
specified date and (ii) the following representations and warranties as to U.S.
Shoe and its Subsidiaries, to the extent made (or deemed made) prior to the
Merger Borrowing Date, are to the best knowledge of the Borrower and are based
solely on their review of publicly available information and certain
confidential information made available to Luxottica Group and the Borrower by
U.S. Shoe without making any representation or warranty as to the accuracy of
any such information).
8.01 Corporate Status. Each of Luxottica Group and each of its
----------------
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (iii) is
duly qualified and is authorized to do business and is in good standing in each
jurisdiction where the conduct of its business requires such qualification
except for failures to be so qualified which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Luxottica Group and its Subsidiaries taken as a whole
or the Borrower and its Subsidiaries taken as a whole.
8.02 Corporate Power and Authority. Each of Luxottica Group and each
-----------------------------
of its Subsidiaries has the corporate power and authority to execute, deliver
and perform the terms and provisions of each of the Documents to which it is
party and has taken all necessary corporate action to authorize the execution,
delivery and performance by it of each of such Documents. Each Credit Party has
duly executed and delivered each of the Documents to which it is party, and each
of such Documents constitutes the legal, valid and binding obligation of such
Credit Party enforceable in accordance with its terms.
8.03 No Violation. Neither the execution, delivery or performance by
------------
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality other than, in
the case of any Tender Offer Document or Merger Document, such contraventions
that could not have an adverse effect on the ability of any Credit Party to
consummate the Acquisition or the Refinancing and which could not have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or
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otherwise) or prospects of Luxottica Group and its Subsidiaries taken as a whole
or the Borrower and its Subsidiaries taken as a whole, (ii) will conflict with
or result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the properties or assets of Luxottica Group or
any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, credit agreement or loan agreement (other than any such agreement
relating to any Indebtedness to be Refinanced), or any other material agreement,
contract or instrument, to which Luxottica Group or any of its Subsidiaries is a
party or by which it or any of its property or assets is bound or to which it
may be subject or (iii) will violate any provision of the certificate of
incorporation or by-laws (or equivalent organizational documents) of Luxottica
Group or any of its Subsidiaries.
8.04 Governmental Approvals. No order, consent, approval, license,
----------------------
authorization or validation of, or filing, recording or registration with
(except (x) as have been obtained or made on or prior to the Initial Borrowing
Date, (y) the filing of the merger certificate in connection with the Merger
(which filing, if this representation or warranty is made on the Merger
Borrowing Date, has been made) and (z) for immaterial filings, recordings or
registrations in connection with the Acquisition which in no event could prevent
or delay the consummation of the Acquisition), or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (i) the execution, delivery and
performance of any Document or (ii) the legality, validity, binding effect or
enforceability of any such Document.
8.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; etc. (a) The consolidated balance sheet of Luxottica
- ------------------------------
Group and its Subsidiaries at December 31, 1994 and the related statements of
consolidated income, consolidated cash flows and shareholders' equity of
Luxottica Group and its Subsidiaries for the fiscal year ended on such date, and
furnished to the Banks prior to the Effective Date present fairly the financial
position of Luxottica Group and its Subsidiaries at the date of such balance
sheet and the results of the operations of Luxottica Group and its Subsidiaries
for the fiscal year ended December 31, 1994. The pro forma income statements of
--- -----
Luxottica Group and its Subsidiaries (including U.S. Shoe and its Subsidiaries)
prepared prior to the Initial Borrowing Date and designated by the Borrower as
the pro forma income statements referred to in this Section 8.05(a), copies of
--- -----
which have been furnished to the Banks on or prior to the Initial Borrowing Date
pursuant to Section 5A.10, present fairly the consolidated pro forma results of
--- -----
operations of the entities covered thereby for the twelve month period ending
December 31, 1994 in the case of Luxottica Group and
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its Subsidiaries (excluding U.S. Shoe and its Subsidiaries), combined with the
twelve month period ending January 28, 1995 in the case of U.S. Shoe and its
Subsidiaries, in each case based on the assumption that the Acquisition, the
Refinancing, the related financing thereof and the other transactions
contemplated hereby had been consummated on the first day of each such period.
All such financial statements (other than such pro forma income statements to
--- -----
the extent expressly noted therein) have been prepared in accordance with GAAP.
Since December 31, 1994, there has been no material adverse change in the busi-
ness, operations, property, assets, liabilities, condition (financial or other-
wise) or prospects of Luxottica Group and its Subsidiaries taken as a whole.
Since January 29, 1994, there has been no material adverse change in the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of U.S. Shoe and its Subsidiaries taken as a whole.
(b) (i) On and as of each of the Initial Borrowing Date and the
Merger Borrowing Date, after giving effect to the Refinancing and to all
Indebtedness (including the Loans) being incurred or assumed and Liens created
by the Borrower and the Guarantors in connection therewith, (a) the sum of the
assets, at a fair valuation, of the Borrower and the Guarantors (taken as a
whole) will exceed their debts; (b) the Borrower and the Guarantors (taken as a
whole) have not incurred and do not intend to incur, and do not believe that
they will incur, debts beyond their ability to pay such debts as such debts
mature; and (c) the Borrower and the Guarantors (taken as a whole) will have
sufficient capital with which to conduct their business. For purposes of this
Section 8.05(b), "debt" means any liability on a claim, and "claim" means (i)
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, un-
disputed, legal, equitable, secured, or unsecured or (ii) right to an equitable
remedy for breach of performance if such breach gives rise to a payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
Neither Luxottica Group nor any other Parent Guarantor falls within the
description of Article 5 or Article 187 of the Italian Insolvency Law (Royal
Decree No. 267 of March 16, 1942) and no conditions exist under Articles 64, 65,
66 and 67 of the Italian Insolvency Law for the setting aside of the execution,
delivery or performance by Luxottica Group or any other Parent Guarantor of any
Credit Document to which it is a party.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 5A.10 (including the footnotes to such financial statements)
or as set forth on Schedule IX, there were as of the Initial Borrowing Date no
liabilities or obligations with respect to Luxottica Group or any of its
Subsidiaries of any
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nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in the aggregate, would be
material to Luxottica Group and its Subsidiaries taken as a whole or U.S. Shoe
and its Subsidiaries taken as a whole. Except as disclosed on Schedule IX, as
of the Initial Borrowing Date, neither Luxottica Group nor the Borrower knows of
any basis for the assertion against it or any of its Subsidiaries of any
liability or obligation of any nature whatsoever that is not fully disclosed in
the financial statements delivered pursuant to Section 5A.10 which, either
individually or in the aggregate, would be reasonably expected to be material to
Luxottica Group and its Subsidiaries taken as a whole or U.S. Shoe and its
Subsidiaries taken as a whole.
(d) On and as of the Initial Borrowing Date, the financial
projections (the "Projections") previously delivered to the Administrative Agent
and the Banks and set forth in the Confidential Information Memorandum dated
March 1995 prepared in connection with the Transaction have been prepared on a
basis reasonably consistent with the historical financial statements of
Luxottica Group referred to in Section 8.05(a) (except for any purchase
accounting adjustments that may be required as a result of the Acquisition), and
there are no statements or conclusions in any of the Projections which are based
upon or include information known to Luxottica Group or the Borrower to be mis-
leading in any material respect or which fail to take into account material
information regarding the matters reported therein, it being understood by the
Banks that the Projections were based on a purchase price of $24 per Share. On
the Initial Borrowing Date and subject to the foregoing provisions of this
Section 8.05(d), Luxottica Group and the Borrower believed that the Projections
were reasonable and attainable.
8.06 Litigation. There are no actions, suits or proceedings (private
----------
or governmental) pending or threatened (i) with respect to the Transaction or
any Document (other than certain immaterial litigation brought by several
existing shareholders of U.S. Shoe in connection with the Acquisition, which
litigation, in any event, shall not prohibit or impose material adverse
conditions on, or delay, the consummation of the Tender Offer or the Merger in
accordance with the terms of the respective Documents therefor) or (ii) that
could reasonably be expected to materially and adversely affect (a) the busi-
ness, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Luxottica Group and its Subsidiaries taken as a whole
or the Borrower and its Subsidiaries taken as a whole or (b) the rights or
remedies of the Administrative Agent, the Collateral Agent or the Banks or on
the ability of any Credit Party to perform its obligations to them hereunder and
under the other Credit Documents to which it is, or will be, a party.
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8.07 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) furnished by or on behalf of Luxottica Group or any of its Subsidiaries
in writing to the Administrative Agent or any Bank (including, without
limitation, all information contained in the Documents) for purposes of or in
connection with this Agreement, the other Credit Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of Luxottica Group or any of its
Subsidiaries in writing to the Administrative Agent or any Bank will be, true
and accurate in all material respects on the date as of which such information
is dated or certified and not incomplete by omitting to state any fact necessary
to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information
was provided.
8.08 Use of Proceeds; Margin Regulations. (a) All proceeds of Term
-----------------------------------
Loans incurred on the Initial Borrowing Date shall be contributed by the
Borrower to Avant-Garde as a cash equity contribution, and Avant-Garde shall
immediately contribute such proceeds to Bidco as a cash equity contribution to
be utilized by Bidco solely to finance the purchase of Shares pursuant to the
Offer to Purchase and to pay fees and expenses incurred in connection with the
Transaction. All proceeds of Term Loans incurred on the Merger Borrowing Date
shall be contributed by the Borrower to Avant-Garde as a cash equity
contribution, and Avant-Garde shall immediately contribute such proceeds to
Bidco as a cash equity contribution to be utilized by Bidco solely to pay the
merger consideration in connection with the Merger and to pay fees and expenses
incurred in connection therewith.
(b) The proceeds of the Revolving Loans and the Swingline Loans may
be utilized (x) for the same purposes as Term Loans and to consummate the
Refinancing and (y) for the working capital and general corporate requirements
of the Borrower and its Subsidiaries and Avant-Garde and its Subsidiaries.
(c) Neither the making of any Loan nor the use of the proceeds
thereof nor the occurrence of any other Credit Event will violate or be
inconsistent with the provisions of Regulation G, T, U or X and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock in
violation of Regulation U or Regulation G or to extend credit for the purpose of
purchasing or carrying any Margin Stock in violation of Regulation U or
Regulation G.
(d) At the time of each Credit Event occurring on or after the Merger
Borrowing Date, not more than 25% of the value of the assets of each of
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the Borrower and its Subsidiaries taken as a whole and Luxottica Group and its
Subsidiaries taken as a whole will constitute Margin Stock.
8.09 Tax Returns and Payments. Each of Luxottica Group and each of
------------------------
its Subsidiaries has filed or caused to be filed, on a timely basis, with the
appropriate taxing authority, all federal, state and other material returns,
statements, forms and reports for taxes (the "Returns") required to be filed by
or with respect to the income, properties or operations of Luxottica Group
and/or any of its Subsidiaries. The Returns accurately reflect in all material
respects all liability for taxes of Luxottica Group and its Subsidiaries for the
periods covered thereby. Luxottica Group and each of its Subsidiaries have paid
all material taxes payable by them other than taxes which are not delinquent,
and other than those contested in good faith and for which adequate reserves
have been established in accordance with GAAP. Except as disclosed on Schedule
IX, there is no material action, suit, proceeding, investigation, audit, or
claim now pending or, to the best knowledge of Luxottica Group and the Borrower,
threatened by any authority regarding any taxes relating to Luxottica Group or
any of its Subsidiaries. Except as set forth on Schedule IX, as of the Initial
Borrowing Date, neither Luxottica Group nor any of its Subsidiaries has entered
into an agreement or waiver or been requested to enter into an agreement or
waiver extending any statute of limitations relating to the payment or
collection of taxes of Luxottica Group or any of its Subsidiaries, or is aware
of any circumstances that would cause the taxable years or other taxable periods
of Luxottica Group or any of its Subsidiaries not to be subject to the normally
applicable statute of limitations. Neither Luxottica Group nor any of its Sub-
sidiaries has provided, with respect to themselves or property held by them, any
consent under Section 341 of the Code. Neither Luxottica Group nor any of its
Subsidiaries has incurred, or will incur, any material tax liability in connec-
tion with the Transaction and the other transactions contemplated hereby except
in connection with the sale of all or any part of the Apparel Division and the
Footwear Division.
8.10 Compliance with ERISA. Except as set forth on Schedule IX: (i)
---------------------
each Plan is in substantial compliance with ERISA and the Code; no Reportable
Event has occurred with respect to a Plan; no Plan is insolvent or in
reorganization; no Plan has an Unfunded Current Liability which, when added to
the Unfunded Current Liabilities of any other Plans, is in excess of $1,000,000;
no Plan has an accumulated or waived funding deficiency or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; neither Luxottica Group nor any Subsidiary of Luxottica Group nor any
ERISA Affiliate has failed to make a required contribution under a Plan or a
Foreign Pension Plan when due, the failure of which has had or is reasonably
likely to result in a material liability; neither Luxottica Group nor any
Subsidiary of Luxottica Group nor any
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ERISA Affiliate has incurred any material liability to or on account of a Plan
pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or reasonably
expects to incur any material liability (including any indirect, contingent, or
secondary liability) under any of the foregoing Sections with respect to any
Plan; no proceedings have been instituted to terminate or appoint a trustee to
administer any Plan; no condition exists which presents a material risk to
Luxottica Group or any Subsidiary of Luxottica Group or any ERISA Affiliate of
incurring a material liability to or on account of a Plan pursuant to the
foregoing provisions of ERISA and the Code; neither Luxottica Group nor any
Subsidiary of Luxottica Group nor any ERISA Affiliate has at any time
contributed to or had an obligation to contribute to a multiemployer plan (as
defined in Section 4001(a)(3) of ERISA); no lien imposed under the Code or ERISA
on the assets of Luxottica Group or any Subsidiary of Luxottica Group or any
ERISA Affiliate exists or is reasonably likely to arise on account of any Plan;
and Luxottica Group and its Subsidiaries do not maintain or contribute to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA) the obligations with respect to which could
reasonably be expected to have a material adverse effect on the ability of
Luxottica Group or any of its Subsidiaries to perform their respective
obligations under the Credit Documents or a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Luxottica Group and its Subsidiaries taken as a whole
or the Borrower and its Subsidiaries taken as a whole.
(ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. Neither
Luxottica Group nor any of its Subsidiaries has incurred any material liability
in connection with the termination of or withdrawal from any Foreign Pension
Plan. The present value of the accrued benefit liabilities (whether or not
vested) under each Foreign Pension Plan, determined as of the end of Luxottica
Group's most recently ended fiscal year on the basis of actuarial assumptions,
each of which is reasonable, did not exceed the current value of the assets of
such Foreign Pension Plan allocable to such benefit liabilities by an amount
that is reasonably likely to result in a material liability.
8.11 The Security Documents. (a) The provisions of the Security
----------------------
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title
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and interest of the Credit Parties party thereto in the Security Agreement
Collateral described therein, and the Security Agreement creates a fully per-
fected first lien on, and security interest in, all right, title and interest in
all of the Security Agreement Collateral described therein, subject to no other
Liens other than Permitted Liens. The recordation of the Assignment of Security
Interest in U.S. Patents and Trademarks in the form attached to the Security
Agreement in the United States Patent and Trademark Office together with filings
on Form UCC-1 made pursuant to the Security Agreement will be effective, under
applicable law, to perfect the security interest granted to the Collateral Agent
in the trademarks and patents covered by the Security Agreement and the
recordation of the Assignment of Security Interest in U.S. Copyrights in the
form attached to the Security Agreement with the United States Copyright Office
together with filings on Form UCC-1 made pursuant to the Security Agreement will
be effective under federal law to perfect the security interest granted to the
Collateral Agent in the copyrights covered by the Security Agreement. Each
Credit Party to the Security Agreement has good and valid title to all Security
Agreement Collateral described therein, free and clear of all Liens except those
described above in this clause (a).
(b) The security interests created in favor of the Collateral Agent,
as Pledgee, for the benefit of the Secured Creditors under the Pledge Agreement
constitute first priority perfected security interests in the Pledged Securities
described in the Pledge Agreement, subject to no security interests of any other
Person. No filings or recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests created in the Pledged
Securities and the proceeds thereof under the Pledge Agreement.
(c) The Mortgages create, as security for the obligations purported
to be secured thereby, a valid and enforceable perfected security interest in
and mortgage lien on all of the Mortgaged Properties in favor of the Collateral
Agent (or such other trustee as may be required or desired under local law) for
the benefit of the Secured Creditors, superior to and prior to the rights of all
third Persons (except that the security interest and mortgage lien created in
the Mortgaged Properties may be subject to the Permitted Encumbrances related
thereto) and subject to no other Liens (other than Permitted Liens). Schedule
III contains a true and complete list of each parcel of Real Property owned or
leased by the Borrower and its Subsidiaries on the Initial Borrowing Date, and
the type of interest therein held by such Persons. Each Credit Party has good
and indefeasible title to all fee-owned Mortgaged Properties and valid leasehold
title to all Leaseholds, in each case free and clear of all Liens except those
described in the first sentence of this subsection (c).
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8.12 Representations and Warranties in Documents. All representa-
-------------------------------------------
tions and warranties set forth in the other Documents were true and correct in
all material respects at the time as of which such representations and
warranties were made (or deemed made).
8.13 Properties. Each of Luxottica Group and each of its Subsidi-
----------
aries has good and valid title to all properties owned by them, including all
property reflected in the balance sheets of Luxottica Group and U.S. Shoe
delivered pursuant to Section 5A.10 (except as sold or otherwise disposed of
since the date of such balance sheets in the ordinary course of business or as
otherwise permitted under Section 10.02), free and clear of all Liens, other
than (i) as referred to in the balance sheets or in the notes thereto or in the
pro forma balance sheet or (ii) Permitted Liens.
8.14 Capitalization. (a) On the Effective Date, the authorized
--------------
capital stock of Luxottica Group consists of 45,050,000 ordinary shares, Lire
1,000 par value per share, of which 44,584,500 ordinary shares are issued and
outstanding as of the Effective Date (of which 10,349,394 such ordinary shares
are represented by American Depositary Shares which are listed on the New York
Stock Exchange). All such outstanding ordinary shares (including, to the best
knowledge of Luxottica Group, the American Depositary Shares) have been duly and
validly issued, are fully paid and non-assessable and have been issued free of
preemptive rights. Luxottica Group does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock, or any
stock appreciation or similar rights other than Luxottica Group's American
Depositary Shares listed on the New York Stock Exchange.
(b) On the Effective Date, the authorized capital stock of the
Borrower consists of 1,000 shares of Common Stock, $.01 par value per share, of
which 100 shares are issued and outstanding as of the Effective Date.
(c) On the Effective Date, the authorized capital stock of U.S. Shoe
consists of (i) 60,000,000 shares of Common Stock, no par value, of which
46,958,375 shares are issued and outstanding as of the Effective Date (plus any
additional shares of Common Stock of U.S. Shoe which may have been issued
pursuant to the stock option plans, employee incentive plans and/or stock
purchase plans referred to in Section 4.4(c) of the Merger Agreement), (ii)
750,000 voting preferred shares, no par value, of which no shares are issued and
outstanding as of
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the Effective Date and (iii) 750,000 non-voting preferred shares, no par value,
of which no shares are issued and outstanding as of the Effective Date.
8.15 Subsidiaries. Schedule IV lists each Subsidiary of Luxottica
------------
Group, and the direct and indirect ownership interest of Luxottica Group there-
in, in each case as of the Initial Borrowing Date. All outstanding shares of
capital stock of each Subsidiary of Luxottica Group have been duly and validly
issued, are fully paid and non-assessable and have been issued free of
preemptive rights. Except as set forth on Schedule IV for the respective
Subsidiary, no Subsidiary of Luxottica Group has outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any right
to subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of or any calls,
commitments or claims of any character relating to, its capital stock or any
stock appreciation or similar rights.
8.16 Compliance with Statutes, etc. Each of Luxottica Group and each
------------------------------
of its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls), except such
noncompliances as could not, individually or in the aggregate, reasonably be ex-
pected to have a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Luxottica Group and its Subsidiaries taken as a whole or the Borrower and its
Subsidiaries taken as a whole.
8.17 Investment Company Act. Neither Luxottica Group nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an "invest-
ment company," within the meaning of the Investment Company Act of 1940, as
amended.
8.18 Public Utility Holding Company Act. Neither Luxottica Group nor
----------------------------------
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
8.19 Environmental Matters. (a) Each of Luxottica Group and each of
---------------------
its Subsidiaries has complied with all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws. There are no
pending or, to the best knowledge of Luxottica Group and the Borrower,
threatened
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Environmental Claims against Luxottica Group or any of its Subsidiaries or any
Real Property owned or operated by Luxottica Group or any of its Subsidiaries.
There are no facts, circumstances, conditions or occurrences on any Real
Property owned or operated by Luxottica Group or any of its Subsidiaries or, to
the best knowledge of Luxottica Group and the Borrower, on any property
adjoining or in the vicinity of any such Real Property that could reasonably be
expected (i) to form the basis of an Environmental Claim against Luxottica Group
or any of its Subsidiaries or any such Real Property or (ii) to cause any such
Real Property to be subject to any restrictions on the ownership, occupancy, use
or transferability of such Real Property by Luxottica Group or any of its
Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, or Released on or from, any
Real Property owned or operated by Luxottica Group or any of its Subsidiaries
except in compliance with all Environmental Laws and reasonably required in
connection with the operation, use and maintenance of any such Real Property by
Luxottica Group or such Subsidiary's business.
(c) Notwithstanding anything to the contrary in this Section 8.19,
the representations made in this Section 8.19 shall only be untrue if the effect
of the failures, noncompliances and other circumstances of the types described
above, either individually or in the aggregate, could reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Luxottica Group
and its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken
as a whole.
8.20 Labor Relations. Neither Luxottica Group nor any of its
---------------
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on Luxottica Group and its
Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as a
whole. There is (i) no unfair labor practice complaint pending against
Luxottica Group or any of its Subsidiaries or, to the best knowledge of
Luxottica Group and the Borrower, threatened against any of them, before the
National Labor Relations Board, and no material grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against Luxottica Group or any of its Subsidiaries or, to the best
knowledge of Luxottica Group and the Borrower, threatened against any of them,
(ii) no strike, labor dispute, slowdown or stoppage pending against Luxottica
Group or any of its Subsidiaries or, to the best knowledge of Luxottica Group
and the Borrower, threatened against Luxottica Group or any of its Subsidiaries
and (iii) to the best knowledge of Luxottica Group and the Borrower,
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no union representation proceeding is pending with respect to the employees of
Luxottica Group or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Luxottica Group and its Subsidiaries
taken as a whole or the Borrower and its Subsidiaries taken as a whole.
8.21 Patents, Licenses, Franchises and Formulas. Each of Luxottica
------------------------------------------
Group and each of its Subsidiaries owns all patents, trademarks, permits,
service marks, trade names, copyrights, licenses, franchises and formulas, or
rights with respect to the foregoing, and has obtained assignments of all leases
and other rights of whatever nature, reasonably necessary for the present
conduct of its business, without any known conflict with the rights of others
which, or the failure to obtain which, as the case may be, would result in a
material adverse effect on the business, operations, property, assets, liabil-
ities, condition (financial or otherwise) or prospects of Luxottica Group and
its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as
a whole.
8.22 Indebtedness. Schedule V sets forth a true and complete list of
------------
all Indebtedness of Luxottica Group and its Subsidiaries as of the Initial
Borrowing Date (excluding the Loans, the Letters of Credit and intercompany
Indebtedness, the "Existing Indebtedness"), in each case showing the aggregate
principal amount thereof (and available commitments, if any, thereunder) and the
name of the respective borrower and any other entity which directly or
indirectly guaranteed such debt.
8.23 Offer to Purchase. All necessary governmental and third party
-----------------
approvals in connection with the purchase of Shares pursuant to the Offer to
Purchase, the transactions contemplated thereby and otherwise referred to
therein have been or, prior to the time when required, will have been, obtained
and remain in effect, and all applicable waiting periods have or, prior to the
time when required, will have, expired without, in all such cases, any action
being taken by any competent authority which restrains, prevents, imposes
materially adverse conditions upon or unduly hinders, the consummation of the
purchase of Shares pursuant to the Offer to Purchase. Additionally, there does
not exist any judgment, order, injunction or other restraint issued or filed
with respect to the purchase of Shares pursuant to the Offer to Purchase, or the
making of Loans, or the performance by the Credit Parties of their obligations
under the Documents. At the time of their dissemination to the public, the
Offer to Purchase and any amendments or supplements thereto and all documents
required to be filed by Luxottica Group
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or Bidco, pursuant to the Securities Exchange Act of 1934, as amended, copies of
which documents have been or will be delivered to each Bank (other than exhibits
to such filings, which have been made available to each Bank upon request
therefor), do not and will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which made, not misleading.
8.24 Tender Offer. At the time of consummation thereof, the Tender
------------
Offer shall have been consummated in accordance with the terms of the Tender
Offer Documents and all applicable laws. At the time of consummation of the
Tender Offer, all consents and approvals of, and filings and registrations with,
and all other actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate the Tender Offer will
have been obtained, given, filed or taken and are or will be in full force and
effect (or effective judicial relief with respect thereto has been obtained).
All applicable waiting periods with respect thereto have or, prior to the time
when required, will have, expired without, in all such cases, any action being
taken by any competent authority which restrains, prevents, or imposes material
adverse conditions upon the Tender Offer. Additionally, there does not exist
any judgment, order or injunction prohibiting or imposing material adverse
conditions upon the Tender Offer, or the occurrence of any Credit Event or the
performance by Luxottica Group or any of its Subsidiaries of their respective
obligations under the respective Documents. All actions taken by Luxottica
Group or any of its Subsidiaries pursuant to or in furtherance of the Tender
Offer have been taken in compliance with the Tender Offer Documents and all
applicable laws. On the Initial Borrowing Date, a sufficient number of Shares
have been tendered and purchased by Bidco pursuant to the Offer to Purchase to
permit Bidco to consummate the Merger with only the vote of the Shares owned by
it, and no other vote (including, without limitation, of any other shareholder
of U.S. Shoe) shall be required in order to consummate the Merger. There is no
applicable state shareholder protection, anti-takeover or other legislation
which would delay, or prevent, the consummation of the Acquisition.
8.25 Merger. At the time of consummation thereof, the Merger shall
------
have been consummated in accordance with the terms of the Merger Documents and
all applicable laws. At the time of consummation of the Merger, all consents
and approvals of, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
in order to make or consummate the Merger will have been obtained, given, filed
or taken and are or will be in full force and effect (or effective judicial
relief with respect thereto has been obtained). All applicable waiting periods
with respect thereto have or, prior to the time when required, will have,
expired without, in all such cases, any action
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being taken by any competent authority which restrains, prevents, or imposes
material adverse conditions upon the Merger. Additionally, there does not exist
any judgment, order or injunction prohibiting or imposing material adverse
conditions upon the Merger, or the occurrence of any Credit Event or the
performance by Luxottica Group or any of its Subsidiaries of their respective
obligations under the respective Documents. All actions taken by Luxottica
Group or any of its Subsidiaries pursuant to or in furtherance of the Merger
have been taken in compliance with the Merger Documents and all applicable laws.
SECTION 9. Affirmative Covenants. The Borrower hereby covenants and
---------------------
agrees that on and after the Effective Date and until the Total Commitments and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings,
together with interest, Fees and all other Obligations incurred hereunder and
thereunder, are paid in full:
9.01 Information Covenants. The Borrower shall furnish to the
---------------------
Administrative Agent and each Bank:
(a) Quarterly Financial Statements. Within 60 days after the close
------------------------------
of each of the first three quarterly accounting periods in each fiscal year
of Luxottica Group, the consolidated balance sheet of Luxottica Group and
its Subsidiaries and the consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries, in each case as at the end of such
quarterly accounting period and the related consolidated and, in the case
of the Borrower and its Subsidiaries, consolidating statements of income
and retained earnings and statement of cash flows for such quarterly
accounting period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly accounting period, in each case setting
forth comparative figures for the related periods in the prior fiscal year,
all of which shall be certified by the chief financial officer of Luxottica
Group, subject to normal year-end adjustments.
(b) Annual Financial Statements. (i) Within 120 days after the
---------------------------
close of each fiscal year of Luxottica Group, the consolidated balance
sheet of Luxottica Group and its Subsidiaries and the consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries, in each
case as at the end of such fiscal year and the related consolidated and, in
the case of the Borrower and its Subsidiaries, consolidating statements of
income and retained earnings and of cash flows for such fiscal year setting
forth comparative figures for the preceding fiscal year and, in the case of
the consolidated financial statements, audited by Deloitte & Touche or such
other independent
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certified public accountants of recognized national standing reasonably
acceptable to the Administrative Agent, together with a report of such
accounting firm stating that in the course of its regular audit of the
financial statements of Luxottica Group and its Subsidiaries, which audit
was conducted in accordance with auditing standards generally accepted in
Italy, which do not differ in any significant respect from auditing
standards generally accepted in the United States, such accounting firm
obtained no knowledge of any Default or Event of Default which has occurred
and is continuing with respect to the covenants set forth in Sections 10.07
through 10.10, inclusive, or, if in the opinion of such accounting firm
such a Default or an Event of Default has occurred and is continuing, a
statement as to the nature thereof and (ii) concurrently with the filing
thereof with the SEC, management's discussions and analysis of the
important operational and financial developments during such fiscal year as
contained in the Annual Report on Form 20-F filed by Luxottica Group with
the SEC.
(c) Budgets. No later than 60 days following the commencement of
-------
each fiscal year of Luxottica Group, a budget in form satisfactory to the
Administrative Agent (including budgeted statements of income and sources
and uses of cash and balance sheets) prepared by Luxottica Group for each
of the five years immediately following such fiscal year prepared in sum-
mary form, in each case, of Luxottica Group and its Subsidiaries (and, in
the case of U.S. Shoe and its Subsidiaries, on a consolidated basis and on
a division by division basis), accompanied by the statement of the chief
financial officer or treasurer of Luxottica Group to the effect that, to
the best of such officer's knowledge, the budget is a reasonable estimate
for the period covered thereby.
(d) Management Letters. Promptly after the receipt thereof by
------------------
Luxottica Group or any of its Subsidiaries, a copy of any "management let-
ter" received by Luxottica Group or such Subsidiary from its certified pub-
lic accountants delivered to its board of directors and the management's
responses thereto.
(e) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 9.01(a) and (b), a certificate
of the chief financial officer of Luxottica Group to the effect that, to
the best of such officer's knowledge, no Default or Event of Default has
occurred and is continuing or, if any Default or Event of Default has
occurred and is continuing, specifying the nature and extent thereof, which
certificate shall, (i) if delivered with the financial statements required
by Section 9.01(a) or (b), set
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forth (x) the calculations required to establish whether Luxottica Group
and its Subsidiaries were in compliance with the provisions of Sections
4.02(e), 10.03, 10.04, 10.05 and 10.07 through 10.10, inclusive, at the end
of such fiscal quarter or year, as the case may be, and (y) the convenience
translations and reconciliations required by Section 14.07 necessary to
calculate the financial covenants set forth in such Sections 10.07 through
10.10, inclusive, at the end of such fiscal quarter or year, as the case
may be, and (ii) if delivered with the financial statements required by
Section 9.01(b), set forth the calculations required to establish the
amount of Excess Cash Flow for the respective Excess Cash Payment Period
and whether Luxottica Group and its Subsidiaries were in compliance with
the provisions of Section 4.02(f).
(f) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after an officer of Luxottica Group or any of
its Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of
any event which constitutes a Default or an Event of Default and (ii) any
litigation or governmental investigation or proceeding pending (x) against
Luxottica Group or any of its Subsidiaries which could reasonably be ex-
pected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or pros-
pects of Luxottica Group and its Subsidiaries taken as a whole or the
Borrower and its Subsidiaries taken as a whole, (y) with respect to any
material Indebtedness of Luxottica Group or any of its Subsidiaries or (z)
with respect to any Document.
(g) Other Reports and Filings. Promptly, copies of all financial
-------------------------
information, proxy materials and other information and reports, if any,
which Luxottica Group or any of its Subsidiaries shall file with the
Securities and Exchange Commission or any successor thereto (the "SEC") or
deliver to holders of its Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other
representative therefor).
(h) Environmental Matters. Promptly upon, and in any event within
---------------------
ten Business Days after, an officer of Luxottica Group or any of its
Subsidiaries obtains knowledge thereof, notice of one or more of the
following environmental matters, unless such environmental matters could
not, individually or when aggregated with all other such environmental
matters, be reasonably expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or
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prospects of Luxottica Group and its Subsidiaries taken as a whole or the
Borrower and its Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim against
Luxottica Group or any of its Subsidiaries or any Real Property owned
or operated by Luxottica Group or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by Luxottica Group or any of its Subsidi-
aries that (a) results in noncompliance by Luxottica Group or any of
its Subsidiaries with any applicable Environmental Law or (b) could
reasonably be expected to form the basis of an Environmental Claim
against Luxottica Group or any of its Subsidiaries or any such Real
Property;
(iii) any condition or occurrence on any Real Property owned or
operated by Luxottica Group or any of its Subsidiaries that could rea-
sonably be expected to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability by
Luxottica Group or any of its Subsidiaries of such Real Property under
any Environmental Law; and
(iv) the taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated by Luxottica Group or any of its Subsidi-
aries as required by any Environmental Law or any governmental or
other administrative agency; provided that in any event Luxottica
--------
Group and each of its Subsidiaries shall deliver to each Bank all
notices received by it or any of its Subsidiaries from any government
or governmental agency under, or pursuant to, CERCLA.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and Luxottica Group's or such Subsidiary's response thereto. In addition,
Luxottica Group and each of its Subsidiaries will provide the Banks with
copies of all material communications with any government or governmental
agency relating to Environmental Laws, all communications (except for
routine communications in the ordinary course of business) with any Person
(other than its attorneys) relating to any Environmental Claim of which
notice is required to be given pursuant to this Section 9.01(h), and such
detailed
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reports of any such Environmental Claim as may reasonably be requested by
the Banks.
(i) Footwear and Apparel Information. Copies of any financial
--------------------------------
statements or material notices delivered by or to U.S. Shoe or any of its
Subsidiaries pursuant to the Nine West Agreement or any other agreement for
the sale of all or any part of the Footwear Division or the Apparel
Division, which financial statements and/or material notices shall be
delivered to the Administrative Agent and each of the Banks within five
days after Luxottica Group or any of its Subsidiaries receives a copy
thereof or delivers any such financial statement or notice.
(j) Certain Historical Financial Information with Respect to U.S.
-------------------------------------------------------------
Shoe. (A) Promptly, and in any event within five Business Days, after
----
Luxottica Group or any of its Subsidiaries receives same (or after same is
made available to any such Person), the consolidated balance sheet of U.S.
Shoe and its Subsidiaries as at the end of any quarterly or annual
accounting period of U.S. Shoe and its Subsidiaries (beginning with its
fiscal year ended January 28, 1995 or, if financial statements for such
fiscal year have already been furnished to the Banks pursuant to Section
5A.10(iii), the first fiscal quarter of U.S. Shoe ended thereafter) which
ends on or prior to the Initial Borrowing Date, and the related
consolidated statements of income and retained earnings and statement of
cash flows for such quarterly or annual accounting period in the form
prepared by U.S. Shoe for filing with the SEC on Form 10-Q or 10-K, as the
case may be, or if U.S. Shoe no longer files financial statements with the
SEC on such Forms, in substantially similar form.
(B) Notwithstanding anything to the contrary contained in preceding
clause (A), if the financial statements referenced in preceding clause (A)
for each quarterly or annual accounting period (x) beginning with the
fiscal year of U.S. Shoe ended January 28, 1995 or, if financial statements
for such period have already been furnished to the Banks pursuant to
Section 5A.10(iii), the first fiscal quarter ended thereafter and (y) ended
on or prior to the Initial Borrowing Date, have not been furnished to the
Banks on or prior to the 60th day after the Initial Borrowing Date (because
same were not theretofore available), all such financial statements shall
be furnished to the Banks on the 60th day after the Initial Borrowing Date.
(C) Within 90 days after the Initial Borrowing Date, a consolidated
balance sheet of U.S. Shoe as of the Initial Borrowing Date and the related
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consolidated statements of income, retained earnings and cash flows for the
period beginning on the first day after the last day of the fiscal quarter
of U.S. Shoe last ended prior to the Initial Borrowing Date and ending on
the Initial Borrowing Date (taken as one accounting period), and otherwise
prepared on a basis consistent with the financial statements theretofore
filed by U.S. Shoe with the SEC on Form 10-Q.
(k) Certain Pro Forma Financial Information. For each Test Period
----------------------------------------
which ends less than one year after the Initial Borrowing Date,
consolidated income statements of Luxottica Group and its Subsidiaries for
such Test Period which shall contain historical financial information for
that portion of the Test Period which occurs after the Initial Borrowing
Date and pro forma financial information for that portion of the Test
--- -----
Period which occurs prior to the Initial Borrowing Date, which pro forma
--- -----
financial information shall be calculated as if the Acquisition, the
Refinancing, the related financing thereof and the other transactions
contemplated hereby had been consummated on the first day of such Test
Period, shall be calculated and presented in a manner consistent with the
pro forma income statements referred to in Section 8.05(a) which were
furnished to the Banks on or prior to the Initial Borrowing Date (except
that the pro forma financial information for Luxottica Group and its
Subsidiaries and U.S. Shoe and its Subsidiaries shall be presented for the
same periods), and shall be delivered at the same time as the respective
quarterly or annual financial statements are delivered pursuant to Section
9.01(a) or 9.01(b), as the case may be.
(l) Other Information. From time to time, such other information or
-----------------
documents (financial or otherwise) with respect to Luxottica Group or its
Subsidiaries as any Bank may reasonably request in writing.
9.02 Books, Records and Inspections. The Borrower will, and will
------------------------------
cause each of its Subsidiaries to, and the Borrower will take all actions so
that Luxottica Group and each of its other Subsidiaries will, keep proper books
of record and account in which full, true and correct entries in conformity with
GAAP and all requirements of law shall be made of all dealings and transactions
in relation to its business and activities. The Borrower will, and will cause
each of its Subsidiaries to, and the Borrower will take all actions so that
Luxottica Group and each of its other Subsidiaries will, permit officers and
designated representatives of the Administrative Agent or any Bank to visit and
inspect upon reasonable notice, during regular business hours and under guidance
of officers of Luxottica Group or such Subsidiary, any of the properties of
Luxottica Group or such Subsidiary, and to examine the books of account of
Luxottica Group or such Subsidiary and discuss
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the affairs, finances and accounts of Luxottica Group or such Subsidiary with,
and be advised as to the same by, its and their officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or such Bank may reasonably request.
9.03 Maintenance of Property; Insurance. (a) Schedule VI sets forth
----------------------------------
a true and complete listing of all insurance maintained by Luxottica Group and
its Subsidiaries (other than U.S. Shoe and its Subsidiaries) as of the Initial
Borrowing Date. The Borrower will, and will cause each of its Subsidiaries to,
and the Borrower will take all actions so that Luxottica Group and each of its
Subsidiaries will, (i) keep all property necessary in their respective
businesses in good working order and condition (ordinary wear and tear
excepted), (ii) maintain insurance on all their respective property in at least
such amounts and against at least such risks as is consistent and in accordance
with industry practice and (iii) furnish to each Bank, upon written request,
full information as to the insurance carried. In addition to the requirements
of the immediately preceding sentence, Luxottica Group and its Subsidiaries will
at all times cause insurance of the types described in Schedule VI to be
maintained (with at least the same scope of coverage as that described in Sched-
ule VI) at levels which are at least as great as the respective amount described
opposite the respective type of insurance on Schedule VI under the column headed
"Maximum Amount Required to be Maintained," it being understood and agreed that
this Section 9.03 shall apply to U.S. Shoe and its Subsidiaries after the Merger
Borrowing Date and based on the Schedule VI delivered pursuant to Section 6.04.
(b) The Borrower will, and will cause each of its Subsidiaries to,
and the Borrower will take all actions so that Luxottica Group and each of its
other Subsidiaries will, at all times keep their respective property insured in
favor of the Collateral Agent, and all policies (including Mortgage Policies) or
certificates (or certified copies thereof) with respect to such insurance (and
any other insurance maintained by Luxottica Group or any of its Subsidiaries)
(i) shall be endorsed to the Collateral Agent's satisfaction for the benefit of
the Collateral Agent (including, without limitation, by naming the Collateral
Agent as loss payee or as an additional insured or, in the case of property
insurance maintained by Luxottica Group or any of its Italian Subsidiaries, by
noting a charge on such policy in favor of the Collateral Agent), (ii) shall
state that such insurance policies shall not be cancelled without at least 20
days' prior written notice thereof by the respective insurer to the Collateral
Agent, (iii) shall provide that the respective insurers irrevocably waive any
and all rights of subrogation with respect to the Collateral Agent and the
Secured Creditors, (iv) shall contain the standard non-contributory mortgagee
clause endorsement in favor of the Collateral Agent with respect to hazard
insurance coverage, (v) shall, with respect to property and casualty insurance,
provide that any
- -------
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losses shall be payable to the Collateral Agent as loss payee or as an
additional insured notwithstanding (A) any act or neglect of Luxottica Group or
any of its Subsidiaries, (B) the occupation or use of the properties for
purposes more hazardous than those permitted by the terms of the respective
policy if such coverage is obtainable at commercially reasonable rates and is of
the kind from time to time customarily insured against by Persons owning or
using similar property and in such amounts as are customary, (C) any foreclosure
or other proceeding relating to the insured properties prior to the time of any
purchase by a third party pursuant to any such foreclosure or other proceeding
if such coverage is available at commercially reasonable rates or (D) any change
in the title to or ownership or possession of the insured properties by and
among Luxottica Group and its Subsidiaries and (vi) shall be deposited with the
Collateral Agent, provided that the provisions of clauses (iii), (iv) and (v)
above shall only apply to the Borrower and the other Domestic Subsidiaries of
Luxottica Group. It is understood and agreed that any property insurance
required to be maintained by Luxottica Group or any of its Subsidiaries may
provide that, so long as neither the Administrative Agent nor the Collateral
Agent has notified the respective insurer that a Default or an Event of Default
exists, any losses payable under such policies of less than $10,000,000 may be
paid directly to Luxottica Group or such Subsidiary.
(c) If Luxottica Group or any of its Subsidiaries shall fail to
maintain all insurance in accordance with this Section 9.03, or if Luxottica
Group or any of its Subsidiaries shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Administrative Agent and/or
the Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and Luxottica Group and the Borrower agree to reimburse
the Administrative Agent or the Collateral Agent, as the case may be, for all
costs and expenses of procuring such insurance.
9.04 Corporate Franchises. The Borrower will, and will cause each of
--------------------
its Subsidiaries to, and the Borrower will take all actions so that Luxottica
Group and each of its other Subsidiaries will, do or cause to be done, all
things necessary to preserve and keep in full force and effect their respective
existence and material rights, franchises, licenses and patents; provided,
--------
however, that nothing in this Section 9.04 shall prevent (i) sales of assets by
- -------
Luxottica Group or any of its Subsidiaries in accordance with Section 10.02 or
(ii) the withdrawal by Luxottica Group or any of its Subsidiaries of their
qualification as a foreign corporation in any jurisdiction where such withdrawal
could not reasonably be expected to have a material adverse effect on the busi-
ness, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Luxottica Group and its Subsidiaries taken as a whole
or the Borrower and its Subsidiaries taken as a whole.
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9.05 Compliance with Statutes, etc. The Borrower will, and will
------------------------------
cause each of its Subsidiaries to, and the Borrower will take all actions so
that Luxottica Group and each of its other Subsidiaries will, comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the con-
duct of its business and the ownership of its property, except such noncom-
pliances as could not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Luxottica Group
and its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken
as a whole.
9.06 Compliance with Environmental Laws. (a) The Borrower will
----------------------------------
comply, and will cause each of its Subsidiaries to comply, and the Borrower will
take all actions so that Luxottica Group and each of its other Subsidiaries will
comply, with all Environmental Laws applicable to the ownership or use of its
Real Property now or hereafter owned or operated by Luxottica Group or any of
its Subsidiaries, except such noncompliances as could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Luxottica Group and its Subsidiaries taken as a whole
or the Borrower and its Subsidiaries taken as a whole, and all such Persons will
within a reasonable time period pay or cause to be paid all costs and expenses
incurred in connection with such compliance, and will keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to such
Environmental Laws. Neither Luxottica Group nor any of its Subsidiaries will
generate, use, treat, store, release or dispose of, or permit the generation,
use, treatment, storage, release or disposal of Hazardous Materials on any Real
Property now or hereafter owned or operated by Luxottica Group or any of its
Subsidiaries, or transport or permit the transportation of Hazardous Materials
to or from any such Real Property except for Hazardous Materials used or stored
at any such Real Properties in material compliance with all applicable Environ-
mental Laws and reasonably required in connection with the operation, use and
maintenance of any such Real Property.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, the Borrower will provide, at the
Borrower's sole cost and expense, an environmental site assessment report con-
cerning any Mortgaged Property, prepared by an environmental consulting firm
approved by the Administrative Agent, indicating the presence or absence of
Hazardous Materials and the potential cost of any removal or remedial action in
connection with any Hazardous Materials on such Mortgaged Property; provided,
--------
that such request may
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be made only if (i) there has occurred and is continuing an Event of Default,
(ii) the Administrative Agent reasonably believes that the respective Credit
Party or any such Mortgaged Property is not in material compliance with Environ-
mental Law, or (iii) circumstances exist that reasonably could be expected to
form the basis of a material Environmental Claim against such Credit Party or
any such Mortgaged Property. If the Borrower fails to provide the same within
90 days after such request was made, the Administrative Agent may order the
same, and the Borrower shall grant and hereby grants to the Administrative Agent
and the Banks and their agents access to such Mortgaged Property and
specifically grants the Administrative Agent and the Banks an irrevocable non-
exclusive license, subject to the rights of tenants, to undertake such an
assessment, all at the Borrower's sole cost and expense.
9.07 ERISA. As soon as possible and, in any event, within 10 days
-----
after Luxottica Group, any Subsidiary of Luxottica Group or any ERISA Affiliate
knows or has reason to know of the occurrence of any of the following, the
Borrower will deliver to the Administrative Agent a certificate of the chief
financial officer or other senior officer of the Borrower setting forth details
as to such occurrence and the action, if any, that Luxottica Group, such
Subsidiary or such ERISA Affiliate is required or proposes to take, together
with any notices, if any, required or proposed to be given to or filed with or
by Luxottica Group, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably expected to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
contribution required to be made by Luxottica Group or a Subsidiary of Luxottica
Group or an ERISA Affiliate under a Plan or a Foreign Pension Plan was not made
when due, the failure of which has had or is reasonably likely to result in a
material liability; that a Plan has been or is reasonably expected to be termi-
nated, reorganized, partitioned or declared insolvent under Title IV of ERISA;
that a Plan has an Unfunded Current Liability giving rise to a lien under ERISA
or the Code; that proceedings are reasonably likely to be or have been
instituted to terminate or appoint a trustee to administer a Plan; that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that Luxottica Group, any Subsidiary of
Luxottica Group or any ERISA Affiliate will or is reasonably expected to incur
any liability (including any indirect, contingent, or secondary liability) to or
on account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971 or 4975 of the
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Code or Section 409 or 502(i) or 502(l) of ERISA; that Luxottica Group or any
Subsidiary of Luxottica Group is reasonably likely to incur any material
liability pursuant to any employee welfare benefit plan (as defined in Section
3(1) of ERISA) that provides benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA); or that Luxottica
Group or any Subsidiary of Luxottica Group may reasonably be expected to incur
any material liability prior to the Final Maturity Date pursuant to any employee
pension benefit plan (as defined in Section 3(2) of ERISA) other than a Plan.
Luxottica Group will deliver to the Administrative Agent (with sufficient copies
for each of the Banks) a complete copy of the annual report (Form 5500) of each
Plan (including, to the extent required, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information) required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Banks
pursuant to the first sentence hereof, copies of annual reports and any material
notices received by Luxottica Group, any Subsidiary of Luxottica Group or any
ERISA Affiliate with respect to any Plan or Foreign Pension Plan shall be
delivered to the Administrative Agent (with sufficient copies for each of the
Banks) no later than 20 days after the date such report has been filed with the
Internal Revenue Service or such notice has been received by Luxottica Group,
the Subsidiary or the ERISA Affiliate, as applicable.
9.08 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
------------------------------------
financial reporting purposes, cause (i) each of its, Luxottica Group's, and each
of Luxottica Group's Subsidiaries' fiscal years to end on December 31 and
(ii) each of its, Luxottica Group's and each of Luxottica Group's Subsidiaries'
fiscal quarters to end on the last day of each March, June, September and
December, provided that U.S. Shoe and its Subsidiaries shall have until
December 31, 1995 to cause each of its fiscal quarters and fiscal years to end
as provided in clauses (i) and (ii) above.
9.09 Performance of Obligations. The Borrower will, and will cause
--------------------------
each of its Subsidiaries to, and the Borrower will take all actions so that
Luxottica Group and each of its other Subsidiaries will, perform all of its
obligations under the terms of each mortgage, indenture, security agreement and
other debt instrument by which it is bound, except such non-performances as
could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, operations, property, assets, liabil-
ities, condition (financial or otherwise) or prospects of Luxottica Group and
its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as
a whole.
9.10 Payment of Taxes. The Borrower will, and will cause each of its
----------------
Subsidiaries to, and the Borrower will take all actions so that Luxottica Group
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and each of its other Subsidiaries will, pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, in each case on a
timely basis, and all lawful claims which, if unpaid, might become a Lien or
charge upon any properties of Luxottica Group or any of its Subsidiaries, prov-
ided that neither Luxottica Group nor any of its Subsidiaries shall be required
to pay any such tax, assessment, charge, levy or claim which is being contested
in good faith and by proper proceedings if it has maintained adequate reserves
with respect thereto as and to the extent required by GAAP.
9.11 Additional Mortgages; Title Insurance; Surveys. Within 60 days
----------------------------------------------
following the Merger Borrowing Date, the Borrower shall have caused to be
delivered to the Collateral Agent:
(a) fully executed counterparts of Mortgages in form and substance
satisfactory to the Administrative Agent, which Mortgages shall cover such
of the Real Property owned by U.S. Shoe or any of its Subsidiaries (other
than with respect to any owned Real Property (i) to be sold in connection
with the sale of the Footwear Division under the Nine West Agreement, so
long as such sale is consummated by September 30, 1995 or (ii) used
exclusively in the Apparel Division, unless otherwise required by the
Administrative Agent or the Required Banks) as shall be designated as a
Mortgaged Property by the Administrative Agent or the Required Banks, toge-
ther with evidence that counterparts of such Mortgages have been delivered
to the title insurance company insuring the Lien of such Mortgages for
recording in all places to the extent necessary or, in the reasonable
opinion of the Collateral Agent, desirable to effectively create a valid
and enforceable first priority mortgage lien on each such Mortgaged
Property (subject only to Permitted Encumbrances) in favor of the
Collateral Agent (or such other trustee as may be required or desired under
local law) for the benefit of the Secured Creditors;
(b) Mortgage Policies on each Mortgaged Property owned by U.S. Shoe
or any of its Subsidiaries issued by title insurers reasonably satisfactory
to the Administrative Agent in amounts satisfactory to the Administrative
Agent assuring the Administrative Agent that the Mortgages on such
Mortgaged Properties are valid and enforceable first priority mortgage
liens on the respective Mortgaged Properties, free and clear of all defects
and encumbrances except Permitted Encumbrances and such Mortgage Policies
shall otherwise be required to be in form and substance satisfactory to the
Administrative Agent and shall include, as appropriate, an endorsement for
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future advances under this Agreement and the Notes and for any other matter
that the Administrative Agent in its reasonable discretion may reasonably
request, shall not include an exception for mechanics' liens, and shall
provide for affirmative insurance and such reinsurance as the
Administrative Agent in its discretion may reasonably request; and
(c) a survey in form and substance satisfactory to the Administrative
Agent for each Mortgaged Property owned by U.S. Shoe or any of its
Subsidiaries, certified by a licensed professional surveyor reasonably
satisfactory to the Administrative Agent.
9.12 Additional Security; Further Assurances. (a) The Borrower
---------------------------------------
will, and will cause each other Wholly-Owned Domestic Subsidiary of Luxottica
Group to, grant to the Collateral Agent security interests and mortgages in such
Real Property of the Borrower or any other Wholly-Owned Domestic Subsidiary of
Luxottica Group as are not covered by the Mortgages delivered pursuant to
Section 5A.14 or 9.11, as may be requested from time to time by the
Administrative Agent or the Required Banks. All such security interests and
mortgages shall be granted pursuant to Mortgages satisfactory in form and
substance to the Administrative Agent and shall constitute valid and enforceable
perfected Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as are permitted by Section 10.01 at the time
of perfection thereof. Such Mortgages or instruments related thereto shall have
been duly recorded or filed in such manner and in such places as are required by
law to establish, perfect, preserve and protect the Liens in favor of the
Collateral Agent required to be granted pursuant to such Mortgages and all
taxes, fees and other charges payable in connection therewith shall have been
paid in full.
(b) The Borrower will, and will cause each of its Subsidiaries to,
and the Borrower will take all actions so that Luxottica Group and each of its
other Subsidiaries will, at their expense, make, execute, endorse, acknowledge,
file and/ or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to the
Collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, Luxottica Group and the Borrower shall cause
to be delivered to the Collateral Agent such opinions of counsel, Mortgage
Policies, surveys and other related documents as may be requested by the
Collateral Agent to assure itself that this Section 9.12 has been complied with.
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(c) The Borrower agrees that each action required above by this
Section 9.12 shall be completed as soon as possible, but in no event later than
60 days after such action is requested to be taken by the Administrative Agent
or the Required Banks.
(d) To the extent Luxottica Group or any of its Subsidiaries creates,
establishes or acquires any Wholly-Owned Domestic Subsidiary after the Initial
Borrowing Date in accordance with the other provisions of this Agreement, each
such Wholly-Owned Domestic Subsidiary shall be required to become a party to
each of the Subsidiaries Guaranty, the Security Agreement, the Pledge Agreement
and the Contribution Agreement by executing a counterpart thereof or by entering
into an amendment thereto satisfactory to the Administrative Agent and 100% of
the capital stock of such new Wholly-Owned Domestic Subsidiary shall be pledged
pursuant to the Pledge Agreement. In connection with the foregoing, to the
extent requested by the Administrative Agent or the Collateral Agent, such
Wholly-Owned Domestic Subsidiary shall be required to deliver such relevant
documentation (including opinions of counsel, UCC-1 Financing Statements and
officer's certificates) of the type described in Section 5A as the respective
Wholly-Owned Domestic Subsidiary would have had delivered if it were a Credit
Party on the Initial Borrowing Date. The Borrower agrees that each action
required to be taken pursuant to this clause (d) shall be completed
contemporaneously with the creation, establishment or acquisition of such
Wholly-Owned Domestic Subsidiary. In addition to the foregoing, all other
Pledged Securities acquired after the Effective Date by any Credit Party party
to the Pledge Agreement shall, to the extent required by the Pledge Agreement,
be delivered to the Collateral Agent for pledge pursuant to the Pledge
Agreement.
9.13 Interest Rate Protection. If the Footwear Division is not sold
------------------------
by September 30, 1995, the Borrower will, no later than 45 days following
September 30, 1995, enter into Interest Rate Protection Agreements in form and
substance satisfactory to the Administrative Agent, with a term through December
31, 1996, establishing a fixed or maximum interest rate acceptable to the
Administrative Agent for an aggregate amount equal to at least 50% of the
aggregate outstanding principal amount of the Term Loans then outstanding, it
being understood and agreed that in no event shall the Administrative Agent
require the Borrower to enter into any Interest Rate Protection Agreement which
provides for a fixed or maximum interest rate of less than 3% in excess of the
"LIBOR" rate as in effect at the time of the entering into of any such Interest
Rate Protection Agreement.
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9.14 Ownership of Subsidiaries. Except to the extent otherwise
-------------------------
permitted by this Agreement, the Borrower shall take all actions so that
Luxottica Group will own (directly or through one or more Wholly-Owned
Subsidiaries), 100% of the capital stock of each of its Subsidiaries, provided
that with respect to those Subsidiaries of Luxottica Group listed on Schedule IV
which are non-Wholly-Owned Subsidiaries, the Borrower shall take all actions so
that Luxottica Group will maintain at least the ownership percentage in such
Subsidiaries as set forth on such Schedule IV.
9.15 Consummation of the Merger and Refinancing. (a) The Borrower
------------------------------------------
will, and will cause each of its Subsidiaries to, consummate the Merger within
120 days following the Initial Borrowing Date. On the date that the Merger is
consummated (and whether or not any Loans are incurred on such date), the
Borrower will, and will cause each of its Subsidiaries to, take all actions
required to be taken by the respective Credit Parties pursuant to Section 6.
(b) The Borrower will, and will cause each of its Subsidiaries to,
consummate the Refinancing within 120 days following the Merger Borrowing Date.
At the time of the consummation of the Refinancing, all commitments under the
Indebtedness to be Refinanced shall have been terminated and all loans -
thereunder shall have been repaid in full, together with interest thereon, all
letters of credit issued thereunder shall have been terminated, and all other
amounts owing pursuant thereto shall have been repaid in full, and the
Administrative Agent shall have received evidence in form, scope and substance
satisfactory to it that the matters set forth in this Section 9.15 have been
satisfied on such date. In addition, at the time of the consummation of the
Refinancing, the creditors under the Indebtedness to be Refinanced shall have
terminated and released all security interests and Liens (if any) on the assets
owned by U.S. Shoe or any of its Subsidiaries, and the Administrative Agent
shall have received such releases of security interests in and Liens on the
assets owned by such Credit Parties as may have been requested by the
Administrative Agent, which releases shall be required to be in form and
substance satisfactory to the Administrative Agent. Without limiting the
foregoing, there shall have been delivered (i) proper termination statements
(Form UCC-3 or the appropriate equivalent) for filing under the UCC of each
jurisdiction where a financing statement (Form UCC-1 or the appropriate equiva-
lent) was filed with respect to U.S. Shoe or any of its Subsidiaries in connec-
tion with the security interests created with respect to the Indebtedness to be
Refinanced and the documentation related thereto, (ii) terminations or
assignments of any security interest in, or Lien on, any patents, trademarks,
copyrights, or similar interests of U.S. Shoe or any of its Subsidiaries on
which filings have been made and (iii) terminations of all mortgages, leasehold
mortgages and deeds of trust created with
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respect to property of U.S. Shoe or any of its Subsidiaries, all of which shall
be required to be in form and substance satisfactory to the Administrative
Agent.
SECTION 10. Negative Covenants. The Borrower hereby covenants and
------------------
agrees that on and after the Effective Date and until the Total Commitments and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Drawings,
together with interest, Fees and all other Obligations incurred hereunder and
thereunder, are paid in full:
10.01 Liens. The Borrower will not, and will not permit any of its
-----
Subsidiaries to, and the Borrower will take all actions so that neither
Luxottica Group nor any of its other Subsidiaries will, create, incur, assume or
suffer to exist any Lien upon or with respect to any property or assets (real or
personal, tangible or intangible) of Luxottica Group or any of its Subsidiaries,
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable with recourse to
Luxottica Group or any of its Subsidiaries), or assign any right to receive in-
come or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute; provided
--------
that the provisions of this Section 10.01 shall not prevent the creation, in-
currence, assumption or existence of the following (Liens described below are
herein referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP;
(ii) Liens in respect of property or assets of Luxottica Group or any
of its Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money, such
as carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of Luxottica Group's
or such Subsidiary's property or assets or materially impair the use there-
of in the operation of the business of Luxottica Group or such Subsidiary
or (y) which are being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of
the property or assets subject to any such Lien;
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(iii) Liens in existence on the Effective Date which, in the case of
Luxottica Group and its Subsidiaries (other than U.S. Shoe and its
Subsidiaries), are listed, and the property subject thereto described, in
Schedule VII, and any renewals or extensions of such Liens so long as the
aggregate principal amount of the Indebtedness, if any, secured by such
Liens does not increase from that amount outstanding at the time of any
such renewal or extension and any such renewal or extension does not
encumber any additional assets of Luxottica Group or any of its
Subsidiaries than those assets encumbered on the Effective Date, provided,
in any event, that any Liens securing the Indebtedness to be Refinanced
shall only be permitted through the earlier of (x) the consummation of the
Refinancing and (y) the 120th day following the Merger Borrowing Date;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) Liens placed upon equipment or machinery used in the ordinary
course of business of Luxottica Group or any of its Subsidiaries at the
time of acquisition thereof by Luxottica Group or any such Subsidiary or
within 90 days thereafter to secure Indebtedness incurred to pay all or a
portion of the purchase price thereof provided that (x) the aggregate
--------
outstanding principal amount of all Indebtedness secured by Liens permitted
by this clause (vi) shall not at any time exceed $10,000,000 and (y) in all
events, the Lien encumbering the equipment or machinery so acquired does
not encumber any other asset of Luxottica Group or such Subsidiary;
(vii) Liens placed upon assets subject to Capitalized Lease Obligations
to the extent permitted by Section 10.04(vi), provided that (x) such Liens
only secure the payment of Indebtedness arising under such Capitalized
Lease Obligation and (y) the Lien encumbering the asset giving rise to the
Capitalized Lease Obligation does not encumber any other asset of Luxottica
Group or any of its Subsidiaries;
(viii) easements, rights-of-way, restrictions (including zoning restric-
tions), encroachments, protrusions and other similar charges or encum-
brances, and minor title deficiencies, in each case whether now or
hereafter in existence, not securing Indebtedness and not materially inter-
fering with the conduct of the business of Luxottica Group or any of its
Subsidiaries;
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(ix) Liens arising from precautionary UCC financing statement filings
regarding operating leases;
(x) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of Luxottica Group or any of
its Subsidiaries;
(xi) statutory and contractual landlord's liens under leases to which
Luxottica Group or any of its Subsidiaries is a party; and
(xii) Liens (other than any Lien imposed by ERISA) (x) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, (y) to secure the performance of tenders, statutory obligations
(other than excise taxes), surety, stay, customs and appeal bonds,
statutory bonds, bids, leases, government contracts, trade contracts,
performance and return of money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money) or (z)
deposits made in the ordinary course of business to secure liability for
premiums to insurance carriers, provided that the aggregate amount of
--------
deposits at any time pursuant to preceding clauses (y) and (z) shall not
exceed $25,000,000 in the aggregate.
10.02 Consolidation, Merger, Purchase or Sale of Assets, etc. The
-------------------------------------------------------
Borrower will not, and will not permit any of its Subsidiaries to, and the
Borrower will take all actions so that neither Luxottica Group nor any of its
other Subsidiaries will, wind up, liquidate or dissolve its affairs or enter
into any transaction of merger or consolidation, or convey, sell, lease or
otherwise dispose of (or agree to do any of the foregoing at any future time)
all or any part of its property or assets, or enter into any sale-leaseback
transactions, or purchase or otherwise acquire (in one or a series of related
transactions) any part of the property or assets (other than purchases or other
acquisitions of inventory, materials, equipment and intangible assets in the
ordinary course of business) of any Person, except that:
(i) the Acquisition shall be permitted;
(ii) Capital Expenditures by Luxottica Group and its Subsidiaries shall
be permitted to the extent not in violation of Section 10.07;
(iii) Luxottica Group and its Subsidiaries may in the ordinary course of
business, sell, lease or otherwise dispose of equipment or materials which,
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in the reasonable judgment of such Person, are obsolete, worn out or other-
wise no longer useful in the conduct of such Person's business;
(iv) Luxottica Group and its Subsidiaries may in the ordinary course of
business, sell, lease or otherwise dispose of other equipment and materials
so long as (x) within 180 days after the date of any such sale Luxottica
Group or such Subsidiary has entered into an agreement to purchase
replacement equipment or materials with the Net Sale Proceeds therefrom and
such Net Sale Proceeds are actually used to purchase such replacement
equipment or materials within 365 days after the day of any such sale and
(y) the Net Sale Proceeds from all such sales shall not exceed $25,000,000
in any fiscal year of Luxottica Group, it being understood that to the
extent such Net Sale Proceeds are not so committed to be used or actually
used within such 180 day period or 365 day period, as the case may be, such
Net Sale Proceeds shall be applied in accordance with Section 4.02(e);
(v) Investments may be made to the extent permitted by Section 10.05;
(vi) Luxottica Group and its Subsidiaries may lease (as lessee) real or
personal property in the ordinary course of business so long as any such
lease does not create a Capitalized Lease Obligation except to the extent
permitted by Section 10.04(vi);
(vii) Luxottica Group and its Subsidiaries may make sales of inventory
in the ordinary course of business;
(viii) Luxottica Group and its Subsidiaries may, in the ordinary course
of business, enter into licensing arrangements with respect to intellectual
property rights owned or used by them, provided that any licensing
arrangement covering any intellectual property rights owned by Luxottica
Group or any of its Subsidiaries shall not prohibit the granting of Liens
thereon to the Secured Creditors;
(ix) any Subsidiary of Luxottica Group (other than Luxottica S.p.A., La
Meccanoptica and the Borrower and its Subsidiaries) may merge with and into
any Wholly-Owned Subsidiary of Luxottica Group (other than the Borrower and
its Wholly-Owned Subsidiaries), in each case so long as the surviving
corporation of any such merger is a Wholly-Owned Subsidiary of Luxottica
Group;
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(x) U.S. Shoe may transfer the assets and liabilities associated with
all or any portion of the Apparel Division to one or more Wholly-Owned
Domestic Subsidiaries of U.S. Shoe and U.S. Shoe may transfer the assets
and liabilities associated with the Footwear Division to another Wholly-
Owned Domestic Subsidiary of U.S. Shoe so long as each such Wholly-Owned
Domestic Subsidiary takes (to the extent that it has not already done so)
all of the actions required pursuant to Sections 9.12 and 10.15;
(xi) U.S. Shoe and its Subsidiaries may sell their Footwear Division
(x) in accordance with the terms of the Nine West Agreement or (y) if for
any reason the Nine West Agreement is terminated in accordance with its
terms, otherwise, so long as in any transaction pursuant to this clause
(y), (i) at least $425,000,000 of the Net Sale Proceeds therefrom are
payable in cash and at the time of the closing of such sale and (ii) all
other terms and conditions of such sale are reasonably acceptable to the
Required Banks (including, without limitation, any indemnities given by
Luxottica Group or any of its Subsidiaries and the degree of recourse to
Luxottica Group or any of its Subsidiaries), provided that 100% of the Net
Sale Proceeds from any sale of the Footwear Division pursuant to this
clause (xi) shall be applied in accordance with Section 4.02(e);
(xii) U.S. Shoe and its Subsidiaries may sell their Apparel Division, in
whole or in part, so long as (i) each such sale is at fair market value (as
determined in good faith by the Board of Directors of Luxottica Group),
(ii) in the case of each such partial sale, at least 90% of the
consideration therefor shall be in the form of cash and shall be payable at
the closing of each such sale, (iii) 100% of the Net Sale Proceeds from
each sale are applied in accordance with Section 4.02(e) and (iv) the other
terms and conditions of each such sale (including, without limitation, the
purchase price, the liabilities assumed in connection therewith, any
indemnities given by Luxottica Group or any of its Subsidiaries, the degree
of recourse to Luxottica Group or any of its Subsidiaries and the identity
of the Person against which such right of recourse may be enforced) are
reasonably acceptable to the Administrative Agent and the Required Banks;
(xiii) following any sale of the Footwear Division pursuant to the Nine
West Agreement, any warrants received by the Borrower or any of its
Subsidiaries in connection with such sale (or any shares of common stock of
Nine West issued upon the exercise of any such warrants) may at any time
thereafter be sold for cash at fair market value (as determined in good
faith
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by the Borrower), provided that 100% of the Net Sale Proceeds from each
such sale are applied in accordance with Section 4.02(e);
(xiv) Luxottica Group and its Subsidiaries may make sales of other
assets (other than any Mortgaged Property or the capital stock of any
Guarantor) so long as the aggregate proceeds from all such sales do not
exceed $15,000,000 in any fiscal year of Luxottica Group; and
(xv) Luxottica Group and its Subsidiaries may acquire the capital stock
of, or all or substantially all of the assets of, any Person (or any
product line or division of such Person) so long as (i) the aggregate
amount expended pursuant to this clause (xv), together with the aggregate
amount of Investments made pursuant to Section 10.05(xii), does not exceed
$30,000,000 in any fiscal year of Luxottica Group, provided that such
aggregate amount may be increased to $50,000,000 in any fiscal year
(beginning after December 31, 1995) so long as (I) the Leverage Ratio at
the time of any such acquisition (and after giving effect thereto and to
any Indebtedness incurred, issued or assumed in connection therewith) is
less than 3.00:1.00, (II) the Leverage Ratio during the Test Period then
most recently ended shall have been less than 3.00:1.00 at all times, with
such Leverage Ratio to be calculated on a pro forma basis as if such
--- -----
acquisition (and any Indebtedness incurred, issued or assumed (or expected
to be incurred, issued or assumed) in connection therewith had been
incurred on the first day of, and remained outstanding throughout, such
Test Period) had been consummated on the first day of such Test Period and
(III) at least 10 Business Days prior to any such acquisition Luxottica
Group shall have delivered to the Administrative Agent and each of the
Banks a certificate of its chief financial officer setting forth in
reasonable detail the pro forma calculations required to establish such
--- -----
compliance and (ii) any Liens or Indebtedness incurred, created or assumed
in connection with any acquisition permitted under this clause (xv) is
otherwise permitted under Sections 10.01 and 10.04.
To the extent the Required Banks (or, to the extent required by Section 14.12,
all of the Banks) waive the provisions of this Section 10.02 with respect to the
sale of any Collateral, or any Collateral is sold as permitted by this Section
10.02, such Collateral shall be sold free and clear of the Liens created by the
Security Documents, and the Administrative Agent and Collateral Agent shall be
authorized to take any actions deemed appropriate in order to effect the
foregoing.
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<PAGE>
10.03 Dividends. The Borrower will not, and will not permit any of
---------
its Subsidiaries to and the Borrower will take all actions so that neither
Luxottica Group nor any of its other Subsidiaries will, authorize, declare or
pay any Dividends with respect to Luxottica Group or any of its Subsidiaries,
except that:
(i) any Subsidiary of the Borrower may pay Dividends to the Borrower
or to any Wholly-Owned Subsidiary of the Borrower, provided, that (x) in
connection with any Dividend paid by Avant-Garde to the Borrower, Avant-
Garde may pay to Luxottica Group its proportionate share of such Dividend
based on its .1% equity interest in Avant-Garde and (y) prior to the Merger
Borrowing Date, neither U.S. Shoe nor any of its Subsidiaries may pay any
Dividends except to the extent permitted under Section 5.2.4 of the Merger
Agreement (it being understood, however, that any Dividends paid pursuant
to clause (a) thereof may only be paid to the extent declared prior to the
Initial Borrowing Date);
(ii) any Subsidiary of Luxottica Group (other than the Borrower and its
Subsidiaries) may (x) pay Dividends to Luxottica Group or to any Wholly-
Owned Subsidiary of Luxottica Group and (y) if such Subsidiary is not a
Wholly-Owned Subsidiary, pay Dividends to its shareholders generally so
long as Luxottica Group or its respective Subsidiary which owns the equity
interest or interests in the Subsidiary paying the Dividends receives at
least its proportionate share thereof (based upon its relative holdings of
capital stock in the Subsidiary paying such Dividends);
(iii) the Borrower may pay Dividends to La Meccanoptica and Luxottica
S.p.A. so long as (i) no Default or Event of Default then exists or would
result therefrom and (ii) the aggregate amount of Dividends paid pursuant
to this clause (iii), together with the amount of Investments made pursuant
to Section 10.05(vi), does not exceed $8,000,000 in any fiscal year of
Luxottica Group;
(iv) Luxottica Group may pay Dividends so long as (i) no Default or
Event of Default then exists or would result therefrom and (ii) the
aggregate amount of Dividends paid in any fiscal year of Luxottica Group
does not exceed the Lire equivalent of $8,000,000 at the time of
declaration thereof, it being understood and agreed, however, that in
fiscal year 1995 only, Luxottica Group may declare a Dividend in an
aggregate amount not to exceed Lire 37,000,000,000 so long as (x) the
aggregate amount actually paid as a Dividend in fiscal year 1995 does not
exceed the Lire equivalent of $8,000,000 (the amount declared but not paid
(as the same may be reduced
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from time to time as a result of Dividends paid by Luxottica Group in
subsequent fiscal years to the extent permitted by this clause (iv) or
immediately succeeding clause (v)) is referred to as the "Declared and
Unpaid Dividend") and (y) those shareholders of Luxottica Group that would
otherwise be entitled to receive, but do not receive, their share of the
Declared and Unpaid Dividend agree in writing with Luxottica Group that
such shareholders will not enforce their claims against Luxottica Group in
respect of such Declared and Unpaid Dividend and that such shareholders
will defer receiving such amounts until the same is permitted to be paid in
accordance with the terms of this Agreement;
(v) in addition to the Dividends permitted to be paid pursuant to
clauses (iii) and (iv) of this Section 10.03, the Borrower may pay
Dividends to La Meccanoptica and Luxottica S.p.A., and Luxottica Group may
pay Dividends, in each case so long as (i) no Default or Event of Default
then exists or would result therefrom, (ii) the aggregate amount of
Dividends paid in any fiscal year pursuant to this clause (v) does not
exceed an amount equal to the remainder of (1) the Remaining Excess Cash
Amount with respect to the immediately preceding fiscal year less (2) the
amount of Capital Expenditures made pursuant to Section 10.07(c) for the
then current fiscal year, (iii) the Leverage Ratio at the time of any such
Dividend is less than 3.00:1.00, (iv) the Leverage Ratio during the Test
Period then most recently ended shall have been less than 3.00:1.00 at all
times, (v) at least 10 Business Days prior to any such Dividend Luxottica
Group shall have delivered to the Administrative Agent and each of the
Banks a certificate of its chief financial officer setting forth in
reasonable detail the calculations required to establish such compliance
and (vi) no Dividends may be paid pursuant to this clause (v) in any fiscal
year until the required repayment pursuant to Section 4.02(f) has been
made; and
(vi) Bidco may pay the merger consideration in connection with the
consummation of the Merger pursuant to the terms of the Merger Agreement.
10.04 Indebtedness. The Borrower will not, and will not permit any
------------
of its Subsidiaries to, and the Borrower will take all actions so that neither
Luxottica Group nor any of its other Subsidiaries will, contract, create, incur,
assume or suffer to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
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(ii) Existing Indebtedness to the extent, in the case of Luxottica
Group and its Subsidiaries (other than U.S. Shoe and its Subsidiaries),
such Existing Indebtedness is listed on Schedule V, and any refinancings or
renewals thereof so long as any such refinancing or renewal shall not
exceed the principal amount of such Existing Indebtedness outstanding at
the time of the refinancing or renewal thereof, provided, in any event,
that the Indebtedness to be Refinanced shall only be permitted to (A)
remain outstanding through the earlier of (x) the consummation of the
Refinancing and (y) the 120th day following the Merger Borrowing Date and
(B) be refinanced through borrowings pursuant to this Agreement;
(iii) accrued expenses and current trade accounts payable incurred in
the ordinary course of business;
(iv) Indebtedness under Interest Rate Protection Agreements entered
into in compliance with Section 9.13;
(v) Indebtedness subject to Liens permitted under Section 10.01(vi);
(vi) Indebtedness arising under Capitalized Lease Obligations so long
as the aggregate principal amount thereof does not exceed $25,000,000 at
any time outstanding;
(vii) intercompany Indebtedness among Luxottica Group and its
Subsidiaries to the extent permitted by Sections 10.05(iv), (v) and (vi);
(viii) Indebtedness under Other Hedging Agreements providing protection
against fluctuations in currency or commodity prices in connection with
Luxottica Group's or any of its Subsidiaries' ordinary business operations
so long as management of Luxottica Group or such Subsidiary has determined
that the entering into of such Other Hedging Agreements are bona fide
hedging activities (and are not for speculative purposes) and are
consistent with their past practices;
(ix) Indebtedness of Luxottica Group or any of its Italian Subsidiaries
in connection with bank guaranties issued in favor of the Italian
government in respect of value added taxes so long as the aggregate amount
of such Indebtedness does not exceed $5,000,000 at any time outstanding;
(x) Indebtedness of Luxottica Group or any of its Italian Subsidiaries
incurred in the ordinary course of business in connection with bank
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guaranties issued in favor of the Italian government in respect of tax
refunds received by Luxottica Group or such Italian Subsidiaries from the
Italian government;
(xi) the guaranty issued by Luxottica Group in support of the
obligations of Avant-Garde and Bidco under the Merger Agreement so long as
the terms of such guaranty are in the form of one of the Merger Documents
delivered pursuant to Section 5A.08(c);
(xii) guaranties issued by U.S. Shoe in the ordinary course of business
in support of the lease obligations of its Subsidiaries;
(xiii) the guaranty issued by LensCrafters in connection with the sale of
the Footwear Division pursuant to the Nine West Agreement;
(xiv) Indebtedness incurred in fiscal year 1995 by Luxottica Group as a
result of the declaration of Dividends as permitted by Section 10.03(iv),
so long as the aggregate amount of such Indebtedness does not exceed the
amount of the Declared and Unpaid Dividend as permitted by said
Section 10.03(iv); and
(xv) additional unsecured Indebtedness of Luxottica Group and its
Subsidiaries not to exceed $100,000,000 in aggregate principal amount
outstanding at any time, provided that any Indebtedness incurred under this
clause (xv) may only be incurred on or after the Merger Borrowing Date.
10.05 Advances, Investments and Loans. The Borrower will not, and
-------------------------------
will not permit any of its Subsidiaries to, and the Borrower will take all
actions so that neither Luxottica Group nor any of its other Subsidiaries will,
directly or indirectly, lend money or credit or make advances to any Person, or
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person, or purchase
or own a futures contract or otherwise become liable for the purchase or sale of
currency or other commodities at a future date in the nature of a futures con-
tract, or hold any cash or Cash Equivalents (each of the foregoing an
"Investment" and, collectively, "Investments"), except that the following shall
be permitted:
(i) Luxottica Group and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with cus-
tomary terms;
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(ii) Luxottica Group and its Subsidiaries may acquire and hold cash and
Cash Equivalents;
(iii) Luxottica Group and its Subsidiaries may enter into Interest Rate
Protection Agreements and Other Hedging Agreements to the extent permitted
in Section 10.04(iv) and (viii);
(iv) the Borrower and its Wholly-Owned Domestic Subsidiaries may make
intercompany loans to one another, provided that (x) all such intercompany
--------
loans are evidenced by an intercompany promissory note in the form of
Exhibit M (each an "Intercompany Note"), (y) each such Intercompany Note is
pledged by the Borrower or such Wholly-Owned Domestic Subsidiary to the
Collateral Agent pursuant to the Pledge Agreement and (z) after the Initial
Borrowing Date and prior to the Merger Borrowing Date, the Borrower and its
Wholly-Owned Domestic Subsidiaries may also make intercompany loans to U.S.
Shoe and its Wholly-Owned Domestic Subsidiaries;
(v) Luxottica Group and its Wholly-Owned Subsidiaries (other than the
Borrower and its Wholly-Owned Domestic Subsidiaries) may make intercompany
loans to one another or to the Borrower or any Wholly-Owned Domestic
Subsidiary of the Borrower provided that any such intercompany loan made to
a Parent Guarantor (to the extent not made by another Parent Guarantor) or
to the Borrower or a Wholly-Owned Domestic Subsidiary of the Borrower shall
contain the subordination provisions set forth in Exhibit N;
(vi) the Borrower and its Subsidiaries may make intercompany loans to
Luxottica Group or any of its Wholly-Owned Subsidiaries (other than the
Borrower and its Wholly-Owned Subsidiaries) so long as the aggregate
principal amount of all such intercompany loans made in any fiscal year of
Luxottica Group does not exceed the remainder of (x) $15,000,000 less (y)
the amount of Dividends paid pursuant to Section 10.03(iii);
(vii) Luxottica Group and its Wholly-Owned Subsidiaries may make cash
equity contributions to their respective direct Wholly-Owned Subsidiaries,
provided that the aggregate amount of cash equity contributions made to
Wholly-Owned Subsidiaries that are not Guarantors shall not exceed
$10,000,000 in any fiscal year of Luxottica Group;
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(viii) Investments existing on the Effective Date which, in the case of
Luxottica Group and its Subsidiaries (other than U.S. Shoe and its
Subsidiaries), are listed on Schedule VIII shall in each case be permitted;
(ix) Luxottica Group and its Subsidiaries may make loans or advances to
their respective employees in the ordinary course of business in an
aggregate principal amount for all such loans and advances not to exceed
$2,000,000 outstanding at any time (determined without regard to any write-
downs or write-offs for such loans and advances);
(x) Luxottica Group may make Investments in connection with the Brico
Put and Call;
(xi) Luxottica Group and its Subsidiaries may acquire and hold non-cash
Investments issued by the purchasers of assets sold in accordance with
Section 10.02(xi), (xii) or (xiv); and
(xii) in addition to the Investments permitted by preceding clauses (i)
through (xi), Luxottica Group and its Subsidiaries may make Investments in
an aggregate amount not to exceed, when added to the amount of acquisitions
made pursuant to Section 10.02(xv), $30,000,000 in any fiscal year of
Luxottica Group, provided that such aggregate amount may be increased to
$50,000,000 in any fiscal year to the extent permitted (and in accordance
with the terms of) Section 10.02(xv).
10.06 Transactions with Affiliates. The Borrower will not, and will
----------------------------
not permit any of its Subsidiaries to, and the Borrower will take all actions so
that neither Luxottica Group nor any of its other Subsidiaries will, enter into
any transaction or series of related transactions with any Affiliate of
Luxottica Group or any of its Subsidiaries (other than transactions among
Luxottica Group and its Wholly-Owned Subsidiaries, in each case to the extent
such transactions are otherwise permitted under this Agreement), other than in
the ordinary course of business and on terms and conditions substantially as
favorable to Luxottica Group or such Subsidiary as would reasonably be obtained
by Luxottica Group or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in Section 10.03;
(ii) Investments may be entered into among Luxottica Group and its
Subsidiaries to the extent permitted by Section 10.05; and
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(iii) customary fees may be paid to directors of Luxottica Group and its
Subsidiaries.
Without limiting the foregoing provisions of this Section 10.06, in no event
shall any management, consulting or similar fees be paid by Luxottica Group or
any of its Subsidiaries to any Affiliate of Luxottica Group (other than
Luxottica Group or a Wholly-Owned Subsidiary of Luxottica Group), provided that
(i) non-Wholly-Owned Subsidiaries of Luxottica Group may pay management fees to
minority equity owners in such non-Wholly-Owned Subsidiaries so long as any such
minority equity owner is not an Affiliate of Luxottica Group other than by
reason of its minority equity ownership in such non-Wholly-Owned Subsidiary and
(ii) Luxottica Group and its Subsidiaries may pay management, consulting or
similar fees to their Affiliates so long as such payments are consistent with
their past practices and such payments have historically reduced, and will
continue in the future to reduce, Consolidated Net Income for the year in which
paid.
10.07 Capital Expenditures. (a) The Borrower will not, and will not
--------------------
permit any of its Subsidiaries to, and the Borrower will take all actions so
that neither Luxottica Group nor any of its other Subsidiaries will, make any
Capital Expenditures, except that:
(i) during any period set forth below, Luxottica Group and its
Subsidiaries may make Capital Expenditures (other than Capital Expenditures
in respect of the Apparel Division and Footwear Division) so long as the
aggregate amount of Capital Expenditures made under this clause (i) in any
period set forth below does not exceed the amount set forth opposite such
period below:
Period Amount
------ ------
Effective Date through and
including December 31, 1995 $60,000,000
Fiscal year ending December
31, 1996 and each fiscal $65,000,000
year thereafter
Notwithstanding anything to the contrary contained above in this clause (i), to
the extent that Capital Expenditures made during any period set forth above are
less than the amount set forth opposite such period above such unused amount may
be carried forward to the immediately succeeding fiscal year and utilized to
make
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Capital Expenditures of the type permitted above in this clause (i) in excess of
the amount permitted above in the following period, provided, that (x) any
--------
amounts carried forward from the immediately preceding period may not be
utilized during the current period unless and until the relevant amount set
forth opposite such period in the table above shall have been utilized in full
to make Capital Expenditures during such period and (y) no amounts once carried
forward to the next period may be carried forward to periods thereafter. In
addition to the foregoing, Luxottica Group and its Subsidiaries may make
additional Capital Expenditures to the extent that any asset acquisition made as
permitted under Section 10.02(xv) or any Investment made as permitted by Section
10.05(xii) constitutes Capital Expenditures.
(ii) during any period set forth below, but only until the Apparel
Division has been sold, U.S. Shoe and its Subsidiaries may make Capital
Expenditures in respect of the Apparel Division so long as the aggregate
amount of Capital Expenditures made under this clause (ii) in any period
set forth below does not exceed the amount set forth opposite such period
below:
Period Amount
------ ------
Initial Borrowing Date through
and including December 31,
1995 $35,000,000
Fiscal year ending December
31, 1996 and each fiscal
year ending thereafter $35,000,000
(iii) during any period set forth below, but only until the Footwear
Division has been sold, U.S. Shoe and its Subsidiaries may make Capital
Expenditures in respect of the Footwear Division so long as the aggregate
amount of Capital Expenditures made under this clause (iii) in any period
set forth below does not exceed the amount set forth opposite such period
below:
Period Amount
------ ------
Initial Borrowing Date through
and including December 31,
1995 $14,000,000
Fiscal year ending December 31,
1996 and each fiscal year ending
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thereafter $14,000,000
(b) In addition to the Capital Expenditures permitted to be made
pursuant to clauses (a) and (c) of this Section 10.07, the amount of insurance
proceeds received by Luxottica Group and its Subsidiaries from any Recovery
Event may be used by Luxottica Group and its Subsidiaries to make Capital
Expenditures to replace or restore any properties or assets in respect of which
such proceeds were paid, in each case to the extent such proceeds are not
required to be applied pursuant to Section 4.02(g), provided that any proceeds
that are so used to make Capital Expenditures pursuant to this clause (b) are,
to the extent required by Section 4.02(g), used within the period of time as is
set forth in the respective officer's certificate delivered pursuant to such
Section 4.02(g).
(c) In addition to the Capital Expenditures permitted to be made
pursuant to clauses (a) and (b) of this Section 10.07, Luxottica Group and its
Subsidiaries may make Capital Expenditures (other than Capital Expenditures in
respect of the Apparel Division and Footwear Division) in any fiscal year of
Luxottica Group beginning with its fiscal year commencing on January 1, 1996, by
an amount equal to the remainder of (i) the Remaining Excess Cash Amount with
respect to the immediately preceding fiscal year less (ii) the amount of
Dividends paid pursuant to Section 10.03(v) in the then current fiscal year.
10.08 Consolidated Interest Coverage Ratio. The Borrower will not,
------------------------------------
and the Borrower will take all actions so that Luxottica Group will not, permit
the Consolidated Interest Coverage Ratio for any Test Period ending on the last
day of a fiscal quarter set forth below to be less than the ratio set forth
opposite such fiscal quarter below (as tested on the last day of such Test
Period):
Fiscal Quarter Ending Ratio
--------------------- -----
June 30, 1995 2.00:1.00
September 30, 1995 2.30:1.00
December 31, 1995 2.40:1.00
March 31, 1996 2.40:1.00
June 30, 1996 2.40:1.00
September 30, 1996 2.65:1.00
December 31, 1996 3.20:1.00
March 31, 1997 3.65:1.00
June 30, 1997 3.65:1.00
September 30, 1997 3.90:1.00
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December 31, 1997 4.25:1.00
and thereafter
10.09 Consolidated Fixed Charge Coverage Ratio. The Borrower will
----------------------------------------
not, and the Borrower will take all actions so that Luxottica Group will not,
permit the Consolidated Fixed Charge Coverage Ratio for any Test Period ending
on the last day of a fiscal quarter of Luxottica Group to be less than 1.00:1.00
(as tested on the last day of such Test Period).
10.10 Leverage Ratio. The Borrower will not, and the Borrower will
--------------
take all actions so that Luxottica Group will not, permit the Leverage Ratio at
any time during a period set forth below to exceed the ratio set forth opposite
the respective period set forth below:
Period Ratio
------ -----
Effective Date
through and including
June 30, 1995 5.25:1.00
July 1, 1995 5.00:1.00
through and including
September 30, 1995
October 1, 1995 through 4.50:1.00
and including December 31, 1995
January 1, 1996 through 3.00:1.00
and including March 31, 1996
April 1, 1996 through 2.70:1.00
and including September 30, 1996
Thereafter 2.50:1.00
10.11 Limitation on Modifications of Indebtedness; Modifications of
-------------------------------------------------------------
Certificate of Incorporation, By-Laws and Certain Other Agreements; etc. The
- ------------------------------------------------------------------------
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Borrower will not, and will not permit any of its Subsidiaries to, and the
Borrower will take all actions so that neither Luxottica Group nor any of its
other Subsidiaries will:
(i) amend or modify, or permit the amendment or modification of, any
provision of the Existing Indebtedness or of any agreement (including,
without limitation, any purchase agreement, indenture, loan agreement or
security agreement) relating thereto other than any amendments or modifica-
tion thereto which do not in any way adversely affect the interests of the
Banks;
(ii) amend, modify or change its certificate of incorporation
(including, without limitation, by the filing or modification of any
certificate of designation) or by-laws (or the equivalent organizational
documents), or any agreement entered into by it, with respect to its
capital stock (including any Shareholders' Agreement), or enter into any
new agreement with respect to its capital stock, other than any amendments,
modifications or changes pursuant to this clause (ii) or any such new
agreements pursuant to this clause (ii) which do not in any way adversely
affect the interest of the Banks;
(iii) amend, modify or change in any material respect or in any
respect that may be adverse to the interests of the Banks, any of the
Tender Offer Documents or the Merger Documents, provided that in no event
shall Luxottica Group or any of its Subsidiaries be permitted to give any
consent pursuant to Section 5.2 of the Merger Agreement (other than
pursuant to Section 5.2.15 thereof) without the consent of the Required
Banks;
(iv) amend, modify or change any Tax Sharing Agreement in any
material respect; or.
(v) amend, modify or change the Nine West Agreement other than
immaterial amendments, modifications or changes thereto which are not
adverse in any respect to the interests of the Banks.
10.12 Limitation on Certain Restrictions on Subsidiaries. The
--------------------------------------------------
Borrower will not, and will not permit any of its Subsidiaries to, and the
Borrower will take all actions so that neither Luxottica Group nor any of its
other Subsidiaries will, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary of Luxottica Group to (a) pay dividends or make any
other distributions on its capital stock or any other interest or participation
in its profits owned by Luxottica Group
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<PAGE>
or any Subsidiary of Luxottica Group, or pay any Indebtedness owed to Luxottica
Group or a Subsidiary of Luxottica Group, (b) make loans or advances to
Luxottica Group or any of Luxottica Group's Subsidiaries or (c) transfer any of
its properties or assets to Luxottica Group or any of its Subsidiaries, except
for such encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Agreement and the other Credit Documents, (iii) cus-
tomary provisions restricting subletting or assignment of any lease governing a
leasehold interest of Luxottica Group or a Subsidiary of Luxottica Group, (iv)
customary provisions restricting assignment of any licensing agreement entered
into by Luxottica Group or a Subsidiary of Luxottica Group in the ordinary
course of business, (v) restrictions contained in Existing Indebtedness of U.S.
Shoe and its Subsidiaries, which restrictions shall only be permitted through
the earlier of (x) the consummation of the Refinancing and (i) the 120th day
following the Merger Borrowing Date and (vi) restrictions on the transfer of any
asset subject to a Lien permitted by this Agreement.
10.13 Limitation on Issuance of Capital Stock. (a) The Borrower
---------------------------------------
will not, and will not permit any of its Subsidiaries to, and the Borrower will
take all actions so that neither Luxottica Group nor any of its other
Subsidiaries will, issue (i) any class of preferred stock or (ii) any class of
redeemable (except at the sole option of Luxottica Group or such Subsidiary)
common stock.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, and the Borrower will take all actions so that Luxottica Group
will not permit any of its other Subsidiaries to, issue any capital stock
(including by way of sales of treasury stock) or any options or warrants to pur-
chase, or securities convertible into, capital stock, except (i) for transfers
and replacements of then outstanding shares of capital stock, (ii) for stock
splits, stock dividends and additional issuances which do not decrease the per-
centage ownership of Luxottica Group or any of its Subsidiaries in any class of
the capital stock of such Subsidiary, (iii) the Brico Put and Call and (iv) to
qualify directors to the extent required by applicable law.
10.14 Business. The Borrower will not, and will not permit any of
--------
its Subsidiaries to, and the Borrower will take all actions so that neither
Luxottica Group nor any of its other Subsidiaries will, engage (directly or
indirectly) in any business other than the businesses in which Luxottica Group
and its Subsidiaries are engaged on the Initial Borrowing Date and reasonable
extensions thereof and businesses incidental thereto, provided that, except to
the extent otherwise permitted by this Section 10.14, only U.S. Shoe and its
Subsidiaries may engage (i) in the apparel business but only until the Apparel
Division is sold and (ii) in the footwear business but only until the Footwear
Division is sold.
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<PAGE>
10.15 Limitation on the Creation of Subsidiaries. Notwithstanding
------------------------------------------
anything to the contrary contained in this Agreement, the Borrower will not, and
will not permit any of its Subsidiaries to, and the Borrower will take all
actions so that neither Luxottica Group nor any of its other Subsidiaries will,
establish, create or acquire after the Initial Borrowing Date any Subsidiary;
provided that, Luxottica Group and its Wholly-Owned Subsidiaries shall be
- --------
permitted to establish or create Wholly-Owned Subsidiaries and, to the extent
permitted by Sections 10.02(xv) and 10.05(xii), non-Wholly-Owned Subsidiaries,
so long as (A) in the case of the establishment, creation or acquisition of a
Wholly-Owned Domestic Subsidiary (i) at least 15 days' prior written notice
thereof is given to the Administrative Agent, (ii) 100% of the capital stock
thereof is owned by the Borrower or one of its Wholly-Owned Domestic
Subsidiaries, (iii) 100% of the capital stock of such new Wholly-Owned Domestic
Subsidiary is pledged pursuant to the Pledge Agreement and the certificates
representing such stock, together with stock powers duly executed in blank, are
delivered to the Collateral Agent and (iv) such new Wholly-Owned Domestic
Subsidiary takes all actions required pursuant to Section 9.12 and (B) in the
case of the establishment, creation or acquisition of a non-Wholly-Owned
Subsidiary, the capital stock thereof, to the extent owned by the Borrower or
any of its Wholly-Owned Domestic Subsidiaries, is pledged pursuant to the Pledge
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent.
10.16 Margin Stock. The Borrower will not, and will not permit any
------------
of its Subsidiaries to, and the Borrower will take all actions so that neither
Luxottica Group nor any of its other Subsidiaries will, own any Margin Stock
except (i) until the consummation of the Merger, Bidco may own shares of common
stock of U.S. Shoe, which shares upon consummation of the Merger shall (and the
Borrower shall take all action so that such shares) no longer constitute Margin
Stock, (ii) warrants to purchase shares of common stock of Nine West issued to
U.S. Shoe in connection with the sale of the Footwear Division pursuant to the
Nine West Agreement (including any shares of common stock of Nine West issued in
connection with the exercise of such warrants) and (iii) other Margin Stock with
an aggregate value not to exceed $250,000 at any time.
SECTION 11. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
11.01 Payments. The Borrower shall (i) default in the payment when
--------
due of any principal of any Loan or any Note, (ii) default, and such default
shall continue unremedied for three or more Business Days, in the payment when
due of any interest on any Loan or Note, or any Fees or any other amounts (other
than
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<PAGE>
Unpaid Drawings) owing hereunder or thereunder or (iii) default, and such
default shall continue unremedied for five or more Business Days, in the payment
when due of any Unpaid Drawings; or
11.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
11.03 Covenants. The Borrower shall (i) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Section 9.01(f)(i), 9.08, 9.14 or 9.15 or Section 10 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement con-
tained in this Agreement and such default shall continue unremedied for a period
of 30 days after written notice to the defaulting party by the Administrative
Agent or the Required Banks; or
11.04 Default Under Other Agreements. (i) Luxottica Group or any of
------------------------------
its Subsidiaries shall (x) default in any payment of any Indebtedness (other
than (A) the Obligations and (B) through and including the earlier of (1) the
consummation of the Refinancing and (2) the 120th day following the Merger
Borrowing Date, the Existing Indebtedness of U.S. Shoe and its Subsidiaries) be-
yond the period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created or (y) default in the observance or
performance of any agreement or condition relating to any Indebtedness (other
than (A) the Obligations and (B) through and including the earlier of (1) the
consummation of the Refinancing and (2) the 120th day following the Merger
Borrowing Date, the Existing Indebtedness of U.S. Shoe and its Subsidiaries) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any notice is required),
any such Indebtedness to become due prior to its stated maturity, or (ii) any
Indebtedness (other than (A) the Obligations and (B) through and including the
earlier of (1) the consummation of the Refinancing and (2) the 120th day
following the Merger Borrowing Date, the Existing Indebtedness of U.S. Shoe and
its Subsidiaries) of Luxottica Group or any of its Subsidiaries shall be
declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not be a Default or an Event of Default under this
- --------
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<PAGE>
Section 11.04 unless the aggregate principal amount of all Indebtedness as
described in preceding clauses (i) and (ii) is at least $10,000,000; or
11.05 Bankruptcy, etc. Luxottica Group or any of its Subsidiaries
----------------
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any suc-
cessor thereto (the "Bankruptcy Code") or under the Italian Insolvency Law
(Royal Decree No. 267 of March 16, 1942); or an involuntary case is commenced
against Luxottica Group or any of its Subsidiaries and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after commence-
ment of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
Luxottica Group or any of its Subsidiaries, Luxottica Group or any of its Subsi-
diaries commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
Luxottica Group or any of its Subsidiaries, or there is commenced against
Luxottica Group or any of its Subsidiaries any such proceeding which remains
undismissed for a period of 60 days, or Luxottica Group or any of its Subsid-
iaries is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or Luxottica Group or
any of its Subsidiaries suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue undischarged or unstayed
for a period of 60 days; or Luxottica Group or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or any corporate action is
taken by Luxottica Group or any of its Subsidiaries for the purpose of effecting
any of the foregoing; or
11.06 ERISA. Upon the occurrence of the events described in
-----
following clauses (a), (b) and (c): (a) any Plan shall fail to satisfy the
minimum funding standard required for any plan year or part thereof or a waiver
of such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had or is likely to have a
trustee appointed to administer such Plan by action of the United States
government or any agency thereof, any Plan is, shall have been or is likely to
be terminated or to be the subject of termination proceedings under ERISA by
action of the United States government or any agency thereof, any Plan shall
have an Unfunded Current Liability, a contribution required to be made to a Plan
or a Foreign Pension Plan has not been timely made, Luxottica Group or any
Subsidiary of Luxottica Group or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code, or Luxottica Group or any Subsidiary of
Luxottica Group has incurred or is likely to incur liabilities pursuant
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<PAGE>
to one or more employee welfare benefit plans (as defined in Section 3(1) of
ERISA) that provide benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or employee pension benefit
plans (as defined in Section 3(2) of ERISA) or Foreign Pension Plans; and (b)
there shall result from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a material risk of incurring
a liability; and (c) which lien, security interest or liability, individually,
or in the aggregate, in the reasonable opinion of the Required Banks, will
reasonably be expected to have a material adverse effect on the business, opera-
tions, properties, assets, liabilities, condition (financial or otherwise) or
prospects of Luxottica Group and its Subsidiaries taken as a whole or the
Borrower and its Subsidiaries taken as a whole; or
11.07 Security Documents. At any time after the execution and
------------------
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease in any material respect to give the Collateral Agent
for the benefit of the Secured Creditors the Liens, rights, powers and
privileges purported to be created thereby (including, without limitation, a
perfected security interest in, and Lien on, all of the Collateral), in favor of
the Collateral Agent, superior to and prior to the rights of all third Persons
(except as permitted by Section 10.01), and subject to no other Liens (except as
permitted by Section 10.01), or any Credit Party shall default in the due per-
formance or observance of any term, covenant or agreement on its part to be per-
formed or observed pursuant to any of the Security Documents and such default
shall continue beyond any grace period specifically applicable thereto pursuant
to the terms of such Security Document; or
11.08 Guaranty. Any Guaranty or any provision thereof shall cease to
--------
be in full force or effect as to the relevant Guarantor, or any Guarantor or
Person acting by or on behalf of such Guarantor shall deny or disaffirm such
Guarantor's obligations under the relevant Guaranty, or any Guarantor shall
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to its Guaranty; or
11.09 Judgments. One or more judgments or decrees shall be entered
---------
against Luxottica Group or any of its Subsidiaries involving in the aggregate
for Luxottica Group and its Subsidiaries a liability (not paid or fully covered
by a reputable and solvent insurance company) and such judgments and decrees
either shall be final and non-appealable or shall not be vacated, discharged or
stayed or bonded pending appeal for any period of 60 consecutive days, and the
aggregate amount of all such judgments exceeds $10,000,000; or
11.10 Change of Control. A Change of Control shall occur;
-----------------
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<PAGE>
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of the Administrative
Agent, any Bank or the holder of any Note to enforce its claims against any
Credit Party (provided that, if an Event of Default specified in Section 11.05
--------
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent to the Borrower as spec-
ified in clauses (i) and (ii) below shall occur automatically without the giving
of any such notice): (i) declare the Total Commitments terminated, whereupon
all Commitments of each Bank shall forthwith terminate immediately and any
Commitment Commission shall forthwith become due and payable without any other
notice of any kind; (ii) declare the principal of and any accrued interest in
respect of all Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; (iii) terminate any Letter of Credit,
which may be terminated, in accordance with its terms; (iv) direct the Borrower
to pay (and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 11.05 with respect to the
Borrower, it will pay) to the Collateral Agent at the Payment Office such addi-
tional amount of cash, to be held as security by the Collateral Agent, as is
equal to the aggregate Stated Amount of all Letters of Credit issued for the
account of the Borrower and then outstanding; (v) enforce, as Collateral Agent,
all of the Liens and security interests created pursuant to the Security Docu-
ments; and (vi) apply any cash collateral as provided in Section 4.02.
SECTION 12. Definitions and Accounting Terms.
--------------------------------
12.01 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquisition" shall mean (collectively) (x) the purchase by Bidco for
cash of the outstanding Shares pursuant to the Offer to Purchase and (y) the
Merger.
"A Credit" shall have the meaning provided in Section 15.02.
"A Credit Amount" shall have the meaning provided in Section 15.03.
"Additional Subsidiary Guarantor" shall mean U.S. Shoe and each of its
Wholly-Owned Domestic Subsidiaries.
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<PAGE>
"Adjusted Available Revolving Loan Commitment" for each Bank shall
mean at any time such Bank's Revolving Loan Commitment less such Bank's Adjusted
RL Percentage of the Blocked Commitment, if any, at such time.
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing (x)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by the Administrative Agent on the basis of quotations
for such certificates received by it from three certificate of deposit dealers
in New York of recognized standing or, if such quotations are unavailable, then
on the basis of other sources reasonably selected by the Administrative Agent,
by (y) a percentage equal to 100% minus the stated maximum rate of all reserve
requirements as specified in Regulation D applicable on such day to a three-
month certificate of deposit of a member bank of the Federal Reserve System in
excess of $100,000 (including, without limitation, any marginal, emergency, sup-
plemental, special or other reserves), plus (2) the then daily net annual
assessment rate as estimated by the Administrative Agent for determining the
current annual assessment payable by the Administrative Agent to the Federal
Deposit Insurance Corporation for insuring three-month certificates of deposit.
"Adjusted Consolidated Net Income" for any period shall mean
Consolidated Net Income for such a period plus, without duplication, the sum of
the amount of all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense and non-cash interest expense,
but excluding any net non-cash charges reflected in Adjusted Consolidated
Working Capital) and net non-cash losses which were included in arriving at
Consolidated Net Income for such period less the sum of the amount of all net
non-cash income and gains (exclusive of items reflected in Adjusted
Consolidated Working Capital) included in arriving at the Consolidated Net
Income for such period, adjusted to exclude the amount of all gains from sales
of assets which require a payment or commitment reduction pursuant to Section
4.02(e), as well as any cash taxes payable as a result of such sales, in each
case to the extent included in arriving at the Consolidated Net Income for such
period.
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<PAGE>
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities.
"Adjusted RL Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank, such Bank's RL Percentage and (y) at a time when a Bank
Default exists, (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Loan Commitment at such time by the Adjusted Total
Revolving Loan Commitment at such time, it being understood that all references
herein to Revolving Loan Commitments and the Adjusted Total Revolving Loan Com-
mitment at a time when the Total Revolving Loan Commitment or Adjusted Total
Revolving Loan Commitment, as the case may be, has been terminated shall be
references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination,
provided that (A) no Bank's Adjusted RL Percentage shall change upon the occur-
- --------
rence of a Bank Default from that in effect immediately prior to such Bank
Default if after giving effect to such Bank Default, and any repayment of
Revolving Loans and Swingline Loans at such time pursuant to Section 4.02(a) or
otherwise, the sum of (i) the aggregate outstanding principal amount of
Revolving Loans of all Non-Defaulting Banks, plus (ii) the aggregate outstanding
principal amount of Swingline Loans, plus (iii) the Letter of Credit
Outstandings, exceed the Adjusted Total Revolving Loan Commitment; (B) the
changes to the Adjusted RL Percentage that would have become effective upon the
occurrence of a Bank Default but that did not become effective as a result of
the preceding clause (A) shall become effective on the first date after the
occurrence of the relevant Bank Default on which the sum of (i) the aggregate
outstanding principal amount of the Revolving Loans of all Non-Defaulting Banks,
plus (ii) the aggregate outstanding principal amount of Swingline Loans, plus
(iii) the Letter of Credit Outstandings, is equal to or less than the Adjusted
Total Revolving Loan Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted
RL Percentage is changed pursuant to the preceding clause (B) and (ii) any re-
payment of such Bank's Revolving Loans or of Unpaid Drawings or of Swingline
Loans that were made during the period commencing after the date of the relevant
Bank Default and ending on the date of such change to its Adjusted RL Percentage
must be returned to the Borrower as a preferential or similar payment in any
bankruptcy or similar proceeding of the Borrower, then the change to such Non-
Defaulting Bank's Adjusted RL Percentage effected pursuant to said clause (B)
shall be reduced to that positive change, if any, as would have been made to its
Adjusted RL Percentage if (x) such repayments had not been made and (y) the
maximum change to its Adjusted RL Percentage would have resulted in the sum of
the outstanding principal of Revolving Loans made by such Bank plus such Bank's
new
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<PAGE>
Adjusted RL Percentage of the outstanding principal amount of Swingline Loans
and of Letter of Credit Outstandings equalling such Bank's Revolving Loan
Commitment at such time.
"Adjusted Total Available Revolving Loan Commitment" shall mean at any
time the Total Available Revolving Loan Commitment at such time less the
aggregate Revolving Loan Commitments of all Defaulting Banks at such time.
"Adjusted Total Revolving Loan Commitment" shall mean at any time the
Total Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
all Defaulting Banks.
"Administrative Agent" shall mean Credit Suisse, in its capacity as
Administrative Agent for the Banks hereunder, and shall include any successor to
the Administrative Agent appointed pursuant to Section 13.09.
"Affiliate" shall mean, with respect to any Person, any other Person
(i) directly or indirectly controlling (including, but not limited to, all
directors, officers and partners of such Person), controlled by, or under direct
or indirect common control with, such Person or (ii) that directly or indirectly
owns more than 5% of any class of the capital stock, of or equity interests in,
such Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Aggregate Unutilized Commitment" with respect to any Bank at any time
shall mean the sum of (i) such Bank's Term Loan Commitment at such time, if any,
plus (ii) such Bank's Revolving Loan Commitment at such time, if any, less the
sum of (x) the aggregate outstanding principal amount of all Revolving Loans
made by such Bank at such time plus (y) such Bank's Adjusted RL Percentage of
the Letter of Credit Outstandings at such time.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed or replaced from time to
time.
"Allocated Percentage" for any Bank at any time shall be that
percentage (x) the numerator of which is the sum of (i) the Term Loan Commitment
of such Bank at such time, (ii) the aggregate principal amount of Term Loans of
such Bank then outstanding, and (iii) the Revolving Loan Commitment of such Bank
at such time and (y) the denominator of which is the sum of (i) the aggregate
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principal amount of all Term Loans then outstanding and (ii) the Total
Commitment at such time.
"A Portion" shall have the meaning provided in Section 15.02(a).
"Apparel Division" shall mean the existing women's apparel retailing
division of U.S. Shoe and its Subsidiaries, which division includes Casual
Corner, Petite Sophisticate, Capezio, Pappagallo, August Max Woman and Career
Image Company Store.
"Applicable Commitment Commission Percentage" shall mean, at any time,
a percentage per annum equal to 1/2 of 1%; provided, that from and after the
--------
first day of any Margin Reduction Period (the "Start Date") to and including the
last day of such Margin Reduction Period (the "End Date"), the Applicable
Commitment Commission Percentage shall be the respective percentage per annum
set forth in either clause (A) or (B) below if, but only if, as of the last day
of the most recent fiscal quarter or year, as the case may be, of Luxottica
Group ended immediately prior to such Start Date (the "Test Date") the
conditions in either clause (A) or (B) below are met:
(A) 3/8 of 1% if, but only if, as of the Test Date for such Start
Date both of the following conditions are met and the conditions set forth
in clause (B) below are not satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than or equal to 3.25:1.00;
and
(ii) the Leverage Ratio on such Test Date is less than or equal
to 3.50:1.00; or
(B) 1/4 of 1% if, but only if, as of the Test Date for such Start
Date both of the following conditions are met:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than or equal to 4.50:1.00;
and
(ii) the Leverage Ratio on such Test Date is less than or equal
to 2.00:1.00.
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Notwithstanding anything to the contrary contained above in this definition, the
Applicable Commitment Commission Percentage shall be 1/2 of 1% per annum at any
time that an Event of Default shall exist.
"Applicable Excess Cash Flow Recapture Percentage" shall mean, at any
time, 75%; provided, that if on the relevant Excess Cash Payment Date occurring
--------
after the sale of U.S. Shoe's Footwear Division the Interest Reduction Discount
then in effect is 1-1/4%, then the Applicable Excess Cash Flow Recapture
Percentage shall instead be 50%. Notwithstanding anything to the contrary
contained above in this definition, the Applicable Excess Cash Flow Recapture
Percentage shall be 75% at any time that an Event of Default shall exist.
"Applicable Margin" shall mean a percentage per annum equal to (i) in
the case of Base Rate Loans, 1%, less the then applicable Interest Reduction
Discount, provided that in no event shall the Applicable Margin for Base Rate
Loans be less than 0%, and (ii) in the case of Eurodollar Loans, 2%, less the
then applicable Interest Reduction Discount. Notwithstanding anything to the
contrary contained above in this definition or in the definition of Interest
Reduction Discount, in the event that the Footwear Division of U.S. Shoe is not
sold within 12 months following the Initial Borrowing Date in accordance with
the terms of this Agreement the Applicable Margin for Base Rate Loans and
Eurodollar Loans at any time shall be increased by 1/4 of 1% until such time as
the Footwear Division is so sold.
"Approved Bank" shall have the meaning provided in the definition of
"Cash Equivalents".
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit O (appropriately
completed).
"Available Revolving Loan Commitment" for any Bank shall mean, at any
time, the Revolving Loan Commitment of such Bank as then in effect less such
Bank's RL Percentage of the amount of the Blocked Commitment, if any, at such
time.
"Avant-Garde" shall mean Avant-Garde Optics, Inc., a New York
corporation and, after giving effect to the Credit Events occurring on the
Initial Borrowing Date, a 99.9% direct Subsidiary of the Borrower, with the
remaining .1% owned directly by Luxottica Group.
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"Bank" shall mean each lender listed on Schedule I, as well as any
Person which becomes a "Bank" hereunder pursuant to Section 1.13 and/or
14.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.04(c) or (ii) a Bank having notified in writing the Borrower
and/or the Administrative Agent that it does not intend to comply with its
obligations under Section 1.01(d) or Section 2, in the case of either clause (i)
or (ii) as a result of any takeover of such Bank by any regulatory authority or
agency.
"Bankruptcy Code" shall have the meaning provided in Section 11.05.
"Base Rate" at any time shall mean the higher of (i) 1/2 of 1% in
excess of the Adjusted Certificate of Deposit Rate and (ii) the Prime Lending
Rate.
"Base Rate Loan" shall mean each Loan designated or deemed designated
as such by the Borrower at the time of the incurrence thereof or conversion
thereto.
"B Credit" shall have the meaning provided in Section 15.02.
"B Credit Amounts" shall have the meaning provided in Section 15.03.
"Bidco" shall mean Luxottica Acquisition Corp., a Delaware corporation
and a Wholly-Owned Subsidiary of Avant-Garde.
"Blocked Commitment" shall mean (i) for the period from and including
the Initial Borrowing Date through but not including the Merger Borrowing Date,
$150,000,000 and (ii) for the period thereafter, $0.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments of the respective Tranche (or from
the Swingline Bank in the case of Swingline Loans) on a given date (or resulting
from a conversion or conversions on such date) having in the case of Eurodollar
Loans the same Interest Period, provided that Base Rate Loans incurred
--------
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pursuant to Section 1.10(b) shall be considered part of the related Borrowing of
Eurodollar Loans.
"B Portion" shall have the meaning provided in Section 15.02(b).
"Brico Put and Call" shall mean the put option right attributed to
Messrs. Brignone and Bonseri pursuant to which they have the right to sell to
Luxottica Group their minority participations in Brico S.r.l., or the call
option right attributed to Luxottica Group pursuant to which Luxottica Group has
the right to purchase the minority participations of either or both of Messrs.
Brignone and Bonseri, in either case pursuant to terms and subject to conditions
set forth in that certain Purchase and Sale Agreement, dated as of June 27,
1994, among Luxottica Group and Messrs. Brignone, Bonseri and Coppi.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the London interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures made by such Person which should be capitalized in accordance with
GAAP, including all such expenditures with respect to fixed or capital assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with GAAP) and, without duplication, the
amount of all Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under GAAP, are or will be required to be capitalized on the
books of such Person, in each case taken at the amount thereof accounted for as
indebtedness in accordance with GAAP.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
--------
United States is pledged in support thereof) having maturities of not more than
six months from the date of acquisition, (ii) time deposits and certificates of
deposit of any commercial bank having, or which is the principal banking
subsidiary of a bank
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holding company organized under the laws of the United States, any State
thereof, the District of Columbia or any foreign jurisdiction having capital,
surplus and undivided profits aggregating in excess of $200,000,000 (any such
bank or bank holding company, an "Approved Bank"), with maturities of not more
than six months from the date of acquisition by such Person, (iii) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any Approved Bank,
(iv) commercial paper issued by any Approved Bank or commercial paper issued by
any industrial or financial company with a short-term commercial paper rating of
at least A-1 or the equivalent thereof by Standard & Poor's Ratings Group or at
least P-1 or the equivalent thereof by Moody's Investors Service, Inc. and in
each case maturing not more than six months after the date of acquisition by
such Person, (v) investments in money market funds substantially all of whose
assets are comprised of securities of the types described in clauses (i) through
(iv) above and (vi) demand deposit accounts maintained in the ordinary course of
business not in excess of $10,000,000 in the aggregate.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Sec. 9601 et seq.
-- ----
"Change of Control" shall mean at any time (i) Leonardo Del Vecchio,
any of his children, any corporation or partnership wholly-owned (directly or
indirectly) by one or more such persons and/or any trusts over which such
persons have sole control (voting or otherwise) and which name as beneficiaries
only such persons or such persons' spouse or children, shall cease to own
(directly or indirectly) at least 51% on a fully diluted basis of the economic
and voting interests of Luxottica Group, (ii) the Borrower shall cease to be a
Wholly-Owned Subsidiary of Luxottica Group, (iii) Avant-Garde shall cease to be
a Wholly-Owned Subsidiary of the Borrower or (iv) after the Initial Borrowing
Date, U.S. Shoe shall cease to be a Subsidiary of Avant-Garde and after the
Merger Borrowing Date, U.S. Shoe shall cease to be a Wholly-Owned Subsidiary of
Avant-Garde.
"Clean-Down Period" shall mean a 30 consecutive day period which shall
commence on or after the Merger Borrowing Date (or any anniversary thereof) and
terminate on or before the immediately succeeding anniversary of the Merger
Borrowing Date (or any such succeeding anniversary) during which the amount of
the Total Unutilized Revolving Loan Commitment was equal to or greater than
$150,000,000 for such consecutive 30-day period.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the material rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date of this Agreement, and to any subsequent provisions of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged
Properties, and all cash and Cash Equivalents delivered as collateral pursuant
to Section 4.02 or 11.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors pursuant to the Security Documents.
"Commitment" shall mean any of the commitments of any Bank, i.e.,
----
whether the Term Loan Commitment or Revolving Loan Commitment.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Consolidated Current Assets" shall mean, at any time, the consol-
idated current assets of Luxottica Group and its Subsidiaries.
"Consolidated Current Liabilities" shall mean, at any time, the
consolidated current liabilities of Luxottica Group and its Subsidiaries at such
time, but excluding the current portion of any Indebtedness under this Agreement
and the current portion of any other long-term Indebtedness which would other-
wise be included therein.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income before Consolidated Interest Expense and provision for taxes and without
giving effect to any extraordinary gains or losses or gains or losses from sales
of assets other than from sales of inventory in the ordinary course of business.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of all amortization of intangibles and
depreciation that were deducted in arriving at Consolidated EBIT for such
period.
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"Consolidated Fixed Charge Coverage Ratio" for any period shall mean
the ratio of (x) the sum of (i) Consolidated EBITDA for such period and (ii) the
amount of all lease payments made by Luxottica Group and its Subsidiaries during
such period to (y) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" for any period shall mean the sum,
without duplication, of (i) Consolidated Interest Expense for such period,
(ii) the amount of all Capital Expenditures made by Luxottica Group and its
Subsidiaries during such period (other than Capital Expenditures (x)
constituting Capitalized Lease Obligations or (y) made with the proceeds from
asset sales or insurance proceeds from any Recovery Event to the extent such
proceeds are not required to be applied by the Borrower as a mandatory repayment
pursuant to Section 4.02(e) or (g), as the case may be), (iii) all cash payments
in respect of taxes or tax liabilities (excluding (x) cash taxes arising out of
the sale of all or any portion of the Footwear Division or the Apparel Division
or the sale of any other assets outside the ordinary course of business and (y)
deferred tax liabilities for periods prior to the consummation of the Merger
which become payable in cash within the one year period following the Merger
Borrowing Date) during such period (net of any cash refunds actually received
during such period), (iv) the amount of all lease payments made by Luxottica
Group and its Subsidiaries during such period, (v) the amount of all cash
Dividends which were paid by Luxottica Group during such period and (vi) the
scheduled principal amount of all amortization payments on all Indebtedness
(excluding payments pursuant to the Refinancing and the Scheduled Repayment
which is due on the Special Scheduled Repayment Date, but including, without
limitation, the principal component of all Capitalized Lease Obligations) of
Luxottica Group and its Subsidiaries for such period (as determined on the first
day of the respective period).
"Consolidated Indebtedness" shall mean, at any time, all Indebtedness
of Luxottica Group and its Subsidiaries determined on a consolidated basis
(other than accrued expenses and current trade accounts payable incurred in the
ordinary course of business).
"Consolidated Interest Coverage Ratio" for any period shall mean the
ratio of Consolidated EBITDA to Consolidated Interest Expense for such period.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of Luxottica Group and its Subsidiaries determined
on a consolidated basis for such period (calculated without regard to any limit-
ations on the payment thereof) plus, without duplication, that portion of
Capitalized Lease Obligations of Luxottica Group and its Subsidiaries represent-
ing the interest factor
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for such period, but excluding the amortization of any deferred financing costs
incurred in connection with this Agreement.
"Consolidated Net Income" shall mean, for any period, the consolidated
net after tax income (or loss) of Luxottica Group and its Subsidiaries for such
period, determined on a consolidated basis, provided that (i) the net income (or
loss) of any Subsidiary of Luxottica Group which is accounted for by Luxottica
Group by the equity method of accounting shall be included only to the extent of
the amount of cash dividends or distributions paid to Luxottica Group or a
Wholly-Owned Subsidiary thereof and (ii) the net income (or loss) of any
Subsidiary acquired by Luxottica Group or a Subsidiary thereof in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
-------- -------
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if the less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the terms of
the instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Contribution Agreement" shall have the meaning provided in Section
5A.15.
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"Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, the
Security Documents, the Guaranties and the Contribution Agreement.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit.
"Credit Party" shall mean each Parent Guarantor, the Borrower and each
Subsidiary Guarantor.
"Declared and Unpaid Dividend" shall have the meaning provided in
Section 10.03(iv).
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other distribution, payment or delivery of property
(other than common stock of such Person) or cash to its stockholders as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
a consideration any shares of any class of its capital stock outstanding on or
after the Effective Date (or any options or warrants issued by such Person with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase or other-
wise acquire for a consideration any shares of any class of the capital stock of
such Person outstanding on or after the Effective Date (or any options or war-
rants issued by such Person with respect to its capital stock). Without
limiting the foregoing, "Dividends" with respect to any Person shall also in-
clude all payments made or required to be made by such Person with respect to
any stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents, the Tender Offer
Documents and the Merger Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
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"Domestic Subsidiary" shall mean each Subsidiary of Luxottica Group
incorporated or organized in the United States or any State or territory
thereof, it being understood that all Domestic Subsidiaries, other than
Luxottica USA, shall be Subsidiaries of the Borrower.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Effective Date" shall have the meaning provided in Section 14.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act).
"End Date" shall have the meaning provided in the definition of
Applicable Commitment Commission Percentage.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereafter, "Claims"), including, without
limitation, (a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief in connection with alleged injury or threat of
injury to health, safety or the environment due to the presence of Hazardous
Materials.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy and rule of common law now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Luxottica Group or
any of its respective Subsidiaries, relating to the environment, employee health
and safety or Hazardous Materials, including, without limitation, CERCLA; RCRA;
the Federal Water Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.; the Toxic
-- ----
Substances Control Act, 15 U.S.C. Sec.2601 et seq.; the Clean Air Act, 42 U.S.C.
-- ----
Sec. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sec. 3803 et seq.;
-- ---- -- ----
the Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; the Emergency
-- ----
Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. Sec. 11001
et seq., the Hazardous Material Transportation
- -- ----
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Act, 49 U.S.C. Sec. 1801 et seq. and the Occupational Safety and Health Act, 29
-- ----
U.S.C. Sec. 651 et seq. (to the extent it regulates occupational exposure to
-- ----
Hazardous Materials); and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and material
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Luxottica Group or any Subsidiary of Luxottica
Group would be deemed to be a "single employer" (i) within the meaning of
Section 414(b), (c), (m) or (o) of the Code or (ii) as a result of Luxottica
Group or a Subsidiary of Luxottica Group being or having been a general partner
of such person.
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the arithmetic average (rounded
upward to the nearest 1/100 of 1%) of the offered quotation to first-class banks
in the London interbank Eurodollar market by each Reference Bank for Dollar
deposits of amounts in immediately available funds comparable to the outstanding
principal amount of the Eurodollar Loan of such Reference Bank with maturities
comparable to the Interest Period applicable to such Eurodollar Loan commencing
two Business Days thereafter as of 11:00 A.M. (London time) on the date which is
two Business Days prior to the commencement of such Interest Period, divided
(and rounded upward to the nearest 1/16 of 1%) by (b) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves required by applicable law) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D); provided that if one or more of the Reference Banks fail to
--------
provide the Administrative Agent with its aforesaid rate, then the Eurodollar
Rate shall be determined based on the rate or rates provided to the
Administrative Agent by the other Reference Bank or Reference Banks.
"Event of Default" shall have the meaning provided in Section 11.
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"Excess Cash Flow" shall mean, for any period, the remainder of (a)
the sum of (i) Adjusted Consolidated Net Income for such period and (ii) the
decrease, if any, in Adjusted Consolidated Working Capital from the first day to
the last day of such period, minus (b) the sum of (i) the amount of Capital
Expenditures made by Luxottica Group and its Subsidiaries on a consolidated
basis during such period pursuant to and in accordance with Section 10.07 (but
excluding Capital Expenditures (w) financed with the proceeds of Indebtedness,
(x) made with the proceeds of equity issuances or capital contributions, (y)
made with the proceeds of asset sales to the extent permitted under Section
10.02(iv) and (z) made pursuant to Section 10.07(b) and (c)), (ii) the aggregate
amount of permanent principal payments of Indebtedness for borrowed money of
Luxottica Group and its Subsidiaries (but excluding (w) payments made with
proceeds of asset sales, (x) payments made pursuant to the Refinancing, (y)
payments made with the proceeds of other Indebtedness or equity issuances or
capital contributions and (z) payments of Loans or other Obligations, provided
--------
that repayments of Loans shall be deducted in determining Excess Cash Flow if
such repayments were (I) required as a result of a Scheduled Repayment under
Section 4.02(b) (but not as a reduction to the amount of Scheduled Repayments
pursuant to another provision of this Agreement), but excluding the Scheduled
Repayment which is due on the Special Scheduled Repayment Date except to the
extent that such Scheduled Repayment is made with funds generated from
operations, or (II) made as a voluntary prepayment pursuant to Section 4.01 with
funds generated from operations (but in the case of a voluntary prepayment of
Revolving Loans or Swingline Loans, only to the extent accompanied by a volun-
tary reduction to the Total Revolving Loan Commitment)) during such period,
(iii) Dividends paid by Luxottica Group pursuant to Section 10.03(iv) during
such period in an amount not to exceed the Lire equivalent of $8,000,000 and
(iv) the increase, if any, in Adjusted Consolidated Working Capital from the
first day to the last day of such period.
"Excess Cash Payment Date" shall mean the date occurring 120 days
after the last day of each fiscal year of Luxottica Group (beginning with its
fiscal year ended December 31, 1995).
"Excess Cash Payment Period" shall mean with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of Luxottica Group.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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"Existing Indebtedness" shall have the meaning provided in Section
8.22.
"Existing Indebtedness Agreements" shall have the meaning set forth in
Section 5A.05.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final Maturity Date" shall mean June 30, 2001.
"Footwear Division" shall mean the existing footwear division of U.S.
Shoe and its Subsidiaries, which division includes their manufacturing,
wholesale and retailing operations.
"Foreign Pension Plan" means any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Luxottica Group or any one or
more of its Subsidiaries primarily for the benefit of employees of Luxottica
Group or such Subsidiaries residing outside the United States of America, which
plan, fund or other similar program provides, or results in, retirement income,
a deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of Luxottica Group
that is incorporated under the laws of any jurisdiction other than the United
States of America, any State thereof, the United States Virgin Islands or Puerto
Rico.
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"GAAP" shall mean (i) in the case of the financial statements required
to be delivered as to the Borrower and its Subsidiaries, US GAAP, (ii) in the
case of the financial statements required to be delivered as to Luxottica Group
and its Subsidiaries and the financial covenants set forth herein, Italian GAAP
and (iii) in all other cases, generally accepted accounting principles in the
jurisdiction in which such Person's principal place of business is located, as
applicable, but otherwise subject, in each case, to the provisions of Section
14.07.
"Guaranties" shall mean and include each of the Parents Guaranty and
the Subsidiaries Guaranty.
"Guarantor" shall mean each Parent Guarantor and each Subsidiary
Guarantor.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas, (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous mater-
ials," "extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law and (c) any other chem-
ical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority under Environmental Laws.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or ser-
vices, (ii) the maximum amount available to be drawn under all letters of credit
issued for the account of such Person and all unpaid drawings in respect of such
letters of credit, (iii) all Indebtedness of the types described in clause (i),
(ii), (iv), (v), (vi) or (vii) of this definition secured by any Lien on any
property owned by such Person, whether or not such Indebtedness has been assumed
by such Person (to the extent of the value of the respective property), (iv) the
aggregate amount required to be capitalized under leases under which such Person
is the lessee, (v) all obligations of such Person to pay a specified purchase
price for goods or services, whether or not delivered or accepted, i.e., take-
----
or-pay and similar obligations, (vi) all Contingent Obligations of such Person,
(vii) all obligations under any Interest Rate Protection Agreement or Other
Hedging Agreement or under any similar type of agreement or
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arrangement and (viii) all obligations in respect of the Declared and Unpaid
Dividend.
"Indebtedness to be Refinanced" shall mean all Existing Indebtedness
of U.S. Shoe and its Subsidiaries, with such exceptions thereto as may be
acceptable to the Administrative Agent and the Required Banks.
"Initial Borrowing Date" shall mean the date occurring on or after the
Effective Date on which the initial Borrowing of Loans occurs.
"Initial Subsidiary Guarantor" shall mean each of Avant-Garde, Bidco
and each other Wholly-Owned Domestic Subsidiary of Luxottica Group (other than
U.S. Shoe and its Subsidiaries).
"Intercompany Note" shall have the meaning provided in Section
10.05(iv).
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the third Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement, interest rate floor agreement or other similar agreement or
arrangement.
"Interest Reduction Discount" shall mean initially zero and from and
after any Start Date occurring after the last day of the first fiscal quarter of
Luxottica Group ended after the Merger Borrowing Date to and including the
corresponding End Date:
(A) 1/4 of 1% if, but only if, as of the Test Date for such Start Date
both of the following conditions are met and the conditions set forth in
none of clauses (B), (C), (D) and (E) below are satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than or equal to 3.00:1.00;
and
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(ii) the Leverage Ratio for the Test Period ended on such Test Date
shall be less than or equal to 4.05:1.00;
(B) 1/2 of 1% if, but only if, as of the Test Date for such Start Date
both of the following conditions are met and the conditions set forth in
none of clauses (C), (D) and (E) below are satisfied:
(i) the Consolidated Interest Coverage for the Test Period ended on
such Test Date shall be greater than or equal to 3.25:1.00; and
(ii) the Leverage Ratio for the Test Period ended on such Test Date
shall be less than or equal to 3.50:1.00;
(C) 3/4 of 1% if, but only if, as of the Test Date for such Start Date
both of the following conditions are met and the conditions set forth in
none of clauses (D) and (E) below are satisfied:
(i) the Consolidated Interest Coverage for the Test Period ended on
such Test Date shall be greater than or equal to 3.75:1.00; and
(ii) the Leverage Ratio for the Test Period ended on such Test Date
shall be less than or equal to 2.75:1.00;
(D) 1% if, but only if, as of the Test Date for such Start Date both
of the following conditions are met and the conditions set forth in clause
(E) below are not satisfied:
(i) the Consolidated Interest Coverage for the Test Period ended on
such Test Date shall be greater than or equal to 4.25:1.00; and
(ii) the Leverage Ratio for the Test Period ended on such Test Date
shall be less than or equal to 2.50:1.00; or
(E) 1-1/4% if, but only if, as of the Test Period ended on such Test
Date both of the following conditions are met:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than or equal to 4.50:1.00;
and
(ii) the Leverage Ratio for the Test Period ended on such Test Date
shall be less than or equal to 2.00:1.00.
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Notwithstanding anything to the contrary above in this definition, the Interest
Reduction Discount shall be reduced to zero at all times when an Event of
Default shall exist.
"Investments" shall have the meaning provided in Section 10.05.
"Issuing Bank" shall mean Credit Suisse and any Bank which at the
request of the Borrower and with the consent of the Administrative Agent (which
consent will not be unreasonably withheld) agrees, in such Bank's sole
discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2.
"Italian GAAP" shall mean accounting principles consistent with those
established by the Italian Accounting Profession and, in their absence, with
those established by the International Accounting Standards Committee (when not
in conflict with Italian civil law), consistently applied throughout the periods
involved.
"La Meccanoptica" shall mean La Meccanoptica Leonardo S.p.A., an
Italian corporation and a Wholly-Owned Subsidiary of Luxottica Group.
"L/C Supportable Indebtedness" shall mean (i) obligations of the
Borrower and its Subsidiaries incurred in the ordinary course of business with
respect to insurance obligations and workers' compensation, surety bonds and
other similar statutory obligations and (ii) such other obligations of the
Borrower and its Subsidiaries as are reasonably acceptable to the respective
Issuing Bank and otherwise permitted to exist pursuant to the terms of this
Agreement without giving rise to a Default or an Event of Default.
"Leaseholds" of any Person means all the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"LensCrafters" shall mean LensCrafters, Inc., an Ohio corporation and
a Wholly-Owned Subsidiary of U.S. Shoe.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
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"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Leverage Ratio" shall mean, at any time, the ratio of (A) the sum of
(x) Consolidated Indebtedness (excluding the Revolving Outstandings) at such
time and (y) the average Revolving Outstandings for the then most recently ended
Test Period to (B) Consolidated EBITDA for the then most recently ended Test
Period. Notwithstanding anything to the contrary contained in the immediately
preceding sentence, for purposes of Section 10.10 only (and not for purposes of
any calculations of the Applicable Commitment Commission Percentage or the
Interest Reduction Discount), for any Test Period which ends prior to the first
anniversary of the Merger Borrowing Date, in calculating the average Revolving
Outstandings during such Test Period, on any day upon which the Revolving
Outstandings exceed $400,000,000, the Revolving Outstandings shall instead be
deemed to be $400,000,000.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.
"Luxottica Group" shall mean Luxottica Group S.p.A., an Italian
corporation.
"Luxottica S.p.A." shall mean Luxottica S.p.A., an Italian corporation
and a Wholly-Owned Subsidiary of Luxottica Group.
"Luxottica USA" shall mean Luxottica USA Inc., a New York corporation
and a Wholly-Owned Subsidiary of Luxottica Group.
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"Mandatory Borrowing" shall have the meaning provided in Section
1.01(d).
"Margin Reduction Period" shall mean each period which shall commence
on a date on which the financial statements are delivered pursuant to Section
9.01(a) or (b), as the case may be, and which shall end on the earlier of (i)
the date of actual delivery of the next financial statements pursuant to Section
9.01(a) or (b), as the case may be, and (ii) the latest date on which the next
financial statements are required to be delivered pursuant to Section 9.01(a) or
(b), as the case may be, provided that the first Margin Reduction Period shall
commence no earlier than the date of delivery of the first set of financial
statements pursuant to Section 9.01(a) after the Merger Borrowing Date.
"Margin Stock" shall have the meaning provided in Regulation U.
"Maximum Exposure Amount" at any time prior to the Merger Borrowing
Date shall mean an amount equal to the sum of (i) 50% of the "value" of all
shares of U.S. Shoe owned by Luxottica Group and its Subsidiaries which is
subject to the pledge provided in the Pledge Agreement, with the "value" of each
such Share for this purpose being deemed to be $28 or, if less, the actual price
per Share paid pursuant to the Tender Offer and (ii) $700,000,000 minus the
aggregate amount of any repayments of B Credits made with proceeds of asset
sales by Luxottica Group and its Subsidiaries (other than U.S. Shoe and its
Subsidiaries) effected after the Effective Date and prior to the Merger
Borrowing Date.
"Maximum Swingline Amount" shall mean $10,000,000.
"Merger" shall mean the merger of Bidco with and into U.S. Shoe, with
U.S. Shoe being the surviving corporation of such merger, and as a result of
which, U.S. Shoe shall become a Wholly-Owned Subsidiary of Avant-Garde.
"Merger Agreement" shall mean any Agreement and Plan of Merger entered
into among Luxottica Group, U.S. Shoe and Bidco in connection with the Merger,
as the same may be amended, modified or supplemented thereafter with the consent
of the Administrative Agent and the Required Banks.
"Merger Borrowing Date" shall mean the date on which the Merger is
consummated.
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"Merger Documents" shall mean the Merger Agreement and all other
documents entered into by Luxottica Group, Bidco or U.S. Shoe in connection with
the Merger.
"Mortgage" shall mean each mortgage, deed to secure debt or deed of
trust in form and substance satisfactory to the Administrative Agent pursuant to
which any Credit Party shall have granted to the Collateral Agent a mortgage
lien on such Credit Party's Mortgaged Property.
"Mortgage Policy" shall mean each mortgage title insurance policy in
form and substance satisfactory to the Administrative Agent insuring the
mortgage lien on each Mortgage Property.
"Mortgaged Property" shall mean each Real Property owned by the
Borrower, any of its Subsidiaries or any other Domestic Subsidiary of Luxottica
Group designated as a Mortgaged Property on Schedule III or pursuant to Section
9.11(a) or 9.12(a).
"Net Sale Proceeds" shall mean for any sale of assets, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise (including any cash received from the
sale of the warrants (or the shares of Nine West issued upon the exercise of
such warrants) issued to U.S. Shoe pursuant to the Nine West Agreement), but
only as and when received) received from any sale of assets, net of reasonable
transaction costs (including, without limitation, any underwriting, brokerage or
other customary selling commissions and reasonable legal, advisory and other
fees and expenses associated therewith), the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness of the
Banks pursuant to this Agreement) which is secured by the respective assets
which were sold, and the estimated marginal increase in income taxes which will
be payable by Luxottica Group's, the Borrower's or U.S. Shoe's consolidated
group with respect to the fiscal year in which the sale occurs as a result of
such sale.
"Nine West" shall mean Nine West Group, Inc., a Delaware corporation.
"Nine West Agreement" shall mean the Asset Purchase Agreement dated as
of March 15, 1995 among Nine West, Footwear Acquisition Corp. and U.S. Shoe.
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"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Noon Buying Rate" shall mean the noon buying rate in New York City
for cable transfers in foreign currencies as certified for customs purposes by
the Federal Reserve Bank of New York.
"Note" shall mean each Term Note, each Revolving Note and the
Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 12 East 49th Street, New York, New York 10017, Attention:
Syndications/Agency, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent, the Collateral Agent, the Issuing Bank or any Bank pursuant to the terms
of this Agreement or any other Credit Document.
"Offer to Purchase" shall mean the Offer to Purchase, dated March 3,
1995, issued by Luxottica Group and Bidco in connection with the Tender Offer,
as the same has been amended prior to the Effective Date, and as the same may be
amended, modified or supplemented thereafter in accordance with the terms of
this Agreement.
"Other Hedging Agreement" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
"Parent Guarantors" shall mean and include each of Luxottica Group,
Luxottica S.p.A. and La Meccanoptica.
"Parents Guaranty" shall have the meaning provided in Section
5A.11(b).
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"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Administrative Agent
located at 12 East 49th Street, New York, New York 10017, or such other office
as the Administrative Agent may hereafter designate in writing as such to the
other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the Mortgage Policy
delivered with respect thereto, all of which exceptions must be acceptable to
the Administrative Agent in its reasonable discretion.
"Permitted Liens" shall have the meaning provided in Section 10.01.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of), Luxottica Group or a
Subsidiary of Luxottica Group or an ERISA Affiliate, and each such plan for the
five year period immediately following the latest date on which Luxottica Group,
a Subsidiary of Luxottica Group or an ERISA Affiliate maintained, contributed or
had an obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section 5A.12.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in the Pledge Agreement.
"Pledged Securities" shall mean all "Pledged Securities" as defined in
the Pledge Agreement.
"Prime Lending Rate" shall mean the rate which Credit Suisse announces
from time to time as its prime lending rate, the Prime Lending Rate to change
when and as such prime lending rate changes. The Prime Lending Rate is
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a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Credit Suisse may make commercial loans or
other loans at rates of interest at, above or below the Prime Lending Rate.
"Projections" shall have the meaning provided in Section 8.05(d).
"Proxy Materials" shall mean all proxy materials sent by Luxottica
Group or any of its Subsidiaries to the shareholders of U.S. Shoe in connection
with the Acquisition.
"Quarterly Payment Date" shall mean the last Business Day of each
March, June, September and December, occurring after the Initial Borrowing Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Sec. 6901 et seq.
-- ----
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by Luxottica Group or any of
its Subsidiaries of any cash insurance proceeds or condemnation award payable by
reason of theft, loss, physical destruction or damage or any other similar event
with respect to any property or assets of Luxottica Group or any of its
Subsidiaries.
"Reference Banks" shall mean Credit Suisse, Credito Italiano (New York
Branch) and Nationsbank, N.A. (Carolinas).
"Refinancing" shall mean the repayment in full by, or on behalf of,
U.S. Shoe of the Indebtedness to be Refinanced.
"Register" shall have the meaning provided in Section 14.15.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
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"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing or
migration into the environment.
"Remaining Excess Cash Amount" shall mean, for each Excess Cash
Payment Period, an amount equal to the remainder of (i) 100% of Excess Cash Flow
for such Excess Cash Payment Period less (ii) the Applicable Excess Cash Flow
Recapture Percentage of Excess Cash Flow for such Excess Cash Payment Period.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Regulation Section 2615.
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
outstanding Term Loans (and, if prior to the Merger Borrowing Date, Term Loan
Commitments) and Revolving Loan Commitments (or after the termination thereof,
outstanding Revolving Loans and Adjusted RL Percentage of Swingline Loans and
Letter of Credit Outstandings) represent an amount greater than 50% of the sum
of all outstanding Term Loans (and, if prior to the Merger Borrowing Date, Term
Loan Commitments) of Non-Defaulting Banks and the Adjusted Total Revolving Loan
Commitment (or after the termination thereof, the sum of the then total
outstanding Revolving Loans of Non-Defaulting Banks and the aggregate Adjusted
RL Percentages of all Non-Defaulting Banks of the total outstanding Swingline
Loans and Letter of Credit Outstandings at such time).
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"Returns" shall have the meaning provided in Section 8.09.
"Revolving Loan" shall have the meaning provided in Section 1.01(b).
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I directly below the column entitled
"Revolving Loan Commitment," as same may be (x) reduced from time to time
pursuant to Sections 3.02, 3.03 and/or 11 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section 1.13 or 14.04(b).
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"Revolving Outstandings" at any time shall mean the sum of the
aggregate principal amount of Revolving Loans and Swingline Loans then
outstanding plus the aggregate amount of Letter of Credit Outstandings at such
time.
"RL Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, provided that if the RL Percentage of
--------
any Bank is to be determined after the Total Revolving Loan Commitment has been
terminated, then the RL Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.
"Scheduled Repayment Date" shall have the meaning provided in Section
4.02(b).
"Scheduled Repayment" shall have the meaning provided in Section
4.02(b).
"SEC" shall have the meaning provided in Section 9.01(g).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b).
"Secured Creditors" shall have the meaning provided in the respective
Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Security Agreement" shall have the meaning provided in Section 5A.13.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Document" shall mean and include each of the Pledge Agree-
ment, the Security Agreement and each Mortgage.
"Shareholders' Agreements" shall have the meaning provided in Section
5A.05.
"Shares" shall mean all outstanding shares of common stock of U.S.
Shoe.
"Special Funding Procedures Letter" shall mean the Special Funding
Procedures Letter, among the Borrower, the Administrative Agent and the Banks,
substantially in the form of Exhibit P.
"Special Scheduled Repayment Date" shall mean that date which is
eighteen months after the Initial Borrowing Date.
"Standby Letter of Credit" shall mean each Letter of Credit issued by
the Issuing Bank for the account of the Borrower and in support of L/C
Supportable Indebtedness.
"Start Date" shall have the meaning provided in the definition of
Applicable Commitment Commission Percentage.
"Stated Amount" of each Letter of Credit shall mean, at any time, the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any conditions to drawing could then be met).
"Subsidiaries Guaranty" shall have the meaning provided in Section
5A.11(a).
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency)
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is at the time owned by such Person and/or one or more Subsidiaries of such
Person and (ii) any partnership, association, joint venture or other entity in
which such Person and/or one or more Subsidiaries of such Person has more than a
50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Initial Subsidiary Guarantor,
each Additional Subsidiary Guarantor and each other Wholly-Owned Domestic
Subsidiary of Luxottica Group.
"Supermajority Banks" shall mean those Non-Defaulting Banks which
would constitute the Required Banks under, and as defined in, this Agreement if
the percentage "50%" contained therein were changed to "75%".
"Swingline Bank" shall mean Credit Suisse.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Final Maturity Date.
"Swingline Loans" shall have the meaning provide in Section 1.01(c).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Date" shall mean that date upon which the Administrative
Agent determines in its sole discretion (and notifies the Borrower) that the
primary syndication (and resultant addition of Persons as Banks pursuant to
Section 14.04(b)) has been completed.
"Tax Sharing Agreements" shall have the meaning provided in Section
5A.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Tender Offer" shall mean the tender offer commenced by Luxottica
Group and Bidco pursuant to the Offer to Purchase.
"Tender Offer Documents" shall mean the Offer to Purchase, the
Schedule 14D-1 filed by Luxottica Group and Bidco and all amendments and
exhibits thereto and related documents filed with the SEC or distributed to the
shareholders of U.S. Shoe.
"Term Loan" shall have the meaning provided in Section 1.01(a).
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"Term Loan Borrowing Date" shall mean and include each of the Initial
Borrowing Date and the Merger Borrowing Date.
"Term Loan Commitment" shall mean, for each Bank, the amount set forth
opposite such Bank's name in Schedule I directly below the column entitled "Term
Loan Commitment", as same may be (x) reduced from time to time pursuant to
Sections 3.03, 4.02 and/or 11 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 1.13 or 14.04.
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Date" shall have a meaning provided in the definition of
Applicable Commitment Commission Percentage.
"Test Period" shall mean each period of four consecutive fiscal
quarters of Luxottica Group (in each case taken as one accounting period),
provided that the first Test Period shall end on the last day of the first
fiscal quarter following the Merger Borrowing Date, provided further, that for
purposes of Section 10.09 only, the first Test Period shall end on December 31,
1995.
"Total Available Revolving Loan Commitment" shall mean, at any time,
the Total Revolving Loan Commitment less the Blocked Commitment, if any, at such
time.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean, at any time, the sum of the
Term Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
an amount equal to the remainder of (x) the Total Revolving Loan Commitment then
in effect less (y) the sum of the aggregate principal amount of Revolving Loans
and Swingline Loans then outstanding plus the then aggregate amount of the
Letter of Credit Outstandings at such time, provided that for purposes of
Section 4.02(i) only, the calculation pursuant to clause (y) above will not
include the aggregate amount of the Letter of Credit Outstandings at such time.
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"Trade Letter of Credit" shall mean each Letter of Credit issued by
the Issuing Bank for the account of the Borrower and in support of trade
obligations of the Borrower or any of its Subsidiaries that arise in the
ordinary course of business.
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being three separate Tranches, i.e., Term
----
Loans, Revolving Loans and Swingline Loans.
"Transaction" shall mean, collectively, the consummation of the Tender
Offer, the Merger and the Refinancing, as well as the payment of all fees and
expenses in connection therewith.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if any, by
which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unutilized Revolving Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Revolving Loan Commitment at such time less the
sum of (i) the aggregate outstanding principal amount of Revolving Loans made by
such Bank and (ii) such Bank's Adjusted RL Percentage of the Letter of Credit
Outstanding at such time.
"US GAAP" shall mean generally accepted accounting principles in the
United States consistently applied throughout the periods involved.
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"U.S. Shoe" shall mean The United States Shoe Corporation, an Ohio
corporation.
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned Sub-
sidiaries of such Person and (ii) any partnership, association, joint venture or
other entity in which such Person and/or one or more Wholly-Owned Subsidiaries
of such Person has a 100% equity interest at such time, provided that Avant-
Garde and its Wholly-Owned Subsidiaries will be deemed to be Wholly-Owned
Subsidiaries of the Borrower so long as the Borrower owns at least 99.9% of the
capital stock of Avant-Garde and Luxottica Group owns the remaining .1% of such
capital stock.
SECTION 13. The Administrative Agent.
------------------------
13.01 Appointment. The Banks hereby designate Credit Suisse as
-----------
Administrative Agent (for purposes of this Section 13, the term "Administrative
Agent" shall include Credit Suisse in its capacity as Administrative Agent under
this Agreement and as Collateral Agent pursuant to the Security Documents) to
act as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Administrative Agent to take
such action on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Administrative
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Administrative Agent may perform any of its duties
hereunder by or through its officers, directors, agents, employees or af-
filiates.
13.02 Nature of Duties. The Administrative Agent shall not have any
----------------
duties or responsibilities except those expressly set forth in this Agreement
and the other Credit Documents. Neither the Administrative Agent nor any of its
officers, directors, agents, employees or affiliates shall be liable for any
action taken or omitted by it or them hereunder or under any other Credit
Document or in connection herewith or therewith, unless caused by its gross
negligence or willful misconduct. The duties of the Administrative Agent shall
be mechanical and administrative in nature; the Administrative Agent shall not
have by reason of this
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Agreement or any other Credit Document a fiduciary relationship in respect of
any Bank or the holder of any Note; and nothing in this Agreement or any other
Credit Document, expressed or implied, is intended to or shall be so construed
as to impose upon the Administrative Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.
13.03 Lack of Reliance on the Administrative Agent. Independently
--------------------------------------------
and without reliance upon the Administrative Agent, each Bank and the holder of
each Note, to the extent it deems appropriate, has made and shall continue to
make (i) their own independent investigation of the financial condition and
affairs of Luxottica Group and its Subsidiaries in connection with the making
and the continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) their own appraisal of the creditworthiness of
Luxottica Group and its Subsidiaries and, except as expressly provided in this
Agreement, the Administrative Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Bank or the holder of
any Note with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter. The Administrative Agent shall not be responsible to any Bank
or the holder of any Note for any recitals, statements, information, represen-
tations or warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness, genuine-
ness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of Luxottica Group and its Subsidiaries or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of Luxottica Group and its Subsidiaries or the existence or
possible existence of any Default or Event of Default.
13.04 Certain Rights of the Administrative Agent. If the Administra-
------------------------------------------
tive Agent shall request instructions from the Required Banks with respect to
any act or action (including failure to act) in connection with this Agreement
or any other Credit Document, the Administrative Agent shall be entitled to
refrain from such act or taking such action unless and until the Administrative
Agent shall have received instructions from the Required Banks; and the
Administrative Agent shall not incur liability to any Person by reason of so re-
fraining. Without limiting the foregoing, neither any Bank nor the holder of
any Note shall have any right of action whatsoever against the Administrative
Agent as a result of the Administrative Agent acting or refraining from acting
hereunder or under any other Credit Document in accordance with the instructions
of the Required Banks.
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13.05 Reliance. The Administrative Agent shall be entitled to rely,
--------
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Administrative Agent believed to be the proper
Person, and, with respect to all legal matters pertaining to this Agreement and
any other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent.
13.06 Indemnification. To the extent the Administrative Agent is not
---------------
reimbursed and indemnified by the Borrower or the Guarantors, the Banks will
reimburse and indemnify the Administrative Agent, in proportion to their
respective "percentages" as used in determining the Required Banks, for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever kind
or nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties hereunder or under any other
Credit Document, in any way relating to or arising out of this Agreement or any
other Credit Document; provided that no Bank shall be liable for any portion of
--------
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's gross negligence or willful misconduct.
13.07 The Administrative Agent in its Individual Capacities. With
-----------------------------------------------------
respect to its obligations to make Loans under this Agreement, the
Administrative Agent shall have the rights and powers specified herein for a
"Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required Banks,"
"holders of Notes" or any similar terms shall, unless the context clearly
otherwise indicates, include the Administrative Agent in its individual
capacities. The Administrative Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with any
Credit Party or any Affiliate of any Credit Party as if it was not performing
the duties specified herein, and may accept fees and other consideration from
any Credit Party for services in connection with this Agreement and otherwise
without having to account for the same to the Banks.
13.08 Holders. The Administrative Agent may deem and treat the payee
-------
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been accepted by the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on
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any subsequent holder, transferee, assignee or indorsee, as the case may be, of
such Note or of any Note or Notes issued in exchange therefor.
13.09 Resignation by the Administrative Agent. (a) The Administra-
---------------------------------------
tive Agent may resign from the performance of all its functions and duties
hereunder and/or under the other Credit Documents at any time by giving 15
Business Days' prior written notice to the Banks. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower (which consent will not be unreasonably withheld or
delayed), shall then appoint a commercial bank or trust company with capital and
surplus of not less than $500 million as successor Administrative Agent who
shall serve as Administrative Agent hereunder or thereunder until such time, if
any, as the Required Banks appoint a successor Administrative Agent as provided
above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 20th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Banks shall thereafter perform all
the duties of the Administrative Agent hereunder and/or under any other Credit
Document until such time, if any, as the Required Banks appoint a successor
Administrative Agent as provided above.
SECTION 14. Miscellaneous.
-------------
14.01 Payment of Expenses, etc. The Borrower shall: (i) whether or
-------------------------
not the transactions herein contemplated are consummated, pay all out-of-pocket
costs and expenses of the Administrative Agent (including, without limitation,
the reasonable fees and disbursements of White & Case and local and foreign
counsel) in connection with the preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto, of the Administrative Agent in connection with its
syndication efforts with respect to this Agreement and of the Administrative
Agent and, following and during the
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continuation of an Event of Default, for each of the Banks in connection with
the enforcement of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein (including, without
limitation, the reasonable fees and disbursements of counsel for the
Administrative Agent and, following and during the continuation of an Event of
Default in connection with the enforcement of this Agreement and the other
Credit Documents, for each of the Banks); (ii) pay and hold each of the Banks
harmless from and against any and all present and future stamp, excise and other
similar taxes with respect to the foregoing matters and save each of the Banks
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such Bank)
to pay such taxes; and (iii) indemnify the Administrative Agent and each Bank,
and each of their respective officers, directors, employees, representatives,
agents and affiliates from and hold each of them harmless against any and all
liabilities, obligations (including removal or remedial actions), losses, dam-
ages, penalties, claims, actions, judgments, suits, costs, expenses and dis-
bursements (including reasonable attorneys' and consultants' fees and
disbursements) incurred by, imposed on or assessed against any of them as a
result of, or arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not the Administrative
Agent or any Bank is a party thereto) related to the entering into and/or
performance of this Agreement or any other Credit Document or the use of any
Letter of Credit or the proceeds of any Loans hereunder or the consummation of
any transactions contemplated herein or in any other Credit Document or the
exercise of any of their rights or remedies provided herein or in the other
Credit Documents, or (b) the actual or alleged presence of Hazardous Materials
in the air, surface water or groundwater or on the surface or subsurface of any
Real Property owned or at any time operated by Luxottica Group or any of its
Subsidiaries, the generation, storage, transportation, handling or disposal of
Hazardous Materials at any location, whether or not owned or operated by
Luxottica Group or any of its Subsidiaries, the non-compliance of any Real
Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against Luxottica Group, any of
its Subsidiaries or any Real Property owned or at any time operated by Luxottica
Group or any of its Subsidiaries, including, in each case, without limitation,
the reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding (but
excluding any losses, liabilities, claims, damages or expenses to the extent
incurred by reason of the gross negligence or willful misconduct of the Person
to be indemnified). To the extent that the undertaking to indemnify, pay or
hold harmless the Administrative Agent or any Bank set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall make the maximum
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contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
14.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Bank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Bank (including, without limitation, by branches
and agencies of such Bank wherever located) to or for the credit or the account
of the Borrower or any other Credit Party against and on account of the
Obligations and liabilities of the Borrower or such other Credit Party to such
Bank under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased by such Bank pursuant
to Section 14.06(b), and all other claims of any nature or description arising
out of or connected with this Agreement or any other Credit Document, irrespec-
tive of whether or not such Bank shall have made any demand hereunder and
although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
14.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
the Borrower's address specified opposite its signature below; if to Luxottica
Group, at Luxottica Group's address specified opposite its signature below; if
to any Bank, at such Bank's address specified opposite its name on Schedule II;
and if to the Administrative Agent, at the Notice Office; or, as to any Credit
Party or the Administrative Agent, at such other address as shall be designated
by such party in a written notice to the other parties hereto and, as to each
Bank, at such other address as shall be designated by such Bank in a written
notice to the Borrower and the Administrative Agent. All such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, or cabled
or sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier, except that notices and
communications to the Administrative Agent shall not be effective until received
by the Administrative Agent.
14.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and
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assigns of the parties hereto; provided, however, the Borrower may not assign or
-------- -------
transfer any of its rights, obligations or interest hereunder or under any other
Credit Document without the prior written consent of the Banks and, provided
--------
further, that, although any Bank may transfer, assign or grant participations in
- -------
its rights hereunder, such Bank shall remain a "Bank" for all purposes hereunder
(and may not transfer or assign all or any portion of its Commitments hereunder
except as provided in Section 14.04(b)) and the transferee, assignee or
participant, as the case may be, shall not constitute a "Bank" hereunder and,
provided further, that no Bank shall transfer or grant any participation under
- ----------------
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such amendment
or waiver would (i) extend the final scheduled maturity of any Loan, Note or
Letter of Credit (unless such Letter of Credit is not extended beyond the Final
Maturity Date) in which such participant is participating, or reduce the rate or
extend the time of payment of interest or Fees thereon (except in connection
with a waiver of applicability of any post-default increase in interest rates)
or reduce the principal amount thereof, or increase the amount of the
participant's participation over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment shall not constitute a change in the terms of
such participation, and that an increase in any Commitment or Loan shall be
permitted without the consent of any participant if the participant's participa-
tion is not increased as a result thereof), (ii) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement or (iii) release all or substantially all of the Collateral under all
of the Security Documents (except as expressly provided in the Credit Documents)
supporting the Loans in which such participant is participating. In the case of
any such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be determined as if such
Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Revolving
Loan Commitment (and related outstanding Obligations hereunder) and/or its out-
standing Term Loans (and, if prior to the Merger Borrowing Date, Term Loan
Commitment) to its parent company and/or any affiliate of such Bank which is at
least 50% owned by such Bank or its parent company or to one or more Banks or
(y) assign all, or if less than all, a portion equal to at least $5,000,000 in
the aggregate for the assigning Bank or assigning Banks, of such Revolving Loan
Commitments and outstanding principal amount of Term Loans (and, if prior to the
Merger Borrowing
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<PAGE>
Date, Term Loan Commitments) hereunder to one or more Eligible Transferees, each
of which assignees shall become a party to this Agreement as a Bank by execution
of an Assignment and Assumption Agreement, provided that, (i) at such time
--------
Schedule I shall be deemed modified to reflect the Commitments (and/or out-
standing Term Loans, as the case may be) of such new Bank and of the existing
Banks, (ii) new Notes will be issued, at the Borrower's expense, to such new
Bank and to the assigning Bank upon the request of such new Bank or assigning
Bank, such new Notes to be in conformity with the requirements of Section 1.05
(with appropriate modifications) to the extent needed to reflect the revised
Commitments (and/or outstanding Term Loans, as the case may be), (iii) the
consent of the Administrative Agent shall be required in connection with any
assignment pursuant to clause (y) above (which consent shall not be unreasonably
withheld or delayed), (iv) the consent of each Issuing Bank shall be required in
connection with any assignment of Revolving Loan Commitments pursuant to clause
(y) above (which consent shall not be unreasonably withheld or delayed) and (v)
the Administrative Agent shall receive at the time of each assignment pursuant
to clause (y) above which occurs after the Syndication Date, from the assigning
or assignee Bank, the payment of a non-refundable assignment fee of $3,500. To
the extent of any assignment pursuant to this Section 14.04(b), the assigning
Bank shall be relieved of its obligations hereunder with respect to its assigned
Commitments. At the time of each assignment pursuant to this Section 14.04(b)
to a Person which is not already a Bank hereunder and which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
Federal income tax purposes, the respective assignee Bank shall provide to the
Borrower and the Administrative Agent the appropriate Internal Revenue Service
Forms (and, if applicable, a Section 4.04(b)(ii) Certificate) described in
Section 4.04(b). To the extent that an assignment of all or any portion of a
Bank's Commitments and related outstanding Obligations pursuant to Section 1.13
or this Section 14.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 1.11, 2.06 or 4.04 from those being charged
by the respective assigning Bank prior to such assignment, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
14.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
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Document and no course of dealing between the Borrower or any other Credit Party
and the Administrative Agent or any Bank or the holder of any Note shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies herein or in
any other Credit Document expressly provided are cumulative and not exclusive of
any rights, powers or remedies which the Administrative Agent or any Bank or the
holder of any Note would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Administrative Agent or any Bank or the holder of any Note to any other
or further action in any circumstances without notice or demand.
14.06 Payments Pro Rata. (a) Except as otherwise provided in this
-----------------
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, the Administrative Agent shall distribute such payment to the Banks
entitled thereto (other than any Bank that has consented in writing to waive its
pro rata share of any such payment) pro rata based upon their respective shares,
- --- ---- --- ----
if any, of the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; provided that if all or any portion of such excess
--------
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 14.06(a) and (b) shall be subject to the
express
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provisions of this Agreement which require, or permit, differing payments to be
made to Non-Defaulting Banks as opposed to Defaulting Banks.
14.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with, in the case of Luxottica Group and its Subsidiaries, Italian
GAAP, and in the case of the Borrower and its Subsidiaries, US GAAP, consist-
ently applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by the Borrower to the Banks);
provided that, the financial statements of Luxottica Group and its Subsidiaries,
- --------
to the extent prepared in accordance with Italian GAAP, shall also (x) be
accompanied by convenience translations pursuant to which all Lire amounts will
be converted into Dollars using the Noon Buying Rate as in effect on the last
day of the respective fiscal quarter or year of Luxottica Group, as the case may
be, and (y) contain a reconciliation between Italian GAAP and US GAAP.
(b) Notwithstanding anything to the contrary contained in clause (a)
of this Section 14.07, (i) all calculations used in determining Excess Cash
Flow, the Applicable Commitment Commission Percentage, the Interest Reduction
Discount and compliance with Sections 10.08, 10.09 and 10.10 shall convert all
Lire amounts into Dollars using the average rate of exchange during the relevant
fiscal period based on the rates in effect in Milan, Italy on each business day
during such fiscal period, provided that in determining the Leverage Ratio for
such fiscal period the numerator thereof shall be calculated by converting all
Lire amounts into Dollars using the Noon Buying Rate as in effect on the last
day of the relevant fiscal period, (ii) for purposes of determining compliance
by Luxottica Group and its Subsidiaries with any incurrence tests set forth in
Sections 10.01, 10.02, 10.03, 10.04, 10.05 and 10.07, any amounts so incurred or
expended (to the extent incurred or expended in a currency other than Dollars)
shall be converted into Dollars on the basis of the Noon Buying Rate as in
effect on the date of such incurrence or expenditure, it being understood,
however, that prior to any additional incurrence or expenditure under any
provision of any such Section that has an aggregate Dollar limitation provided
for therein for any fiscal period, the Borrower shall recalculate any
incurrences or expenditures theretofore made during such fiscal period based on
the Noon Buying Rate on the date on which such additional incurrence or
expenditure is to be made, (iii) except as otherwise specifically provided
herein, all computations determining compliance with Sections 10.07 through
10.10, inclusive, and in determining the Applicable Commitment Commission
Percentage and the Interest Reduction Discount for any period shall (x) utilize
accounting principles and policies in conformity with those used to prepare the
historical financial statements of Luxottica Group and its Subsidiaries referred
to in Section 8.05(a), but shall be
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made in accordance with the requirements of clause (i) or (ii), as the case may
be, of this Section 14.07(b), provided that (I) for any Test Period which ends
within one year after the Initial Borrowing Date, such financial covenants and
calculations will be based on, and in accordance with, the relevant pro forma
--- -----
income statements delivered pursuant to Section 9.01(k) and (II) all amounts
that are initially expressed in Dollars shall not be required to be converted
into Lire, and (y) for periods prior to the Merger Borrowing Date, shall treat
U.S. Shoe as a Wholly-Owned Subsidiary of Luxottica Group even though U.S. Shoe
would not otherwise constitute a Wholly-Owned Subsidiary in accordance with the
definition thereof and (iv) in determining compliance with Sections 10.07
through 10.10, inclusive, and in determining Excess Cash Flow, the Applicable
Commitment Commission Percentage and the Interest Reduction Discount, no effect
shall be given to any purchase accounting adjustments made as a result of the
Acquisition.
(c) All computations of interest in respect of Eurodollar Loans shall
be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable. All computations of interest in respect of Base
Rate Loans, Commitment Commission and other Fees hereunder shall be made on the
basis of a year of 365/366 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest, Commitment Commission or other Fees are payable.
14.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
- ----------
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHER-
WISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION
SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK
10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE
FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL
LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT
SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE BORROWER AGREES TO DESIGNATE A
NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE
PURPOSES OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT. THE
BORROWER FURTHER
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IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS
SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE BORROWER IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
14.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with Luxottica Group, the
Borrower and the Administrative Agent.
14.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which the Borrower and each of the Banks shall
have signed a counterpart hereof (whether the same or different counterparts)
and shall have delivered the same to the Administrative Agent at its Notice
Office or, in the case of the Banks, shall have given to the Administrative
Agent telephonic (confirmed in writing), written or telex notice (actually
received) at such office that the same has been signed and mailed to it. The
Administrative Agent will give Luxottica Group, the Borrower and each of the
Banks prompt written notice of the occurrence of the Effective Date.
14.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
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14.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
-------------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the Re-
quired Banks, provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected thereby), (i) extend the final scheduled
maturity of any Loan or Note or extend the stated maturity of any Letter of
Credit beyond the Final Maturity Date, or reduce the rate or extend the time of
payment of interest or Fees thereon, or reduce the principal amount thereof
(except to the extent repaid in cash), (ii) release all or substantially all of
the Collateral (except as expressly provided in the Credit Documents) under all
the Security Documents, (iii) release any Parent Guarantor, U.S. Shoe or Avant-
Garde from its obligations under the respective Guaranty, (iv) amend, modify or
waive any provision of this Section 14.12, (v) reduce the percentage specified
in the definition of Required Banks (it being understood that, with the consent
of the Required Banks, additional extensions of credit pursuant to this Agree-
ment may be included in the determination of the Required Banks on substantially
the same basis as the extensions of Term Loans and Revolving Loan Commitments
are included on the Effective Date) or (vi) consent to the assignment or trans-
fer by the Borrower of any of its rights and obligations under this Agreement;
provided further, that no such change, waiver, discharge or termination shall
- ----------------
(u) increase the Commitments of any Bank over the amount thereof then in effect
without the consent of such Bank (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction in the Total Commitment shall not constitute an
increase of the Commitment of any Bank, and that an increase in the available
portion of any Commitment of any Bank shall not constitute an increase in the
Commitment of such Bank), (v) without the consent of each Issuing Bank, amend,
modify or waive any provision of Section 2 or alter its rights or obligations
with respect to Letters of Credit, (w) without the consent of the Swingline
Bank, amend, modify or waive any provision relating to the rights or obligations
of the Swingline Bank or with respect to Swingline Loans, (x) without the
consent of the Administrative Agent, amend, modify or waive any provision of
Section 13 as same applies to the Administrative Agent or any other provision as
same relates to the rights or obligations of such Administrative Agent, (y)
without the consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral Agent or (z)
without the consent of the Supermajority Banks, amend, modify or change the
definition of Supermajority Banks or extend or reduce any Scheduled Repayment.
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(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (vi), inclusive, of the first proviso to Section 14.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Banks whose individual
consent is required are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Bank or Banks (or, at the option
of the Borrower if the respective Bank's consent is required with respect to
less than all Tranches of Loans (or related Commitments), to replace only the
respective Tranche or Tranches of Commitments and/or Loans of the respective
non-consenting Bank which gave rise to the need to obtain such Bank's individual
consent) with one or more Replacement Banks pursuant to Section 1.13 so long as
at the time of such replacement, each such Replacement Bank consents to the pro-
posed change, waiver, discharge or termination or (B) terminate such non-
consenting Bank's Revolving Loan Commitment (if such Bank's consent is required
as a result of its Revolving Loan Commitment), Term Loan Commitment (if prior to
the Merger Borrowing Date and if such Bank's consent is required as a result of
its Term Loan Commitment) and/or repay each Tranche of outstanding Loans of such
Bank which gave rise to the need to obtain such Bank's consent, in accordance
with Sections 3.02(b) and/or 4.01(b), provided that, unless the Commitments are
--------
terminated, and Loans repaid, pursuant to preceding clause (B) are immediately
replaced in full at such time through the addition of new Banks or the increase
of the Commitments and/or outstanding Loans of existing Banks (who in each case
must specifically consent thereto), then in the case of any action pursuant to
preceding clause (B) the Required Banks (determined before giving effect to the
proposed action) shall specifically consent thereto, provided further, that in
----------------
any event the Borrower shall not have the right to replace a Bank, terminate its
Revolving Loan Commitment or Term Loan Commitment or repay its Loans solely as a
result of the exercise of such Bank's rights (and the withholding of any
required consent by such Bank) pursuant to the second proviso (other than clause
(z) thereof) to Section 14.12(a).
14.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Sections 1.10, 1.11, 2.06, 4.04, 14.01 and 14.06 shall survive
the execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Loans.
14.14 Domicile of Loans. Each Bank may transfer and carry its Loans
-----------------
at, to or for the account of any office, Subsidiary or affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 14.14 would, at the time of such
transfer,
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result in increased costs under Section 1.10, 1.11, 2.06 or 4.04 from those
being charged by the respective Bank prior to such transfer, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective transfer).
14.15 Register. The Borrower hereby designates the Administrative
--------
Agent to serve as the Borrower's agent, solely for purposes of this Section
14.15, to maintain a register (the "Register") on which it will record the Com-
mitments from time to time of each of the Banks, the Loans made by each of the
Banks and each repayment in respect of the principal amount of the Loans of each
Bank. Failure to make any such recordation, or any error in such recordation
shall not affect the Borrower's obligations in respect of such Loans. With
respect to any Bank, the transfer of the Commitments of such Bank and the rights
to the principal of, and interest on, any Loan made pursuant to such Commitments
shall not be effective until such transfer is recorded on the Register
maintained by the Administrative Agent with respect to ownership of such
Commitments and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitments and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
14.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 14.15.
14.16 Confidentiality. (a) Subject to the provisions of clause (b)
---------------
of this Section 14.16, each Bank agrees that it will use its reasonable efforts
not to disclose without the prior consent of the Borrower (other than to its
employees, auditors, advisors or counsel or to another Bank if the Bank or such
Bank's holding or parent company in its sole discretion determines that any such
party should have access to such information, provided such Persons shall be
subject to the provisions of this Section 14.16 to the same extent as such Bank)
any information with respect to Luxottica Group or any of its Subsidiaries which
is now or in the future furnished
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<PAGE>
pursuant to this Agreement or any other Credit Document and which is designated
by the Borrower or Luxottica Group to the Banks or the Administrative Agent in
writing as confidential, provided that any Bank may disclose any such
--------
information (a) as has become generally available to the public, (b) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in respect to any summons or subpoena or in connection with any litigation, (d)
in order to comply with any law, order, regulation or ruling applicable to such
Bank, (e) to the Administrative Agent or the Collateral Agent and (f) to any
prospective or actual transferee or participant in connection with any
contemplated transfer or participation of any of the Notes or Commitments or any
interest therein by such Bank, provided, that such prospective transferee or
--------
participant agrees with such Bank to be bound by the provisions of this Section
14.16; provided, further, prior to any disclosure as required by clause (c)
above, such Bank shall use its best efforts to give the Borrower reasonable
prior notice thereof to permit the Borrower to seek to obtain a protective order
if it so chooses.
(b) Each of Luxottica Group and the Borrower hereby acknowledges and
agrees that each Bank may share with any of its affiliates any information
related to Luxottica Group or any of its Subsidiaries (including, without
limitation, any nonpublic customer information regarding the creditworthiness of
Luxottica Group or any of its Subsidiaries, provided such Persons shall be
subject to the provisions of this Section 14.16 to the same extent as such
Bank).
SECTION 15. Treatment of Extensions of Credit for Purposes of
-------------------------------------------------
Regulation G and U.
- ------------------
15.01 Treatment for Purposes of Regulations G and U. The Borrower
---------------------------------------------
and the Banks agree that, for purposes of this Agreement and for determining
compliance with Regulations G and U, all extensions of credit made hereunder
prior to the Merger Borrowing Date shall be deemed to be "purpose loans" under
Regulation G or U, as the case may be, and the provisions of this Section 15
shall apply.
15.02 Allocation of Credit. Extensions of credit made hereunder
--------------------
prior to the Merger Borrowing Date by each Bank shall at all times be treated
for purposes of Regulation G or U, as the case may be, as two separate
extensions of
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<PAGE>
credit (the "A Credit" and the "B Credit" of such Bank; collectively, the "A
Credits" and the "B Credits"), as follows:
(a) the principal amount of the A Credit of such Bank shall be an
amount equal to the aggregate of the A Portions of all Loans made by such
Bank (for purposes of this Section 15, the "A Portion" of any Loan shall be
a portion of the original principal amount of such Loan equal to such
Bank's Allocated Percentage of the maximum loan value of the Shares of U.S.
Shoe purchased pursuant to the Offer to Purchase as determined by such Bank
at the time of the making of such Loan in accordance with Regulation G or
U, as applicable) minus all payments and prepayments applied thereto in
accordance with Sections 15.03(a) and (b) and Section 15.04; and
(b) the principal amount of the B Credit of such Bank shall be an
amount equal to the aggregate of the B Portions of all Loans and Letters of
Credit made (or participated in) by such Bank (for purposes of this Section
15, the "B Portion" of (x) any Loan shall mean the difference between the
original principal amount of such Loan and the A Portion of such Loan and
(y) any Letter of Credit shall be the Stated Amount thereof) minus all
payments and prepayments applied thereto in accordance with Sections
15.03(a) and (b) and Section 15.04.
15.03 Allocation of Collateral. (a) The benefits of pledges in
------------------------
favor of the Banks (direct and indirect) in the Shares of U.S. Shoe purchased
pursuant to the Offer to Purchase and the proceeds thereof (including proceeds
of sales of assets by U.S. Shoe and its Subsidiaries) provided for by this
Agreement shall be allocated to the payment of the principal of and interest on
the A Credits of the Banks and to all other amounts payable by the Borrower
under this Agreement in connection with the A Credits (collectively, the "A
Credit Amounts"); and only after the payment in full of the A Credit Amounts
such benefits shall be allocated to the payment of the principal of and interest
on the B Credits of the Banks and of all other amounts payable by the Borrower
under this Agreement in connection with the B Credits (collectively, the "B
Credit Amounts").
(b) The benefits of the pledges in favor of the Banks (direct and
indirect) in the assets of the Borrower other than Shares of U.S. Shoe (and the
proceeds thereof as provided in Section 15.03(a)) purchased pursuant to the
Offer to Purchase provided for by this Agreement shall be allocated first to the
payment of the B Credit Amounts; and only after the payment in full of all B
Credit Amounts, to the payment of the A Credit Amounts.
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<PAGE>
(c) Each Bank will mark its records to identify irrevocably the A
Credit of such Bank with the benefits described in paragraph (a) of this Section
15.03 and the B Credit of such Bank with the benefits described in paragraph (b)
of this Section 15.03.
(d) In order to better enable the Banks to comply with paragraph (c)
of this Section 15.03, extensions of credit under this Agreement shall be
treated as separate and distinct "Loans" (A Credits, being credits for which the
Bank is relying upon the Shares of U.S. Shoe purchased pursuant to the Offer to
Purchase as security and B Credits, being credits for which the Bank is relying
upon assets other than Shares of U.S. Shoe purchased pursuant to the Offer to
Purchase as security) for purposes of borrowings, payments, prepayments and
conversions of Loans and Letters of Credit under this Agreement.
(e) The Borrower and the Banks hereby acknowledge and agree that (i)
the Scheduled Repayment which is due on the Special Scheduled Repayment Date
shall be allocated to the A Credits and (ii) any Letters of Credit issued
hereunder prior to the Merger Borrowing Date shall be allocated to the B
Credits.
(f) The Borrower will not, and will not permit any of its
Subsidiaries to, and the Borrower will take all actions so that neither
Luxottica Group nor any of its other Subsidiaries will, sell, transfer or
otherwise dispose of any assets, or otherwise withdraw or substitute any direct
or indirect security for any extensions of credit pursuant to this Agreement,
unless after giving effect thereto and to any prepayments to be made in
connection therewith, such sale, transfer, disposition or other withdrawal or
substitution would be permissible under Section 221.3(f) of Regulation U or
Section 207.3(i) of Regulation G, as applicable.
15.04 Allocation of Payments. Except as otherwise specifically
----------------------
provided in this Agreement (but in any event subject to the requirements of
Regulation G or U, as the case may be), all payments and prepayments by the
Borrower of the Loans and Letters of Credit shall be applied first to the
payment or prepayment of the B Credits and second to the payment or prepayment
of the A Credits, provided that each such payment and prepayment made with funds
--------
derived from assets subject to the provisions of paragraph (a) of Section 15.03
shall be applied first to the payment or prepayment of the A Credit Amounts and
second to the payment or prepayment of the B Credit Amounts.
15.05 Information. The Borrower will furnish to each Bank, prior to
-----------
the making of any Loan or the issuance of any Letter of Credit or at any time
thereafter upon the request of such Bank, such information as such Bank may
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require to determine the A and B Portions thereof, and from time to time such
other information as such Bank may require to comply with paragraphs (c) and (d)
of Section 15.03 and with Sections 15.04 and 15.05 and to further determine
compliance with Regulation G or U, as the case may be, and such documents as
such Bank may require to comply with Regulation G or U, as the case may be.
15.06 Assignments; Participations. At the time of the making of any
---------------------------
assignment or the granting of any participation under this Agreement, the
transferor shall furnish to the transferee a copy of the Form F.R. G-3 or F.R.
U-1 originally obtained with respect to the transferred interest pursuant to
Section 5A.16 of this Agreement.
15.07 Individual Bank Responsibility. Each Bank shall be responsible
------------------------------
for its own compliance with and administration of the provisions of this Section
15, and the Administrative Agent shall bear no responsibility for any determi-
nations or allocations (including, without limitation, any allocations of
payments or prepayments) made or to be made by any Bank as required by such
provisions. Each Bank acknowledges that it has made its own independent
evaluation of the non-margin stock collateral for the Loans and Letters of
Credit and confirms that it has assigned a "good faith loan value" to such non-
margin stock collateral of at least $700,000,000.
15.08 Maximum Outstanding Credit. To ensure compliance with
--------------------------
Regulations G and U, all parties to this Agreement hereby agree that,
notwithstanding anything to the contrary contained herein, the aggregate amount
of A Credits and B Credits outstanding at any time prior to the Merger Borrowing
Date shall in no event exceed the Maximum Exposure Amount at such time.
15.09 Termination. The provisions of this Section 15 shall terminate
-----------
and cease to be of any further force or effect upon the earlier of (x) the
consummation of the Merger (so long as the Shares of U.S. Shoe no longer
constitute Margin Stock at such time) and (y) that date upon which the Shares of
U.S. Shoe no longer constitute Margin Stock.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- -------
44 Harbor Park Drive LUXOTTICA U.S. HOLDINGS CORP.
Port Washington, New York 11050
Attention: General Counsel
Telephone No.: (516) 484-3800 By /s/ Claudio Del Vecchio
-----------------------------
Facsimile No.: (516) 484-9010 Title: President
CREDIT SUISSE,
Individually, and as Administrative
Agent
By /s/ Nikolai A. Nachamkin
----------------------------
Title: Associate
By /s/ Kathleen D. O'Brien
-----------------------------
Title: Member of Senior Mgmt.
ABN AMRO BANK N.V.
NEW YORK BRANCH
By /s/ Daniel Strumphler
------------------------------
Title: Group Vice President
By /s/ Anne-Maureen Sarfati
------------------------------
Title: Vice President
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<PAGE>
BANCA CRT S.P.A.
By/s/ Robert P. DeSantes
-----------------------------
Title: Vice President &
Head of Corporate Banking
By/s/ Franco Marino
--------------------------------
Title: Deputy Mgr. & First V.P.
BANCA COMMERCIALE ITALIANA
GRAND CAYMAN BRANCH
By /s/ W. Ambrogi
------------------------------
Title: FVP & Deputy Manager
By /s/ A. Perrino
-------------------------------
Title: Vice President
BANCA DI ROMA
By /s/ Giovanni Maraschi
-----------------------------
Title: Vice President
By/s/ Enrico Verdoscia
-----------------------------
Title: Vice President
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<PAGE>
BANCO AMBROSIANO VENETO
By/s/ Guiseppe Vincenzino
-----------------------------
Title: Representative
BANCO DI NAPOLI S.P.A.
By/s/ Carroll Garcia
-----------------------------
Title: First Vice President
By/s/ Claude P. Mapes
------------------------------
Title: First Vice President
BANCA POPOLARE DI MILANO
By/s/ Fulvio Montanari
----------------------------
Title: First Vice President
By/s/ Patrick Dillon
----------------------------
Title: Vice President
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By/s/ David Madoc-Jones
----------------------------
Title:Vice President
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<PAGE>
THE BANK OF NOVA SCOTIA
By /s/ Terry Fryett
---------------------------
Title: Vice President
BANQUE PARIBAS
By/s/ Mary Finnegan
----------------------------
Title: Group Vice President
By/s/ John J. McCormick, III
----------------------------
Title: Assistant Vice President
CIBC, INC.
By/s/ Brian O'Callahan
----------------------------
Title: Authorized Signatory
CARIPLO - CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE, S.P.A.
By/s/ Anthony Giobbi
----------------------------
Title: Vice President
By/s/ Renato Bassi
----------------------------
Title: First Vice President
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<PAGE>
CREDITO ITALIANO (NEW YORK BRANCH)
By/s/ Alberto Devoto
----------------------------
Title: Snr. V.P. & Manager
By/s/ Umberto Seretti
----------------------------
Title: Vice President
CREDIT LYONNAIS (NEW YORK BRANCH)
By/s/ Frederick Haddad
----------------------------
Title: Senior Vice President
CREDIT LYONNAIS
(CAYMAN ISLAND BRANCH)
By /s/ Frederick Haddad
-------------------------------
Title: Authorized Signature
CREDITO ROMAGNOLO
By Credito Italiano as Attorney in Fact
By /s/ Saiyed A. Abbas
----------------------------
Title: Attorney in Fact
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<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By/s/ Juan R. Navas Sacasa
----------------------------
Title: Director
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By/s/ Katsunori Nozawa
----------------------------
Title: Vice President & Mgr.
ISTITUTO MOBILIARE ITALIANO, S.P.A.
By/s/ Elia Calabraia
----------------------------
Title: Direttore Centrale
ISTITUTO BANCARIO SAN PAOLO DI TORINO,
S.P.A.
By/s/ Ettore Viazzo
----------------------------
Title: Vice President
By/s/ Alex Guzzo
----------------------------
Title: Vice President
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<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By/s/ Patricia Loret de Mola
----------------------------
Title: Senior Vice President
MONTE DEI PASCHI DI SIENA
By/s/ G. Natalicchi
----------------------------
Title: S.V.P. & General Mgr.
By/s/ Brian R. Landy
----------------------------
Title: Vice President
NATIONSBANK, N.A. (CAROLINAS)
By /s/ David F. Sachsenmaier
----------------------------
Title: Vice President
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