<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
----------------
(Mark
One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1997
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-22033
WESLEY JESSEN VISIONCARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 36-4023739
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
333 EAST HOWARD AVENUE, DES PLAINES, 60018-5903
IL (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (847) 294-3000
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO [_]
As of May 12, 1997, the number of shares of Common Stock of the Registrant
outstanding was 17,097,028.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<C> <S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at March 29, 1997
(unaudited) and December 31, 1996........................ 1
Condensed Consolidated Statements of Operations for the
three months ended March 29, 1997 and March 31, 1996
(unaudited).............................................. 2
Condensed Consolidated Statements of Cash Flows for the
three months ended March 29, 1997 and March 31, 1996
(unaudited).............................................. 3
Condensed Consolidated Statements of Changes in
Stockholders' Equity (Deficit) for the period June 29,
1995 through December 31, 1996 and for the three months
ended March 29, 1997 (unaudited)......................... 4
Notes to the Condensed Consolidated Financial Statements. 5-10
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 11-15
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders...... 16
Item 6 Exhibits and Reports on Form 8-K......................... 16
Signatures
</TABLE>
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
WESLEY JESSEN VISIONCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 31,
ASSETS 1997 1996
------ ----------- ------------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents........................... $ 7,362 $ 7,073
Accounts receivable--trade, net..................... 40,498 38,869
Other receivables................................... 5,039 5,155
Inventories......................................... 56,995 69,139
Deferred income taxes............................... 20,119 20,119
Prepaid expenses.................................... 9,396 9,531
Assets held for sale................................ -- 7,500
-------- --------
Total current assets.............................. 139,409 157,386
-------- --------
Property, plant and equipment, net.................... 12,117 10,125
Other assets.......................................... 1,120 1,346
Deferred income taxes................................. 10,026 4,227
Note receivable....................................... 4,500 --
Capitalized financing fees, net....................... 2,465 7,516
-------- --------
Total assets...................................... $169,637 $180,600
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<S> <C> <C>
Current liabilities:
Trade accounts payable.............................. $ 13,737 $ 12,434
Accrued compensation and benefits................... 9,735 16,121
Accrued advertising................................. 5,130 3,751
Other accrued liabilities........................... 19,883 20,938
Transition reserve.................................. 16,699 18,894
Income taxes payable................................ 5,783 6,989
-------- --------
Total current liabilities......................... 70,967 79,127
-------- --------
Negative goodwill, net................................ 10,381 10,577
Long term debt........................................ 75,100 102,975
Other liabilities..................................... 852 1,213
-------- --------
Total liabilities................................. 157,300 193,892
-------- --------
Stockholders' equity (deficit):
Common stock, $.01 par value, 50,000,000 shares
authorized, 17,097,028 and 14,276,028 issued and
outstanding at March 29, 1997 and December 31,
1996, respectively................................. 171 143
Additional paid in capital.......................... 44,475 7,654
Accumulated deficit................................. (33,188) (22,457)
Cumulative translation adjustment................... 879 1,368
-------- --------
Total stockholders' equity (deficit).............. 12,337 (13,292)
-------- --------
Total liabilities and stockholders' equity
(deficit)........................................ $169,637 $180,600
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------
MARCH 29, 1997 MARCH 31, 1996
-------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales........................................ $ 64,071 $ 30,147
----------- -----------
Operating costs and expenses:
Cost of goods sold............................. 21,870 8,461
Cost of goods sold--inventory step-up (Note 4). 13,092 5,953
Marketing and administrative................... 33,256 16,520
Research and development....................... 3,021 1,274
Amortization of intangibles.................... (196) (196)
----------- -----------
Loss from operations............................. (6,972) (1,865)
Other expense:
Interest expense, net.......................... 1,860 1,096
----------- -----------
Loss before income taxes and extraordinary loss.. (8,832) (2,961)
Income tax benefit............................... 3,003 506
----------- -----------
Net loss before extraordinary loss............... (5,829) (2,455)
Extraordinary loss, net of related tax benefit of
$2,526.......................................... (4,902) --
----------- -----------
Net loss......................................... $ (10,731) $ (2,455)
=========== ===========
Pro forma primary net loss per common share (Note
2):
Net loss before extraordinary loss............. $ (0.38) $ (0.17)
=========== ===========
Extraordinary loss, net of tax benefit......... $ (0.32) $ --
=========== ===========
Net loss....................................... $ (0.70) $ (0.17)
=========== ===========
Weighted average common shares used in
computation of pro forma primary net loss per
common share.................................. 15,420,459 14,637,984
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 29, MARCH 31,
1997 1996
----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss.............................................. $ (10,731) $(2,455)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Extraordinary loss on early extinguishment of debt.. 7,428 --
Depreciation expense................................ 122 8
Purchased inventory step-up......................... 13,092 5,953
Amortization of capitalized financing fees.......... 118 145
Amortization negative goodwill...................... (196) (196)
Deferred income taxes............................... (5,799) (506)
Other............................................... (489) --
Changes in balance sheet items
Accounts receivable--trade, net..................... (1,629) 32
Other receivables................................... 116 (425)
Inventories......................................... (948) 4,490
Prepaid expenses.................................... 135 (653)
Other assets........................................ 226 --
Trade accounts payable.............................. 1,303 (3,172)
Accrued liabilities................................. (8,257) 2,423
Other liabilities................................... (361) --
Income taxes payable................................ (1,206) (655)
--------- -------
Cash provided by (used in) operating activities... (7,076) 4,989
--------- -------
Cash flows provided by (used in) investing activities:
Proceeds from Natural Touch sale...................... 3,000 --
Capital expenditures.................................. (2,114) (536)
--------- -------
Cash provided by (used in) investing activities... 886 (536)
--------- -------
Cash provided by (used in) financing activities:
Issuance of stock..................................... 36,849 10
Proceeds from long term debt.......................... 78,000 --
Payment of financing fees............................. (2,495) --
Payments of long term debt............................ (105,875) (5,500)
--------- -------
Cash provided by (used in) financing activities... 6,479 (5,490)
--------- -------
Net increase (decrease) in cash and cash equivalents.. 289 (1,037)
Cash and cash equivalents:
Beginning of period................................... 7,073 2,522
--------- -------
End of period......................................... $ 7,362 $ 1,485
========= =======
Supplemental disclosure of cash flow information
Cash paid during the period for interest.............. $ 2,414 $ 1,172
========= =======
Cash paid during the period for taxes, net............ $ 2,471 $ 629
========= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
CLASS L TOTAL
COMMON STOCK COMMON STOCK ADDITIONAL CUMULATIVE STOCKHOLDERS'
---------------- ----------------- PAID IN ACCUMULATED TRANSLATION EQUITY
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT (DEFICIT)
-------- ------ ---------- ------ ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 29,
1995................... -- $-- -- -- -- $ -- $ -- $ --
Issuance of stock....... 429,177 4 3,862,604 39 7,739 -- -- 7,782
Stock subscription
receivable............. -- -- -- (1) (256) -- -- (257)
Net loss................ -- -- -- -- -- (19,715) -- (19,715)
-------- ---- ---------- ---- ------- -------- ------ --------
Balance at December 31,
1995................... 429,177 4 3,862,604 38 7,483 (19,715) -- (12,190)
Issuance of stock....... 823 -- 7,396 -- 15 -- -- 15
Stock subscription
receivable............. -- -- -- 1 256 -- -- 257
Currency translation
adjustment............. -- -- -- -- -- -- 1,368 1,368
Net loss................ -- -- -- -- -- (2,742) -- (2,742)
Exchange of stock....... (108,933) (1) 220,582 2 -- -- -- 1
Retroactive effect of
February 12, 1997
Class L Common Stock
Reclassification....... (321,067) (3) 1,460,517 15 -- -- -- 12
Retroactive effect of
February 12, 1997
Common Stock split...... -- -- 8,724,929 87 (100) -- -- (13)
-------- ---- ---------- ---- ------- -------- ------ --------
Balance at December 31,
1996................... -- $-- 14,276,028 143 7,654 $(22,457) $1,368 $(13,292)
Issuance of stock
(unaudited)............ -- -- 2,821,000 28 36,564 -- -- 36,592
Stock compensation
(unaudited)............ -- -- -- -- 257 -- -- 257
Currency translation
adjustment (unaudited). -- -- -- -- -- -- (489) (489)
Net loss (unaudited).... -- -- -- -- -- (10,731) -- (10,731)
-------- ---- ---------- ---- ------- -------- ------ --------
Balance at March 29,
1997 (unaudited)....... -- $-- 17,097,028 $171 $44,475 $(33,188) $ 879 $ 12,337
======== ==== ========== ==== ======= ======== ====== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of business
The Company's primary business activity is the research, development,
manufacture, marketing and sale of conventional and disposable soft contact
lenses in the United States and certain other countries. The Company is
headquartered in Des Plaines, Illinois and operates in one business segment.
Basis of presentation
The consolidated financial statements of the Company include the accounts of
Wesley Jessen VisionCare, Inc. (formerly known as Wesley-Jessen Holding,
Inc.), its wholly owned subsidiary, Wesley-Jessen Corporation, and Wesley-
Jessen Corporation's wholly owned subsidiaries (collectively, the "Company").
All significant intercompany transactions have been eliminated.
Effective June 29, 1995, Wesley-Jessen Corporation completed the acquisition
(the "Wesley Jessen Acquisition") of the Wesley-Jessen contact lens business
of Schering-Plough Corporation. As a result of the Wesley Jessen Acquisition,
Wesley-Jessen Corporation acquired certain assets from Schering-Plough,
consisting of manufacturing facilities in Des Plaines, Illinois and Cidra,
Puerto Rico, a distribution facility in Chicago, Illinois, and a number of
non-U.S. sales and service offices, assumed certain liabilities of the
predecessor, and paid acquisition costs directly attributable to the Wesley
Jessen Acquisition.
The unaudited financial information presented reflects all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
consolidated financial statements for an interim period. All such adjustments
are of a normal, recurring nature. Results of operations for an interim period
are not necessarily indicative of results for the full year. These interim
financial statements should be read in conjunction with the financial
statements and related notes contained in the Special Financial Report on Form
10-K filed pursuant to Rule 15d-2 for the year ended December 31, 1996.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
period. Actual results could differ from those estimates.
The Offering
On February 19, 1997, the Company completed an initial public offering of
2.5 million shares of common stock at a price of $15.00 per share (the "IPO"),
and on March 20, 1997 the Company sold an additional 321,000 shares at $15.00
per share upon the exercise by the underwriters of an over-allotment option
granted by the Company in connection with the IPO (the IPO and the over-
allotment are collectively referred to herein as the "Offering")
Prior to the IPO, the Company had two classes of issued and outstanding
stock, the Class L common stock, (the "Class L Common") and the common stock,
which were identical except that each share of Class L Common was entitled to
a preferential payment (the "Preference Amount") upon any distribution by the
Company to holders of its capital stock (whether by dividend, liquidating
distribution or otherwise) equal to the original cost of such share ($17.41)
plus an amount which accrued on a daily basis at a rate of 12.5% per annum on
such cost and on the amount so accrued in prior quarters. As of February 12,
1997, the Preference Amount was $21.24 per share of Class L Common issued at
the time of the Wesley Jessen Acquisition. Prior to the
5
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
completion of the IPO, all of the outstanding shares of Class L Common were
reclassified pursuant to the terms of the Company's amended and restated
Certificate of Incorporation into shares of common stock (the
"Reclassification") and a 3.133-for-one stock split was effected as to all of
the then outstanding shares of common stock (the "Split"). In connection with
the Reclassification (prior to the Split), each outstanding share of Class L
Common was reclassified into one share of common stock plus an additional
number of shares having a value, based on the Offering price, equal to the
Preference Amount as of February 12, 1997. For balance sheet presentation
purposes the Reclassification and the Split have been given effect as if they
had occurred on December 31, 1996 and all share and per share data have been
restated.
2. PRO FORMA PRIMARY NET LOSS PER SHARE
Given the changes in the Company's capital structure described in Note 1,
historical loss per share amounts are not presented as they are not considered
to be meaningful. The calculation of pro forma primary net loss per share was
determined by dividing the net loss by the pro forma weighted average common
and common stock equivalent shares outstanding after giving retroactive effect
to the Wesley Jessen Acquisition, the Reclassification and the Split. In
addition, in accordance with the Securities and Exchange Commission Staff
Accounting Bulletin No. 83, using the treasury stock method, 361,956 shares
have been included in the calculation of common stock equivalent shares for
the three months ended March 31, 1996.
The net proceeds from the Offering were used to retire indebtedness existing
under its credit agreement (Note 6). Supplemental pro forma net loss per share
is ($0.61) for the three months ended March 29, 1997; the number of shares of
common stock whose proceeds are deemed to be used to retire debt is 2,821,000.
This calculation assumes the debt retirement had taken place at the later of
the beginning of the respective period or the issuance of the debt. The amount
of interest expense eliminated, net of income tax effects, is $0.3 million for
the three months ended March 29, 1997.
3. ACQUISITIONS
The Wesley Jessen Acquisition was completed for a total purchase price of
$76.6 million, consisting of cash paid of $47.0 million and liabilities
assumed of $29.6 million. The Wesley Jessen Acquisition was financed by $43.0
million of bank debt and $7.5 million of proceeds from the issuance of the
Company's common stock.
On October 2, 1996, the Company acquired the contact lens business of the
Barnes-Hind division of Pilkington plc ("the Barnes-Hind Acquisition").
Aggregate consideration of $62.4 million for the acquisition was comprised of
$57.4 in cash and a $5.0 million subordinated promissory note (Note 6). In
addition the Company assumed liabilities of $55.3 million and paid acquisition
related fees of $2.9 million. The cash portion of the purchase was financed by
the proceeds from the Barnes-Hind Acquisition Financing (Note 6). The purchase
method of accounting was used to record the acquisition. The financial
statements presented herein reflect the allocation of the purchase price to
the acquired assets and liabilities based on their estimated fair values. The
results of the operations of the acquired company have been included in the
results of operations of the Company since the acquisition date.
In connection with the Barnes-Hind Acquisition, the Company entered into a
voluntary consent order with the Federal Trade Commission which provides,
among other things, that the Company must divest Barnes-Hind's U.S. Natural
Touch product line. On March 17, 1997, the Company completed the sale of the
product line for which, under the agreement, it received aggregate
consideration of $7.5 million, consisting of $3.0 million in cash and a four-
year, $4.5 million promissory note. The promissory note accrues compounded
interest at a rate of 12% per annum, 8% of which is paid currently and 4% of
which is payable at the maturity of the note in
6
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
2001. As part of the agreement, the Company has entered into a supply agreement
pursuant to which the Company will supply the purchaser with Natural Touch
lenses for sale in the United States. The purchase accounting for the Barnes-
Hind Acquisition includes the expected effects of the divestiture and has been
reflected such that no gain or loss results from the divestiture.
Pro forma results
The unaudited pro forma results of the operations for the Company are set
forth below, giving pro forma effect to the following: (i) the Barnes-Hind
Acquisition; (ii) the Barnes-Hind Acquisition Financing described in Note 6;
(iii) the estimated recurring cost savings to the Company from facilities and
personnel rationalizations; (iv) elimination of non-recurring increases to cost
of goods sold as a result of applying purchase accounting to inventories
following the Wesley Jessen Acquisition and the Barnes-Hind Acquisition, (v)
the divestiture of Barnes-Hind's U.S. Natural Touch product line; and (vi)
adjusting the income tax (expense) benefit to an assumed effective rate of 34%,
each as if the transactions had occurred as of January 1, 1996 (in thousands,
except share and per share data):
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31,
1996
-----------
<S> <C>
Net sales.................................................... $ 61,733
===========
Net income................................................... $ 2,342
===========
Pro forma net income per common and common share equivalent.. $ 0.14
===========
Weighted average shares used in computation of pro forma
income per common and common share equivalent............... 16,522,016
===========
</TABLE>
The pro forma results are not necessarily indicative of what actually would
have occurred if the Barnes-Hind Acquisition had been in effect for the period
presented and are not intended to be a projection of future results, which are
dependent on the ability of the Company to accomplish its objectives in
connection with the Barnes-Hind Acquisition. The future success of the Barnes-
Hind Acquisition and its effect on the financial operating results of the
Company will depend in large part on the ability of management to integrate the
Barnes-Hind manufacturing, sales and marketing administrative functions into
the Wesley Jessen operations and achieve the cost savings expected to result
from the acquisition-integration measures adopted by the Company.
4. COMPONENTS OF CERTAIN BALANCE SHEET ACCOUNTS
Accounts receivable--trade, net
Accounts receivable--trade, net consist of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 31,
1997 1996
--------- ------------
<S> <C> <C>
Accounts receivable--trade......................... $58,634 $56,480
Less allowances:
Doubtful accounts................................ (7,994) (6,989)
Sales returns and adjustments.................... (10,142) (10,622)
------- -------
Accounts receivable--trade, net.................... $40,498 $38,869
======= =======
</TABLE>
7
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
Inventories
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 31,
1997 1996
--------- ------------
<S> <C> <C>
Raw materials...................................... $ 5,615 $ 6,073
Work-in-process.................................... 8,254 8,958
Finished goods..................................... 43,126 54,108
------- -------
Total.......................................... $56,995 $69,139
======= =======
</TABLE>
In connection with the Wesley Jessen Acquisition and the Barnes-Hind
Acquisition, under the purchase method of accounting, the Company's total
inventories were written up $40.6 million and $36.7 million, respectively, to
fair value at the date of acquisition. Of these amounts, $6.0 million and
$13.1 million were charged to cost of goods sold during the three months ended
March 31, 1996 and March 29, 1997, respectively.
Property, plant and equipment, net
Property, plant and equipment, net, consists of the following (in
thousands):
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 31,
1997 1996
--------- ------------
<S> <C> <C>
Buildings and improvements......................... $ 1,413 $ 1,230
Machinery, equipment, furniture and fixtures....... 8,052 6,257
Construction-in-progress........................... 3,170 3,034
------- -------
12,635 10,521
Less: accumulated depreciation..................... (518) (396)
------- -------
Property, plant and equipment, net................. $12,117 $10,125
======= =======
</TABLE>
5. TRANSITION AND RESTRUCTURING RESERVES
In connection with the Barnes-Hind Acquisition, management approved a
transition plan to integrate the acquired operations, for which an accrual of
$20.4 million (transition reserve) was established in purchase accounting.
Costs associated with the transition plan are comprised of facility and
employee termination costs related to the closure of the Barnes-Hind corporate
offices in Sunnyvale, California by the end of the second quarter of 1997. In
addition, management plans to curtail certain manufacturing activities in San
Diego, California which will comprise reductions in both manufacturing and
administrative functions. These activities will be transferred to other
Company locations. Payments related to the transition for the three months
ended March 29, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
EMPLOYEE LEASE FACILITY
RELATED TERMINATION RESTORATION
COSTS COSTS AND OTHER COSTS TOTAL
-------- ----------- --------------- -------
<S> <C> <C> <C> <C>
Transition reserve at
December 31, 1996......... $15,623 $2,243 $1,028 $18,894
Charges against the
reserve................... 1,708 -- 487 2,195
------- ------ ------ -------
Transition reserve at March
29, 1997.................. $13,915 $2,243 $ 541 $16,699
======= ====== ====== =======
</TABLE>
8
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
In addition to the transition plan, the Company committed to a plan to
restructure the Wesley Jessen operations following the Barnes-Hind
Acquisition, resulting in a charge of $3.4 million in the fourth quarter of
1996 (restructuring reserve). Pursuant to the restructuring plan, the Chicago
distribution facilities will be consolidated with those in Des Plaines,
Illinois in September, 1997. The restructuring reserve, totaling $3.0 million
at March 29, 1997, consists of costs related to the shutdown of the Chicago
distribution facility and employee termination, lease termination and other
restructuring costs associated with consolidation of the Company's European
facilities with those facilities acquired in the Barnes-Hind Acquisition.
Usage of the restructuring reserve for the three months ended March 29, 1997
is as follows (in thousands):
<TABLE>
<CAPTION>
LEASE
EMPLOYEE TERMINATION
RELATED COSTS COSTS OTHER COSTS TOTAL
------------- ----------- ----------- ------
<S> <C> <C> <C> <C>
Restructuring reserve at
December 31, 1996......... $1,000 $1,900 $500 $3,400
Charges against the
reserve................... 197 5 239 441
------ ------ ---- ------
Restructuring reserve at
March 29, 1997............ $ 803 $1,895 $261 $2,959
====== ====== ==== ======
</TABLE>
6. LONG-TERM DEBT
Barnes-Hind Acquisition Financing
On October 2, 1996, in connection with the Barnes-Hind Acquisition, the
Company replaced its long-term borrowing arrangement with the following credit
facilities (the "1996 Credit Agreement"):
$45 million revolving credit facility due February 28, 2002
$45 million Term Loan A due February 28, 2002
$50 million Term Loan B due February 29, 2004
In connection with the refinancing, the Company incurred and capitalized
financing fees of approximately $7.8 million, which were being amortized over
the term of the 1996 Credit Agreement.
Additionally, as part of the consideration paid for the Barnes-Hind
Acquisition, the Company entered into a $5.0 million promissory note with
Pilkington plc (the "Pilkington Note") which bears interest at 8.0% compounded
annually and payable at maturity. The note matures on February 1, 2005,
subject to certain acceleration provisions. The Pilkington Note is subordinate
to all current and long term debt of the Company.
Initial Public Offering Refinancing
On February 19, 1997, in connection with the IPO, the Company replaced its
long term borrowing arrangements with the following credit facilities (the
"1997 Credit Agreement"):
$35 million revolving loan facility due February 19, 2002
$65 million Term Loan A due February 19, 2002
In connection with the refinancing, the Company recognized an extraordinary
loss of $7.4 million ($4.9 million, net of income tax benefits), relating to
the write-off of capitalized financing fees incurred in connection with the
Barnes-Hind Acquisition Financing. Additionally, the Company incurred and
capitalized financing fees of approximately $2.5 million, which will be
amortized over the term of the 1997 Credit Agreement.
9
<PAGE>
WESLEY JESSEN VISIONCARE, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
(UNAUDITED)
Amounts borrowed under the 1997 Credit Agreement bear interest at either Base
Rate (higher of (i) 0.5% in excess of the Federal Reserve reported adjusted
certificate of deposit rate and (ii) the lender's prime lending rate) plus a
margin up to 0.75% based on leverage ratios calculated as of certain dates or
the Eurodollar Rate as determined by the lenders plus a margin of 0.75% to
1.75% based on leverage ratios calculated as of certain dates as defined in the
credit agreement and the type of loan. Additionally, the Company is required to
pay a commitment fee on the unutilized revolving loan commitments ranging from
0.30% to 0.50% based on leverage ratios calculated as of certain dates. The
unutilized portion of the revolving credit facilities at March 29, 1997 was
$30.0 million. The credit facilities are guaranteed by each of its domestic
subsidiaries and secured by essentially all assets of the domestic
subsidiaries.
The 1997 Credit Agreement contains a number of covenants restricting the
Company and its subsidiaries with respect to the incurrence of indebtedness,
the creation of liens, the consummation of certain transactions such as sales
of substantial assets, mergers or consolidations, the making of certain
investments, capital expenditures, and payment of dividends. In addition, the
Company is required to maintain certain financial covenants and ratios.
Interest Rate Instrument
The Company has purchased an interest rate cap on $35.0 million notional
principal amount at 8.5%, which expires on December 31, 1999. The cap purchased
is intended to provide partial protection to the Company from exposure relating
to its variable rate debt instruments in the event a higher floating interest
rate scenario is encountered during a period. The cap rate is based on three
month LIBOR.
7. SUBSEQUENT EVENT
On May 7, 1997, Wesley Jessen Corporation, a wholly owned subsidiary of the
Company, loaned the Company's Chief Executive Officer ("CEO") $1.2 million, in
exchange for an unsecured promissory note bearing interest at the rate of 8%,
interest payable quarterly. The note is due at the earlier of (i) May 9, 2002,
(ii) the date the CEO ceases to be employed by the Company, or (iii) the date
the CEO disposes of any of his common stock holdings in the Company.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following management's discussion and analysis provides information with
respect to the results of operations of the Company for the quarters ended
March 31, 1996 and March 29, 1997, (the "three months ended"). The Company
completed the Wesley Jessen Acquisition on June 29, 1995, the Barnes-Hind
Acquisition on October 2, 1996 and the IPO on February 19, 1997. The
acquisitions were accounted for under the purchase method of accounting.
Because of the revaluation of the assets and liabilities of Wesley Jessen and
Barnes-Hind and the related impacts on costs of sales and expenses, the
historical financial statements for the periods discussed are not directly
comparable. For comparative purposes, the combined results of operations of
the Company and Barnes-Hind for the quarters ended March 31, 1996 and March
29, 1997 have been set forth on an "As Adjusted" basis as if the Barnes-Hind
Acquisition and the Offering had occurred on January 1, 1996. See "Results of
Operations".
OVERVIEW
Wesley Jessen is the leading worldwide developer, manufacturer and marketer
of specialty soft contact lenses, based on its share of the specialty lens
market. The Company's products include cosmetic lenses, which change or
enhance the wearer's eye color appearance; toric lenses, which correct vision
for people with astigmatism; and premium lenses, which offer value-added
features such as improved comfort for dry eyes and protection from UV light.
Founded in 1946 by pioneers in the contact lens industry, the Company has a
long-standing reputation for innovation and new product introductions. Wesley
Jessen develops technology, manufacturing processes and products through a
combination of its in-house staff of more than 50 engineers and scientists and
Company-sponsored research by third-party experts. The Company markets and
sells its products (i) to consumers through industry advertising campaigns,
and (ii) to eyecare practitioners through its 180-person salesforce and
network of 60 independent distributors, which together sell the Company's
products in more than 75 countries.
WESLEY JESSEN ACQUISITION
Effective June 29, 1995, Wesley-Jessen Corporation completed the acquisition
(the "Wesley Jessen Acquisition") of the Wesley-Jessen contact lens business
(the "Predecessor") of Schering-Plough Corporation. As a result of the Wesley
Jessen Acquisition, Wesley-Jessen Corporation acquired certain assets from
Schering-Plough, assumed certain liabilities of the Predecessor, and paid
certain acquisition costs directly attributable to the Wesley Jessen
Acquisition. The Wesley Jessen Acquisition was completed for a total purchase
price of $76.6 million, consisting of cash paid of $47.0 million and
liabilities assumed of $29.6 million. The Wesley Jessen Acquisition was
financed by $43.0 million of bank debt and $7.5 million of proceeds from the
issuance of the Company's common stock.
BARNES-HIND ACQUISITION
On October 2, 1996, the Company acquired substantially all the assets and
assumed certain liabilities of the Barnes-Hind division of Pilkington plc (the
"Barnes-Hind Acquisition"). The purchase price in the Barnes-Hind Acquisition
of approximately $62.4 million (plus related acquisition and financing fees of
$10.7 million) was funded with approximately $68.1 million of borrowings under
the $140.0 million 1996 Credit Agreement and the $5.0 million Pilkington Note.
In connection with the Barnes-Hind Acquisition, the Company borrowed an
additional $28.5 million to repay its then outstanding term loans and to fund
ongoing working capital needs.
In connection with the Barnes-Hind Acquisition, the Company has identified
significant operating synergies and is in the process of implementing certain
cost reduction measures that are expected to improve the Company's operating
results. The cost reductions are reflected in the Company's unaudited As
Adjusted financial data. See "Results of Operations." While the Company
believes that these expenses will not recur, there can be no assurance that
the Company will be able to achieve such cost savings in future periods.
11
<PAGE>
As a result of the Wesley Jessen and Barnes-Hind Acquisitions, the Company
incurred significant non-recurring charges as follows: (i) a non-cash increase
in cost of goods sold of $6.0 million in the first quarter of 1996 relating to
the amortization of Wesley Jessen purchased inventory step-up to fair value at
the acquisition date; (ii) a fourth quarter of 1996 charge of $3.4 million for
restructuring the Company's operations following the Barnes-Hind Acquisition;
(iii) a non-cash increase in cost of goods sold of $14.1 million in the fourth
quarter of 1996 and $13.1 million in the first quarter of 1997, respectively,
relating to the amortization of Barnes-Hind purchased inventory step-up to fair
value at the acquisition date; and (iv) pre-tax extraordinary losses relating
to the extinguishment of debt of $2.8 million and $7.4 million in the fourth
quarter of 1996 and the first quarter of 1997, respectively.
In connection with the Barnes-Hind Acquisition, the Company entered into a
voluntary consent order with the Federal Trade Commission which provides, among
other things, that the Company must divest Barnes-Hind's U.S. Natural Touch
product line. On March 17, 1997, the Company completed the sale of the product
line for which, under the agreement, it received aggregate consideration of
$7.5 million, consisting of $3.0 million in cash and a four-year $4.5 million
promissory note. As part of the agreement, the Company entered into a supply
agreement pursuant to which the Company will supply the purchaser with Natural
Touch lenses for sale in the United States.
THE OFFERING
On February 19, 1997, the Company completed an initial public offering of 2.5
million shares of common stock at a price of $15.00 per share (the "IPO"), and
on March 20, 1997 the Company sold an additional 321,000 shares at $15.00 per
share upon the exercise by the underwriters of an over-allotment option granted
by the Company in connection with the IPO (the IPO and the over-allotment are
collectively referred to herein as the "Offering").
Prior to the IPO, the Company had two classes of issued and outstanding
stock, the Class L common stock, (the "Class L Common") and the common stock,
which were identical except that each share of Class L Common was entitled to a
preferential payment (the "Preference Amount") upon any distribution by the
Company to holders of its capital stock (whether by dividend, liquidating
distribution or otherwise) equal to the original cost of such share ($17.41)
plus an amount which accrued on a daily basis at a rate of 12.5% per annum on
such cost and on the amount so accrued in prior quarters. As of February 12,
1997, the Preference Amount was $21.24 per share of Class L Common issued at
the time of the Wesley Jessen Acquisition. Prior to the completion of the IPO,
all of the outstanding shares of Class L Common were reclassified pursuant to
the terms of the Company's amended and restated Certificate of Incorporation
into shares of common stock and a 3.133-for-one stock split was effected as to
all of the then outstanding shares of common stock. In connection with the
Reclassification (prior to the Split), each outstanding share of Class L Common
was reclassified into one share of common stock plus an additional number of
shares having a value, based on the Offering price, equal to the Preference
Amount as of February 12, 1997. An aggregate of 1,460,517 shares of common
stock was issued in exchange for the outstanding shares of Class L Common in
connection with the Reclassification. Fractional shares otherwise issuable as a
result of the Reclassification and Split were rounded to the nearest whole
dollar.
In connection with the IPO, the Company incurred an extraordinary charge for
debt extinguishment costs of $7.4 million ($4.9 million, net of income tax
benefits), relating to the write-off of capitalized financing fees incurred in
connection with the Barnes-Hind Acquisition financing. Additionally, the
Company incurred and capitalized financing fees of $2.5 million, which will be
amortized over 60 months.
Interest expense reductions as if the IPO had occurred at January 1, 1996 are
reflected in the Company's unaudited As Adjusted financial data. See "Results
of Operations". While the Company believes that this interest expense will not
recur, there can be no assurance that the Company's interest expense will not
increase in future periods either as a result of increased borrowings or higher
interest rates.
12
<PAGE>
RESULTS OF OPERATIONS
The unaudited As Adjusted results of operations for the Company are set out
below, giving effect to the following:
For the three months ended March 29, 1997, adjustments have been made to
(i) eliminate the non-cash increase in cost of goods sold of $13.1 million
relating to the amortization of Barnes-Hind purchased inventory step-up to
fair value at the October 1996 acquisition date; (ii) exclude $0.8 million
of nonrecurring transitional administrative expenses incurred at the
Barnes-Hind corporate facility in Sunnyvale, California; (iii) reflect the
$0.4 million pro forma reduction in interest expense resulting from the
refinancing of the 1996 Credit Agreement and the use of the net proceeds of
the IPO to repay outstanding debt; (iv) eliminate the $4.9 million
extraordinary write-off of capitalized financing fees, net of tax; and (v)
reflect the As Adjusted income tax expense resulting from the preceding
adjustments to an effective income tax rate of 34%.
For the three months ended March 31, 1996, adjustments have been made to
reflect (i) the Barnes-Hind Acquisition as though the acquisition had taken
place January 1, 1996; (ii) the March 1997 divestiture of the U.S. Natural
Touch product line; (iii) the elimination of the non-cash increase in cost
of goods sold of $6.0 million relating to the amortization of Wesley Jessen
purchased inventory step-up to fair value at the June 1995 acquisition
date; (iv) the refinancing of the Company's 1996 Credit Agreement; and (v)
the use of the net proceeds of the IPO to repay outstanding debt.
AS ADJUSTED STATEMENT OF OPERATIONS DATA
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 29, MARCH 31,
1997 1996
---------- ----------
<S> <C> <C>
Statement of Operations Data:
Net sales............................................ $64,071 $61,733
Operating costs and expenses:
Cost of goods sold................................. 21,870 22,666
Marketing and administrative....................... 32,505 29,818
Research and development........................... 3,021 3,216
Amortization of negative goodwill.................. (196) (196)
---------- ----------
Income from operations............................. 6,871 6,229
Other expense--
Interest expense, net............................... 1,449 1,438
---------- ----------
Income before income taxes........................... 5,422 4,791
Income tax expense................................... (1,843) (1,629)
---------- ----------
Net income........................................... $ 3,579 $ 3,162
Other Data:
Net income per common and common share equivalent.... $ 0.18 $ 0.16
========== ==========
Weighted average shares used in computation of net
income per common and common share equivalent....... 19,352,554 19,352,554
========== ==========
</TABLE>
As Adjusted Three Months Ended March 29, 1997 Compared to As Adjusted Three
Months Ended March 31, 1996
Net sales for the three months ended March 29, 1997 increased $2.4 million,
or 3.8%, to $64.1 million from $61.7 million for the three months ended March
31, 1996. This increase resulted primarily from 33.3% growth in sales of the
Company's disposable and planned replacement contact lenses, from $15.7 million
to $20.9
13
<PAGE>
million, partially offset by decreases in the conventional lens product lines.
Sales of disposable and planned replacement contact lenses grew 42.5% in the
U.S. and 25.6% internationally. Total sales in North America remained
relatively flat, while total sales in the rest of the world grew 7.5% from
$25.5 million to $27.4 million.
Gross profit for the three months ended March 29, 1997 increased $3.1
million, or 8.0%, to $42.2 million from $39.1 million in the comparable 1996
period. Gross profit margin increased to 65.9% for the three months ended
March 29, 1997 from 63.3% in the comparable period. This improvement reflects
cost savings that resulted from improved plant utilization and other operating
efficiencies.
Marketing and administrative expenses for the three months ended March 29,
1997 increased by $2.7 million, or 9.0%, to $32.5 million from $29.8 million
for the three months ended March 31, 1996. As a percentage of net sales,
marketing and administrative expenses increased to 50.7% in the 1997 period
from 48.3% in the 1996 period. This increase is largely due primarily to
higher promotional spending and performance related compensation expenses.
Research and development expenses for the three months ended March 29, 1997
decreased by $0.2 million, or 6.1%, to $3.0 million from $3.2 million for the
three months ended March 31, 1996. As a percentage of net sales, research and
development expenses for the three months ended March 29, 1997 decreased to
4.7% from 5.2% in the prior year period. This decrease is due to operational
synergies being realized by the Company as a result of the Barnes-Hind
Acquisition.
Income from operations for the three months ended March 29, 1997 increased
by $0.6 million to income of $6.9 million from $6.2 million for the three
months ended March 31, 1996. This increase resulted from the substantial
improvement in the Company's gross margin offset by the increase in marketing
and administrative expenses.
Net income for the three months ended March 29, 1997 increased by $0.4
million to $3.6 million from $3.2 million for the three months ended March 31,
1996. This resulted from improvement in the Company's gross margins, offset by
increased spending in marketing and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily through funds provided
from operations and through borrowings under a revolving credit facility. Net
cash used in operating activities for the period from January 1, 1997 through
March 29, 1997 totaled approximately $7.1 million. This use resulted from
increases in accounts receivable along with payments made relating to (i) the
prior year's performance related compensation; (ii) integration costs relating
to the Barnes-Hind Acquisition; and (iii) income taxes, partially offset by
increases in accounts payable. For the three months ended March 31, 1996, the
Company generated approximately $5.0 million in cash from operating
activities, primarily as a result of improvements in profitability, decreases
in inventories and increases in accrued liabilities, offset by decreases in
accounts payable. Since December 31, 1996, the Company has reduced its long-
term debt by $27.9 million, due entirely to the proceeds from the IPO.
For the three months ended March 29, 1997 and March 31, 1996, the Company
made capital expenditures of approximately $2.1 million and $0.5 million,
respectively. The majority of these capital expenditures were for equipment
maintenance and improvement, improvements in information technology, the
partial automation of the Company's Southampton, U.K. manufacturing facility
and the consolidation of the businesses. The Company has currently budgeted
approximately $18.0 million of capital expenditures for 1997 to (i) facilitate
the consolidation of the businesses; (ii) complete the installation of the
Company's software information system; and (iii) complete the automation of
the Company's Southampton manufacturing facility. The Company expects to fund
these capital expenditures primarily from cash generated from operating
activities and borrowings under its revolving credit facility.
14
<PAGE>
As a result of the Barnes-Hind Acquisition, the Company expects to incur
integration costs of approximately $20.4 million, principally for severance
costs and lease expenses on vacated premises through September of 1998. These
costs were recorded in connection with the purchase accounting for the Barnes-
Hind Acquisition. As of March 29, 1997, the Company has paid $3.7 million of
these integration costs.
As of March 29, 1997, the Company had approximately $30.0 million in
borrowing availability under the revolving credit facility portion of the 1997
Credit Agreement. Management believes that, based on current levels of
operations and anticipated internal growth, cash flow from operations,
potential borrowings available under the 1997 Credit Agreement and available
cash on hand at March 29, 1997 of $7.2 million, will be adequate over the next
twelve months to make required payments of principal and interest on the
Company's indebtedness, to fund anticipated capital expenditures and working
capital requirements, to support the aforementioned integration costs, and to
enable the Company and its subsidiaries to comply with the terms of their debt
agreements. However, actual capital requirements may change, particularly as a
result of any acquisitions which the Company may pursue. The ability of the
Company to meet its debt service obligations and reduce its total debt will be
dependent upon the future performance of the Company and its subsidiaries
which, in turn, will be subject to general economic conditions and to
financial, business and other factors, including factors beyond the Company's
control.
A portion of the debt of the Company bears interest at floating rates;
therefore, the Company's financial condition is and will continue to be
affected by changes in prevailing interest rates. In December of 1996, the
Company purchased an interest rate cap on $35.0 million notional principal
amount at a fixed rate of 8.5%, which expires on December 31, 1999. The cap is
intended to provide partial protection from exposure relating to the Company's
variable rate debt instruments in the event of higher interest rates.
More than 42% of the Company's net sales for the three months ended March
29, 1997 were to international customers and the Company expects that sales to
international customers will continue to represent a material portion of its
net sales. Historically, fluctuations in foreign currency exchange rates have
not had a material affect on the Company's results of operations and the
Company does not expect such fluctuations to be material in the foreseeable
future.
INFLATION
Management believes that inflation has not had a material impact on results
of operations for the Company during the three months ended March 29, 1997 and
March 31, 1996.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share." This
Statement establishes standards for computing and presenting earnings per
share and applies to entities with publicly held common stock. It simplifies
the standards for computing earnings per share previously defined in APB
Opinion No. 15, "Earnings per Share", making them comparable to international
EPS standards. It replaces the current presentation of primary EPS with a
presentation of basic EPS, requires dual presentation of basic and diluted EPS
on the face of the income statement for all entities with complex capital
structures and requires reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation.
The Statement is effective for financial statements issued for periods
ending after December 15, 1997. The Company intends to comply with this
requirement for the twelve month period ending December 31, 1997.
15
<PAGE>
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to Section 228 of the General Corporation Law of the State of
Delaware, on January 21, 1997 the stockholders of the Company, by written
consent without a meeting, adopted a resolution approving an amendment to the
Company's Certificate of Incorporation changing the Company's name from
Wesley-Jessen Holding, Inc. to Wesley Jessen VisionCare, Inc.
Pursuant to Section 228 of the General Corporation Law of the State of
Delaware, on February 11, 1997 the stockholders of the Company, by written
consent without a meeting, adopted resolutions:
1. Approving the Amended and Restated Certificate of Incorporation of
the Company.
2. Approving the Amended and Restated By-laws of the Company.
3. Approving the appointment of Price Waterhouse LLP as the Company's
independent public accounting firm.
4. Approving the form of the Indemnification Agreement for Directors
and certain officers of the Company.
5. Approving the 1997 Stock Incentive Plan.
6. Approving the Employee Stock Discount Purchase Plan.
7. Approving the Non-Employee Director Stock Option Plan.
8. Electing (i) John W. Maki as Class I Director, to serve until the
annual meeting of stockholders in 1998; (ii) Adam W. Kirsch and
Edward J. Kelley as Class II Directors, to serve until the annual
meeting of stockholders in 1999; and (iii) Stephen G. Pagliuca,
Kevin J. Ryan and John J. O'Malley as Class III Directors, to serve
until the annual meeting of stockholders in 2000.
Votes cast for the above matters: Common Stock--3,870,000 and Class
L Common--321,067.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. The following exhibits are filed herewith and made a part
hereof.
<TABLE>
<C> <S> <C>
3.1(i) Amended and Restated Certificate of Incorporation.
3.1(ii) Amended and Restated By-laws.
4.1 Credit Agreement, dated February 19, 1997, among Wesley
Jessen VisionCare, Inc., Wesley-Jessen Corporation, vari-
ous lending institutions, and Bankers Trust Company, as
Agent.
4.2 Security Agreement, dated as of February 19, 1997, among
Wesley Jessen VisionCare, Inc., Wesley-Jessen Corporation,
certain other subsidiaries of Wesley Jessen VisionCare,
Inc. and Bankers Trust Company, as Collateral Agent.
4.3 Pledge Agreement, dated as of February 19, 1997, by Wesley
Jessen VisionCare, Inc., Wesley-Jessen Corporation and
certain other subsidiaries of Wesley Jessen VisionCare,
Inc. in favor of Bankers Trust Company, as Collateral
Trustee and Agent.
4.4 Subsidiary Guaranty, dated as of February 19, 1997, made
by each subsidiary of Wesley-Jessen Corporation named
therein and Bankers Trust Company, as Agent.
10.1 Wesley Jessen VisionCare, Inc. 1997 Stock Incentive Plan.
10.2 Wesley Jessen VisionCare, Inc. Employee Stock Discount
Purchase Plan.
</TABLE>
16
<PAGE>
<TABLE>
<C> <S> <C>
10.3 Wesley Jessen VisionCare, Inc. Non-Employee Director Stock
Option Plan.
10.4 Indemnification Agreement, dated as of March 4, 1997 and
effective as of February 12, 1997, between Kevin J. Ryan
and the Company with an attached schedule listing the
other officers and directors who entered into such an
agreement.
10.5 Asset Purchase Agreement, dated as of January 24, 1997, by
and among Wesley-Jessen Corporation, PBH, Inc. and The
Cooper Companies, Inc.
27.1 Financial Data Schedule.
</TABLE>
(b) REPORTS ON FORM 8-K
NONE.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Wesley Jessen Visioncare, Inc.
/s/ Edward J. Kelley
By: _________________________________
Edward J. Kelley (Duly authorized
officer and Chief Financial
Officer)
Date: May 13, 1997
18
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
NO. DESCRIPTION OF DOCUMENT PAGE
------- ----------------------- ----
<C> <S> <C>
3.1(i) Amended and Restated Certificate of Incorporation.
3.1(ii) Amended and Restated By-laws.
4.1 Credit Agreement, dated February 19, 1997, among Wesley
Jessen VisionCare, Inc., Wesley-Jessen Corporation, various
lending institutions, and Bankers Trust Company, as Agent.
4.2 Security Agreement, dated as of February 19, 1997, among
Wesley Jessen VisionCare, Inc., Wesley-Jessen Corporation,
certain other subsidiaries of Wesley Jessen VisionCare, Inc.
and Bankers Trust Company, as Collateral Agent.
4.3 Pledge Agreement, dated as of February 19, 1997, by Wesley
Jessen VisionCare, Inc., Wesley-Jessen Corporation and cer-
tain other subsidiaries of Wesley Jessen VisionCare, Inc. in
favor of Bankers Trust Company, as Collateral Trustee and
Agent.
4.4 Subsidiary Guaranty, dated as of February 19, 1997, made by
each subsidiary of Wesley-Jessen Corporation named therein
and Bankers Trust Company, as Agent.
10.1 Wesley Jessen VisionCare, Inc. 1997 Stock Incentive Plan.
10.2 Wesley Jessen VisionCare, Inc. Employee Stock Discount Pur-
chase Plan.
10.3 Wesley Jessen VisionCare, Inc. Non-Employee Director Stock
Option Plan.
10.4 Indemnification Agreement, dated as of March 4, 1997 and ef-
fective as of February 12, 1997, between Kevin J. Ryan and
the Company, with an attached schedule listing the other of-
ficers and directors who entered into such an agreement.
10.5 Asset Purchase Agreement, dated as of January 24, 1997, by
and among Wesley-Jessen Corporation, PBH, Inc. and The Cooper
Companies, Inc.
27.1 Financial Data Schedule.
</TABLE>
19
<PAGE>
EXHIBIT 3.1 (i)
---------------
RESTATED CERTIFICATE OF INCORPORATION
OF
WESLEY JESSEN VISIONCARE, INC.
ARTICLE I - Name
----------------
The name of the corporation is Wesley Jessen VisionCare, Inc.
(hereinafter referred to as the "Corporation").
-----------
ARTICLE II - Registered Office
------------------------------
The address of the registered office of the Corporation in the State
of Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County
of Kent 19901. The name of the registered agent of the Corporation at that
address is The Prentice-Hall Corporation System, Inc.
ARTICLE III - Purpose
---------------------
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law").
--------------------------------
ARTICLE IV - Capital Stock
--------------------------
Part A. General. The maximum number of shares of capital stock that
------- -------
the Corporation is authorized to have outstanding at any one time is 55,000,000
shares, consisting of: (i) 5,000,000 shares of Preferred Stock, par value $0.01
per share (the "Preferred Stock"); and (ii 50,000,000 shares of Common Stock,
---------------
par value $0.01 per share (the "Common Stock").
------------
Part B. Preferred Stock. Authority is hereby expressly vested in
------- ---------------
the Board of Directors of the Corporation, subject to the provisions of this
ARTICLE IV and to the limitations prescribed by law, to authorize the issuance
- ----------
from time to time of one or more series of Preferred Stock. The authority of
the Board of Directors with respect to each series shall include, but not be
limited to, the determination or fixing of the following by resolution or
resolutions adopted by the affirmative vote of a majority of the total number of
the Directors then in office:
<PAGE>
(1) The designation of such series;
(2) The dividend rate of such series, the conditions and dates upon
which such dividends shall be payable, the relation which such dividends shall
bear to the dividends payable on any other class or classes or series of the
Corporation's capital stock and whether such dividends shall be cumulative or
non-cumulative;
(3) Whether the shares of such series shall be subject to redemption
for cash, property or rights, including securities of any other corporation, by
the Corporation or upon the happening of a specified event and, if made subject
to any such redemption, the times or events, prices, rates, adjustments and
other terms and conditions of such redemptions;
(4) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series;
(5) Whether or not the shares of such series shall be convertible
into, or exchangeable for, at the option of either the holder or the Corporation
or upon the happening of a specified event, shares of any other class or classes
or of any other series of the same class of the Corporation's capital stock and,
if provision be made for conversion or exchange, the times or events, prices,
rates, adjustments and other terms and conditions of such conversions or
exchanges;
(6) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock;
(7) The rights of the holders of the shares of such series upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
(8) The provisions as to voting, optional and/or other special rights
and preferences, if any, including, without limitation, the right to elect one
or more Directors.
Part C. Common Stock. Except as otherwise provided by the Delaware
------- ------------
General Corporation Law or this Restated Certificate of Incorporation (the
"Restated Certificate"), and subject to the rights of holders of any series of
- ---------------------
Preferred Stock, the holders of record of Common Stock shall share ratably in
all dividends payable in cash, stock or otherwise and other distributions,
whether in respect of liquidation or dissolution (voluntary or involuntary) or
otherwise and, are subject to all the powers, rights, privileges, preferences
and priorities of any series of Preferred Stock as provided herein or in any
resolution or resolutions adopted by the Board of Directors pursuant to
authority expressly vested in it by the provisions of Section B of this ARTICLE
-------
IV.
- --
(1) The Common Stock shall not be convertible into, or exchangeable
for, shares of any other class or classes or of any other series of the same of
the Corporation's capital stock.
(2) No holder of Common Stock shall have any preemptive,
subscription, redemption, conversion or sinking fund rights with respect to the
Common Stock, or to any
-2-
<PAGE>
obligations convertible (directly or indirectly) into stock of the Corporation
whether now or hereafter authorized.
(3) Except as otherwise provided by the Delaware General Corporation
Law, or the Restated Certificate and subject to the rights of holders of any
series of Preferred Stock, all of the voting power of the stockholders of the
Corporation shall be vested in the holders of the Common Stock, and each holder
of Common Stock shall have one vote for each share held by such holder on all
matters voted upon by the stockholders of the Corporation.
Part D. Reclassification and Stock Split.
------- --------------------------------
(1) Reclassification. Immediately upon the filing of this Restated
----------------
Certificate with the Secretary of State of the State of Delaware (the "Effective
---------
Time"), each share of Class L Common Stock, par value $.01 per share, of the
- ----
Corporation (the "Class L Common"), outstanding immediately prior to the
--------------
Effective Time shall be, without further action by the Corporation or any of the
holders thereof, reclassified into one share of Common Stock plus an additional
number of shares of Common Stock equal to the sum of the Unreturned Original
Cost and Unpaid Yield (as such terms are defined in the Corporation's
Certificate of Incorporation as in effect immediately prior to the Effective
Time) on each share of Class L Common as of the Effective Date divided by the
Public Offering Price. The fraction resulting from dividing the sum of the
Unreturned Original Cost and Unpaid Yield of each share of Class L Common by the
Public Offering Price is referred to herein as the "Class L Conversion Factor".
-------------------------
Each certificate representing shares of Class L Common shall automatically
represent from and after the Effective Time that number of shares of Common
Stock equal to the number of shares shown on the face of the certificate plus
such additional number of shares equal to the number of shares shown on the face
of the certificate multiplied by the Class L Conversion Factor. For purpose of
this Part D of this ARTICLE IV, "Public Offering Price" shall mean the initial
---------- ---------------------
public offering price per share of Common Stock set forth on the cover page of
the Corporation's Prospectus included in the Registration Statement on Form S-1
(Registration No. 333-17353) (the "Registration Statement"), relating to the
----------------------
initial public offering of the Corporation's Common Stock and in the form first
used to confirm sales of the Common Stock, without deduction for any
underwriting discounts or commissions or any expenses incurred by the
Corporation in connection with the initial public offering and as adjusted so as
to not give effect to the stock split described in the following paragraph.
(2) Stock Split. At the Effective Time and immediately following the
-----------
reclassification of the Class L Common set forth above (the "Reclassification"),
----------------
each share of Common Stock outstanding at the Effective Time (after giving
effect to the Reclassification) shall be, without further action by the
Corporation or any of the holders thereof, changed and converted into a number
of shares of Common Stock equal to that number determined by multiplying each
outstanding share of Common Stock by 3.132930888 (the "Stock Split Factor").
------------------
Each certificate then outstanding representing shares of Common Stock (including
those certificates that represent shares of Common Stock as a result of the
Reclassification) shall automatically represent from and after the Effective
Time that number of shares of Common Stock equal to the number of shares shown
on the face of the certificate multiplied by the Stock Split Factor
(3.132930888).
-3-
<PAGE>
(3) Fractional Shares. Notwithstanding the foregoing, in the event
-----------------
that the conversion of the Common Stock described above would result in any
holder of shares of Common Stock holding a share of Common Stock that is not an
integral multiple of one, the effect of the conversion shall be such that the
shares of Common Stock issued as a result of the conversion shall be the
integral multiple of one closest to the product of the Stock Split Factor and
the number of shares of Common Stock held by such holder, with fractions of 0.50
and greater being rounded up to the next higher integral multiple of one and
fractions less than 0.50 being rounded down to the next lower integral multiple
of one. No consideration will be paid in lieu of fractions that are rounded
down.
ARTICLE V - Existence
---------------------
The Corporation is to have perpetual existence.
ARTICLE VI - By-laws
--------------------
In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board of Directors of the Corporation is
expressly authorized to make, alter, amend, change, add to or repeal the By-laws
of the Corporation by the affirmative vote of a majority of the total number of
Directors then in office. Any alteration or repeal of the By-laws of the
Corporation by the stockholders of the Corporation shall require the affirmative
vote of at least a majority of the voting power of the then outstanding shares
of capital stock of the Corporation entitled to vote on such alteration or
repeal, subject to ARTICLE IX hereof and ARTICLE VII of the Corporation's By-
---------- -----------
laws.
ARTICLE VII - Stockholders and Directors
----------------------------------------
Part A. Stockholder Action. Election of Directors need not be by
------- ------------------
written ballot unless the By-laws of the Corporation so provide. Subject to any
rights of holders of any series of Preferred Stock, from and after the date on
which the Common Stock of the Corporation is registered pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (i) any action
------------
required or permitted to be taken by the stockholders of the Corporation must be
effected at an annual or special meeting of stockholders of the Corporation and
may not be effected in lieu thereof by any consent in writing by such
stockholders, (ii) special meetings of stockholders of the Corporation may be
called only by either the Board of Directors pursuant to a resolution adopted by
the affirmative vote of the majority of the total number of Directors then in
office or by the chief executive officer of the Corporation and (iii) advance
notice of stockholder nominations of persons for election to the Board of
Directors of the Corporation and of business to be brought before any annual
meeting of the stockholders by the stockholders of the Corporation shall be
given in the manner provided in the By-laws of the Corporation.
Part B. Number of Directors and Term of Office. Subject to any
------- --------------------------------------
rights of holders of any series of Preferred Stock to elect additional Directors
under specified circumstances,
-4-
<PAGE>
the number of Directors which shall constitute the Board of Directors of the
Corporation shall be fixed from time to time in the manner set forth in the By-
laws of the Corporation. The Directors of the Corporation shall be divided into
three classes: Class I, Class II and Class III. Membership in such class shall
be as nearly equal in number as possible. The term of office of the initial
Class I Directors shall expire at the annual election of Directors by the
stockholders of the Corporation in 1998, the term of office of the initial Class
II Directors shall expire at the annual election of Directors by the
stockholders of the Corporation in 1999 and the term of office of the initial
Class III Directors shall expire at the annual election of Directors by the
stockholders of the Corporation in 2000, or thereafter when their respective
successors in each case are elected by the stockholders and qualified, subject
however, to prior death, resignation, retirement, disqualification or removal
from office for cause. At each succeeding annual election of Directors by the
stockholders of the Corporation beginning in 1998, the Directors chosen to
succeed those whose terms then expire shall be identified as being of the same
class as the Directors they succeed and shall be elected for a term expiring at
the third succeeding annual election of Directors by the stockholders of the
Corporation, or thereafter when their respective successors in each case are
elected by the stockholders and qualified. If the number of Directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of Directors in each class as nearly equal as possible,
and any additional Director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall coincide
with the remaining term of that class, but in no case shall a decrease in the
number of Directors shorten the term of any incumbent Director.
Part C. Removal and Resignation. No Director may be removed from
------- -----------------------
office without cause and without the affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of Directors voting
together as a single class; provided, however, that if the holders of any class
-------- -------
or series of capital stock are entitled by the provisions of this Restated
Certificate (it being understood that any references to this Restated
Certificate shall include any duly authorized certificate of designation) to
elect one or more Directors, such Director or Directors so elected may be
removed without cause only by the vote of the holders of a majority of the
outstanding shares of that class or series entitled to vote. Any Director may
resign at any time upon written notice to the Corporation.
Part D. Vacancies and Newly Created Directorships. Subject to any
------- -----------------------------------------
rights of holders of any series of Preferred Stock to fill such newly created
Directorships or vacancies, any newly created Directorships resulting from any
increase in the authorized number of Directors and any vacancies in the Board of
Directors resulting from death, resignation, disqualification or removal from
office for cause shall, unless otherwise provided by law or by resolution
approved by the affirmative vote of a majority of the total number of Directors
then in office, be filled only by resolution approved by the affirmative vote of
a majority of the total number of Directors then in office. Any Director so
chosen shall hold office until the next election of the class for which such
Director shall have been chosen, and until his successor shall have been duly
elected and qualified, unless he shall resign, die, become disqualified or be
removed for cause.
Part E. Effectiveness. The provisions of this ARTICLE VII shall
------- -------------
terminate and be of no further force and effect in the event that the initial
public offering of the Corporation's
-5-
<PAGE>
Common Stock as contemplated by the Corporation's Prospectus included in the
Registration Statement is not consummated within 30 days of the Effective Date.
ARTICLE VII - General Provisions
--------------------------------
Part A. Dividends. The Board of Directors shall have authority from
------- ---------
time to time to set apart out of any assets of the Corporation otherwise
available for dividends a reserve or reserves as working capital or for any
other purpose or purposes, and to abolish or add to any such reserve or reserves
from time to time as said board may deem to be in the interest of the
Corporation; and said Board shall likewise have power to determine in its
discretion, except as herein otherwise provided, what part of the assets of the
Corporation available for dividends in excess of such reserve or reserves shall
be declared in dividends and paid to the stockholders of the Corporation.
Part B. Issuance of Stock. The shares of all classes of stock of
------- -----------------
the Corporation may be issued by the Corporation from time to time for such
consideration as from time to time may be fixed by the Board of Directors of the
Corporation, provided that shares of stock having a par value shall not be
issued for a consideration less than such par value, as determined by the Board.
At any time, or from time to time, the Corporation may grant rights or options
to purchase from the Corporation any shares of its stock of any class or classes
to run for such period of time, for such consideration, upon such terms and
conditions, and in such form as the Board of Directors may determine. The Board
of Directors shall have authority, as provided by law, to determine that only a
part of the consideration which shall be received by the Corporation for the
shares of its stock which it shall issue from time to time, shall be capital;
provided, however, that, if all the shares issued shall be shares having a par
- -------- -------
value, the amount of the part of such consideration so determined to be capital
shall be equal to the aggregate par value of such shares. The excess, if any, at
any time, of the total net assets of the Corporation over the amount so
determined to be capital, as aforesaid, shall be surplus. All classes of stock
of the Corporation shall be and remain at all times nonassessable.
The Board of Directors is hereby expressly authorized, in its
discretion, in connection with the issuance of any obligations or stock of the
Corporation (but without intending hereby to limit its general power so to do in
other cases), to grant rights or options to purchase stock of the Corporation of
any class upon such terms and during such period as the Board of Directors shall
determine, and to cause such rights to be evidenced by such warrants or other
instruments as it may deem advisable.
Part C. Inspection of Books and Records. The Board of Directors
------- -------------------------------
shall have power from time to time to determine to what extent and at what times
and places and under what conditions and regulations the accounts and books of
the Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of the
Board of Directors or of the stockholders of the Corporation.
-6-
<PAGE>
Part D. Location of Meetings, Books and Records. Except as
------- ---------------------------------------
otherwise provided in the By-laws, the stockholders of the Corporation and the
Board of Directors may hold their meetings and have an office or offices outside
of the State of Delaware and, subject to the provisions of the laws of said
State, may keep the books of the Corporation outside of said State at such
places as may, from time to time, be designated by the Board of Directors.
ARTICLE IX - Amendments
-----------------------
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate in the manner now or
hereinafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding anything contained in this Restated Certificate to
the contrary, Parts A, B and C of ARTICLE IV, ARTICLE VII, ARTICLE X, and this
---------- ----------- ---------
ARTICLE IX of this Restated Certificate shall not be altered, amended or
- ----------
repealed and no provision inconsistent therewith shall be adopted without the
affirmative vote of the holders of at least 66 2/3% of the voting power of the
then outstanding shares of capital stock of the Corporation entitled to vote on
such alteration, amendment or repeal, voting together as a single class (other
than any alteration or amendment to Part A of ARTICLE IV that increases the
----------
authorized number of shares of Preferred Stock or Common Stock).
ARTICLE X - Liability
---------------------
Part A. Limitation of Liability.
------- -----------------------
(1) To the fullest extent permitted by the Delaware General
Corporation Law as it now exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), and except as otherwise provided in the Corporation's By-laws, no
Director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages arising from a breach of fiduciary duty owed
to the Corporation or its stockholders.
(2) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a Director of the Corporation existing at the time of such repeal
or modification.
Part B. Right to Indemnification. Each person who was or is made a
------- ------------------------
party or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of the
----------
fact that he or she is or was a Director or officer of the Corporation or, while
a Director or officer of the Corporation, is or was serving at the request of
the Corporation as a Director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (an "indemnitee"), whether the basis of
----------
such proceeding is alleged action in an official capacity as a Director or
officer or in any other capacity while serving as a Director or officer, shall
be
-7-
<PAGE>
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted prior thereto), against all expense, liability and loss
(including attorneys' fees, judgments, fines, excise exercise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as to
an indemnitee who has ceased to be a Director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in Part C of this
ARTICLE X with respect to proceedings to enforce rights to indemnification, the
- ---------
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation. The right
to indemnification conferred in this Part B of this ARTICLE X shall be a
---------
contract right and shall include the obligation of the Corporation to pay the
expenses incurred in defending any such proceeding in advance of its final
disposition (an "advance of expenses"); provided, however, that, if and to the
------------------- -------- -------
extent that the Delaware General Corporation Law requires, an advance of
expenses incurred by an indemnitee in his or her capacity as a Director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking (an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
-----------
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (a "final adjudication") that such
------------------
indemnitee is not entitled to be indemnified for such expenses under this Part B
or otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same or
lesser scope and effect as the foregoing indemnification of Directors and
officers.
Part C. Procedure for Indemnification. Any indemnification of a
------- -----------------------------
Director or officer of the Corporation or advance of expenses under Part B of
this ARTICLE X shall be made promptly, and in any event within forty-five days
---------
(or, in the case of an advance of expenses, twenty days), upon the written
request of the Director or officer. If a determination by the Corporation that
the Director or officer is entitled to indemnification pursuant to this ARTICLE
-------
X is required, and the Corporation fails to respond within sixty days to a
- -
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advance of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within forty-five days (or, in the case of an advance of
expenses, twenty days), the right to indemnification or advances as granted by
this ARTICLE X shall be enforceable by the Director or officer in any court of
---------
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of expenses where the undertaking required pursuant to
Part B of this ARTICLE X, if any, has been tendered to the Corporation) that the
---------
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant
-8-
<PAGE>
is proper in the circumstances because he or she has met the applicable standard
of conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct. The procedure
for indemnification of other employees and agents for whom indemnification is
provided pursuant to Part B of this ARTICLE X shall be the same procedure set
---------
forth in this Part C for Directors or officers, unless otherwise set forth in
the action of the Board of Directors providing indemnification for such employee
or agent.
Part D. Insurance. The Corporation may purchase and maintain
------- ---------
insurance on its own behalf and on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation or was serving at the
request of the Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss asserted against him or her and incurred by him or
her in any such capacity, whether or not the Corporation would have the power to
indemnify such person against such expenses, liability or loss under the
Delaware General Corporation Law.
Part E. Service for Subsidiaries. Any person serving as a Director,
------- ------------------------
officer, employee or agent of another corporation, partnership, limited
liability company, joint venture or other enterprise, at least 50% of whose
equity interests are owned by the Corporation (a "subsidiary" for this ARTICLE
---------- -------
X) shall be conclusively presumed to be serving in such capacity at the request
- --
of the Corporation.
Part F. Reliance. Persons who after the date of the adoption of
------- --------
this provision become or remain Directors or officers of the Corporation or who,
while a Director or officer of the Corporation, become or remain a Director,
officer, employee or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE X in entering into or continuing such service. The
---------
rights to indemnification and to the advance of expenses conferred in this
ARTICLE X shall apply to claims made against an indemnitee arising out of acts
- ---------
or omissions which occurred or occur both prior and subsequent to the adoption
hereof.
Part G. Non-Exclusivity of Rights. The rights to indemnification
------- -------------------------
and to the advance of expenses conferred in this ARTICLE X shall not be
---------
exclusive of any other right which any person may have or hereafter acquire
under this Restated Certificate or under any statute, by-law, agreement, vote of
stockholders or disinterested Directors or otherwise.
Part H. Merger or Consolidation. For purposes of this ARTICLE X,
------- ----------------------- ---------
references to the "Corporation" shall include, in addition to the resulting
Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
Directors, officers and employees or agents, so that any person who is or was a
Director, officer, employee or agent of such constituent Corporation, or is or
was serving at the request of such constituent Corporation as a Director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position
-9-
<PAGE>
under this ARTICLE X with respect to the resulting or surviving Corporation as
---------
he or she would have with respect to such constituent Corporation if its
separate existence had continued.
ARTICLE XI - Business Combinations
----------------------------------
The Corporation expressly elects to be governed by Section 203 of the
Delaware General Corporation Law. Notwithstanding the terms of Section 203 of
the Delaware General Corporation Law, Bain Capital, Inc. and its affiliates (the
"Bain Entities") shall not be deemed at any time and without regard to the
-------------
percentage of voting stock of the Corporation owned by the Bain Entities to be
an "interested stockholder" as such term is defined in Section 203(c)(5) of the
Delaware General Corporation Law.
* * * * *
-10-
<PAGE>
EXHIBIT 3.1(ii)
---------------
AMENDED AND RESTATED BY-LAWS
OF
WESLEY JESSEN VISIONCARE, INC.
A Delaware Corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of Wesley Jessen
---------- -----------------
VisionCare, Inc. (the "Corporation") in the State of Delaware shall be located
at 1013 Centre Road, in the City of Wilmington, County of New Castle 19805.
The name of the Corporation's registered agent at such address shall be The
Prentice-Hall Corporation System, Inc. The registered office and/or registered
agent of the Corporation may be changed from time to time by action of the Board
of Directors.
Section 2. Other Offices. The Corporation may also have offices at such
---------- -------------
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Annual Meeting. An annual meeting of the stockholders shall
---------- --------------
be held each year within 150 days after the close of the immediately preceding
fiscal year of the Corporation or at such other time specified by the Board of
Directors for the purpose of electing Directors and conducting such other proper
business as may come before the annual meeting. At the annual meeting,
stockholders shall elect Directors and transact such other business as properly
may be brought before the annual meeting pursuant to ARTICLE II, Section 11
----------
hereof.
Section 2. Special Meetings. Special meetings of the stockholders may
---------- ----------------
only be called in the manner provided in the Restated Certificate of
Incorporation.
Section 3. Place of Meetings. The Board of Directors may designate any
---------- -----------------
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting. If no designation is made,
or if a special meeting be otherwise called, the place of meeting shall be the
principal executive office of the Corporation. If for any reason any annual
meeting shall not be held during any year, the business thereof may be
transacted at any special meeting of the stockholders.
<PAGE>
Section 4. Notice. Whenever stockholders are required or permitted to
---------- ------
take action at a meeting, written or printed notice stating the place, date,
time and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than 10 nor more than 60 days before the date of the meeting. All such
notices shall be delivered, either personally or by mail, by or at the direction
of the Board of Directors, the chairman of the board, the president or the
secretary, and if mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, addressed to the
stockholder at his, her or its address as the same appears on the records of the
Corporation. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
---------- -----------------
ledger of the Corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
---------- ------
capital stock entitled to vote, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders, except as otherwise
provided by the General Corporation Law of the State of Delaware or by the
Restated Certificate of Incorporation. If a quorum is not present, the holders
of a majority of the shares present in person or represented by proxy at the
meeting, and entitled to vote at the meeting, may adjourn the meeting to another
time and/or place. When a specified item of business requires a vote by a class
or series (if the Corporation shall then have outstanding shares of more than
one class or series) voting as a class, the holders of a majority of the shares
of such class or series shall constitute a quorum (as to such class or series)
for the transaction of such item of business.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
---------- ------------------
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
---------- -------------
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless (i) by express provisions of an applicable law or
-2-
<PAGE>
of the Restated Certificate of Incorporation a different vote is required, in
which case such express provision shall govern and control the decision of such
question, or (ii) the subject matter is the election of Directors, in which case
Section 2 of ARTICLE III hereof shall govern and control the approval of such
-----------
subject matter.
Section 9. Voting Rights. Except as otherwise provided by the General
---------- -------------
Corporation Law of the State of Delaware, the Restated Certificate of
Incorporation of the Corporation or any amendments thereto or these By-laws,
every stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of common stock held by such
stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
----------- -------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
Section 11. Business Brought Before an Annual Meeting. At an annual
----------- -----------------------------------------
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (ii)
brought before the meeting by or at the direction of the Board of Directors or
(iii) otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than 60 days nor more than 90 days prior to the meeting; provided, however,
-------- -------
that in the event that less than 70 days' notice or prior public announcement of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the date on which such notice of the date of
the annual meeting was mailed or such public announcement was made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting, (ii) the name
and address, as they appear on the Corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the Corporation
which are beneficially owned by the stockholder and (iv) any material
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interest of the stockholder in such business. Notwithstanding anything in these
By-laws to the contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this section. The
presiding officer of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this section; if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted. For purposes of this
section, "public announcement" shall mean disclosure in a press release reported
by Dow Jones News Service, Associated Press or a comparable national news
service. Nothing in this section shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
ARTICLE III
-----------
Directors
---------
Section 1. General Powers. The business and affairs of the Corporation
---------- --------------
shall be managed by or under the direction of the Board of Directors. In
addition to such powers as are herein and in the Restated Certificate of
Incorporation expressly conferred upon it, the Board of Directors shall have
and may exercise all the powers of the Corporation, subject to the provisions of
the laws of Delaware, the Restated Certificate of Incorporation and these By-
laws.
Section 2. Number, Election and Term of Office. Subject to any rights of
---------- -----------------------------------
the holders of any series of Preferred Stock to elect additional Directors under
specified circumstances, the number of Directors which shall constitute the
Board of Directors shall be fixed from time to time by resolution adopted by the
affirmative vote of a majority of the total number of Directors then in office.
The Directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote in the
election of Directors; provided that, whenever the holders of any class or
series of capital stock of the Corporation are entitled to elect one or more
Directors pursuant to the provisions of the Restated Certificate of
Incorporation of the Corporation (including, but not limited to, for purposes of
these By-laws, pursuant to any duly authorized certificate of designation), such
Directors shall be elected by a plurality of the votes of such class or series
present in person or represented by proxy at the meeting and entitled to vote in
the election of such Directors. The Directors shall be elected and shall hold
office only in the manner provided in the Restated Certificate of Incorporation.
Section 3. Removal and Resignation. No Director may be removed from
---------- -----------------------
office without cause and without the affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of capital stock
entitled to vote generally in the election of Directors voting together as a
single class; provided, however, that if the holders of any class or series of
capital stock are entitled by the provisions of the Restated Certificate of
Incorporation (it being understood that any references to the Restated
Certificate of Incorporation shall include any duly authorized certificate of
designation) to elect one or more Directors, such Director or Directors so
elected may be removed without cause only by the vote of the holders of a
majority of the outstanding shares of
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that class or series entitled to vote. Any Director may resign at any time upon
written notice to the Corporation.
Section 4. Vacancies. Vacancies and newly created directorships resulting
---------- ---------
from any increase in the total number of Directors may be filled only in the
manner provided in the Restated Certificate of Incorporation.
Section 5. Nominations.
---------- -----------
(a) Only persons who are nominated in accordance with the procedures
set forth in these By-laws shall be eligible to serve as Directors. Nominations
of persons for election to the Board of Directors of the Corporation may be made
at a meeting of stockholders (i) by or at the direction of the Board of
Directors or (ii) by any stockholder of the Corporation who was a stockholder of
record at the time of giving of notice provided for in this By-law, who is
entitled to vote generally in the election of Directors at the meeting and who
shall have complied with the notice procedures set forth below in Section 5(b).
(b) In order for a stockholder to nominate a person for election to
the Board of Directors of the Corporation at a meeting of stockholders, such
stockholder shall have delivered timely notice of such stockholder's intent to
make such nomination in writing to the secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the Corporation (i) in the case of an annual
meeting, not less than 60 nor more than 90 days prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
-------- -------
that the date of the annual meeting is changed by more than 30 days from such
anniversary date, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the earlier of the
day on which notice of the date of the meeting was mailed or public disclosure
of the meeting was made, and (ii) in the case of a special meeting at which
Directors are to be elected, not later than the close of business on the 10th
day following the earlier of the day on which notice of the date of the meeting
was mailed or public announcement of the meeting was made. Such stockholder's
notice shall set forth (i) as to each person whom the stockholder proposes to
nominate for election as a Director at such meeting all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a Director
if elected); (ii) as to the stockholder giving the notice (A) the name and
address, as they appear on the Corporation's books, of such stockholder and (B)
the class and number of shares of the Corporation which are beneficially owned
by such stockholder and also which are owned of record by such stockholder; and
(iii) as to the beneficial owner, if any, on whose behalf the nomination is
made, (A) the name and address of such person and (B) the class and number of
shares of the Corporation which are beneficially owned by such person. At the
request of the Board of Directors, any person nominated by the Board of
Directors for election as a Director shall furnish to the secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee.
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<PAGE>
(c) No person shall be eligible to serve as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
section. The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this section, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded. A
stockholder seeking to nominate a person to serve as a Director must also comply
with all applicable requirements of the Exchange Act, and the rules and
regulations thereunder with respect to the matters set forth in this section.
Section 6. Annual Meetings. The annual meeting of the Board of Directors
---------- ---------------
shall be held without other notice than this By-law immediately after, and at
the same place as, the annual meeting of stockholders.
Section 7. Other Meetings and Notice. Regular meetings, other than the
---------- -------------------------
annual meeting, of the Board of Directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the Board of Directors may be called by the
chairman of the board, the president (if the president is a Director) or, upon
the written request of at least a majority of the Directors then in office, the
secretary of the Corporation on at least 24 hours notice to each Director,
either personally, by telephone, by mail or by telecopy.
Section 8. Chairman of the Board, Quorum, Required Vote and Adjournment.
---------- ------------------------------------------------------------
The Board of Directors shall elect, by the affirmative vote of a majority of the
total number of Directors then in office, a chairman of the board, who shall
preside at all meetings of the stockholders and Board of Directors at which he
or she is present and shall have such powers and perform such duties as the
Board of Directors may from time to time prescribe. If the chairman of the
board is not present at a meeting of the stockholders or the Board of Directors,
the president (if the president is a Director and is not also the chairman of
the board) shall preside at such meeting, and, if the president is not present
at such meeting, a majority of the Directors present at such meeting shall elect
one of their members to so preside. A majority of the total number of Directors
then in office shall constitute a quorum for the transaction of business.
Unless by express provision of an applicable law, the Restated Certificate of
Incorporation or these By-laws a different vote is required, the vote of a
majority of Directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors. If a quorum shall not be present at any
meeting of the Board of Directors, the Directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Committees. The Board of Directors may, by resolution passed
---------- ----------
by a majority of the total number of Directors then in office, designate one or
more committees, each committee to consist of one or more of the Directors of
the Corporation, which to the extent provided in such resolution or these By-
laws shall have, and may exercise, the powers of the Board of Directors in the
management and affairs of the Corporation, except as otherwise limited by law.
The Board of Directors may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Such committee or committees shall have such name or
names as may be determined from time to time by resolution
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adopted by the Board of Directors. Each committee shall keep regular minutes of
its meetings and report the same to the Board of Directors when required.
Section 10. Committee Rules. Each committee of the Board of Directors may
----------- ---------------
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the Board of
Directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. Unless otherwise provided in such a
resolution, in the event that a member and that member's alternate, if
alternates are designated by the Board of Directors, of such committee is or are
absent or disqualified, the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in place of any such absent or disqualified member.
Section 11. Communications Equipment. Members of the Board of Directors
----------- ------------------------
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
and speak with each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 12. Waiver of Notice and Presumption of Assent. Any member of the
----------- ------------------------------------------
Board of Directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 13. Action by Written Consent. Unless otherwise restricted by the
----------- -------------------------
Restated Certificate of Incorporation, any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the Corporation shall be elected by
---------- ------
the Board of Directors and shall consist of a chairman of the board, a chief
executive officer, a president, one or more vice-presidents, a secretary, a
chief financial officer and such other officers and assistant
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<PAGE>
officers as may be deemed necessary or desirable by the Board of Directors. Any
number of offices may be held by the same person, except that neither the chief
executive officer nor the president shall also hold the office of secretary. In
its discretion, the Board of Directors may choose not to fill any office for any
period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the Corporation
---------- ---------------------------
shall be elected annually by the Board of Directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as convenient.
Vacancies may be filled or new offices created and filled at any meeting of the
Board of Directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the Board of
---------- -------
Directors may be removed by the Board of Directors at its discretion, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
---------- ---------
death, resignation, removal, disqualification or otherwise may be filled by the
Board of Directors.
Section 5. Compensation. Compensation of all executive officers shall be
---------- ------------
approved by the Board of Directors, and no officer shall be prevented from
receiving such compensation by virtue of his or her also being a Director of the
Corporation.
Section 6. Chairman of the Board. The chairman of the board shall preside
---------- ---------------------
at all meetings of the stockholders and of the Board of Directors and shall have
such other powers and perform such other duties as may be prescribed to him or
her by the Board of Directors or provided in these By-laws.
Section 7. Chief Executive Officer. The chief executive officer shall
---------- -----------------------
have the powers and perform the duties incident to that position. Subject to
the powers of the Board of Directors and the chairman of the board, the chief
executive officer shall be in the general and active charge of the entire
business and affairs of the Corporation, and shall be its chief policy making
officer. The chief executive officer shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or provided in
these By-laws. The chief executive officer is authorized to execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. Whenever the president is unable to serve, by reason of
sickness, absence or otherwise, the chief executive officer shall perform all
the duties and responsibilities and exercise all the powers of the president.
Section 8. The President. The president of the Corporation shall, subject
---------- -------------
to the powers of the Board of Directors, the chairman of the board and the chief
executive officer, have general charge of the business, affairs and property of
the Corporation, and control over its officers, agents and employees. The
president shall see that all orders and resolutions of the Board of Directors
are
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<PAGE>
carried into effect. The president is authorized to execute bonds, mortgages and
other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the chairman of the board, the chief executive officer, the Board
of Directors or as may be provided in these By-laws.
Section 9. Vice-Presidents. The vice-president, or if there shall be more
---------- ---------------
than one, the vice-presidents in the order determined by the Board of Directors
or the chairman of the board, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and
have such other powers as the Board of Directors, the chairman of the board, the
chief executive officer, the president or these By-laws may, from time to time,
prescribe. The vice-presidents may also be designated as executive vice-
presidents or senior vice-presidents, as the Board of Directors may from time to
time prescribe.
Section 10. The Secretary and Assistant Secretaries. The secretary shall
----------- ---------------------------------------
attend all meetings of the Board of Directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose or shall ensure that
his or her designee attends each such meeting to act in such capacity. Under the
chairman of the board's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the Board of Directors, the chairman of
the board, the chief executive officer, the president or these By-laws may, from
time to time, prescribe; and shall have custody of the corporate seal of the
Corporation. The secretary, or an assistant secretary, shall have authority to
affix the corporate seal to any instrument requiring it and when so affixed, it
may be attested by his or her signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
or her signature. The assistant secretary, or if there be more than one, any of
the assistant secretaries, shall in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the Board of Directors, the
chairman of the board, the chief executive officer, the president, or secretary
may, from time to time, prescribe.
Section 11. The Chief Financial Officer. The chief financial officer
----------- ---------------------------
shall have the custody of the corporate funds and securities; shall keep full
and accurate all books and accounts of the Corporation as shall be necessary or
desirable in accordance with applicable law or generally accepted accounting
principles; shall deposit all monies and other valuable effects in the name and
to the credit of the Corporation as may be ordered by the chairman of the board
or the Board of Directors; shall cause the funds of the Corporation to be
disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the Board of Directors, at
its regular meeting or when the Board of Directors so requires, an account of
the Corporation; shall have such powers and perform such duties as the Board of
Directors, the chairman of the board, the chief executive officer, the president
or these By-laws may, from time
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<PAGE>
to time, prescribe. If required by the Board of Directors, the chief financial
officer shall give the Corporation a bond (which shall be rendered every six
years) in such sums and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of chief financial officer and for the restoration to the Corporation, in case
of death, resignation, retirement or removal from office of all books, papers,
vouchers, money and other property of whatever kind in the possession or under
the control of the chief financial officer belonging to the Corporation.
Section 12. Other Officers, Assistant Officers and Agents. Officers,
----------- ---------------------------------------------
assistant officers and agents, if any, other than those whose duties are
provided for in these By-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the Board of Directors.
Section 13. Absence or Disability of Officers. In the case of the absence
----------- ---------------------------------
or disability of any officer of the Corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the Board of Directors may by resolution delegate the powers and
duties of such officer to any other officer or to any Director, or to any other
person selected by it.
ARTICLE V
---------
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the Corporation shall be
---------- ----
entitled to have a certificate, signed by, or in the name of the Corporation by
the chairman of the board, the chief executive officer or the president and the
secretary or an assistant secretary of the Corporation, certifying the number of
shares owned by such holder in the Corporation. If such a certificate is
countersigned (i) by a transfer agent or an assistant transfer agent other than
the Corporation or its employee or (ii) by a registrar, other than the
Corporation or its employee, the signature of any such chairman of the board,
chief executive officer, president, secretary or assistant secretary may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
Corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the Corporation. Shares of stock of the Corporation
shall only be transferred on the books of the Corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the Corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization and other matters as
the Corporation may reasonably require, and accompanied by all
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<PAGE>
necessary stock transfer stamps. In that event, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates and record the transaction on its books. The
Board of Directors may appoint a bank or trust company organized under the laws
of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the Corporation.
Section 2. Lost Certificates. The Board of Directors may direct a new
---------- -----------------
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or certificates,
or his or her legal representative, to give the Corporation a bond sufficient to
indemnify the Corporation against any claim that may be made against the
Corporation on account of the loss, theft or destruction of any such certificate
or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
---------- ---------------------------------------------
the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than 60 nor less than 10 days
before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is first given. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Other Purposes. In order that the
---------- ---------------------------------------
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than 60 days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
Section 5. Registered Stockholders. Prior to the surrender to the
---------- -----------------------
Corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications and otherwise to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
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<PAGE>
Section 6. Subscriptions for Stock. Unless otherwise provided for in the
---------- -----------------------
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
Board of Directors. Any call made by the Board of Directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation.
ARTICLE VI
----------
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
---------- ---------
Corporation, subject to the provisions of the certificate of , if any, may be
declared by the Board of Directors at any regular or special meeting, in
accordance with applicable law. Dividends may be paid in cash, in property or
in shares of the capital stock, subject to the provisions of the Restated
Certificate of Incorporation. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
any other purpose and the Directors may modify or abolish any such reserve in
the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts or other orders
---------- ------------------------
for the payment of money by or to the Corporation and all notes and other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner, as shall be determined by resolution of the Board of Directors or a duly
authorized committee thereof.
Section 3. Contracts. In addition to the powers otherwise granted to
---------- ---------
officers pursuant to ARTICLE IV hereof, the Board of Directors may authorize any
----------
officer or officers, or any agent or agents, of the Corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The Corporation may lend money to, or guarantee any
---------- -----
obligation of, or otherwise assist any officer or other employee of the
Corporation or of its subsidiaries, including any officer or employee who is a
Director of the Corporation or its subsidiaries, whenever, in the judgment of
the Directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the Board
of Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this section shall be deemed to deny,
limit or restrict the powers of guaranty or warranty of the Corporation at
common law or under any statute.
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<PAGE>
Section 5. Fiscal Year. The fiscal year of the Corporation shall be fixed
---------- -----------
by resolution of the Board of Directors.
Section 6. Corporate Seal. The Board of Directors may provide a corporate
---------- --------------
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal, Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
---------- --------------------------------------
any other Corporation held by the Corporation shall be voted by the chief
executive officer, the president or a vice-president, unless the Board of
Directors specifically confers authority to vote with respect thereto, which
authority may be general or confined to specific instances, upon some other
person or officer. Any person authorized to vote securities shall have the
power to appoint proxies, with general power of substitution.
Section 8. Inspection of Books and Records. The Board of Directors shall
---------- -------------------------------
have power from time to time to determine to what extent and at what times and
places and under what conditions and regulations the accounts and books of the
Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of the
Board of Directors or of the stockholders of the Corporation.
Section 9. Section Headings. Section headings in these By-laws are for
---------- ----------------
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
----------- -----------------------
these By-laws is or becomes inconsistent with any provision of the Restated
Certificate of Incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these By-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VII
-----------
AMENDMENTS
----------
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is expressly authorized to make,
alter, amend, change, add to or repeal these By-laws by the affirmative vote of
a majority of the total number of Directors then in office. Any alteration or
repeal of these By-laws by the stockholders of the Corporation shall require the
affirmative vote of a majority of the outstanding shares of the Corporation
entitled to vote on such alteration or repeal; provided, however, that Section
-------- -------
11 of ARTICLE II and Sections 2, 3, 4 and 5 of ARTICLE III and this ARTICLE VII
---------- ----------- -----------
of these By-laws shall not be altered, amended or repealed and
-13-
<PAGE>
no provision inconsistent therewith shall be adopted without the affirmative
vote of the holders of at least 66% of the outstanding shares of the
Corporation entitled to vote on such alteration or repeal.
-14-
<PAGE>
Exhibit 4.1
-----------
________________________________________________________________________________
CREDIT AGREEMENT
among
WESLEY JESSEN VISIONCARE, INC.,
WESLEY-JESSEN CORPORATION,
VARIOUS LENDING INSTITUTIONS,
and
BANKERS TRUST COMPANY,
AS AGENT
________________________________
Dated as of February 19, 1997
________________________________
$100,000,000
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
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<TABLE>
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<S> <C>
SECTION 1. Amount and Terms of Credit....................................... 1
1.01 Commitments....................................................... 1
1.02 Minimum Borrowing Amounts, etc.................................... 3
1.03 Notice of Borrowing............................................... 4
1.04 Disbursement of Funds............................................. 5
1.05 Notes............................................................. 5
1.06 Conversions....................................................... 6
1.07 Pro Rata Borrowings............................................... 7
1.08 Interest.......................................................... 7
1.09 Interest Periods.................................................. 8
1.10 Increased Costs, Illegality, etc.................................. 9
1.11 Compensation...................................................... 11
1.12 Change of Lending Office.......................................... 12
1.13 Replacement of Banks.............................................. 12
SECTION 2. Letters of Credit................................................ 13
2.01 Letters of Credit................................................. 13
2.02 Letter of Credit Requests; Notices of Issuance.................... 15
2.03 Agreement to Repay Letter of Credit Payments...................... 15
2.04 Letter of Credit Participations................................... 16
2.05 Increased Costs................................................... 18
SECTION 3. Fees; Commitments................................................ 19
3.01 Fees.............................................................. 19
3.02 Voluntary Termination or Reduction of Total Unutilized Revolving
Loan Commitment................................................. 20
3.03 Mandatory Adjustments of Commitments, etc......................... 21
SECTION 4. Payments......................................................... 21
4.01 Voluntary Prepayments............................................. 21
4.02 Mandatory Prepayments............................................. 22
4.03 Method and Place of Payment....................................... 26
4.04 Net Payments...................................................... 26
SECTION 5. Conditions Precedent............................................. 28
5.01 Execution of Agreement; Notes..................................... 28
5.02 No Default; Representations and Warranties........................ 29
5.03 Officer's Certificate............................................. 29
5.04 Opinions of Counsel............................................... 29
5.05 Corporate Proceedings............................................. 29
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5.06 Adverse Change, etc............................................... 30
5.07 Litigation........................................................ 30
5.08 Approvals......................................................... 30
5.09 Consummation of the Transaction................................... 30
5.10 Existing Credit Agreement......................................... 30
5.11 Security Documents................................................ 31
5.12 Subsidiary Guaranty............................................... 32
5.13 Mortgages; Title Insurance; Surveys, etc.......................... 32
5.14 Plans; Collective Bargaining Agreements; Existing Indebtedness
Agreements; Shareholders' Agreements; Management
Agreements; Employment Agreements; Tax Allocation
Agreements; Material Contracts.................................. 33
5.15 Solvency Certificate; Evidence of Insurance....................... 35
5.16 Pro Forma Balance Sheets.......................................... 35
5.17 Projections....................................................... 35
5.18 Existing Indebtedness............................................. 35
5.19 Payment of Fees................................................... 36
5.20 Notice of Borrowing; Letter of Credit Request..................... 36
SECTION 6. Representations, Warranties and Agreements....................... 36
6.01 Corporate Status.................................................. 36
6.02 Corporate Power and Authority..................................... 37
6.03 No Violation...................................................... 37
6.04 Litigation........................................................ 37
6.05 Use of Proceeds; Margin Regulations............................... 38
6.06 Governmental Approvals............................................ 38
6.07 Investment Company Act............................................ 38
6.08 Public Utility Holding Company Act................................ 38
6.09 True and Complete Disclosure...................................... 38
6.10 Financial Condition; Financial Statements......................... 39
6.11 Security Interests................................................ 40
6.12 Subsidiary Name Changes........................................... 40
6.13 Transaction....................................................... 40
6.14 Special Purpose Corporation....................................... 41
6.15 Compliance with ERISA............................................. 41
6.16 Capitalization.................................................... 42
6.17 Subsidiaries...................................................... 42
6.18 Intellectual Property............................................. 43
6.19 Compliance with Statutes, etc..................................... 43
6.20 Environmental Matters............................................. 43
6.21 Properties........................................................ 44
6.22 Labor Relations................................................... 44
6.23 Tax Returns and Payments.......................................... 44
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6.24 Existing Indebtedness............................................. 45
SECTION 7. Affirmative Covenants............................................ 45
7.01 Information Covenants............................................. 46
7.02 Books, Records and Inspections.................................... 49
7.03 Insurance......................................................... 49
7.04 Payment of Taxes.................................................. 49
7.05 Corporate Franchises.............................................. 50
7.06 Compliance with Statutes, etc..................................... 50
7.07 Compliance with Environmental Laws................................ 50
7.08 ERISA............................................................. 51
7.09 Good Repair....................................................... 51
7.10 End of Fiscal Years; Fiscal Quarters.............................. 52
7.11 Additional Security; Further Assurances........................... 52
7.12 Register.......................................................... 53
7.13 Maintenance of Corporate Separateness............................. 53
7.14 Foreign Subsidiaries Security..................................... 54
7.15 Contributions; Payments........................................... 55
7.16 Interest Rate Protection.......................................... 55
SECTION 8. Negative Covenants............................................... 55
8.01 Changes in Business............................................... 55
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc............ 56
8.03 Liens............................................................. 61
8.04 Indebtedness...................................................... 63
8.05 Advances, Investments and Loans................................... 65
8.06 Dividends, etc.................................................... 69
8.07 Transactions with Affiliates...................................... 71
8.08 Capital Expenditures.............................................. 71
8.09 Minimum Consolidated EBITDA....................................... 72
8.10 Interest Coverage Ratio........................................... 73
8.11 Leverage Ratio.................................................... 73
8.12 Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation, Byy
Laws and Certain Other Agreements; Issuance of Capital Stock;
etc............................................................. 74
8.13 Limitation on Certain Restrictions on Subsidiaries................ 74
8.14 Limitation on the Creation of Subsidiaries........................ 75
SECTION 9. Events of Default................................................ 75
9.01 Payments.......................................................... 75
9.02 Representations, etc.............................................. 75
9.03 Covenants......................................................... 76
</TABLE>
(iii)
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9.04 Default Under Other Agreements.................................... 76
9.05 Bankruptcy, etc................................................... 76
9.06 ERISA............................................................. 77
9.07 Security Documents................................................ 77
9.08 Guaranties........................................................ 77
9.09 Judgments......................................................... 77
9.10 Ownership......................................................... 78
SECTION 10. Definitions..................................................... 78
SECTION 11. The Agent....................................................... 108
11.01 Appointment...................................................... 108
11.02 Delegation of Duties............................................. 108
11.03 Exculpatory Provisions........................................... 108
11.04 Reliance by Agent................................................ 109
11.05 Notice of Default................................................ 109
11.06 Non-Reliance on Agent and Other Banks............................ 109
11.07 Indemnification.................................................. 110
11.08 Agent in its Individual Capacity................................. 111
11.09 Holders.......................................................... 111
11.10 Resignation of the Agent; Successor Agent........................ 111
SECTION 12. Miscellaneous................................................... 112
12.01 Payment of Expenses, etc......................................... 112
12.02 Right of Setoff, Collateral Matters.............................. 112
12.03 Notices.......................................................... 113
12.04 Benefit of Agreement............................................. 113
12.05 No Waiver; Remedies Cumulative................................... 115
12.06 Payments Pro Rata................................................ 115
12.07 Calculations; Computations....................................... 116
12.08 Governing Law; Submission to Jurisdiction; Venue................. 116
12.09 Counterparts..................................................... 117
12.10 Effectiveness.................................................... 117
12.11 Headings Descriptive............................................. 118
12.12 Amendment or Waiver; etc......................................... 118
12.13 Survival119
12.14 Domicile of Loans................................................ 119
12.15 Confidentiality.................................................. 119
12.16 Waiver of Jury Trial............................................. 120
SECTION 13. Holdings Guaranty............................................... 120
13.01 The Guaranty..................................................... 120
13.02 Bankruptcy....................................................... 120
</TABLE>
(iv)
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13.03 Nature of Liability.............................................. 121
13.04 Independent Obligation........................................... 121
13.05 Authorization.................................................... 121
13.06 Reliance......................................................... 122
13.07 Subordination.................................................... 122
13.08 Waiver........................................................... 123
13.09 Nature of Liability.............................................. 124
</TABLE>
ANNEX I List of Banks and Commitments
ANNEX II Bank Addresses
ANNEX III Existing Letters of Credit
ANNEX IV Real Properties
ANNEX V Projections
ANNEX VI Subsidiaries
ANNEX VII Insurance
ANNEX VIII Existing Indebtedness
ANNEX IX Existing Liens
ANNEX X Subsidiary Name Changes
ANNEX XI Capitalization
ANNEX XII Investments
ANNEX XIII Intentionally Omitted
ANNEX XIV Excluded Intellectual Property
ANNEX XV Asset Sales
ANNEX XVI Acquisition Documents
ANNEX XVII Financial Statements
ANNEX XVIII Conflicts
EXHIBIT A-1 - Form of Notice of Borrowing
EXHIBIT A-2 - Form of Letter of Credit Request
EXHIBIT B-1 - Form of Term Note
EXHIBIT B-2 - Form of Revolving Note
EXHIBIT B-3 - Form of Swingline Note
EXHIBIT C - Form of Section 4.04(b)(ii) Certificate
EXHIBIT D - Form of Opinion of Kirkland & Ellis
EXHIBIT E - Form of Officers' Certificate
EXHIBIT F - Form of Pledge Agreement
EXHIBIT G - Form of Security Agreement
EXHIBIT H - Form of Subsidiary Guaranty
EXHIBIT I - Form of Assignment and Assumption Agreement
EXHIBIT J - Form of Intercompany Note
EXHIBIT K - Form of Solvency Certificate
EXHIBIT L - Form of Shareholder Subordinated Note
EXHIBIT M - Form of Borrower Subordinated Note
(v)
<PAGE>
CREDIT AGREEMENT, dated as of February 19, 1997, among WESLEY JESSEN
VISIONCARE, INC., a Delaware corporation ("Holdings"), WESLEY-JESSEN
CORPORATION, a Delaware corporation (the "Borrower"), the lenders from time to
time party hereto (each, a "Bank" and, collectively, the "Banks"), and BANKERS
TRUST COMPANY, as Agent (in such capacity, the "Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in Section 10 are
used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available the credit facilities provided
for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 Commitments. (A) Subject to and upon the terms and conditions
-----------
herein set forth, each Bank severally agrees to make a loan or loans to the
Borrower, which loans shall be drawn, to the extent such Bank has a commitment
under such Facility, under the Term Loan Facility and the Revolving Loan
Facility, as set forth below:
(a) Loans under the Term Loan Facility (each, a "Term Loan" and,
collectively, the "Term Loans") (i) shall be incurred by the Borrower
pursuant to a single drawing, which shall be on the Initial Borrowing Date,
(ii) shall be denominated in U.S. Dollars, (iii) except as hereinafter
provided, may, at the option of the Borrower, be incurred and maintained as
and/or converted into Base Rate Loans or Eurodollar Loans, provided, that
--------
(x) all Term Loans made by all Banks pursuant to the same Borrowing shall,
unless otherwise specifically provided herein, consist entirely of Term
Loans of the same Type and (y) unless the Agent has determined that the
Syndication Date has occurred (at which time this clause (y) shall no
longer be applicable), 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 (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 after the Initial
Borrowing Date and on or before the sixth Business Day following the
Initial Borrowing Date, 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 Borrowing may only be made on the last day of the Interest
Period of the second such Borrowing) and (iv) shall not exceed for any Bank
at the time of incurrence thereof on the Initial Borrowing Date that
aggregate principal
<PAGE>
amount which equals the Term Loan Commitment, if any, of such Bank at such
time. Once repaid, Term Loans may not be reborrowed.
(b) Each loan under the Revolving Loan Facility (each, a "Revolving
Loan" and, collectively, the "Revolving Loans") (i) may be incurred by the
Borrower at any time and from time to time on and after the Initial
Borrowing Date and prior to the Maturity Date, (ii) shall be denominated in
U.S. Dollars, (iii) except as hereinafter provided, may, at the option of
the Borrower, be incurred and maintained as and/or converted into Base Rate
Loans or Eurodollar Loans, provided, that (x) all Revolving Loans made as
--------
part of the same Borrowing shall, unless otherwise specifically provided
herein, consist of Revolving Loans of the same Type and (y) unless the
Agent has determined that the Syndication Date has occurred (at which time
this clause (y) shall no longer be applicable), 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 (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 after the Initial Borrowing Date and on or before the sixth
Business Day following the Initial Borrowing Date, 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 Borrowing may only be made on
the last day of the Interest Period of the second such Borrowing), (iv) may
be repaid and reborrowed in accordance with the provisions hereof and (v)
shall not exceed for any Bank at any time outstanding that aggregate
principal amount which, when combined with (I) the aggregate principal
amount of all other then outstanding Revolving Loans made by such Bank and
(II) such Bank's RL Percentage, if any, of the Swingline Loans then
outstanding and the Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, Revolving Loans or Swingline Loans) at such time, equals the
Revolving Loan Commitment, if any, of such Bank at such time.
(B) Subject to and upon the terms and conditions herein set forth,
BTCo in its individual capacity 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 to the Borrower (each, a "Swingline Loan" and, collectively, the
"Swingline Loans"), which Swingline Loans (i) shall be made and maintained as
Base Rate Loans, (ii) shall be denominated in U.S. Dollars, (iii) may be repaid
and reborrowed in accordance with the provisions hereof, (iv) shall not exceed
in aggregate principal amount at any time outstanding, when combined with the
aggregate principal amount of all Revolving Loans then outstanding and the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid
with the proceeds of, and simultaneously with the incurrence of, Revolving Loans
or Swingline Loans) at such time, an amount equal to the Total Revolving Loan
Commitment then in effect and (v) shall not exceed in aggregate principal amount
at any time outstanding the Maximum Swingline Amount. Notwithstanding the
foregoing, during each period of fourteen consecutive days
-2-
<PAGE>
occurring prior to the Swingline Expiry Date, there shall be at least one day on
which there are no outstanding Swingline Loans. BTCo shall not be obligated to
make any Swingline Loans at a time when a Bank Default exists unless BTCo has
entered into arrangements satisfactory to it and the Borrower to eliminate
BTCo's risk with respect to the Defaulting Bank's or Banks' participation in
such Swingline Loans, including by cash collateralizing such Defaulting Bank's
or Banks' RL Percentage of the outstanding Swingline Loans. BTCo will not make a
Swingline Loan after it has received written notice from the Borrower or the
Required Banks stating that a Default or an Event of Default exists until such
time as BTCo shall have received a written notice of (i) rescission of such
notice from the party or parties originally delivering the same or (ii) a waiver
of such Default or Event of Default from the Required Banks.
(C) On any Business Day, BTCo may, in its sole discretion, give
notice to the RL Banks that its outstanding Swingline Loans shall be funded with
a Borrowing of Revolving Loans (provided that each such notice shall be deemed
--------
to have been automatically given upon the occurrence of a Default or an Event
of Default under Section 9.05 or upon the exercise of any of the remedies
provided in the last paragraph of Section 9), 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 RL
Banks pro rata based on each RL Bank's RL Percentage, and the proceeds thereof
--- ----
shall be applied directly to repay BTCo for such outstanding Swingline Loans.
Each RL Bank hereby irrevocably agrees to make Base Rate 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 BTCo, notwithstanding (i) that the amount of the Mandatory Borrowing may not
comply with the Minimum Borrowing Amount otherwise required hereunder, (ii)
whether any conditions specified in Section 5 are then satisfied, (iii) whether
a Default or an Event of Default has occurred and is continuing, (iv) the date
of such Mandatory Borrowing and (v) any reduction in the Total Revolving Loan
Commitment after any such Swingline Loans were made. 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 in respect of the Borrower), each RL Bank
(other than BTCo) hereby agrees that it shall forthwith purchase from BTCo
(without recourse or warranty) such assignment of the outstanding Swingline
Loans as shall be necessary to cause the RL Banks to share in such Swingline
Loans ratably based upon their respective RL Percentages, provided that all
--------
interest payable on the Swingline Loans shall be for the account of BTCo until
the date the respective assignment is purchased and, to the extent attributable
to the purchased assignment, shall be payable to the RL Bank purchasing same
from and after such date of purchase.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
-------------------------------
of each Borrowing under a Facility shall not be less than the Minimum Borrowing
Amount for such Facility. More than one Borrowing may be incurred on any day;
provided, that at no time shall there be outstanding more than ten Borrowings of
- --------
Eurodollar Loans.
-3-
<PAGE>
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
-------------------
incur Loans under any Facility (excluding Borrowings of Swingline Loans and
Mandatory Borrowings), it shall give the 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) of each Borrowing of
Eurodollar Loans and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing of Base Rate
Loans to be made hereunder. Each such notice (each, a "Notice of Borrowing")
shall, except as provided in Section 1.10, be irrevocable, and, in the case of
each written notice and each confirmation of telephonic notice, shall be in the
form of Exhibit A-1, appropriately completed to specify (i) the Facility
pursuant to which such Borrowing is to be made, (ii) the aggregate principal
amount of the Loans to be made pursuant to such Borrowing, (iii) the date of
such Borrowing (which shall be a Business Day) and (iv) whether the respective
Borrowing shall consist of Base Rate Loans or, to the extent permitted
hereunder, Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall promptly give each Bank written
notice (or telephonic notice promptly confirmed in writing) of each proposed
Borrowing, of such Bank's proportionate share thereof, if any, and of the other
matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo not later than 12:00 Noon (New
York time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in
each case (x) the date of such Borrowing (which shall be a Business Day) and (y)
the aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(C), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of Mandatory Borrowings as set forth in such
Section 1.01(C).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent or BTCo (in the case of a Borrowing of Swingline Loans) or the respective
Letter of Credit Issuer (in the case of Letters of Credit), as the case may be,
may prior to receipt of written confirmation act without liability upon the
basis of such telephonic notice, believed by the Agent, BTCo, or such Letter of
Credit Issuer, as the case may be, in good faith to be from an Authorized
Officer of the Borrower. In each such case, the Borrower hereby waives the
right to dispute the Agent's, BTCo's or such Letter of Credit Issuer's record of
the terms of such telephonic notice.
1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New York
---------------------
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 2:00 P.M. (New York time) on the date specified
in Section 1.03(b)(i)
-4-
<PAGE>
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(C)), each Bank with a Commitment
under the respective Facility will make available its pro rata share, if any,
--- ----
of each Borrowing requested to be made on such date (or in the case of Swingline
Loans, BTCo shall make available the full amount thereof) in the manner provided
below. All amounts shall be made available to the Agent in U.S. Dollars and
immediately available funds at the Payment Office and the Agent promptly will
make available to the Borrower by depositing to its account at the Payment
Office the aggregate of the amounts so made available in the type of funds
received. Unless the 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 Agent
its portion of the Borrowing or Borrowings to be made on such date, the Agent
may assume that such Bank has made such amount available to the Agent on such
date of Borrowing, and the Agent, in reliance upon such assumption, may (in its
sole discretion and without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Bank and the Agent has made available same
to the Borrower, the Agent shall be entitled to recover such corresponding
amount from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding amount to
the Agent. The Agent shall also be entitled to recover from the 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
Agent to the Borrower to the date such corresponding amount is recovered by the
Agent, at a rate per annum equal to (x) if paid by such Bank, the overnight
Federal Funds rate or (y) if paid by the Borrower, the then applicable rate of
interest, calculated in accordance with Section 1.08, for the respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
-----
and interest on, all the Loans made to it by each Bank shall be evidenced (i) if
Term Loans, by a promissory note substantially 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
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 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 or its registered assigns
and be dated the Initial Borrowing Date, (iii) be in a stated principal amount
equal to the Term Loans made by such Bank, (iv) mature on the Maturity Date, (v)
bear interest as provided in the
-5-
<PAGE>
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
voluntary prepayment as provided in Section 4.01, and 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 or its registered
assigns 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, (iv) mature on the
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 voluntary prepayment as provided
in Section 4.01, and 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 BTCo shall (i) be executed by the
Borrower, (ii) be payable to the order of BTCo or its registered assigns and
be 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, (iv) mature on the Swingline Expiry Date, (v)
bear interest as provided in Section 1.08 in respect of the Base Rate Loans
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01, and 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 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
portion at least equal to the applicable Minimum Borrowing Amount of the
outstanding principal amount of the Loans (other than Swingline Loans which at
all times shall be maintained as Base Rate Loans) owing by the Borrower pursuant
to a single Facility into a Borrowing or Borrowings of another Type of Loan
under such Facility; provided, that (i) except as otherwise provided in Section
--------
1.10(b), no partial conversion of a Borrowing of Eurodollar Loans shall reduce
the outstanding principal amount of the Eurodollar Loans made pursuant to such
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
Base Rate Loans may only be converted into Eurodollar Loans if no payment
Default, or Event of Default, is in existence on the date of the conversion,
(iii) Borrowings of Eurodollar Loans resulting from this Section 1.06 shall be
limited in number as provided in Section 1.02 and (iv) unless the Agent has
determined that the Syndication Date has occurred (at which time this clause
(iv) shall no longer be applicable), prior to the 90th day after the Initial
Borrow
-6-
<PAGE>
ing 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 the proviso to each of
Section 1.01(A)(a)(iii) and 1.01(A)(b)(iii) and then only 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
such Sections. Each such conversion shall be effected by the Borrower by giving
the Agent at its Notice Office, prior to 11:00 A.M. (New York time), at least
three Business Days' (or one Business Day's in the case of a conversion into
Base Rate Loans) prior written notice (or telephonic notice promptly confirmed
in writing) (each, a "Notice of Conversion") specifying the Loans to be so
converted, the Type of Loans to be converted into and, if to be converted into a
Borrowing of Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of Loans (other than
-------------------
Swingline Loans) under this Agreement shall be made by the Banks pro rata on the
--- ----
basis of their Term Loan Commitments or Revolving Loan Commitments, as the case
may be. 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 to be made by it hereunder, regardless of
the failure of any other Bank to fulfill its commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
--------
Loan shall bear interest from the date of the Borrowing thereof 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 at all times be the
Applicable Base Rate Margin plus the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof 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(b), as applicable, at a rate per annum which shall at all
times be the Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan shall bear interest at a rate per annum equal
to the greater of (x) the rate which is 2% in excess of the rate then borne by
such Loans and (y) the rate which is 2% in excess of the rate otherwise
applicable to Base Rate Loans of such Facility from time to time. Interest
which accrues under this Section 1.08(c) shall be payable on demand.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each
-7-
<PAGE>
Base Rate Loan, quarterly in arrears on each Quarterly Payment Date, (ii) in
respect of each Eurodollar Loan, on (x) the date of any prepayment or repayment
thereof (on the amount prepaid or repaid), (y) the date of any conversion into a
Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10(b), as applicable (on the
amount converted) and (z) 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, at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing
of Eurodollar Loans for any Interest Period, shall promptly notify the Borrower
and the Banks thereof.
1.09 Interest Periods. At the time the Borrower gives a Notice of
----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 12:00 Noon (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of
the Interest Period applicable to such Borrowing, which Interest Period shall,
at the option of the Borrower, be a one, two, three or six-month period or, to
the extent approved by all Banks with a Commitment and/or outstanding Loans, as
the case may be, of the respective Facility, a twelve-month period.
Notwithstanding anything to the contrary contained above:
(i) all Eurodollar Loans comprising a Borrowing shall have the same
Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence on
the day on which the next preceding Interest Period expires;
(iii) if any Interest Period 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, that if any Interest Period would
--------
otherwise expire on a day which
-8-
<PAGE>
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 for a Borrowing under a Facility may be
elected if it would extend beyond the Maturity Date;
(vi) no Interest Period may be elected at any time when a payment
Default, or an Event of Default, is then in existence; and
(vii) no Interest Period with respect to any Borrowing of Term
Loans shall extend beyond any date upon which a mandatory prepayment of
such Term Loans is required to be made under Section 4.02(A)(b)(i) or (ii),
as the case may be, if, after giving effect to the selection of such
Interest Period, the aggregate principal amount of such Term Loans
maintained as Eurodollar Loans with Interest Periods ending after such date
of mandatory repayment would exceed the aggregate principal amount of
such Term Loans permitted to be outstanding after such mandatory
prepayment.
If upon the expiration of any Interest Period, the Borrower has failed to elect,
or is not permitted to elect by virtue of the application of clause (vi)
above, a new Interest Period to be applicable to the respective Borrowing of
Eurodollar Loans as provided above, the Borrower shall be deemed to have
elected to convert such Borrowing into a Borrowing of 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 (x) in
---------------------------------
the case of clause (i) below, the Agent or (y) in the case of clauses (ii) and
(iii) below, any Bank, shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period, 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 Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a
change in the rate of net income taxes or similar charges) because of (x)
any change since the date of this Agreement in any applicable law,
governmental rule, regulation, guideline, order 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, guide-
-9-
<PAGE>
line, order or request (such as, for example, but not limited to a change
in official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of
the Eurodollar Rate) and/or (y) other circumstances affecting such Bank,
the interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time since the date of this Agreement, that the making
or continuance of any Eurodollar Loan has become unlawful by compliance by
such Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law but with which
such Bank customarily complies even though the failure to comply therewith
would not be unlawful), or has become impracticable 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 Agent in the case of clause (i)
above) shall (x) on such date and (y) as promptly as practicable (and in any
event within five Business Days) after the date on which such event no longer
exists give notice (by telephone confirmed in writing) to the Borrower and
(except in the case of clause (i)) to the Agent of such determination (which
notice the 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 Agent notifies the Borrower and the
Banks that the circumstances giving rise to such notice by the Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower agrees to pay to such Bank, upon written demand therefor (accompanied
by the written notice referred to below), 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 calculation thereof,
submitted to the Borrower by such Bank shall, absent manifest error, be final
and conclusive and binding upon all 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
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the
Borrower shall) either (i) if the affected Eurodollar Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.10(a)(ii) or (iii)), or
(ii) if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' notice to the Agent, require the affected Bank to convert each
such Eurodollar Loan into a Base
-10-
<PAGE>
Rate Loan (which conversion, in the case of the circumstances described in
Section 1.10(a)(iii), shall occur no later than the last day of the Interest
Period then applicable to such Eurodollar Loan (or such earlier date as shall be
required by applicable law)); 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 any Bank shall have determined that after the date hereof, the
adoption or effectiveness of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by the National Association of Insurance Commissioners
("NAIC") or any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by such
Bank or any corporation controlling such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of the NAIC
or any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's or such other corporation's
capital or assets as a consequence of such Bank's Commitments or obligations
hereunder to a level below that which such Bank or such other corporation could
have achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Bank's or such other corporation's policies with respect
to capital adequacy), then from time to time, upon written demand by such Bank
(with a copy to the Agent), accompanied by the notice referred to in the last
sentence of this clause (c), the Borrower agrees to pay to such Bank such
additional amount or amounts as will compensate such Bank or such other
corporation for such reduction. Each Bank, upon determining in good faith 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 set forth
the basis of the calculation of such additional amounts, although the failure to
give any such notice shall not release or diminish the Borrower's obligations
to pay additional amounts pursuant to this Section 1.10(c) upon the subsequent
receipt of such notice.
1.11 Compensation. The Borrower agrees to compensate each Bank,
------------
promptly upon its written request (which request shall set forth the basis for
requesting such compensation and shall be made through the Agent), for all
reasonable 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 loss of anticipated profit with respect to any Loans) which such
Bank may sustain: (i) if for any reason (other than a default by such Bank or
the Agent) a Borrowing of 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 repayment made pursuant to Section 4.02 or as a
result of an acceleration of the Loans pursuant to Section 9) or conversion of
any Eurodollar Loans occurs on a date which is not the last day of an Interest
Period applicable thereto; (iii) if any prepayment of any 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
-11-
<PAGE>
Eurodollar Loans when required by the terms of this Agreement or (y) an election
made pursuant to Section 1.10(b). Calculation of all amounts payable to a Bank
under this Section 1.11 shall be made as though that Bank had actually funded
its relevant Eurodollar Loan through the purchase of a Eurodollar deposit
bearing interest at the Eurodollar Rate in an amount equal to the amount of that
Loan, having a maturity comparable to the relevant Interest Period and through
the transfer of such Eurodollar deposit from an offshore office of that Bank to
a domestic office of that Bank in the United States of America; provided,
--------
however, that each Bank may fund each of its Eurodollar Loans in any manner it
- -------
sees fit and the foregoing assumption shall be utilized only for the calculation
of amounts payable under this Section 1.11. It is further understood and agreed
that if any repayment of Eurodollar Loans pursuant to Section 4.01 or any
conversion of Eurodollar Loans pursuant to Section 1.06 in either case occurs on
a date which is not the last day of an Interest Period applicable thereto, such
repayment or conversion shall be accompanied by any amounts owing to any Bank
pursuant to this Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.05 or 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 designation is made on such
--------
terms that, in the sole judgment of such Bank, such Bank and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequences of the event giving rise to the operation of any 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 Section 1.10,
2.05 or 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting
--------------------
Bank, (y) upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with
respect to any Bank which results in such Bank charging to the Borrower
increased costs in excess of those being generally charged by the other Banks or
(z) in the case of a refusal by a Bank to consent to a proposed change,
waiver, discharge or termination with respect to this Agreement which has been
approved by the Required Banks as provided in Section 12.12(b), the Borrower
shall have the right, if no payment Default, or Event of Default, then exists,
to replace such Bank (the "Replaced Bank") with one or more other Eligible
Transferee or Transferees, none of whom shall constitute a Defaulting Bank at
the time of such replacement (collectively, the "Replacement Bank") reasonably
acceptable to the Agent, 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 12.04(b) (and with all
fees payable pursuant to said Section 12.04(b) to be paid by the Replacement
Bank) pursuant to which the Replacement Bank shall acquire all of the
Commitments and outstanding Loans of, and in each case participations in Letters
of Credit by, 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
-12-
<PAGE>
all accrued interest on, all outstanding Loans of the Replaced Bank, (B) an
amount equal to all Unpaid Drawings 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 pursuant to Section 3.01, (y) the
respective Letter of Credit Issuer an amount equal to such Replaced Bank's RL
Percentage of any Unpaid Drawing (which at such time remains an Unpaid Drawing)
with respect to a Letter of Credit issued by it to the extent such amount was
not theretofore funded by such Replaced Bank and (z) BTCo an amount equal to
such Replaced Bank's RL Percentage of any Mandatory Borrowing to the extent such
amount was not theretofore funded by such Replaced Bank, and (ii) all
obligations (including, without limitation, all such amounts, if any, due and
owing under Section 1.11) of the Borrower due and owing to the Replaced Bank
(other than those specifically described in clause (i) above in respect of which
the assignment purchase price has been, or is concurrently being, paid) 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 Agent pursuant to Section 7.12 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 the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions under this Agreement, which
shall survive as to such Replaced Bank and (y) Annex I hereto shall be deemed
modified to reflect the changed Commitments (and/or outstanding Term Loans, as
the case may be) resulting from the assignment from the Replaced Bank to the
Replacement Bank.
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, the Borrower may request a Letter of Credit Issuer
at any time and from time to time on or after the Initial Borrowing Date and
prior to the Maturity Date to issue, for the account of the Borrower and in
support of, (x) trade obligations of the Borrower or any of its Subsidiaries
that arise in the ordinary course of business and are in respect of general
corporate purposes of the Borrower or its Subsidiaries, as the case may be,
and/or (y) on a standby basis, L/C Supportable Indebtedness, and subject to and
upon the terms and conditions herein set forth each Letter of Credit Issuer
agrees to issue from time to time, irrevocable letters of credit in such form as
may be approved by such Letter of Credit Issuer (each such letter of credit, a
"Letter of Credit" and, collectively, the "Letters of Credit"). Annex III
contains a description of all letters of credit issued by BTCo pursuant to the
Existing Credit Agreement and which remain outstanding on the Initial Borrowing
Date. Each such letter of credit, including any extension thereof (each an
"Existing Letter of Credit") shall constitute a "Letter of Credit" for all
purposes of this Agreement and shall be deemed issued for purposes of Sections
2.04(a), 3.01(b) and 3.01(c) on the Initial Borrowing Date. Notwithstanding the
foregoing, no Letter of Credit Issuer shall be under any obligation to issue any
Letter of Credit if at the time of such issuance:
-13-
<PAGE>
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Letter of Credit Issuer shall prohibit, or
request that such Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Letter of Credit Issuer with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which such
Letter of Credit Issuer 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 Letter of Credit Issuer as of the
date hereof and which such Letter of Credit Issuer in good faith deems
material to it; or
(ii) such Letter of Credit Issuer shall have received notice from the
Required Banks prior to the issuance of such Letter of Credit of the type
described in clause (vi) of Section 2.01(b).
(b) 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 either (x) $17,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans and Swingline Loans then outstanding, the Total
Revolving Loan Commitment at such time; (ii) (x) each standby Letter of Credit
shall have an expiry date occurring not later than one year (or, in the case of
standby Letters of Credit issued in support of Foreign Subsidiary Working
Capital Indebtedness, three years, provided, that the aggregate Stated Amount of
--------
all such Letters of Credit shall not exceed $10,000,000) after such standby
Letter of Credit's date of issuance, provided, that any standby Letter of Credit
--------
may be automatically extendable for periods of up to one year so long as such
standby Letter of Credit provides that the respective Letter of Credit Issuer
retains an option, satisfactory to such Letter of Credit Issuer, to terminate
such standby Letter of Credit within a specified period of time prior to each
scheduled extension date and (y) each trade Letter of Credit shall have an
expiry date occurring not later than 180 days after such trade Letter of
Credit's date of issuance; (iii) (x) no standby Letter of Credit shall have an
expiry date occurring later than the Business Day next preceding the Maturity
Date and (y) no trade Letter of Credit shall have an expiry date occurring later
than 30 days prior to the Maturity Date; (iv) each Letter of Credit shall be
denominated in U.S. Dollars and payable on a sight basis; (v) the Stated Amount
of each Letter of Credit shall not be less than $100,000 or such lesser amount
as is acceptable to the Letter of Credit Issuer; and (vi) no Letter of Credit
Issuer will issue any Letter of Credit after it has received written notice from
the Borrower or the Required Banks stating that a Default or an Event of Default
exists until such time as such Letter of Credit Issuer shall have received a
written notice of (i) rescission of such notice from the
-14-
<PAGE>
party or parties originally delivering the same or (ii) a waiver of such Default
or Event of Default by the Required Banks.
(c) Notwithstanding the foregoing, in the event a Bank Default
exists, no Letter of Credit Issuer shall be required to issue any Letter of
Credit unless the respective Letter of Credit Issuer has entered into
arrangements satisfactory to it and the Borrower to eliminate such Letter of
Credit Issuer's risk with respect to the participation in Letters of Credit of
the Defaulting Bank or Banks, including by cash collateralizing such Defaulting
Bank's or Banks' RL Percentage of the Letter of Credit Outstandings.
2.02 Letter of Credit Requests; Notices of Issuance. (a) Whenever
----------------------------------------------
it desires that a Letter of Credit be issued, the Borrower shall give the Agent
and the respective Letter of Credit Issuer written notice (or telephonic
notice confirmed in writing) thereof prior to 12:00 Noon (New York time) at
least five Business Days (or such shorter period as may be acceptable to such
Letter of Credit Issuer) prior to the proposed date of issuance (which shall be
a Business Day) which written notice shall be in the form of Exhibit A-2 (each
such notice, a "Letter of Credit Request"). Each Letter of Credit Request shall
include any other documents as the respective Letter of Credit Issuer
customarily requires in connection therewith.
(b) Each Letter of Credit Issuer shall, promptly after the date of
each issuance of or amendment or modification to a Letter of Credit by it, give
the Agent, each RL Bank and the Borrower written notice of the issuance of or
amendment or modification to such Letter of Credit, accompanied by a copy to the
Agent of such Letter of Credit or Letters of Credit or such amendment or
modification.
2.03 Agreement to Repay Letter of Credit Payments. (a) The Borrower
--------------------------------------------
hereby agrees to reimburse the respective Letter of Credit Issuer, by making
payment to the Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit issued by it (each such amount so paid or disbursed until
reimbursed, an "Unpaid Drawing") no later than one Business Day following the
date of such payment or disbursement, with interest on the amount so paid or
disbursed by such Letter of Credit Issuer, to the extent not reimbursed prior
to 1:00 P.M. (New York time) on the date of such payment or disbursement, from
and including the date paid or disbursed to but not including the date such
Letter of Credit Issuer is reimbursed therefor at a rate per annum which shall
be the Applicable Base Rate Margin plus the Base Rate as in effect from time to
time for Revolving Loans (plus an additional 2% per annum if not reimbursed by
the third Business Day after the date of such payment or disbursement), such
interest also to be payable on demand. Each Letter of Credit Issuer shall
provide the Borrower prompt notice of any payment or disbursement made by it
under any Letter of Credit issued by it, although the failure of, or delay in,
giving any such notice shall not release or diminish the obligations of the
Borrower under this Section 2.03(a) or under any other Section of this
Agreement.
-15-
<PAGE>
(b) The Borrower's obligation under this Section 2.03 to reimburse
the respective Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower may have or have had against such Letter
of Credit Issuer, the Agent or any Bank, including, without limitation, any
defense based upon the failure of any drawing under a Letter of Credit issued by
it to substantially conform to the terms of the Letter of Credit or any non-
application or misapplication by the beneficiary of the proceeds of such
drawing; provided, however, that the Borrower shall not be obligated to
-------- -------
reimburse such Letter of Credit Issuer for any wrongful payment made by such
Letter of Credit Issuer under a Letter of Credit issued by it as a result of
acts or omissions constituting willful misconduct or gross negligence on the
part of such Letter of Credit Issuer.
2.04 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by a Letter of Credit Issuer of any Letter of Credit, such Letter of
Credit Issuer shall be deemed to have sold and transferred to each other RL
Bank, and each such RL Bank (each, a "Participant") shall be deemed irrevocably
and unconditionally to have purchased and received from such Letter of Credit
Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such Participant's RL Percentage, in such Letter of Credit,
each substitute Letter of Credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto (although
Letter of Credit Fees shall be payable directly to the Agent for the account of
the RL Banks as provided in Section 3.01(b) and the Participants shall have no
right to receive any portion of any Facing Fees) and any security therefor or
guaranty pertaining thereto. Upon any change in the Revolving Loan Commitments
of the RL Banks pursuant to Section 1.13 or 12.04(b) or otherwise, 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 RL Percentages of the assigning and
assignee Banks.
(b) In determining whether to pay under any Letter of Credit, no
Letter of Credit Issuer shall have any obligation relative to the Participants
other than to determine that any documents required to be delivered under such
Letter of Credit have been delivered and that they appear to comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by any Letter of Credit Issuer 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 Letter of Credit
Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment
under any Letter of Credit issued by it and the Borrower shall not have
reimbursed such amount in full to such Letter of Credit Issuer pursuant to
Section 2.03(a), such Letter of Credit Issuer shall promptly notify the Agent,
and the Agent shall promptly notify each Participant of such failure, and each
Participant shall promptly and unconditionally pay to the Agent for the account
of such Letter of Credit Issuer, the amount of such Participant's RL
-16-
<PAGE>
Percentage of such payment in U.S. Dollars and in same day funds; provided,
--------
however, that no Participant shall be obligated to pay to the Agent its RL
- -------
Percentage of such unreimbursed amount for any wrongful payment made by such
Letter of Credit Issuer under a Letter of Credit issued by it as a result of
acts or omissions constituting willful misconduct or gross negligence on the
part of such Letter of Credit Issuer. If the Agent so notifies any Participant
required to fund a payment under a Letter of Credit prior to 11:00 A.M. (New
York time) on any Business Day, such Participant shall make available to the
Agent for the account of the respective Letter of Credit Issuer such
Participant's 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 RL Percentage of the amount of such payment available to the Agent for the
account of the respective Letter of Credit Issuer, such Participant agrees to
pay to the Agent for the account of such Letter of Credit Issuer, forthwith on
demand such amount, together with interest thereon, for each day from such date
until the date such amount is paid to the Agent for the account of such Letter
of Credit Issuer at the overnight Federal Funds rate. The failure of any
Participant to make available to the Agent for the account of the respective
Letter of Credit Issuer its RL Percentage of any payment under any Letter of
Credit issued by it shall not relieve any other Participant of its obligation
hereunder to make available to the Agent for the account of such Letter of
Credit Issuer its RL Percentage of any payment under any such 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
Agent for the account of such Letter of Credit Issuer such other Participant's
RL Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Agent has received for the account of
such Letter of Credit Issuer any payments from the Participants pursuant to
clause (c) above, such Letter of Credit Issuer shall promptly pay to the Agent
and the Agent shall promptly pay to each Participant which has paid its RL
Percentage thereof, in U.S. Dollars and in same day funds, an amount equal to
such Participant's RL Percentage of the principal amount thereof and interest
thereon accruing after the purchase of the respective participations.
(e) The obligations of the Participants to make payments to the Agent
for the account of the respective Letter of Credit Issuer with respect to
Letters of Credit issued by it shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other 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, set-off, defense or other right
which the Borrower 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
-17-
<PAGE>
may be acting), the Agent, any Letter of Credit Issuer, any Bank, or other
Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between the Borrower or any of its
Subsidiaries and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
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
(v) the occurrence of any Default or Event of Default.
2.05 Increased Costs. If after the date hereof, the adoption or
---------------
effectiveness of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Letter of Credit
Issuer or any Participant with any request or directive (whether or not having
the force of law) by any such authority, central bank or comparable agency shall
either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by such
Letter of Credit Issuer or such Participant's participation therein, or (ii)
impose on any Letter of Credit Issuer or any Participant any other conditions
affecting this Agreement, any Letter of Credit or such Participant's
participation therein; and the result of any of the foregoing is to increase the
cost to such Letter of Credit Issuer or such Participant of issuing, maintaining
or participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Participant
hereunder, then, upon written demand to the Borrower by such Letter of Credit
Issuer or such Participant (a copy of which notice shall be sent by such Letter
of Credit Issuer or such Participant to the Agent), accompanied by the
certificate described in the last sentence of this Section 2.05, the Borrower
shall pay to such Letter of Credit Issuer or such Participant such additional
amount or amounts as will compensate such Letter of Credit Issuer or such
Participant for such increased cost or reduction. A certificate submitted to
the Borrower by such Letter of Credit Issuer or such Participant, as the case
may be (a copy of which certificate shall be sent by such Letter of Credit
Issuer or such Participant to the Agent), setting forth the basis for the
determination of such additional amount or amounts necessary to compensate such
Letter of Credit Issuer or such Participant as aforesaid shall be final and
conclusive and binding on the Borrower absent manifest error, although the
failure to deliver any such certificate shall not release or diminish the
Borrower's obligations to pay additional amounts pursuant to this Section 2.05
upon subsequent receipt of such certificate.
-18-
<PAGE>
SECTION 3. Fees; Commitments.
-----------------
3.01 Fees. (a) The Borrower shall pay to the Agent for distribution
----
to each Non-Defaulting Bank a commitment fee (the "Commitment Fee") for the
period from the Effective Date to but not including the date the Total
Commitment has been terminated, computed at a rate for each day equal to the
Applicable Commitment Fee Percentage on the daily Aggregate Unutilized
Commitment of such Non-Defaulting Bank. Accrued Commitment Fees shall be due
and payable in arrears on each Quarterly Payment Date and the date upon which
the Total Revolving Loan Commitment is terminated.
(b) The Borrower shall pay to the Agent for the account of the RL
Banks pro rata on the basis of their RL Percentages, a fee in respect of each
--- ----
Letter of Credit (the "Letter of Credit Fee") computed at a rate per annum equal
to the Applicable Eurodollar Margin then in effect with respect to Revolving
Loans on the daily 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 first day after the termination of the Total Revolving
Loan Commitment upon which no Letters of Credit remain outstanding.
(c) The Borrower shall pay to the Agent for the account of the
respective Letter of Credit Issuer a fee in respect of each Letter of Credit
issued by such Letter of Credit Issuer (the "Facing Fee") computed at the rate
of 1/4 of 1% per annum on the daily Stated Amount of such Letter of Credit;
provided, that in no event shall the annual Facing Fee with respect to each
- --------
Letter of Credit be less than $500; it being agreed that, on the date of
issuance of any Letter of Credit and on each anniversary thereof prior to the
termination of such Letter of Credit, if $500 will exceed the amount of Facing
Fees that will accrue with respect to such Letter of Credit for the immediately
succeeding 12-month period, the full $500 shall be payable on the date of
issuance of such Letter of Credit and on each such anniversary thereof prior to
the termination of such Letter of Credit. Except as provided in the immediately
preceding sentence, accrued Facing Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first day after the
termination of the Total Revolving Loan Commitment upon which no Letters of
Credit remain outstanding.
(d) The Borrower hereby agrees to pay directly to the respective
Letter of Credit Issuer upon each issuance of, payment under, and/or amendment
of, a Letter of Credit issued by it such amount as shall at the time of such
issuance, payment or amendment be the administrative charge which such Letter
of Credit Issuer is customarily charging for issuances of, payments under or
amendments of, letters of credit issued by it.
(e) The Borrower shall pay to the Agent, for its own account, such
fees as may be agreed to from time to time between the Borrower and the Agent,
when and as due.
(f) All computations of Fees shall be made in accordance with Section
12.07(b).
-19-
<PAGE>
3.02 Voluntary Termination or Reduction of Total Unutilized Revolving
----------------------------------------------------------------
Loan Commitment. (a) Upon at least two Business Days' prior written notice (or
- ---------------
telephonic notice promptly confirmed in writing) to the Agent at its Notice
Office (which notice the Agent shall promptly transmit to each of the Banks),
the Borrower shall have the right, without premium or penalty, to terminate or
partially reduce the Total Unutilized Revolving Loan Commitment; provided that
--------
(x) any such termination or partial reduction shall apply to proportionately and
permanently reduce the Revolving Loan Commitment of each of the RL Banks and (y)
any partial reduction pursuant to this Section 3.02(a) shall be in the amount of
at least $1,000,000.
(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
12.12(b), the Borrower shall have the right, upon five Business Days' prior
written notice to the Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks), to terminate the entire Revolving Loan
Commitment of such Bank, so long as all Loans, together with accrued and unpaid
interest, Fees and all other amounts, due and owing to such Bank are repaid
concurrently with the effectiveness of such termination pursuant to Section
4.01(b) and the Borrower shall pay to the Agent at such time an amount in cash
and/or Cash Equivalents equal to such Bank's RL Percentage of the outstanding
Letters of Credit (which cash and/or Cash Equivalents shall be held by the Agent
as security for the obligations of the Borrower hereunder in respect of the
outstanding Letters of Credit pursuant to a cash collateral agreement to be
entered into in form and substance reasonably satisfactory to the Agent, which
shall permit certain investments in Cash Equivalents reasonably satisfactory to
the Agent until the proceeds are applied to the secured obligations) (at which
time Annex I shall be deemed modified to reflect such changed amounts), and at
such time, 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, 2.05, 4.04, 12.01 and
12.06), which shall survive as to such repaid Bank.
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
------------------------------------------
Commitment shall terminate in its entirety on March 31, 1997 unless the Initial
Borrowing Date has occurred on or before such date.
(b) The Total Term Loan Commitment shall terminate on the Initial
Borrowing Date, after giving effect to the making of Term Loans on such date.
(c) The Total Revolving Loan Commitment (and the Revolving Loan
Commitment of each Bank) shall terminate on the earlier of (x) the date on which
a Change of Control Event occurs and (y) the Maturity Date.
(d) On each date upon which a mandatory repayment of Term Loans
pursuant to Section 4.02(A)(c), (d), (e), (f), (g) or (h) is required (and
exceeds in amount the aggregate principal amount of Term Loans then outstanding)
or would be required if an un-
-20-
<PAGE>
limited amount of Term Loans were then outstanding, the Total Revolving Loan
Commitment shall be permanently reduced by the amount, if any, by which the
amount required to be applied pursuant to said Sections (determined as if an
unlimited amount of Term Loans were actually outstanding) exceeds the aggregate
principal amount of Term Loans then outstanding. Notwithstanding anything to the
contrary contained in the immediately preceding sentence, in no event shall the
Total Revolving Loan Commitment be reduced to an amount less than $25,000,000
pursuant to or as a result of this Section 3.03(d).
(e) Each reduction or adjustment of the Total Term Loan Commitment or
the Total Revolving Loan Commitment pursuant to this Section 3.03 (or pursuant
to Section 4.02) shall apply proportionately to the Term Loan Commitment or the
Revolving Loan Commitment, as the case may be, of each Bank with such a
Commitment.
SECTION 4. Payments.
--------
4.01 Voluntary Prepayments. (a) The Borrower shall have the right
---------------------
to prepay the Loans made to it, in whole or in part, without premium or
penalty, except as otherwise provided in this Agreement, from time to time on
the following terms and conditions: (i) the Borrower shall give the Agent at its
Notice Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay such Loans, whether such Loans are Term Loans,
Revolving Loans or Swingline Loans, the amount of such prepayment and (in the
case of Eurodollar Loans) the specific Borrowing(s) pursuant to which made,
which notice shall be given by the Borrower prior to 11:00 A.M. (New York time)
(x) at least one Business Day prior to the date of such prepayment in the case
of Term Loans or Revolving Loans maintained as Base Rate Loans, (y) on the date
of such prepayment in the case of Swingline Loans and (z) at least three
Business Days prior to the date of such prepayment in the case of Eurodollar
Loans, which notice shall, except in the case of Swingline Loans, promptly be
transmitted by the Agent to each of the Banks; (ii) each prepayment shall be in
an aggregate principal amount of (A) at least $1,000,000 in the case of
Eurodollar Loans and (B) at least $500,000 in the case of Base Rate Loans (or
$100,000 in the case of Swingline Loans); provided, that no partial prepayment
--------
of Eurodollar Loans made pursuant to a Borrowing shall reduce the aggregate
principal amount of the Eurodollar Loans outstanding pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans; provided, that 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 Loans of a Defaulting Bank at any time when the aggregate amount of
Revolving Loans of any Non-Defaulting Bank exceeds such Non-Defaulting Bank's RL
Percentage of all Revolving Loans then outstanding; and (iv) each prepayment of
Term Loans pursuant to this Section 4.01 shall reduce the then remaining
Scheduled Repayments on a pro rata basis (based upon the then remaining
--- ----
principal amount of each such Scheduled Repayment).
-21-
<PAGE>
(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
12.12(b), the Borrower shall have the right, upon five Business Days' prior
written notice to the Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks) to repay all Loans of such Bank,
together with accrued and unpaid interest, Fees and all other amounts due and
owing to such Bank in accordance with said Section 12.12(b), so long as (A) in
the case of the repayment of Revolving Loans of any RL Bank pursuant to this
clause (b), the Revolving Loan Commitment of such RL Bank is terminated
concurrently with such repayment pursuant to Section 3.02(b) (at which time
Annex I shall be deemed modified to reflect the changed Revolving Loan
Commitments) and (B) in the case of the repayment of Loans of any Bank, the
consents required by Section 12.12(b) in connection with the repayment pursuant
to this clause (b) shall have been obtained.
4.02 Mandatory Prepayments.
---------------------
(A) Requirements:
------------
(a) If on any date the sum of (i) the aggregate outstanding
principal amount of Revolving Loans and Swingline Loans (after giving effect to
all other repayments thereof on such date) plus (ii) the Letter of Credit
Outstandings on such date exceeds the Total Revolving Loan Commitment as then in
effect, the Borrower shall repay on such date the principal of Swingline Loans,
and if no Swingline Loans are or remain outstanding, Revolving Loans, in an
aggregate amount equal to such excess. If, after giving effect to the prepayment
of all outstanding Swingline Loans and Revolving Loans, the aggregate amount of
Letter of Credit Outstandings exceeds the Total Revolving Loan Commitment as
then in effect, the Borrower agrees to pay to the Agent an amount in cash and/or
Cash Equivalents equal to such excess (up to the aggregate amount of Letter of
Credit Outstandings at such time) and the Agent shall hold such payment as
security for the obligations of the Borrower hereunder pursuant to a cash
collateral agreement to be entered into in form and substance reasonably
satisfactory to the Agent (which shall permit certain investments in Cash
Equivalents reasonably satisfactory to the Agent until the proceeds are applied
to the secured obligations).
(b) The Borrower shall be required to repay the principal amount of
Term Loans on each date set forth below in the amount set forth opposite such
date below (each such repayment, as the same may be reduced as provided in
Sections 4.01 and 4.02(B), a "Scheduled Repayment"):
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<PAGE>
<TABLE>
<CAPTION>
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
the last Business Day in March, 1998 $2,500,000
the last Business Day in June, 1998 $2,500,000
the last Business Day in September, 1998 $2,500,000
the last Business Day in December, 1998 $2,500,000
the last Business Day in March, 1999 $3,750,000
the last Business Day in June, 1999 $3,750,000
the last Business Day in September, 1999 $3,750,000
the last Business Day in December, 1999 $3,750,000
the last Business Day in March, 2000 $3,750,000
the last Business Day in June, 2000 $3,750,000
the last Business Day in September, 2000 $3,750,000
the last Business Day in December, 2000 $3,750,000
the last Business Day in March, 2001 $5,000,000
the last Business Day in June, 2001 $5,000,000
the last Business Day in September, 2001 $5,000,000
the last Business Day in December, 2001 $5,000,000
Maturity Date $5,000,000
</TABLE>
(c) On the third Business Day after the date of receipt thereof by
Holdings and/or any of its Subsidiaries of Proceeds from any Asset Sale (or, in
the case of an Asset Sale in which payments to Holdings or any of its
Subsidiaries originate from outside the United States, within five Business Days
after the date of receipt of such Proceeds), an amount equal to 100% of the Net
Proceeds from such Asset Sale shall be applied as a mandatory repayment of
principal of the Term Loans, provided that with respect to no more than (x)
--------
$5,000,000 in the aggregate of the Net Proceeds received in connection with any
West Coast Asset Sale and (y) $5,000,000 in the aggregate of the Net Proceeds
received in connection with all other Asset Sales in any fiscal year of the
Borrower, the Net Proceeds therefrom shall not be required to be so applied on
such date to the extent that no payment Default, or Event of Default, then
exists and the Borrower delivers a certificate to the Agent on or prior to such
date stating that such Net Proceeds shall be used to purchase assets used or to
be used in the businesses referred to in Section 8.01(a) (including, without
limitation, capital stock of a corporation engaged in any such business) within
one year following the date of receipt of such Proceeds from such Asset Sale
(which certificate shall set forth the estimates of the proceeds to be so
expended), provided, that (1) if all or any portion of such Net Proceeds not so
--------
applied to the repayment of Term Loans are not so used (or contractually
committed to be used) within such one year period, such remaining portion shall
be applied on the last day of such period as a mandatory
-23-
<PAGE>
repayment of principal of outstanding Term Loans as provided above in this
Section 4.02(A)(c) and (2) if all or any portion of such Net Proceeds are not
required to be applied within such one year period referred to in clause (1)
above because such amount is contractually committed to be used and subsequent
to such date such contract is terminated or expires without such portion being
so used, then such remaining portion shall be applied on the date of such
termination or expiration as a mandatory repayment of principal of outstanding
Term Loans as provided in this Section 4.02(A)(c).
(d) On the Business Day after the date of the receipt thereof by
Holdings and/or any of its Subsidiaries, an amount equal to 50% of the cash
proceeds (net of underwriting discounts, fees and commissions and other costs
and expenses associated therewith) of the sale or issuance of preferred or
common equity of (or cash capital contributions to) Holdings or any of its
Subsidiaries (other than (w) issuances of Holdings Common Stock and Permitted
Holdings PIK Securities by Holdings as consideration in connection with any
Permitted Acquisition, (x) issuances of Holdings Common Stock or warrants or
options to purchase Holdings Common Stock (including as a result of the exercise
of any options with regard thereto) to employees, directors and management of
Holdings and its Subsidiaries, (y) equity contributions to any Subsidiary of
Holdings made by Holdings or any other Subsidiary of Holdings and (z) issuances
of Holdings Common Stock pursuant to the IPO) shall be applied as a mandatory
repayment of principal of the Term Loans; provided that $10,000,000 of cash
--------
equity contributions in the aggregate from Bain Capital or any Related Party
shall not be required to be applied as provided above in this Section 4.02(A)(d)
so long as such equity contributions are substantially contemporaneously
contributed to the capital of the Borrower as an equity contribution or loaned
to the Borrower (such loan to be evidenced by the Borrower Subordinated Note)
(the cash contributions made pursuant to this proviso, "Permitted Equity
Proceeds").
(e) On the date of the receipt thereof by Holdings and/or any of its
Subsidiaries, an amount equal to 100% of the proceeds (net of underwriting
discounts, fees and commissions and other costs and expenses associated
therewith) of the incurrence of Indebtedness by Holdings and/or any of its
Subsidiaries (other than Indebtedness permitted to be incurred by Section 8.04
as in effect on the Effective Date) shall be applied as a mandatory repayment
of principal of the Term Loans.
(f) On each Excess Cash Payment Date, an amount equal to the
Applicable ECF Percentage of Excess Cash Flow of the Borrower and its
Subsidiaries for the most recent Excess Cash Flow Period ending prior to such
Excess Cash Payment Date shall be applied as a mandatory repayment of principal
of the Term Loans.
(g) Within 10 days following each date on which Holdings 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 costs, expenses and taxes
incurred in connection with such Recovery Event) shall be applied as a
mandatory repayment of principal of the Term Loans; provided that so long as no
--------
Default or Event of Default then exists and
-24-
<PAGE>
such proceeds do not exceed $25,000,000, 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 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 one year following the date of the receipt of
such proceeds (which certificate shall set forth the estimates of the proceeds
to be so expended), and provided further, that (i) if the amount of such
----------------
proceeds exceeds $25,000,000, then the entire amount and not just the portion in
excess of $25,000,000 shall be applied as a mandatory repayment of Term Loans as
provided above in this Section 4.02(A)(g), (ii) if all or any portion of such
proceeds not required to be applied to the repayment of Term Loans pursuant to
the preceding proviso are not so used (or contractually committed to be used)
within one year after the date of the receipt of such proceeds, such remaining
portion shall be applied on the last day of such period as a mandatory repayment
of principal of the Term Loans as provided in this Section 4.02(A)(g) and (iii)
if all or any portion of such proceeds are not required to be applied within the
one year period referred to in clause (ii) above because such amount is
contractually committed to be used and subsequent to such date such contract is
terminated or expires without such portion being so used, then such remaining
portion shall be applied on the date of such termination or expiration as a
mandatory repayment of principal of outstanding Term Loans as provided in this
Section 4.02(A)(g).
(h) On the date of the receipt thereof by Holdings and/or any of its
Subsidiaries of a Pension Plan Refund, an amount equal to 100% of such Pension
Plan Refund shall be applied as a mandatory repayment of principal of Term
Loans.
(B) Application:
-----------
(a) All repayments of Term Loans shall be applied to reduce the then
remaining Scheduled Repayments pro rata based on the then remaining Scheduled
--- ----
Repayments.
(b) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans which are to be repaid and
the specific Borrowing(s) under the affected Facility pursuant to which made;
provided, that (i) Euro dollar Loans made pursuant to a specific Facility may be
- --------
designated for repayment pursuant to this Section 4.02 only on the last day of
an Interest Period applicable thereto unless all Eurodollar Loans made pursuant
to such Facility with Interest Periods ending on such date of required
prepayment and all Base Rate Loans made pursuant to such Facility have been paid
in full; (ii) if any repayment of Eurodollar Loans made pursuant to a single
Borrowing shall reduce the outstanding Loans made pursuant to such Borrowing to
an amount less than the Minimum Borrowing Amount, such Borrowing shall be
immediately converted into Base Rate Loans; and (iii) each repayment of any
Loans made pursuant to a Borrowing shall be applied pro rata among such Loans;
--- ----
provided, that no repayment pursuant to Section 4.02(A)(a) shall be applied to
- --------
any Revolving Loans of a Defaulting Bank at any time when the aggregate amount
of the Revolving Loans of any Non-Defaulting Bank exceeds such
-25-
<PAGE>
Non-Defaulting Bank's RL Percentage of Revolving Loans then outstanding. In the
absence of a designation by the Borrower as described in the preceding sentence,
the 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.
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
pro vided herein, all payments under this Agreement shall be made to the Agent
for the ratable account of the Banks entitled thereto, not later than 12:00 Noon
(New York time) on the date when due and shall be made in immediately available
funds and in U.S. Dollars at the Payment Office, it being understood that
written, telex or facsimile transmission notice by the Borrower to the Agent to
make a payment from the funds in the Borrower's account at the Payment Office
shall constitute the making of such payment to the extent of such funds held in
such account. Any payments under this Agreement which are made later than 12:00
Noon (New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder 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 respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to 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
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net 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 pre ceding 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 net 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 taxes as such
Bank shall determine are payable by, or 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
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<PAGE>
on behalf of such Bank pursuant to this sentence. The Borrower will furnish to
the 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 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 12.04 (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) 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, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and can not deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit C (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. 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 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 Agent of its inability to deliver any such Form or
Certificate. Notwithstanding anything to the contrary contained in Section
4.04(a), but subject to Section 12.04(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 and (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
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<PAGE>
extent that such Forms do not establish a complete exemption from withholding of
such taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 4.04 and except as set forth in Section
12.04(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.
SECTION 5. Conditions Precedent. The obligation of each Bank to make
--------------------
each Loan to the Borrower hereunder, and the obligation of any Letter of Credit
Issuer to issue each Letter of Credit hereunder, is subject, at the time of each
such Credit Event (except as otherwise hereinafter indicated), to the
satisfaction of the following conditions:
5.01 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 Agent for the account of each Bank the appropriate
Term Note and Revolving Note, if any, and to BTCo the Swingline Note, in each
case executed by the Borrower and in the amount, maturity and as otherwise
provided herein.
5.02 No Default; Representations and Warranties. At the time of each
------------------------------------------
Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents in effect at such time shall
be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
5.03 Officer's Certificate. On the Initial Borrowing Date, the Agent
---------------------
shall have received a certificate dated such date signed by an appropriate
officer of the Borrower stating that all of the applicable conditions set forth
in Sections 5.02, 5.07, 5.08, 5.09 and 5.10 have been satisfied as of such date.
5.04 Opinions of Counsel. On the Initial Borrowing Date, the Agent
-------------------
shall have received opinions, addressed to the Agent and each of the Banks and
dated the Initial Borrowing Date, from (i) Kirkland & Ellis, counsel to the
Credit Parties, which opinion shall cover the matters contained in Exhibit D and
such other matters incident to the trans actions contemplated herein as the
Agent may reasonably request and (ii) local counsel and other counsel to the
Credit Parties and/or the Agent reasonably satisfactory to the Agent,
(including, without limitation, McConnell Valdes, as special Puerto Rico counsel
to Wesley-Jessen (Puerto Rico)), which opinions shall cover such matters
incident to the transactions
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<PAGE>
contemplated herein and in the other Credit Documents as the Agent may
reasonably request and shall be in form and substance reasonably satisfactory to
the Agent.
5.05 Corporate Proceedings. (a) On the Initial Borrowing Date, the
---------------------
Agent shall have received from each Credit Party a certificate, dated the
Initial Borrowing Date, signed by the chairman, a vice chairman, the president
or any vice-president of such Credit Party, and attested to by the secretary or
any assistant secretary of such Credit Party, in the form of Exhibit E with
appropriate insertions, together with copies of the Certificate of Incorporation
and By-Laws of such Credit Party and the resolutions of such Credit Party
referred to in such certificate and all of the foregoing (including each such
Certificate of Incorporation and By-Laws) shall be reasonably satisfactory to
the Agent.
(b) On the Initial Borrowing Date, 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
reasonably satisfactory in form and substance to the Agent, and the Agent shall
have received all information and copies of all certificates, documents and
papers, including good standing certificates, bring-down certificates and any
other records of corporate proceedings and governmental approvals, if any, which
the Agent reasonably may have requested in connection therewith, such documents
and papers, where appropriate, to be certified by proper corporate or
governmental authorities.
5.06 Adverse Change, etc. On or prior to the Initial Borrowing Date,
--------------------
nothing shall have occurred since September 28, 1996 (and neither the Banks nor
the Agent shall have become aware of any facts or conditions not previously
known) which the Required Banks or the Agent shall determine (a) has, or could
reasonably be expected to have, a material adverse effect on the rights or
remedies of the Banks or the Agent, or on the ability of any Credit Party to
perform its obligations to them hereunder or under any other Credit Document or
(b) has, or could reasonably be expected to have, a Material Adverse Effect.
5.07 Litigation. On the Initial Borrowing Date, there shall be no
----------
actions, suits or proceedings pending or threatened (a) with respect to this
Agreement or any other Document or the Transaction (b) which the Agent or the
Required Banks shall determine could reasonably be expected to (i) have a
Material Adverse Effect or (ii) have a material adverse effect on the
Transaction, the rights or remedies of the Banks or the Agent here under or
under any other Credit Document or on the ability of any Credit Party to perform
its respective obligations to the Banks or the Agent hereunder or under any
other Credit Document.
5.08 Approvals. On or prior to the Initial Borrowing Date, all
---------
necessary governmental (domestic and foreign) and third party approvals 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
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<PAGE>
restrains, prevents or imposes materially adverse conditions upon the
consummation of the Transaction, the transactions contemplated by the Documents
and 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 pend ing or notified prohibiting or
imposing materially adverse conditions upon the consummation of the Transaction
or the making of Loans.
5.09 Consummation of the Transaction. On the Initial Borrowing Date,
-------------------------------
(a) Holdings shall have received gross cash proceeds of at least $36,000,000 in
connection with the registered initial public offering (the "IPO") by Holdings
of Holdings Common Stock, (b) Holdings shall have used the net cash proceeds
received from the IPO to make a cash common equity contribution to the Borrower,
and (c) the Agent shall have received (i) true and correct copies of the IPO
Documents and (ii) evidence in form, scope and substance reasonably satisfactory
to it that the matters set forth in this Section 5.09 have been satisfied on
such date.
5.10 Existing Credit Agreement. (a) On the Initial Borrowing Date,
-------------------------
the commitments under the Existing Credit Agreement shall have been terminated,
all loans thereunder shall have been repaid in full, together with all accrued
and unpaid interest thereon, all accrued and unpaid fees thereon shall have been
paid in full, all letters of credit issued thereunder shall have been terminated
or incorporated hereunder as Existing Letters of Credit, and all other amounts
then owing pursuant to the Existing Credit Agreement shall have been repaid in
full, and the Agent shall have received evidence in form, scope and substance
reasonably satisfactory to it that the matters set forth in this Section 5.10(a)
have been satisfied at such time.
(b) On the Initial Borrowing Date, all security interests and Liens
created under the Existing Credit Agreement and the related security documents
on the capital stock of, and assets (including intercompany notes) owned by,
Holdings and its Subsidiaries shall have been terminated and released, and the
Agent shall have received all such releases as may have been requested by the
Agent, which releases shall be in form and substance reasonably satisfactory to
the Agent.
5.11 Security Documents. (a) On the Initial Borrowing Date,
------------------
Holdings, the Borrower and each Subsidiary Guarantor shall have duly authorized,
executed and delivered a Pledge Agreement in the form of Exhibit F, together
with such changes (or with such other documents) as may be requested by the
Collateral Agent in connection with local law (as modified, amended or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Pledge Agreement") and shall have delivered to the Collateral Agent, as
pledgee thereunder, all of the Pledged Securities referred to therein, endorsed
in blank in the case of promissory notes or accompanied by executed and undated
stock powers in the case of capital stock, and the Pledge Agreement and such
other documents shall be in full force and effect.
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<PAGE>
(b) On the Initial Borrowing Date, Holdings, the Borrower and each
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Security Agreement in the form of Exhibit G, together with such changes (or with
such other documents) as may be requested by the Collateral Agent in connection
with local law (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "Security Agreement") covering
all of the Security Agreement Collateral, together with:
(A) executed copies of Financing Statements (Form UCC-1 and/or UCC-
3) or appropriate local equivalent in appropriate form for filing under the
UCC or appropriate local equivalent of each jurisdiction as may be
necessary to perfect the security interests purported to be created by the
Security Agreement;
(B) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of a recent date listing all effective
financing statements that name the Acquired Business, Holdings, the
Borrower or any of their respective Domestic Subsidiaries or a division or
operating unit of any such Person, as debtor and that are filed in the
jurisdictions referred to in clause (A) above, together with copies of such
financing statements (none of which shall cover the Collateral except (x)
those with respect to which appropriate termination statements executed by
the secured lender thereunder have been delivered to the Agent and (y) to
the extent evidencing Permitted Liens);
(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 opinion of the Collateral Agent, desirable to perfect the security
interests intended to be created by the Security Agreement; and
(D) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect the security
interests purported to be created by the Security Agreement have been
taken;
and the Security Agreement shall be in full force and effect.
5.12 Subsidiary Guaranty. On the Initial Borrowing Date, each
-------------------
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Subsidiary Guaranty in the form of Exhibit H (as modified, amended or
supplemented from time to time in accordance with the terms hereof and thereof,
the "Subsidiary Guaranty"), and the Subsidiary Guaranty shall be in full force
and effect.
5.13 Mortgages; Title Insurance; Surveys, etc. (a) On the Initial
-----------------------------------------
Borrow ing Date, the Collateral Agent shall have received fully executed
counterparts of deeds of trust, mortgages and similar documents in each case in
form and substance satisfactory to the Collateral Agent (as amended, modified or
supplemented from time to time in accor-
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<PAGE>
dance with the terms hereof and thereof, each a "Mortgage" and, collectively,
the "Mort gages") covering all the Mortgaged Properties located in the United
States, and arrange ments reasonably satisfactory to the Collateral Agent shall
be in place to provide that counterparts of such Mortgages shall be recorded
within two Business Days after the Initial Borrowing Date in all places to the
extent necessary or desirable, in the judgment of the Collateral Agent,
effectively to create a valid and enforceable first priority Lien, subject only
to Permitted Encumbrances, on each such Mortgaged Property 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) On the Initial Borrowing Date, (i) the Collateral Agent shall
have received certified copies of fully executed counterparts of one or more
chattel mortgages covering the personal property of the Borrower and its
Subsidiaries located in Puerto Rico, and arrangements reasonably satisfactory to
the Collateral Agent shall be in place to provide that certified copies of
counterparts of such chattel mortgages shall be presented for recording on the
Initial Borrowing Date or within ten days thereof in all places to the extent
necessary or desirable, in the judgment of the Collateral Agent, effectively to
create a valid and enforceable first priority Lien, subject only to Permitted
Encumbrances, on each such personal property and (ii) the Borrower and/or its
relevant Subsidiary, as the case may be, shall have executed a pledge agreement
(the "Puerto Rico Pledge Agreement") and each of the Borrower and such
Subsidiary shall have delivered to the Collateral Agent the Mortgage Notes (as
defined in the Puerto Rico Pledge Agreement) in respect of such chattel
mortgages.
(c) On the Initial Borrowing Date, the Collateral Agent shall have
received mortgagee title insurance policies (or binding commitments to issue
such title insurance policies) issued by title insurers reasonably satisfactory
to the Collateral Agent (the "Mortgage Policies") in amounts reasonably
satisfactory to the Collateral Agent and assuring the Collateral Agent that
the Mortgages are valid and enforceable first priority mortgage Liens on the
respective Mortgaged Properties, free and clear of all defects and encumbrances
except Permitted Encumbrances. Such Mortgage Policies shall be in form
and substance reasonably satisfactory to the Collateral Agent and (i) shall
include an endorsement for future advances under this Agreement, the Notes and
the Mortgages and for any other matter that the Collateral Agent in its
discretion may reasonably request (to the extent available in the respective
jurisdiction of each Mortgaged Property), (ii) shall not include an exception
for mechanics' liens and (iii) shall provide for affirmative insurance and such
reinsurance (including direct access agreements) as the Collateral Agent in its
discretion may reasonably request.
(d) On the Initial Borrowing Date, the Collateral Agent shall have
received either (x) an officer's certificate of the Borrower or the respective
Subsidiary Guarantor with respect to each Mortgaged Property owned by such
Credit Party certifying that there has been no material alterations or
improvements to such Mortgaged Property since the Original Effective Date, which
certificate shall be in form and substance reasonably
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<PAGE>
satisfactory to the Collateral Agent or (y) in the case of any Mortgaged
Property for which the foregoing certification cannot be made, an updated survey
for such Mortgaged Property, in form and substance reasonably satisfactory to
the Collateral Agent, certified by a licensed professional surveyor reasonably
satisfactory to the Collateral Agent. The Collateral Agent shall also have
received such estoppel letters, landlord waiver letters, non-disturbance letters
and similar assurances as may have been requested by the Collateral Agent, which
letters shall be in form and substance reasonably satisfactory to the Collateral
Agent.
5.14 Plans; Collective Bargaining Agreements; Existing Indebtedness
--------------------------------------------------------------
Agreements; Shareholders' Agreements; Management Agreements; Employment
- -----------------------------------------------------------------------
Agreements; Tax Allocation Agreements; Material Contracts. On or prior to the
- ---------------------------------------------------------
Initial Borrowing Date, there shall have been delivered to the Banks copies,
certified as true and correct by an appropriate officer of Holdings or its
Subsidiaries, of:
(a) any Plans that are to be assumed by Holdings or any of its
Subsidiaries after giving effect to the consummation of the Transaction and
for each such Plan (i) that is a "single-employer plan" (as defined in
Section 4001(a)(15) of ERISA) the most recently completed actuarial
valuation prepared therefor by such Plan's regular enrolled actuary and the
Schedule B, "Actuarial Information" to the IRS Form 5500 (Annual Report)
most recently filed with the Internal Revenue Service and (ii) that is a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA), each of
the documents referred to in clause (i) either in the possession of
Holdings, any Subsidiary of Holdings or any ERISA Affiliate or reasonably
available thereto from the sponsor or trustees of such Plan;
(b) any collective bargaining agreements or any other similar
agreement or arrangement covering the employees of Holdings or any of its
Subsidiaries that are to remain in effect after giving effect to the
consummation of the Transaction (collectively, the "Collective Bargaining
Agreements");
(c) all agreements evidencing or relating to the Existing
Indebtedness that are to remain in effect after giving effect to the
consummation of the Transaction (collectively, the "Existing Indebtedness
Agreements");
(d) all agreements entered into by Holdings or any of its
Subsidiaries governing the terms and relative rights of its capital stock,
and any agreements entered into by shareholders relating to any such entity
with respect to their capital stock, in each case that are to remain in
effect after giving effect to the consummation of the Transaction
(collectively, the "Shareholders' Agreements");
(e) any material agreements (or the forms thereof) with members of,
or with respect to, the management of Holdings or any of its Subsidiaries
that are to remain in effect after giving effect to the consummation of the
Transaction (collectively, the "Management Agreements");
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<PAGE>
(f) any employment agreements entered into by Holdings or any of its
Subsidiaries (collectively, the "Employment Agreements");
(g) any tax sharing or tax allocation agreements entered into by
Holdings or any of its Subsidiaries (collectively, the "Tax Allocation
Agreements"); and
(h) all material contracts and licenses of Holdings or any of its
Subsidiaries that are to remain in effect after giving effect to the
consummation of the Transaction (collectively, the "Material Contracts");
all of which Plans, Collective Bargaining Agreements, Existing Indebtedness
Agreements, Shareholders' Agreements, Management Agreements, Employment
Agreements, Tax Allo cation Agreements and Material Contracts shall be in form
and substance reasonably satisfactory to the Agent and shall be in full force
and effect on the Initial Borrowing Date; provided, however, that only those
-------- -------
Plans, Collective Bargaining Agreements, Existing Indebtedness Agreements,
Shareholders' Agreements, Management Agreements, Employment Agreements, Tax
Allocation Agreements and Material Contracts which were not in existence on the
Original Effective Date or, if in existence on the Original Effective Date, have
been modified since such date, shall be required to be delivered pursuant to
this Section 5.14.
5.15 Solvency Certificate; Evidence of Insurance. On the Initial
--------------------------------------------
Borrowing Date, the Agent shall have received:
(a) a Certificate from the Chief Financial Officer of Holdings, in
the form of Exhibit K, addressed to the Agent and each of the Banks and
dated the Initial Borrowing Date and supporting the conclusions, that,
after giving effect to the Transaction and the incurrence of all financings
contemplated herein, the Borrower (on a stand-alone basis) and Holdings and
its Subsidiaries (on a consolidated basis) 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 respective businesses and will not have incurred debts beyond their
ability to pay such debts as they mature and become due; and
(b) evidence of insurance complying with the requirements of Section
7.03 for the business and properties of Holdings and its Subsidiaries
(including, without limitation, the Acquired Business), in scope, form and
substance reasonably satisfactory to the Agent and the Required Banks and
naming the Collateral Agent as an additional insured and/or loss payee, and
stating that such insurance shall not be cancelled or revised without 30
days prior written notice by the insurer to the Collateral Agent.
5.16 Pro Forma Balance Sheets. On or prior the Initial Borrowing
------------------------
Date, there shall have been delivered to the Agent, an unaudited pro forma
--- -----
consolidated balance
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<PAGE>
sheet of Holdings and its Subsidiaries after giving effect to the Transaction
and prepared in accordance with GAAP, together with a related funds flow
statement, which pro forma balance sheets and funds flow statement shall be
--- -----
reasonably satisfactory in form and substance to the Agent and the Required
Banks.
5.17 Projections. On or prior to the Initial Borrowing Date, the
-----------
Banks shall have received the financial projections (the "Projections") set
forth on Annex V hereto, which include the projected results of Holdings and its
Subsidiaries for the five fiscal years ended after the Initial Borrowing Date.
5.18 Existing Indebtedness. On the Initial Borrowing Date and after
---------------------
giving effect to the Transaction and the Loans incurred on the Initial Borrowing
Date, neither Holdings nor any of its Subsidiaries shall have any preferred
stock or Indebtedness outstanding except for Indebtedness permitted under
Section 8.04. On and as of the Initial Borrowing Date, all of the Existing
Indebtedness shall remain outstanding after giving effect to the Transaction and
the other transactions contemplated hereby without any default or events of
default existing thereunder or arising as a result of the Transaction and the
other transactions contemplated hereby (except to the extent amended or waived
by the parties thereto on terms and conditions reasonably satisfactory to the
Agent and the Required Banks). On and as of the Initial Borrowing Date, the
Agent and the Required Banks shall be satisfied with the amount of and the terms
and conditions of all Existing Indebtedness.
5.19 Payment of Fees. On the Initial Borrowing Date, all costs, fees
---------------
and expenses, and all other compensation contemplated by this Agreement, due to
the Agent or the Banks (including, without limitation, legal fees and expenses)
shall have been paid to the extent due.
5.20 Notice of Borrowing; Letter of Credit Request. The Agent shall
---------------------------------------------
have received a Notice of Borrowing satisfying the requirements of Section 1.03
with respect to each incurrence of Loans, and the Agent and the respective
Letter of Credit Issuer shall have received a Letter of Credit Request
satisfying the requirements of Section 2.02 with respect to each issuance of a
Letter of Credit.
The acceptance of the benefits of each Credit Event shall constitute a
repre sentation and warranty by each Credit Party to each of the Banks that all
of the applicable conditions specified above exist as of the date of such Credit
Event. All of the certificates, legal opinions and other documents and papers
referred to in this Section 5, unless other wise specified, shall be delivered
to the Agent at its 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 satisfactory in form and substance to the Agent and the Required Banks.
SECTION 6. Representations, Warranties and Agreements. In order to
------------------------------------------
induce the Banks to enter into this Agreement and to make the Loans and issue
and/or participate in the Letters of Credit provided for herein, each of
Holdings and the Borrower
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<PAGE>
makes the following representations, warranties and agreements with the Banks in
each case after giving effect to the Transaction, all of which shall survive the
execution and delivery of this Agreement, the making of the Loans and the
issuance of the Letters of Credit (with the occurrence of each Credit Event
being deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct in all material respects on and
as of the date of each such Credit Event, unless stated to relate to a specific
earlier date in which all representations and warranties shall be true and
correct in all material respects as of such earlier date):
6.01 Corporate Status. Holdings and each of its Subsidiaries (i) is
----------------
a duly organized and validly existing corporation in good standing (to the
extent such concept is relevant in such jurisdiction) under the laws of the
jurisdiction of its organization, (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 all jurisdictions where it is required
to be so qualified and where the failure to be so qualified would have a
Material Adverse Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party. Each Credit Party has duly
executed and delivered each Credit Document to which it is a party and each such
Credit Document constitutes the legal, valid and binding obligation of such
Credit Party enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
6.03 No Violation. Neither the execution, delivery or performance by
------------
any Credit Party of the Credit Documents to which it is a party nor compliance
by any Credit Party with the terms and provisions thereof, nor the consummation
of the transactions contemplated herein or therein, (i) will contravene any
applicable provision of any law, statute, rule or regulation, or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
except as set forth on Annex XVIII, will conflict or be in consistent with or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or (other than pursuant to the Security
Documents) result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of Holdings or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
loan agreement, credit agreement or any other material agreement or instrument
to which Holdings or any of its Subsidiaries is a party or by which it or any of
its property or assets are bound or to which it may be subject or (iii) will
violate any provision of the Certificate of Incorporation or By-Laws of Holdings
or any of its Subsidiaries.
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<PAGE>
6.04 Litigation. There are no actions, suits or proceedings pending
----------
or, to the knowledge of Holdings or any of its Subsidiaries, threatened, with
respect to Holdings or any of its Subsidiaries (i) that could reasonably be
expected to have a Material Adverse Effect or (ii) that could reasonably be
expected to have a material adverse effect on the rights or remedies of the
Banks or on the ability of any Credit Party to perform its respec tive
obligations to the Banks hereunder and under the other Credit Documents to which
it is, or will be, a party. Additionally, there does not exist any judgment,
order or injunction prohibiting or imposing material adverse conditions upon the
occurrence of any Credit Event.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
-----------------------------------
Term Loans shall be utilized to finance the Transaction and to pay fees and
expenses incurred in connection therewith.
(b) The proceeds of Revolving Loans and Swingline Loans shall be
utilized for the general corporate and working capital purposes of the Borrower
and its Subsidiaries; provided that proceeds of Revolving Loans and Swingline
--------
Loans in an aggregate amount not to exceed $12,500,000 may be used to finance
the Transaction.
(c) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System and no part of the proceeds of
any Loan will be used to purchase or carry any Margin Stock or to extend
credit for the purpose of purchasing or carrying any Margin Stock.
6.06 Governmental Approvals. No order, consent, approval, license,
----------------------
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic 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 Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
Credit Document.
6.07 Investment Company Act. Neither Holdings nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 Public Utility Holding Company Act. Neither Holdings nor any of
----------------------------------
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
com pany," 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.
6.09 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) heretofore or contemporaneously furnished by or on behalf of Holdings
or any of
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<PAGE>
its Subsidiaries in writing to the Agent or any Bank (including, without
limitation, all information contained in the Documents) for purposes of or in
connection with this Agreement or any transaction contemplated herein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of any such Persons in writing to the 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 material fact
necessary to make such information (taken as a whole) not misleading at such
time in light of the circumstances under which such information was provided, it
being understood that the representation and warranty made in this Section 6.09
with respect to the information contained in the IPO Documents is only being
made on and as of the Initial Borrowing Date.
6.10 Financial Condition; Financial Statements. (a) On and as of
-----------------------------------------
the Initial Borrowing Date, on a pro forma basis after giving effect to the
--- -----
Transaction and to all Indebtedness incurred, and to be incurred (including,
without limitation, the Loans), and Liens created, and to be created, by each
Credit Party in connection therewith, with respect to each of Holdings and its
Subsidiaries (on a consolidated basis) and of the Borrower (on a stand-alone
basis) (x) the sum of the assets, at a fair valuation, of each of Holdings and
its Subsidiaries (on a consolidated basis) and of the Borrower (on a stand-alone
basis) will exceed its debts, (y) it has not incurred nor intended to, nor
believes that it will, incur debts beyond its ability to pay such debts as such
debts mature and (z) it will have sufficient capital with which to conduct its
business. For purposes of this Section 6.10, "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, undisputed, 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.
(b) The consolidated balance sheet of Holdings and its Subsidiaries
at September 28, 1996 and the related statements of operations and cash flows
and changes in shareholders' equity of Holdings and its Subsidiaries for the
approximately nine-month period ended as of said date, copies of which have
heretofore been furnished to each Bank, present fairly in all material respects
the consolidated financial position of Borrower and its Subsidiaries at the date
of said statements and the results for the periods covered thereby. All such
financial statements have been prepared in accordance with GAAP con sistently
applied except to the extent provided in the notes to said financial statements.
(c) Except as set forth on Annex XVII, the statements of financial
condition of the Acquired Business at March 31, 1996 and the related statements
of income and cash flows of the Acquired Business for the fiscal years ended as
of said dates, copies of which have heretofore been furnished to each Bank,
present fairly in all material respects the consolidated financial position of
the Acquired Business at the dates of said statements and the results for the
periods covered thereby. All such financial statements have been
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<PAGE>
prepared in accordance with GAAP consistently applied except to the extent
provided in the notes to said financial statements.
(d) Since September 28, 1996, nothing has occurred that has had or
could reasonably be expected to have a Material Adverse Effect.
(e) Except as fully reflected in the financial statements described
in Section 6.10(b) and (c) and the Indebtedness incurred under this Agreement,
(i) there were as of the Initial Borrowing Date (and after giving effect to any
Loans made on such date), no liabilities or obligations (excluding current
obligations incurred in the ordinary course of business) with respect to
Holdings or any of its Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due), and (ii) neither
Holdings nor the Borrower know of any basis for the assertion against Holdings
or any of its Subsidiaries of any such liability or obligation which, in the
case of clause (i) or (ii) either individually or in the aggregate, is or would
be reasonably likely to have, a Material Adverse Effect.
(f) The Projections are based on good faith estimates and assumptions
made by the management of Holdings, and on the Initial Borrowing Date such
management believed that the Projections were reasonable and attainable, it
being recognized by the Banks, however, that projections as to future events are
not to be viewed as facts and that the actual results during the period or
periods covered by the Projections probably will differ from the projected
results and that the differences may be material. There is no fact known to
Holdings or any of its Subsidiaries which would have a Material Adverse Effect,
which has not been disclosed herein or in such other documents, certificates and
statements furnished to the Banks for use in connection with the transactions
contemplated hereby.
6.11 Security Interests. On and after the Initial Borrowing Date,
------------------
each of the Security Documents creates (or after the execution and delivery
thereof will create), as security for the Obligations, a valid and enforceable
perfected security interest in and Lien on all of the Collateral subject
thereto, superior to and prior to the rights of all third Persons and subject to
no other Liens (except that the Security Agreement Collateral, the Mortgaged
Properties and the collateral covered by the Additional Security Documents may
be subject to Permitted Liens relating thereto), in favor of the Collateral
Agent. No filings or recordings are required in order to perfect the security
interests created under any Security Document except for filings or recordings
required in connection with any such Security Document which shall have been
made on or prior to the Initial Borrowing Date as contemplated by Section
5.10(b) or on or prior to the execution and delivery thereof as contemplated by
Sections 7.11, 7.14 and 8.14.
6.12 Subsidiary Name Changes. The corporate names of each of the
-----------------------
Subsidiaries set forth on Annex X have been changed to the respective new
corporate names appearing opposite such Subsidiaries on Annex X.
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<PAGE>
6.13 Transaction. At the time of consummation thereof, the
-----------
Transaction shall have been consummated in all material respects in accordance
with the terms of the Documents and all applicable laws. At the time of
consummation thereof, 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 con
summate the Transaction have been obtained, given, filed or taken or waived and
are or will be in full force and effect (or effective judicial relief with
respect thereto has been obtained) except where the failure to obtain, give,
file, or take would not reasonably be expected to have a Material Adverse
Effect. 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 Transaction. Additionally, there
does not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the Transaction, or the performance by Holdings
and its Subsidiaries of their obligations under the Documents and all
applicable laws.
6.14 Special Purpose Corporation. Holdings has no significant assets
---------------------------
(other than the capital stock of the Borrower, immaterial assets used for the
performance of those activities permitted to be performed by Holdings pursuant
to Section 8.01(b) and Borrower Subordinated Notes) or liabilities (other than
under this Agreement and the other Credit Documents, those liabilities under the
other Documents, the Seller Subordinated Note, those liabilities permitted to be
incurred by Holdings pursuant to Section 8.01(b)) and, as and when issued from
time to time in accordance with the terms of this Agreement, Permitted Holdings
PIK Securities and Shareholder Subordinated Notes).
6.15 Compliance with ERISA. (a) 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; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for a waiver of the minimum funding standard or an extension of any
amortization period within the meaning of Section 412 of the Code; all contri
butions required to be made with respect to a Plan and a Foreign Pension Plan
have been timely made; neither Holdings nor any Subsidiary of Holdings nor any
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, 4975 or 4980 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 (other than liabilities of any ERISA Affiliate which could
not, by operation of law or otherwise, become a liability of Holdings or any of
its Subsidiaries); no proceedings have been instituted to terminate, or to
appoint a trustee to administer, any Plan; no condition exists which presents a
material risk to Holdings or any Subsidiary of Holdings or any ERISA Affiliate
of incurring a liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code; using actuarial assumptions and computation
methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the
aggregate
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<PAGE>
liabilities of Holdings and its Subsidiaries and its ERISA Affiliates to all
Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
in the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Plan ended prior to the date of the most recent
Credit Event, would not result in a Material Adverse Effect; no lien imposed
under the Code or ERISA on the assets of Holdings or any Subsidiary of Holdings
or any ERISA Affiliate exists or is likely to arise on account of any Plan; and
Holdings and its Subsidiaries do not maintain or contribute to any employee wel
fare 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.
(b) 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
Holdings nor any of its Subsidiaries has incurred any material obligation 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 which is funded, determined as of the end of the
most recently ended fiscal year of the Borrower 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, and for each Foreign Pension Plan which
is not funded, the obligations of such Foreign Pension Plan are properly
accrued.
6.16 Capitalization. (a) On the Initial Borrowing Date after giving
--------------
effect to the Transaction, the authorized capital stock of (i) Holdings shall
consist of 50,000,000 shares of common stock, $.01 par value per share (such
authorized shares of common stock, together with any subsequently authorized
shares of common stock of Holdings, the "Holdings Common Stock"), of which
16,776,028 shares shall be issued and outstanding. All such outstanding shares
have been duly and validly issued, are fully paid and nonassessable. Except as
set forth on Annex XI hereto, Holdings 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 pro viding for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock.
(b) On the Initial Borrowing Date and after giving effect to the
Transaction and the other transactions contemplated hereby, the authorized
capital stock of the Borrower shall consist of 1,000 shares of common stock,
$.01 par value per share, all of which shares shall be issued and outstanding
and owned by Holdings. All such outstanding shares have been duly and validly
issued and are fully paid and nonassessable. The Borrower 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,
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<PAGE>
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital
stock.
6.17 Subsidiaries. On and as of the Initial Borrowing Date and after
------------
giving effect to the consummation of the Transaction, Holdings has no
Subsidiaries other than the Borrower and its Subsidiaries, and the Borrower has
no Subsidiaries other than those Subsidiaries listed on Annex VI. Annex VI
correctly sets forth, as of the Initial Borrowing Date and after giving effect
to the Transaction, the percentage ownership (direct and indirect) of Holdings
in each class of capital stock of each of its Subsidiaries and also identifies
the direct owner thereof. All outstanding shares of capital stock of each
Subsidiary of the Borrower have been duly and validly issued, are fully paid and
nonassessable and have been issued free of preemptive rights. No Subsidiary of
the Borrower 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 or warrants 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.
6.18 Intellectual Property. Except as set forth on Annex XIV,
---------------------
Holdings and each of its Subsidiaries owns or holds a valid license to use all
the material patents, trademarks, permits, service marks, trade names,
technology, know-how and formulas or other rights with respect to the foregoing,
free from restrictions that are materially adverse to the use thereof, that are
used in the operation of the business of Holdings and each of its Subsidiaries
as presently conducted.
6.19 Compliance with Statutes, etc. Holdings 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 compliance with all applicable
Environmental Laws with respect to any Real Property or governing its business
and the requirements of any permits issued under such Environmental Laws with
respect to any such Real Property or the operations of Holdings or any of its
Subsidiaries), except such non-compliance as is not likely to, individually or
in the aggregate, have a Material Adverse Effect.
6.20 Environmental Matters. (a) Holdings and each of its
---------------------
Subsidiaries have complied with, and on the date of each Credit Event are in
compliance 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 Holdings and the Borrower, past or threatened Environmental
Claims against Holdings or any of its Subsidiaries or any Real Property owned
or operated by Holdings or any of its Subsidiaries that individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect. There
are no facts, circumstances, conditions or occurrences on any Real Property
owned or operated by Holdings or any of its Subsidiaries or, to the best
knowledge of
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<PAGE>
Holdings and the Borrower, on any property adjoining or in the vicinity of any
such Real Property that would reasonably be expected (i) to form the basis of an
Environmental Claim against Holdings or any of its Subsidiaries or any such Real
Property that individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect 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 Holdings 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, any Real Property owned or
operated by Holdings or any of its Subsidiaries where such generation, use,
treatment or storage has violated or would reasonably be expected to violate any
Environmental Law. Hazardous Materials have not at any time been Released on or
from any Real Property owned or operated by Holdings or any of its Subsidiaries.
There are not now any underground storage tanks located on any Real Property
owned or operated by Holdings or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 6.20,
the repre sentations made in this Section 6.20 shall only be untrue if the
aggregate effect of all restrictions, failures, noncompliance, Environmental
Claims, Releases and presence of underground storage tanks, in each case of the
types described above, would reasonably be expected to have a Material Adverse
Effect.
6.21 Properties. All Real Property owned or leased by Holdings or
----------
any of its Domestic Subsidiaries as of the Initial Borrowing Date and after
giving effect to the Transaction, and the nature of the interest therein, is
correctly set forth in Annex IV. Holdings and each of its Subsidiaries has good
and marketable title to, or a validly subsisting leasehold interest in, all
material properties owned or leased by it, including all Real Property reflected
in Annex IV or in the financial statements referred to in Section 6.10(b) or
(c), free and clear of all Liens, other than Permitted Liens.
6.22 Labor Relations. Neither Holdings nor any of its Subsidiaries
---------------
is engaged in any unfair labor practice that could reasonably be expected to
have a Material Adverse Effect. There is (i) no unfair labor practice complaint
pending against Holdings or any of its Subsidiaries or, to the best knowledge of
Holdings and the Borrower, threatened against any of them, before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against Holdings or
any of its Subsidiaries or, to the best knowledge of Holdings and the Borrower,
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings or any of its Subsidiaries or, to the best
knowledge of Holdings and the Borrower, threatened against Holdings or any of
its Subsidiaries and (iii) to the best knowledge of Holdings and the Borrower,
no union representation question existing with respect to the employees of
Holdings or any of its Subsidiaries and, to the best knowledge of Holdings and
the Borrower, no union organizing activities are taking place,
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<PAGE>
except (with respect to any matter specified in clause (i), (ii) or (iii) above,
either individually or in the aggregate) such as is not reasonably likely to
have a Material Adverse Effect.
6.23 Tax Returns and Payments. All Federal, material 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 the Acquired Business and of Holdings and/or any of its Subsidiaries have
been timely filed with the appropriate taxing authority. The Returns accurately
reflect all liability for taxes of the Acquired Business and of Holdings and its
Subsidiaries, as the case may be, for the periods covered thereby. Holdings and
each of its Subsidiaries have paid all taxes payable by them other than taxes
which are not yet due and payable, and other than those contested in good faith
by appropriate proceedings and for which adequate reserves have been established
in accordance with GAAP. Except as disclosed in the financial statements
referred to in Section 6.10(b) and (c), there is no material action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge of
Holdings and the Borrower, threatened by any authority regarding any taxes
relating to the Acquired Business or to Holdings or any of its Subsidiaries. As
of the Initial Borrowing Date, neither Holdings 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 Holdings or any of its Subsidiaries, or is aware of
any circumstances that would cause the taxable years or other taxable periods of
Holdings or any of its Subsidiaries not to be subject to the normally
applicable statute of limitations. Neither Holdings nor any of its Subsidiaries
have provided, with respect to themselves or property held by them, any consent
under Section 341 of the Code. Neither Holdings nor any of its Subsidiaries has
incurred, or will incur, any material tax liability in connection with the
Transaction and the other transactions contemplated hereby.
6.24 Existing Indebtedness. Annex VIII sets forth a true and
---------------------
complete list of all Indebtedness of Holdings and its Subsidiaries as of the
Initial Borrowing Date and which is to remain outstanding after giving effect to
the Transaction and the incurrence of Loans on such date (excluding the Loans
and the Letters of Credit, the "Existing Indebtedness"), in each case showing
the aggregate principal amount thereof and the name of the respective borrower
and any other entity which directly or indirectly guaranteed such debt.
SECTION 7. Affirmative Covenants. Holdings and the Borrower hereby
---------------------
covenant and agree that on the Effective Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Letters of
Credit (other than Letters of Credit, together with all Fees that have accrued
and will accrue thereon through the stated termination date of such Letters of
Credit, which have been supported in a manner satisfactory to the respective
Letter of Credit Issuer in its sole absolute discretion) or Notes are
outstanding and the Loans and Unpaid Drawings, together with interest, Fees and
all other Obligations (other than any indemnities described in Section 12.13
hereof which are not then due and payable) incurred hereunder, are paid in full:
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7.01 Information Covenants. Holdings will furnish to each Bank:
---------------------
(a) Monthly Reports. Within 30 days after the end of each fiscal
---------------
month of Holdings (or 45 days in the case of monthly reports for periods ending
on or prior to the last day of February, 1998), the consolidated balance sheet
of Holdings and its Subsidiaries as at the end of such fiscal month and the
related consolidated statements of income and retained earnings and of cash
flows for such fiscal month and for the elapsed portion of the fiscal year ended
with the last day of such fiscal month, setting forth comparable budgeted
figures for such fiscal month and, commencing with the first fiscal month to end
after the first anniversary of the Initial Borrowing Date, setting forth
comparative figures for the corresponding month in the prior fiscal year, all of
which shall be certified by the chief financial officer or other Authorized
Officer of the Borrower, subject to normal year-end audit adjustments and the
absence of footnote disclosure.
(b) Quarterly Financial Statements. Within 45 days after the close
------------------------------
of each quarterly accounting period in each fiscal year of Holdings commencing
with the quarterly accounting period ending on March 31, 1997, the consolidated
balance sheet of Holdings and its Subsidiaries as at the end of such quarterly
accounting period and the related consolidated statements of income and retained
earnings and 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, all of which shall be in reasonable detail and certified by
the chief financial officer or other Authorized Officer of Holdings that they
fairly present the financial condition of Holdings and its Subsidiaries as of
the dates indicated and the results of their operations and changes in their
cash flows for the periods indicated, subject to normal year-end audit
adjustments and the absence of footnote disclosure.
(c) Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year of Holdings (or 90 days after the Effective Date in the case
of the fiscal year ended December 31, 1996), the consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
such fiscal year, setting forth comparative budgeted figures for such fiscal
year and, commencing with the fiscal year ending December 31, 1998, setting
forth comparative consolidated figures for the preceding fiscal year, and, in
the case of all such financial statements (but excluding such comparative
budgeted figures), certified by Price Waterhouse LLP or such other independent
certified public accountants of recognized national standing as shall be
reasonably acceptable to the Agent, in each case to the effect that such
statements fairly present in all material respects the financial condition of
Holdings and its Subsidiaries as of the dates indicated and the results of their
operations and cash flows, together with a certificate of such accounting firm
stating that in the course of its regular audit of the business of Holdings and
its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, no Default or Event of Default which has occurred
and is continuing has come to their attention insofar as such Default or
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<PAGE>
Event of Default relates to financial and accounting matters or, if such a
Default or Event of Default has come to their attention a statement as to the
nature thereof.
(d) Budgets, etc. Not more than 60 days after the commencement of
-------------
each fiscal year of the Borrower, budgets of the Borrower and its Subsidiaries
in reasonable detail for each of the four fiscal quarters of such fiscal year as
customarily prepared by management for its internal use setting forth, with
appropriate discussion, the principal assumptions upon which such budgets are
based. Together with each delivery of financial statements pursuant to Section
7.01(b) and (c), a comparison of the current year to date financial results
(other than in respect of the balance sheets included therein) against the
budgets required to be submitted pursuant to this clause (d) shall be presented.
(e) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 7.01(b) and (c), a certificate of
the chief financial officer or other Authorized Officer of Holdings to the
effect that no Default or Event of Default exists or, if any Default or Event of
Default does exist, specifying the nature and extent thereof, which certificate
shall set forth the calculations required to establish whether Holdings and its
Subsidiaries were in compliance with the provisions of Sections 8.04(d),
8.04(h), 8.05 and 8.08 through and including 8.11, as at the end of such fiscal
quarter or year, as the case may be. In addition, at the time of the delivery
of the financial statements provided for in Section 7.01(c), a certificate of
the chief financial officer or other Authorized Officer of Holdings setting
forth the amount of, and calculations required to establish the amount of,
Excess Cash Flow for the Excess Cash Flow Period ending on the last day of the
respective fiscal year. Further, at the time that Holdings either contributes
or loans any cash to the Borrower the proceeds of which are not required to be
used to repay Term Loans as provided in clause (i) of the final proviso to
Section 4.02(A)(d), a certificate of the chief financial officer or other
Authorized Officer of Holdings setting forth the intended use by the Borrower or
its Subsidiaries of such proceeds.
(f) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within five Business Days (or 10 Business Days in the case of clause (y) below)
after any Senior Officer of Holdings or any of its Subsidiaries obtains
knowledge thereof, notice of (x) the occurrence of any event which constitutes a
Default or an Event of Default, which notice shall specify the nature thereof,
the period of existence thereof and what action Holdings or the Borrower
proposes to take with respect thereto and shall state that such notice is a
"notice of default" and (y) the commencement of, or threat of, or any
significant development in, any litigation or governmental proceeding pending
against Holdings or any of its Subsidiaries which is likely to have a Material
Adverse Effect, or a material adverse effect on the ability of any Credit Party
to perform its respective obligations hereunder or under any other Credit
Document.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of
-----------------
each report or "management letter" submitted to Holdings or any of its
Subsidiaries by its
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independent accountants in connection with any annual, interim or special audit
made by them of the books of Holdings or any of its Subsidiaries.
(h) Environmental Matters. Promptly after obtaining knowledge of any
---------------------
of the following, written notice of:
(i) any pending or threatened material Environmental Claim against
Holdings or any of its Subsidiaries or any Real Property owned or operated
by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on any Real Property owned or
operated by Holdings or any of its Subsidiaries that (x) results in
material noncompliance by Holdings or any of its Subsidiaries with any
applicable Environmental Law or (y) could reasonably be anticipated to form
the basis of a material Environmental Claim against Holdings or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned or
operated by Holdings or any of its Subsidiaries that could reasonably be
anticipated to cause such Real Property to be subject to any material
restrictions on the ownership, occupancy, use or transferability by
Holdings or its Subsidiary, as the case may be, of its interest in such
Real Property under any Environmental Law; and
(iv) the taking of any material removal or remedial action in
response to the actual or alleged presence of any Hazardous Material on any
Real Property owned or operated by Holdings or any of its Subsidiaries
where Holdings or any of its Subsidiaries is or is reasonably expected to
be responsible for the cost of such action or where the taking of such
action could reasonably be expected to materially interfere with the
operations of Holdings or any of its Subsidiaries at such Real Property.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action and
Holdings' or the Borrower's response thereto. In addition, Holdings agrees to
provide the Banks with copies of all material written communications by Holdings
or any of its Subsidiaries with any Person, government or governmental agency
relating to any of the matters set forth in clauses (i)-(iv) above, and such
detailed reports relating to any of the matters set forth in clauses (i)-(iv)
above, as may reasonably be requested by the Agent or the Required Banks.
(i) Other Information. Promptly upon transmission thereof, copies of
-----------------
any filings and registrations with, and reports to, the SEC by Holdings or any
of its Subsidiaries and copies of all financial statements, proxy statements,
notices and reports as Holdings or any of its Subsidiaries shall generally send
to analysts or the holders of their capital stock in their capacity as holders
(in each case to the extent not theretofore delivered to the Banks pursuant to
this Agreement) and, with reasonable promptness, such other information or
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documents (financial or otherwise) as the Agent on its own behalf or on behalf
of any Bank may reasonably request from time to time.
7.02 Books, Records and Inspections. Holdings will, and will cause
------------------------------
each of its Subsidiaries to, permit, upon notice to the chief financial officer
or other Authorized Officer of Holdings or the Borrower, (x) officers and
designated representatives of the Agent or any Bank to visit and inspect any of
the properties or assets of Holdings and any of its Subsidiaries in whomsoever's
possession, and to examine the books of account of Holdings and any of its
Subsidiaries and discuss the affairs, finances and accounts of Holdings and of
any of its Subsidiaries with, and be advised as to the same by, their officers
and independent accountants, all at such reasonable times and intervals and to
such reasonable extent as the Agent or any Bank may desire and (y) the Agent,
at the request of the Required Banks, to conduct, at Holdings' and the
Borrower's expense, an audit of the accounts receivable and/or inventories of
the Borrower and its Subsidiaries at such times (but no more frequently than
once a year unless an Event of Default has occurred and is continuing) as the
Required Banks shall reasonably require.
7.03 Insurance. Holdings will, and will cause each of its
---------
Subsidiaries to, at all times from and after the Effective Date maintain in full
force and effect insurance with reputable and solvent insurance carriers in such
amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice. At
any time that insurance at the levels described in Annex VII is not being
maintained by Holdings and its Subsidiaries, Holdings will notify the Banks in
writing thereof and, if thereafter notified by the Agent to do so, Holdings will
obtain insurance at such levels to the extent then generally available (but in
any event within the deductible or self-insured retention limitations set forth
in the preceding sentence) or otherwise as are acceptable to the Agent.
Holdings will furnish to the Agent on the Initial Borrowing Date and on each
date as the Agent or the Required Banks may reasonably request, a summary of the
insurance carried in respect of Holdings and its Subsidiaries and the assets of
Holdings and its Subsidiaries together with certificates of insurance and other
evidence of such insurance, if any, naming the Collateral Agent as an additional
insured and/or loss payee.
7.04 Payment of Taxes. Holdings will pay and discharge, and will
----------------
cause each of its Subsidiaries to 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, prior to the date on which material
penalties attach thereto, and all lawful claims for sums that have become due
and payable which, if unpaid, might become a Lien not otherwise permitted under
Section 8.03(a) or charge upon any properties of Holdings or any of its
Subsidiaries; provided, that neither Holdings 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 in accordance with GAAP.
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<PAGE>
7.05 Corporate Franchises. Holdings will do, and will cause each of
--------------------
its Subsidiaries to do, or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises and authority to do business; provided, however, that any transaction
-------- -------
permitted by Section 8.02 will not constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. Holdings will, and will cause
------------------------------
each of its Subsidiaries to, 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 conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls) other than
such non-compliance as would not have a Material Adverse Effect or a material
adverse effect on the ability of any Credit Party to perform its obligations
under any Credit Document to which it is a party.
7.07 Compliance with Environmental Laws. (a) Holdings will pay, and
----------------------------------
will cause each of its Subsidiaries to pay, all costs and expenses incurred by
it in keeping in compliance with all Environmental Laws, and will keep or cause
to be kept all Real Properties owned or operated by Holdings or any of its
Subsidiaries free and clear of any Liens imposed pursuant to such Environmental
Laws; and (b) neither Holdings 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 owned
or operated by Holdings or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property, unless
the failure to comply with the requirements specified in clause (a) or (b)
above, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. If Holdings or any of its Subsidiaries, or
any tenant or occupant of any Real Property, cause or permit any intentional or
unintentional act or omission resulting in the presence or Release of any
Hazardous Material (except in compliance with applicable Environmental Laws),
each of Holdings and the Borrower agrees to undertake, and/or to cause any of
its Subsidiaries, tenants or occupants to undertake, at their sole expense, any
clean up, removal, remedial or other action required pursuant to Environmental
Laws to remove and clean up any Hazardous Materials from any Real Property
except where the failure to do so would not be reasonably expected to have a
Material Adverse Effect; provided, that neither Holdings nor any of its
--------
Subsidiaries shall be required to comply with any such order or directive which
is being contested in good faith and by proper proceedings so long as it has
maintained adequate reserves with respect to such compliance to the extent
required in accordance with GAAP.
7.08 ERISA. As soon as possible and, in any event, within 10 days
-----
after Holdings or any Subsidiary of Holdings or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following events to the extent
that one or more of such events is reasonably likely to result in a material
liability to Holdings or any Subsidiary of Holdings, Holdings will deliver to
each of the Banks a certificate of the chief
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financial officer or other Authorized Officer of Holdings setting forth details
as to such occurrence and the action, if any, which Holdings, such Subsidiary or
such ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by Holdings, such
Subsidiary, such 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 may 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 to a Plan or Foreign Pension
Plan has not been timely made; that a Plan has been or may be terminated,
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 may 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
Holdings, any Subsidiary of Holdings or any ERISA Affiliate will or may incur
any liability (including any 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, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of
ERISA; or that Holdings or any Subsidiary of Holdings has or may incur any
liability under any employee welfare benefit plan (within the meaning of 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 any employee
pension benefit plan (as defined in Section 3(2) of ERISA). At the request of
any Bank, Holdings will deliver to such Bank a complete copy of the annual
report (Form 5500) of each Plan required to be filed with the Internal Revenue
Service. In addition, at the request of any Bank, copies of annual reports and
any notices received by Holdings or any Subsidiary of Holdings or any ERISA
Affiliate with respect to any Plan or Foreign Pension Plan shall be delivered to
such Bank no later than 10 days after the date of any such request.
7.09 Good Repair. Holdings will, and will cause each of its
-----------
Subsidiaries to, ensure that its material properties and equipment used in its
business are kept in good repair, working order and condition, normal wear and
tear and damage by casualty excepted, and, subject to Section 8.08, that from
time to time there are made in such properties and equipment all needful and
proper repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.
7.10 End of Fiscal Years; Fiscal Quarters. Holdings will, for
------------------------------------
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year, provided that
the fiscal year of Wesley-Jessen (Puerto Rico) shall end on November 30 of each
year and (ii) each of its, and each of its Subsidiaries', fiscal quarters to end
on dates which are consistent with a fiscal year ending on December
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<PAGE>
31, provided that the fiscal quarters of Wesley-Jessen (Puerto Rico) shall end
on dates which are consistent with a fiscal year ending on November 30.
7.11 Additional Security; Further Assurances. (a) Holdings will,
---------------------------------------
and will cause each of its Domestic Subsidiaries (and to the extent that Section
7.14 is operative, each of its Foreign Subsidiaries) to, grant to the Collateral
Agent security interests and mortgages in such assets and properties of Holdings
and its Subsidiaries as are not covered by the Security Documents, and as may be
requested from time to time by the Agent or the Required Banks (collectively,
the "Additional Security Documents"). All such security interests and mortgages
shall be granted pursuant to documentation reasonably satisfactory in form and
substance to the Agent and shall constitute valid and enforceable perfected
security interests and mortgages superior to and prior to the rights of all
third Persons and subject to no other Liens except for Permitted Liens. The
Additional Security Documents 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 the Additional Security Documents and
all taxes, fees and other charges payable in connection therewith shall have
been paid in full.
(b) Holdings will, and will cause each of its Subsidiaries to, at the
expense of Holdings and the Borrower, 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, real
property surveys, 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, Holdings
shall cause to be delivered to the Collateral Agent such opinions of counsel,
title insurance and other related documents as may be reasonably requested by
the Agent to assure themselves that this Section 7.11 has been complied with.
(c) If the Agent or the Required Banks determine that they are
required by law or regulation to have appraisals prepared in respect of the Real
Property of Holdings and its Subsidiaries constituting Collateral, the Borrower
shall provide to the Agent appraisals which satisfy the applicable requirements
of the Real Estate Appraisal Reform Amendments of the Financial Institution
Reform, Recovery and Enforcement Act of 1989 and which shall be in form and
substance satisfactory to the Agent.
(d) Holdings and the Borrower agree that each action required above
by this Section 7.11 shall be completed as soon as possible, but in no event
later than 90 days after such action is either requested to be taken by the
Agent or the Required Banks or required to be taken by Holdings and its
Subsidiaries pursuant to the terms of this Section 7.11; provided that in no
--------
event shall Holdings or the Borrower be required to take any action, other than
using its reasonable efforts, to obtain consents from third parties with respect
to its compliance with this Section 7.11.
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<PAGE>
7.12 Register. The Borrower hereby designates the Agent to serve as
--------
the Borrower's agent, solely for purposes of this Section 7.12, to maintain a
register (the "Register") on which it will record the Commitments 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
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
Agent on the Register only upon the acceptance by the Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
12.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the 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 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 Agent in performing its duties under this Section 7.12.
7.13 Maintenance of Corporate Separateness. Holdings will, and will
-------------------------------------
cause each of its Subsidiaries to, satisfy customary corporate formalities,
including the maintenance of corporate records. Neither the Borrower nor any
Subsidiary of the Borrower shall make any payment to a creditor of Holdings
(other than a Guaranteed Creditor pursuant to any Credit Document or an
Interest Rate Protection Agreement or Other Hedging Agreement entered into with
any such Guaranteed Creditor) in respect of any liability of Holdings, and no
bank account of Holdings shall be commingled with any bank account of the
Borrower or any Subsidiary of the Borrower. Any financial statements
distributed to any creditors of Holdings shall, to the extent permitted by GAAP,
clearly establish the corporate separateness of Holdings from the Borrower and
each of the Borrower's Subsidiaries. Finally, neither the Borrower nor any of
its Subsidiaries shall take any action, or conduct its affairs in a manner,
which is likely to result in the corporate existence of Holdings on the one hand
and of the Borrower or any Subsidiary of the Borrower on the other hand being
ignored, or in the assets and liabilities of the Borrower or any Subsidiary of
the Borrower being substantively consolidated with those of Holdings in a
bankruptcy, reorganization or other insolvency proceeding.
7.14 Foreign Subsidiaries Security. If following a change in the
-----------------------------
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for
the Borrower reasonably acceptable
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<PAGE>
to the Agent and the Required Banks does not within 30 days after a request from
the Agent or the Required Banks deliver evidence, in form and substance mutually
satisfactory to the Agent and the Borrower, with respect to any Foreign
Subsidiary which has not already had all of its stock pledged pursuant to the
Pledge Agreement that (i) a pledge (x) of 66-2/3% or more of the total combined
voting power of all classes of capital stock of such Foreign Subsidiary entitled
to vote, and (y) of any promissory note issued by such Foreign Subsidiary to
Holdings or any of its Domestic Subsidiaries, (ii) the entering into by such
Foreign Subsidiary of a security agreement in substantially the form of the
Security Agreement and (iii) the entering into by such Foreign Subsidiary of a
guaranty in substantially the form of the Subsidiary Guaranty, in any such case
could reasonably be expected to cause (I) the undistributed earnings of such
Foreign Subsidiary as determined for Federal income tax purposes to be treated
as a deemed dividend to such Foreign Subsidiary's United States parent for
Federal income tax purposes or (II) other material adverse federal income tax
consequences to the Credit Parties, then in the case of a failure to deliver the
evidence described in clause (i) above, that portion of such Foreign
Subsidiary's outstanding capital stock or any promissory notes so issued by such
Foreign Subsidiary, in each case not theretofore pledged pursuant to the Pledge
Agreement shall be pledged to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement
in substantially similar form, if needed), and in the case of a failure to
deliver the evidence described in clause (ii) above, such Foreign Subsidiary
shall execute and deliver the Security Agreement (or another security agreement
in substantially similar form, if needed), granting the Secured Creditors a
security interest in all of such Foreign Subsidiary's assets and securing the
Obligations of the Borrower under the Credit Documents and under any Interest
Rate Protection Agreement or Other Hedging Agreement and, in the event the
Subsidiary Guaranty shall have been executed by such Foreign Subsidiary, the
obligations of such Foreign Subsidiary thereunder, and in the case of a failure
to deliver the evidence described in clause (iii) above, such Foreign Subsidiary
shall execute and deliver the Subsidiary Guaranty (or another guaranty in
substantially similar form, if needed), guaranteeing the Obligations of the
Borrower under the Credit Documents and under any Interest Rate Protection
Agreement or Other Hedging Agreement, in each case to the extent that the
entering into such Security Agreement or Subsidiary Guaranty is permitted by the
laws of the respective foreign jurisdiction and with all documents delivered
pursuant to this Section 7.14 to be in form and substance reasonably
satisfactory to the Agent and the Required Banks.
7.15 Contributions; Payments. (a) Holdings will contribute as an
-----------------------
equity contribution to the capital of the Borrower upon its receipt thereof, any
cash proceeds (net of reasonable costs associated with such sale or issuance)
received by Holdings from any sale or issuance of its preferred or common equity
(including, without limitation, the proceeds of the IPO) or any cash capital
contributions received by Holdings, provided that to the extent permitted by
--------
Section 8.05(s), Holdings may lend proceeds of Permitted Equity Proceeds to the
Borrower.
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<PAGE>
(b) The Borrower will use the proceeds of all equity contributions
received by it from Holdings as provided in clause (a) above toward the
repayment of Term Loans to the extent required by Section 4.02.
7.16 Interest Rate Protection. The Borrower shall, or prior to the
------------------------
Effective Date, enter into, and thereafter maintain, Interest Rate Protection
Agreements, satisfactory to the Agent, with a term of at least thirty months,
establishing a fixed or maximum interest rate acceptable to the Agent in respect
of at least $35,000,000 of the outstanding Term Loans.
SECTION 8. Negative Covenants. Holdings and the Borrower hereby
------------------
covenant and agree that as of the Effective Date and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated, no
Letters of Credit (other than Letters of Credit, together with all Fees that
have accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
respective Letter of Credit Issuer in its sole and absolute discretion) or Notes
are outstanding and the Loans and Unpaid Drawings, together with interest, Fees
and all other Obligations (other than any indemnities described in Section 12.13
hereof which are not then due and payable) incurred hereunder, are paid in full:
8.01 Changes in Business. (a) Holdings and its Subsidiaries will
-------------------
not engage in any business other than the business engaged in by Holdings and
its Subsidiaries (including, without limitation, the Acquired Business) as of
the Effective Date and activities directly related thereto, and similar or
related businesses.
(b) Notwithstanding the foregoing, Holdings will engage in no
business other than (i) its ownership of the capital stock of the Borrower,
those obligations of officers and employees of Holdings and its Subsidiaries to
the extent permitted by Section 8.05(e) and having those liabilities which it is
responsible for under this Agreement and the other Documents to which it is a
party and Borrower Subordinated Notes, (ii) the issuance of Permitted Holdings
PIK Securities, the Seller Subordinated Note, shares of Holdings Common Stock
and options and warrants to purchase Holdings Common Stock, and (iii) activities
associated with expenses paid with dividends made by the Borrower pursuant to
Section 8.06(iii). Notwithstanding the foregoing, Holdings may engage in those
activities that are incidental to (a) the maintenance of its corporate existence
in compliance with applicable law, (b) legal, tax and accounting matters in
connection with any of the foregoing activities and (c) the entering into, and
performing its obligations under, this Agreement and the other Documents to
which it is a party.
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc.
-------------------------------------------------------
Holdings will not, and will not permit any of its Subsidiaries to, 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
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<PAGE>
property or assets (other than inventory in the ordinary course of business
through distribution arrangements, vendor financial service programs or
otherwise), or enter into any partnerships, joint ventures or 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 and equipment in the ordinary course of
business) of any Person, except that the following shall be permitted:
(a) the Borrower and its Subsidiaries may lease as lessee or lessor
or license as licensee or licensor real or personal property in the
ordinary course of business and otherwise in compliance with this
Agreement, so long as any such lease or license by the Borrower or any of
its Subsidiaries in its capacity as lessor or licensor, as the case may be,
does not prohibit the granting of a Lien by the Borrower or any of its
Subsidiaries pursuant to the Mortgages in the real property covered by such
lease or pursuant to the Security Agreement in the personal property
covered by such lease or license, as the case may be;
(b) Capital Expenditures by the Borrower and its Subsidiaries to the
extent not in violation of Section 8.08;
(c) the advances, investments and loans permitted pursuant to
Section 8.05;
(d) the Borrower and its Subsidiaries may sell or discount, in each
case without recourse, accounts receivables arising in the ordinary course
of business, but only in connection with the compromise or collection
thereof;
(e) the Borrower and its Subsidiaries may sell or exchange specific
items of equipment, so long as the purpose of each such sale or exchange is
to acquire (and results within 180 days of such sale or exchange in the
acquisition of) replacement items of equipment which are, in the reasonable
business judgment of the Borrower and its Subsidiaries, the functional
equivalent of the item of equipment so sold or exchanged;
(f) the Borrower and its Subsidiaries may, in the ordinary course of
business, license as licensee or licensor patents, trademarks, copyrights
and know-how to or from third Persons and to one another so long as any
such license by the Borrower or any of its Subsidiaries in its capacity as
licensor is permitted to be assigned pursuant to the Security Agreement (to
the extent that a security interest in such patents, trademarks, copyrights
and know-how is granted thereunder) and does not otherwise prohibit the
granting of a Lien by the Borrower or any of its Subsidiaries pursuant to
the Security Agreement in the intellectual property covered by such
license;
(g) any Foreign Subsidiary may be merged with and into, or be
dissolved or liquidated into, or transfer any of its assets to, any Wholly-
Owned Foreign
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<PAGE>
Subsidiary so long as (i) such Wholly-Owned Foreign Subsidiary is the
surviving corporation of any such merger, dissolution or liquidation and
(ii) in each case at least 65% of the total combined voting power of all
classes of capital stock of all first-tier Foreign Subsidiaries are pledged
pursuant to the Pledge Agreement;
(h) the assets of any Foreign Subsidiary may be transferred to the
Borrower or any of its Wholly-Owned Domestic Subsidiaries, and any Foreign
Subsidiary may be merged with and into, or be dissolved or liquidated into,
the Borrower or any of its Wholly-Owned Domestic Subsidiaries so long as
the Borrower or such Wholly-Owned Domestic Subsidiary is the surviving
corporation of any such merger, dissolution or liquidation;
(i) the Borrower or any of its Wholly-Owned Domestic Subsidiaries
may transfer to one or more Wholly-Owned Foreign Subsidiaries those assets
theretofore transferred to the Borrower or such Wholly-Owned Domestic
Subsidiary by a Foreign Subsidiary (whether by merger, liquidation,
dissolution or otherwise) pursuant to clause (h) of this Section 8.02;
(j) the Borrower and its Subsidiaries may sell or otherwise transfer
inventory to their respective Subsidiaries for resale by such Subsidiaries,
and Subsidiaries of the Borrower may sell or otherwise transfer inventory
to the Borrower for resale by the Borrower so long as the security interest
granted to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Security Agreement in the inventory so transferred (or the
proceeds thereof, in the case of a transfer to a Foreign Subsidiary) shall
remain in full force and effect and perfected (to at least the same extent
as in effect immediately prior to such transfer);
(k) the Borrower may contribute cash to one or more Wholly-Owned
Domestic Subsidiaries formed after the Initial Borrowing Date in accordance
with Section 8.14, so long as the aggregate amount of such cash so
contributed to all such Domestic Subsidiaries does not exceed $2,000,000;
(l) the Borrower and its Domestic Subsidiaries may transfer assets
(other than inventory) to Wholly-Owned Foreign Subsidiaries so long as the
aggregate fair market value of all such assets so transferred (determined
in good faith by the Board of Directors or senior management of the
Borrower) to all such Foreign Subsidiaries does not exceed $10,000,000;
(m) assets of the Borrower and its Domestic Subsidiaries (other than
any Domestic Subsidiary owning assets or having operations in Puerto Rico)
constituting non-U.S. operations may be transferred to Wholly-Owned Foreign
Subsidiaries of the Borrower;
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(n) each of the Borrower and its Subsidiaries may sell assets,
provided that (x) the aggregate sale of proceeds from all assets subject to
--------
such sales pursuant to this clause (n) shall not exceed $5,000,000 in any
fiscal year of the Borrower, (y) any such asset sale is for at least 80% in
cash and at fair market value (as determined in good faith by the Board of
Directors or senior management of the Borrower) and (z) the Net Proceeds
therefrom are either applied to repay Term Loans as provided in Section
4.02(A)(c) or reinvested to the extent permitted by Section 4.02(A)(c);
(o) each of the Borrower and its Subsidiaries may sell other assets,
provided that the aggregate sale proceeds from all assets subject to such
--------
sales pursuant to this clause (o) shall not exceed $500,000 in any fiscal
year of the Borrower;
(p) so long as no Default or Event of Default then exists or would
result therefrom, the Borrower and its Subsidiaries may acquire assets or
the capital stock of any Person (any such acquisition permitted by this
clause (p), a "Permitted Acquisition"), provided, that (i) such Person (or
--------
the assets so acquired) was, immediately prior to such acquisition, engaged
(or used) primarily in the businesses permitted pursuant to Section
8.01(a), (ii) if such acquisition is structured as a stock acquisition,
then either (A) the Person so acquired becomes a Wholly-Owned Subsidiary of
the Borrower or (B) such Person is merged with and into the Borrower or a
Wholly-Owned Subsidiary of the Borrower (with the Borrower or such Wholly-
Owned Subsidiary being the surviving corporation of such merger), and in
any case, all of the provisions of Section 8.14 have been complied with in
respect of such Person, (iii) any Liens or Indebtedness assumed or issued
in connection with such acquisition are otherwise permitted under Section
8.03 or 8.04, as the case may be, (iv) the only consideration paid in
connection with such Permitted Acquisition consists of cash, Holdings
Common Stock (valued based on the then current trading price for such
Holdings Common Stock) and/or Permitted Holdings PIK Securities (valued at
the aggregate liquidation preference thereof in the case of preferred stock
and the aggregate face amount thereof in the case of indebtedness), and (v)
(x) any such Permitted Acquisition (or series of related Permitted
Acquisitions) involving an expenditure (with the consideration valued as
set forth in clause (iv) above) in excess of $20,000,000 and less than or
equal to $30,000,000 shall not be consummated without the prior written
consent of the Required Banks unless the Pro Forma Leverage Ratio on the
date of such acquisition is less than 2.50:1.00 and (y) any such Permitted
Acquisition (or series of related Permitted Acquisitions) involving an
expenditure (with the consideration valued as set forth in clause (iv)
above) in excess of $30,000,000 shall not be consummated without the prior
written consent of the Required Banks;
(q) any Domestic Subsidiary of the Borrower may transfer assets
(other than accounts receivable and inventory) to the Borrower or to any
other Wholly-
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Owned Domestic Subsidiary of the Borrower so long as the security interests
granted to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Security Documents in the assets so transferred shall
remain in full force and effect and perfected (to at least the same extent
as in effect immediately prior to such transfer);
(r) any Wholly-Owned Domestic Subsidiary of the Borrower may merge
with and into, or be dissolved or liquidated into, the Borrower so long as
(i) the Borrower is the surviving corporation of such merger, dissolution
or liquidation and (ii) the security interests granted to the Collateral
Agent for the benefit of the Secured Creditors pursuant to the Security
Documents in the assets of such Wholly-Owned Domestic Subsidiary shall
remain in full force and effect and perfected (to at least the same extent
as in effect immediately prior to such merger);
(s) any Domestic Subsidiary of the Borrower may merge with and into,
or be dissolved or liquidated into, any other Wholly-Owned Domestic
Subsidiary of the Borrower so long as (i) such Wholly-Owned Domestic
Subsidiary of the Borrower is the surviving corporation of such merger,
dissolution or liquidation and (ii) the security interests granted to the
Collateral Agent for the benefit of the Secured Creditors pursuant to the
Security Documents in the assets of such Domestic Subsidiary shall remain
in full force and effect and perfected (to at least the same extent as in
effect immediately prior to such merger, dissolution or liquidation);
(t) the Borrower and its Subsidiaries may effect the Designated Real
Property Sale, provided that the Designated Real Property Sale is for at
--------
least 80% in cash and at fair market value (as determined in good faith by
the Board of Directors or senior management of the Borrower);
(u) the Borrower and its Subsidiaries may effect any West Coast
Asset Sale, provided that (x) any such West Coast Asset Sale is for at
--------
least 80% in cash and at fair market value (as determined in good faith by
the Board of Directors or senior management of the Borrower) and (y) the
Net Proceeds therefrom are either applied to repay Term Loans as provided
in Section 4.02(A)(c) or reinvested to the extent permitted by Section
4.02(A)(c);
(v) the Borrower and its Subsidiaries may, in the ordinary course of
business, sell, transfer or otherwise dispose of assets (including, without
limitation, patents, trademarks, copyrights and know-how) which, in the
reasonable judgment of the Borrower or such Subsidiary, are determined to
be uneconomical, negligible or obsolete in the conduct of its business;
(w) (I) the Borrower and/or its Subsidiaries may enter into
factoring arrangements with respect to accounts receivable arising in Japan
in connection with
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business activities therein, (II) the Borrower and its Domestic
Subsidiaries may sell or otherwise transfer accounts receivable between or
among themselves in the ordinary course of business, and (III) Foreign
Subsidiaries may sell or otherwise transfer accounts receivable between or
among themselves in the ordinary course of business;
(x) the Permitted Sale-Leaseback Transaction shall be permitted so
long as (I) the Net Proceeds therefrom are either applied to repay Term
Loans as provided in Section 4.02(A)(c) or reinvested to the extent
permitted by Section 4.02(A)(c) and (II) the lease obligations created
thereby are otherwise permitted under this Agreement; and
(y) the Borrower and its subsidiaries may transfer or divest of the
Natural Touch brand name and the assets related thereto, it being
understood that such transferor divestiture shall not be subject to the
provisions set forth in clause (y) of Section 8.02(n);
(z) the Borrower and its Subsidiaries may sell those assets listed
on Annex XV, provided that (x) any such asset sale is for at least 80% in
--------
cash and at fair market value (as determined in good faith by the Board of
Directors or senior management of the Borrower) and (y) the Net Proceeds
therefrom are either applied to repay Term Loans as provided in Section
4.02(A)(c) or reinvested to the extent permitted by Section 4.02(A)(c); and
(aa) the Acquisition.
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or disposed of as permitted by this Section 8.02 (and such Collateral is
permitted to be released from the Liens created by the respective Security
Document), such Collateral in each case shall be sold or otherwise disposed of
free and clear of the Liens created by the Security Documents and the Agent
shall take such actions (including, without limitation, directing the Collateral
Agent to take such actions) as are appropriate in connection therewith.
8.03 Liens. Holdings will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible) of Holdings 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 or notes with recourse to
Holdings or any of its Subsidiaries) or assign any right to receive income,
except for the following (collectively, the "Permitted Liens"):
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(a) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes, assessments or governmental charges
or levies being contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with GAAP;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business and which have not arisen to secure Indebtedness for borrowed
money, such as carriers', warehousemen's and mechanics' Liens, statutory
landlord's Liens, and other similar Liens arising in the ordinary course of
business, and which either (x) do not in the aggregate materially detract
from the value of such property or assets or materially impair the use
thereof in the operation of the business of the Borrower or any of its
Subsidiaries or (y) are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement and the Security
Documents;
(d) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Annex IX, without
giving effect to any extensions or renewals thereof;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09;
(f) Liens incurred or deposits made (x) in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money); and (y) to
secure the performance of leases of Real Property, to the extent incurred
or made in the ordinary course of business consistent with past practices;
(g) licenses, leases or subleases granted to third Persons not
interfering in any material respect with the business of the Borrower or
any of its Subsidiaries;
(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
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(i) Liens arising from precautionary UCC financing statements
regarding operating leases permitted by this Agreement;
(j) any interest or title of a licensor, lessor or sublessor under
any lease permitted by this Agreement;
(k) Permitted Encumbrances;
(l) Liens arising pursuant to purchase money mortgages, Capital
Leases or security interests securing Indebtedness representing the
purchase price (or financing of the purchase price within 90 days after the
respective purchase) of assets acquired after the Initial Borrowing Date,
provided that (i) any such Liens attach only to the assets so purchased,
--------
(ii) the Indebtedness secured by any such Lien does not exceed 100%, nor is
less than 70%, of the lesser of the fair market value or the purchase price
of the property being purchased at the time of the incurrence of such
Indebtedness and (iii) the Indebtedness secured thereby is permitted to be
incurred pursuant to Section 8.04(d);
(m) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Borrower in
existence at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition, provided that (i) any Indebtedness that is secured by such
--------
Liens is permitted to exist under Section 8.04(j), and (ii) such Liens are
not incurred in contemplation of such Permitted Acquisition and do not
attach to any other asset of the Borrower or any of its Subsidiaries;
(n) Liens securing Indebtedness permitted pursuant to, and subject
to the limitations set forth in, clause (x) of Section 8.04(h), so long as
any such Lien attaches only to the assets of the respective Foreign
Subsidiary which is the obligor under such Indebtedness;
(o) Liens upon or with respect to inventory arising pursuant to
agreements to repurchase such inventory, provided that any such Liens
--------
attach only to the subject inventory and are created in the ordinary course
of business; and
(p) additional Liens incurred by the Borrower and its Subsidiaries
so long as the value of the property subject to such Liens, and the
Indebtedness and other obligations secured thereby, do not exceed
$1,000,000.
8.04 Indebtedness. Holdings will not, and will not permit any of its
------------
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
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(b) Existing Indebtedness outstanding on the Initial Borrowing Date
and listed on Annex VIII, without giving effect to any subsequent
extension, renewal or refinancing thereof, except as permitted by Section
8.05(t);
(c) Indebtedness under Interest Rate Protection Agreements entered
into to protect the Borrower against fluctuations in interest rates in
respect of the Obligations;
(d) Capitalized Lease Obligations and Indebtedness of the Borrower
and its Subsidiaries incurred pursuant to purchase money Liens, provided,
--------
that (x) all such Capitalized Lease Obligations are permitted under Section
8.08 and (y) the sum of (i) the aggregate Capitalized Lease Obligations
plus (ii) the aggregate principal amount of such purchase money
Indebtedness outstanding at any time (A) during the period (taken as one
accounting period) from the Effective Date and ending on December 31, 1997,
shall not exceed $5,000,000, and (B) during any fiscal year of the Borrower
thereafter shall not exceed the amount set forth opposite such fiscal year
as set forth below:
Fiscal Year Ending Amount
------------------ ------
December 31, 1998 $6,000,000
December 31, 1999 $7,000,000
December 31, 2000 $8,000,000
Thereafter $9,000,000
(e) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 8.05(g);
(f) Indebtedness of Holdings under the Shareholder Subordinated
Notes;
(g) Indebtedness under Other Hedging Agreements providing protection
against fluctuations in currency values in connection with the Borrower's
or any of its Subsidiaries' operations so long as management of the
Borrower or such Subsidiary, as the case may be, has determined that the
entering into of such Other Hedging Agreements are bona fide hedging
---- ----
activities;
(h) Indebtedness (x) of Foreign Subsidiaries under lines of credit
extended by third Persons to any such Foreign Subsidiary the proceeds of
which Indebtedness are used for such Foreign Subsidiary's working capital
purposes, provided that the aggregate principal amount of all such
--------
Indebtedness outstanding at any time for all Foreign Subsidiaries shall not
exceed $30,000,000 (the "Foreign Subsidiary Working Capital Indebtedness"),
and (y) consisting of guaranties or similar credit support by the Borrower
or any Foreign Subsidiary of any such Foreign Subsidiary Working Capital
Indebtedness (including, without limitation, Letters of Credit
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issued for the account of the Borrower or any such Foreign Subsidiary in
favor of lenders in respect of any such Foreign Subsidiary Working Capital
Indebtedness);
(i) Indebtedness of Foreign Subsidiaries to the Borrower and its
Domestic Subsidiaries as a result of any investment made pursuant to
Section 8.05(o);
(j) Indebtedness of a Subsidiary acquired pursuant to a Permitted
Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition
of an asset securing such Indebtedness), provided that (i) such
--------
Indebtedness was not incurred in connection with or in anticipation of
such Permitted Acquisition, (ii) such Indebtedness does not constitute debt
for borrowed money (other than debt for borrowed money incurred in
connection with industrial revenue or industrial development bond
financings), it being understood and agreed that Capitalized Lease
Obligations and purchase money Indebtedness shall not constitute debt for
borrowed money for purposes of this clause (j), and (iii) at the time of
such Permitted Acquisition such Indebtedness does not exceed 10% of the
total value of the assets of the Subsidiary so acquired, or of the asset so
acquired, as the case may be;
(k) Indebtedness consisting of guaranties (x) by the Borrower of
Indebtedness, leases and other obligations permitted to be incurred by
Domestic Wholly-Owned Subsidiaries, (y) by Domestic Subsidiaries of
Indebtedness, leases and other obligations permitted to be incurred by the
Borrower or other Domestic Wholly-Owned Subsidiaries and (z) by Foreign
Subsidiaries of Indebtedness, leases and other obligations permitted to be
incurred by other Foreign Wholly-Owned Subsidiaries;
(l) Indebtedness of the Borrower constituting Borrower Subordinated
Loans to the extent permitted by Section 8.05(s);
(m) Indebtedness of Holdings incurred under Permitted Holdings PIK
Securities, provided that the aggregate outstanding principal amount of
--------
Permitted Holding PIK Securities constituting Indebtedness shall not exceed
$20,000,000 plus the amount of interest on such Permitted Holdings PIK
Securities paid in kind or through accretion;
(n) Indebtedness consisting of take-or-pay supply agreement entered
into by the Borrower and its Subsidiaries in the ordinary course of
business;
(o) Indebtedness of Holdings incurred under the Seller Subordinated
Note in an aggregate amount not to exceed $5,000,000 (as reduced by any
repayments of principal thereof) plus additional indebtedness of Holdings
incurred under the Seller Subordinated Note representing accrued but unpaid
interest thereon; provided, however, that no such indebtedness incurred by
-------- -------
Holdings under the Seller
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Subordinated Note shall be guaranteed or supported by the Borrower or any
of its Subsidiaries;
(p) additional Indebtedness of the Borrower and its Domestic
Subsidiaries not otherwise permitted hereunder not exceeding $5,000,000, in
aggregate principal amount at any time outstanding.
8.05 Advances, Investments and Loans. Holdings will not, and will
-------------------------------
not permit any of its Subsidiaries to, 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 Person, or
purchase or own a futures contract or otherwise become liable for the purchase
or sale of currency or other commodities at a future date in the nature of a
futures contract, or hold any cash, Cash Equivalents or Foreign Cash
Equivalents, except:
(a) the Borrower and its Subsidiaries may invest in cash and Cash
Equivalents;
(b) the Borrower and its Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms of the Borrower or such Subsidiary;
(c) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in good faith
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(d) Interest Rate Protection Agreements entered into in compliance
with Section 8.04(c) shall be permitted;
(e) Holdings may acquire and hold obligations of one or more
officers or other employees of Holdings or its Subsidiaries in connection
with such officers' or employees' acquisition of shares of Holdings Common
Stock so long as no cash is paid by Holdings or any of its Subsidiaries in
connection with the acquisition of any such obligations;
(f) deposits made in the ordinary course of business consistent with
past practices to secure the performance of leases shall be permitted;
(g) the Borrower may make intercompany loans and advances to any of
its Subsidiaries and any Subsidiary of the Borrower may make intercompany
loans and advances to the Borrower or any other Subsidiary of the Borrower
(collectively,
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"Intercompany Loans"), provided, that (w) at no time shall the aggregate
--------
outstanding principal amount of Intercompany Loans made pursuant to this
clause (g) by the Borrower and its Domestic Subsidiaries to Foreign
Subsidiaries, when added to the amount of contributions, capitalizations
and forgiveness theretofore made pursuant to clause (l), exceed $22,000,000
(determined without regard to any write-downs or write-offs of such loans
and advances), provided that, in addition to such $22,000,000, such other
--------
Intercompany Loans may also be made by the Borrower and its Domestic
Subsidiaries to Foreign Subsidiaries in an amount up to the Excess Proceeds
Amount at the time of any such loan, (x) each Intercompany Loan made by a
Foreign Subsidiary to the Borrower or a Domestic Subsidiary shall contain
the subordination provisions set forth on Exhibit L, (y) each Intercompany
Loan shall be evidenced by an Intercompany Note and (z) each such
Intercompany Note (other than (1) Intercompany Notes issued by Foreign
Subsidiaries to the Borrower or Domestic Subsidiaries and (2) Intercompany
Notes held by Foreign Subsidiaries) shall be pledged to the Collateral
Agent pursuant to the Pledge Agreement;
(h) loans and advances by the Borrower and its Subsidiaries to
employees of Holdings and its Subsidiaries for moving and travel expenses
and other similar expenses, in each case incurred in the ordinary course of
business, in an aggregate outstanding principal amount not to exceed
$3,000,000 at any time (determined without regard to any write-down or
write-offs of such loans and advances) shall be permitted;
(i) Holdings may make equity contributions to the capital of the
Borrower;
(j) Foreign Subsidiaries may invest in Foreign Cash Equivalents;
(k) Other Hedging Agreements may be entered into in compliance with
Section 8.04(g);
(l) the Borrower and its Domestic Subsidiaries may make cash capital
contributions to Foreign Subsidiaries, and may capitalize or forgive any
Indebtedness owed to them by a Foreign Subsidiary and outstanding under
clause (g) of this Section 8.05, provided that the aggregate amount of such
--------
contributions, capitalizations and forgiveness made pursuant to this clause
(l), when added to the aggregate outstanding principal amount of
Intercompany Loans made to Foreign Subsidiaries under clause (g)
(determined without regard to any write-downs or write-offs thereof) shall
not exceed an amount equal to $22,000,000, provided that, in addition to
--------
such $22,000,000, such contributions, capitalizations and forgiveness may
be made at any time in an amount up to the Excess Proceeds Amount at such
time;
(m) Permitted Acquisitions shall be permitted;
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(n) the Borrower and its Subsidiaries may make investments in their
respective Subsidiaries in connection with the transfers of those assets
permitted to be transferred pursuant to Sections 8.02(g), (h) and (i), it
being understood that the Borrower and its Subsidiaries may convert any
investment initially made as an equity investment to intercompany
Indebtedness held by the Borrower or such Subsidiary;
(o) the Borrower and its Domestic Subsidiaries may make and hold
invest ments in their respective Foreign Subsidiaries to the extent that
such investments arise from the sale of inventory in the ordinary course of
business by the Borrower or such Domestic Subsidiary to such Foreign
Subsidiaries for resale by such Foreign Subsidiaries (including any such
investments resulting from the extension of the payment terms with respect
to such sales);
(p) the Borrower and its Subsidiaries may hold additional
investments in their respective Subsidiaries to the extent that such
investments reflect an increase in the value of such Subsidiaries;
(q) the Borrower and its Subsidiaries may capitalize one or more
foreign sales corporations created in accordance with Section 8.14 with
cash contributions in an aggregate amount not to exceed $200,000 for all
such foreign sales corporations;
(r) the Borrower and its Subsidiaries may make transfers of assets
to their respective Subsidiaries in accordance with Section 8.02(h), (i),
(j), (k), (l), (m) and (q);
(s) Holdings may make intercompany loans to the Borrower on a
subordinated basis (collectively, "Borrower Subordinated Loans") so long as
(x) all such Borrower Subordinated Loans are evidenced by a Borrower
Subordinated Note and (y) the proceeds used by Holdings to make such
Borrower Subordinated Loans come from the Permitted Equity Proceeds;
(t) advances, loans and investments in existence on the Initial
Borrowing Date and listed on Annex XII shall be permitted, without giving
effect to any additions thereto or replacements thereof (except those
additions or replacements which are existing obligations as of the Initial
Borrowing Date), provided that those loans outstanding to Subsidiaries on
--------
the Initial Borrowing Date may be repaid and reborrowed so long as the
aggregate outstanding principal amount of all such loans does not exceed
that aggregate principal amount outstanding on the Initial Borrowing Date;
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(u) the Borrower and its Subsidiaries may acquire and hold debt
and/or equity securities as partial consideration for a sale of assets
pursuant to Section 8.02(n), (o), (t), (u) or (z) to the extent permitted
by any such Section;
(v) the Borrower and/or its Subsidiaries may enter into a joint
venture in China and in connection therewith may transfer assets (other
than accounts receivable and inventory that is not raw material inventory)
to such joint venture, provided, that (A) the aggregate fair market value
--------
of all assets of the Borrower and its Domestic Subsidiaries so transferred
(determined in good faith by the Board of Directors or senior management of
the Borrower) does not exceed $1,000,000 and (B) the aggregate fair market
value of all assets of Foreign Subsidiaries so transferred (determined in
good faith by the Board of Directors or senior management of the Borrower)
does not exceed $1,000,000;
(w) Holdings may repurchase shares of the Holdings Common Stock as
and to the extent permitted under Section 8.06; and
(x) in addition to investments permitted by clauses (a) through (w)
above, so long as no Default or Event of Default then exists or would
result therefrom, the Borrower and its Subsidiaries may make additional
loans, advances and investments to or in a Person so long as the amount of
any such loan, advance or investment (at the time of the making thereof)
does not exceed an amount equal to the sum of (A) $7,500,000 less the
aggregate amount of such $7,500,000 previously used to make loans, advances
and investments pursuant to this clause (x) to the extent same are then
still outstanding (determined without regard to any write-downs or write-
offs thereof and net of cash repayments of principal in the case of loans
and cash equity returns (whether as a dividend or redemption) in the case
of equity investments) plus (B) an amount equal to the Excess Proceeds
Amount at such time; provided, that (1) any loan, advance or investment
--------
made with the Excess Proceeds Amount shall be in or to a Person of which
the Borrower owns (directly or indirectly) at least a majority economic and
voting interest (including the interest purchased or to be purchased with
the respective investment) and (2) neither the Borrower nor any of its
Subsidiaries may make or own any investment in Margin Stock.
8.06 Dividends, etc. Holdings will not, and will not permit any of
---------------
its Subsidiaries to, declare or pay any dividends (other than dividends payable
solely in common stock of Holdings or any such Subsidiary, as the case may be)
or return any capital to, its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock, now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, and Holdings will not permit any of its Subsidiaries to
purchase or otherwise acquire for consideration any shares of any class of the
capital stock of Holdings or any other Subsidi
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ary, as the case may be, now or hereafter outstanding (or any options or
warrants or stock appreciation rights issued by such Person with respect to its
capital stock) (all of the fore going "Dividends"), except that:
(i) the Transaction shall be permitted;
(ii) any Subsidiary of the Borrower may pay Dividends to the
Borrower or any Wholly-Owned Subsidiary of the Borrower;
(iii) (a) Holdings may redeem or purchase shares of Holdings
Common Stock or options to purchase Holdings Common Stock, held by former
employees of Holdings or any of its Subsidiaries following the termination
of their employ ment, provided that (w) the only consideration paid by
--------
Holdings in respect of such redemptions and/or purchases shall be cash and
Shareholder Subordinated Notes, (x) the sum of (A) the aggregate amount
paid by Holdings in cash in respect of all such redemptions and/or
purchases plus (B) the aggregate amount of all principal and interest
payments made on Shareholder Subordinated Notes, shall not exceed
$2,000,000 in any fiscal year of Holdings, provided that such amount shall
--------
be increased by an amount equal to the proceeds received by Holdings after
the Effective Date from the sale or issuance of Holdings Common Stock to
management of Holdings or any of its Subsidiaries and (y) at the time of
any cash payment permitted to be made pursuant to this Section 8.06(iii),
no Default or Event of Default shall then exist or result therefrom; and
(b) so long as no Default or Event of Default then exists or would result
therefrom, the Borrower may pay cash Dividends to Holdings so long as
Holdings promptly uses such proceeds for the purposes described in clause
(iii)(a) of this Section 8.06;
(iv) (a) Holdings may redeem or purchase shares of Holdings
Common Stock or options to purchase Holdings Common Stock held by the two
individuals holding the offices of Chairman and Chief Financial Officer of
the Borrower as of the Effective Date following the death or disability of
such individuals, provided that (x) the aggregate amount paid by Holdings
in respect of all such redemptions and/or purchases for (I) the individual
holding the office of Chairman shall not exceed $10,000,000 and (II) the
individual holding the office of Chief Financial Officer does not exceed
$2,000,000 and (y) at the time of any payment permitted to be made pursuant
to this Section 8.06(iv), no Default or Event of Default shall then exist
or result therefrom and (b) so long as no Default or Event of Default then
exists or would result therefrom, the Borrower may pay cash Dividends to
Holdings so long as the cash proceeds thereof are promptly used by Holdings
for the purposes described in clause (iv)(a) of this Section 8.06;
(v) the Borrower may pay cash Dividends to Holdings so long as
the proceeds thereof are promptly used by Holdings to (x) pay operating
expenses in the ordinary course of business (including, without limitation,
professional fees and
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<PAGE>
expenses) and other similar corporate overhead costs and expenses, provided
--------
that the aggregate amount of cash Dividends paid pursuant to this clause
(x) shall not during any fiscal year of the Borrower exceed $1,000,000 or
(y) pay salaries or other compensation of employees who perform services
for Holdings and the Borrower, provided that the aggregate amount of cash
Dividends paid pursuant to this clause (y) shall not during any fiscal year
of the Borrower exceed $250,000;
(vi) the Borrower may pay cash Dividends to Holdings in the
amounts and at the times of any payment by Holdings in respect of taxes,
provided that (x) the amount of cash Dividends paid pursuant to this clause
--------
(vi) to enable Holdings to pay federal income taxes at any time shall not
exceed the lesser of (A) the amount of such federal income taxes owing by
Holdings at such time for the respective period and (B) the amount of such
federal income taxes that would be owing by the Borrower and its
Subsidiaries on a consolidated basis for such period if determined without
regard to Holdings' ownership of the Borrower and (y) any refunds shall
promptly be returned by Holdings to the Borrower;
(vii) Holdings may pay regularly scheduled Dividends on the
Permitted Holdings PIK Securities (to the extent issued as preferred stock)
pursuant to the terms thereof solely through the issuance of additional
shares of such Permitted Holdings PIK Securities, provided that in lieu of
--------
issuing additional shares of such Permitted Holdings PIK Securities as
Dividends, Holdings may increase the liquidation preference of the shares
of Permitted Holdings PIK Securities in respect of which such Dividends
have accrued;
(viii) so long as no Default or Event of Default exists or would
result therefrom, the Borrower may pay a cash Dividend to Holdings the
proceeds of which are used to repay the Seller Subordinated Note to the
extent permitted under Section 8.12(i); and
(ix) (a) Holdings may pay cash Dividends in addition to those
permitted above in this Section 8.06 in an amount not to exceed $2,000,000
in any fiscal year, plus the Excess Proceeds Amount at the time of the
payment of any such Dividend, so long as no Default or Event of Default
then exists or would result therefrom, and (b) so long as no Default or
Event of Default then exists or would result therefrom, the Borrower may
pay cash Dividends to Holdings so long as the cash proceeds thereof are
promptly used by Holdings for the purpose described in clause (ix)(a) of
this Section 8.06.
8.07 Transactions with Affiliates. Holdings will not, and will not
----------------------------
permit any of its Subsidiaries to, enter into any transaction or series of
transactions with any Affiliate other than in the ordinary course of business
and on terms and conditions substantially as favorable to Holdings or such
Subsidiary as would be obtainable by Holdings or such Subsidiary at the time in
a comparable arm's-length transaction with a Person other
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<PAGE>
than an Affiliate; provided, that the shall in any event be permitted: (i) the
Transaction; (ii) Holdings and the Borrower and its Domestic Subsidiaries may
make any payments required under the Holdings Tax Allocation Agreement; (iii)
the payment of reasonable out-of-pocket expenses incurred by Bain Capital and/or
Related Parties in providing services the Borrower; (iv) the payment, on a
quarterly basis, of management fees to Bain Capital and/or Related Parties in
aggregate amount (for all such Persons taken together) not to exceed $500,000 in
any fiscal quarter of the Borrower; and (iv) the payment by the Borrower, in
connection with any acquisition, divestiture or financing transaction that is
consummated, of a transaction fee to Bain Capital and/or the Bain Affiliates in
an aggregate amount (for all such Persons taken together) not to exceed 1% of
the aggregate value of any such transaction.
8.08 Capital Expenditures. (a) Holdings will not, and will not
--------------------
permit any of its Subsidiaries to, make any Capital Expenditures, except that,
(i) during the period commencing on January 1, 1997 and ending December 31,
1998, the Borrower and its Subsidiaries may make Capital Expenditures in an
aggregate amount not to exceed $27,500,000 and (ii) during any fiscal year
thereafter the Borrower and its Subsidiaries may make Capital Expenditures so
long as the aggregate amount of such Capital Expenditures does not exceed
$5,000,000.
(b) Notwithstanding the foregoing, in the event that the amount of
Capital Expenditures permitted to be made by the Borrower and its Subsidiaries
pursuant to clause (a) above in any period (before giving effect to any increase
in such permitted expenditure amount pursuant to this clause (b)) is greater
than the amount of such Capital Expenditures made by the Borrower and its
Subsidiaries during such period, such excess (the "Rollover Amount") may be
carried forward and utilized to make Capital Expenditures in succeeding fiscal
years, provided that in no event shall the aggregate amount of Capital
Expenditures made by the Borrower and its Subsidiaries during any fiscal year
pursuant to Section 8.08(a) and this Section 8.08(b) exceed 125% of the amount
permitted to be made in such fiscal year pursuant to Section 8.08(a).
(c) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make Capital Expenditures (which Capital Expenditures will not be included
in any determination under the foregoing clause (a)) with the proceeds of Asset
Sales to the extent such proceeds are not required to be applied to repay Term
Loans pursuant to Section 4.02(A)(c).
(d) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make Capital Expenditures (which Capital Expenditures will not be included
in any determination under the foregoing clause (a)) with the insurance
proceeds received by the Borrower or any of its Subsidiaries from any Recovery
Event so long as such Capital Expenditures are to replace or restore any
properties or assets in respect of which such proceeds were paid within one
year following the date of the receipt of such insurance proceeds to the
extent such insurance pro
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<PAGE>
ceeds are not required to be applied to repay Term Loans pursuant to Section
4.02(A)(g).
(e) Notwithstanding the foregoing, the Borrower and its Subsidiaries
may make Capital Expenditures at any time in an aggregate amount equal to the
Excess Proceeds Amount at such time (which Capital Expenditures will not be
included in any determination under the foregoing clause (a)).
8.09 Minimum Consolidated EBITDA. The Borrower will not permit
---------------------------
Consolidated EBITDA for any Test Period ending on a date set forth below to be
less than the amount set forth opposite such date:
Minimum Consolidated
Date EBITDA
---- --------------------
6/30/97 6,700,000
9/30/97 15,200,000
12/31/97 24,300,000
3/31/98 33,600,000
6/30/98 36,500,000
9/30/98 37,500,000
12/31/98 38,200,000
3/31/99 39,400,000
6/30/99 40,600,000
9/30/99 41,800,000
12/31/99 43,100,000
3/31/00 43,600,000
6/30/00 44,200,000
9/30/00 44,700,000
12/31/00 45,300,000
3/31/01 45,900,000
6/30/01 46,500,000
9/30/01 47,100,000
12/31/01 47,700,000
3/31/02 48,300,000
8.10 Interest Coverage Ratio. The Borrower will not permit the
-----------------------
Interest Coverage Ratio for any Test Period ending on a date set forth below to
be less than the ratio set forth opposite such date:
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<PAGE>
Date Ratio
---- -----
6/30/97 to and
including 12/31/98 4.00:1.00
3/31/99 to and
including 12/31/99 4.50:1.00
All Test Periods thereafter 5.00:1.00
8.11 Leverage Ratio. The Borrower will not permit the Leverage Ratio
--------------
at any time during a period set forth below to be more than the ratio set forth
opposite such period:
Period Ratio
------ -----
6/30/97 to and
including 12/31/99 4.00:1.00
Thereafter to
and including 12/31/00 3.50:1.00
Thereafter 3.00:1.00
8.12 Limitation on Voluntary Payments and Modifications of
-----------------------------------------------------
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
- --------------------------------------------------------------------------------
Other Agreements; Issuance of Capital Stock; etc. Holdings will not, and will
- -------------------------------------------------
not permit any of its Subsidiaries to:
(i) make (or give any notice in respect of) any payment or
prepayment on or redemption or acquisition for value of any Seller
Subordinated Note or make any interest payment on any Seller Subordinated
Note, provided that, notwithstanding the foregoing, Holdings may repay the
-------- ----
Seller Subordinated Note, together with accrued but unpaid interest
thereon, so long as no Default or Event of Default then exists or would
result therefrom;
(ii) amend, modify or change, or permit the amendment or
modification of, any provision of the Seller Subordinated Note in a manner
which would be adverse to the interests of the Banks;
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<PAGE>
(iii) amend, modify or change in any way adverse to the interests
of the Banks, any Management Agreement, the terms of any Tax Allocation
Agreement, its Certificate of Incorporation (including, without limitation,
by the filing or modification of any certificate of designation) or By-
Laws, or any agreement entered into by it, with respect to its capital
stock (including any Shareholders' Agreement), or enter into any new
agreement with respect to its capital stock which would be adverse to the
interests of the Banks; or
(iv) issue any class of capital stock other than (x) in the case
of the Borrower and its Subsidiaries, non-redeemable common stock and (y)
in the case of Holdings, (1) the issuance of Holdings Common Stock or
Permitted Holdings PIK Securities as consideration for a Permitted
Acquisition pursuant to Section 8.02(p) and (2) issuances of Holdings
Common Stock where, after giving effect to such issuance, no Event of
Default will exist under Section 9.10 and to the extent the proceeds
thereof are applied in accordance with Sections 4.02(A)(d) and 7.15.
8.13 Limitation on Certain Restrictions on Subsidiaries. Holdings
--------------------------------------------------
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by Holdings or any Subsidiary
of Holdings, or pay any Indebtedness owed to Holdings or a Subsidiary of
Holdings, (b) make loans or advances to Holdings or any of Holdings'
Subsidiaries or (c) transfer any of its properties or assets to Holdings or any
of Holdings' 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) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Borrower or a
Subsidiary of the Borrower, (iv) customary provisions restricting assignment of
any licensing agreement entered into by the Borrower or a Subsidiary of the
Borrower in the ordinary course of business, (v) customary provisions
restricting the transfer of assets subject to Liens permitted under Sections
8.03(l) and (m) and (vi) any document or instrument evidencing Foreign
Subsidiary Working Capital Indebtedness so long as such encumbrance or
restriction only applies to the Foreign Subsidiary incurring such Indebtedness.
8.14 Limitation on the Creation of Subsidiaries. Notwithstanding
------------------------------------------
anything to the contrary contained in this Agreement, Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Initial Borrowing Date any Subsidiary; provided that the Borrower and its
--------
Wholly-Owned Subsidiaries shall be permitted to establish or create (x)
Subsidiaries as a result of investments made pursuant to Section 8.05 and (y)
Wholly-Owned Subsidiaries so long as (i) at least 30 days' prior written notice
thereof (or such lesser notice as is acceptable to the Agent) is given to the
Agent, (ii) the capital stock of such new Subsidiary is pledged pursuant to, and
to the extent required by, this Agreement and the Pledge Agreement and the
certificates, if any, representing such stock, together with stock powers duly
executed in blank, are delivered to the Collateral
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<PAGE>
Agent, (iii) such new Subsidiary (other than a Foreign Subsidiary except to the
extent otherwise required pursuant to Section 7.14) executes a counterpart of
the Subsidiary Guaranty, the Pledge Agreement and the Security Agreement, and
(iv) to the extent requested by the Agent or the Required Banks, takes all
actions required pursuant to Section 7.11. In addition, each new Wholly-Owned
Subsidiary that is required to execute any Credit Document shall execute and
deliver, or cause to be executed and delivered, all other relevant documentation
of the type described in Section 5 as such new Subsidiary would have had to
deliver if such new Subsidiary were a Credit Party on the Initial Borrowing
Date.
SECTION 9. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each, an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when
--------
due of any principal of the Loans or (ii) default, and such default shall
continue for three or more days, in the payment when due of any Unpaid Drawing,
any interest on the Loans or any Fees or any other amounts owing hereunder or
under any other Credit Document; or
9.02 Representations, etc. Any representation, warranty or statement
---------------------
made by Holdings, the Borrower or any other Credit Party herein or in any other
Credit Document or in any statement or 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
9.03 Covenants. Any Credit Party shall (a) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Sections 7.11, 7.13, 7.15 or 8, or (b) default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 9.01, 9.02 or clause (a) of this Section 9.03) contained in this
Agreement and such default shall continue unremedied for a period of at least 30
days after notice to the defaulting party by the Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) Holdings or any of its
------------------------------
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which Indebtedness was created or (ii) default in
the observance or performance of any agreement or condition relating to any such
Indebtedness 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 per mit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause any such Indebtedness to become due prior to its
stated maturity; or (b) any Indebtedness (other than the Obligations) of
Holdings or any of its Subsidiaries shall be declared to be due and payable,
or shall be required to be prepaid other than by a regularly scheduled required
prepayment or as a mandatory prepayment (unless such required prepayment or
mandatory prepayment results from a default thereunder or an event
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<PAGE>
of the type that constitutes an Event of Default), prior to the stated maturity
thereof; provided, that it shall not constitute an Event of Default pursuant to
--------
clause (a) or (b) of this Section 9.04 unless the principal amount of any one
issue of such Indebtedness, or the aggregate amount of all such Indebtedness
referred to in clauses (a) and (b) above, exceeds $2,500,000 at any one time; or
9.05 Bankruptcy, etc. Holdings 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 successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against
Holdings or any of its Subsidiaries and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement 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 Holdings or any of its
Subsidiaries; or Holdings or any of its Subsidiaries 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 Holdings or any of
its Subsidiaries; or there is commenced against Holdings or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or Holdings or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or Holdings 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
Holdings or any of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by Holdings or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. (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, any Plan is, shall have been or is likely to be terminated
or the subject of termination proceedings under ERISA, 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, Holdings or any Subsidiary of
Holdings 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, 4975 or
4980 of the Code, or Holdings or any Subsidiary of Holdings has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) which 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; (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 which arises from such event or events will have a Material Adverse
Effect; or
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<PAGE>
9.07 Security Documents. (a) Except in each case to the extent
------------------
resulting from the failure of the Collateral Agent to retain possession of the
applicable Pledged Securities, any Security Document shall cease to be in full
force and effect, or shall cease to give the Collateral Agent the Liens, rights,
powers and privileges purported to be created thereby in favor of the Collateral
Agent, or (b) any Credit Party shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document and such default shall continue
beyond any cure or grace period specifically applicable thereto pursuant to the
terms of such Security Document; or
9.08 Guaranties. The Guaranties or any provision thereof shall cease
----------
to be in full force and effect, or any Guarantor or any Person acting by or on
behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations
under any Guaranty or any Guarantor shall default in the due performance or
observance of any material term, covenant or agreement on its part to be
performed or observed pursuant to any Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be entered
---------
against Holdings or any of its Subsidiaries involving a liability (not paid or
not fully covered by insurance) in excess of $2,500,000 for all such judgments
and decrees and all such judgments or decrees shall not have been vacated,
discharged or stayed or bonded pending appeal within 60 days from the entry
thereof; or
9.10 Ownership. A Change of Control Event shall have occurred;
---------
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against any Guarantor or the Borrower, except as otherwise
specifically provided for in this Agreement (provided, that if an Event of
--------
Default specified in Section 9.05 shall occur with respect to the Borrower, the
result which would occur upon the giving of written notice by the Agent as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitment (or the unutilized
portion thereof) terminated, whereupon the Commitment of each Bank (or the
unutilized portion thereof) shall forthwith terminate immediately and any
Commitment Fees 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 all Obligations owing hereunder (including Unpaid Drawings) 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 the Borrower; (iii) enforce, as Collateral Agent (or direct the
Collateral Agent to enforce), any or all of the Liens and security interests
created pursuant to the Security Documents; (iv) terminate any Letter of Credit
which may be terminated in accordance with its terms; and (v) direct the
Borrower to pay (and the Borrower hereby agrees upon receipt of such notice, or
upon the occurrence of any Event of Default specified in Section 9.05, to pay)
to the Collateral
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<PAGE>
Agent at the Payment Office such additional amounts of cash, to be held as
security for the Borrower's reimbursement obligations in respect of Letters of
Credit then outstanding, equal to the aggregate Stated Amount of all Letters of
Credit then outstanding.
SECTION 10. Definitions. As used herein, the following terms shall
-----------
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Acquired Business" shall mean the assets and Subsidiaries acquired by
the Borrower pursuant to the Acquisition Documents.
"Acquired Entity or Business" shall have the meaning set forth in the
definition of "Consolidated Net Income."
"Acquisition" shall mean the acquisition by the Borrower of the
Acquired Business of the Seller and substantially all the assets of Pilkington
Deutschland GmbH, a company registered under the laws of Germany pursuant to,
and in accordance with the terms of, the Acquisition Documents.
"Acquisition Agreements" shall mean (i) the Agreement for Purchase and
Sale, dated July 5, 1996, by and between the Borrower and the Seller, as in
effect on the Initial Borrowing Date, between the Borrower and the Seller, as
amended, modified or supplemented from time to time in accordance with the terms
thereof and hereof and (ii) each of the agreements listed on Annex XVI hereto.
"Acquisition Documents" shall mean the Acquisition Agreements, and all
other purchase and other agreements, instruments and documents relating to the
Acquisition.
"Additional Security Documents" shall have the meaning provided in
Section 7.11.
"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 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 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
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<PAGE>
certificate of deposit of a member bank of the Federal Reserve System in excess
of $100,000 (including, without limitation, any marginal, emergency,
supplemental, special or other reserves), plus (2) the then daily net annual
assessment rate as estimated by the Agent for determining the current annual
assessment payable by BTCo to the Federal Deposit Insurance Corporation for
insuring three month certificates of deposit.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 5% or
more of the securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Agent appointed pursuant to
Section 11.10.
"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,
and (ii) such Bank's Revolving Loan Commitment at such time less the sum of (x)
----
the aggregate outstanding principal amount of all Revolving Loans made by such
Bank and (y) such Bank's RL Percentage of the Letter of Credit Outstandings at
such time.
"Agreement" shall mean this Credit Agreement, as the same may be from
time to time modified, amended and/or supplemented.
"Applicable Base Rate Margin" shall mean, during any Applicable
Period, the respective percentage per annum set forth in clause (A), (B), (C) or
(D) below if, but only if, as of the Test Date with respect to such Applicable
Period the condition set forth in clause (A), (B), (C) or (D), as the case may
be, below is met:
(A) .75% if, as of the Test Date the Leverage Ratio for the Test
Period ended on such Test Date shall be 3.5:1.0 or greater;
(B) .50% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 3.5:1.0 and the
condition set forth in clauses (C) and (D) below are not satisfied;
(C) .25% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 3.0:1.0 and the
condition set forth in clause (D) below is not satisfied; or
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<PAGE>
(D) .0% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 2.5:1.0.
Notwithstanding anything to the contrary contained above in this definition, (i)
except as provided in clause (ii) below, the Applicable Base Rate Margin shall
be .25% until the first Start Date to occur after March 31, 1997, and (ii) the
Applicable Base Rate Margin shall be .75% at any time when (x) an Event of
Default shall exist or (y) financial statements have not been delivered when
required pursuant to Section 7.01(b) or (c), as the case may be.
"Applicable Commitment Fee Percentage" shall mean, during any
Applicable Period, the respective percentage per annum set forth in clause (A),
(B), (C), (D) or (E) below if, but only if, as of the Test Date with respect to
such Applicable Period the condition set forth in clause (A), (B), (C), (D) or
(E) below, as the case may be, is met:
(A) .50% if, as of the Test Date the Leverage Ratio for the Test
Period ended on such Test Date shall be 3.5:1.0 or greater;
(B) .45% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 3.5:1.0 and none
of the conditions set forth in clause (C), (D) or (E) below are satisfied;
(C) .40% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 3.0:1.0 and
neither of the conditions set forth in clause (D) or (E) below, as the case
may be, are satisfied;
(D) .35% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 2.5:1.0 and the
condition set forth in clause (E) below is not satisfied; or
(E) .30% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 2.0:1.0.
Notwithstanding anything to the contrary contained above in this definition, (i)
except as provided in clause (iii) below, the Applicable Commitment Fee
Percentage shall be .40% until the first Start Date to occur after March 31,
1997, (ii) the Applicable Commitment Fee Percentage shall not be less than .35%
until the first Start Date to occur after December 31, 1997 and (iii) the
Applicable Commitment Fee Percentage shall be .50% at all times when (x) an
Event of Default shall exist or (y) financial statements have not been delivered
when required pursuant to Section 7.01(b) or (c), as the case may be.
"Applicable ECF Percentage" shall mean, initially, 50%, provided, that
--------
on and after the date on which the aggregate outstanding principal amount of
Term Loans is $40,000,000 or less, the Applicable ECF Percentage shall be 25%.
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"Applicable Eurodollar Margin" shall mean, during any Applicable
Period, the respective percentage per annum set forth in clause (A), (B), (C),
(D) or (E) below if, but only if, as of the Test Date with respect to such
Applicable Period the condition set forth in clause (A), (B), (C), (D) or (E),
as the case may be, below is met:
(A) 1.75% if, as of the Test Date the Leverage Ratio for the Test
Period ended on such Test Date shall be 3.5:1.0 or greater;
(B) 1.50% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 3.5:1.0 and none
of the conditions set forth in clause (C), (D) or (E) below, as the case
may be, are satisfied;
(C) 1.25% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 3.0:1.0 and
neither of the conditions set forth in clause (D) or (E) below, as the case
may be, are satisfied;
(D) 1.00% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 2.5:1.0 and the
condition set forth in clause (E) below is not satisfied; or
(E) .75% if, but only if, as of the Test Date the Leverage Ratio for
the Test Period ended on such Test Date shall be less than 2.0:1.0.
Notwithstanding anything to the contrary contained above in this definition, (i)
except as provided in clause (iii) below, the Applicable Eurodollar Margin shall
be 1.25% until the first Start Date to occur after March 31, 1997, (ii) the
Applicable Eurodollar Margin shall not be less than 1.00% until the first Start
Date to occur after December 31, 1997 and (iii) the Applicable Eurodollar Margin
shall be 1.75% at any time when (x) an Event of Default shall exist or (y)
financial statements have not been delivered when required pursuant to Section
7.01(b) or (c), as the case may be.
"Applicable Period" shall mean each period which shall commence on a
date on which the financial statements are delivered pursuant to Section 7.01(b)
or (c), 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 7.01(b)
or (c), as the case may be, and (ii) the latest date on which the next financial
statements are required to be delivered pursuant to Section 7.01(b) or (c), as
the case may be.
"Asset Sale" shall mean any sale, transfer or other disposition by
Holdings or any of its Subsidiaries to any Person other than the Borrower or any
Wholly-Owned Subsidiary of the Borrower of any asset (including, without
limitation, any capital stock or other securities of another Person, but
excluding the sale by such Person of its own capital stock) of Holdings or such
Subsidiary other than (i) sales, transfers or other dispositions
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of inventory made in the ordinary course of business and (ii) sales of assets
pursuant to Section 8.02(d), (e), (f), (o), (t), (v), (w) or (y), provided, that
--------
the sale of the Natural Touch trademark and the one-time sale of inventory
related thereto pursuant to Section 8.02 shall be considered an Asset Sale.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit J (appropriately
completed).
"Authorized Officer" shall mean the Chief Executive Officer,
President, Chief Financial Officer, Treasurer, Controller or Secretary or any
other senior officer of Holdings or the Borrower designated as such in writing
to the Agent by Holdings or the Borrower, in each case to the extent reasonably
acceptable to the Agent.
"Bain Affiliates" shall mean any Affiliate of Bain Capital, provided
that for purposes of the definition of "Change of Control Event", the term Bain
Affiliate shall not include (x) any portfolio company of either Bain Capital or
any Affiliate of Bain Capital or (y) any officer or director of Holdings or any
of its Subsidiaries that is not also a partner or stockholder of Bain Capital on
the Effective Date.
"Bain Capital" shall mean Bain Capital, Inc. a Delaware corporation.
"Bank" shall have the meaning provided in the first paragraph of this
Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of an RL Bank to make available its portion of any Borrowing or to
fund its portion of any unreimbursed payment under Section 2.04(c) or (ii) an RL
Bank having notified the Agent and/or the Borrower that it does not intend to
comply with the obligations under Section 1.01(A)(c), 1.01(C) or 2.04(c), in the
case of either clause (i) or (ii) above as a result of the appointment of a
receiver or conservator with respect to such Bank at the direction or request of
any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (x) the rate which is
1/2 of 1% in excess of the Adjusted Certificate of Deposit Rate and (y) the
Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
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"Borrower Subordinated Loans" shall have the meaning provided in
Section 8.05(s).
"Borrower Subordinated Note" shall mean an unsecured junior
subordinated note issued by the Borrower (and not guaranteed or supported in any
way by any Subsidiary of the Borrower) in the form of Exhibit M, as amended,
modified or supplemented from time to time in accordance with the terms hereof
and thereof.
"Borrowing" shall mean the incurrence of one Type of Loan pursuant to
a single Facility by the Borrower from all of the Banks having Commitments with
respect to such Facility on a pro rata basis on a given date (or resulting from
--- ----
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period; provided, that Base Rate Loans incurred pursuant to Section
--------
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions 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) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect to any Person, without
duplication, all expenditures by such Person which should be capitalized in
accordance with GAAP, including, without duplication, 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 the amount of all Capitalized Lease Obligations incurred by such
Person.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided, that the full faith and credit of the United
--------
States of America is pledged
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in support thereof) having maturities of not more than twelve months from the
date of acquisition, (ii) U.S. dollar denominated time deposits, certificates of
deposit and bankers acceptances of (x) any Bank or (y) any bank whose short-term
commercial paper rating from Standard & Poor's Corporation ("S&P") is at least
A-1 or the equivalent thereof or from Moody's Investors Service, Inc.
("Moody's") is at least P-1 or the equivalent thereof (any such bank or Bank, an
"Approved Bank"), in each case with maturities of not more than twelve months
from the date of acquisition, (iii) commercial paper issued by any Approved Bank
or by the parent company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody's, or guaranteed by any industrial company with
a long term unsecured debt rating of at least A or A2, or the equivalent of each
thereof, from S&P or Moody's, as the case may be, and in each case maturing
within twelve months after the date of acquisition, (iv) marketable direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within twelve months from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either S&P or
Moody's and (v) investments in money market funds substantially all the assets
of which are comprised of securities of the types described in clauses (i)
through (iv) above.
"Change of Control Event" shall mean (a) Holdings shall cease to own
directly 100% on a fully diluted basis of the economic and voting interest in
the Borrower's capital stock or (b) any Person or "group" (within the meaning of
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as in effect on
the Effective Date), other than Bain Capital and/or the Bain Affiliates, shall
(A) have acquired beneficial ownership of 30% or more on a fully diluted basis
of the voting and/or economic interest in Holdings' capital stock or (B)
obtained the power (whether or not exercised) to elect a majority of Holdings'
directors or (c) the Board of Directors of Holdings shall cease to consist of a
majority of Continuing Directors.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of
this Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Secured Creditors.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.14(b).
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"Commitment" shall mean, with respect to each Bank, such Bank's Term
Loan Commitment and Revolving Loan Commitment.
"Commitment Fee" shall have the meaning provided in Section 3.01(a).
"Consolidated Current Assets" shall mean, at any time, the current
assets (other than cash, Cash Equivalents and deferred income taxes to the
extent included in current assets) of the Borrower and its Subsidiaries at such
time determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any time, the
current liabilities of the Borrower and its Subsidiaries determined on a
consolidated basis, but excluding (i) deferred income taxes, (ii) the current
portion of and accrued but unpaid interest on any Indebtedness under this
Agreement and any other long-term Indebtedness which would otherwise be included
therein, (iii) short-term borrowings of Foreign Subsidiaries unless the proceeds
thereof are used to finance current assets of such Foreign Subsidiaries and (iv)
to the extent deducted in determining Consolidated Net Income, reserves for
incentive employee bonuses, litigation reserves and delinquent and/or disputed
accounts payable.
"Consolidated Debt" shall mean, at any time, all Indebtedness of the
Borrower and its Subsidiaries determined on a consolidated basis, provided that
--------
for purposes of this definition, (i) the amount of Indebtedness in respect of
Interest Rate Protection Agreements shall be at any time the unrealized net loss
portion, if any, of the Borrower and/or its Subsidiaries thereunder on a marked-
to-market basis determined no more than one month prior to such time and (ii) to
the extent that any Foreign Subsidiary Working Capital Indebtedness is supported
by a Letter of Credit, the amount of such arrangement that shall constitute
Consolidated Debt shall be the greater of the outstanding principal amount of
such Indebtedness and the stated amount of such Letter of Credit.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income, before (i) total interest expense (inclusive of amortization of deferred
financing fees, premiums on Interest Rate Protection Agreements and any other
original issue discount) of the Borrower and its Subsidiaries determined on a
consolidated basis, (ii) the write-off of inventory step-up and in-process
research and development costs in accordance with purchase accounting, (iii) any
non-cash charges deducted in determining Consolidated Net Income for such period
and related to the issuance by Holdings of stock, warrants or options to
management (or any exercise of any such warrants or options), (iv) provisions
for taxes based on income and foreign withholding taxes, (v) giving effect to
any extraordinary gains or losses but with giving effect to gains or losses from
sales of assets sold in the ordinary course of business, (vi) any non-cash
charges related to the write-up of samples in accordance with purchase
accounting, (vii) Restructuring Expenditures to the extent deducted in
determining Consolidated Net Income for such period, provided that the aggregate
--------
amount of Restructuring Expenditures added back pursuant to this clause (vii)
for
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all periods shall not exceed $25,250,000 and (viii) giving effect to the
write-off of capitalized financing fees relating to the financing incurred to
finance the Acquisition.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of all depreciation expense and
amortization expense that were deducted in determining Consolidated EBIT for
such period; provided, that (x) for purposes of the definitions of Applicable
--------
Base Rate Margin, Applicable Commitment Fee Percentage and Applicable Eurodollar
Margin, and for the definition of Leverage Ratio as such definition is used in
the foregoing definitions, for the Test Period ending March 31, 1997,
Consolidated EBITDA shall be the actual Consolidated EBITDA for such Test Period
plus $24,200,000, and (y) for purposes of the definition of Leverage Ratio and
Pro Forma Leverage Ratio only, (i) for the Test Period ending June 30, 1997,
Consolidated EBITDA shall be the actual Consolidated EBITDA for such Test Period
multiplied by 4, (ii) for the Test Period ending September 30, 1997,
Consolidated EBITDA shall be the actual Consolidated EBITDA for such Test Period
multiplied by 2, and (iii) for the Test Period ending December 31, 1997,
Consolidated EBITDA shall be actual Consolidated EBITDA for such Test Period
multiplied by 4/3.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its Subsidiaries determined on a consolidated
basis with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs or benefits under Interest Rate Protection
Agreements, but excluding, however, amortization of any payments made to obtain
any Interest Rate Protection Agreements and deferred financing costs and any
interest expense on deferred compensation arrangements to the extent included in
total interest expense.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss), after provision for taxes, of the Borrower and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period but
excluding any unrealized losses and gains for such period resulting from mark-
to-market of Other Hedging Agreements; provided that (x) for purposes of
--------
Section 8.11 and the definitions of Applicable Base Rate Margin, Applicable
Commitment Fee Percentage, Applicable ECF Percentage and Applicable Eurodollar
Margin there shall be included (to the extent not already included) in
determining Consolidated Net Income for any period the net income (or loss) of
any Person, business, property or asset acquired during such period pursuant to
Section 8.02(p) and not subsequently sold or otherwise disposed of by the
Borrower or one of its Subsidiaries during such period (each such Person,
business, property or asset acquired and not subsequently disposed of during
such period, an "Acquired Entity or Business"), in each case based on the actual
net income (or loss) of such Acquired Entity or Business for the entire period
(including the portion thereof occurring prior to such acquisition) and (y) for
purposes of calculating Consolidated Net Income for any period, Consolidated Net
Income shall be adjusted for factually supportable and identifiable pro forma
cost savings for such
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period determined in accordance with GAAP and concurred in by the Borrower's
independent accountants that are directly attributable to the acquisition of an
Acquired Entity or Business pursuant to a Permitted Acquisition.
"Contingent Obligations" 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,
(a) to purchase any such primary obligation or any property constituting
direct or indirect security therefor, (b) 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, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner 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 or standard contractual indemnities (including without
limitation indemnities entered into in connection with the IPO Documents)
entered into, in each case 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 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.
"Continuing Directors" shall mean the directors of Holdings on the
Effective Date and each other director if such director's nomination for the
election to the Board of Directors of Holdings is recommended by a majority of
the then Continuing Directors.
"Credit Documents" shall mean this Agreement, the Notes, the
Guaranties and each Security Document.
"Credit Event" shall mean the making of a Loan (other than a Revolving
Loan made pursuant to a Mandatory Borrowing) or the issuance of a Letter of
Credit.
"Credit Party" shall mean Holdings, the Borrower and each Subsidiary
Guarantor.
"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.
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"Designated Real Property Sale" shall mean a sale by the Borrower
and/or any of its Subsidiaries of the Real Property owned by them as of the
Initial Borrowing Date and located in San Diego, California.
"Dividends" shall have the meaning provided in Section 8.06.
"Documents" shall mean the Credit Documents and the IPO Documents.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower which
is not a Foreign Subsidiary.
"Effective Date" shall have the meaning provided in Section 12.10.
"Eligible Transferee" shall mean and include a commercial bank,
investment company, financial institution or other "accredited investor" (as
defined in Regulation D of the Securities Act).
"Employment Agreements" shall have the meaning provided in Section
5.14(f).
"End Date" shall mean the last day of any Applicable Period.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings relating
in any way to any violation (or alleged violation) by Holdings or any of its
Subsidiaries under any Environmental Law (hereafter "Claims") or any permit
issued to Holdings or any of its Subsidiaries under any such law, 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 resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Law" shall mean any federal, state or local statute,
law, rule, regulation, ordinance, code, policy or 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 (for purposes of this definition
(collectively, "Laws")), relating to the environment or Hazardous Materials or
health and safety to the extent health and safety issues arise under the
Occupational Safety and Health Act of 1970, as amended, or any such similar
Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and the
rulings issued there-
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under. 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 Holdings or any Subsidiary of Holdings would be
deemed to be a "single employer" within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean, with respect to each Interest Period for
a Eurodollar Loan, (i) the arithmetic average (rounded to the nearest 1/100 of
1%) of the offered quotation to first-class banks in the interbank Eurodollar
market by the Agent for U.S. dollar deposits of amounts in same day funds
comparable to the outstanding principal amount of the Eurodollar Loan of the
Agent for which an interest rate is then being determined with maturities
comparable to the Interest Period to be applicable to such Eurodollar Loan,
determined as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (ii) 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) applicable to any member bank of the Federal Reserve System in respect
of Eurocurrency liabilities as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Excess Cash Flow" shall mean, for any period, (i) the sum of (A)
Consolidated Net Income for such period, plus (B) without duplication, the
----
amount of all non-cash charges (including, without limitation or duplication,
depreciation, amortization and non-cash interest expense but excluding any non-
cash charges deducted in determining Consolidated Current Liabilities or
Consolidated Current Assets) included in determining Consolidated Net Income for
such period, plus (C) the decrease, if any, in Working Capital from the first
----
day to the last day of such period, plus (D) any cash reimbursement from the
----
Seller required pursuant to the Acquisition Agreements for purchase price
adjustments (other than reimbursements or payments used or to be used by October
2, 1997 to effect the European restructuring or to pay employee liabilities
incurred in connection with the Acquisition), minus (ii) the sum of (A) any non-
-----
cash credits (including from sales of assets but excluding reserves excluded
from Consolidated Current Liabilities (as described in item (iv) of the
definition thereof) in a previous period to the extent such reserves are
reversed in the current period) included in determining Consolidated Net Income
for such period, (B) gains from sales of assets (other than sales of inventory
in the ordinary course of business) included in determining Consolidated Net
Income for such period, (C) an amount equal to (1) all Capital Expenditures
(excluding Capital Expenditures made pursuant to
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Section 8.08(c), (d) or (e)) made during such period that are not financed by
Indebtedness (including Capitalized Lease Obligations but excluding Loans
hereunder) plus (or minus, if negative) (2) the Rollover Amount for such period
to be carried forward to the next period less the Rollover Amount (if any) for
the preceding period carried forward to the current period, (D) the aggregate
principal amount of permanent principal payments of Indebtedness for borrowed
money of the Borrower and its Subsidiaries (other than repayments of Loans,
provided that repayments of Loans shall be deducted in determining Excess Cash
Flow if such repayments were (x) required as a result of a Scheduled Repayment
under Section 4.02(A)(b) or (y) made as a voluntary prepayment with internally
generated funds (but in the case of a voluntary prepayment of Revolving Loans,
only to the extent accompanied by a voluntary reduction to the Total Revolving
Loan Commitment)) during such period, (E) non-cash charges added back in a
previous period pursuant to clause (i)(B) above to the extent any such charge
has become a cash item in the current period, (F) the increase, if any, in
Working Capital from the first day to the last day of such period, (G) costs
incurred by Holdings during such period and paid for with the proceeds of
dividends paid by the Borrower pursuant to Section 8.06(iv), to the extent not
deducted in determining Consolidated Net Income for such period, (H) any cash
payment to the Seller required pursuant to the Acquisition Agreements for
purchase price adjustments, (I) any cash Restructuring Expenditures incurred
during such period to the extent not deducted in determining Consolidated Net
Income for such period, (J) any Restructuring Reserves as at the end of such
period, (K) any cash disbursements made during such period against non-current
liabilities (such as transition reserves and deferred taxes) to the extent not
deducted in determining Consolidated Net Income and (L) the aggregate amount of
cash Dividends paid by Holdings or the Borrower pursuant to Section 8.06(ix)
(other than cash Dividends, if any, paid with any portion of the Excess Proceeds
Amounts.
"Excess Cash Flow Period" shall mean each fiscal year of the Borrower,
commencing with the fiscal year ending December 31, 1997.
"Excess Cash Payment Date" shall mean the date occurring 90 days after
the last day of a fiscal year of the Borrower (beginning with its fiscal year
ending on December 31, 1997).
"Excess Proceeds" shall mean (i) the portion of the net proceeds
received by Holdings after the Effective Date from any issuance of Holdings
Common Stock (other than Permitted Equity Proceeds and other than proceeds
received from the IPO) which is permitted to be retained by Holdings pursuant to
Section 4.02(A)(d), to the extent contributed to the Borrower in accordance with
Section 7.15, (ii) the portion of Excess Cash Flow of the Borrower and its
Subsidiaries which is permitted to be retained by the Borrower pursuant to
Section 4.02(A)(f) and (iii) 100% of the Permitted Equity Proceeds received by
Holdings from time to time, to the extent contributed or loaned to the Borrower
in accordance with Section 4.02(A)(d).
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"Excess Proceeds Amount" shall initially be zero, which amount shall
be (A) increased (i) on each Excess Cash Payment Date (commencing with the
---------
Excess Cash Payment Date occurring 90 days after the fiscal year ending December
31, 1997) so long as any repayment required pursuant to Section 4.02(A)(f) has
been made, by an amount equal to that percentage of Excess Cash Flow of the
Borrower and its Subsidiaries which is permitted to be retained pursuant to
Section 4.02(A)(f) of Excess Cash Flow for the immediately preceding Excess Cash
Flow Period, (ii) on the date of the receipt by Holdings of the proceeds from
any issuance of Holdings Common Stock (other than Permitted Equity Proceeds and
other than proceeds received from the IPO), so long as any repayment pursuant to
Section 4.02(A)(d) has been made and Holdings has contributed such proceeds to
the Borrower in accordance with Section 7.15, by an amount equal to 50% of the
net proceeds from such offering or issuance and (iii) on the date of the receipt
by Holdings of any Permitted Equity Proceeds so long as Holdings has contributed
or loaned such Permitted Equity Proceeds to the Borrower in accordance with
Section 4.02(A)(d), by an amount equal to 100% of such Permitted Equity
Proceeds, and (B) reduced (i) on each Excess Cash Payment Date (commencing with
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the Excess Cash Payment Date occurring 90 days after the fiscal year ending
December 31, 1997) where Excess Cash Flow for the immediately preceding Excess
Cash Flow Period is a negative number, by such amount, (ii) at the time any
Capital Expenditure is made pursuant to Section 8.08(e), by the amount thereof,
(iii) at the time any investment is made pursuant to Section 8.05(x), by the
amount (if any) of Excess Proceeds expended in connection therewith, (iv) at the
time when the Borrower or any Domestic Subsidiary makes an Intercompany Loan to
a Foreign Subsidiary pursuant to Section 8.05(g), by the amount (if any) of
Excess Proceeds expended in connection therewith, (v) at the time when the
Borrower or any Domestic Subsidiary makes a contribution to or a capitalization
or forgiveness of Indebtedness of any Foreign Subsidiary pursuant to Section
8.05(l), by the amount (if any) of Excess Proceeds expended in connection
therewith, and (vi) at the time Holdings pays any Dividend pursuant to Section
8.06(ix), by the amount (if any) of Excess Proceeds expended in connection
therewith (it being understood that the Excess Proceeds Amount may be reduced to
an amount below zero after giving effect to the reductions enumerated in clause
(B) above).
"Existing Credit Agreement" shall mean the Credit Agreement, dated as
of October 2, 1996, among Holdings, the Borrower, the lenders party thereto, and
Bankers Trust Company, as Agent, together with all other agreements, instruments
and documents executed or delivered pursuant thereto or in connection therewith
(including, without limitation, all promissory notes, guarantees and security
documents).
"Existing Indebtedness" shall have the meaning provided in Section
6.24.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.14(c).
"Existing Letters of Credit" shall have the meaning provided in
Section 2.01(a).
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"Facility" shall mean any of the credit facilities established under
this Agreement, i.e., the Term Loan Facility or the Revolving Loan Facility.
----
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Foreign Cash Equivalents" shall mean certificates of deposit or
bankers acceptances of any bank organized under the laws of Canada, Japan or any
country that is a member of the European Economic Community whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof, in each case with
maturities of not more than twelve months from the date of acquisition.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Holdings or any one or more
of its Subsidiaries primarily for the benefit of employees of Holdings 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 the Borrower that
is incorporated under the laws of any jurisdiction other than the United States
of America, any State thereof, or any territory thereof.
"Foreign Subsidiary Working Capital Indebtedness" shall have the
meaning provided in Section 8.04(h).
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as promulgated by the American Institute of Certified
Public Accountants and its committees, as in effect from time to time; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guaranteed Creditors" shall mean and include each of the Agent, the
Collateral Agent, the Banks and each party (other than any Credit Party) party
to an Interest Rate Protection Agreement or Other Hedging Agreement to the
extent such party constitutes a Secured Creditor under the Security Documents.
"Guaranteed Obligations" shall mean (i) the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of the
principal and
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interest on each Note issued by the Borrower to each Bank, and Loans made, under
this Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit, together with all the other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of the Borrower to such Bank
now existing or hereafter incurred under, arising out of or in connection with
this Agreement or any other Credit Document and the due performance and
compliance with all the terms, conditions and agreements contained in the Credit
Documents by the Borrower and (ii) the full and prompt payment when due (whether
by acceleration or otherwise) of all obligations (including obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) of the Borrower owing under any such Interest Rate Protection
Agreement or Other Hedging Agreement entered into by the Borrower or any of its
Subsidiaries with any Bank or any affiliate thereof (even if such Bank
subsequently ceases to by a Bank under this Agreement for any reason) so long as
such Bank or affiliate participates in such Interest Rate Protection Agreement
or Other Hedging Agreement, and their subsequent assigns, if any, whether now in
existence or hereafter arising, and the due performance and compliance with all
terms, conditions and agreements contained therein.
"Guarantor" shall mean Holdings and each Subsidiary Guarantor.
"Guaranty" shall mean and include each of the Holdings Guaranty and
the Subsidiary Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical 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; and (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "restricted hazardous materials," "extremely hazardous wastes,"
"restrictive hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar meaning and regulatory
effect.
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
"Holdings Common Stock" shall have the meaning provided in Section
6.16.
"Holdings Guaranty" shall mean the guaranty of Holdings pursuant to
Section 13.
"Holdings Tax Allocation Agreement" shall mean the Tax Sharing
Agreement, dated as of the Original Effective Date, among Holdings and the
Borrower and its Domestic Subsidiaries.
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"Indebtedness" of any Person shall mean without duplication (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person but excluding deferred rent as determined in
accordance with GAAP, (iii) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (v) all Capitalized Lease Obligations of such Person, (vi) 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, (vii) all obligations under Interest Rate Protection Agreements and
Other Hedging Agreements and (viii) all Contingent Obligations of such Person,
provided, that Indebtedness shall not include trade payables and accrued
- --------
expenses, in each case arising in the ordinary course of business.
"Initial Borrowing Date" shall mean the date upon which the Term Loans
are initially incurred hereunder.
"Intercompany Loan" shall have the meaning provided in Section
8.05(g).
"Intercompany Notes" shall mean promissory notes, in the form of
Exhibit K, evidencing Intercompany Loans.
"Interest Coverage Ratio" shall mean, for any period, the ratio of
Consolidated EBITDA to Consolidated Interest Expense for such period.
"Interest Period," with respect to any Eurodollar Loan, shall mean the
interest period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"IPO" shall have the meaning provided in Section 5.09.
"IPO Documents" shall mean the Registration Statement relating to the
registration of the Holdings Common Stock, and all other documents or agreements
related to the consummation of the IPO, including, without limitation, all
underwriting or similar agreements and all documents filed with the SEC.
"L/C Supportable Indebtedness" shall mean (i) Foreign Subsidiary
Working Capital Indebtedness, (ii) obligations of the Borrower or 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 (iii) such other obligations of
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the Borrower or any of its Subsidiaries as are reasonably acceptable to the
Agent and the respective Letter of Credit Issuer and otherwise permitted to
exist pursuant to the terms of this Agreement.
"Leasehold" of any Person shall mean all of 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.
"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).
"Letter of Credit Issuer" shall mean BTCo, and any RL Bank which at
the request of the Borrower and with the consent of the Agent agrees, in such RL
Bank's sole discretion, to become a Letter of Credit Issuer for the purpose of
issuing Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.02(a).
"Leverage Ratio" shall mean, at any time, the ratio of Consolidated
Debt at such time to Consolidated EBITDA for the Test Period then last ended.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same
effect as the foregoing).
"Loan" shall mean each and every Loan made by any Bank hereunder,
including Term Loans, Revolving Loans or Swingline Loans.
"Management Agreements" shall have the meaning provided in Section
5.14(e).
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(c).
"Margin Stock" shall have the meaning provided in Regulation U.
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"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrower, Holdings and its Subsidiaries taken as a whole or
the Borrower and its Subsidiaries taken as a whole.
"Material Contracts" shall have the meaning provided in Section
5.14(h).
"Maturity Date" shall mean February 19, 2002.
"Maximum Swingline Amount" shall mean $10,000,000.
"Minimum Borrowing Amount" shall mean (i) for Base Rate Loans (other
than Swingline Loans), $1,000,000; (ii) for Eurodollar Loans, $1,000,000; and
(iii) for Swingline Loans, $250,000.
"Mortgage" shall have the meaning provided in Section 5.13(a).
"Mortgage Policies" shall have the meaning provided in Section
5.13(b).
"Mortgaged Properties" shall mean and include (i) all Real Properties
owned and leased by Holdings and its Domestic Subsidiaries to the extent
designated as such on Annex IV and (ii) each Real Property subjected to a
mortgage in favor of the Collateral Agent for the benefit of the Secured
Creditors pursuant to Section 7.11.
"NAIC" shall have the meaning provided in Section 1.10(c).
"Net Proceeds" shall mean, with respect to any Asset Sale, the
Proceeds resulting therefrom net of (a) cash expenses of sale (including
brokerage fees, if any, transfer taxes and payment of principal, premium and
interest of Indebtedness other than the Loans required to be repaid as a result
of such Asset Sale) and (b) incremental income taxes paid or payable as a result
thereof.
"Non-Defaulting Bank" shall mean each Bank other than a Defaulting
Bank.
"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.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, New York, New York 10006 or such other office as the Agent
may designate to Holdings, the Borrower and the Banks from time to time.
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"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Acquisition" shall mean the acquisition by the Borrower and
its Subsidiaries of the Wesley-Jessen conventional and disposable soft contact
lenses business from the Schering Corporation.
"Original Effective Date" shall mean October 2, 1996.
"Other Hedging Agreements" shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations in currency values.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, New York, New York 10006 or such other office as the Agent
may designate to Holdings, the Borrower and the Banks from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Pension Plan Refund" shall mean any cash payments (net of reasonable
costs associated therewith, including income, excise and other taxes payable
thereon) received by Holdings and/or of its Subsidiaries from any return of any
surplus assets from any single Plan or Foreign Pension Plan, other than any
return of amounts representing overestimates of any amounts due under any single
Plan or Foreign Pension Plan.
"Permitted Acquisition" shall have the meaning provided in Section
8.02(p).
"Permitted Covenant" shall mean (i) any periodic reporting covenant,
(ii) any covenant restricting payments by Holdings with respect to any
securities of Holdings which are junior to the Permitted Holdings PIK
Securities, (iii) any covenant the default of which can only result in an
increase in the amount of any redemption price, repayment amount, dividend rate
or interest rate, (iv) any covenant the default of which gives rise only to
rights or remedies which are subject to subordination terms reasonably
acceptable to the Agent, (v) any covenant providing board observance rights with
respect to Holdings' board of directors and (vi) any other covenant that does
not adversely affect the interests of the Banks (as reasonably determined by the
Agent).
"Permitted Encumbrances" shall mean (i) those liens, encumbrances and
other matters affecting title to any Mortgaged Property listed in the Mortgage
Policies in
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respect thereof and found, on the date of delivery of such Mortgage Policies to
the Agent in accordance with the terms hereof, reasonably acceptable by the
Agent, (ii) as to any particular Mortgaged Property at any time, such easements,
encroachments, covenants, rights of way, minor defects, irregularities or
encumbrances on title which do not, in the reasonable opinion of the Agent,
materially impair such Mortgaged Property for the purpose for which it is held
by the mortgagor thereof, or the lien held by the Collateral Agent, (iii)
municipal and zoning ordinances which are not violated in any material respect
by the existing improvements and the present use made by the mortgagor thereof
of the Premises (as defined in the respective Mortgage), (iv) general real
estate taxes and assessments not yet delinquent, and (v) such other items with
respect to Real Property as the Agent may consent to (such consent not to be
unreasonably withheld).
"Permitted Equity Proceeds" shall have the meaning provided in Section
4.02(A)(d).
"Permitted Holdings PIK Securities" shall mean any preferred stock or
subordinated promissory note of Holdings (or any security of Holdings that is
convertible or exchangeable into any preferred stock or subordinated promissory
note of Holdings), so long as the terms of any such preferred stock,
subordinated promissory note or security of Holdings (i) do not provide any
collateral security, (ii) do not provide any guaranty or other support by the
Borrower or any Subsidiaries of the Borrower, (iii) do not contain any mandatory
put, redemption, repayment, sinking fund or other similar provision occurring
before the sixth anniversary of the Initial Borrowing Date, (iv) do not require
the cash payment of dividends or interest before the sixth anniversary of the
Initial Borrowing Date, (v) do not contain any covenants other than any
Permitted Covenant, (vi) do not grant the holders thereof any voting rights
except for (x) voting rights required to be granted to such holders under
applicable law and (y) limited customary voting rights on fundamental matters
such as mergers, consolidations, sales of substantial assets, or liquidations
involving Holdings, and (vii) are otherwise reasonably satisfactory to the
Agent.
"Permitted Liens" shall have the meaning provided in Section 8.03.
"Permitted Sale-Leaseback Transactions" shall mean the sale and
leaseback by the Borrower and/or any of its Subsidiaries of vehicles owned by
such Persons.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, 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) Holdings, any of its Subsidiaries or
any ERISA Affiliate and each such plan for the five calendar year period
immediately following the latest date on
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which Holdings, any of its Subsidiaries or any ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section 5.11(a).
"Pledged Securities" shall mean all the Pledged Securities as defined
in the Pledge Agreement.
"Prime Lending Rate" shall mean the rate which BTCo 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 a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Proceeds" shall mean, with respect to any Asset Sale, the aggregate
cash payments (including any cash received by way of deferred payment pursuant
to a note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, but only as and when so
received) received by Holdings and/or any of its Subsidiaries from such Asset
Sale.
"Pro Forma Leverage Ratio" shall mean, at any time for the
determination thereof, the ratio of (x) Consolidated Debt at such time to (y)
Consolidated EBITDA for the Test Period then last ended, with such Pro Forma
Leverage Ratio to be determined on a pro forma basis as if the respective
--- -----
Permitted Acquisition (and the incurrence, assumption and/or repayment of any
Indebtedness in connection with such Permitted Acquisition), as the case may be,
had occurred on the first day of such Test Period (and such Indebtedness, if
any, had remained outstanding (or had not been outstanding, as the case may be)
throughout such Test Period). On the date of a Permitted Acquisition pursuant
to which the Pro Forma Leverage Ratio is to be calculated, the Borrower shall
deliver to the Agent a certificate of the Borrower's chief financial officer
setting forth in reasonable detail the pro forma calculations required to
--- -----
establish the Pro Forma Leverage Ratio (with such pro forma calculations to be
--- -----
made on a basis reasonably satisfactory to the Agent and to assume that the
interest expense attributable to any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the date of such Permitted Acquisition (taking into account any
Interest Rate Protection Agreement applicable to such Indebtedness if such
Interest Rate Protection Agreement has a remaining term in excess of 12 months)
had been the applicable rate for the entire period. In calculating the Pro Forma
Leverage Ratio in connection with any Permitted Acquisition, it is understood
that Consolidated EBITDA shall include the results of operations of the Person
or assets acquired pursuant to such Permitted Acquisition on a pro forma basis
--- -----
as if such acquisition had occurred on the first day of the respective Test
Period.
"Projections" shall have the meaning provided in Section 5.17.
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"Puerto Rico Pledge Agreement" shall have the meaning provided in
Section 5.13(b).
"Puerto Rico Security Documents" shall mean the Puerto Rico Pledge
Agreement, the Chattel Mortgage, dated as of February 19, 1997, between Wesley-
Jessen (Puerto Rico), as mortgagor, and the Collateral Agent, as mortgagee, the
Chattel Mortgage Note, dated as of February 19, 1997, by Wesley-Jessen (Puerto
Rico) in favor of the Collateral Agent, the real estate mortgage constituted by
Wesley-Jessen (Puerto Rico) upon its facilities in Cidra, Puerto Rico by virtue
of deed number 29 executed June 28, 1995 before notary Juan Agustin Rivero and
mortgage note, dated June 29, 1995, by Wesley-Jessen (Puerto Rico) in favor of
The First National Bank of Chicago, duly endorsed in favor of the Collateral
Agent, in the principal amount of $4,000,000.
"Quarterly Payment Date" shall mean the last Business Day of each
March, June, September and December.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by Holdings or any of its
Subsidiaries of any insurance or condemnation proceeds payable (i) by reason of
any theft, physical destruction or damage or any other similar event with
respect to any properties or assets of Holdings or any of its Subsidiaries, (ii)
by reason any condemnation, taking, seizing or similar event with respect to any
properties or assets of Holdings or any of its Subsidiaries and (iii) under any
policy of insurance required to be maintained under Section 7.03.
"Refinancing" shall mean the refinancing by the Borrower and the
termination by the Borrower in full of all commitments under the Existing Credit
Agreement, together with the payment of all loans, accrued interest, premiums,
fees, commissions, expenses and other amounts owing in connection with the
refinancing of the Existing Credit Agreement.
"Refinancing Documents" shall mean each of the agreements, documents
and instruments entered into in connection with the Refinancing.
"Register" shall have the meaning provided in Section 7.12.
"Registration Statement" shall mean Holdings' Registration Statement
on Form S-1 in the form delivered to the Banks pursuant to Section 5.09 as
amended from time to time.
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"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 any portion thereof establishing margin requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from to time in effect and any successor to all or
any portion thereof establishing margin requirements.
"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 establishing margin requirements.
"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 any portion thereof establishing margin requirements.
"Related Party" shall mean any Affiliate of Bain Capital on the
Effective Date, provided that for purposes of the definition of "Change of
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Control Event," the term Related Party shall not include (x) any portfolio
company of Bain Capital or any Affiliate of Bain Capital or (y) any officer or
director of Holdings or any of its Subsidiaries if not also a partner or
stockholder of Bain Capital on the Effective Date.
"Release" means disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing,
pouring and the like, into or upon any land or water or air, or otherwise
entering into the environment.
"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 subsection .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 Revolving Loan Commitments (or, if after the Total
Revolving Loan Commitment has been terminated, outstanding Revolving Loans and
RL Percentages of outstanding Swingline Loans and Letter of Credit Outstandings)
constitute greater than 50% of the sum of (i) the total outstanding Term Loans
of Non-Defaulting Banks and (ii)
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the Total Revolving Loan Commitment less the aggregate Revolving Loan
Commitments of Defaulting Banks (or, if after the Total Revolving Loan
Commitment has been terminated, the total outstanding Revolving Loans of Non-
Defaulting Banks and the aggregate RL Percentages of all Non-Defaulting Banks of
the total outstanding Swingline Loans and Letter of Credit Outstandings at such
time).
"Restructuring Expenditures" shall mean nonrecurring expenditures and
charges arising out of the restructuring, consolidation, severance or
discontinuance of any portion of the operations of any entities or businesses of
Holdings and its Subsidiaries in connection with the Acquisition and the
Original Acquisition.
"Restructuring Reserves" shall mean, at any time, an amount equal to
$25,250,000 less all Restructuring Expenditures theretofore made after the
Initial Borrowing Date.
"Returns" shall have the meaning provided in Section 6.23.
"Revolving Loan" shall have the meaning provided in Section
1.01(A)(c).
"Revolving Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I directly below the column
entitled "Revolving Loan Commitment," as the same may be reduced from time to
time pursuant to Section 3.02, 3.03, 4.01(b) and/or 9 or otherwise modified
pursuant to Section 1.13 and/or 12.04(b).
"Revolving Loan Facility" shall mean the Facility evidenced by the
Total Revolving Loan Commitment.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"RL Bank" shall mean at any time each Bank with a Revolving Loan
Commitment or with outstanding Revolving Loans.
"RL Percentage" shall mean at any time for each RL Bank, the
percentage obtained by dividing such RL Bank's Revolving Loan Commitment at such
time by the Total Revolving Loan Commitment at such time; provided, that if the
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Total Revolving Loan Commitment has been terminated, the RL Percentage of each
RL Bank shall be determined by dividing such RL Bank's Revolving Loan Commitment
immediately prior to such termination by the Total Revolving Loan Commitment
immediately prior to such termination.
"Rollover Amount" shall have the meaning provided in Section 8.08(b),
provided that for purposes of the definition of Excess Cash Flow, for the Excess
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Cash Flow Period ending December 31, 1997 only, the term Rollover Amount shall
mean $27,500,000
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minus the aggregate amount of Capital Expenditures made during the period from
January 1, 1997 through December 31, 1997 under Section 8.08(a).
"Scheduled Repayment" shall have the meaning provided in Section
4.02(A)(b).
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning provided in the respective
Security Documents.
"Security Agreement" shall have the meaning provided in Section
5.11(b).
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Documents" shall mean and include the Security Agreement,
the Pledge Agreement, each Puerto Rico Security Documents, each Mortgage, each
Additional Security Document, if any and each other document or instrument
entered into pursuant to Sections 5.11 and 7.14, if any, in each case as and
when executed and delivered in accordance with the terms of this Agreement and
as the same may be amended, modified or supplemented from time to time in
accordance with the terms thereof and hereof.
"Seller" shall mean Pilkington plc, a company registered under the
laws of England and Wales.
"Seller Subordinated Note" shall mean the unsecured junior
subordinated note issued by Holdings in favor of the Seller in connection with
the Acquisition.
"Senior Officer" shall mean Chief Executive Officer, President, Chief
Financial Officer, Treasurer, Controller or Secretary or any other senior
officer of Holdings or any of its Subsidiaries with knowledge of, or
responsibility for, the financial affairs of such Person.
"Shareholder Subordinated Note" shall mean an unsecured junior
subordinated note issued by Holdings (and not guaranteed or supported in any way
by the Borrower or any of its Subsidiaries) in the form of Exhibit L, as the
same may be amended, modified or supplemented from time to time pursuant to the
terms hereof and thereof.
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"Shareholders' Agreements" shall have the meaning set forth in Section
5.14(d).
"Start Date" shall mean the first day of any Applicable Period.
"Stated Amount" of each Letter of Credit shall mean at any time the
maximum amount available to be drawn thereunder (regardless of whether any
conditions for drawing could then be met).
"Subsidiary" of any Person shall mean and include (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) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Subsidiary of the Borrower
(other than a Foreign Subsidiary except to the extent otherwise provided in
Section 7.14) that is or becomes a party to the Subsidiary Guaranty.
"Subsidiary Guaranty" shall have the meaning provided in Section 5.12.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(B).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Date" shall mean that date upon which the Agent
determines (and notifies the Borrower and the Banks) that the primary
syndication (and resulting addition of Persons as Banks pursuant to Section
12.04(b)) has been completed.
"Tax Allocation Agreements" shall have the meaning provided in Section
5.14(g).
"Taxes" shall have the meaning provided in Section 4.04.
"Term Loan" shall have the meaning provided in Section 1.01(A)(a).
"Term Loan Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I directly below the column
entitled
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"Term Loan Commitment," as the same may be reduced or terminated
pursuant to Section 3.03 and/or 9 or otherwise modified pursuant to Section 1.13
and/or 12.04(b).
"Term Loan Facility" shall mean the Facility evidenced by the Total
Term Loan Commitment.
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Date" shall mean, with respect to any Applicable Period, the
last day of the most recent fiscal quarter or fiscal year, as the case may be,
ended immediately prior to the Start Date with respect to such Applicable
Period.
"Test Period" shall mean (i) for any determination made prior to March
31, 1998, the period from April 1, 1997 to the last day of the fiscal quarter of
the Borrower then last ended and (ii) for any determination made thereafter, the
four consecutive fiscal quarters of the Borrower then last ended; provided, that
--------
for purposes of the definitions of Applicable Base Rate Margin, Applicable
Commitment Fee Percentage and Applicable Eurodollar Margin, and for the
definition of Leverage Ratio as such definition is used in the foregoing
definitions, the definition of Test Period shall also include the fiscal quarter
ending March 31, 1997.
"Total Commitment" shall mean the sum of the Total Term Loan
Commitment and the Total Revolving Loan Commitment.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving
Loan Commitments of each of the RL Banks.
"Total Term Loan Commitment" shall mean the sum of the Term Loan
Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
(i) the Total Revolving Loan Commitment at such time less (ii) the sum of the
aggregate principal amount of all Revolving Loans and Swingline Loans at such
time plus the Letter of Credit Outstandings at such time.
"Transaction" shall mean, collectively, (i) the IPO, (ii) the
Refinancing, (iii) the occurrence of Credit Events hereunder on the Initial
Borrowing Date, (iv) such other transactions as contemplated by the Documents
and (v) the payment of fees and expenses in connection with the foregoing.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
----
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"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean 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. 35, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.03(a).
"U.S. Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States of America.
"Wesley-Jessen (Puerto Rico)" shall mean Wesley-Jessen (Puerto Rico),
Inc., a Delaware corporation.
"West Coast Asset Sale" shall mean the sale by the Borrower and/or any
of its Subsidiaries of (x) any or all of the assets on or at the Borrower's San
Diego, California facility, but excluding the Real Property relating to such
facility, and (y) any or all of the assets on or at the Borrower's Sunnyvale,
California facility, in the case of both clause (x) and (y) above to the extent
sold in connection with the restructuring or transfer to other facilities of the
operations at such facility.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying shares
and/or other nominal amounts of shares required to be held other than by such
Person under applicable law) is at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries 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.
"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Written," "written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile device, telegraph
or cable.
SECTION 11. The Agent.
---------
11.01 Appointment. Each Bank hereby irrevocably designates and
-----------
appoints BTCo as Agent of such Bank (such term to include for purposes of this
Section 11, BTCo acting as Collateral Agent) to act as specified herein and in
the other Credit Documents,
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and each such Bank hereby irrevocably authorizes BTCo as the Agent to take such
action on its behalf under the provisions of this Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
The Agent agrees to act as such upon the express conditions contained in this
Section 11. Notwithstanding any provision to the contrary elsewhere in this
Agreement or in any other Credit Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in the other
Credit Documents, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agent. The provisions
of this Section 11 are solely for the benefit of the Agent and the Banks, and
neither Holdings nor any of its Subsidiaries shall have any rights as a third
party beneficiary of any of the provisions hereof. In performing its functions
and duties under this Agreement, the Agent shall act solely as agent of the
Banks and the Agent does not assume and shall not be deemed to have assumed any
obligation or relationship of agency or trust with or for Holdings or any of its
Subsidiaries.
11.02 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care except to the extent otherwise required by Section 11.03.
11.03 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person in its capacity as Agent under or in connection with this Agreement or
the other Credit Documents (except for its or such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by Holdings, any of
its Subsidiaries or any of their respective officers contained in this Agreement
or the other Credit Documents, any other Document or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Document or for
any failure of Holdings or any of its Subsidiaries or any of their respective
officers to perform its obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or the other Documents, or to inspect the properties, books
or records of Holdings or any of its Subsidiaries. The Agent shall not be
responsible to any Bank for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Agreement or any other
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by the Agent to the Banks
or
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by or on behalf of Holdings or any of its Subsidiaries to the Agent or any Bank
or be required to ascertain or inquire as to the performance or observance of
any of the terms, conditions, provisions, covenants or agreements contained
herein or therein or as to the use of the proceeds of the Loans or of the
existence or possible existence of any Default or Event of Default.
11.04 Reliance by Agent. The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to Holdings or any of its Subsidiaries),
independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Credit Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems appropriate or it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and
the other Credit Documents in accordance with a request of the Required Banks
(or all of the Banks, to the extent required by this Agreement), and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Banks.
11.05 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has actually received notice from a Bank, Holdings or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Agent receives such a notice, the Agent shall give prompt notice thereof to
the Banks. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks;
provided, that, unless and until the Agent shall have received such
- --------
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
11.06 Non-Reliance on Agent and Other Banks. Each Bank expressly
-------------------------------------
acknowledges that neither the Agent nor any of its respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of Holdings or any of its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other condition, prospects and
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creditworthiness of Holdings and its Subsidiaries and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other condition, prospects and
creditworthiness of Holdings and its Subsidiaries. The Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of Holdings or any of its Subsidiaries
which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
11.07 Indemnification. The Banks agree to indemnify the Agent in its
---------------
capacity as such ratably according to their respective "percentages" as used in
determining the Required Banks at such time or, if the Commitments have
terminated and all Loans have been repaid in full, as determined immediately
prior to such termination and repayment (with such "percentages" to be
determined as if there are no Defaulting Banks), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the Agent in its
capacity as such in any way relating to or arising out of this Agreement or any
other Credit Document, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted to be taken
by the Agent under or in connection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by Holdings or any of its
Subsidiaries; provided, that no Bank shall be liable to the Agent for the
--------
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
primarily from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent be insufficient or become impaired (other than as a result of the gross
negligence or willful misconduct of the Agent), the Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The agreements in this
Section 11.07 shall survive the payment of all Obligations.
11.08 Agent in its Individual Capacity. The Agent and its affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with Holdings and its Subsidiaries as though the Agent were not the
Agent hereunder. With respect to the Loans made by it and all Obligations owing
to it, the Agent shall have the same rights and powers under this Agreement as
any Bank and may exercise the same as though it were not the Agent and the terms
"Bank" and "Banks" shall include the Agent in its individual capacity. The
Agent and/or its affiliates may own stock of Holdings or any Subsidiary of
Holdings and may accept deposits from, lend money to, and generally engage
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in any kind of banking, trust or other business with Holdings or any Affiliate
of Holdings as if it were 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.
11.09 Holders. The 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 filed with the Agent. Any request, authority or consent of any Person
or entity 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 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.
11.10 Resignation of the Agent; Successor Agent. The Agent may
-----------------------------------------
resign as the Agent upon 20 days' notice to the Banks and, unless a Default of
the type referred to in Section 9.05 has occurred and is continuing, to the
Borrower. Upon the resignation of the Agent, the Required Banks shall appoint
from among the Banks a successor Agent which is a bank or a trust company for
the Banks subject, to the extent that no payment Default or Event of Default has
occurred and is then continuing, to prior approval by the Borrower (such
approval not to be unreasonably withheld or delayed), whereupon such successor
agent shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall include such successor agent effective upon its appointment, and
the resigning Agent's rights, powers and duties as the Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement. If a successor Agent shall not
have been so appointed within such 20 day period after the date such notice of
resignation was given by the Agent, the Agent's resignation shall become
effective and the Banks shall thereafter perform all duties of the Agent
hereunder and/or under any other Credit Documents until such time, if any, as
the Required Banks appoint a successor Agent as provided above. After the
resignation of the Agent hereunder, the provisions of this Section 11 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
SECTION 12. Miscellaneous.
-------------
12.01 Payment of Expenses, etc. The Borrower hereby agrees to: (i)
-------------------------
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent (including, without
limitation, the reasonable fees and disbursements of White & Case and local
counsel) in connection with the negotiation, preparation, execution and delivery
of the Credit Documents and the documents and instruments referred to therein
and any amendment, waiver or consent relating thereto and in connection with the
Agent's syndication efforts with respect to this Agreement; (ii) pay all
reasonable out-of-pocket costs and expenses of the Agent and each of the Banks
in connection with the enforcement of the Credit Documents and the documents and
instruments referred to therein and, after an Event of Default shall have
occurred and be
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continuing, the protection of the rights of the Agent and each of the Banks
thereunder (including, without limitation, the reasonable fees and disbursements
of counsel (including in-house counsel) for the Agent and for each of the
Banks); (iii) pay and hold each of the Banks harmless from and against any and
all present and future stamp 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 (iv)
indemnify the Agent, the Collateral Agent and each Bank, its officers,
directors, trustees, employees, representatives and agents from and hold each of
them harmless against any and all losses, liabilities, claims, damages or
expenses incurred by 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 Agent, the Collateral Agent or any Bank is a
party thereto and whether or not any such investigation, litigation or other
proceeding is between or among the Agent, the Collateral Agent, any Bank, any
Credit Party or any third Person or otherwise) related to the entering into
and/or performance of this Agreement or any other Document or the use of the
proceeds of any Loans hereunder or the Transaction or the consummation of any
other transactions contemplated in any Document (but excluding any such 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), 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 or any
Environmental Claim, in each case, including, without limitation, the reasonable
fees and disbursements of counsel and independent consultants incurred in
connection with any such investigation, litigation or other proceeding.
12.02 Right of Setoff, Collateral Matters. (a) 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 and during the
continuance 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 Holdings or any of its Subsidiaries 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
Holdings or any of its Subsidiaries against and on account of the Obligations of
Holdings or any of its Subsidiaries to such Bank under this Agreement or under
any of the other Credit Documents, including, without limitation, all interests
in Obligations of Holdings or any of its Subsidiaries purchased by such Bank
pursuant to Section 12.06(b), and all other claims of any nature or description
arising out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Bank shall have made any demand hereunder
and although said Obligations shall be contingent or unmatured.
(b) NOTWITHSTANDING THE FOREGOING SUBSECTION (a), AT ANY TIME THAT
THE LOANS OR ANY OTHER OBLIGATION SHALL BE
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SECURED BY REAL PROPERTY LOCATED IN CALIFORNIA, NO BANK SHALL EXERCISE A RIGHT
OF SETOFF, BANKER'S LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE
ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR
ANY NOTE THAT IS NOT TAKEN BY THE REQUIRED BANKS OR APPROVED IN WRITING BY THE
REQUIRED BANKS IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT
TO SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE
OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE)
AFFECT OR IMPAIR THE VALIDITY, PRIORITY OR ENFORCEABILITY OF THE LIENS GRANTED
TO THE COLLATERAL AGENT PURSUANT TO THE SECURITY DOCUMENTS OR THE ENFORCEABILITY
OF THE NOTES AND OTHER OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY
BANK OF ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE REQUIRED BANKS
SHALL BE NULL AND VOID. THIS SUBSECTION (b) SHALL BE SOLELY FOR THE BENEFIT OF
EACH OF THE BANKS HEREUNDER.
12.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Bank, at its address specified
for such Bank on Annex II; or, at such other address as shall be designated by
any party in a written notice to the other parties hereto. All such notices and
communications shall be mailed, telegraphed, telexed, telecopied or cabled or
sent by overnight courier, and shall be effective when received.
12.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, no Credit Party may assign
-------- -------
or transfer any of its rights, obligations or interest hereunder or under any
other Credit Document without the prior written consent of all of the Banks and,
provided further, that no Bank may assign or transfer all or any portion of its
- ----------------
Revolving Loan Commitment and/or its outstanding Loans except as provided in
Section 12.04(b) and, provided further, that although any Bank may grant
----------------
participations in its rights hereunder in accordance with this Section, such
Bank shall remain a "Bank" for all purposes hereunder and the participant shall
not constitute a "Bank" hereunder and, provided further, that no Bank shall
----------------
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 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
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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 participation 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 hereunder 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
outstanding Term Loans 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
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 Annex I shall be deemed
--------
modified to reflect the Commitments (and/or outstanding Term Loans, as the case
may be) of such new Bank and of the existing Banks, (ii) upon surrender of the
old Notes, new Notes will be issued, at the Borrower's expense, to such new Bank
and to the 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 Agent shall be required in connection
with any such assignment pursuant to clause (y) of this Section 12.04(b) (which
consent shall not be unreasonably withheld or delayed) and (iv) the Agent shall
receive at the time of each such assignment, from the assigning or assignee
Bank, the payment of a non-refundable assignment fee of $3,500 and, provided
--------
further, that such transfer or assignment will not be effective until recorded
- -------
by the Agent on the Register pursuant to Section 7.13 hereof. To the extent of
any assignment pursuant to this Section 12.04(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 12.04(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
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
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Bank's Commitments and related outstanding Obligations pursuant to Section 1.13
or this Section 12.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 1.11, 2.05 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.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and the Agent or any Bank 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 and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Agent or any
Bank 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
Agent or the Banks to any other or further action in any circumstances without
notice or demand.
12.06 Payments Pro Rata. (a) The Agent agrees that promptly after
-----------------
its receipt of each payment from or on behalf of any Credit Party in respect of
any Obligations of such Credit Party, it shall, except as otherwise provided in
this Agreement, distribute such payment to the Banks (other than any Bank that
has consented in writing to waive its pro rata share of 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 or 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 of the Banks in such amount; provided, that if
--------
all or any portion of such excess amount is thereafter recovered
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<PAGE>
from such Bank, such purchase shall be rescinded and the purchase price restored
to the extent of such recovery, but without interest.
12.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by Holdings or the Borrower to the Banks); provided, that except as otherwise
--------
specifically provided herein, all computations determining compliance with
Sections 4.02 and 8, including definitions used therein, shall utilize
accounting principles and policies in effect at the time of the preparation of,
and in conformity with those used to prepare, the September 28, 1996 financial
statements delivered to the Banks pursuant to Section 6.10(b), but shall not
give effect to (i) purchase accounting adjustments required or permitted by APB
16 and its interpretations (including non-cash write-ups and non-cash charges
relating to inventory, fixed assets and in-process research and development, in
each case arising in connection with the Acquisition, the Original Acquisition
or any Permitted Acquisitions) and APB 17 and its interpretations (including
non-cash charges relating to intangibles and goodwill arising in connection with
the Acquisition, the Original Acquisition or any Permitted Acquisitions) and
(ii) those fees paid to Bain Capital and/or Related Parties pursuant to Sections
8.07(i) and 8.07(iii).
(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
12.08 Governing Law; Submission to Jurisdiction; Venue. (a) THIS
------------------------------------------------
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL 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, each
Credit Party hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Credit Party hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Credit Party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or any
other Credit Document brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such Credit Party. Each Credit Party irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such Credit Party, at its address for notices pursuant to Section 12.03, such
service to become effective 30 days after such mailing. Each Credit Party
hereby irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right of
the Agent, any Bank or the holder of any Note to serve process in
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any other manner permitted by law or to commence legal proceedings or otherwise
proceed against any Credit Party in any other jurisdiction.
(b) Each Credit Party 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.
12.09 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 complete set of
counterparts executed by all the parties hereto shall be lodged with Holdings,
the Borrower and the Agent.
12.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which Holdings, 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 Agent at the Notice
Office or, in the case of the Banks, shall have given to the Agent telephonic
(confirmed in writing), written, telex or facsimile notice (actually received)
at such office that the same has been signed and mailed to it. The Agent will
give Holdings, the Borrower and each Bank prompt written notice of the
occurrence of the Effective Date.
12.11 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.
12.12 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
Required 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 in the case of following clause (i)), (i)
extend the final scheduled maturity of any Loan or Note or extend the stated
maturity of any Letter of Credit beyond the Maturity Date, or reduce the rate or
extend the time of payment of interest or Fees thereon, or reduce the principal
amount thereof (it being understood that any amendment or modification to the
financial definitions in this Agreement shall not constitute a reduction in any
rate of interest or fees for the purposes of this clause (i)), (ii) release all
or substantially all of the Collateral (except as expressly provided in the
Security Documents) under all the Security Documents, (iii) amend, modify or
waive any provision of this Section 12.12, (iv) reduce the percentage specified
in the definition of Required Banks (it being understood that, with the consent
of
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the Required Banks, additional extensions of credit pursuant to this Agreement
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 (v) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement; provided
--------
further, that no such change, waiver, discharge or termination shall (1)
- -------
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), (2) without the consent of BTCo and each other Letter
of Credit Issuer, amend, modify or waive any provision of Section 2 or alter its
rights or obligations with respect to Letters of Credit, (3) without the consent
of BTCo, alter its rights or obligations with respect to Swingline Loans, (4)
without the consent of the Agent, amend, modify or waive any provision of
Section 11 as same applies to the Agent or any other provision as same relates
to the rights or obligations of the Agent or (5) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clause (a)(i) through (v), inclusive, of the first proviso to Section 12.12(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 clause (A) or (B) below,
to either (A) replace each such non-consenting Bank or Banks 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 proposed change,
waiver, discharge or termination or (B) terminate such non-consenting Bank's
Commitments and repay in full its outstanding Loans, in accordance with Sections
3.02(b) and/or 4.01(b), provided that, unless the Commitments 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
----------------
the Borrower shall not have the right to replace a Bank 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 to Section 12.12(a).
12.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Section 1.10, 1.11, 2.05, 4.04, 11.07 or 12.01, shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
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<PAGE>
12.14 Domicile of Loans. Each Bank may transfer and carry its Loans
-----------------
at, to or for the account of any branch office, subsidiary or affiliate of such
Bank; provided, that the Borrower shall not be responsible for costs arising
--------
under Section 1.10, 1.11, 2.05 or 4.04 resulting from any such transfer (other
than a transfer pursuant to Section 1.12) to the extent such costs would not
otherwise be applicable to such Bank in the absence of such transfer.
12.15 Confidentiality. (a) Each of the Banks agrees that it will
---------------
use its best efforts not to disclose without the prior consent of the Borrower
(other than to its employees, auditors, counsel or other professional advisors,
to affiliates 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) any information with respect to Holdings, the Borrower or
any of its Subsidiaries which is furnished pursuant to this Agreement;
provided, that any Bank may disclose any such information (a) as has become
- --------
generally available to the public or has become available to such Bank on a
non-confidential basis, (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, the Federal Deposit Insurance Corporation, the NAIC or similar
organizations (whether in the United States or elsewhere) or their successors,
(c) as may be required or appropriate in response 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, and (e) to any prospective
transferee in connection with any contemplated transfer of any of the Notes or
any interest therein by such Bank; provided, that such prospective transferee
--------
agrees to be bound by the provisions of this Section 12.15 to the same extent as
such Bank.
(b) Each of Holdings and the Borrower hereby acknowledges and agrees
that each Bank may share with any of its affiliates any information related to
Holdings or any of its Subsidiaries (including, without limitation, any
nonpublic customer information regarding the creditworthiness of Holdings and
its Subsidiaries, provided that such Persons shall be subject to the provisions
of this Section 12.15 to the same extent as such Bank).
12.16 Waiver of Jury Trial. 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.
SECTION 13. Holdings Guaranty.
-----------------
13.01 The Guaranty. In order to induce the Banks to enter into this
------------
Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by Holdings from the proceeds of the Loans and the
issuance of the Letters of Credit, Holdings hereby agrees with the Banks as
follows: Holdings hereby unconditionally
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<PAGE>
and irrevocably guarantees as primary obligor and not merely as surety the full
and prompt payment when due, whether upon maturity, acceleration or otherwise,
of any and all of the Guaranteed Obligations of the Borrower to the Guaranteed
Creditors. If any or all of the Guaranteed Obligations of the Borrower to the
Guaranteed Creditors becomes due and payable hereunder, Holdings unconditionally
promises to pay such indebtedness to the Agent and/or the Banks, or order, on
demand, together with any and all expenses which may be incurred by the Agent or
the Banks in collecting any of the Guaranteed Obligations. If claim is ever made
upon any Guaranteed Creditor for repayment or recovery of any amount or amounts
received in payment or on account of any of the Guaranteed Obligations and any
of the aforesaid payees repays all or part of said amount by reason of (i) any
judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property or (ii) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including the Borrower), then and in such event Holdings agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon
Holdings, notwithstanding any revocation of this Guaranty other instrument
evidencing any liability of the Borrower, and Holdings shall be and remain
liable to the aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such payee.
13.02 Bankruptcy. Additionally, Holdings unconditionally and
----------
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
of the Borrower to the Guaranteed Creditors whether or not due or payable by the
Borrower upon the occurrence of any of the events specified in Section 9.05, and
unconditionally promises to pay such indebtedness to the Guaranteed Creditors,
or order, on demand, in lawful money of the United States.
13.03 Nature of Liability. The liability of Holdings hereunder is
-------------------
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrower whether executed by Holdings, any other
guarantor or by any other party, and the liability of Holdings hereunder is not
affected or impaired by (a) any direction as to application of payment by the
Borrower or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
Guaranteed Obligations of the Borrower, or (c) any payment on or in reduction of
any such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, or (e) any payment
made to any Guaranteed Creditor on the Guaranteed Obligations which any such
Guaranteed Creditor repays to the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and Holdings waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
13.04 Independent Obligation. The obligations of Holdings hereunder
----------------------
are independent of the obligations of any other guarantor, any other party or
the Borrower, and a separate action or actions may be brought and prosecuted
against Holdings whether or not action is brought against any other guarantor,
any other party or the Borrower and whether
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or not any other guarantor, any other party or the Borrower be joined in any
such action or actions. Holdings waives, to the full extent permitted by law,
the benefit of any statute of limitations affecting its liability hereunder or
the enforcement thereof. Any payment by the Borrower or other circumstance which
operates to toll any statute of limitations as to the Borrower shall operate to
toll the statute of limitations as to any Guarantor.
13.05 Authorization. Holdings authorizes the Guaranteed Creditors
-------------
without notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability hereunder,
from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended, renewed
or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than
the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Guaranteed Creditors
regardless of what liability or liabilities of Holdings or the Borrower
remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this Agreement
or any of such other instruments or agreements; and/or
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<PAGE>
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Holdings from its liabilities under this Guaranty.
13.06 Reliance. It is not necessary for any Guaranteed Creditor to
--------
inquire into the capacity or powers of the Borrower or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
Guaranteed Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
13.07 Subordination. Any of the indebtedness of the Borrower
-------------
relating to the Guaranteed Obligations now or hereafter owing to Holdings is
hereby subordinated to the Guaranteed Obligations of the Borrower owing to the
Guaranteed Creditors; and if the Agent so requests at a time when an Event of
Default exists, all such indebtedness relating to the Guaranteed Obligations of
the Borrower to Holdings shall be collected, enforced and received by Holdings
for the benefit of the Guaranteed Creditors and be paid over to the Agent on
behalf of the Guaranteed Creditors on account of the Guaranteed Obligations of
the Borrower to the Guaranteed Creditors, but without affecting or impairing in
any manner the liability of Holdings under the other provisions of this
Guaranty. Prior to the transfer by Holdings of any note or negotiable
instrument evidencing any of the indebtedness relating to the Guaranteed
Obligations of the Borrower to Holdings, Holdings shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, Holdings hereby
agrees with the Guaranteed Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under Section 509 of the Bankruptcy Code or otherwise)
until all Guaranteed Obligations have been irrevocably paid in full in cash.
13.08 Waiver. (a) Holdings waives any right (except as shall be
------
required by applicable statute and cannot be waived) to require any Guaranteed
Creditor to (i) proceed against the Borrower, any other guarantor or any other
party, (ii) proceed against or exhaust any security held from the Borrower, any
other guarantor or any other party or (iii) pursue any other remedy in any
Guaranteed Creditor's power whatsoever. Holdings waives any defense based on or
arising out of any defense of the Borrower, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the validity, legality or unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower other than payment in full of the Guaranteed
Obligations. The Guaranteed Creditors may, at their election, foreclose on
any security held by the Agent, the Collateral Agent or any other Guaranteed
Creditor by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Guaranteed Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of Holdings
hereunder except to the extent the Guaranteed Obligations
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<PAGE>
have been paid. Holdings waives any defense arising out of any such election by
the Guaranteed Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
Holdings against the Borrower or any other party or any security.
(b) Holdings waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Guaranteed Obligations. Holdings assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which Holdings assumes
and incurs hereunder, and agrees that the Agent and the Banks shall have no duty
to advise Holdings of information known to them regarding such circumstances or
risks.
(c) Holdings hereby acknowledges and affirms that it understands that
to the extent the Guaranteed Obligations are secured by real property located in
the State of California, Holdings shall be liable for the full amount of its
liability hereunder notwithstanding foreclosure on such real property by
trustee sale or any other reason impairing Holdings' or any secured creditor's
right to proceed against the Borrower or any other guarantor of the Guaranteed
Obligations.
(d) Holdings hereby waives, to the fullest extent permitted by
applicable law, all rights and benefits under Sections 580a, 580b, 580d and 726
of the California Code of Civil Procedure. Holdings hereby further waives, to
the fullest extent permitted by applicable law, without limiting the generality
of the foregoing or any other provision hereof, all rights and benefits which
might otherwise be available to Holdings under Sections 2787 through 2855,
inclusive, 2899 and 3433 of the California Civil Code.
(e) Holdings further understands, is aware and hereby acknowledges
that if the Guaranteed Creditors elect to nonjudicially foreclose on any real
property security located in the State of California any right of subrogation of
Holdings against any Credit Party may be impaired or extinguished and that as a
result of such impairment or extinguishment of subrogation rights, Holdings
may have a defense to a deficiency judgment arising out of the operation of
Section 580d of the California Code of Civil Procedure and related principles of
estoppel. Holdings waives all rights and defenses arising out of an election of
remedies by the Guaranteed Creditors, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a Guaranteed
Obligation, has destroyed the guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise.
13.09 Nature of Liability. It is the desire and intent of Holdings
-------------------
and the Guaranteed Creditors that this Guaranty shall be enforced against
Holdings to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which
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<PAGE>
enforcement is sought. If, however, and to the extent that, the obligations of
Holdings under this Guaranty shall be adjudicated to be invalid or unenforceable
for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers), then the amount
of the Guaranteed Obligations of Holdings shall be deemed to be reduced and
Holdings shall pay the maximum amount of the Guaranteed Obligations which would
be permissible under applicable law.
* * *
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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:
- -------
333 East Howard Avenue WESLEY JESSEN VISIONCARE,
Des Plaines, Illinois 60018-5903 INC.
Attention: Chief Financial Officer
Telephone: (847) 294-3868 By /s/ Edward J. Kelley
------------------------------------
Telecopier:(847) 294-3058 Title: Vice President, Chief
Financial Officer, Treasurer,
Secretary
333 East Howard Avenue WESLEY-JESSEN CORPORATION
Des Plaines, Illinois 60018-5903
Attention: Chief Financial Officer
Telephone: (847) 294-3868 By /s/ Edward J. Kelley
------------------------------------
Telecopier:(847) 294-3058 Title: Vice President, Chief
Financial Officer, Treasurer
BANKERS TRUST COMPANY,
individually and as Agent
By /s/ Mary Kay Coyle
----------------------------------
Title: Managing Director
<PAGE>
THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ Julia H. Bristow
----------------------------------
Title: Managing Director
FLEET NATIONAL BANK
By /s/ Andy H. Sassine
-----------------------------------
Title: Vice President
HARRIS TRUST AND
SAVINGS BANK
By /s/ Lee A. Vandermyde
----------------------------------
Title: Vice President
LASALLE NATIONAL BANK
By /s/ F. Ward Nixon
------------------------------------
Title: Senior Vice President
<PAGE>
NATIONAL BANK OF CANADA
By /s/ C.F. Boot Martin, Jr.
------------------------------------
Title: Vice President and Branch
Manager
By /s/ William W. Mucker
----------------------------------
Title: Assistant Vice President
SOCIETE GENERALE
By /s/ John J. Wagner
------------------------------------
Title: Vice President
<PAGE>
ANNEX I
-------
LIST OF BANKS
-------------
<TABLE>
<CAPTION>
Revolving
Term Loan
Bank Commitment Commitment
---- ---------- ----------
<S> <C> <C>
Bankers Trust Company $17,875,000 $ 9,625,000
The First National Bank of Chicago $ 8,125,000 $ 4,375,000
Fleet National Bank $ 8,125,000 $ 4,375,000
Harris Trust and Savings Bank $ 8,125,000 $ 4,375,000
National Bank of Canada $ 6,500,000 $ 3,500,000
LaSalle National Bank $ 8,125,000 $ 4,375,000
Societe Generale $ 8,125,000 $ 4,375,000
Total $65,000,000 $35,000,000
=========== ===========
</TABLE>
<PAGE>
ANNEX II
--------
BANK ADDRESSES
--------------
Bank
- ---- Address
-------
Bankers Trust Company One Bankers Trust Plaza
New York, NY 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-9094
Facsimile No.: (212) 250-7218
The First National Bank of Chicago One First National Plaza
Chicago, IL 60670
Attention: Julia Bristow
Telephone: (312) 732-5927
Facsimile: (312) 732-1117
Fleet National Bank One Federal Street
Mail Stop MAOFDO3C
Boston, MA 02110
Attention: Andy Sassine
Telephone: (617) 346-5692
Facsimile: (617) 346-4806
Harris Trust and Savings Bank 111 West Monroe Street
2 West
Chicago, IL 60690
Attention: Rich Michalik
Telephone: (312) 461-2272
Facsimile: (312) 461-2591
National Bank of Canada 225 West Washington
Suite 1100
Chicago, IL 60606
Attention: Bill Mucker
Telephone: (312) 558-1676
Facsimile: (312) 558-6461
<PAGE>
ANNEX II
PAGE 2
LaSalle National Bank 135 South LaSalle Street
Chicago, IL 60603
Attention: Ward Nixon
Telephone: (312) 904-8339
Facsimile: (312) 904-4364
Societe Generale 1221 Avenue of the Americas
New York, NY 10020
Attention: Jack Wagner
Telephone: (212) 278-6736
Facsimile: (212) 278-6178
<PAGE>
ANNEX III
---------
EXISTING LETTERS OF CREDIT
--------------------------
<PAGE>
ANNEX IV
--------
REAL PROPERTIES
---------------
<PAGE>
ANNEX V
-------
PROJECTIONS
-----------
<PAGE>
ANNEX VI
--------
SUBSIDIARIES
------------
<PAGE>
ANNEX VII
---------
INSURANCE
---------
<PAGE>
ANNEX VIII
----------
EXISTING INDEBTEDNESS
---------------------
<PAGE>
ANNEX IX
--------
EXISTING LIENS
--------------
Filing File Original Description
Location Debtor Secured Party Number File Date Of Collateral
- -------- ------ ------------- ------ --------- -------------
<PAGE>
ANNEX X
-------
SUBSIDIARY NAME CHANGES
-----------------------
<PAGE>
ANNEX XI
--------
CAPITALIZATION
--------------
<PAGE>
ANNEX XII
---------
INVESTMENTS
-----------
<PAGE>
ANNEX XIII
----------
PROJECTED CONSOLIDATED EBITDA
-----------------------------
<PAGE>
ANNEX XIV
---------
EXCLUDED INTELLECTUAL PROPERTY
------------------------------
<PAGE>
ANNEX XV
--------
ASSET SALES
-----------
<PAGE>
ANNEX XVI
---------
ACQUISITION DOCUMENTS
---------------------
<PAGE>
ANNEX XVII
----------
FINANCIAL STATEMENTS
--------------------
<PAGE>
ANNEX XVIII
-----------
CONFLICTS
---------
<PAGE>
EXHIBIT A-1
-----------
FORM OF NOTICE OF BORROWING
---------------------------
[Date]
Bankers Trust Company, as Agent
for the Banks party to the
Credit Agreement referred
to below
One Bankers Trust Plaza
New York, New York 10006
Attention: ___________________
Ladies and Gentlemen:
The undersigned, Wesley-Jessen Corporation (the "Borrower"), refers to
the Credit Agreement, dated as of February 19, 1997 (as amended from time to
time, the "Credit Agreement", the terms defined therein being used herein as
therein defined), among Wesley Jessen VisionCare, Inc., the Borrower, the
financial institutions from time to time party thereto (the "Banks"), and you,
as Agent for such Banks, and, subject to the terms of Sections 1.10(a) and (b)
of the Credit Agreement, hereby gives you irrevocable notice pursuant to Section
1.03(a) of the Credit Agreement, that the undersigned hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 1.03(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is __________, 19
__./1/
-
(ii) The aggregate principal amount of the Proposed Borrowing is
$______.
(iii) The Proposed Borrowing shall consist of [Term Loans] [Revolving
Loans].
____________________
/1/ Shall be a Business Day at least one Business Day in the case of Base
-
Rate Loans and three Business Days in the case of Eurodollar Loans, in each
case, after the date hereof.
<PAGE>
EXHIBIT A-1
Page 2
(iv) The Loans to be made pursuant to the Proposed Borrowing shall be
initially maintained as [Base Rate Loans] [Eurodollar Loans].
[(v) The initial Interest Period for the Proposed Borrowing is [one
month] [two months] [three months] [six months] [, subject to availability
to all Banks with Commitments and/or outstanding Loans under the respective
Facility, twelve months, and if such Interest Period is unavailable
[specify alternative desired]].]/2/
-
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in the Credit
Agreement and in the other Credit Documents are and will be true and
correct in all material respects, both before and after giving effect to
the Proposed Borrowing and to the application of the proceeds thereof, as
though made on such date, unless stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date; and
(B) no Default or Event of Default has occurred and is continuing, or
would result from such Proposed Borrowing or from the application of the
proceeds thereof.
Very truly yours,
WESLEY-JESSEN CORPORATION
By_____________________________
Title:
______________________
/2/ To be included for a Proposed Borrowing of Eurodollar Loans.
-
<PAGE>
EXHIBIT A-2
-----------
FORM OF LETTER OF CREDIT REQUEST
--------------------------------
No. (1) Dated (2)
----- ---------
Bankers Trust Company, individually and as
Agent under the Credit Agreement (as amended, modified or supplemented from
time to time, the "Credit Agreement"), dated as of February 19, 1997, among
Wesley Jessen VisionCare, Inc., Wesley-Jessen Corporation, the financial
institutions from time to time party thereto and Bankers Trust Company, as
Agent
One Bankers Trust Plaza
New York, New York 10006
[Name and Address of
Letter of Credit Issuer]
Dear Sirs:
We hereby request that Bankers Trust Company, in its individual
capacity, issue a [trade] [standby] Letter of Credit for the account of the
undersigned on (3) (the "Date of Issuance") in the aggregate stated amount
-----
of (4) .
---------
____________________________
/1/ Letter of Credit Request Number.
-
/2/ Date of Letter of Credit Request.
-
/3/ Date of Issuance which shall be at least 5 Business Days from the date
-
hereof (or such shorter period as may be acceptable to the respective
Letter of Credit Issuer).
/4/ Aggregate initial stated amount of Letter of Credit which shall not be
-
less than $100,000 or such lesser amount as is acceptable to the respective
Letter of Credit Issuer.
<PAGE>
EXHIBIT A-2
Page 2
For purposes of this Letter of Credit Request, unless otherwise
defined herein, all capitalized terms used herein which are defined in the
Credit Agreement shall have the respective meaning provided therein.
The beneficiary of the requested Letter of Credit will be (5) ,
---------
and such Letter of Credit will be in support of (6) and will
---------
have a stated expiration date of (7) .
---------
We hereby certify that:
(1) The representations and warranties contained in the Credit
Agreement and in the other Credit Documents will be true and correct in all
material respects on the Date of Issuance, both before and after giving
effect to the issuance of the Letter of Credit requested hereby (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).
(2) No Default or Event of Default has occurred and is continuing
nor, after giving effect to the issuance of the Letter of Credit requested
hereby, would such a Default or an Event of Default occur.
_____________________________
/5/ Insert name and address of beneficiary.
-
/6/ Insert description of L/C Supportable Indebtedness in the case of standby
-
Letters of Credit and insert description of permitted trade obligations in
the case of trade Letters of Credit.
/7/ Insert last date upon which drafts may be presented which may not be later
-
than (i) in the case of standby Letter of Credit, the earlier of (x) 12
months after the Date of Issuance (or in the case of standby Letters of
Credit issued in support of Foreign Subsidiary Working Capital
Indebtedness, three years) and (y) the Business Day next preceding the
Maturity Date and (ii) in the case trade Letters of Credit, the earlier of
(x) 180 days after the Date of Issuance and (y) 30 days prior to the
Maturity Date.
<PAGE>
EXHIBIT A-2
Page 3
Copies of all documentation with respect to the supported transaction
are attached hereto.
WESLEY-JESSEN CORPORATION
By_____________________________
Title:
<PAGE>
EXHIBIT B-1
-----------
FORM OF TERM NOTE
-----------------
$__________ New York, New York
_______ __, 199_
FOR VALUE RECEIVED, WESLEY-JESSEN CORPORATION, a Delaware corporation
(the "Borrower"), hereby promises to pay to ___________________ or its
registered assigns (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust
Company (the "Agent") located at One Bankers Trust Plaza, New York, New York
10006 on the Maturity Date (as defined in the Agreement referred to below)
the principal sum of _____________ DOLLARS ($__________) or, if less, the
unpaid principal amount of all Term Loans (as defined in the Agreement) made
by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Term Notes referred to in the Credit
Agreement, dated as of February 19, 1997, among Wesley Jessen VisionCare,
Inc., the Borrower, the financial institutions from time to time party
thereto (including the Bank) and the Agent (as amended, modified or
supplemented from time to time, the "Agreement") and is entitled to the
benefits thereof and of the other Credit Documents (as defined in the
Agreement). This Note is secured by the Security Documents (as defined in the
Agreement) and is entitled to the benefits of the Guaranties (as defined in
the Agreement). This Note is subject to voluntary prepayment and mandatory
repayment prior to the Maturity Date, in whole or in part, as provided in the
Agreement, and Term Loans may be converted from one Type (as defined in the
Agreement) into another Type to the extent provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
WESLEY-JESSEN CORPORATION
By________________________________
Title:
<PAGE>
EXHIBIT B-2
-----------
FORM OF REVOLVING NOTE
----------------------
$___________ New York, New York
_________ __, 199_
FOR VALUE RECEIVED, WESLEY-JESSEN CORPORATION, a Delaware corporation
(the "Borrower"), hereby promises to pay to __________ or its registered
assigns (the "Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust Company (the
"Agent") located at One Bankers Trust Plaza, New York, New York 10006 on the
Maturity Date (as defined in the Agreement referred to below) the principal
sum of _____________ DOLLARS ($__________) or, if less, the unpaid principal
amount of all Revolving Loans (as defined in the Agreement) made by the Bank
pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of February 19, 1997, among Wesley Jessen VisionCare,
Inc., the Borrower, the financial institutions from time to time party
thereto (including the Bank) and the Agent (as amended, modified or
supplemented from time to time, the "Agreement") and is entitled to the
benefits thereof and of the other Credit Documents (as defined in the
Agreement). This Note is secured by the Security Documents (as defined in the
Agreement) and is entitled to the benefits of the Guaranties (as defined in
the Agreement). This Note is subject to voluntary prepayment and mandatory
repayment prior to the Maturity Date, in whole or in part, as provided in the
Agreement, and Revolving Loans may be converted from one Type (as defined in
the Agreement) into another Type to the extent provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
WESLEY-JESSEN CORPORATION
By________________________________
Title:
<PAGE>
EXHIBIT B-3
-----------
FORM OF SWINGLINE NOTE
----------------------
$10,000,000 New York, New York
_________ __, 199_
FOR VALUE RECEIVED, WESLEY-JESSEN CORPORATION, a Delaware corporation
(the "Borrower"), hereby promises to pay to BANKERS TRUST COMPANY or its
registered assigns (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust
Company (the "Agent") located at One Bankers Trust Plaza, New York, New York
10006 on the Swingline Expiry Date (as defined in the Agreement referred to
below) the principal sum of TEN MILLION DOLLARS ($10,000,000) or, if less,
the unpaid principal amount of all Swingline Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is the Swingline Note referred to in the Credit Agreement,
dated as of February 19, 1997, among Wesley Jessen VisionCare, Inc., the
Borrower, the financial institutions from time to time party thereto
(including the Bank) and the Agent (as amended, modified or supplemented from
time to time, the "Agreement") and is entitled to the benefits thereof and of
the other Credit Documents (as defined in the Agreement). This Note is
secured by the Security Documents (as defined in the Agreement) and is
entitled to the benefits of the Guaranties (as defined in the Agreement).
This Note is subject to voluntary prepayment and mandatory repayment prior to
the Swingline Expiry Date, in whole or in part, as provided in the Agreement.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may
become or be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
WESLEY-JESSEN CORPORATION
By________________________________
Title:
<PAGE>
EXHIBIT C
---------
FORM OF SECTION 4.04(b)(ii) CERTIFICATE
---------------------------------------
Reference is hereby made to the Credit Agreement, dated as of February
19, 1997, among Wesley Jessen VisionCare, Inc., Wesley-Jessen Corporation,
the financial institutions from time to time party thereto and Bankers Trust
Company, as Agent (as amended, modified or supplemented from time to time,
the "Credit Agreement"). Pursuant to the provisions of Section 4.04(b)(ii) of
the Credit Agreement, the undersigned hereby certifies that it is not a
"bank" as such term is used in Section 881(c)(3)(A) of the Internal Revenue
Code of 1986, as amended.
[NAME OF BANK]
By ____________________________
Title:
Date: _______________, ____
<PAGE>
EXHIBIT E
---------
FORM OF OFFICERS' CERTIFICATE
-----------------------------
I, the undersigned, [President/Vice President/Treasurer] of [Name of
Credit Party], a corporation organized and existing under the laws of the
State of Delaware (the "Company"), do hereby certify on behalf of the Company
that:
1. This Certificate is furnished pursuant to the Credit Agreement,
dated as of February 19, 1997, among [Wesley Jessen VisionCare, Inc.,]
[Wesley-Jessen Corporation,] [the Company,] the financial institutions from
time to time party thereto, and Bankers Trust Company, as Agent (such Credit
Agreement, as in effect on the date of this Certificate, being herein called
the "Credit Agreement"). Unless otherwise defined herein, capitalized terms
used in this Certificate shall have the meanings set forth in the Credit
Agreement.
2. The following named individuals are elected officers of the
Company, each holds the office of the Company set forth opposite his name and
has held such office since __________, 19__./1/ The signature written
-
opposite the name and title of each such officer is his genuine signature.
<TABLE>
<CAPTION>
Name/2/ Office Signature
------------ ---------- -------------
<S> <C> <C>
------------ ---------- -------------
------------ ---------- -------------
------------ ---------- -------------
</TABLE>
3. Attached hereto as Exhibit A is a certified copy of the
Certificate of Incorporation of the Company, as filed in the Office of the
Secretary of State of the State of Delaware on ___________, 19__, together
with all amendments thereto adopted through the date hereof.
_______________________
/1/ Insert a date prior to the time of any corporate action relating to the
-
Credit Documents or related documentation.
/2/ Include name, office and signature of each officer who will sign any
-
Credit Document, including the officer who will sign the certification at
the end of this Certificate or related documentation.
<PAGE>
EXHIBIT E
Page 2
4. Attached hereto as Exhibit B is a true and correct copy of the
By-Laws of the Company which were duly adopted, are in full force and effect
on the date hereof, and have been in effect since _____________, 19__.
5. Attached hereto as Exhibit C is a true and correct copy of
resolutions which were duly adopted on __________, 1996 [by unanimous written
consent of the Board of Directors of the Company] [by a meeting of the Board
of Directors of the Company at which a quorum was present and acting
throughout], and said resolutions have not been rescinded, amended or
modified. Except as attached hereto as Exhibit C, no resolutions have been
adopted by the Board of Directors of the Company which deal with the
execution, delivery or performance of the Documents by the Company.
[6. On the date hereof, all of the applicable conditions set forth in
Sections 5.02, 5.07, 5.08, 5.09, and 5.10 have been satisfied.]/3/
-
[6. Attached hereto as Exhibit D are true and correct copies of all
Plans of Holdings and its Subsidiaries and the other documents referred to in
Section 5.14(a), to the extent such Plans were not in existence on the
Original Effective Date or, if in existence on the Original Effective Date,
have been modified since such date.
7. Attached hereto as Exhibit E are true and correct copies of all
Collective Bargaining Agreements of Holdings and its Subsidiaries to the
extent such Collective Bargaining Agreements were not in existence on the
Original Effective Date or, if in existence on the Original Effective Date,
have been modified since such date.
8. Attached hereto as Exhibit F are true and correct copies of all
Existing Indebtedness Agreements of Holdings and its Subsidiaries, to the
extent such Existing Indebtedness Agreements were not in existence on the
Original Effective Date or, if in existence on the Original Effective Date,
have been modified since such date.
9. Attached hereto as Exhibit G is a true and correct copy of the
Shareholders' Agreements of Holdings and its Subsidiaries, to the extent such
Shareholders' Agreements were not in existence on the Original Effective Date
or, if in existence on the Original Effective Date, have been modified since
such date.
10. Attached hereto as Exhibit H are true and correct copies of all
Management Agreements of Holdings and its Subsidiaries, to the extent such
Management Agreements were not in existence on the Original Effective Date
or, if in existence on the Original Effective Date, have been modified since
such date.
_____________________________
/3/ Include bracketed item 6 in Officers' Certificate of the Borrower.
-
<PAGE>
EXHIBIT E
Page 3
11. Attached hereto as Exhibit I are true and correct copies of all
Employment Agreements of Holdings and its Subsidiaries, to the extent such
Employment Agreements were not in existence on the Original Effective Date
or, if in existence on the Original Effective Date, have been modified since
such date.
12. Attached hereto as Exhibit J is a true and correct copy of any
Tax Allocation Agreements of Holdings and its Subsidiaries, to the extent
such Tax Allocation Agreements were not in existence on the Original
Effective Date or, if in existence on the Original Effective Date, have been
modified since such date.
13. Attached hereto as Exhibit K are true and correct copies of all
Material Contracts of Holdings and its Subsidiaries, to the extent such
Material Contracts were not in existence on the Original Effective Date or,
if in existence on the Original Effective Date, have been modified since such
date.]
14. Attached hereto as Exhibit L are true and correct copies of the
IPO Documents./4/
-
[6][7][15]. On the date hereof, the representations and warranties
contained in the [Credit Agreement and in the other]/5/ Credit Documents
-
to which the Company is a party are true and correct in all material respects
with the same effect as though such representations and warranties had been
made on the date hereof, both before and after giving effect to the
incurrence of Loans on the date hereof and the application of the proceeds
thereof.
[8][16]. On the date hereof, no Default or Event of Default has
occurred and is continuing or would result from the Borrowing to occur on the
date hereof or from the application of the proceeds thereof./6/
-
[7][9][17]. There is no proceeding for the dissolution or liquidation
of the Company or threatening its existence.
___________________________________
/4/ Insert bracketed items 6 through 14 in Officers' Certificate of
-
Holdings.
/5/ Insert bracketed language in Officers' Certificates of Holdings and the
-
Borrower.
/6/ Insert bracket and item [8][16] in Officers' Certificate of Holdings and
-
the Borrower.
<PAGE>
EXHIBIT E
Page 4
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
February, 1997.
[NAME OF CREDIT PARTY]
______________________________
Name:
Title:
I, the undersigned, [Secretary/Assistant Secretary] of the Company, do
hereby certify on behalf of the Company that:
1. [Name of Person making above certifications] is the duly elected
and qualified [President/Vice President/Treasurer] of the Company and the
signature above is his genuine signature.
2. The certifications made by [name of Person making above
certifications] on behalf of the Company in Items 2, 3, 4, 5 and [7][9][17]
above are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
February, 1997.
[NAME OF CREDIT PARTY]
____________________________
Name:
Title:
<PAGE>
EXHIBIT I
---------
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
DATE: ________, 19__
Reference is made to the Credit Agreement described in Item 2 of Annex
I annexed hereto (as such Credit Agreement may hereafter be amended, modified
or supplemented from time to time, the "Credit Agreement"). Unless defined in
Annex I attached hereto, terms defined in the Credit Agreement are used
herein as therein defined. _____________ (the "Assignor") and ______________
(the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and
obligations under the Credit Agreement as of the date hereof which represents
the percentage interest specified in Item 4 of Annex I (the "Assigned Share")
of all of the outstanding rights and obligations under the Credit Agreement
relating to the Facilities listed in Item 4 of Annex I, including, without
limitation, (i) in the case of any assignment of all or any portion of the
Assignor's outstanding Term Loans, all rights and obligations with respect to
the Assigned Share of such outstanding Term Loans and (ii) in the case of any
assignment of all or any portion of the Assignor's Revolving Loan Commitment,
all rights and obligations with respect to the Assigned Share of the Total
Revolving Loan Commitment and of any outstanding Revolving Loans, Swingline
Loans and Letters of Credit.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any liens or security interests; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
Holdings or any of its Subsidiaries or the performance or observance by
Holdings or any of its Subsidiaries of any of their respective obligations
under the Credit Agreement or the other Credit Documents or any other
instrument or document furnished pursuant thereto.
<PAGE>
EXHIBIT I
Page 2
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor
or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Agent and the Collateral Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the
other Credit Documents as are delegated to the Agent and the Collateral Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; [and] (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Bank[; and (v) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as
to the Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the
Assignee under the Credit Agreement or such other documents as are necessary
to indicate that all such payments are subject to such rates at a rate
reduced by an applicable tax treaty]./1/
-
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Agent. The effective
date of this Assignment and Assumption Agreement shall be the date of
execution hereof by the Assignor and the Assignee, to the extent required by
the Credit Agreement, the receipt of the consent of the Agent, receipt by the
Agent of the assignment fee referred to in Section 12.04(b) of the Credit
Agreement and the registration of the transfer on the Register as provided in
Section 7.12 of the Credit Agreement, or such later date as otherwise
specified in Item 5 of Annex I (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Agent, as of the Settlement Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a Bank thereunder
and under the other Credit Documents and (ii) the Assignor shall, to the
extent provided in this Assignment and Assumption Agreement, relinquish its
rights and be released from its obligations under the Credit Agreement and
the other Credit Documents.
________________________________
/1/ If the Assignee is organized under the laws of a jurisdiction outside
-
the United States.
<PAGE>
EXHIBIT I
Page 3
6. It is agreed that upon the effectiveness hereof, the Assignee
shall be entitled to (x) all interest on the Assigned Share of the Loans at
the rates specified in Item 6 of Annex I, (y) all Commitment Fees (if
applicable) on the Assigned Share of the Total Revolving Loan Commitment at
the rate specified in Item 7 of Annex I and (z) all Letter of Credit Fees (if
applicable) on the Assignee's participation in all Letters of Credit at the
rate specified in Item 8 of Annex I, which, in each case, accrue on and after
the Settlement Date, such interest and, if applicable, Commitment Fees and
Letter of Credit Fees, to be paid by the Agent directly to the Assignee. It
is further agreed that all payments of principal made on the Assigned Share
of the Loans which occur on and after the Settlement Date will be paid
directly by the Agent to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor an amount specified by the Assignor in writing
which represents the Assigned Share of the principal amount of the respective
Loans made by the Assignor pursuant to the Credit Agreement which are
outstanding on the Settlement Date, net of any closing costs, and which are
being assigned hereunder. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods
prior to the Settlement Date directly between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
EXHIBIT I
Page 4
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written, such execution also
being made on Annex I hereto.
[NAME OF ASSIGNOR],
as Assignor
By____________________________
Title:
[NAME OF ASSIGNEE],
as Assignee
By____________________________
Title:
[Acknowledged and Agreed:
BANKERS TRUST COMPANY,
as Agent
By____________________________
Title:]/2/
-
_________________________
/2/ The consent of the Agent is required only in connection with assignments
-
pursuant to clause (y) of Section 12.04(b) of the Credit Agreement (which
consent shall not be unreasonably withheld or delayed).
<PAGE>
ANNEX I
-------
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. The Borrower: Wesley-Jessen Corporation (the "Borrower").
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of February 19, 1997, among Wesley Jessen
VisionCare, Inc., the Borrower, the financial institutions from time to
time party thereto, and Bankers Trust Company, as Agent.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
Total Revolv-
Outstanding principal of ing Loan
Term Loans Commitment
---------- ----------
<S> <C> <C>
a. Aggregate Amount for all Banks $_________ $_________
b. Assigned Share ________% ________%
c.Amount of Assigned Share $_________ $_________
</TABLE>
5. Settlement Date:
6. Rate of Interest As set forth in Section 1.08 of the Credit
to the Assignee: Agreement (unless otherwise agreed to by the
Assignor and the Assignee)/1/
-
7. Commitment Fee: As set forth in Section 3.01(a) of the Credit
Agreement
________________________
/1/ The Borrower and the Agent shall direct the entire amount of the
-
interest to the Assignee at the rate set forth in Section 1.08 of the Credit
Agreement, with the Assignor and Assignee effecting any agreed upon sharing of
interest through payments by the Assignee to the Assignor.
<PAGE>
ANNEX I
Page 2
to the Assignee: (unless otherwise agreed to by the Assignor and
the Assignee)/2/
-
8. Letter of Credit As set forth in Section 3.01(b) of the Credit
Fee to the Assignee: Agreement (unless otherwise agreed to by the
Assignor and the Assignee)/3/
-
9. Notice:
ASSIGNEE:
___________________
___________________
___________________
___________________
Attention:
Telephone:
Telecopier:
Reference:
/2/ Insert "Not Applicable" in lieu of text if no portion of the Total
-
Revolving Loan Commitment is being assigned. Otherwise, the Borrower and the
Agent shall direct the entire amount of the Commitment Fee to the Assignee at
the rate set forth in Section 3.01(a) of the Credit Agreement, with the Assignor
and the Assignee effecting any agreed upon sharing of the Commitment Fee through
payment by the Assignee to the Assignor.
/3/ Insert "Not Applicable" in lieu of text if no portion of the Total
-
Revolving Loan Commitment is being assigned. Otherwise, the Borrower and the
Agent shall direct the entire amount of the Letter of Credit Fee to the Assignee
at the rate set forth in Section 3.01(b) of the Credit Agreement, with the
Assignor and the Assignee effecting any agreed upon sharing of the Letter of
Credit Fee through payment by the Assignee to the Assignor.
<PAGE>
ANNEX I
Page 3
Payment Instructions:
ASSIGNEE:
___________________
___________________
___________________
___________________
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By________________________ By__________________________
________________________ __________________________
(Print Name and Title) (Print Name and Title)
<PAGE>
EXHIBIT J
---------
FORM OF INTERCOMPANY NOTE
-------------------------
New York, New York
___________, ____
FOR VALUE RECEIVED, __________________________, a ___________
corporation (the "Payor"), hereby promises to pay on demand to the order of
______________________, or its registered assigns (the "Payee"), in lawful
money of the United States of America in immediately available funds, at such
location in the United States of America as the Payee shall from time to time
designate, the unpaid principal amount of all loans and advances made by the
Payee to the Payor.
The Payor promises also to pay interest on the unpaid principal amount
hereof in like money at said office from the date hereof until paid at such
rate per annum as shall be agreed upon from time to time by the Payor and
Payee.
Upon the commencement of any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar proceeding of any jurisdiction relating to the Payor, the unpaid
principal amount hereof shall become immediately due and payable without
presentment, demand, protest or notice of any kind in connection with this
Note.
This Note is one of the Intercompany Notes referred to in the Credit
Agreement, dated as of February 19, 1997, among Wesley Jessen VisionCare,
Inc., Wesley-Jessen Corporation, the financial institutions from time to time
party thereto and Bankers Trust Company, as Agent (as amended, modified or
supplemented from time to time, the "Credit Agreement") and is subject to the
terms thereof, and shall be pledged by the Payee pursuant to the Pledge
Agreement (as defined in the Credit Agreement). The Payor hereby acknowledges
and agrees that the Collateral Agent pursuant to and as defined in the Pledge
Agreement, as in effect from time to time, may exercise all rights provided
therein with respect to this Note.
The Payee is hereby authorized (but not required) to record all loans
and advances made by it to the Payor (all of which shall be evidenced by this
Note), and all repayments or prepayments thereof, in its books and records,
such books and records constituting prima facie evidence of the
----- -----
accuracy of the information contained therein.
<PAGE>
EXHIBIT J
Page 2
All payments under this Note shall be made without offset,
counterclaim or deduction of any kind.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
[NAME OF PAYOR]
By________________________
Title:
Pay to the order of
____________________________
[NAME OF PAYEE]
By__________________________
Title:
<PAGE>
EXHIBIT K
---------
OFFICER'S SOLVENCY CERTIFICATE
------------------------------
I, the undersigned, the chief financial officer of Wesley Jessen
VisionCare, Inc., a corporation organized and existing under the laws of the
State of Delaware ("Holdings"), do hereby certify on behalf of Holdings that:
1. This Certificate is furnished pursuant to Section 5.15(a) of the
Credit Agreement, dated as of February 19, 1997 among Holdings, Wesley-Jessen
Corporation (the "Borrower"), the financial institutions from time to time party
thereto (the "Banks") and Bankers Trust Company, as Agent (such Credit
Agreement, as in effect on the date of this Certificate, being herein called the
"Credit Agreement"). Unless otherwise defined herein, capitalized terms used in
this Certificate shall have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms below shall have the
following definitions:
(a) "Fair Value"
The amount at which the assets, in their entirety, determined on a
going concern basis of the Borrower (on a stand-alone basis) and
Holdings and its Subsidiaries (on a consolidated basis), in each case
would change hands between a willing buyer and a willing seller,
within a commercially reasonable period of time, each having
reasonable knowledge of the relevant facts, with neither being under
any compulsion to act.
(b) "Present Fair Salable Value"
The amount that could be obtained by an independent willing seller
from an independent willing buyer if the assets of the Borrower (on a
stand-alone basis) and Holdings and its Subsidiaries (on a
consolidated basis) are sold with reasonable promptness under normal
selling conditions in a current market.
(c) "New Financing"
The indebtedness incurred or to be incurred by Holdings and its
Subsidiaries under the Credit Documents (assuming the full utilization
by the Borrower of the Total Revolving Loan Commitment under the
Credit Agreement) and all other financing contemplated by the Credit
Documents, in each case after giving effect to the Transaction and the
incurrence of all financings contemplated therewith.
<PAGE>
EXHIBIT K
---------
Page 2
(d) "Stated Liabilities"
The recorded liabilities (including Contingent Liabilities that would
be recorded in accordance with generally accepted accounting
principles ("GAAP") consistently applied) of the Borrower (on a stand-
alone basis), and Holdings and its Subsidiaries (on a consolidated
basis) in each case at March 31, 1996, together with (i) the net
change in long-term debt (including current maturities) between March
31, 1996 and the date hereof and (ii) without duplication, the amount
of all New Financing.
(e) "Contingent Liabilities"
The maximum estimated amount of liability reasonably likely to result
from pending litigation, asserted claims and assessments, guaranties,
uninsured risks and other contingent liabilities of the Borrower (on a
stand-alone basis) and Holdings and its Subsidiaries (on a
consolidated basis) (exclusive of such Contingent Liabilities to the
extent reflected in Stated Liabilities).
(f) "Will be able to pay its Stated Liabilities, including Contingent
Liabilities, as they mature."
For the period from the date hereof through the stated maturity of all
New Financing, each of the Borrower (on a stand-alone basis) and
Holdings and its Subsidiaries (on a consolidated basis) will have
sufficient assets and cash flow to pay its Stated Liabilities and
Contingent Liabilities as those liabilities mature or otherwise become
due.
(g) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the stated maturity of all
New Financing, each of the Borrower (on a stand-alone basis) and
Holdings and its Subsidiaries (on a consolidated basis) in each case
after consummation of the Transaction and all Indebtedness (including
the Revolving Loans) being incurred or assumed and Liens created in
connection therewith, is a going concern and has sufficient capital to
ensure that it will continue to be a going concern for such period and
to remain a going concern despite moderately negative deviations from
the Projections discussed below.
3. For purposes of this Certificate, I, or officers of Holdings under
my direction and supervision, have performed the following procedures as of and
for the periods set forth below.
(a) I have reviewed the consolidated balance sheet of Holdings and its
Subsidiaries (other than the Acquired Business) at September 28, 1996
and the related consolidated statements of operations and cash flow
and changes
<PAGE>
EXHIBIT K
---------
Page 3
in shareholders' equity of Holdings and its Subsidiaries for the nine-
month period ended on such date.
(b) I have reviewed the consolidated balance sheet of the Acquired
Business at March 31, 1996 and t he related consolidated statements of
operations and cash flow and changes in shareholders' equity of the
Acquired Business for the fiscal year ended on such date.
(c) I have reviewed the unaudited pro forma consolidated financial
statements of Holdings and its Subsidiaries prepared in accordance
with generally accepted accounting principles consistently applied
after giving effect to the Transaction and the incurrence of the New
Financing, and verified the mathematical accuracy of the application
of the pro forma adjustments to the amounts in the audited
consolidated financial statements.
(d) I have made inquiries of certain other officials of Holdings who have
responsibility for financial and accounting matters regarding:
1. whether the unaudited pro forma consolidated financial statements
referred to in paragraph (c) above are in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the unaudited financial
statements as at September 28, 1996;
2. whether with respect to Holdings and its Subsidiaries (other than
the Acquired Business) at September 28, 1996, there were any
decreases as compared with December 31, 1995, in the consolidated
net assets or the excess of consolidated current assets over
consolidated current liabilities of Holdings and its Subsidiaries
(other than the Acquired Business); and
3. Whether with respect to the Acquired Business, at September 28,
1996, there were any decreases as compared with March 31, 1996,
in the consolidated net assets or the excess of consolidated
current assets over consolidated current liabilities of the
Acquired Business.
(d) I have read:
1. the Credit Documents and the IPO Documents and the respective
Schedules and Exhibits thereto.
(e) With respect to Contingent Liabilities, I:
1. inquired of certain officials of Holdings who have responsibility
for legal, financial and accounting matters as to the existence
and
<PAGE>
EXHIBITS K
----------
Page 4
estimated liability with respect to all Contingent
Liabilities known to them;
2. confirmed with senior officers of Holdings that, to the best of
such officers' knowledge, (i) all appropriate items were included
in Stated Liabilities or Contingent Liabilities made known to me
in the course of my inquiry and that (ii) the amounts relating
thereto were the maximum estimated amount of liability reasonably
likely to result therefrom as of the date hereof;
3. hereby certify that, to the best of my knowledge, all material
Contingent Liabilities that may arise from any pending
litigation, asserted claims and assessments, guarantees,
uninsured risks and other Contingent Liabilities of Holdings and
its Subsidiaries (exclusive of such Contingent Liabilities to the
extent reflected in Stated Liabilities) have been considered in
making the certification set forth in paragraph 4 below, and with
respect to each such Contingent Liability the estimable maximum
estimated amount of liability with respect thereto was used in
making such certification.
(f) I have had the Projections, which have been previously delivered to
the Banks, prepared under my direction and have re-examined the
Projections on the date hereof and considered the effect thereon of
any changes since the date of the preparation thereof on the results
projected therein. After such review, I hereby certify that in my
opinion the Projections are reasonable and attainable. Furthermore,
the Projections support the conclusions contained in the last
paragraph of this Certificate.
(g) I have made inquiries of certain officers of Holdings which have
responsibility for financial reporting and accounting matters
regarding whether they were aware of any events or conditions that, as
of the date hereof, would cause the Borrower (on a stand-alone basis)
and Holdings and its Subsidiaries (on a consolidated basis), in each
case after giving effect to the consummation of the Transaction and
the related financing transactions (including the incurrence of the
New Financing), to (i) have assets with a Fair Value or Present Fair
Salable Value that are less than the sum of Stated Liabilities and
Contingent Liabilities; (ii) have Unreasonably Small Capital; or (iii)
not be able to pay its Stated Liabilities and Contingent Liabilities
as they mature or otherwise become due.
4. Based on and subject to the foregoing, I hereby certify on behalf
of Holdings that, after giving effect to the Transaction and the related
financing transactions (including the New Financing), it is my informed opinion
that as of the date hereof (i) the Fair Value and Present Fair Salable Value of
the assets of each of the Borrower (on a stand-alone basis) and Holdings and its
Subsidiaries (on a consolidated basis) in each case exceed
<PAGE>
its Stated Liabilities and Contingent Liabilities; (ii) the Borrower (on a
stand-alone basis) and Holdings and its Subsidiaries (on a consolidated basis)
will not have Unreasonably Small Capital; and (iii) the Borrower (on a stand-
alone basis) and Holdings and its Subsidiaries (on a consolidated basis) will be
able to pay its Stated Liabilities and Contingent Liabilities as they mature or
otherwise become due.
IN WITNESS WHEREOF, Holdings has caused its duly authorized chief
financial officer to execute and deliver this Certificate this ____ day of
February, 1997.
WESLEY JESSEN VISIONCARE, INC.
By______________________________
Name:
Title:
<PAGE>
EXHIBIT L
---------
FORM OF SHAREHOLDER SUBORDINATED NOTE
-------------------------------------
$_______________ New York, New York
[DATE]
FOR VALUE RECEIVED, Wesley Jessen VisionCare, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to _______________ or [his]
[her] [its] assigns (the "Payee"), in lawful money of the United States of
America in immediately available funds, at ______________________________, the
principal sum of __________________ DOLLARS, which amount shall be payable on
_____________./1/
[The Company promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at a
rate per annum equal to __________________, such interest to be paid [semi-
annually] [annually] on ___________ [and _________] of each year and at maturity
hereof.]
This Note is subject to voluntary prepayment, in whole or in part, at
the option of the Company, without premium or penalty.
This Note is one of the Shareholder Subordinated Notes referred to in
the Credit Agreement, dated as of February 19, 1997, by and among the Company,
Wesley-Jessen Corporation, the lenders from time to time party thereto (the
"Banks"), and Bankers Trust Company, as Agent (as amended, modified,
supplemented, extended, restated, refinanced, replaced or refunded from time to
time, the "Credit Agreement") and shall be subject to the provisions thereof.
Unless otherwise defined herein, all capitalized terms used herein or in Annex A
attached hereto and defined in the Credit Agreement shall have the meaning
assigned to such term in the Credit Agreement.
Notwithstanding anything to the contrary contained in this Note, the
Payee understands and agrees that the Company shall not be required to make, and
shall not make, any payment of principal or interest on this Note to the extent
that such payment is prohibited by the terms of any Senior Indebtedness (as
defined in Annex A attached hereto), including, but not limited to, Sections
8.06 and 8.12 of the Credit Agreement.
______________
/1//// Insert a date on or after August 18, 2002.
<PAGE>
EXHIBIT L
Page 2
This Note, and the Company's obligations hereunder, shall be
subordinate and junior to all indebtedness of the Company constituting Senior
Indebtedness (as defined in Section 1.07 of Annex A attached hereto) on the
terms and conditions set forth in Annex A attached hereto, which Annex A is
herein incorporated by reference and made a part hereof as if set forth herein
in its entirety.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
WESLEY JESSEN VISIONCARE, INC.
By__________________________
Title:
<PAGE>
ANNEX A
TO EXHIBIT L
------------
Section 1.01. Subordination of Liabilities. Wesley Jessen
----------------------------
VisionCare, Inc. (the "Company"), for itself, its successors and assigns,
covenants and agrees, and each holder of the Note to which this Annex A is
attached (the "Note") by its acceptance thereof likewise covenants and agrees,
that the payment of the principal of, interest on, and all other amounts owing
in respect of, the Note (the "Subordinated Indebtedness") is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment in full in cash of all Senior Indebtedness (as defined in Section
1.07 of this Annex A). The provisions of this Annex A shall constitute a
continuing offer to all persons who, in reliance upon such provisions, become
holders of, or continue to hold, Senior Indebtedness, and such provisions are
made for the benefit of the holders of Senior Indebtedness, and such holders are
hereby made obligees hereunder the same as if their names were written herein as
such, and they and/or each of them may proceed to enforce such provisions.
Section 1.02. Company Not to Make Payments with Respect to
--------------------------------------------
Subordinated Indebtedness in Certain Circumstances. (a) Upon the maturity of
- --------------------------------------------------
any Senior Indebtedness (including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by acceleration or
otherwise, all Obligations (as defined in Section 1.07 of this Annex A) owing in
respect thereof, in each case to the extent due and owing, shall first be paid
in full in cash, before any payment, whether in cash, property, securities or
otherwise) is made on account of the Subordinated Indebtedness.
(b) Until all Senior Indebtedness has been paid in full in cash and
all commitments in respect of such Senior Indebtedness have been terminated, the
sum of all payments in respect of the Note (including principal and interest),
together with the sum of (i) all payments made under all other Shareholder
Subordinated Notes and (ii) all payments made by the Company and its
Subsidiaries to repurchase stock of the Company held by employees of the Company
and its Subsidiaries shall not exceed at any time that amount permitted by the
terms of the respective issue of Senior Indebtedness.
(c) The Company may not, directly or indirectly, make any payment of
any Subordinated Indebtedness and may not acquire any Subordinated Indebtedness
for cash or property until all Senior Indebtedness has been paid in full in cash
if any default or event of default under the Credit Agreement (as defined in
Section 1.07 of this Annex A) or any other issue of Senior Indebtedness is then
in existence or would result therefrom. Each holder of the Note hereby agrees
that, so long as any such default or event of default in respect of any issue of
Senior Indebtedness exists, it will not sue for, or otherwise take any action to
enforce the Company's obligations to pay, amounts owing in respect of the Note.
Each holder of the Note understands and agrees that to the extent that clause
(b) of this Section 1.02 reduces the payment of interest and/or principal which
would otherwise be payable under the Note but for the limitations set forth in
such clause (b), such unpaid amount shall not constitute a payment default under
the Note and the holder of the Note may
<PAGE>
ANNEX A
TO EXHIBIT L
Page 2
not sue for, or otherwise take action to enforce the Company's obligation to pay
such amount, provided that such unpaid principal or interest shall remain an
--------
obligation of the Company to the holder of the Note pursuant to the terms of
the Note.
(d) In the event that notwithstanding the provisions of the
preceding subsections (a), (b) and (c) of this Section 1.02, the Company shall
make any payment on account of the Subordinated Indebtedness at a time when
payment is not permitted by said subsection (a), (b) or (c), such payment shall
be held by the holder of the Note, in trust for the benefit of, and shall be
paid forthwith over and delivered to, the holders of Senior Indebtedness or
their representative or the trustee under the indenture or other agreement
pursuant to which any instruments evidencing any Senior Indebtedness may have
been issued, as their respective interests may appear, for application pro rata
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in accordance with the terms of
such Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness. Without in any way
modifying the provisions of this Annex A or affecting the subordination effected
hereby if the hereafter referenced notice is not given, the Company shall give
the holder of the Note prompt written notice of any event which would prevent
payments under Section 1.02(a), (b) or (c) hereof.
Section 1.03. Subordination to Prior Payment of All Senior
--------------------------------------------
Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any
- ---------------------------------------------------------------------
distribution of assets of the Company upon dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled
to receive payment in full in cash of all Senior Indebtedness (including,
without limitation, post-petition interest at the rate provided in the
documentation with respect to the Senior Indebtedness, whether or not such
post-petition interest is an allowed claim against the debtor in any
bankruptcy or similar proceeding) before the holder of the Note is entitled
to receive any payment of any kind or character on account of the
Subordinated Indebtedness;
(b) any payment or distributions of assets of the Company of any
kind or character, whether in cash, property or securities to which the
holder of the Note would be entitled except for the provisions of this
Annex A, shall be paid by the liquidating trustee or agent or other person
making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or other trustee or agent, directly to the
holders of Senior Indebtedness or their representative or
<PAGE>
ANNEX A
TO EXHIBIT L
Page 3
representatives, or to the trustee or trustees under any indenture under
which any instruments evidencing any such Senior Indebtedness may have been
issued, to the extent necessary to make payment in full in cash of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, shall be
received by the holder of the Note on account of Subordinated Indebtedness
before all Senior Indebtedness is paid in full in cash, such payment or
distribution shall be received and held in trust for and shall be paid over
to the holders of the Senior Indebtedness remaining unpaid or unprovided
for or their representative or representatives, or to the trustee or
trustees under any indenture under which any instruments evidencing any of
such Senior Indebtedness may have been issued, for application to the
payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full in cash, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
Without in any way modifying the provisions of this Annex A or
affecting the subordination effected hereby if the hereafter referenced notice
is not given, the Company shall give prompt written notice to the holder of the
Note of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency or receivership proceedings or upon
assignment for the benefit of creditors or otherwise).
Section 1.04. Subrogation. Subject to the prior payment in full in
-----------
cash of all Senior Indebtedness, the holder of the Note shall be subrogated to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Note shall be paid in full, and for the purpose
of such subrogation no payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the holder of
the Note by virtue of this Annex A which otherwise would have been made to the
holder of the Note shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holder of the Note, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Annex A are and are intended solely or
the purpose of defining the relative rights of the holder of the Note, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of the Company Unconditional. Nothing
---------------------------------------
contained in this Annex A or in the Note is intended to or shall impair, as
between the Company and
<PAGE>
ANNEX A
TO EXHIBIT L
Page 4
the holder of the Note, the obligation of the Company, which is absolute and
unconditional, to pay to the holder of the Note the principal of and interest on
the Note as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the holder
of the Note and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the holder of the
Note from exercising all remedies otherwise permitted by applicable law upon an
event of default under the Note, subject to the rights, if any, under this Annex
A of the holders of Senior Indebtedness in respect of cash, property, or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred to in this Annex A, the
holder of the Note shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
holder of the Note, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Annex A.
Section 1.06. Subordination Rights Not Impaired by Acts or Omissions
------------------------------------------------------
of Company or Holders of Senior Indebtedness. No right of any present or future
- --------------------------------------------
holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act in good faith by
any such holder, or by any noncompliance by the Company with the terms and
provisions of the Note, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
the Note with respect hereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, or renew or alter, any Senior Indebtedness or
amend, modify or supplement any agreement or instrument governing or evidencing
such Senior Indebtedness or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Senior
Indebtedness including, without limitation, the waiver of default thereunder and
the release of any collateral securing such Senior Indebtedness, all without
notice to or assent from the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior Indebtedness"
-------------------
shall mean all Obligations (as defined below) (i) of the Company under the
Credit Agreement (as amended, modified, supplemented, extended, restated,
refinanced, replaced or refunded from time to time, the "Credit Agreement"),
dated as of February 19, 1997, by and among the Company, Wesley-Jessen
Corporation, the lenders from time to time party thereto (the
<PAGE>
ANNEX A
TO EXHIBIT L
Page 5
"Banks"), and Bankers Trust Company, as Agent, and any renewal, extension,
restatement, refinancing or refunding thereof, including, but not limited to,
the Company's guaranty of all Guaranteed Obligations (as defined in the Credit
Agreement) and (ii) of the Company and of the Borrower (as defined in the Credit
Agreement), in respect of any Interest Rate Protection Agreements or Other
Hedging Agreements (each as defined in the Credit Agreement). As used herein,
the term "Obligation" shall mean any principal, interest, pre mium, penalties,
fees, expenses, indemnities and other liabilities and obligations payable under
the documentation governing any Senior Indebtedness (including interest after
the commencement of any bankruptcy, insolvency, receivership or similar
proceeding, whether or not such interest is an allowed claim against the debtor
in any such proceeding).
<PAGE>
EXHIBIT M
---------
FORM OF BORROWER SUBORDINATED NOTE
----------------------------------
$_______________ New York, New York
[DATE]
FOR VALUE RECEIVED, Wesley-Jessen Corporation, a Delaware
corporation (the "Company"), hereby promises to pay to Wesley Jessen VisionCare,
Inc., a Delaware corporation (the "Payee"), in lawful money of the United States
of America in immediately available funds, at ______________________________,
the principal sum of __________________ DOLLARS, which amount shall be payable
on _____________./2////
[The Company promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at a
rate per annum equal to __________________, such interest to be paid [semi-
annually] [annually] on ___________ [and _________] of each year and at maturity
hereof.]
This Note is subject to voluntary prepayment, in whole or in part, at
the option of the Company, without premium or penalty.
This Note is one of the Borrower Subordinated Notes referred in the
Credit Agreement, dated as of February 19, 1997, by and among the Payee, the
Company, the lenders from time to time party thereto (the "Banks"), and Bankers
Trust Company, as Agent (as amended, modified, supplemented, extended, restated,
refinanced, replaced or refunded from time to time, the "Credit Agreement") and
shall be subject to the provisions thereof. Unless otherwise defined herein, all
capitalized terms used herein or in Annex A attached hereto and defined in the
Credit Agreement shall have the meaning assigned to such term in the Credit
Agreement.
Notwithstanding anything to the contrary contained in this Note, the
Payee understands and agrees that the Company shall not be required to make, and
shall not make, any payment of principal or interest on this Note to the extent
that such payment is prohibited by the terms of any Senior Indebtedness (as
defined in Annex A attached hereto), including, but not limited to, Section 8.12
of the Credit Agreement.
This Note, and the Company's obligations hereunder, shall be
subordinate and junior to all indebtedness of the Company constituting Senior
Indebtedness (as defined in
_______________
/2/ Insert a date on or after August 18, 2002.
<PAGE>
EXHIBIT M
Page 2
Section 1.07 of Annex A attached hereto) on the terms and conditions set forth
in Annex A attached hereto, which Annex A is herein incorporated by reference
and made a part hereof as if set forth herein in its entirety.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
WESLEY-JESSEN CORPORATION
By__________________________
Title:
<PAGE>
ANNEX A
TO EXHIBIT M
------------
Section 1.01. Subordination of Liabilities. Wesley-Jessen
----------------------------
Corporation (the "Company"), for itself, its successors and assigns, covenants
and agrees, and each holder of the Note to which this Annex A is attached (the
"Note") by its acceptance thereof likewise covenants and agrees, that the
payment of the principal of, interest on, and all other amounts owing in respect
of, the Note (the "Subordinated Indebtedness") is hereby expressly subordinated,
to the extent and in the manner hereinafter set forth, to the prior payment in
full in cash of all Senior Indebtedness (as defined in Section 1.07 of this
Annex A). The provisions of this Annex A shall constitute a continuing offer to
all persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made for the
benefit of the holders of Senior Indebtedness, and such holders are hereby made
obligees hereunder the same as if their names were written herein as such, and
they and/or each of them may proceed to enforce such provisions.
Section 1.02. Company Not to Make Payments with Respect to
--------------------------------------------
Subordinated Indebtedness in Certain Circumstances. (a) Upon the maturity of
- --------------------------------------------------
any Senior Indebtedness (including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by acceleration or
otherwise, all Obligations (as defined in Section 1.07 of this Annex A) owing in
respect thereof, in each case to the extent due and owing, shall first be paid
in full in cash, before any payment, whether in cash, property, securities or
otherwise) is made on account of the Subordinated Indebtedness.
(b) Until all Senior Indebtedness has been paid in full in cash and
all commitments in respect of such Senior Indebtedness have been terminated, the
sum of all payments in respect of the Note (including principal and interest),
together with the sum of all payments made under all other Borrower Subordinated
Notes (as defined in the Credit Agreement referred to in Section 1.07 of this
Annex A) shall not exceed at any time that amount permitted by the terms of the
respective issue of Senior Indebtedness, including, but not limited to, Section
8.12 of the Credit Agreement referred to below.
(c) The Company may not, directly or indirectly, make any payment of
any Subordinated Indebtedness and may not acquire any Subordinated Indebtedness
for cash or property until all Senior Indebtedness has been paid in full in cash
if any default or event of default under the Credit Agreement referred to below
or any other issue of Senior Indebtedness is then in existence or would result
therefrom. Each holder of the Note hereby agrees that, so long as any such
default or event of default in respect of any issue of Senior Indebtedness
exists, it will not sue for, or otherwise take any action to enforce the
Company's obligations to pay, amounts owing in respect of the Note. Each holder
of the Note understands and agrees that to the extent that clause (b) of this
Section 1.02 reduces the payment of interest and/or principal which would
otherwise be payable under the Note but for the limitations set forth in such
clause (b), such unpaid amount shall not constitute a payment default under the
Note and the holder of the Note may not sue for, or otherwise take
<PAGE>
ANNEX A
TO EXHIBIT M
PAGE 2
action to enforce the Company's obligation to pay such amount, provided that
--------
such unpaid principal or interest shall remain an obligation of the Company to
the holder of the Note pursuant to the terms of the Note.
(d) In the event that notwithstanding the provisions of the
preceding subsections (a), (b) and (c) of this Section 1.02, the Company shall
make any payment on account of the Subordinated Indebtedness at a time when
payment is not permitted by said subsection (a), (b) or (c), such payment shall
be held by the holder of the Note, in trust for the benefit of, and shall be
paid forthwith over and delivered to, the holders of Senior Indebtedness or
their representative or the trustee under the indenture or other agreement
pursuant to which any instruments evidencing any Senior Indebtedness may have
been issued, as their respective interests may appear, for application pro rata
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in accordance with the terms of
such Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness. Without in any way
modifying the provisions of this Annex A or affecting the subordination effected
hereby if the hereafter referenced notice is not given, the Company shall give
the holder of the Note prompt written notice of any event which would prevent
payments under Section 1.02(a), (b) or (c) hereof.
Section 1.03. Subordination to Prior Payment of All Senior
--------------------------------------------
Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any
- ---------------------------------------------------------------------
distribution of assets of the Company upon dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled
to receive payment in full in cash of all Senior Indebtedness (including,
without limitation, post-petition interest at the rate provided in the
documentation with respect to the Senior Indebtedness, whether or not such
post-petition interest is an allowed claim against the debtor in any
bankruptcy or similar proceeding) before the holder of the Note is entitled
to receive any payment of any kind or character on account of the
Subordinated Indebtedness;
(b) any payment or distributions of assets of the Company of any
kind or character, whether in cash, property or securities to which the
holder of the Note would be entitled except for the provisions of this
Annex A, shall be paid by the liquidating trustee or agent or other person
making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or other trustee or agent, directly to the
holders of Senior Indebtedness or their representative or
<PAGE>
ANNEX A
TO EXHIBIT M
Page 3
representatives, or to the trustee or trustees under any indenture under
which any instruments evidencing any such Senior Indebtedness may have been
issued, to the extent necessary to make payment in full in cash of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, shall be
received by the holder of the Note on account of Subordinated Indebtedness
before all Senior Indebtedness is paid in full in cash, such payment or
distribution shall be received and held in trust for and shall be paid over
to the holders of the Senior Indebtedness remaining unpaid or unprovided
for or their representative or representatives, or to the trustee or
trustees under any indenture under which any instruments evidencing any of
such Senior Indebtedness may have been issued, for application to the
payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full in cash, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
Without in any way modifying the provisions of this Annex A or
affecting the subordination effected hereby if the hereafter referenced notice
is not given, the Company shall give prompt written notice to the holder of the
Note of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency or receivership proceedings or upon
assignment for the benefit of creditors or otherwise).
Section 1.04. Subrogation. Subject to the prior payment in full in
-----------
cash of all Senior Indebtedness, the holder of the Note shall be subrogated to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Note shall be paid in full, and for the purpose
of such subrogation no payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the holder of
the Note by virtue of this Annex A which otherwise would have been made to the
holder of the Note shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holder of the Note, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Annex A are and are intended solely or
the purpose of defining the relative rights of the holder of the Note, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of the Company Unconditional. Nothing
---------------------------------------
contained in this Annex A or in the Note is intended to or shall impair, as
between the Company and
<PAGE>
ANNEX A
TO EXHIBIT M
Page 4
the holder of the Note, the obligation of the Company, which is absolute and
unconditional, to pay to the holder of the Note the principal of and interest on
the Note as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the holder
of the Note and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the holder of the
Note from exercising all remedies otherwise permitted by applicable law upon an
event of default under the Note, subject to the rights, if any, under this Annex
A of the holders of Senior Indebtedness in respect of cash, property, or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred to in this Annex A, the
holder of the Note shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
holder of the Note, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Annex A.
Section 1.06. Subordination Rights Not Impaired by Acts or Omissions
------------------------------------------------------
of Company or Holders of Senior Indebtedness. No right of any present or future
- --------------------------------------------
holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act in good faith by
any such holder, or by any noncompliance by the Company with the terms and
provisions of the Note, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
the Note with respect hereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, or renew or alter, any Senior Indebtedness or
amend, modify or supplement any agreement or instrument governing or evidencing
such Senior Indebtedness or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Senior
Indebtedness including, without limitation, the waiver of default thereunder and
the release of any collateral securing such Senior Indebtedness, all without
notice to or assent from the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior Indebtedness"
-------------------
shall mean all Obligations (as defined below) (i) of the Company under, or in
respect of, the Credit Agreement (as amended, modified, supplemented, extended,
restated, refinanced, replaced or refunded from time to time, the "Credit
Agreement"), dated as of February 19, 1997, by and among Wesley Jessen
VisionCare, Inc., the Company, the lenders from time to time
<PAGE>
ANNEX A
TO EXHIBIT M
Page 5
party thereto (the "Banks"), and Bankers Trust Company, as Agent, and any
renewal, extension, restatement, refinancing or refunding thereof and (ii) of
the Company under, or, in respect of, any Interest Rate Protection Agreements
(as defined in the Credit Agreement) or Other Hedging Agreements (as defined in
the Credit Agreement). As used herein, the term "Obligation" shall mean any
principal, interest, premium, penalties, fees, expenses, indemnities and other
liabilities and obligations payable under the documentation governing any Senior
Indebtedness (including interest after the commencement of any bankruptcy,
insolvency, receivership or similar proceeding, whether or not such interest is
an allowed claim against the debtor in any such proceeding).
<PAGE>
EXHIBIT 4.2
-----------
================================================================================
SECURITY AGREEMENT
among
WESLEY JESSEN VISIONCARE, INC.,
WESLEY-JESSEN CORPORATION,
CERTAIN OTHER SUBSIDIARIES
OF WESLEY JESSEN VISIONCARE, INC.
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of February 19, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I SECURITY INTERESTS........................................ 2
1.1. Grant of Security Interests............................... 2
1.2. Power of Attorney......................................... 3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND
COVENANTS................................................. 3
2.1. Necessary Filings......................................... 3
2.2. No Liens.................................................. 3
2.3. Other Financing Statements................................ 4
2.4. Chief Executive Office; Records........................... 4
2.5. Location of Inventory and Equipment....................... 5
2.6. Recourse.................................................. 5
2.7. Trade Names; Change of Name............................... 5
ARTICLE III SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS................. 6
3.1. Additional Representations and Warranties................. 6
3.2. Maintenance of Records.................................... 6
3.3. Direction to Account Debtors; Contracting Parties; etc.... 6
3.4. Modification of Terms; etc................................ 7
3.5. Collection................................................ 7
3.6. Instruments............................................... 8
3.7. Further Actions........................................... 8
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS.................. 8
4.1. Additional Representations and Warranties................. 8
4.2. Licenses and Assignments.................................. 9
4.3. Infringements............................................. 9
4.4. Preservation of Marks..................................... 9
4.5. Maintenance of Registration............................... 9
4.6. Future Registered Marks................................... 10
4.7. Remedies.................................................. 10
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS..................... 11
5.1. Additional Representations and Warranties................. 11
5.2. Licenses and Assignments.................................. 11
5.3. Infringements............................................. 12
5.4. Maintenance of Patents.................................... 12
5.5. Prosecution of Patent Application......................... 12
5.6. Other Patents and Copyrights.............................. 12
5.7. Remedies.................................................. 12
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL...................... 13
6.1. Protection of Collateral Agent's Security................. 13
6.2. Warehouse Receipts Non-Negotiable......................... 14
6.3. Further Actions........................................... 14
6.4. Financing Statements...................................... 14
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT
OF DEFAULT................................................ 14
7.1. Remedies; Obtaining the Collateral Upon Default........... 14
7.2. Remedies; Disposition of the Collateral................... 16
7.3. Waiver of Claims.......................................... 17
7.4. Application of Proceeds................................... 17
7.5. Remedies Cumulative....................................... 19
7.6. Discontinuance of Proceedings............................. 19
ARTICLE VIII INDEMNITY................................................. 20
8.1. Indemnity................................................. 20
8.2. Indemnity Obligations Secured by Collateral; Survival..... 21
ARTICLE IX DEFINITIONS............................................... 21
ARTICLE X MISCELLANEOUS............................................. 26
10.1. Notices................................................... 26
10.2. Waiver; Amendment......................................... 27
10.3. Obligations Absolute...................................... 27
10.4. Successors and Assigns.................................... 27
10.5. Headings Descriptive...................................... 28
10.6. Governing Law............................................. 28
10.7. Assignor's Duties......................................... 28
10.8. Termination; Release...................................... 28
10.9. Counterparts.............................................. 29
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
10.10. The Collateral Agent...................................... 29
10.11. Additional Assignors...................................... 29
</TABLE>
ANNEX A Schedule of Chief Executive Offices and other Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Trade and Fictitious Names
ANNEX D List of Marks
ANNEX E List of Patents and Applications
ANNEX F List of Copyrights and Applications
ANNEX G Grant of Security Interest in United States Trademarks and Patents
ANNEX H Grant of Security Interest in United States Copyrights
(iii)
<PAGE>
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of February 19, 1997, among each of the
undersigned (each, an "Assignor" and, together with any other entity that
becomes a party hereto pursuant to Section 10.11 hereof, the "Assignors") and
Bankers Trust Company, as Collateral Agent (the "Collateral Agent"), for the
benefit of the Secured Creditors (as defined below). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement (as
defined below) shall be used herein as therein defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Wesley Jessen VisionCare, Inc. ("Holdings"), Wesley-Jessen
Corporation (the "Borrower"), the financial institutions from time to time party
thereto (the "Banks"), and Bankers Trust Company, as Agent (the "Agent," and
together with the Collateral Agent and the Banks, the "Bank Creditors"), have
entered into a Credit Agreement, dated as of February 19, 1997 (as amended,
modified or supplemented from time to time, the "Credit Agreement"), providing
for the making of Loans to the Borrower and the issuance of, and participation
in, Letters of Credit for the account of the Borrower, all as contemplated
therein;
WHEREAS, the Borrower may from time to time be party to one or more
(i) interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors", and together with the Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed to
the Secured Creditors the payment when due of all obligations and liabilities of
the Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
<PAGE>
WHEREAS, pursuant to the Subsidiary Guaranty, each Assignor (other
than Holdings and the Borrower) has jointly and severally guaranteed to the
Secured Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower under the Credit Agreement that the Assignors shall have executed and
delivered to the Collateral Agent this Agreement; and
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt
---------------------------
and complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest of first priority in, all of the
right, title and interest of such Assignor in, to and under all of the
following, whether now existing or hereafter from time to time acquired: (i)
each and every Receivable, (ii) all Contracts, together with all Contract Rights
arising thereunder (other than Contracts which by their terms cannot be
pledged), (iii) all Inventory, (iv) all Equipment, (v) all Marks, together with
the registrations and right to all renewals thereof, and the goodwill of the
business of such Assignor symbolized by the Marks, (vi) all Patents and
Copyrights, (vii) all computer programs of such Assignor and all intellectual
property rights therein and all other proprietary information of such Assignor,
including, but not limited to, trade secrets, (viii) all other Goods, General
Intangibles, Chattel Paper, Documents and Instruments, (ix) the Cash Collateral
Account and all monies, securities and instruments deposited or required to be
deposited in such Cash Collateral Account, and (x)
-2-
<PAGE>
all Proceeds and products of any and all of the foregoing (all of the above,
collectively, the "Collateral").
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
-----------------
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be reasonably necessary or advisable to
protect the interests of the Secured Creditors, which appointment as attorney is
coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and recordings
-----------------
necessary or appropriate to create, preserve and perfect the security interest
granted by such Assignor to the Collateral Agent hereby in respect of the
Collateral have been accomplished (or will have been accomplished on the
Business Day immediately following the Initial Borrowing Date) and the security
interest granted to the Collateral Agent pursuant to this Agreement in and to
the Collateral creates a perfected security interest therein prior to the rights
of all other Persons therein and subject to no other Liens (other than Permitted
Liens) and is entitled to all the rights, priorities and benefits afforded by
the Uniform Commercial Code or other relevant law as enacted in any relevant
jurisdiction to perfected security interests, in each case to the extent that
the Collateral consists of the type of property in which a security interest may
be perfected by filing a financing statement under the Uniform
-3-
<PAGE>
Commercial Code as enacted in any relevant jurisdiction or in the United States
Patent and Trademark Office or United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired by it
--------
from time to time after the date hereof such Assignor will be, the owner of, or
has rights in, all Collateral free from any Lien, security interest, encumbrance
or other right, title or interest of any Person (other than Permitted Liens),
and such Assignor shall defend the Collateral to the extent of its rights
therein against all claims and demands of all Persons at any time claiming the
same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. As of the date hereof, there is no
--------------------------
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as the Total Commitment has not been terminated or
any Note remains unpaid or any of the Obligations remain unpaid or any Interest
Rate Protection Agreement or Other Hedging Agreement or Letter of Credit remains
in effect (other than Letters of Credit, together with all Fees that have
accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
Letter of Credit issuer in its sole and absolute discretion) or any Obligations
are owed with respect thereto, such Assignor will not execute or authorize to be
filed in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except (a) financing statements filed or to be filed
in respect of and covering the security interests granted hereby by such
Assignor or as permitted by the Credit Agreement and (b) financing statements
with respect to Permitted Liens.
2.4. Chief Executive Office; Records. The chief executive office of
-------------------------------
such Assignor is located at the address or addresses indicated on Annex A hereto
for such Assignor. Such Assignor will not move its chief executive office
except to such new location as such Assignor may establish in accordance with
the last sentence of this Section 2.4. The originals of all documents
evidencing all Receivables and Contract Rights of such Assignor and the only
original books of account and records of such Assignor relating thereto are, and
will continue to be, kept at such chief executive office, at one or more of the
locations set forth on Annex A hereto or at such new locations as such Assignor
may establish in accordance with the last sentence of this Section 2.4. All
Receivables and Contract Rights of such Assignor are, and will continue to be,
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from, the office locations described above or such
new location established in accordance with the last sentence of this Section
2.4. No Assignor shall establish new locations for such offices
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<PAGE>
until it shall have given to the Collateral Agent notice of its intention to do
so unless (i) such Assignor shall give to the Collateral Agent written notice of
any such relocation of its chief executive office within 10 days following such
relocation, clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new location, it shall take all action,
reasonably satisfactory to the Collateral Agent, to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
2.5. Location of Inventory and Equipment. All Inventory and
-----------------------------------
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor (other than (i) immaterial
portions of Inventory (x) sold on consignment or held on display for
demonstration purposes or (y) transferred to another location in connection with
a sale of such Inventory in the ordinary course of business, so long as such
sale occurs within 60 days from the date of such transfer, (ii) various spare
parts held for maintenance or repair of Equipment), (iii) samples to doctors and
customers or (iv) fitting kits and lens vision machines placed with doctors.
Each Assignor agrees that all Inventory and Equipment now held or subsequently
acquired by it shall be kept at (or shall be in transport to) any one of the
locations shown on Annex B hereto, or such new location as such Assignor may
establish in accordance with the last sentence of this Section 2.5 (other than
(i) immaterial portions of Inventory (x) sold on consignment or held on display
for demonstration purposes or (y) may be transferred to another location in
connection with a sale of such Inventory in the ordinary course of business, so
long as such sale occurs within 30 days from the date of such transfer, (ii)
various spare parts held for maintenance or repair of Equipment), (iii) samples
to doctors and customers or (iv) fitting kits and lens vision machines placed
with doctors. Any Assignor may establish a new location for Inventory and
Equipment only if (i) it shall have given to the Collateral Agent written notice
within 10 days following any such relocation clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may request and (ii) with respect to such new location, it
shall have taken all action reasonably satisfactory to the Collateral Agent to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
2.6. Recourse. This Agreement is made with full recourse to each
--------
Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of such Assignor contained herein, in the other
Credit Documents, in the Interest Rate Protection Agreements or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
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<PAGE>
2.7. Trade Names; Change of Name. No Assignor has or operates in any
---------------------------
jurisdiction under, or in the preceding 12 months has had or has operated in any
jurisdiction under, any trade names, fictitious names or other names except its
legal name and such other trade or fictitious names as are listed on Annex C
hereto. No Assignor shall change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names listed
on Annex C hereto and new names established in accordance with the last sentence
of this Section 2.7. No Assignor shall assume or operate in any jurisdiction
under any new trade, fictitious or other name unless (i) it shall have given to
the Collateral Agent written notice within 10 days following any assumption of,
or operation under, such new name clearly describing such new name and the
jurisdictions in which such new name shall be used and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new name, it shall have taken all action
requested by the Collateral Agent, to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby at all times
fully perfected and in full force and effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Additional Representations and Warranties. As of the time when
-----------------------------------------
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are what they purport to be, and that all
papers and documents (if any) relating thereto will be the only original
writings evidencing and embodying such obligation of the account debtor named
therein (other than copies created for general accounting purposes).
3.2. Maintenance of Records. Each Assignor will keep and maintain at
----------------------
its own cost and expense accurate records of its Receivables and Contracts,
records of all payments received, all credits granted thereon, all merchandise
returned and all other dealings therewith, and such Assignor will make the same
available on such Assignor's premises to the Collateral Agent for inspection, at
such Assignor's own cost and expense, at any and all reasonable times upon prior
notice to an Authorized Officer of such Assignor. Upon the occurrence and during
the continuance of an Event of Default and at the request of the Collateral
Agent, such Assignor shall, at its own cost and expense, deliver all tangible
evidence of its Receivables and Contract Rights (including, without limitation,
all documents evidencing the Receivables and all Contracts) and such books and
records to the Collateral Agent or to its representatives (copies of which
evidence and books
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and records may be retained by such Assignor). Upon the occurrence and during
the continuance of an Event of Default and if the Collateral Agent so directs,
such Assignor shall legend, in form and manner reasonably satisfactory to the
Collateral Agent, the Receivables and the Contracts, as well as books, records
and documents (if any) of such Assignor evidencing or pertaining to such
Receivables and Contracts with an appropriate reference to the fact that such
Receivables and Contracts have been assigned to the Collateral Agent and that
the Collateral Agent has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties; etc. Upon
-------------------------------------------------------
the occurrence and during the continuance of an Event of Default, and if the
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x) and (z) that the Collateral Agent may enforce collection of any such
Receivables and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such Assignor.
Without notice to or assent by any Assignor, the Collateral Agent may apply any
or all amounts then in, or thereafter deposited in, the Cash Collateral Account
which application shall be effected in the manner provided in Section 7.4 of
this Agreement. The costs and expenses (including reasonable attorneys' fees)
of collection, whether incurred by the Assignor or the Collateral Agent, shall
be borne by the relevant Assignor. The Collateral Agent shall deliver a copy of
each notice referred to in the preceding clause (y) to the relevant Assignor;
provided, that the failure by the Collateral Agent to so notify such Assignor
- --------
shall not affect the effectiveness of such notice or the other rights of the
Collateral Agent created by this Section 3.3.
3.4. Modification of Terms; etc. No Assignor shall rescind or cancel
---------------------------
any indebtedness evidenced by any Receivable or under any Contract, or modify in
any material respect any term thereof or make any material adjustment with
respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable or Contract, or interest therein, without the prior written consent
of the Collateral Agent, except as permitted by Section 3.5 hereof or in the
Credit Agreement. Each Assignor will duly fulfill all obligations on its part
to be fulfilled under or in connection with the Receivables and Contracts and
will do nothing to impair the rights of the Collateral Agent in the Receivables
or Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance with
----------
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without
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limitation, amounts which are delinquent, such amounts to be collected in
accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Receivable or Contract, and apply
forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Receivable or under such Contract, except that,
prior to the occurrence of an Event of Default, any Assignor may allow in the
ordinary course of business as adjustments to amounts owing under its
Receivables and Contracts (i) an extension or renewal of the time or times of
payment, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with reasonable business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services or for other reasons which such Assignor finds
appropriate in accordance with reasonable business judgment. The reasonable
costs and expenses (including, without limitation, attorneys' fees) of
collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument
-----------
constituting Collateral, such Assignor will within 10 Business Days notify the
Collateral Agent thereof, and upon request by the Collateral Agent will promptly
deliver such Instrument to the Collateral Agent appropriately endorsed to the
order of the Collateral Agent as further security hereunder.
3.7. Further Actions. Each Assignor will, at its own 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 its Receivables, Contracts, Instruments and other
property or rights covered by the security interest hereby granted, as the
Collateral Agent may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
-----------------------------------------
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use the registered Marks listed in Annex D hereto for such Assignor
and that said listed Marks constitute all the United States marks and
applications for United States marks registered in the United States Patent and
Trademark Office that such Assignor presently owns or uses in connection with
its business. Each Assignor represents and warrants that it owns, is
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<PAGE>
licensed to use or otherwise has the right to use all Marks that it uses. Each
Assignor further warrants that it has no knowledge of any third party claim that
any aspect of such Assignor's present or contemplated business operations
infringes or will infringe any trademark, service mark or trade name. Each
Assignor represents and warrants that it is the true and lawful owner of or
otherwise has the right to use all U.S. trademark registrations and applications
listed in Annex D hereto and that said registrations are valid, subsisting, have
not been cancelled and that such Assignor is not aware of any third-party claim
that any of said registrations is invalid or unenforceable, or is not aware that
there is any reason that any of said registrations is invalid or unenforceable,
or is not aware that there is any reason that any of said applications will not
pass to registration. Each Assignor represents and warrants that upon the
recordation of a Grant of Security Interest in United States Trademarks and
Patents in the form of Annex G hereto in the United States Patent and Trademark
Office, together with filings on Form UCC-1 pursuant to this Agreement, all
filings, registrations and recordings necessary or appropriate to perfect the
security interest granted to the Collateral Agent in the United States Marks
covered by this Agreement under federal law will have been accomplished. Each
Assignor agrees to execute such a Grant of Security Interest in United States
Trademark and Patents covering all right, title and interest in each United
States Mark, and the associated goodwill, of such Assignor, and to record the
same. Each Assignor hereby grants to the Collateral Agent an absolute power of
attorney to sign, upon the occurrence and during the continuance of an Event of
Default, any document which may be required by the United States Patent and
Trademark Office in order to effect an absolute assignment of all right, title
and interest in each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted by the
------------------------
Credit Agreement or this Agreement, each Assignor hereby agrees not to divest
itself of any right under any Mark absent prior written approval of the
Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning
-------------
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who such Assignor believes is infringing or diluting or otherwise
violating in any material respect any of such Assignor's rights in and to any
Mark, or with respect to any party claiming that such Assignor's use of any Mark
violates in any material respect any property right of that party. Each Assignor
further agrees, unless otherwise agreed by the Collateral Agent, to prosecute
any Person infringing any Mark in accordance with commercially reasonable
business practices.
4.4. Preservation of Marks. Each Assignor agrees to use its Marks in
---------------------
interstate commerce during the time in which this Agreement is in effect,
sufficiently to
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preserve such Marks as trademarks or service marks under the laws of the United
States; provided, that, to the extent permitted by the Credit Agreement, no
--------
Assignor shall be obligated to preserve any Mark in the event such Assignor
determines, in its reasonable business judgment, that the preservation of such
Mark is no longer desirable in the conduct of its business.
4.5. Maintenance of Registration. Each Assignor shall, at its own
---------------------------
expense, diligently process all documents required by the Trademark Act of 1946,
15 U.S.C. (S)(S) 1051 et seq. to maintain trademark registrations, including but
-- ----
not limited to affidavits of use and applications for renewals of registration
in the United States Patent and Trademark Office for all of its registered Marks
pursuant to 15 U.S.C. (S)(S) 1058(a), 1059 and 1065, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
Collateral Agent; provided, that no Assignor shall be obligated to maintain
--------
registration of any Mark in the event that such Assignor determines, in its
reasonable business judgment, that such maintenance of such Mark is no longer
necessary or desirable in the conduct of its business. Each Assignor agrees to
notify the Collateral Agent three (3) months prior to the dates on which the
affidavits of use or the applications for renewal registration are due with
respect to any registered Mark that the affidavits of use or the renewal is
being processed or being abandoned, as the case may be.
4.6. Future Registered Marks. If any Mark registration issues
-----------------------
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days of
receipt of such certificate, such Assignor shall deliver to the Collateral Agent
a copy of such certificate, and a grant of security in such Mark, to the
Collateral Agent and at the expense of such Assignor, confirming the grant of
security in such Mark to the Collateral Agent hereunder, the form of such
security to be substantially the same as the form hereof or in such other form
as may be reasonably satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be continuing,
--------
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same, vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such rights,
title and interest shall immediately vest, in the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency; (ii) take and use
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or sell the Marks and the goodwill of such Assignor's business symbolized by the
Marks and the right to carry on the business and use the assets of such Assignor
in connection with which the Marks have been used; and (iii) direct such
Assignor to refrain, in which event such Assignor shall refrain, from using the
Marks in any manner whatsoever, directly or indirectly, and, if requested by the
Collateral Agent, change such Assignor's corporate name to eliminate therefrom
any use of any Mark and execute such other and further documents that the
Collateral Agent may request to further confirm this and to transfer ownership
of the Marks and registrations and any pending trademark application in the
United States Patent and Trademark Office to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
-----------------------------------------
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use (i) all material United States trade secrets and proprietary
information necessary to operate the business of the Assignor (the "Trade Secret
Rights"), (ii) the Patents listed in Annex E hereto for such Assignor and that
said Patents constitute all the United States patents and applications for
United States patents that such Assignor now owns or uses and (iii) the
Copyrights listed in Annex F hereto for such Assignor and that said Copyrights
all registrations of United States copyrights and applications for United States
include copyright registrations that such Assignor now owns or uses. Each
Assignor further warrants that it has no knowledge of any third party claim that
any aspect of such Assignor's present or contemplated business operations
infringes or will infringe any patent or any copyright of such Assignor has
misappropriated any trade secret or proprietary information, except those claims
which in the aggregate could not be reasonably expected to have a Material
Adverse Effect. Each Assignor represents and warrants that upon the recordation
of a Grant of Security Interest in United States Trademarks and Patents in the
form of Annex G hereto in the United States Patent and Trademark Office and the
recordation of a Grant of Security Interest in United States Copyrights in the
form of Annex H hereto in the United States Copyright Office, together with
filings on Form UCC-1 pursuant to this Agreement, all filings, registrations and
recordings necessary or appropriate to perfect the security interest granted to
the Collateral Agent in the United States Patents and United States Copyrights
covered by this Agreement under federal law will have been accomplished. Each
Assignor agrees to execute such a Grant of Security Interest in United States
Trademarks and Patents covering all right, title and interest in each United
States Patent of such Assignor and to record the same, and to execute such a
Grant of Security Interest in United States
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Copyrights covering all right, title and interest in each United States
Copyright of such Assignor and to record the same. Each Assignor hereby grants
to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of any Event of Default, any document
which may be required by the United States Patent and Trademark Office or the
United States Copyright Office in order to effect an absolute assignment of all
right, title and interest in each Patent and Copyright, and to record the same.
5.2. Licenses and Assignments. Except as otherwise permitted by the
------------------------
Credit Agreement or this Agreement, each Assignor hereby agrees not to divest
itself of any right under any Patent or Copyright absent prior written approval
of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning
-------------
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement,
contributing infringement or active inducement to infringe any of such
Assignor's rights in and to in any Patent or Copyright or to any claim that such
Assignor's practice of any Patent or use of any Copyright violates any property
right of a third party, or with respect to any misappropriation of any Trade
Secret Right or any claim that such Assignor's practice of any Trade Secret
Right violates any property right of a third party. Each Assignor further
agrees, absent direction of the Collateral Agent to the contrary, diligently to
prosecute any Person infringing any Patent or Copyright or any Person
misappropriating any Trade Secret Right in accordance with commercially
reasonable business practices.
5.4. Maintenance of Patents. At its own expense, each Assignor shall
----------------------
make timely payment of all post-issuance fees required pursuant to 35 U.S.C. (S)
41 to maintain in force rights under each Patent, absent prior written consent
of the Collateral Agent; provided, that, to the extent permitted by the Credit
--------
Agreement, no Assignor shall be obligated to maintain any Patent in the event
such Assignor determines, in its reasonable business judgment, that the
maintenance of such Patent is no longer necessary or desirable in the conduct of
its business.
5.5. Prosecution of Patent Application. At its own expense, each
---------------------------------
Assignor shall diligently prosecute all applications for United States Patents
listed in Annex E hereto for such Assignor and shall not abandon any such
application prior to exhaustion of all administrative and judicial remedies,
absent written consent of the Collateral Agent; provided, that, to the extent
--------
permitted by the Credit Agreement, no Assignor shall be obligated to prosecute
any application in the event such Assignor determines, in its
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reasonable business judgment, that the prosecuting of such application is no
longer necessary or desirable in the conduct of its business.
5.6. Other Patents and Copyrights. Within 30 days of the acquisition
----------------------------
or issuance of a United States Patent, registration of a Copyright, or
acquisition of a registered Copyright, or of filing of an application for a
United States Patent or registration of Copyright, the relevant Assignor shall
deliver to the Collateral Agent a copy of said Copyright or certificate or
registration of, or application therefor, said Patents, as the case may be, with
an assignment for security as to such Patent or Copyright, as the case may be,
to the Collateral Agent and at the expense of such Assignor, confirming the
assignment for security, the form of such assignment for security to be
substantially the same as the form hereof or in such other form as may be
reasonably satisfactory to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be continuing,
--------
the Collateral Agent may by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such other
and further documents as the Collateral Agent may request further to confirm
this and to transfer ownership of the Patents and Copyrights to the Collateral
Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will
-----------------------------------------
do nothing to impair the rights of the Collateral Agent in the Collateral except
to the extent such impairment shall be waived in accordance with the terms of
Section 10.2 hereof. Each Assignor will at all times keep its Inventory and
Equipment insured in favor of the Collateral Agent, at such Assignor's own
expense to the extent and in the manner provided in the Credit Agreement; all
policies or certificates with respect to such insurance (and any
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other insurance maintained by such Assignor) (i) shall be endorsed to the
Collateral Agent's reasonable satisfaction for the benefit of the Collateral
Agent (including, without limitation, by naming the Collateral Agent as
additional insured and loss payee) and (ii) shall state that such insurance
policies shall not be cancelled or revised without 30 days' prior written notice
thereof by the insurer to the Collateral Agent; and certified copies of such
policies or certificates shall be deposited with the Collateral Agent. If any
Assignor shall fail to insure its Inventory and Equipment in accordance with the
preceding sentence, or if any Assignor shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Collateral Agent shall have
the right (but shall be under no obligation) to procure such insurance and such
Assignor agrees to promptly reimburse the Collateral Agent for all costs and
expenses of procuring such insurance. Except as otherwise permitted to be
retained by the relevant Assignor pursuant to the Credit Agreement, the
Collateral Agent shall, at the time such proceeds of such insurance are
distributed to the Secured Creditors, apply such proceeds in accordance with
Section 7.4 hereof. Each Assignor assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of such Assignor
to pay the Obligations shall in no way be affected or diminished by reason of
the fact that such Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-Negotiable. Each Assignor agrees that if
---------------------------------
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law) or, if any warehouse receipt or any receipt in the
nature of a warehouse receipt is "negotiable" (as such term is used in Section
7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction
or under other relevant law) then the respective Assignor shall promptly take
all action as may be required under the relevant jurisdiction to grant a
perfected security interest in such Collateral to the Collateral Agent for the
benefit of the Secured Creditors.
6.3. Further Actions. Each Assignor will, at its own expense, make,
---------------
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, 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 and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
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6.4. Financing Statements. Each Assignor agrees to execute and
--------------------
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the Uniform
Commercial Code as enacted in any and all relevant jurisdictions or any other
relevant law. Each Assignor will pay any applicable filing fees, recordation
taxes and related expenses relating to its Collateral. Each Assignor hereby
authorizes the Collateral Agent to file any such financing statements without
the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor
-----------------------------------------------
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and
may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or any
other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by
the terms of such agreement, instrument or other obligation directly to the
Collateral Agent;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the Collateral
or any part thereof in accordance with Section 7.2 hereof, or direct the
relevant Assignor
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to sell, assign or otherwise liquidate any or all of the Collateral or any
part thereof, and, in each case, take possession of the proceeds of any
such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral Agent,
in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places
so designated by the Collateral Agent and there delivered to the
Collateral Agent;
(y) store and keep any Collateral so delivered to the Collateral
Agent at such place or places pending further action by the Collateral
Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition; and
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for such
term and on such conditions and in such manner as the Collateral Agent
shall in its sole judgment determine (taking into account such provisions
as may be necessary to protect and preserve such Marks, Patents or
Copyrights);
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Agent or the Collateral Agent, in each case acting upon the instructions
of the Required Banks (or, after the date on which all Credit Document
Obligations have been paid in full, the holders of at least the majority of the
outstanding Other Obligations) and that no other Secured Creditor shall have any
right individually to seek to enforce or to enforce this Agreement or to realize
upon the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Agent or the Collateral Agent or the
holders of at least a majority of the outstanding Interest Rate Obligations, as
the case maybe, for the benefit of the Secured Creditors upon the terms of this
Agreement.
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7.2. Remedies; Disposition of the Collateral. Any Collateral
---------------------------------------
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of such Assignor to acquire
the Collateral involved at a price or for such other consideration at least
equal to the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent's option, be subject to reserve), after publication of notice of such
auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York. To the extent permitted by any such
requirement of law, the Collateral Agent may bid for and become the purchaser of
the Collateral or any item thereof, offered for sale in accordance with this
Section without accountability to the relevant Assignor. If, under mandatory
requirements of applicable law, the Collateral Agent shall be required to make
disposition of the Collateral within a period of time which does not permit the
giving of notice to the relevant Assignor as hereinabove specified, the
Collateral Agent need give such Assignor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law.
7.3. Waiver of Claims. Except as otherwise provided in this
----------------
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION
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OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and each Assignor hereby
further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights here under; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
-----------------------
Collateral Agent (or, to the extent the Pledge Agreement, the Mortgages or the
Additional Security Documents require proceeds of collateral under such Security
Documents to be applied in accordance with the provisions of this Agreement, the
Pledgee or Mortgagee under such other Security Document) upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the Collateral
Agent of the type provided in clauses (iii) and (iv) of the definition of
Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors as provided in Section
7.4(c) hereof with each Secured Creditor receiving an amount equal to its
outstanding Obligations or, if the
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proceeds are insufficient to pay in full all such Obligations, its Pro Rata
Share (as defined below) of the amount remaining to be distributed; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) and following the
termination of this Agreement pursuant to Section 10.8 hereof, to the
relevant Assignor or, to the extent directed by such Assignor or a court of
competent jurisdiction, to whomever may be lawfully entitled to receive
such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or amount, that
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then unpaid amount of such Secured Creditor's Obligations and the
denominator of which is the then outstanding amount of all Obligations.
(c) All payments required to be made to the Bank Creditors hereunder
shall be made to the Agent under the Credit Agreement for the account of the
Bank Creditors and all payments required to be made to the Other Creditors
hereunder shall be made directly to the respective Other Creditor.
(d) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Agent under the Credit Agreement and (ii) the Other Creditors for a
determination (which the Agent, each Other Creditor and the Secured Creditors
agree (or shall agree) to provide upon request of the Collateral Agent) of the
outstanding Obligations owed to the Bank Creditors or the Other Creditors, as
the case may be. Unless it has actual knowledge (including by way of written
notice from a Bank Creditor or an Other Creditor) to the contrary, the Agent
under the Credit Agreement, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled to
assume that (x) no Credit Document Obligations other than principal, interest
and regularly accruing fees are owing to any Bank Creditor and (y) no Interest
Rate Protection Agreement or Other Hedging Agreement, or Other Obligations in
respect thereof, are in existence.
(e) It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums referred to in
clause (a) of this Section 7.4 with respect to the relevant Assignor.
7.5. Remedies Cumulative. Each and every right, power and remedy
-------------------
hereby specifically given to the Collateral Agent shall be in addition to every
other right,
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power and remedy specifically given under this Agreement, the Interest Rate
Protection Agreements or Other Hedging Agreements, the other Credit Documents or
now or hereafter existing at law, in equity or by statute and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time or simultaneously and as often and in such
order as may be deemed expedient by the Collateral Agent. All such rights,
powers and remedies shall be cumulative and the exercise or the beginning of the
exercise of one shall not be deemed a waiver of the right to exercise any other
or others. No delay or omission of the Collateral Agent in the exercise of any
such right, power or remedy and no renewal or extension of any of the
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein. No
notice to or demand on any Assignor in any case shall entitle it to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Collateral Agent to any other or further
action in any circumstances without notice or demand. In the event that the
Collateral Agent shall bring any suit to enforce any of its rights hereunder and
shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable expenses, including attorneys' fees, and the amounts thereof
shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent
-----------------------------
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
---------
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents and
servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
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(including attorneys' fees and expenses) (for the purposes of this Section 8.1
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Interest Rate Protection
Agreement or Other Hedging Agreement, any other Credit Document or any other
document executed in connection herewith or therewith or in any other way
connected with the administration of the transactions contemplated hereby or
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage), or contract claim; provided that no Indemnitee
shall be indemnified pursuant to this Section 8.1(a) for losses, damages or
liabilities to the extent caused by the gross negligence or willful misconduct
of such Indemnitee. Each Assignor agrees that upon written notice by any
Indemnitee of the assertion of such a liability, obligation, damage, injury,
penalty, claim, demand, action, suit or judgment, the relevant Assignor shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
use its best efforts to promptly notify the relevant Assignor of any such
assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b) hereof,
each Assignor agrees, jointly and severally, to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses which
such Indemnitee may suffer, expend or incur in consequence of or growing out of
any misrepresentation by any Assignor in this Agreement, any Interest Rate
Protection Agreement or Other Hedging
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Agreement, any other Credit Document or in any writing contemplated by or made
or delivered pursuant to or in connection with this Agreement, any Interest Rate
Protection Agreement or Other Hedging Agreement or any other Credit Document.
(d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any
-----------------------------------------------------
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and the payment of all other
Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Agent" shall have the meaning provided in the recitals to this
Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Banks" shall have the meaning provided in the recitals to this
Agreement.
"Borrower" shall have the meaning provided in the recitals to this
Agreement.
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"Cash Collateral Account" shall mean a cash collateral account
maintained with, and in the sole dominion and control of, the Collateral Agent
for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of this
Agreement.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, any Interest Rate
Protection Agreements or Other Hedging Agreements).
"Copyrights" shall mean any United States or foreign copyright owned
by any Assignor, including any registrations of any Copyrights, in the United
States Copyright Office or the equivalent thereof in any foreign country, other
than those countries outside the United States where the grant of a security
interest would invalidate such Copyrights, as well as any application for a
United States copyright registration now or hereafter made with the United
States Copyright Office by any Assignor.
"Credit Agreement" shall have the meaning provided in the recitals to
this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time, or
both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
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"Equipment" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, movable
trade fixtures and vehicles now or hereafter owned by any Assignor and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Goods" shall have the meaning provided in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.
"Holdings" shall have the meaning provided in the recitals to this
Agreement.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
"Instrument" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Interest Rate Protection Agreements or Other Hedging Agreements"
shall have the meaning provided in the recitals to this Agreement.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through work-
in-process to finished goods -- and all products and proceeds of whatever sort
and wherever located and any portion thereof which may be returned, rejected,
reclaimed or repossessed by the Collateral Agent from any Assignor's customers,
and shall specifically include all "inventory" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor.
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"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any United
States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Assignor, including any registration of any trademarks
and service marks in the United States Patent and Trademark Office, or the
equivalent thereof in any foreign country, other than those countries outside
the United States, where the grant of a security interest would invalidate such
Marks, and any trade dress including logos and/or designs used by any Assignor
in the United States or any foreign country.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of each
Assignor, now existing or hereafter incurred under, arising out of or in
connection with any Credit Document to which such Assignor is a party and the
due performance and compliance by each Assignor with the terms of each such
Credit Document (all such obligations and liabilities under this clause (i),
except to the extent consisting of obligations or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations"); (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and liabilities
of each Assignor now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement or Other Hedging
Agreement including, in the case of Assignors other than the Borrower, all
obligations of such Assignor under its Guaranty in respect of Interest Rate
Protection Agreements or Other Hedging Agreements (all such obligations and
liabilities under this clause (ii) being herein collectively called the "Other
Obligations"); (iii) any and all sums advanced by the Collateral Agent in order
to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of each Assignor referred to in
clauses (i) and (ii), after an Event of Default shall have occurred and be
continuing, the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (v) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement.
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"Other Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Other Obligations" shall have the meaning provided in the definition
of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent to which any
Assignor now or hereafter has title and any divisions or continuations thereof,
as well as any application for a United States or foreign patent now or
hereafter made by any Assignor, except as to patents or patent applications in
those countries where the granting of a security interest in such patents is not
permissible under the laws of that country.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or any Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b) of
this Agreement.
"Receivables" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements
and indemnifications on, or of, any of the foregoing, (d) all powers of attorney
for the execution of any evidence of indebtedness or security or other writing
in connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing statements and
other statements and the registration of other instruments in connection
therewith
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and amendments thereto, notices to other creditors or secured parties, and
certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto and (h) all other writings
related in any way to the foregoing.
"Requisite Creditors" shall have the meaning provided in Section 10.2
of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Termination Date" shall have the meaning provided in Section 10.8 of
this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section 5.1
of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1. Notices. Except as otherwise specified herein, all notices,
-------
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed:
(a) if to any Assignor, at its address set forth opposite its
signature below;
(b) if to the Collateral Agent:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-9094
Facsimile No.: (212) 250-7218;
(c) if to any Bank Creditor (other than the Collateral Agent), at
such address as such Bank Creditor shall have specified in the Credit
Agreement;
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(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. None of the terms and conditions of this
-----------------
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly affected thereby and the
Collateral Agent (with the consent of (x) either the Required Banks or, to the
extent required by Section 12.12 of the Credit Agreement, all of the Banks at
all times prior to the time on which all Credit Document Obligations have been
paid in full or (y) the holders of at least a majority of the outstanding Other
Obligations at all times after the time on which all Credit Document Obligations
have been paid in full); provided, that any change, waiver, modification or
--------
variance affecting the rights and benefits of a single Class of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such Class of Secured
Creditors. For the purpose of this Agreement the term "Class" shall mean each
class of Secured Creditors, i.e., whether (x) the Bank Creditors as holders of
----
the Credit Document Obligations or (y) the Other Creditors as the holders of the
Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks and (y) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
10.3. Obligations Absolute. The obligations of each Assignor
--------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document or
any Interest Rate Protection Agreement or Other Hedging Agreement; or (c) any
amendment to or modification of any Credit Document or any Interest Rate
Protection Agreement or Other Hedging Agreement or any security for any of the
Obligations; whether or not any Assignor shall have notice or knowledge of any
of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding upon
----------------------
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and its successors and assigns; provided, that no Assignor
--------
may transfer or assign any or all of its rights or obligations hereunder without
the prior written consent of the Collateral Agent. All agreements, statements,
representations and warranties made by each Assignor
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<PAGE>
herein or in any certificate or other instrument delivered by such Assignor or
on its behalf under this Agreement shall be considered to have been relied upon
by the Secured Creditors and shall survive the execution and delivery of this
Agreement, the other Credit Documents and the Interest Rate Protection
Agreements or Other Hedging Agreements regardless of any investigation made by
the Secured Creditors or on their behalf.
10.5. Headings Descriptive. The headings of the several sections 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.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything herein
-----------------
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of each Assignor under or with
respect to any Collateral.
10.8. Termination; Release. (a) After the Termination Date, this
--------------------
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Interest Rate Protection Agreements or Other Hedging
Agreements have been terminated, no Note or Letter of Credit is outstanding
(other than Letters of Credit, together with all Fees that have accrued and will
accrue thereon through the stated termination date of such Letters of Credit,
which have been supported in a manner satisfactory to the Letter of Credit
Issuer in its sole and absolute discretion) and all other Obligations (other
than any indemnities
-29-
<PAGE>
described in Section 8.1 hereof and in Section 12.13 of the Credit Agreement
which are not then due and payable) have been paid in full.
(b) In the event that any part of the Collateral is sold or otherwise
disposed of in connection with a sale or other disposition permitted by Section
8.02 of the Credit Agreement or is otherwise released at the direction of the
Required Banks (or all the Banks if required by Section 12.12 of the Credit
Agreement), the Collateral Agent, at the request and expense of such Assignor,
will duly release from the security interest created hereby and assign, transfer
and deliver to such Assignor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in the possession of the Collateral Agent and has not
theretofore been released pursuant to this Agreement.
(c) At any time that the respective Assignor desires that Collateral
be released as provided in the foregoing Section 10.8(a) or (b), it shall
deliver to the Collateral Agent a certificate signed by an Authorized Officer
stating that the release of the respective Collateral is permitted pursuant to
Section 10.8(a) or (b) hereof.
10.9. 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 the Borrower and the
Collateral Agent.
10.10. The Collateral Agent. The Collateral Agent will hold in
--------------------
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the obligations
of the Collateral Agent as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Agreement, are
only those expressly set forth in this Agreement and as provided in the Uniform
Commercial Code in the State of New York. The Collateral Agent shall act
hereunder on the terms and conditions set forth in Section 11 of the Credit
Agreement.
10.11. Additional Assignors. It is understood and agreed that any
--------------------
Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Sections 7.14 and/or 8.14 of the
Credit Agreement shall automatically become an Assignor hereunder by executing a
counterpart hereof and delivering the same to the Collateral Agent.
* * *
-30-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
first above written.
Address: WESLEY JESSEN VISIONCARE, INC.,
333 East Howard Avenue as an Assignor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer, Secretary
Address: WESLEY-JESSEN CORPORATION,
333 East Howard Avenue as an Assignor
Des Plaines, Illinois 60018 By /s/ Edward J. Kelley
Attention: Edward Kelley ------------------------------
Title: Vice President, Chief
Financial Officer, Treasurer
Address: PBH, INC.,
333 East Howard Avenue as an Assignor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
Address: PBH INTERNATIONAL, INC.,
333 East Howard Avenue as an Assignor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
<PAGE>
Address: BARNES HIND INTERNATIONAL,
333 East Howard Avenue INC.,
Des Plaines, Illinois 60018 as an Assignor
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
Address: WESLEY-JESSEN (PUERTO RICO),
333 East Howard Avenue INC.,
Des Plaines, Illinois 60018 as an Assignor
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
BANKERS TRUST COMPANY,
as Collateral Agent
By /s/ Mary Kay Coyle
------------------------
Title: Managing Director
<PAGE>
ANNEX A
to
SECURITY
AGREEMENT
------------
SCHEDULE OF CHIEF EXECUTIVE OFFICES
-----------------------------------
AND OTHER RECORD LOCATIONS
--------------------------
[TO BE PROVIDED]
<PAGE>
ANNEX B
to
SECURITY
AGREEMENT
---------
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
---------------------------------------------
[TO BE PROVIDED]
<PAGE>
ANNEX C
to
SECURITY
AGREEMENT
---------
TRADE AND FICTITIOUS NAMES
--------------------------
[TO BE PROVIDED]
<PAGE>
ANNEX D
to
BORROWER
SECURITY
AGREEMENT
---------
LIST OF MARKS
-------------
[TO BE PROVIDED]
<PAGE>
ANNEX E
to
SECURITY
AGREEMENT
---------
LIST OF PATENTS AND APPLICATIONS
--------------------------------
[TO BE PROVIDED]
<PAGE>
ANNEX F
to
SECURITY
AGREEMENT
---------
LIST OF COPYRIGHTS AND APPLICATIONS
-----------------------------------
[TO BE PROVIDED]
<PAGE>
ANNEX G
-------
GRANT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
---------------------------------------------
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, [Name of Grantor], a _______________ corporation ("the
Grantor") with principal offices at_______________________________, hereby
grants to Bankers Trust Company, as Collateral Agent, with principal offices at
One Bankers Trust Plaza, New York, New York 10006 (the "Grantee"), a security
interest in (i) all of the Grantor's right, title and interest in and to the
United States trademarks, trademark registrations and trademark applications
(the "Marks") set forth on Schedule A attached hereto, (ii) all of the Grantor's
rights, title and interest in and to the United States patents (the "Patents")
set forth on Schedule B attached, in each case together with (iii) all Proceeds
(as such term is defined in the Security Agreement referred to below) and
products of the Marks and Patents, (iv) the goodwill of the businesses with
which the Marks are associated and (v) all causes of action arising prior to or
after the date hereof for infringement of any of the Marks and Patents or unfair
competition regarding the same.
THIS AGREEMENT is made to secure the satisfactory performance and
payment of all the Obligations of the Grantor, as such term is defined in the
Security Agreement among Grantor, the other assignors from time to time party
thereto and the Grantee, dated as of February 19, 1997 (as amended from time to
time, the "Security Agreement"). Upon the occurrence of the Termination Date
(as defined in the Security
<PAGE>
ANNEX G
Page 2
Agreement), the Grantee shall, upon such satisfaction, execute, acknowledge, and
deliver to the Grantor an instrument in writing releasing the security interest
in the Marks and Patents acquired under this Agreement.
This Agreement has been granted in conjunction with the security
interest granted to the Grantee under the Security Agreement. The rights and
remedies of the Grantee with respect to the security interest granted herein are
without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Agreement are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the ___ day of February, 1997.
[NAME OF GRANTOR],
as Grantor
By_______________________________
Title:
BANKERS TRUST COMPANY,
as Collateral Agent and Grantee
By_______________________________
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of February, 1997, before me personally came
_________________ who, being by me duly sworn, did state as follows: that [s]he
is _______________ of [Name of Grantor], that [s]he is authorized to execute the
foregoing Agreement on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
_________________________
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of February, 1997, before me personally came
_____________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________ of Bankers Trust Company, that [s]he is authorized
to execute the foregoing Agreement on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
____________________________
Notary Public
<PAGE>
SCHEDULE A
----------
MARK REG. NO. REG. DATE
- ---- -------- ---------
<PAGE>
SCHEDULE B
----------
PATENT PATENT NO. ISSUE DATE
- ------ ---------- ----------
<PAGE>
ANNEX H
-------
GRANT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, [Name of Grantor], a _______________ corporation (the
"Grantor"), having its chief executive office at ______________________________,
____________________________, is the owner of all right, title and interest in
and to the United States copyrights and associated United States copyright
registrations and applications for registration set forth in Schedule A attached
hereto;
WHEREAS, BANKERS TRUST COMPANY, as Collateral Agent, having its
principal offices at One Bankers Trust Plaza, New York, New York 10006 (the
"Grantee"), desires to acquire a security interest in said copyrights and
copyright registrations and applications therefor; and
WHEREAS, the Grantor is willing to grant to the Grantee a security
interest in and lien upon the copyrights and copyright registrations and
applications therefor described above;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions of the
Security Agreement, dated as of February 19, 1997, made by the Grantor, the
other assignors from time to time party thereto and the Grantee (as amended from
time to time, the "Security Agreement"), the Grantor hereby grants to the
Grantee a security interest in the copyrights and copyright registrations and
applications therefor set forth in Schedule A attached hereto.
This Agreement has been granted in conjunction with the security
interest granted to the Grantee under the Security Agreement. The rights and
remedies of the Grantee with respect to the security interest granted herein are
without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Agreement are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
<PAGE>
ANNEX H
Page 2
Executed at New York, New York, the ___ day of February, 1997.
[NAME OF GRANTOR]
By__________________________
Name:
Title:
BANKERS TRUST COMPANY
By__________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of February, 1997 before me personally came
_______________, who being duly sworn, did depose and say that [s]he is
___________________ of [Name of Grantor], that [s]he is authorized to execute
the foregoing Agreement on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
_________________________
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of February, 1997, before me personally came
_____________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________ of Bankers Trust Company, that [s]he is authorized
to execute the foregoing Agreement on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
____________________________
Notary Public
-2-
<PAGE>
SCHEDULE A
----------
U.S. COPYRIGHTS
---------------
REGISTRATION PUBLICATION
NUMBERS DATE COPYRIGHT TITLE
-------------- ---------------- ---------------
<PAGE>
EXHIBIT 4.3
-----------
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated as of February 19, 1997 (as amended, modified
or supplemented from time to time, this "Agreement"), made by each of the
undersigned (each, a "Pledgor" and, together with any other entity that becomes
a party hereto pursuant to Section 22 hereof, the "Pledgors"), in favor of
BANKERS TRUST COMPANY, as Collateral Agent (the "Pledgee"), for the benefit of
the Secured Creditors (as defined below). Except as otherwise defined herein,
terms used herein and defined in the Credit Agreement (as defined below) shall
be used herein as therein defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Wesley Jessen VisionCare, Inc. ("Holdings"), Wesley-Jessen
Corporation (the "Borrower"), the financial institutions from time to time party
thereto (the "Banks"), and Bankers Trust Company, as Agent (together with any
successor agent, the "Agent", and together with the Pledgee and the Banks, the
"Bank Creditors"), have entered into a Credit Agreement, dated as of February
19, 1997 (as amended, modified or supplemented from time to time, the "Credit
Agreement"), providing for the making of Loans to the Borrower and the issuance
of, and participation in, Letters of Credit for the account of the Borrower, all
as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more
(i) interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors," and together with Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed
to the Secured Creditors the payment when due of all obligations and liabilities
of the Borrower under or with respect to the Credit Documents and the Interest
Rate Protection Agreements or Other Hedging Agreements;
<PAGE>
WHEREAS, pursuant to the Subsidiary Guaranty, each Pledgor (other than
Holdings and the Borrower) has jointly and severally guaranteed to the Secured
Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
WHEREAS, it is a condition precedent to the making of Loans to the
Borrower under the Credit Agreement that each Pledgor shall have executed and
delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor
for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and liabilities
(including obligations which, but for the automatic stay under Section
362(a) of the Bankruptcy Code, would become due) of such Pledgor, now
existing or hereafter incurred under, arising out of or in connection with
any Credit Document to which such Pledgor is a party and the due
performance and compliance by such Pledgor with the terms of each such
Credit Document (all such obligations and liabilities under this clause
(i), except to the extent consisting of obligations or indebtedness with
respect to Interest Rate Protection Agreements or Other Hedging Agreements,
being herein collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of such Pledgor, now
existing or hereafter incurred under, arising out of or in connection with
any Interest Rate Protection Agreement or Other Hedging Agreement
including, in the case of Pledgors other than the Borrower, all obligations
of such Pledgor under its Guaranty in respect of Interest Rate Protection
Agreements or Other Hedging Agreements (all such obligations and
liabilities under this clause (ii) being herein collectively called the
"Other Obligations");
-2-
<PAGE>
(iii) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) or preserve its security interest
in the Collateral;
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred to in
clauses (i), (ii) and (iii) above, after an Event of Default (such term, as
used in this Agreement, shall mean any Event of Default under, and as
defined in, the Credit Agreement, or any payment default by the Borrower
under any Interest Rate Protection Agreement or Other Hedging Agreement and
shall in any event include, without limitation, any payment default (after
the expiration of any applicable grace period) on any of the Obligations
(as hereinafter defined)) shall have occurred and be continuing, the
reasonable expenses of retaking, holding, preparing for sale or lease,
selling or otherwise disposing or realizing on the Collateral, or of any
exercise by the Pledgee of its rights hereunder, together with reasonable
attorneys' fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations".
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein: (i)
the term "Stock" shall mean (x) with respect to corporations incorporated under
the laws of the United States or any State or territory thereof (each, a
"Domestic Corporation"), all of the issued and outstanding shares of capital
stock of any Domestic Corporation at any time owned by each Pledgor and (y) with
respect to corporations not Domestic Corporations (each, a "Foreign
Corporation"), all of the issued and outstanding shares of capital stock at any
time directly owned by any Pledgor of any Foreign Corporation, provided that,
--------
except as provided in the last sentence of this Section 2, such Pledgor shall
not be required to pledge hereunder more than 65% of the total combined voting
power of all classes of capital stock of any Foreign Corporation entitled to
vote; (ii) the term "Notes" shall mean (x) all Intercompany Notes at any time
issued to each Pledgor and (y) all other promissory notes from time to time
issued to, or held by, each Pledgor; provided, that, except as provided in the
--------
last sentence of this Section 2, no Pledgor shall be required to pledge
hereunder any promissory notes (including Intercompany Notes) issued to such
Pledgor by any Subsidiary of such Pledgor which is a Foreign Corporation and
(iii) the term "Securities" shall mean all of the Stock and Notes; provided
--------
that, notwithstanding the foregoing, the term "Securities" shall not include any
Notes listed in Annex D hereto. Each Pledgor represents and warrants that on the
date hereof (i) each Subsidiary of such Pledgor, and the direct ownership
thereof, is listed in Annex A hereto; (ii) the Stock held by such Pledgor
consists of the number and type of shares of the stock of the corporations as
described in Annex B hereto; (iii) such Stock constitutes that percentage of the
issued and outstanding capital stock of the issuing corporation as is set forth
in Annex B hereto; (iv) the Notes held by such Pledgor consist of the promissory
-3-
<PAGE>
notes described in Annex C hereto where such Pledgor is listed as the Lender;
and (v) on the date hereof, such Pledgor owns no other Securities. In the
circumstances and to the extent provided in Section 7.14 of the Credit
Agreement, the 65% limitation set forth in clause (i)(y) and the limitation in
the proviso of clause (ii) in each case of this Section 2 and in Section 3.2
hereof shall no longer be applicable and such Pledgor shall duly pledge and
deliver to the Pledgee such of the Securities not theretofore required to be
pledged hereunder.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations and for the purposes set
------
forth in Section 1 hereof, each Pledgor hereby: (i) grants to the Pledgee a
security interest in all of the Collateral owned by such Pledgor; (ii) pledges
and deposits as security with the Pledgee the Securities owned by such Pledgor
on the date hereof, and delivers to the Pledgee certificates or instruments
therefor, duly endorsed in blank in the case of Notes and accompanied by undated
stock powers duly executed in blank by such Pledgor in the case of Stock, or
such other instruments of transfer as are acceptable to the Pledgee; and (iii)
assigns, transfers, hypothecates, mortgages, charges and sets over to the
Pledgee all of such Pledgor's right, title and interest in and to such
Securities (and in and to all certificates or instruments evidencing such
Securities), to be held by the Pledgee, upon the terms and conditions set forth
in this Agreement.
3.2. Subsequently Acquired Securities. If any Pledgor shall acquire
--------------------------------
(by purchase, stock dividend or otherwise) any additional Securities at any time
or from time to time after the date hereof, such Pledgor will forthwith pledge
and deposit such Securities (or certificates or instruments representing such
Securities) as security with the Pledgee and deliver to the Pledgee certificates
therefor or instruments thereof, duly endorsed in blank in the case of Notes and
accompanied by undated stock powers duly executed in blank in the case of Stock,
or such other instruments of transfer as are acceptable to the Pledgee, and will
promptly thereafter deliver to the Pledgee a certificate executed by any
Authorized Officer of such Pledgor describing such Securities and certifying
that the same have been duly pledged with the Pledgee hereunder. Subject to the
last sentence of Section 2 hereof, no Pledgor shall be required at any time to
pledge hereunder (x) any Stock which is more than 65% of the total combined
voting power of all classes of capital stock of any Foreign Corporation entitled
to vote or (y) any promissory notes (including Intercompany Notes) issued to
such Pledgor by any Subsidiary of such Pledgor which is a Foreign Corporation.
3.3. Uncertificated Securities. Notwithstanding anything to the
-------------------------
contrary contained in Sections 3.1 and 3.2 hereof, if any Securities (whether
now owned or hereafter acquired) are uncertificated securities, the respective
Pledgor shall promptly notify the Pledgee in writing thereof, and, if after such
notification, the Pledgee so requests, such Pledgor shall promptly take all
actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8-321 of the
New York UCC, if applicable). Each Pledgor further agrees to take such actions
as the
-4-
<PAGE>
Pledgee deems reasonably necessary or desirable to effect the foregoing and to
permit the Pledgee to exercise any of its rights and remedies hereunder, and
agrees to provide an opinion of counsel reasonably satisfactory to the Pledgee
with respect to any such pledge of uncertificated Securities promptly upon
request of the Pledgee.
3.4 Definition of Pledged Stock, Pledged Notes, Pledged Securities
--------------------------------------------------------------
and Collateral. All Stock at any time pledged or required to be pledged
- --------------
hereunder is hereinafter called the "Pledged Stock," all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes," all of the Pledged Stock and Pledged Notes together are hereinafter
called the "Pledged Securities," which together with all dividends and interest
thereon, as the case may be, and all proceeds thereof, including any securities
and moneys received and at the time held by the Pledgee hereunder, is
hereinafter called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall
have the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of such Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee. The Pledgee agrees to promptly notify the
relevant Pledgor after the appointment of any sub-agent; provided, however, that
-------- -------
the failure to give such notice shall not affect the validity of such
appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until (i) an
Event of Default shall have occurred and be continuing and (ii) written notice
thereof shall have been given by the Pledgee to the relevant Pledgor (provided,
--------
that if an Event of Default specified in Section 9.05 of the Credit Agreement
shall occur, no such notice shall be required), each Pledgor shall be entitled
to exercise any and all voting and other consensual rights pertaining to the
Pledged Securities and to give all consents, waivers or ratifications in respect
thereof; provided, that no vote shall be cast or any consent, waiver or
--------
ratification given or any action taken which would violate or be inconsistent
with any of the terms of this Agreement, any other Credit Document or any
Interest Rate Protection Agreement or Other Hedging Agreement (collectively, the
"Secured Debt Agreements"), or which would have the effect of impairing the
position or interests of the Pledgee or any other Secured Creditor, except to
the extent such violation, inconsistency or impairment shall be waived in
accordance with the terms of Section 20 hereof. All such rights of such Pledgor
to vote and to give consents, waivers and ratifications shall cease in case an
Event of Default shall occur and be continuing, and Section 7 hereof shall
become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default
shall have occurred and be continuing, all cash dividends payable in respect of
the Pledged Stock and all payments in respect of the Pledged Notes shall be paid
to the respective Pledgor; provided, that all cash dividends payable in respect
--------
of the Pledged Stock which are determined by the Pledgee to represent in whole
or in part an extraordinary,
-5-
<PAGE>
liquidating or other distribution in return of capital shall be paid, to the
extent so determined to represent an extraordinary, liquidating or other
distribution in return of capital, to the Pledgee and retained by it as part of
the Collateral. Subject to the last sentence of Section 3.2 hereof, Pledgee
shall also be entitled to receive directly, and to retain as part of the
Collateral:
(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or
otherwise in respect of the Pledged Stock;
(ii) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the Pledged
Stock by way of stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement; and
(iii) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of Default
shall have occurred and be continuing, the Pledgee shall be entitled to exercise
all of the rights, powers and remedies (whether vested in it by this Agreement
or by any other Secured Debt Agreement or by law) for the protection and
enforcement of its rights in respect of the Collateral, and the Pledgee shall be
entitled, without limitation, to exercise the following rights, which each
Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
payable to such Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Pledged Securities into
the Pledgee's name or the name of its nominee or nominees (the Pledgee
agrees to promptly notify the relevant Pledgor after such transfer;
provided, however, that the failure to give such notice shall not affect
-------- -------
the validity of such transfer);
(iii) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other action to collect upon any
Pledged Note (including, without limitation, to make any demand for payment
thereon);
(iv) subject to the giving of written notice to the relevant
Pledgor in accordance with clause (ii) of Section 5 hereof (to the extent
required by such Section 5), to vote all or any part of the Pledged Stock
(whether or not transferred into the name of the Pledgee) and give all
consents, waivers and ratifications in respect of the Collateral and
otherwise act with respect thereto as though it were the outright owner
thereof (each Pledgor hereby irrevocably constituting and appointing
-6-
<PAGE>
the Pledgee the proxy and attorney-in-fact of such Pledgor, with full power
of substitution to do so); and
(v) at any time or from time to time to sell, assign and deliver,
or grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided, that at least 10 days'
--------
written notice of the time and place of any such sale shall be given to
such Pledgor. Each Pledgor hereby waives and releases to the fullest
extent permitted by law any right or equity of redemption with respect to
the Collateral, whether before or after sale hereunder, and all rights, if
any, of marshalling the Collateral and any other security for the
Obligations or otherwise. At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of the Secured Creditors may bid for
and purchase all or any part of the Collateral so sold free from any such
right or equity of redemption. Neither the Pledgee nor any Secured
Creditor shall be liable for failure to collect or realize upon any or all
of the Collateral or for any delay in so doing nor shall any of them be
under any obligation to take any action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any other
Secured Creditor of any one or more of the rights, powers or remedies provided
for in this Agreement or any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. The Secured Creditors agree that
this Agreement may be enforced only by the action of the Agent or the Pledgee,
in each case acting upon the instructions of the Required Banks (or, after the
date on which all Credit Document Obligations have been paid in full, the
holders of at least the majority of the outstanding Other Obligations) and that
no other Secured Creditor shall have any right individually to seek to enforce
or to enforce this Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Agent or the Pledgee or the holders of at least a majority of
the outstanding Other Obligations, as the case may be, for the benefit of the
Secured Creditors upon the terms of this Agreement.
-7-
<PAGE>
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral pursuant to the terms of
this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided in the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the amount
of the proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor from and against any and all claims, demands, losses, judgments and
liabilities of whatsoever kind or nature, and (ii) to reimburse the Pledgee and
each other Secured Creditor for all costs and expenses, including attorneys'
fees, growing out of or resulting from this Agreement or the exercise by the
Pledgee of any right or remedy granted to it hereunder or under any other
Secured Debt Agreement except, with respect to clauses (i) and (ii) above, for
those arising from the Pledgee's or such other Secured Creditor's gross
negligence or willful misconduct. In no event shall the Pledgee be liable, in
the absence of gross negligence or willful misconduct on its part, for any
matter or thing in connection with this Agreement other than to account for
moneys actually received by it in accordance with the terms hereof. If and to
the extent that the obligations of the Pledgors under this Section 11 are
unenforceable for any reason, each Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
12. FURTHER ASSURANCES. Each Pledgor agrees that it will join with
the Pledgee in executing and, at such Pledgor's own expense, file and refile
under the applicable UCC or appropriate local equivalent, such financing
statements, continuation statements and other documents in such offices as the
Pledgee may deem reasonably necessary or appropriate and wherever required or
permitted by law in order to perfect and preserve the Pledgee's security
interest in the Collateral and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of such Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional conveyances, assignments, agreements and instruments as the Pledgee
may reasonably re-
-8-
<PAGE>
quire or deem advisable to carry into effect the purposes of this Agreement or
to further assure and confirm unto the Pledgee its rights, powers and remedies
hereunder.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on the
terms and conditions set forth herein and in Section 11 of the Credit Agreement.
14. TRANSFER BY PLEDGORS. Except for sales or dispositions of
Collateral permitted pursuant to the Credit Agreement, no Pledgor will sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except in
accordance with the terms of this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR. Each
Pledgor represents, warrants and covenants that (i) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Securities
pledged by it hereunder, subject to no pledge, lien, mortgage, hypothecation,
security interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by this Agreement and liens permitted under
clauses (a) and (e) of Section 8.03 of the Credit Agreement; (ii) it has full
power, authority and legal right to pledge all the Securities pledged by it
pursuant to this Agreement; (iii) this Agreement has been duly authorized,
executed and delivered by such Pledgor and constitutes a legal, valid and
binding obligation of such Pledgor enforceable in accordance with its terms,
except to the extent that the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law); (iv) no consent of any other
party (including, without limitation, any stockholder or creditor of such
Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by such
Pledgor in connection with the execution, delivery or performance of this
Agreement, or in connection with the exercise of its rights and remedies
pursuant to this Agreement, except as may be required in connection with the
disposition of the Securities by laws affecting the offering and sale of
securities generally; (v) the execution, delivery and performance of this
Agreement by such Pledgor does not violate any provision of any applicable law
or regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of the certificate
of incorporation or by-laws of such Pledgor or of any securities issued by such
Pledgor or any of its Subsidiaries, or of any mortgage, indenture, deed of
trust, loan agreement, credit agreement or any other material agreement or
material instrument to which such Pledgor or any of its Subsidiaries is a party
or which
-9-
<PAGE>
purports to be binding upon such Pledgor or any of its Subsidiaries or upon any
of their respective assets and will not result in the creation or imposition of
any lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement; (vi) all the shares of
Stock of Subsidiaries of Holdings have been duly and validly issued, are fully
paid and non assessable; (vii) each of the Pledged Notes constituting
Intercompany Notes, when executed by the obligor thereof, will be the legal,
valid and binding obligation of such obligor, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and (viii)
the pledge and assignment of the Securities pursuant to this Agreement, together
with the delivery of the Securities pursuant to this Agreement (which delivery
has been made), creates a valid and perfected first security interest in such
Securities and the proceeds thereof, subject to no prior lien or encumbrance or
to any agreement purporting to grant to any third party a lien or encumbrance on
the property or assets of such Pledgor which would include the Securities other
than liens permitted under clauses (a) and (e) of Section 8.03 of the Credit
Agreement. Each Pledgor covenants and agrees that it will defend the Pledgee's
right, title and security interest in and to the Securities and the proceeds
thereof against the claims and demands of all persons whomsoever; and such
Pledgor covenants and agrees that it will have like title to and right to pledge
any other property at any time hereafter pledged to the Pledgee as Collateral
hereunder and will likewise defend the right thereto and security interest
therein of the Pledgee and the other Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such agreement or instrument or this Agreement; (iii) any furnishing of any
additional security to the Pledgee or its assignee or any acceptance thereof or
any release of any security by the Pledgee or its assignee; (iv) any limitation
on any party's liability or obligations under any such instrument or agreement
or any invalidity or unenforceability, in whole or in part, of any such
instrument or agreement or any term thereof; or (v) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to such Pledgor or any Subsidiary of such Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Pledgor shall have notice
or knowledge of any of the foregoing.
-10-
<PAGE>
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and any Pledgor shall have received from the Pledgee
a written request or requests that such Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Pledged Stock, such Pledgor
as soon as practicable and at its expense will use its reasonable efforts to
cause such registration to be effected (and be kept effective) and will use its
reasonable efforts to cause such qualification and compliance to be effected
(and be kept effective) as may be so requested and as would permit or facilitate
the sale and distribution of such Pledged Stock, including, without limitation,
registration under the Securities Act of 1933 as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky or
other state securities laws and appropriate compliance with any other government
requirements; provided, that the Pledgee shall furnish to such Pledgor such
--------
information regarding the Pledgee as such Pledgor may request in writing and as
shall be required in connection with any such registration, qualification or
compliance. Such Pledgor will cause the Pledgee to be kept reasonably advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of the Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to such
Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, such Pledged Securities or the part thereof to be sold shall not, for
any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration; provided, that
--------
at least 10 days' notice of the time and place of any such sale shall be given
to such Pledgor. Without limiting the generality of the foregoing, in any such
event the Pledgee, in its sole and absolute discretion: (i) may proceed to make
such private sale notwithstanding that a registration statement for the purpose
of registering such Pledged Securities or part thereof shall have been filed
under such Securities Act; (ii) may approach and negotiate with a single
possible purchaser to effect such sale; and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Pledged Securities or part thereof. In the event of any such sale, the
Pledgee shall incur no responsibility or liability
-11-
<PAGE>
for selling all or any part of the Pledged Securities at a price which the
Pledgee, in its sole and absolute discretion, may in good faith deem reasonable
under the circumstances, notwithstanding the possibility that a substantially
higher price might be realized if the sale were deferred until after
registration as aforesaid.
18. TERMINATION, RELEASE. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of the
respective Pledgor, will promptly execute and deliver to such Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of this
Agreement, and will duly release from the security interest created hereby and
assign, transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Pledgee and as has not theretofore been sold or otherwise applied or
released pursuant to this Agreement. As used in this Agreement, "Termination
Date" shall mean the date upon which the Total Commitment and all Interest Rate
Protection Agreements or Other Hedging Agreements have been terminated, no Note
(as defined in the Credit Agreement) or Letter of Credit is outstanding (other
than Letters of Credit, together with all Fees that have accrued and will accrue
thereon through the stated termination date of such Letters of Credit, which
have been supported in a manner satisfactory to the Letter of Credit Issuer in
its sole and absolute discretion) and all other Obligations (other than
indemnities described in Section 11 hereof and in Section 12.13 of the Credit
Agreement which are not then due and payable) have been paid in full.
(b) In the event that any part of the Collateral is sold or otherwise
disposed of in connection with a sale or other disposition permitted by Section
8.02 of the Credit Agreement or is otherwise released at the direction of the
Required Banks (or all the Banks if required by Section 12.12 of the Credit
Agreement), the Pledgee, at the request and expense of such Pledgor will duly
release from the security interest created hereby and assign, transfer and
deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in possession of the Pledgee and has not theretofore been
released pursuant to this Agreement.
(c) At any time that a Pledgor desires that Collateral be released as
provided in the foregoing Section 18(a) or (b), it shall deliver to the Pledgee
a certificate signed by an Authorized Officer of such Pledgor stating that the
release of the respective Collateral is permitted pursuant to Section 18(a) or
(b).
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<PAGE>
19. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.:(212) 250-9094
Telecopier No.:(212) 250-7218
(c) if to any Bank (other than the Pledgee), at such address as
such Bank shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Pledgor directly affected thereby and the
Pledgee (with the written consent of either (x) the Required Banks (or all the
Banks if required by Section 12.12 of the Credit Agreement) at all times prior
to the time on which all Credit Document Obligations have been paid in full or
(y) the holders of at least a majority of the outstanding Other Obligations at
all times after the time on which all Credit Document Obligations have been paid
in full); provided, that any change, waiver, modification or variance affecting
--------
the rights and benefits of a single Class (as defined below) of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors (as defined below) of
such Class. For the purpose of this Agreement, the term "Class" shall mean each
class of Secured Creditors, i.e., whether (i) the Bank Creditors as holders of
----
the Credit Document Obligations or (ii) the Other Creditors as holders of the
Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (i) with respect to the Credit
Document Obligations, the Required Banks and (ii) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
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<PAGE>
21. MISCELLANEOUS. (a) This Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. THIS AGREEMENT SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. The headings in this Agreement are for purposes of reference
only and shall not limit or define the meaning hereof. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument.
(b) Notwithstanding anything contained herein to the contrary, it is
understood and agreed that with respect to uncertificated Securities of any
Foreign Corporation directly owned by any Pledgor, no Pledgor shall be required
to perfect the Pledgee's security interest in such uncertificated Securities
until such time as the Credit Agreement shall otherwise provide.
(c) A simplified version of this Agreement for the purposes of
pledging the shares of Wesley-Jessen S.p.A., an Italian corporation, is attached
as Exhibit A hereto (the "Unilateral Deed of Pledge") and shall be executed by
the Borrower simultaneously with the signing of this Agreement and notarized and
legalized by means of the apostille thereto pursuant to The Hague Convention of
October 5, 1961. The Unilateral Deed of Pledge shall not supersede in any
fashion the contents of this Agreement. In case of discrepancy, this Agreement
shall prevail over the Unilateral Deed of Pledge.
22. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Sections 7.14 and/or 8.14 of the
Credit Agreement shall automatically become a Pledgor hereunder by executing a
counterpart hereof and delivering the same to the Pledgee.
* * *
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<PAGE>
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
Address: WESLEY JESSEN VISIONCARE, INC.,
333 East Howard Avenue as a Pledgor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer, Secretary
Address: WESLEY-JESSEN CORPORATION,
333 East Howard Avenue as a Pledgor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
Address: PBH, INC.,
333 East Howard Avenue as a Pledgor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
<PAGE>
Address: PBH INTERNATIONAL, INC.,
333 East Howard Avenue as a Pledgor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
Address: BARNES-HIND INTERNATIONAL
333 East Howard Avenue INC.,
Des Plaines, Illinois 60018 as a Pledgor
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
Address: WESLEY-JESSEN (PUERTO RICO),
333 East Howard Avenue INC.,
Des Plaines, Illinois 60018 as a Pledgor
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief Financial
Officer, Treasurer
BANKERS TRUST COMPANY,
as Collateral Agent and Pledgee
By /s/ Mary Kay Coyle
--------------------------
Title: Managing Director
<PAGE>
ANNEX A
to
PLEDGE AGREEMENT
----------------
LIST OF SUBSIDIARIES
--------------------
[TO BE PROVIDED BY PLEDGORS]
<PAGE>
ANNEX B
to
PLEDGE AGREEMENT
----------------
LIST OF STOCK
-------------
[TO BE PROVIDED BY PLEDGORS]
<PAGE>
ANNEX C
to
PLEDGE AGREEMENT
----------------
LIST OF NOTES
-------------
[TO BE PROVIDED BY PLEDGORS]
<PAGE>
ANNEX D
to
PLEDGE AGREEMENT
----------------
LIST OF EXCLUDED NOTES
----------------------
<PAGE>
EXHIBIT 4.4
-----------
SUBSIDIARY GUARANTY
-------------------
GUARANTY, dated as of February 19, 1997 (as amended, modified or
supplemented from time to time, this "Guaranty"), made by each of the
undersigned (each, a "Guarantor" and, together with any other entity that
becomes a party hereto pursuant to Section 26 hereof, the "Guarantors"). Except
as otherwise defined herein, terms used herein and defined in the Credit
Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Wesley Jessen VisionCare, Inc. ("Holdings"), Wesley-Jessen
Corporation (the "Borrower"), the financial institutions from time to time party
thereto (the "Banks"), and Bankers Trust Company, as Agent (together with any
successor agent, the "Agent"), have entered into a Credit Agreement, dated as of
February 19, 1997 (as amended, modified or supplemented from time to time, the
"Credit Agreement"), providing for the making of Loans to the Borrower and the
issuance of, and participation in, Letters of Credit for the account of the
Borrower, all as contemplated therein (the Banks, the Agent and the Collateral
Agent are herein called the "Bank Creditors");
WHEREAS, the Borrower may from time to time be party to one or more
(i) interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and\or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors," and together with the Bank Creditors, are herein called the
"Creditors");
WHEREAS, each Guarantor is a Subsidiary of the Borrower;
WHEREAS, it is a condition to the making of Loans under the Credit
Agreement that each Guarantor shall have executed and delivered this Guaranty;
and
<PAGE>
WHEREAS, each Guarantor will obtain benefits from the incurrence of
Loans by the Borrower under the Credit Agreement and the entering into of
Interest Rate Protection Agreements or Other Hedging Agreements and,
accordingly, desires to execute this Guaranty in order to satisfy the conditions
described in the preceding paragraph and to induce the Banks to make Loans to
the Borrower and Other Creditors to enter into Interest Rate Protection
Agreements or Other Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Creditors and hereby covenants and agrees with each Creditor
as follows:
1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: (i) to the Bank Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the Notes issued by, and the Loans made
to, the Borrower under the Credit Agreement and all reimbursement obligations
and Unpaid Drawings with respect to Letters of Credit and (y) all other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Borrower to the Bank Creditors under the Credit Agreement (including,
without limitation, indemnities, Fees and interest thereon) and the other Credit
Documents to which the Borrower is a party, whether now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement or any
such other Credit Document and the due performance and compliance with the terms
of the Credit Documents by the Borrower (all such principal, interest,
liabilities and obligations under this clause (i), except to the extent
consisting of obligations or liabilities with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein collectively
called the "Credit Document Obligations"); and (ii) to each Other Creditor the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities owing by the Borrower under any Interest Rate Protection
Agreements or Other Hedging Agreements, whether now in existence or hereafter
arising, and the due performance and compliance by the Borrower with all terms,
conditions and agreements contained therein (all such obligations and
liabilities being herein collectively called the "Other Obligations", and
together with the Credit Document Obligations are herein collectively called the
"Guaranteed Obligations"), provided that the maximum amount payable by each
Guarantor hereunder shall at no time exceed the Maximum Amount (as hereinafter
defined) of such Guarantor. As used herein, "Maximum Amount" of any Guarantor
means an amount equal to 95% of the amount by which (i) the present fair
saleable
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value of such Guarantor's assets exceeds (ii) the amount reasonably
expected to come due in respect of all liabilities (including, without
limitation, contingent liabilities), other than liabilities (contingent or
otherwise) of such Guarantor hereunder, in each case determined on the Initial
Borrowing Date or on the day any demand is made under this Guaranty, whichever
date results in a higher Maximum Amount. Subject to the proviso in the second
preceding sentence, each Guarantor understands, agrees and confirms that the
Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against each Guarantor without proceeding against any other
Guarantor, the Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations. All payments by each Guarantor under this Guaranty shall be made on
the same basis as payments by the Borrower are made under Sections 4.03 and 4.04
of the Credit Agreement.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations of the Borrower to the Creditors whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of
the events specified in Section 9.05 of the Credit Agreement, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Creditors, or order, on demand, in lawful money of
the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
of the Borrower whether executed by such Guarantor, any other Guarantor, any
other guarantor or by any other party, and the liability of each Guarantor
hereunder shall not be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations of the Borrower, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination or in crease, decrease or change in personnel by the
Borrower or (e) any payment made to any Creditor on the Guaranteed Obligations
which any Creditor repays the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each Guarantor waives any right to the deferral or modification
of its obligations hereunder by reason of any such proceeding.
4. The obligations of each Guarantor hereunder are independent of
the obligations of any other Guarantor, any other guarantor or the Borrower, and
a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower and whether or not any other Guarantor, any
other guarantor of the Borrower or the Borrower
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be joined in any such action or actions. Each Guarantor waives, to the fullest
extent permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives (to the fullest extent permitted by
applicable law) notice of acceptance of this Guaranty and notice of any
liability to which it may apply, and waives promptness, diligence, presentment,
demand of payment, protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking of other action by the Agent or any other Creditor
against, and any other notice to, any party liable thereon (including such
Guarantor or any other guarantor or the Borrower).
6. Any Creditor may (except as shall be required by applicable
statute and cannot be waived) at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations, any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the guaranty herein
made shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to creditors of the
Borrower;
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(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Creditors regardless of
what liabilities of the Borrower remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or supplement
any of the Interest Rate Protection Agreements or Other Hedging Agreements,
the Credit Documents or any of such other instruments or agreements; and/or
(g) act or fail to act in any manner referred to in this Guaranty
which may deprive such Guarantor of its right to subrogation against the
Borrower to recover full indemnity for any payments made pursuant to this
Guaranty.
7. No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Creditor would otherwise have. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Creditor to any other or further action in any circumstances without
notice or demand. It is not necessary for any Creditor to inquire into the
capacity or powers of the Borrower or any of its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness of the Borrower now or hereafter held by any
Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such
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indebtedness of the Borrower to any Guarantor, if the Agent, after an Event of
Default has occurred and is continuing, so requests, shall be collected,
enforced and received by such Guarantor as trustee for the Creditors and be paid
over to the Creditors on account of the indebtedness of the Borrower to the
Creditors, but without affecting or impairing in any manner the liability of
such Guarantor under the other provisions of this Guaranty. Prior to the
transfer by any Guarantor of any note or negotiable instrument evidencing any
indebtedness of the Borrower to such Guarantor, such Guarantor shall mark such
note or negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, each Guarantor
hereby agrees with the Guaranteed Creditors that it will not exercise any right
of subrogation which it may at any time otherwise have as a result of this
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all Guaranteed Obligations have been irrevocably paid in full
in cash.
10. (a) Each Guarantor waives any right (except as shall be required
by applicable statute or law and cannot be waived) to require the Creditors to:
(i) proceed against the Borrower, any other Guarantor, any other guarantor of
the Borrower or any other party; (ii) proceed against or exhaust any security
held from the Borrower, any other Guarantor, any other guarantor of the Borrower
or any other party; or (iii) pursue any other remedy in the Creditors' power
whatsoever. Each Guarantor waives any (to the fullest extent permitted by
applicable law) defense based on or arising out of any defense of the Borrower,
any other Guarantor, any other guarantor of the Borrower or any other party
other than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of the
Borrower, any other Guarantor, any other guarantor of the Borrower or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations. The Creditors may, at
their election, foreclose on any security held by the Agent, the Collateral
Agent or the other Creditors by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law), or exercise any other right or
remedy the Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. Each Guarantor waives any defense arising out of any such
election by the Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of
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protest, notices of dishonor, notices of acceptance of this Guaranty, and
notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
(c) Each Guarantor understands, is aware and hereby acknowledges
that to the extent the Guaranteed Obligations are secured by real property
located in the State of California, such Guarantor shall be liable for the full
amount of its liability hereunder not withstanding foreclosure on such real
property by trustee sale or any other reason impairing such Guarantor's or any
Creditor's right to proceed against any Credit Party. Each Guarantor hereby
waives, to the fullest extent permitted by law, all rights and benefits under
Section 2809 of the California Civil Code (or any similar law in any other
jurisdiction) purporting to reduce a guarantor's obligation in proportion to the
principal obligation. Each Guarantor hereby waives all rights and benefits under
Section 580a of the California Code of Civil Procedure (or any similar law in
any other jurisdiction) purporting to limit the amount of any deficiency
judgment which might be recoverable following the occurrence of a trustee's sale
under a deed of trust and all rights and benefits under Section 580b of the
California Code of Civil Procedure (or any similar law in any other
jurisdiction) stating that no deficiency may be recovered on a real property
purchase money obligation. Each Guarantor further understands, is aware and
hereby acknowledges that if the Creditors elect to nonjudicially foreclose on
any real property security located in the State of California any right of
subrogation of such Guarantor against any Creditor may be impaired or
extinguished and that as a result of such impairment or extinguishment of
subrogation rights, such Guarantor may have a defense to a deficiency judgment
arising out of the operation of (i) Section 580d of the California Code of Civil
Procedure which states that no deficiency may be recovered on a note secured by
a deed of trust on real property in case such real property is sold under the
power of sale contained in such deed of trust, and (ii) related principles of
estoppel. To the fullest extent permitted by law, each Guarantor waives all
rights and bene fits and any defense arising out of the operation of Section
580d of the California Code of Civil Procedure and related principles of
estoppel, even though such election operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of such Guarantor
against any Credit Party or any other party or any security. In addition, each
Guarantor hereby waives, to the fullest extent permitted by applicable law,
without limiting the generality of the foregoing or any other provision hereof,
all rights and benefits which might otherwise be available to such Guarantor
under Section 726 of the California Code of Civil Procedure and all rights and
benefits which might otherwise be available to such
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Guarantor under California Civil Code Sections 2809, 2810, 2815, 2819, 2821,
2839, 2845, 2848, 2849, 2850, 2899 and 3433 (or any similar law in any other
jurisdiction).
(d) Each Guarantor hereby further waives (to the fullest extent
permitted by applicable law): (i) all rights and defenses arising out of an
election of remedies by the Creditors, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a Guaranteed
Obligation, has destroyed such Guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
California Code of Civil Procedure or otherwise and (ii) such Guarantor's rights
of subrogation and reimbursement and any other rights and defenses available to
such Guarantor by reason of the California Civil Code Sections 2787 to 2855,
inclusive, including, without limitation, (x) any defenses such Guarantor may
have to the Guaranteed Obligations by reason of an election of remedies by the
Creditors and (y) any rights or defenses such Guarantor may have by reason of
protection afforded to the principal borrower with respect to the obligation so
guaranteed pursuant to the antideficiency or other laws of the State of
California limiting or discharging the borrower's indebtedness, including,
without limitation, California Code of Civil Procedure Sections 580a, 580b, 580d
or 726.
11. The Creditors agree that this Guaranty may be enforced only by
the action of the Agent or the Collateral Agent, in each case acting upon the
instructions of the Required Banks (or, after the date on which all Credit
Document Obligations have been paid in full, the holders of at least a majority
of the outstanding Other Obligations) and that no other Creditor shall have any
right individually to seek to enforce or to enforce this Guaranty or to realize
upon the security to be granted by the Security Documents, it being understood
and agreed that such rights and remedies may be exercised by the Agent or the
Collateral Agent or the holders of at least a majority of the outstanding Other
Obligations, as the case may be, for the benefit of the Creditors upon the terms
of this Guaranty and the Security Documents. The Creditors further agree that
this Guaranty may not be enforced against any director, officer, employee, or
stockholder of any Guarantor (except to the extent such stockholder is also a
Guarantor hereunder).
12. In order to induce the Banks to make Loans and issue Letters of
Credit pursuant to the Credit Agreement, and in order to induce the Other
Creditors to execute, deliver and perform the Interest Rate Protection
Agreements or Other Hedging Agreements, each Guarantor represents, warrants and
covenants that:
(a) Such Guarantor (i) is a duly organized and validly existing
corporation and is in good standing (to the extent such concept is relevant
in such jurisdiction) under the laws of the jurisdiction of its
organization, and has the corporate power and authority to own its property
and assets and to transact the business in which it is
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engaged and presently proposes to engage and (ii) is duly qualified and is
authorized to do business and is in good standing in all jurisdictions
where it is required to be so qualified and where the failure to be so
qualified would have a Material Adverse Effect.
(b) Such Guarantor has the corporate power and authority to
execute, deliver and carry out the terms and provisions of this Guaranty
and each other Credit Document to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and
performance by it of each such Credit Document. Such Guarantor has duly
executed and delivered this Guaranty and each other Credit Document to
which it is a party and each such Credit Document constitutes the legal,
valid and binding obligation of such Guarantor enforceable in accordance
with its terms, except to the extent that the enforceability hereof or
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by such
Guarantor of this Guaranty or any other Credit Document to which it is a
party, nor compliance by it with the terms and provisions hereof or thereof
(i) will contravene any applicable provision of any law, statute, rule or
regulation, or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to
the Security Documents) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets
of such Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, credit agreement or
other material agreement or other instrument to which such Guarantor 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 of such Guarantor
or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, 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 this Guaranty or any other Credit
Document to which such Guarantor is a party, or (ii) the legality,
validity, binding effect or enforceability of this Guaranty or any other
Credit Document to which such Guarantor is a party.
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(e) There are no actions, suits or proceedings pending or to the
knowledge of such Guarantor, threatened with respect to such Guarantor (i)
that could reasonably be expected to have a Material Adverse Effect or (ii)
that could reasonably be expected to have a material adverse effect on the
rights or remedies of the Creditors or on the ability of such Guarantor to
perform its respective obligations to the Creditors hereunder and under the
other Credit Documents to which it is a party.
13. Each Guarantor covenants and agrees that on and after the date
hereof and until the termination of the Total Commitment and all Interest Rate
Protection Agreements or Other Hedging Agreements and when no Note or Letter of
Credit remains outstanding (other than Letters of Credit, together with all Fees
that have accrued and will accrue thereon through the stated termination date of
such Letters of Credit, which have been supported in a manner satisfactory to
the Letter of Credit Issuer in its sole and absolute discretion) and all
Guaranteed Obligations have been paid in full (other than indemnities described
in Section 12.13 of the Credit Agreement and analogous provisions in the
Security Documents which are not then due and payable), such Guarantor shall
take, or will refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken so that no violation of any provision,
covenant or agreement contained in Section 7 or 8 of the Credit Agreement, and
so that no Default or Event of Default, is caused by the actions of such
Guarantor or any of its Subsidiaries.
14. The Guarantors hereby jointly and severally agree to pay all
reasonable out-of-pocket costs and expenses of each Creditor in connection with
the enforcement of this Guaranty and any amendment, waiver or consent relating
hereto (including, without limitation, the reasonable fees and disbursements of
counsel (including in-house counsel) employed by any of the Creditors).
15. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
16. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of each
Guarantor directly affected thereby and either (x) the Required Banks (or to the
extent required by Section 12.12 of the Credit Agreement, with the written
consent of each Bank) at all times prior to the time on which all Credit
Document Obligations have been paid in full or (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time on
which all Credit Document Obligations have been paid in full; provided, that any
--------
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Creditors (and not all Creditors in a like or
similar manner) shall require the written
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consent of the Requisite Creditors (as defined below) of such Class of Creditors
(it being understood that the addition or release of any Guarantor hereunder
shall not constitute a change, waiver, discharge or termination affecting any
Guarantor other than the Guarantor so added or released). For the purpose of
this Guaranty the term "Class" shall mean each class of Creditors, i.e., whether
----
(x) the Bank Creditors as holders of the Credit Document Obligations or (y) the
Other Creditors as the holders of the Other Obligations. For the purpose of this
Guaranty, the term "Requisite Creditors" of any Class shall mean each of (x)
with respect to the Credit Document Obligations, the Required Banks and (y) with
respect to the Other Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate Protection
Agreements or Other Hedging Agreements.
17. Each Guarantor acknowledges that an executed (or conformed) copy
of each of the Credit Documents and Interest Rate Protection Agreements or Other
Hedging Agreements has been made available to its principal executive officers
and such officers are familiar with the contents thereof.
18. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement or
any payment default under any Interest Rate Protection Agreement or Other
Hedging Agreement continuing after any applicable grace period), each Creditor
is hereby authorized at any time or from time to time, without notice to any
Guarantor or to any other Person, any such notice being 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 Creditor to or for the
credit or the account of such Guarantor, against and on account of the
obligations and liabilities of such Guarantor to such Creditor under this
Guaranty, irrespective of whether or not such Creditor shall have made any
demand here under and although said obligations, liabilities, deposits or
claims, or any of them, shall be contingent or unmatured. Notwithstanding
anything to the contrary contained in this Section 18, no Creditor shall
exercise any such right of set-off without the prior consent of the Agent or the
Required Banks so long as the Guaranteed Obligations shall be secured by any
Real Property located in the State of California, it being understood and
agreed, however, that this sentence is for the sole benefit of the Creditors and
may be amended, modified or waived in any respect by the Required Banks without
the requirement of prior notice to or consent by any Credit Party and does not
constitute a waiver of any rights against any Credit Party or against any
Collateral.
19. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such
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notice, request, demand or other communication is required or permitted to be
given or made under this Guaranty, addressed to such party at (i) in the case of
any Bank Creditor, as provided in the Credit Agreement, (ii) in the case of any
Guarantor, at its address set forth opposite its signature below and (iii) in
the case of any Other Creditor, at such address as such Other Creditor shall
have specified in writing to the Guarantor; or in any case at such other address
as any of the Persons listed above may hereafter notify the others in writing.
20. If claim is ever made upon any Creditor for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
21. (A) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty or any other Credit Document to which such
Guarantor is a party may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York, and, by
execution and delivery of this Guaranty, each Guarantor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
further irrevocably waives any claim that any such courts lack jurisdiction over
such Guarantor, and agrees not to plead or claim, in any legal action or
proceeding with respect to this Guaranty or any other Credit Document to which
such Guarantor is a party brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such Guarantor. Each Guarantor further 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 each Guarantor at its address set forth
opposite its signature below, such service to become effective 30 days after
such mailing. Each Guarantor hereby irrevocably waives any objection to such
service of process and further irrevocably waives and agrees not to plead or
claim in any action or proceeding commenced hereunder or under any other Credit
Document to which such Guarantor is a party that service of process was in any
way invalid or ineffective. Nothing herein shall affect the right of any of the
Creditors to serve process
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in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against each Guarantor in any other jurisdiction.
(b) Each Guarantor 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 Guaranty 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 such action or proceeding brought in any such court has been brought in an
inconvenient forum.
22. In the event that all of the capital stock of one or more Guarantors
is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 8.02 of the Credit Agreement (or such sale or other
disposition or liquidation has been approved in writing by the Required Banks
(or all Banks if required by Section 12.12 of the Credit Agreement)) and the
proceeds of such sale, disposition or liquidation are applied in accordance with
the provisions of the Credit Agreement, to the extent applicable, such Guarantor
shall be released from this Guaranty and this Guaranty shall, as to each such
Guarantor or Guarantors, terminate, and have no further force or effect (it
being understood and agreed that the sale of one or more Persons that own,
directly or indirectly, all of the capital stock or partnership interests of any
Guarantor shall be deemed to be a sale of such Guarantor for the purposes of
this Section 22).
23. This Guaranty 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 the Borrower and the Agent.
24. EACH GUARANTOR AND EACH OF THE CREDITORS HEREBY IRREVOCABLY WAIVES
ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
25. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense.
-13-
<PAGE>
26. It is understood and agreed that any Subsidiary of Holdings that is
required to execute a counterpart of this Guaranty after the date hereof
pursuant to Sections 7.15 and/or 8.14 of the Credit Agreement shall
automatically become a Guarantor hereunder by executing a counterpart hereof and
delivering the same to the Agent.
* * *
-14-
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Address: PBH, INC.,
333 East Howard Avenue as a Guarantor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief
Financial Officer, Treasurer
Address: PBH INTERNATIONAL, INC.,
333 East Howard Avenue as a Guarantor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief
Financial Officer, Treasurer
Address: BARNES-HIND INTERNATIONAL
333 East Howard Avenue INC.,
Des Plaines, Illinois 60018 as a Guarantor
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief
Financial Officer, Treasurer
-15-
<PAGE>
Address: WESLEY-JESSEN (PUERTO RICO), INC.,
333 East Howard Avenue as a Guarantor
Des Plaines, Illinois 60018
Attention: Edward Kelley
By /s/ Edward J. Kelley
------------------------------------
Title: Vice President, Chief
Financial Officer, Treasurer
BANKERS TRUST COMPANY,
as Agent for the Banks
By /s/ Mary Kay Coyle
----------------------------------
Title: Managing Director
-16-
<PAGE>
EXHIBIT 10.1
------------
WESLEY JESSEN VISIONCARE, INC.
1997 STOCK INCENTIVE PLAN
-------------------------
ARTICLE 1
IDENTIFICATION OF THE PLAN
1.1 Title. The plan described herein shall be known as the Wesley
-----
Jessen VisionCare, Inc. 1997 Stock Incentive Plan (the "Plan").
----
1.2 Purpose. The purpose of this Plan is (i) to compensate certain
-------
officers and employees of Wesley Jessen VisionCare, Inc. (the "Company") and its
-------
Subsidiaries for services rendered by such persons after the date of adoption of
this Plan to the Company or any Subsidiary; (ii) to provide certain officers and
employees of the Company and its Subsidiaries with significant additional
incentive to promote the financial success of the Company; and (iii) to provide
an incentive which may be used to induce able persons to enter into or remain in
the employment of the Company or any Subsidiary.
1.3 Effective Date. The Plan shall become effective upon its approval
--------------
by the Board of Directors and the stockholders of the Company (the "Effective
---------
Date").
- ----
1.4 Defined Terms. Certain capitalized terms used herein have the
-------------
meanings as set forth in Section 10.1 of the Plan.
ARTICLE 2
ADMINISTRATION OF THE PLAN
2.1 Initial Administration. This Plan shall initially be
----------------------
administered by the Board of Directors. The Board of Directors shall delegate
the administration of the Plan to a Compensation Committee (the "Committee") in
---------
the event that such a committee is established by the Board of Directors and is
comprised of persons appointed by the Board of Directors of the Company in
accordance with the provisions of Section 2.3. The Board shall exercise full
power and authority regarding the administration of the Plan until such
administration is delegated to the Committee. Unless the context otherwise
requires, references herein to the Committee shall be deemed to refer to the
Board of Directors until the administration of the Plan has been delegated to
the Committee.
<PAGE>
2.2 Committee's Powers. The Committee shall have full power and
------------------
authority to prescribe, amend and rescind rules and procedures governing
administration of this Plan. The Committee shall have full power and authority
(i) to interpret the terms of this Plan, the terms of the Awards and the rules
and procedures established by the Committee and (ii) to determine the meaning of
or requirements imposed by or rights of any person under this Plan, any Award or
any rule or procedure established by the Committee. Each action of the Committee
which is within the scope of the authority delegated to the Committee by this
Plan or by the Board shall be binding on all persons.
2.3 Committee Membership. The Committee shall be composed of two
-------------------
or more members of the Board, each of whom is an "outside director" as defined
in Section 162(m) of the Code and a "Non-Employee Director," as defined in
Securities and Exchange Commission Rule 16b-3, as amended ("Rule 16b-3"), or any
----------
successor rules or government pronouncements. The Board shall have the power to
determine the number of members which the Committee shall have and to change the
number of membership positions on the Committee from time to time. The Board
shall appoint all members of the Committee. The Board may from time to time
appoint members to the Committee in substitution for, or in addition to, members
previously appointed and may fill vacancies, however caused, on the Committee.
Any member of the Committee may be removed from the Committee by the Board at
any time with or without cause.
2.4 Committee Procedures. The Committee shall hold its meetings at
--------------------
such times and places as it may determine. The Committee may make such rules
and regulations for the conduct of its business as it shall deem advisable.
Unless the Board or the Committee expressly decides to the contrary, a majority
of the members of the Committee shall constitute a quorum and any action taken
by a majority of the Committee members in attendance at a meeting at which a
quorum of Committee members are present shall be deemed an act of the Committee.
2.5 Indemnification. No member of the Committee shall be liable, in
---------------
the absence of bad faith, for any act or omission with respect to his or her
service on the Committee under this Plan. Service on the Committee shall
constitute service as a director of the Company so that the members of the
Committee shall be entitled to indemnification and reimbursement as directors of
the Company for any action or any failure to act in connection with service on
the Committee to the full extent provided for at any time in the Company's
Certificate of Incorporation and By-Laws, or in any insurance policy or other
agreement intended for the benefit of the Company's directors.
-2-
<PAGE>
ARTICLE 3
PERSONS ELIGIBLE TO RECEIVE AWARDS
A person shall be eligible to be granted an Award only if on the
proposed Granting Date for such Award such person is a full-time, salaried
employee of the Company or any Subsidiary, excluding non-management directors of
the Company, or has rendered or is expected to render advisory or consulting
services to the Company or any Subsidiary within a twelve-month period of the
Granting Date. A person eligible to be granted an Award is herein called a
"Grantee."
- --------
ARTICLE 4
GRANT OF AWARDS
4.1 Power to Grant Awards.
---------------------
(a) The Committee is authorized under the Plan to enter into any type
of arrangement with any Grantee that is consistent with the provisions of the
Plan and that by its terms involves the issuance or potential issuance of (i)
shares of Common Stock, par value $.01 per share, of the Company ("Common
------
Stock") or (ii) a Derivative Security (as such term is defined in Rule 16a-1
- -----
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
--------
Act"), as such Rule may be amended from time to time) with an exercise or
- ---
conversion right at a price related to Common Stock or with a value derived from
the value of the shares of Common Stock. The entering into of any such
arrangement is referred to herein as the grant of an "Award."
-----
(b) Awards are not restricted to any specified form or structure and
may include, without limitation, sales or bonuses of stock, restricted stock,
restricted stock unit, stock options, reload stock options, stock purchase
warrants, other rights to acquire stock, securities convertible into or
redeemable for stock, stock appreciation rights, limited stock appreciation
rights, phantom stock, dividend equivalents, performance units or performance
shares, and an Award may consist of one or more such security or benefit.
4.2 Granting Date. An Award shall be deemed to have been granted
-------------
under this Plan on the date (the "Granting Date") which the Committee designates
-------------
as the Granting Date at the time it approves such Award, provided that the
Committee may not designate a Granting Date with respect to any Award which is
earlier than the date on which the granting of such Award is approved by the
Committee.
-3-
<PAGE>
4.3 Award Terms Which The Committee May Determine. The Committee
---------------------------------------------
shall have the power to determine the Grantee to whom Awards are granted, the
number of Shares subject to each Award, the number of Awards granted to each
Grantee and the time at which each Award is granted. Except as otherwise
expressly provided in this Plan, the Committee shall also have the power to
determine, at the time of the grant of each Award, all terms and conditions
governing the rights and obligations of the holder with respect to such Award.
With respect to any Award granted under this Plan that is an option to purchase
Common Stock of the Company (an "Option"), the Committee shall have the power to
------
determine: (a) the purchase price per Share or the method by which the purchase
price per Share will be determined; (b) the length of the period during which
the Option may be exercised and any limitations on the number of Shares
purchasable with the Option at any given time during such period; (c) the times
at which the Option may be exercised; (d) any conditions precedent to be
satisfied before the Option may be exercised, such as vesting period; (e) any
restrictions on resale of any Shares purchased upon exercise of the Option; (f)
the extent to which the Option may be transferable; and (g) whether the Option
will constitute an Incentive Stock Option.
4.4 Award Agreement. No person shall have any rights under any Award
---------------
unless and until the Company and the person to whom such Award is granted have
executed and delivered an agreement expressly granting the Award to such person
and containing provisions setting forth the terms of the Award (an "Award
-----
Agreement"). Unless otherwise provided by the Committee, the form of Stock
- ---------
Option Agreement attached to this Plan as Exhibit A shall be used by the
---------
Committee in granting nonqualified Options under the Plan.
4.5 Limitation on Shares Issuable to any Grantee. The aggregate
--------------------------------------------
number of Shares that may relate to Awards granted to a Grantee during any
calendar year (including those already exercised by the Grantee) shall not
exceed 50,000 shares, as adjusted pursuant to Article 8 of this Plan.
ARTICLE 5
AWARD TERMS
5.1 Plan Provisions Control Terms. The terms of this Plan shall
-----------------------------
govern all Awards. In the event any provision of any Award Agreement conflicts
with any term in this Plan as constituted on the Granting Date of such Award,
the term in this Plan as constituted on the Granting Date of the Award shall
control. Except as provided in Article 8, the terms of any Award may not be
changed after the Granting Date of such Award without the express approval of
the Company and the Award Holder.
-4-
<PAGE>
5.2 Term Limitation. No Incentive Stock Option may be granted under
---------------
this Plan which is exercisable more than ten years after its Granting Date.
This Section 5.2 shall not be deemed to limit the term which the Committee may
specify for any Awards (including Options) granted under the Plan which are not
intended to be Incentive Stock Options.
5.3 Transfer of Awards. An Award granted pursuant to this Plan may
------------------
be transferable as provided in the Award Agreement. It shall be a condition
precedent to any transfer of any Award that the transferee executes and delivers
an agreement acknowledging such Award has been acquired for investment and not
for distribution and is and shall remain subject to this Plan and the Award
Agreement. The "Holder" of any Award shall mean (i) the initial grantee of such
------
Award or (ii) any permitted transferee.
5.4 $100,000 Per Year Limit on Incentive Stock Options. No Grantee
--------------------------------------------------
may be granted Incentive Stock Options if the value of the Shares subject to
those options which first become exercisable in any given calendar year (and the
value of the Shares subject to any other Incentive Stock Options issued to the
Grantee under the Plan or any other plan of the Company or its Subsidiaries
which first become exercisable in such year) exceeds $100,000. For this
purpose, the value of Shares shall be determined on the Granting Date. Any
Incentive Stock Options issued in excess of the $100,000 limit shall be treated
as Options that are not Incentive Stock Options. Incentive Stock Options shall
be taken into account in the order in which they were granted.
5.5 No Right to Employment Conferred. Nothing in this Plan or (in
--------------------------------
the absence of an express provision to the contrary) in any Award Agreement (i)
confers any right or obligation on any person to continue in the employ of the
Company or any Subsidiary or (ii) affects or shall affect in any way any
person's right or the right of the Company or any Subsidiary to terminate such
person's employment with the Company or any Subsidiary at any time, for any
reason, with or without cause.
ARTICLE 6
REGULATORY COMPLIANCE
6.1 Taxes. The Company or any Subsidiary shall be entitled, if the
-----
Committee deems it necessary or desirable, to withhold from an Award Holder's
salary or other compensation (or to secure payment from the Award Holder in lieu
of withholding) all or any portion of any withholding or other tax due from the
Company or any Subsidiary with respect to any Shares deliverable under such
-5-
<PAGE>
Holder's Award or the Committee may (but need not) permit payment of such
withholding by the Company's retention of Shares which would otherwise be
transferred to the Award Holder upon exercise of the Option. In the event any
Common Stock is retained by the Company to satisfy all or any part of the
withholding, the part of the withholding deemed to have been satisfied by such
Common Stock shall be equal to the product derived by multiplying the Per Share
Market Value as of the date of exercise by the number of Shares retained by the
Company. The number of Shares retained by the Company in satisfaction of
withholding shall not be a number which when multiplied by the Per Share Market
Value as of the date of exercise would result in a product greater than the
withholding amount. No fractional Shares shall be retained by the Company in
satisfaction of withholding. Notwithstanding Article 7, unless the Board shall
otherwise determine, for each Share retained by the Company in satisfaction of
all or any part of the withholding amount, the aggregate number of Shares
subject to this Plan shall be increased by one Share. The Company may defer
delivery under a Holder's Award until indemnified to its satisfaction with
respect to such withholding or other taxes.
6.2 Securities Law Compliance. Each Award shall be subject to the
-------------------------
condition that such Award may not be exercised if and to the extent the
Committee determines that the sale of securities upon exercise of the Award may
violate the Securities Act or any other law or requirement of any governmental
authority. The Company shall not be deemed by any reason of the granting of any
Award to have any obligation to register the Shares subject to such Option under
the Securities Act or to maintain in effect any registration of such Shares
which may be made at any time under the Securities Act. An Award shall not be
exercisable if the Committee or the Board determines there is non-public
information material to the decision of the Holder to exercise such Award which
the Company cannot for any reason communicate to such Holder.
ARTICLE 7
SHARES SUBJECT TO THE PLAN
Except as provided in Section 6.1 and Article 8, an aggregate of
800,000 Shares of Common Stock shall be subject to this Plan. Except as
provided in Section 6.1 and Article 8, the Awards shall be limited so that the
sum of the following shall not as of any given time exceed 800,000 Shares: (i)
all Shares subject to Awards outstanding under this Plan at the given time and
(ii) all Shares which shall have been issued by the Company by reason of the
exercise at or prior to the given time of any of the Options. The Common Stock
issued under the Plan may be either authorized and unissued shares, shares
reacquired and held in the
-6-
<PAGE>
treasury of the Company, or both, all as from time to time determined by the
Board. In the event any Award shall expire or be terminated before it is fully
exercised, then all Shares formerly subject to such Award as to which such Award
was not exercised shall be available for any Award subsequently granted in
accordance with the provisions of this Plan. No fractional Shares will be
eligible to be issued under the Plan.
In the event of a change in the Shares as presently constituted, which is
limited to a change of all of its authorized shares with par value into the same
number of shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Shares within the
meaning of the Plan.
ARTICLE 8
ADJUSTMENTS TO REFLECT ORGANIC CHANGES
The Board shall appropriately and proportionately adjust the number
and kind of Shares subject to outstanding Awards, the price for which Shares may
be purchased upon the exercise of outstanding Awards, and the number and kind of
Shares available for Awards subsequently granted under this Plan to reflect any
stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in the capitalization of the Company which the
Board determines to be similar, in its substantive effect upon this Plan or the
Awards, to any of the changes expressly indicated in this sentence. The Board
may (but shall not be required to) make any appropriate adjustment to the number
and kind of Shares subject to outstanding Awards, the price for which Shares may
be purchased upon the exercise of outstanding Awards, and the number and kind of
Shares available for Awards subsequently granted under this Plan to reflect any
spin-off, spin-out or other distribution of assets to stockholders or any
acquisition of the Company's stock or assets or other change which the Board
determines to be similar, in its substantive effect upon this Plan or the
Awards, to any of the changes expressly indicated in this sentence. The
Committee shall have the power to determine the amount of the adjustment to be
made in each case described in the preceding two sentences, but no adjustment
approved by the Committee shall be effective until and unless it is approved by
the Board. In the event of any reorganization, reclassification, consolidation,
merger or sale of all or substantially all of the Company's assets which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock, the Board may (but shall not be
required to) substitute the per share amount of such stock,
-7-
<PAGE>
securities or assets for Shares upon any subsequent exercise of any Award.
ARTICLE 9
AMENDMENT AND TERMINATION OF THE PLAN
9.1 Amendment. Except as provided in the following two sentences,
---------
the Board shall have complete power and authority to amend this Plan at any time
and no approval by the Company's stockholders or by any other person, committee
or other entity of any kind shall be required to make any amendment approved by
the Board effective. So long as the Common Stock is eligible for trading on the
Nasdaq National Market, the Board shall obtain stockholder approval for those
amendments of the Plan required to be so approved pursuant to the By-laws of the
National Association of Securities Dealers. The Board shall not, without the
affirmative approval of the Company's stockholders, amend the Plan in any manner
which would cause any outstanding Incentive Stock Options to no longer qualify
as Incentive Stock Options. No termination or amendment of this Plan may,
without the consent of the Holder of any Award prior to termination or the
adoption of such amendment, materially and adversely affect the rights of such
Holder under such Award.
9.2 Termination. The Board shall have the right and the power to
-----------
terminate this Plan at any time, provided that no Incentive Stock Options may be
granted after the tenth anniversary of the adoption of this Plan. No Award
shall be granted under this Plan after the termination of this Plan, but the
termination of this Plan shall not have any other effect. Any Award outstanding
at the time of the termination of this Plan may be exercised after termination
of this Plan at any time prior to the Expiration Date of such Award to the same
extent such Award would have been exercisable had this Plan not terminated.
ARTICLE 10
DEFINITIONS AND OTHER PROVISIONS OF THE PLAN
10.1 Definitions. Each term defined in this Section 10.1 has the
-----------
meaning indicated in this Section 10.1 whenever such term is used in this Plan:
"Award" has the meaning such term is given in Section 4.1 of this
-----
Plan.
-8-
<PAGE>
"Award Agreement" has the meaning such term is given in Section 4.4 of
---------------
this Plan.
"Board of Directors" and "Board" both mean the Board of Directors of
------------------ -----
the Company as constituted at the time the term is applied.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Committee" has the meaning such term is given in Section 2.1 of this
---------
Plan.
"Common Stock" means the issued or issuable Common Stock, par value
------------
$.01 per share, of the Company.
"Company" as applied as of any given time shall mean Wesley Jessen
-------
VisionCare, Inc., a Delaware corporation, except that if prior to the given time
any corporation or other entity has acquired all or a substantial part of the
assets of the Company (as herein defined) and has agreed to assume the
obligations of the Company under this Plan, or is the survivor in a merger or
consolidation to which the Company was a party, such corporation or other entity
shall be deemed to be the Company at the given time.
"Expiration Date" as applied to any Award means the date specified in
---------------
the Award Agreement between the Company and the Holder as the expiration date of
such Award. If no expiration date is specified in the Award Agreement relating
to any Award, then the Expiration Date of such Award shall be the day prior to
the tenth anniversary of the Granting Date of such Award. Notwithstanding the
preceding sentences, if the person to whom any Incentive Stock Option is granted
owns, on the Granting Date of such Option, stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company (or of any parent or Subsidiary of the Company in existence on the
Granting Date of such Option), and if no expiration date is specified in the
Award Agreement relating to such Option, then the Expiration Date of such Option
shall be the day prior to the fifth anniversary of the Granting Date of such
Option.
"Grantee" has the meaning such term is given in Article 3 of this
-------
Plan.
"Granting Date" has the meaning such term is given in Section 4.2 of
-------------
this Plan.
"Holder" has the meaning such term is given in Section 5.3 of this
------
Plan.
-9-
<PAGE>
"Incentive Stock Option" means an incentive stock option, as defined
----------------------
in Code Section 422, which is granted pursuant to this Plan.
"Option" has the meaning such term is given in Section 4.3 of this
------
Plan.
"Plan" has the meaning such term is given in Section 1.1 of this Plan.
----
"Securities Act" at any given time shall consist of: (i) the
--------------
Securities Act of 1933 as constituted at the given time; (ii) any other law or
laws promulgated prior to the given time by the United States Government which
are in effect at the given time and which regulate or govern any matters at any
time regulated or governed by the Securities Act of 1933; (iii) all regulations,
rules, registration forms and other governmental pronouncements issued under the
laws specified in clauses (i) and (ii) of this sentence which are in effect at
the given time; and (iv) all interpretations by any governmental agency or
authority of the things specified in clause (i), (ii) or (iii) of this sentence
which are in effect at the given time. Whenever any provision of this Plan
requires that any action be taken in compliance with any provision of the
Securities Act, such provision shall be deemed to require compliance with the
Securities Act as constituted at the time such action takes place.
"Share" means a share of Common Stock.
-----
"Subsidiary" means any corporation in which the Company owns, directly
----------
or indirectly, 50% or more of the total combined voting power of all classes of
securities of such corporation.
10.2 Headings. Section headings used in this Plan are for convenience
--------
only, do not constitute a part of this Plan and shall not be deemed to limit,
characterize or affect in any way any provisions of this Plan. All provisions
in this Plan shall be construed as if no headings had been used in this Plan.
10.3 Severability.
------------
(a) General. Whenever possible, each provision in this Plan and in
-------
every Award at any time granted under this Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Plan or any Award at any time granted under this Plan is held to be
prohibited by or invalid under applicable law, then (i) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (ii) all other provisions of
this Plan and every Award at any time granted under this Plan shall remain in
full force and effect.
-10-
<PAGE>
(b) Incentive Stock Options. Whenever possible, each provision in
-----------------------
this Plan and in every Award at any time granted under this Plan which is
evidenced by an Award Agreement which expressly states such Option is intended
to constitute an Incentive Stock Option under Code Section 422 (an "intended
--------
ISO") shall be interpreted in such manner as to entitle such intended ISO to the
tax treatment afforded by the Code to Options which do constitute Incentive
Stock Options under Code Section 422, but if any provision of this Plan or any
intended ISO at any time granted under this Plan is held to be contrary to the
requirements necessary to entitle such intended ISO to the tax treatment
afforded by the Code to Options which do constitute Incentive Stock Options
under Code Section 422, then (i) such provision shall be deemed to have
contained from the outset such language as shall be necessary to entitle such
intended ISO to the tax treatment afforded by the Code to Options which do
constitute Incentive Stock Options under Code Section 422, and (ii) all other
provisions of this Plan and such intended ISO shall remain in full force and
effect. If any Award Agreement covering an intended ISO granted under this Plan
does not explicitly include any terms required to entitle such intended ISO to
the tax treatment afforded by the Code to Options which do constitute Incentive
Stock Options under Code Section 422, then all such terms shall be deemed
implicit in the intention to afford such treatment to such Option and such
Option shall be deemed to have been granted subject to all such terms.
10.4 No Strict Construction. No rule of strict construction shall be
----------------------
applied against the Company, the Committee or any other person in the
interpretation of any of the terms of this Plan, any Award or any rule or
procedure established by the Committee.
10.5 Choice of Law. This Plan and all documents contemplated hereby,
-------------
and all remedies in connection therewith and all questions or transactions
relating thereto, shall be construed in accordance with and governed by the
internal laws of the State of Delaware.
10.6 Tax Consequences. Tax consequences from the purchase and sale of
----------------
Shares may differ among grantees under the Plan. Each grantee of an Award
should discuss specific tax questions regarding participation in the Plan with
his or her own tax advisor.
-11-
<PAGE>
EXHIBIT 10.2
WESLEY JESSEN VISIONCARE, INC.
EMPLOYEE STOCK DISCOUNT PURCHASE PLAN
-------------------------------------
1. Title. The plan described herein shall be known as the Wesley
-----
Jessen VisionCare, Inc. Employee Stock Discount Purchase Plan (the "Plan"). The
----
Plan will be maintained by the Company and any of its subsidiaries that may
adopt the Plan from time to time in accordance with the procedures set forth in
Section 23 hereof (each such adopting subsidiary referred to herein as a
"Covered Entity") with the Company's consent.
--------------
2. Purpose. The purpose of the Plan is to give employees wishing to
-------
do so a convenient means of purchasing at a discount shares of shares of Common
Stock of Wesley Jessen VisionCare, Inc. (the "Shares") through payroll
------
deductions. The Company believes that ownership of Shares by employees will
foster greater employee interest in the Company's growth and development. The
Plan is intended to qualify as an "employee stock purchase plan" under Section
423 of the Internal Revenue Code of 1986, as amended (the "Code").
----
3. Shares Reserved for the Plan. There shall be reserved for
----------------------------
issuance and purchase by employees of the Company under this Plan an aggregate
of 500,000 Shares, subject to adjustment as provided in Section 17 hereof.
Shares subject to the Plan may be shares now or hereafter authorized and
unissued or shares already authorized, issued and owned by the Company. The
right to purchase shares pursuant to the Plan shall be made available by a
series of quarterly offerings to employees eligible to participate in the Plan
pursuant to Section 8 hereof. If and to the extent that any right to purchase
reserved Shares shall not be exercised by any employee for any reason or if such
right to purchase shall terminate as provided herein, Shares that have not been
so purchased under the Plan shall again become available for the purposes of the
Plan during the remaining term of the Plan.
4. Effective Date. The Plan shall become effective on the date of
--------------
the consummation of the initial public offering of the Company's Common Stock,
par value $.01 per share (the "Effective Date").
--------------
5. The Plan Year. The Plan shall operate on a fiscal year beginning
-------------
on the first day of January in each year and ending on the 31st day of December.
This fiscal year is referred to herein as the "Plan year." The initial Plan
---------
year shall begin on the Effective Date.
-1-
<PAGE>
6. Plan Quarters. The Plan year shall be divided into four Plan
-------------
quarters ending March 31, June 30, September 30 and December 31. Each such
quarter is referred to herein as a "Plan quarter."
------------
7. Plan Administration. The Plan shall be administered by the
-------------------
Compensation Committee of the Company's Board of Directors (the "Committee").
---------
As Plan administrator, the Committee shall have complete control of the
administration of the Plan, which includes the determination of employees,
eligibility for participation in accordance with the standards set forth in
Section 8 hereof, the interpretation of provisions of the Plan, the adoption of
any rules or regulations which may be necessary, advisable or desirable in the
operation of the Plan including rules governing the participation of officers
and directors in the Plan in order to exempt transactions under the Plan in
accordance with Rule 16b of the Securities and Exchange Commission, and the
delegation of certain of the duties of the Committee to an agent to facilitate
the purchase and transfer of Shares and to otherwise assist in the
administration of the Plan. The Committee shall control the general
administration of the Plan with all powers necessary to enable it to carry out
its duties in that respect, except that, if for any reason a Committee shall not
have been appointed, all authority and duties of the Committee under this Plan
shall be vested in and exercised by the Board of Directors of the Company.
8. Eligibility. Any employee of the Company who is a United States
-----------
resident or who is a United States citizen temporarily on location at a facility
outside of the United States and any Covered Entity (as defined in Section 22
hereof) shall be eligible to participate in the Plan on the day next following
the six-month anniversary of such employee's employment provided such employee
(i) regularly works at least 1,000 hours during the calendar year, (ii) has an
average work week of 20 hours or more during the period worked and (iii) would
not own, immediately after the exercise of any right granted hereunder, stock
possessing five percent (5%) or more of the combined voting power or value of
all classes of capital stock of the Company. The Committee shall determine
which employees are eligible to participate in the Plan in accordance with the
standards set forth in this Section.
9. Election to Participate, Payroll Deductions and Lump Sum
--------------------------------------------------------
Contributions. An eligible employee may elect to participate in the Plan on any
- -------------
day within the Plan quarter in which such employee becomes eligible to
participate, and thereafter as of the first day of any Plan quarter, by
correctly completing and returning to the Company an enrollment form authorizing
a specified payroll deduction to be made from each subsequent paycheck for the
-2-
<PAGE>
purchase of Shares under this Plan (the "payroll deduction"). The minimum
-----------------
allowable payroll deduction is $25.00 per payroll period. All payroll deductions
shall be made regularly and in equal amounts and shall be credited on the
records of the Company in the name of the eligible employee. Such credit shall
constitute only a bookkeeping entry by the Company and no interest will be paid
or due on any money paid into this Plan or credited to such eligible employee.
Employees who elect to participate in the Plan are referred to herein as
"participating employees."
-----------------------
A participating employee will be deemed to have authorized the same
payroll deduction for each subsequent payroll period provided that he or she is
eligible to participate during each subsequent payroll period. A participating
employee may increase or decrease his or her payroll deduction as of the first
day of the first full payroll period of any Plan quarter by filing the required
form, in the time and manner prescribed by the Committee.
Upon the request of any participating employee, the Company shall
suspend making any payroll deduction with respect to such employee as soon as
practicable after the employee notifies the Company of such request. In such
event, the earliest date upon which payroll deductions may be resumed with
respect to such employee shall be the first day of the Plan quarter occurring
immediately after the first full Plan quarter that follows the suspension of the
employee's payroll deductions.
In the event that an employee ceases to be a participating employee,
or if for any reason the Company does not invest the aggregate amount of payroll
deductions of a participating employee, the amount of payroll deductions not
theretofore invested shall be returned to such employee.
10. Limitation of Number of Shares That an Employee May Purchase. A
------------------------------------------------------------
participant shall be allocated the number of Shares which may be purchased with
such participant's contributions; provided, that a participant may purchase no
more than 125 Shares in any Plan quarter under this Plan; and further provided
that an eligible employee whose purchases for the Plan year do not equal 500
Shares (or, in the case of any partial calender year in which the Plan is in
effect, a number of Shares equal to (i) the number of full or partial Plan
quarters in such year in which the Plan is in effect, multiplied by (ii) 125
Shares) shall be entitled to make a lump sum contribution to such employee's
cash account at any time during the period from January 15 through January 31 of
the following Plan year, the maximum amount of any such contribution to be the
amount necessary to purchase the number of Shares equal to
-3-
<PAGE>
the difference between the participant's aggregate purchases for the immediately
preceding Plan year and 500 Shares (or such lesser number of Shares for any
partial Plan year as determined above). In the case of any such lump sum
contribution, the cost per Share shall be calculated as set forth in Section 12
hereof based upon the closing prices with respect to the immediately preceding
Plan quarter. Notwithstanding the foregoing, no right to purchase Shares under
this Plan shall permit an employee to purchase stock under all employee stock
purchase plans (as defined in Section 423 of the Code) of the Company at a rate
which in aggregate exceeds $25,000 of fair market value of such stock
(determined at the time the right is granted) for each calendar year in which
the right is outstanding at any time. In addition, the total number of Shares
purchased under the Plan shall not exceed 500,000 and if, for any purchase date,
the number of Shares to be purchased with participants' cash account balances,
when aggregated with all prior purchases under the Plan, would exceed 500,000
Shares, allocations to participants for such purchase date shall be reduced pro
rata in accordance with their respective cash account balances, so that the
total allocations shall not cause the total Shares purchased under the Plan to
exceed 500,000 Shares.
11. Accounting for Participant Contributions. The Committee will
----------------------------------------
cause to be established a "cash account" and a "Share account" for each
participant under the Plan for bookkeeping purposes. As soon as practicable on
or after the last day of each Plan quarter, but in no case later than the
fifteenth day of the month immediately following the end of the Plan quarter,
the Committee will credit each participant's cash account with such
participant's payroll deductions during the Plan quarter ("credited payroll
----------------
deductions"). The date of crediting of such credited payroll deductions is
- ----------
referred to herein as the "deduction crediting date." The Company shall not be
------------------------
required to pay or accrue interest on the cash balances in participants' cash
accounts or on the value of participants' Share accounts.
12. Share Purchases. The Committee will use the entire balance of
---------------
funds in participants' cash accounts to purchase Shares to be allocated to
participants' Share accounts within the first 15 working days following each
deduction crediting date. The cost per Share to participants will be 85% of the
lower of the closing price for the Shares on the Nasdaq National Market
("Nasdaq") on the first or the last day of the Plan quarter with respect to
------
which such purchase relates; provided that if the first or last day of the Plan
quarter is a day on which Nasdaq is closed, the price for such day shall be
determined as of the last preceding day on which Nasdaq is open.
-4-
<PAGE>
13. Allocation of Shares. As soon as practicable after all necessary
--------------------
Shares have been purchased by the Committee (or its agent) for the benefit of
participants, the Committee will allocate such Shares to participants' Share
accounts (the date of such allocation to be referred to as the "Share allocation
----------------
date") in the following manner:
- ----
(a) The Committee will allocate full Shares and fractional Shares to
the Share accounts of the individual participants to the extent of the balances
in their respective cash accounts, subject to the limitations set forth in
Section 10. The cash accounts will be charged with the cost to participants of
all Shares so allocated. No cash balances will remain in the participants' cash
accounts immediately after each Share allocation date;
(b) Until certificates are issued, no person shall have any right to
sell, assign, mortgage, pledge, hypothecate or otherwise encumber any of the
Shares allocated to a participant's Share account.
14. Issuance of Share Certificates. Share certificates for the
------------------------------
number of whole Shares in each participant's Share account may be issued to
participants only upon the receipt by the Committee (or its agent) of a
participant's written request indicating the number of Shares (to a maximum of
the number of full Shares in the participant's Share account) for which the
participant wishes to receive certificates. Such request shall be made on a
form at the time prescribed by the Committee and filed with the Committee (or
its agent). Share certificates shall be issued to the participant as soon as
practicable after the end of a Plan quarter.
15. Restrictions on Transfer.
------------------------
(a) Restrictive Legend. Unless the Shares purchased hereunder are
------------------
covered by an effective registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), the certificates representing the Shares
--------------
shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION FROM REGISTRATION THEREUNDER."
-5-
<PAGE>
(b) Opinion of Counsel. The participant may not sell, transfer or
------------------
dispose of any Shares (except pursuant to an effective registration statement
under the Securities Act) without first delivering to the Company an opinion of
counsel reasonably acceptable in form and substance to the Company that
registration under the Securities Act or any applicable state securities law is
not required in connection with such transfer.
16. Expenses. The Company or the Covered Entity will bear the costs
--------
associated with administering the Plan and purchasing Shares. No expenses
attributable to a participant's sale of Shares, however, will be borne by the
Company or the Covered Entity.
17. Cash Dividends, Share Splits and Distributions.
----------------------------------------------
(a) Cash Dividends. Cash dividends attributable to Shares allocated
--------------
to participants' Share accounts as of the record date for which such cash
dividends are declared will be credited to participants' cash accounts as of the
dividend payment date and applied to Share purchases and allocations on the next
Share allocation date in accordance with the methods set forth in Sections 12
and 13 hereof.
(b) Share Distributions and Share Splits. Share distributions and
------------------------------------
Share splits attributable to Shares allocated to participants' Share accounts as
of the Share distribution record date or the Share split effective date will be
credited directly to participants' Share accounts as of the record date and the
effective date, respectively, of such Share distributions and such Share splits.
(c) Share Rights and Warrants. The Company may, from time to time,
-------------------------
in the exercise of its sole discretion, declare Share rights or warrants with
respect to Shares. Following and as of the record date for determining those
shareholders of record entitled to receive Share rights or warrants with respect
to their Shares, the Company shall issue, and the Committee shall allocate, such
Share rights and/or warrants directly to the appropriate participants as though
the Shares allocated to the account of each such participant were held of record
by such participant. Certificates representing such Share rights or warrants, if
any such certificates have been authorized by the Board of Directors of the
Company, may be issued to participants pursuant to the procedures set forth in
Section 14 of this Plan.
(d) Change in Common Stock. In the event of a reorganization,
----------------------
recapitalization, stock split, merger,
-6-
<PAGE>
consolidation or other increase or change in the common stock of the Company,
the Committee may make appropriate changes in the number and type of Shares that
at the time of such event remain available for purchase under this Plan.
18. Voting Rights. Holders of Shares have the right to vote on
-------------
matters affecting the Company. If one of these matters is submitted to the
shareholders for a vote, then following the record date for any shareholder
meeting at which such vote is to occur, the Committee shall advise the Company
of the number of participants for whom Shares are held in Share accounts on such
record date, and the Company shall furnish the Committee (or its agent) with
sufficient sets of its proxy soliciting materials to deliver one set to each
such participant. The Committee shall thereupon forward one set to each
participant for whom allocated Shares are being held and request voting
instructions. Upon receipt of voting instructions, the Committee shall vote the
Shares (including any fractional Shares) as instructed. The Committee shall not
vote any Share allocated to a participant's Share account unless voting
instructions have been received from the participant.
19. Records and Reports to Participants. The Committee shall cause
-----------------------------------
to be maintained true and accurate books of account, and a record of all
transactions under the Plan, and such accounts, books and records relating
thereto shall be open to inspection and audit by such person or persons
designated by the Company. At least annually, but in all cases on or before
March 31 of each year, the Committee shall file with the Chief Financial Officer
of the Company a written report setting forth all receipts and disbursements and
other transactions effected on behalf of the Plan during the last preceding Plan
year, including a description of all Shares purchased together with the cost of
all such Shares. Such report shall also disclose any liabilities of the Plan
and shall show, as of the close of the Plan year, the value of each active cash
account and Share account of each participant together with the record of Share
certificates delivered to each of the participants during such Plan year. The
Committee shall have the right to maintain one or more bank accounts for funds
contributed to the Plan, and to make deposits in and withdrawals therefrom in
connection with its administration of the Plan.
An annual report shall be rendered to each participant in the Plan
annually within 90 days after the close of the Plan year, showing for the Plan
year just ended:
(a) the amounts of employee payroll deductions made for each
participant;
-7-
<PAGE>
(b) the amounts of cash dividends credited to such
participant's cash account;
(c) the number of Shares acquired for such participant's Share
account (including the amounts of Share distributions or Share splits so
allocated or credited);
(d) the cost to the participant per Share of Shares purchased for
such participant;
(e) the number of Shares, if any, for which certificates were
delivered to such participant; and
(f) the beginning and ending balances in the participant's Share and
cash accounts.
20. Termination of Employment. Settlement of the accounts of
-------------------------
participants whose employment has terminated shall be made as of the beginning
of the Plan quarter following the Plan quarter in which termination of
employment occurred.
As promptly as practicable after the close of the Plan quarter in
which termination of employment occurred, the Committee will deliver to such
former participant a certificate for the number of full Shares allocated to such
participant's account and not previously distributed, together with a check for
(i) any remaining cash balance and (ii) the value of any fractional Shares
allocated to such participant's account.
In the event of a participant's death, settlement will be made to the
participant's duly appointed legal representative after the satisfaction of any
applicable legal requirements.
21. Amendment and Termination of the Plan. Subject to the provisions
-------------------------------------
of Section 423 of the Code and Rule 16b-3 under the Securities Exchange Act of
1934, as amended ("Exchange Act"), the Board of Directors may amend this Plan in
------------
any respect; provided, that no amendment may affect any participant's right to
the benefit of contributions made by such participant prior to the date of the
amendment.
The Board of Directors reserves the right to terminate or temporarily
suspend this Plan at the end of any Plan quarter. In the event of termination
or suspension of the Plan, the Committee will make an allocation of Shares to
the Share accounts of the participants in the usual manner. As soon as
practicable, the Committee will distribute to or on behalf of each participant
all of the Shares held in such participant's Share account plus an
-8-
<PAGE>
amount of cash equal to the balance in such participant's cash account.
22. Limitation on Sale of Shares. No Shares will be sold under the
----------------------------
Plan to any employee residing or employed in any jurisdiction where the sale of
such Shares is not permitted under the applicable laws.
23. Adopting Subsidiaries. Any subsidiary of the Company may adopt
---------------------
the Plan on behalf of its employees either unilaterally or by collective
bargaining by filing with the Company a certified copy of a resolution of the
Board of Directors (or other appropriate authorization satisfactory to the
Secretary of the Company) of the subsidiary providing for such subsidiary's
adoption of the Plan and a certified copy of a resolution of the Board of
Directors of the Company consenting to such adoption. Each such adopting
subsidiary is referred to herein as a "Covered Entity."
-9-
<PAGE>
EXHIBIT 10.3
------------
WESLEY JESSEN VISIONCARE, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
---------------------------------------
1. Name and Purpose. This plan shall be called the Wesley Jessen
----------------
VisionCare, Inc. Non-Employee Director Stock Option Plan (the "Plan"). The Plan
----
is intended to encourage stock ownership by Non-Employee Directors (as defined
below) of Wesley Jessen VisionCare, Inc., a Delaware corporation (the
"Company"), to provide such directors with an additional incentive to manage the
-------
Company effectively and to contribute to its success, and to provide a form of
compensation which will attract and retain highly qualified individuals as
members of the Board of Directors of the Company.
2. Effective Date and Term of the Plan. The Plan shall become effective
-----------------------------------
on the date of the consummation of the initial public offering of the Company's
Common Stock, par value $.01 per share (the "Effective Date"). Options may not
--------------
be granted under the Plan after the tenth (10th) anniversary of the Effective
Date (the "Term"); provided, however, that all options outstanding as of that
---- -------- -------
date shall remain or become exercisable pursuant to their terms and the terms of
the Plan.
3. Administration. The Plan shall initially be administered by the Board
--------------
of Directors of the Company (the "Board"). The Board shall delegate the
-----
administration of the Plan to a committee of Board (the "Committee") in the
---------
event such a committee is established by the Board for such purpose and that
committee is composed solely of two or more "Non-Employee Directors" (as such
term is defined under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")). Each member of the Committee shall be eligible
------------
to participate in the Plan. References herein to the Committee shall be deemed
to refer to the Board in the event that the administration of the Plan has not
been delegated to the Committee.
The Committee may, from time to time, establish such regulations,
provisions and procedures, within the terms of the Plan, as in the opinion of
its members may be advisable in the administration of the Plan. A majority of
the Committee shall constitute a quorum, and the acts of a majority of a quorum
at any meeting, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee.
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted pursuant to the Plan shall be final and
binding upon the Company and any optionee.
<PAGE>
No member of the Board of Directors of the Company or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted pursuant thereto.
4. Stock Available for Options. Subject to the adjustments as provided
---------------------------
in Subsection 7(f), the aggregate number of shares of Common Stock, par value
$.01 per share, of the Company (the "Common Stock") reserved for purposes of the
------------
Plan shall be 250,000 shares of authorized and unissued shares or issued shares
reacquired by the Company (the "Shares"). Determinations as to the number of
------
Shares that remain available for issuance under the Plan shall be made in
accordance with such rules and procedures as the Committee shall determine from
time to time. If any outstanding option under the Plan expires or is terminated
for any reason before the end of the Term of the Plan, the shares allocable to
the unexercised portion of such option shall become available for the grant of
other options under the Plan. No shares delivered to the Company in full or
partial payment upon exercise of an option pursuant to Subsection 7(c) or in
full or partial payment of any withholding tax liability permitted under Section
10 shall become available for the grant of other options under the Plan.
5. Participation. Subject to the limitations contained in this Section
-------------
5, any director of the Company who is not a contractual nor common law employee
of the Company or any of its subsidiaries (a "Non-Employee Director") will be
---------------------
eligible to be granted options to purchase shares of the issued or issuable
Common Stock in accordance and consistent with the terms and conditions of the
Plan. An optionee may hold more than one option, but only on the terms and
subject to the restrictions hereafter set forth. Except as provided herein,
terms and conditions of options granted to a director at any given time need not
be the same for any other grant of options.
6. Option Grants.
-------------
(a) Discretionary Grants. In addition to the automatic option grants
--------------------
provided for in Subsections (b) and (c) hereof, the Committee shall be
authorized to determine from time to time the directors (among the Non-
Employee Directors) to be granted options, the number of shares of Common
Stock subject to such options, and the terms and conditions of the options
to be granted. All options granted under this Subsection (a) must be
approved by either the Board or the Committee prior to such grant.
(b) Initial Grants. Each Non-Employee Director who was in office
--------------
prior to the Effective Date and remains in office after the Effective Date,
shall automatically be granted
-2-
<PAGE>
options to purchase 10,000 shares of Common Stock. Any individual elected
to the Board as a Non-Employee Director after the Effective Date shall
automatically be granted options to purchase 10,000 shares of Common Stock
(as adjusted pursuant to Section 8 hereof) upon initial election to such
position.
(c) Annual Grants. Each Non-Employee Director shall automatically be
-------------
entitled to be granted options to purchase 2,000 shares of Common Stock (as
adjusted pursuant to Section 8 hereof) on each anniversary of such Non-
Employee's election to the Board of Directors. Such options will be
granted to each Non-Employee Director on the date of the Company's Annual
Meeting of Stockholders (or such other date as determined by the Board in
the event that an Annual Meeting of Stockholders is not held by the
Company).
(d) Non-Statutory Stock Options. All options granted under the Plan
---------------------------
shall be non-statutory options not intended to qualify under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). Each option
----
granted under the Plan shall provide that such option will not be treated
as an "incentive stock option," as that term is defined in Section 422(b)
of the Code.
7. Terms and Conditions of Options of the Plan. Options granted under
-------------------------------------------
this Plan shall be evidenced by agreements in such form as the Committee shall
from time to time approve, which agreements shall comply with and be subject to
the following conditions:
(a) Term of Options. The term of each option shall be for a period
---------------
of not greater than ten (10) years from the date of grant of the option.
(b) Option Price. The exercise price of each option shall be equal
------------
to one hundred percent (100%) of the Fair Market Value of the shares of
Common Stock on the date of the grant of the option. If the shares are
traded in the over-the-counter market, the Fair Market Value per share
shall be the closing price on the national market list as quoted in the
National Association of Securities Dealers Automated Quotation System
("Nasdaq") on the day the option is granted or if no sale of shares is
------
reflected in Nasdaq on that day, on the next preceding day on which there
was a sale of shares reflected in Nasdaq. If the shares are not traded in
the over-the-counter market but are listed upon an established stock
exchange or exchanges, such Fair Market Value shall be deemed to be the
closing price of the shares on such stock exchange or
-3-
<PAGE>
exchanges on the day the option is granted or if no sale of the shares
shall have been made on any stock exchange on that day, on the next
preceding day on which there was a sale of the shares.
(c) Medium of Payment. The option price shall be payable to the
-----------------
Company either (i) in United States dollars in cash or by check, bank
draft, or money order payable to the order of the Company or (ii) if
permitted by the Board, through the delivery of shares of the Common Stock
with a Fair Market Value on the date of the exercise equal to the option
price, provided such shares are utilized as payment to acquire at least 100
shares of Common Stock, or (iii) by a combination of (i) and (ii) above.
Fair Market Value will be determined in the manner specified in Subsection
7(b) except as to the date of determination.
(d) Exercise of Options. Except as provided herein, the Committee
-------------------
shall have the authority to determine, at the time of grant of each option
pursuant to Subsection 6(a), the times at which an option may be exercised
and any conditions precedent to the exercise of an option. Except as
provided herein, options granted pursuant to Subsection 6(b) shall be
immediately exercisable on the date of grant and options granted pursuant
to Subsection 6(c) shall become exercisable in three equal installments
beginning on the first anniversary of the date of grant and continuing on
each anniversary thereafter until all such options are exercisable. An
option shall be exercisable upon written notice to the Chief Financial
Officer of the Company, as to any or all shares covered by the option,
until its termination or expiration in accordance with its terms or the
provisions of the Plan. Notwithstanding the foregoing, an option shall not
at any time be exercisable with respect to less than 100 shares unless the
remaining shares covered by an option are less than 100 shares. The
purchase price of the shares purchased pursuant to an option shall be paid
in full upon delivery to the optionee of certificates for such shares.
Exercise by an optionee's heir, personal representative or permitted
transferee shall be accompanied by evidence of his or her authority to act,
in a form reasonably satisfactory to the Company.
-4-
<PAGE>
(e) Termination of Service as Director.
----------------------------------
(i) Termination of Service for any Reason Other than Death. In
------------------------------------------------------
the event an optionee shall cease to serve the Company as a director
for any reason other than such optionee's death or Permanent
Disability, each option held by such optionee shall, to the extent
rights to purchase shares under the option have been accrued at the
time such optionee ceases to serve as a director, remain exercisable,
in whole or in part, by the optionee, subject to prior expiration
according to its terms and other limitations imposed by the Plan, for
a period of one (1) year following the optionee's cessation of service
as a director of the Company. If the optionee dies after such
cessation of service, the optionee's options shall be exercisable in
accordance with Subsection 6(e)(ii) hereof.
(ii) Termination of Service for Death or Permanent Disability.
--------------------------------------------------------
If an optionee ceases to be a director by reason of death or Permanent
Disability, each option held by such optionee shall immediately become
exercisable and shall remain exercisable, in whole or in part, by (in
the case of Permanent Disability) the optionee or (in the case of
death) the personal representative of the optionee's estate or by any
person or persons who have acquired the option directly from the
optionee during the shorter of the following periods: (i) the term of
the option, or (ii) a period of two (2) years from the death or
Permanent Disability of such optionee. If an optionee dies or a
Permanent Disability occurs during the extended exercise period
following cessation of service specified in Subsection 6(e)(i) above,
such option may be exercised any time within the longer of such
extended period or one (1) year after death or Permanent Disability,
subject to the prior expiration of the term of the option. For
purposes of this Subsection 6(e)(ii), "Permanent Disability" shall
--------------------
mean a determination by the Social Security Administration or any
similar successor agency that an optionee is "permanently disabled,"
and the date on which a Permanent Disability is deemed to have
occurred shall be the date on which such determination by such agency
shall have been made.
(f) Adjustment in Shares Covered by Option. The number of shares
--------------------------------------
covered by each outstanding option, and the purchase price per share
thereof, shall be proportionately adjusted for any increase or decrease in
the number of issued and outstanding shares resulting from a split in or
combination of
-5-
<PAGE>
shares or the payment of a stock dividend on the shares or any other
increase or decrease in the number of such shares effected without receipt
of consideration by the Company.
If the Company shall be the surviving corporation in any merger or
consolidation or if the Company is merged into a wholly-owned subsidiary
solely for purposes of changing the Company's state of incorporation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of shares subject to the option would have been
entitled to receive in such transaction.
In the event of a Change in Control, only if provided in the option
agreement, any option awarded under this Plan to the extent not previously
exercisable shall immediately become fully exercisable. The Committee in
its sole discretion may direct the Company to cash out all outstanding
options on the basis of the Change in Control Price as of the date a Change
in Control occurs or such other date as the Committee may determine prior
to the Change in Control. For purposes of this Plan, a "Change in Control"
-----------------
means the occurrence of any of the following: (i) when any "person" as
defined in Section 3(a)(9) of the Exchange Act and as used in Sections
13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) of
the Exchange Act but excluding the Company and any subsidiary, any of the
Company's existing stockholders prior to the Effective Date and any
employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan acting as trustee), directly
or indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act, as amended from time to time), after the Effective
Date, of securities of the Company representing 20 percent or more of the
combined voting power of the Company's then outstanding securities; (ii)
when, during any period of 24 consecutive months during the existence of
the Plan, the individuals who, at the beginning of such period, constitute
the Board of Directors of the Company (the "Incumbent Directors") cease for
-------------------
any reason other than death to constitute at least a majority thereof;
provided, however, that a director who was not a director at the beginning
-------- -------
of such 24-month period shall be deemed to have satisfied such 24-month
requirement (and be an Incumbent Director) if such director was elected by,
or on the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either actually
(because they were directors at the beginning of such 24 month period) or
by prior operation of this provision; or (iii) the approval by the
stockholders of the Company of a transaction involving the acquisition of
the
-6-
<PAGE>
Company by an entity other than the Company or a subsidiary through
purchase of assets, by merger, or otherwise. For purposes of this Plan,
"Change in Control Price" means the highest price per share of Common Stock
paid in any transaction reported on the Nasdaq National Market or paid or
offered in any bona fide transaction related to a Change in Control at any
time during the 60-day period immediately preceding the occurrence of the
Change in Control, in each case as determined by the Committee.
In the event of a change in the shares as presently constituted, which
is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par value,
the shares resulting from any such change shall be deemed to be the shares
within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Any such adjustment may provide for the elimination of any fractional share
which might otherwise become subject to an option.
Except as expressly provided in this Subsection 7(f), the optionee
shall have no rights by reason of any split or combination of shares of
stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger, or consolidation or spinoff
of assets or stock of another corporation, and any issue by the Company of
shares of stock of any class, or securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of stock
subject to the option.
The grant of an option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or to consolidate or to dissolve, liquidate or sell,
or transfer all or any part of its business or assets.
(g) Rights of a Stockholder. An optionee shall have no rights as a
-----------------------
stockholder with respect to any shares covered by his or her option until
the date on which the optionee becomes the holder of record of such shares.
No adjustment shall be made for dividends, distributions, or other rights
for which
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<PAGE>
the record date is prior to the date on which he or she shall have become
the holder of record thereof, except as provided in Subsection 7(f).
(h) Postponement of Delivery of Shares and Representations. The
------------------------------------------------------
Company, in its discretion, may postpone the issuance and/or delivery of
shares upon any exercise of an option until completion of the registration
or other qualification of such shares under any state and/or federal law,
rule or regulation as the Company may consider appropriate, and may require
any person exercising an option to make such representations, including a
representation that it is the optionee's intention to acquire shares for
investment and not with a view to distribution thereof, and furnish such
information as it may consider appropriate in connection with the issuance
or delivery of the shares in compliance with applicable laws, rules, and
regulations. In such event no shares shall be issued to such holder unless
and until the Company is satisfied with the accuracy of any such
representations.
(i) Transferability. If provided in the option agreement, the
---------------
options granted pursuant to the Plan may be transferable by a Non-Employee
Director. The Committee shall have the sole discretion to determine to
what extent, if any, the options granted pursuant to the Plan are
transferable by a Non-Employee Director.
(j) Other Provisions. The option agreements authorized under the
----------------
Plan shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the Committee shall deem
advisable.
8. Adjustments in Shares Available for Options. The adjustments in
-------------------------------------------
number and kind of shares and the substitution of shares, affecting outstanding
options in accordance with Subsection 7(f) hereof, shall also apply to the
number and kind of shares issuable upon the exercise of options to be granted
pursuant to Section 6 and the number and kind of shares reserved for issuance
pursuant to the Plan, but not yet covered by options.
9. Amendment of the Plan. The Board, insofar as permitted by law, shall
---------------------
have the right from time to time, with respect to any shares at the time not
subject to options, to suspend or discontinue the Plan or revise or amend it in
any respect whatsoever. So long as the Common Stock is eligible for trading on
the Nasdaq National Market, the Board shall obtain stockholder approval for
those revisions or amendments of the Plan required to be so approved pursuant to
the By-laws of the National Association
-8-
<PAGE>
of Securities Dealers. If the Plan is amended so that the exemption provided by
Rule 16b-3 as a result of the Plan being approved by the stockholders of the
Company is no longer available for options granted under Subsections 6(b) or
6(c) hereof, all options subsequently granted thereunder must be approved by
either the Board or the Committee prior to such grant.
10. Withholding of Taxes. The Company shall have the right to deduct from
--------------------
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock, payment by the optionee
of any federal, state, or local taxes required by law to be withheld. Unless
otherwise prohibited by the Committee, an optionee may satisfy any such
withholding tax obligation by any of the following means or by a combination of
such means:
(a) tendering a cash payment;
(b) authorizing the Company to withhold from the shares otherwise
issuable to the optionee a number of shares having a Fair Market Value as
of the "Tax Date," less than or equal to the amount of withholding tax
obligation; or
(c) delivering to the Company unencumbered shares owned by the
optionee having a Fair Market Value, as of the Tax Date, less than or equal
to the amount of the withholding tax obligation.
The "Tax Date" shall be the date that the amount of tax to be withheld is
--------
determined. Fair Market Value shall be determined in the manner specified in
Subsection 7(b), except as to the date of determination. An optionee's election
to pay the withholding tax obligation by either of (b) or (c) above shall be
irrevocable, may be disapproved by the Committee, and must be made either six
(6) months prior to the Tax Date or during the period beginning on the third
business day following the date of release of the Company's quarterly or annual
summary statement of sales and earnings and ending on the twelfth business day
following such date.
11. Right of Board of Directors or Stockholders to Terminate Director's
-------------------------------------------------------------------
Service. Nothing in this Plan or in the grant of any option hereunder shall in
- -------
any way limit or affect the right of the Board of Directors or the stockholders
of the Company to remove any director or otherwise terminate his or her service
as a director, pursuant to the law, the Restated Certificate of Incorporation,
or Amended and Restated By-laws of the Company.
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<PAGE>
12. Application of Funds. The proceeds received by the Company from the
--------------------
sale of stock pursuant to options will be used for general corporate purposes.
13. No Obligation to Exercise Option. The granting of an option shall
--------------------------------
impose no obligation on the optionee to exercise such option.
14. Construction. This Plan shall be construed under the laws of the
------------
State of Delaware.
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<PAGE>
EXHIBIT 10.4
------------
INDEMNIFICATION AGREEMENT
This Agreement, effective as of February 12, 1997 and dated as of
March 4, 1997, is made by and between Wesley Jessen VisionCare, Inc., a Delaware
corporation (the "Company"), and Kevin J. Ryan who is currently serving as an
officer and director of the Company (the "Indemnitee").
WHEREAS, the Indemnitee is currently serving in the capacity or
capacities described above;
WHEREAS, the Company has made an initial public offering of its common
stock (the "Offering"), which likely has increased the risk of litigation and
other claims being asserted against the directors and officers of the Company;
WHEREAS, the Company wishes the Indemnitee to continue to serve in
such capacity or capacities and the Indemnitee is willing, under certain
circumstances, to continue in such capacity or capacities;
WHEREAS, damages sought and sometimes paid in many claims made against
corporate directors and officers and the expenses required to defend such
claims, whether or not the allegations are meritorious, may not bear a
reasonable relationship to the amount of compensation received by and may be
beyond the financial resources of the Indemnitee;
WHEREAS, the Indemnitee is currently entitled to indemnification under
Delaware General Corporation Law and the Certificate of Incorporation of the
Company, which the Indemnitee does not regard to be adequate protection against
the risks associated with his service to or at the request of the Company;
WHEREAS, the Indemnitee and the Company have concluded that the
exposure to risk of personal liability and payment of damages out of the
Indemnitee's personal assets may result in overly conservative direction and
supervision of the Company's affairs, which is detrimental to the best interests
of the Company and its stockholders; and
WHEREAS, the Company has concluded that additional protection is
necessary for its directors and elected officers.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Agent. For the purposes of this Agreement, "agent" of the
Company means any person who is or was a director, officer, employee, agent or
fiduciary of the Company or a subsidiary of the Company, or is or was serving at
the request of, for the convenience of, or to represent the interests of the
Company or a subsidiary of the Company as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, trust or other
enterprise or entity, including service with respect to an employee benefit
plan.
<PAGE>
(b) Disinterested Director. For purposes of this Agreement,
"Disinterested Director" of the Company means a director of the Company who is
not and was not a party to the proceeding for which indemnification is being
sought by the claimant.
(c) Expenses. For purposes of this Agreement, "expenses" includes
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees and related disbursements, other out-of-
pocket costs and reasonable compensation for time spent by the Indemnitee for
which he is not otherwise compensated by the Company or any third party)
actually and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement, Section 145 of the General
Corporation Law of Delaware or otherwise; provided, however, that expenses shall
-------- -------
not include any judgments, fines, excise taxes or penalties under the Employee
Retirement Income Security Act of 1974 ("ERISA"), or amounts paid in settlement
of a proceeding.
(d) Independent Legal Counsel. For purposes of this Agreement,
"Independent Legal Counsel" means a law firm, a member of a law firm, or an
independent practitioner, that is experienced in matters of corporation law and
shall include any person who, under the applicable standards of professional
conduct then prevailing, would not have a conflict of interest in representing
either the Company or the Indemnitee in an action to determine the Indemnitee's
rights under this Agreement.
(e) Proceeding. For the purposes of this Agreement, "proceeding"
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal, administrative, investigative or any other type
whatsoever.
(f) Subsidiary. For purposes of this Agreement, "subsidiary" means
any corporation, partnership, joint venture or other enterprise, a majority of
whose equity interests are owned by the Company, directly or through one or more
other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve as an agent
of the Company, at its will (or under separate agreement, if such agreement
exists), in the capacity Indemnitee currently serves as an agent of the Company,
so long as he is duly appointed or elected and qualified in accordance with the
applicable provisions of the By-Laws of the Company or any subsidiary of the
Company or until such time as he tenders his resignation in writing; provided,
--------
however, that nothing contained in this Agreement is intended to create any
- -------
right to continued employment of the Indemnitee.
3. Mandatory Indemnification. Subject to the limitations set forth
in Section 7, if the Indemnitee is a person who was or is a party or is
threatened to be made a party to or is involved, including involvement as a
witness, in any proceeding, including any action by or in the right of the
Company, by reason of the fact that he is or was or has agreed to become an
agent, or by reason of any action alleged to have been taken or omitted by him
in any such capacity, the Company shall indemnify the Indemnitee against all
expense, liability and loss (including but not limited to judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement),
actually and reasonably incurred by him in connection with the investigation,
defense,
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<PAGE>
settlement or appeal of such proceeding; provided, however, that except as
provided in Section 7(c) of this Agreement with respect to proceedings seeking
to enforce rights to indemnification, the Company shall indemnify the Indemnitee
in connection with a proceeding (or part thereof) initiated by the Indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Company.
4. Mandatory Advancement of Expenses. The Company shall advance all
expenses incurred by the Indemnitee in connection with the investigation,
defense, settlement or appeal of any proceeding referred to in Section 3 to
which the Indemnitee is a party or is threatened to be made a party or with
respect to which the Indemnitee is otherwise involved (including involvement as
a witness) as an agent of the Company. The Indemnitee hereby undertakes to
repay such amounts advanced if, but only if and to the extent that, it shall
ultimately be determined pursuant to the provisions hereof that the Indemnitee
is not entitled to be indemnified by the Company as authorized hereby. The
advances to be made hereunder shall be paid by the Company to the Indemnitee
within twenty (20) days following delivery of a written request therefor by the
Indemnitee to the Company; provided, however, that, if and to the extent that
the Delaware General Corporation Law requires, an advancement of expenses
incurred by the Indemnitee in his capacity as a director or officer shall be
made only upon delivery of an undertaking by or on behalf of the Indemnitee to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that the
Indemnitee is not entitled to be indemnified for such expenses under this
Agreement or otherwise.
5. Maintenance of D&O Insurance.
(a) So long as the Indemnitee shall continue to serve in any capacity
described in Section 2 and thereafter so long as there is any reasonable
possibility that the Indemnitee shall be subject to any proceeding by reason of
the fact that the indemnitee served in any of such capacities, the Company will
use reasonable efforts to purchase and maintain in effect for the benefit of the
Indemnitee one or more valid, binding and enforceable policies of directors' and
officers' liability insurance ("D&O Insurance") providing, in all respects,
coverage and amounts as reasonably determined by the Board of Directors.
(b) Notwithstanding Section 5(a), the Company shall not be required
to maintain D&O Insurance if such is not reasonably available or if, in the
reasonable business judgment of the Board of Directors of the Company as it may
exist from time to time, either (i) the premium cost for such insurance is
substantially disproportionate to the amount of insurance or (ii) the coverage
is so limited by exclusions that there is insufficient benefit provided by such
insurance.
6. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that the indemnification with respect thereto
properly may be sought from the Company under this Agreement, notify the Company
of the commencement or threat of commencement thereof. The failure to notify or
promptly notify the Company shall not relieve the Company from any liability
-3-
<PAGE>
which it may have to the Indemnitee otherwise than under this Agreement, and
shall relieve the Company from liability hereunder only to the extent the
Company has been prejudiced.
(b) If, at the time of the receipt of a notice of the commencement of
a proceeding pursuant to Section 6(a), the Company has D&O Insurance in effect,
the Company shall give prompt notice of the commencement of such proceeding to
the insurers in accordance with the procedures set forth in the D&O Insurance
policy. The Company shall thereafter take all necessary or desirable action to
cause such insurers to pay, to or on behalf of the Indemnitee, all amounts
payable as a result of such proceeding in accordance with the terms of such
policy.
(c) In the event the Company shall be obligated to pay the expenses
of the Indemnitee in connection with any proceeding, the Company shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee, upon the delivery to the Indemnitee of written notice of its
election to do so. After delivery of such notice, approval of such counsel by
the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any fees of
counsel or other expenses subsequently incurred by the Indemnitee with respect
to the same proceeding; provided that (i) the Indemnitee shall have the right to
employ his own counsel in any such proceeding at the Indemnitee's expense and
(ii) if (A) the employment of counsel by the Indemnitee has been previously
authorized by the Company, or (B) the Indemnitee shall have reasonably concluded
that there is a conflict of interest between the Company and the Indemnitee in
the conduct of any such defense, or (C) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, the fees and expenses
of the Indemnitee's counsel shall be paid by the Company; and provided further
that the Company shall not be required to pay the expenses of more than one such
separate counsel for persons it is indemnifying in any one proceeding.
7. Determination of Right to Indemnification.
(a) To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding referred to in Section 3 or in the
defense of any claim, issue or matter described therein, the Company shall
indemnify the Indemnitee pursuant to Section 3 against expenses actually and
reasonably incurred by him in connection with the investigation, defense, or
appeal of such proceeding. If the Indemnitee has not been successful on the
merits or otherwise in any such defense, the Company also shall indemnify the
Indemnitee pursuant to Section 3 unless, and only to the extent that, the
Indemnitee has not met the applicable standard of conduct under the Company's
Certificate of Incorporation required to entitle the Indemnitee to such
indemnification.
(b) Subject to the provisions of Section 8 relating to a Change in
Control (as defined therein), the determination as to whether the Indemnitee is
entitled to indemnification shall be made as follows: (1) if requested by the
Indemnitee, by Independent Legal Counsel selected by the Indemnitee with the
consent of the Company (which consent shall not be unreasonably withheld) or (2)
if no request is made by the Indemnitee for a determination by Independent Legal
Counsel, (i) by a quorum of the Board of Directors consisting of Disinterested
Directors or (ii) if such quorum is not obtainable or, even if obtainable, if a
quorum of Disinterested Directors so directs, by Independent Legal Counsel in a
written opinion. If Independent Legal Counsel shall make such
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<PAGE>
determination, the Company agrees to pay the reasonable fees of such counsel and
to indemnify such counsel fully against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or relating to
this Agreement or counsel's engagement pursuant hereto.
(c) Notwithstanding a determination that the Indemnitee is not
entitled to indemnification with respect to a specific proceeding, the
Indemnitee shall have the right to apply to the court of Chancery of Delaware,
the court in which that proceeding is or was pending or any other court of
competent jurisdiction, for the purpose of enforcing the Indemnitee's right to
indemnification or the advance payment of expenses pursuant to this Agreement.
The burden of proof shall be on the Company in any such suit to demonstrate by
the weight of the evidence that the Indemnitee is not entitled to
indemnification or advance payment of expenses. The Indemnitee's expenses
incurred in successfully establishing his right to indemnification or
advancement of expenses, in whole or in part, in any such action (or settlement
thereof) shall be paid by the Company.
(d) Notwithstanding anything in Sections 3 or 4 to the contrary, the
Company shall not be liable under this Agreement to make any indemnity payment
or advancement of expenses in connection with any proceeding (i) to the extent
that payment is actually made, or for which payment is available, to or on
behalf of the Indemnitee under an insurance policy, except in respect of any
amount in excess of the limits of liability of such policy or any applicable
deductible under such policy; (ii) to the extent that payment has been or will
be made to the Indemnitee by the Company otherwise than pursuant to this
Agreement; or (iii) to the extent that there was a final adjunction by a court
of competent jurisdiction that the Indemnitee has not met the applicable
standard of conduct required to entitle the Indemnitee to indemnification under
the Delaware General Corporation Law as it now exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
said law permitted the Company to provide prior to such amendment).
8. Change In Control.
(a) The Company agrees that if there is a Change in Control, as
defined below, of the Company (other than a Change in Control which has been
approved by a majority of the members of the Board of Directors who were
directors immediately prior to such Change in Control), then with respect to all
matters thereafter arising concerning the rights of the Indemnitee to indemnity
payments and advance payments of expenses under this Agreement the Company shall
seek legal advice only from Independent Legal Counsel selected by the Indemnitee
with the consent of the Company (which shall not be unreasonably withheld).
Such counsel, among other things, shall render a written opinion to the Company
and the Indemnitee as to whether and to what extent the Indemnitee would be
permitted to be indemnified under this Agreement and applicable law. The
Company agrees to pay the reasonable fees of the Independent Legal Counsel and
to indemnify such counsel fully against any and all expenses (including
attorneys' fees), claims, liabilities and damages arising out of or relating to
this Agreement or counsel's engagement pursuant hereto.
(b) Alternatively, the Indemnitee may choose to submit all matters
arising concerning his rights to indemnity payments and advance payments of
expenses under this
-5-
<PAGE>
Agreement to a panel of three arbitrators, one of whom is selected by the
Company, another of whom is selected by the Indemnitee and the third of whom is
selected by the first two arbitrators so selected. Any such submission shall be
governed by the Commercial Arbitration Rules of the American Arbitration
Association and shall be deemed to be a submission within the meaning of the
Federal Arbitration Act or any statutory modification or re-enactments thereof.
Arbitration proceedings shall take place in Chicago, Illinois, unless otherwise
agreed to by the parties.
(c) "Change in Control" for purposes of this Agreement shall be
deemed to have occurred if (a) any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding voting
securities, except that a person who as of the date of this Agreement owns 20%
or more of the total voting power represented by the Company's outstanding
voting securities shall not be deemed to have caused a Change in Control, or (b)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors and any new director whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-third (2/3) of the directors
then still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof, or (c) the stockholders of the
Company approve a merger, plan of complete liquidation of the Company, an
agreement for the sale or disposition by the Company of all or any substantial
part of the Company's assets, or other business combination of the Company with
any other corporation, other than a business combination which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 80% of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such business combination.
9. Limitation of Actions and Release of Claims. No proceeding shall
be brought and no cause of action shall be asserted by the Company or any
subsidiary or by any stockholder on behalf of the Company or any subsidiary
against the Indemnitee, his spouse, heirs, estate, executors or administrators
after the expiration of one year from the act or omission of the Indemnitee upon
which such proceeding is based; provided, however, that in the event that the
-------- -------
Indemnitee has fraudulently concealed the facts underlying such cause of action,
no proceeding shall be brought and no cause of action shall be asserted after
the expiration of one year from the earlier of (i) the date the Company or any
subsidiary of the Company discovers such facts or (ii) the date the Company or
any subsidiary of the Company could have discovered such facts by the exercise
of reasonable diligence. Any claim or cause of action of the Company or any
subsidiary of the Company, including claims predicated upon the negligent act or
omission of the Indemnitee, shall be extinguished and deemed released unless
asserted by filing of a legal action within such period. This Section 9 shall
not apply to any cause of action which has accrued on the date hereof and of
which
-6-
<PAGE>
the Indemnitee is aware on the date hereof but as to which the Company has no
actual knowledge apart from the Indemnitee's knowledge.
10. Non-exclusivity. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Certificate of Incorporation or By-Laws, the vote of the
Company's stockholders or Disinterested Directors, other agreements, or
otherwise, both as to administrators in his official capacity and to action in
another capacity while occupying his position as an agent of the Company, and
the Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.
11. Settlement. The Company shall not be liable to indemnify the
Indemnitee under this Agreement for any amounts paid in settlement of any
proceeding without its written consent, which consent shall not be unreasonably
withheld. The Company shall not settle any proceeding which would impose any
penalty or limitation on the Indemnitee without the Indemnitee's written
consent, which consent shall not be unreasonably withheld. In the event that
consent is not given and the parties hereto are unable to agree on a proposed
settlement, Independent Legal Counsel shall be retained by the Company, at its
expense, with the consent of the Indemnitee, which consent shall not be
unreasonably withheld, for the purpose of determining whether or not the
proposed settlement is reasonable under all the circumstances; and if
Independent Legal Counsel determines the proposed settlement is reasonable under
all the circumstances, the settlement may be consummated without the consent of
the other party.
12. Subrogation Rights. In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee against any person or organization
and the Indemnitee shall execute all papers required and shall do everything
that may be reasonably necessary to secure such rights.
13. Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the full extent now or hereafter not
prohibited by law. Indemnitee's rights hereunder shall apply to claims made
against Indemnitee arising out of acts or omissions which occurred prior to the
date hereof as well as those which occur after the date hereof.
14. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
(i) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, without limitation, all portions of any paragraph of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or unenforceable
and to give effect to Section 13.
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<PAGE>
15. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
16. Successors and Assigns. The terms of this Agreement shall bind,
and shall inure to the benefit of, the successors and assigns of the parties
hereto.
17. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) on
the date of delivery if delivered by hand or (ii) on the second business day
after being deposited in the U.S. mail (registered or express), postage prepaid.
Addresses for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice. Each party agrees to
receipt for any notice received promptly upon request.
18. Governing Law. This Agreement shall be governed exclusively by
and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
19. Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consents to the jurisdiction of the courts of the State of
Delaware and the Company irrevocably consents to the jurisdiction of any court
in which an Indemnitee brings action pursuant to Section 7(c), for all purposes
in connection with any proceeding which arises out of or relates to this
Agreement. The Company agrees not to initiate any such action or proceeding in
any state other than Delaware.
20. Counterparts. This Agreement may be executed in multiple
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this
Indemnification Agreement effective as of the date first above written.
WESLEY JESSEN VISIONCARE, INC.
By: /s/ Edward J. Kelley
---------------------------------
Edward J. Kelley
Its: Chief Financial Officer
/s/ Kevin J. Ryan
--------------------------------------
Kevin J. Ryan
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<PAGE>
SCHEDULE OF OFFICERS & DIRECTORS
WHO SIGNED AN INDEMNIFICATION AGREEMENT
---------------------------------------
1. Kevin J. Ryan
2. Edward J. Kelley
3. Raleigh S. Althisar, Jr.
4. Lawrence L. Chapoy
5. William M. Flynn
6. Joseph F. Foos
7. George H. McCrary
8. Daniel M. Roussel
9. Thomas F. Steiner
10. Ronald J. Artale
11. Stephen G. Pagliuca
12. Adam W. Kirsch
13. John W. Maki
14. John J. O'Malley
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<PAGE>
EXHIBIT 10.5
------------
EXECUTION COPY
--------------
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of January
24, 1997, by and among Wesley-Jessen Corporation, a Delaware corporation, ("W-
J"), PBH, Inc., a Delaware corporation and a wholly-owned subsidiary of W-J
("PBH," and together with W-J, the "Seller") and The Cooper Companies, Inc., a
--- ------
Delaware corporation ("Buyer"). The Buyer and the Seller are sometimes referred
-----
to herein collectively as the "Parties" and individually as a "Party." Unless
------- -----
otherwise indicated, capitalized terms used but not otherwise defined herein
shall have the meaning given to such terms in Section 8.1 hereof.
The Seller operates PBH's Opaque Lens Business (as defined in Section
1.1 below). Pursuant to that certain Agreement Containing Consent Order dated
September 24, 1996, Federal Trade Commission File No. 961-0060 (the "Consent
-------
Order"), by and between W-J and the United States Federal Trade Commission (the
- -----
"FTC"), W-J has agreed to divest of PBH's Opaque Lens Business.
---
The Buyer wishes to purchase and acquire from the Seller, and the
Seller wishes to sell, assign and transfer to the Buyer, PBH's Opaque Lens
Business, upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I
PURCHASED ASSETS
1.1 PURCHASED ASSETS. Subject to and upon the terms and conditions set
----------------
forth in this Agreement, at the Closing, the Seller will sell, transfer, convey,
assign and deliver to the Buyer, and the Buyer will purchase and acquire from
Seller, all of Seller's right, title, and interest in and to all of the
following rights and assets (other than assets that are part of the Seller's
physical facilities, including without limitation, all property, plant and
equipment) used in or relating to the research, development, distribution or
sale of PBH's Opaque Lens Products by Seller as of the Closing Date
(collectively, "PBH's Opaque Lens Business"):
--------------------------
<PAGE>
(a) all books, records, manuals, reports, lists, advertising and
promotional materials, computer records and other documents relating to PBH's
Opaque Lens Products;
(b) Natural Touch(TM) product line profit and loss statements
relating to each of PBH's Opaque Lens Products for the United States;
(c) all legal or equitable rights in the following trademarks: (A)
"Natural Touch," U.S. Trademark Registration Number 1758144 and (B) "The
Definition of Beautiful Eyes," U.S. Trademark Registration Number 1945993; (the
foregoing collectively referred to as the "Assigned Trademarks");
(d) all lists of stock keeping units ("SKUs") (i.e., all forms,
----
package sizes and other units in which PBH's Opaque Lens Products are sold and
which are used in records of sales and inventories);
(e) all bills of materials for each of PBH's Opaque Lens Products,
consisting of full manufacturing standards and procedures, quality control
specifications, specifications for raw materials and components, including all
lists of authorized sources for materials and components;
(f) all artwork and mechanical drawings currently in use relating to
each of PBH's Opaque Lens Products;
(g) all customer lists, including but not limited to, lists of
distributors, opticians, ophthalmologists, optometrists, and eye-care chains who
have bought PBH's Opaque Lens Products, including, but not limited to, all files
of names, addresses, and telephone numbers of the individual customer contacts,
and the unit and dollar amounts of sales monthly, by product, for each customer
in the United States;
(h) all marketing information, literature and materials relating to
PBH's Opaque Lens Products, including but not limited to Seller's consumer and
trade promotion, marketing and business programs;
(i) all documents containing or relating to product testing and
laboratory research data relating to PBH's Opaque Lens Products, including but
not limited to, all regulatory registrations and correspondence;
(j) all consumer correspondence and documents relating to PBH's
Opaque Lens Business;
-2-
<PAGE>
(k) all documents constituting or relating to price lists for PBH's
Opaque Lens Products;
(l) all documents and information relating to costs of production for
each of PBH's Opaque Lens Products, including, but not limited to, raw material
costs, packaging costs, and advertising and promotional costs;
(m) all documents containing sales data relating to PBH's Opaque Lens
Products;
(n) a license under the patents set forth in the license agreement
attached as Exhibit 1 hereto, all in accordance with the terms and conditions
---------
set forth therein (the "Color Patent License Agreement");
------------------------------
(o) a license under the patents set forth in the license agreement
attached as Exhibit 2 hereto, all in accordance with the terms and conditions
---------
set forth therein (the "Molding Patent License Agreement");
--------------------------------
(p) a license under the patents set forth in the license agreement
attached as Exhibit 3 hereto, all in accordance with the terms and conditions
---------
set forth therein (the "Knapp Patent License Agreement", and together with the
------------------------------
Color Patent License Agreement and the Molding Patent License Agreement, the
"License Agreements");
- -------------------
(q) all trade secrets, technology and know-how of PBH relating to
researching, developing, manufacturing, distributing and selling PBH's Opaque
Lens Products, including, but not limited to, books and records, documents
containing the results of research and development efforts, filings with the
United States Food and Drug Administration ("FDA"), scientific and clinical
---
reports, designs, manuals, drawings, and design, material and equipment
specifications;
(r) all permits, franchises, licenses, approvals and authorizations
of governmental authorities exclusively related to PBH's Opaque Lens Business;
(s) all goodwill associated with the Assigned Trademarks; and
(t) all of PBH's consigned inventory in the field which is
exclusively related to PBH's Opaque Lens Business.
1.2 RESERVED AND EXCLUDED ASSETS. Seller expressly reserves the right to
----------------------------
retain and use in its business copies of all
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<PAGE>
documents, information and rights (except exclusive rights granted to Buyer
pursuant to the Color Patent License Agreement) relating to PBH's Opaque Lens
Business to the extent such documents, information or rights also relate to
products other than PBH's Opaque Lens Products, including without limiting the
foregoing, Opaque Contact Lenses researched, developed, manufactured,
distributed, used or sold by Seller outside of the United States.
Notwithstanding any provision to the contrary contained herein (including,
without limitation, Section 1.1 hereof), the Seller will retain and not
transfer, and the Buyer will not purchase or acquire, any properties, assets or
rights that are not expressly described in Section 1.1 hereof (the "Excluded
--------
Assets"). Excluded Assets, by way of example and not by way of limitation,
- ------
include accounts receivable, cash and cash equivalents, prepayment credits, the
PBH trade name, equipment, machinery and other assets not expressly identified
in Section 1.1 hereof. If the Buyer obtains any properties, assets or rights
that, instead of or in addition to relating to PBH's Opaque Lens Business,
relate to the Seller's or its Affiliates' operations or businesses, the Buyer
shall (i) promptly notify the Seller of that fact, (ii) promptly reassign,
transfer or convey such properties, assets or rights to the Seller, (iii) if the
reassignment, transfer or conveyance referred to in the foregoing clause (ii) is
impractical because of the mixed nature of such properties, assets or rights,
promptly grant Seller a non-exclusive, perpetual, transferable, worldwide,
royalty-free license to use such properties, assets or rights, and (iv) not use
such properties, assets or rights other than in connection with PBH's Opaque
Lens Business. If the Seller retains any properties, assets or rights that are
primarily related to PBH's Opaque Lens Business, the Seller shall (i) promptly
notify the Buyer of that fact, (ii) promptly assign, transfer or convey such
properties, assets or rights to the Buyer, (iii) if the assignment, transfer or
conveyance referred to in the foregoing clause (ii) is impractical because of
the mixed nature of such properties, assets or rights, promptly grant Buyer a
non-exclusive, perpetual, transferable, worldwide, royalty-free license to use
such properties, assets or rights, and (iv) not use such properties, assets or
rights other than in connection with Seller's contact lens business.
1.3 ASSUMPTION OF LIABILITIES. Subject to and upon the terms and
-------------------------
conditions set forth in this Agreement, from and after the Closing Date, the
Buyer will assume and agree to pay and discharge, and the Seller will not be
liable and Buyer will hold Seller harmless against, all liabilities, obligations
and commitments of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, to the extent they
relate to or arise out of the operation of PBH's Opaque Lens
-4-
<PAGE>
Business on or after the Closing Date (collectively, the "Assumed Liabilities").
-------------------
1.4 RETAINED LIABILITIES. The Seller agrees to pay and discharge, and
will hold the Buyer harmless against, all liabilities, obligations and
commitments of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, to the extent they
relate to or arise out of (i) the operation of PBH's Opaque Lens Business prior
to the Closing Date or (ii) the operation of Seller's other businesses, whether
prior to, on or after the Closing Date (collectively, the "Retained
Liabilities").
ARTICLE II
PURCHASE PRICE; CLOSING
2.1 PURCHASE PRICE. The purchase price for PBH's Opaque Lens Business
--------------
will consist of (a) $3,000,000 in cash, $1,000,000 of which has been delivered
(pursuant to the terms and conditions of the escrow agreement attached hereto as
Exhibit 6 (the "Escrow Agreement")) simultaneously with the execution of this
- --------- ----------------
Agreement as a cash deposit (refundable as set forth below) to guarantee
performance of Buyer's obligations under this Agreement, and (b) a $4,500,000
promissory note of Buyer, which promissory note shall be in the form of Exhibit
-------
4 attached hereto (the "Note"). Notwithstanding the foregoing, the $1,000,000
- - ----
cash deposit shall be refunded to the Buyer within 24 hours of any termination
of this Agreement pursuant to Section 6.1, except for a termination resulting
from a breach of this Agreement by the Buyer.
2.2 PLACE AND DATE OF CLOSING. The closing of the purchase and sale of
-------------------------
PBH's Opaque Lens Business, the assumption of the Assumed Liabilities and the
transactions relating thereto (collectively, the "Closing") will take place at a
-------
site mutually agreed upon by Seller and Buyer commencing at 10:00 a.m. local
time one (1) business day following the date as of which the conditions to each
Party's obligations (as set forth in Article V hereof) have been satisfied or
such other date and time as may be mutually agreed upon by the Parties. The
date and time of the Closing are herein referred to as the "Closing Date." At
------------
the Closing:
(a) the Seller will sell, transfer, convey, assign and deliver to the
Buyer all of PBH's Opaque Lens Business and deliver to the Buyer bills of sale
and other instruments of conveyance which are necessary to effect the transfer
of PBH's Opaque Lens Business and such other instruments and certificates as
Buyer may reasonably request;
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<PAGE>
(b) the Buyer will assume all of the Assumed Liabilities and deliver
to the Seller such instruments of assumption as are necessary in order for the
Buyer to assume the Assumed Liabilities;
(c) the Buyer will deliver the remaining $2,000,000 cash portion of
the purchase price to W-J by wire transfer of immediately available funds;
(d) the Buyer will deliver the executed Note; and
(e) the Parties will execute and deliver the License Agreements and
the Supply Agreement (as described in Section 2.5 hereof).
2.3 ALLOCATION OF PURCHASE PRICE.
----------------------------
(a) The Parties agree to allocate the purchase price in accordance
with an allocation schedule to be prepared by Seller in accordance with Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"), such
----
schedule to be subject to Buyer's approval (not to be unreasonably withheld).
The Seller shall deliver such allocation schedule to Buyer within 90 days after
the Closing Date.
(b) In connection with the determination of the foregoing allocation
schedule, the Parties shall cooperate with each other and provide such
information as any of them shall reasonably request. The Parties will file all
tax returns (including but not limited to the filing of Internal Revenue Service
Form 8594) in a manner consistent with such allocation schedule.
2.4 TRANSITION PERIOD. Buyer and Seller hereby agree to cooperate and use
-----------------
reasonable efforts to deliver as soon as reasonably practicable the tangible
assets which are part of PBH's Opaque Lens Business to Buyer's facility in
Pleasanton, California. Each of the Seller and Buyer will bear equally the cost
and expense of the aforementioned delivery.
2.5 SUPPLY AGREEMENT. In order to implement the transition of PBH's
----------------
Opaque Lens Business, on the Closing Date, Buyer and PBH shall enter into an
agreement providing for the supply of PBH's Opaque Lens Products (the "Supplied
--------
Product") to Buyer in accordance with the terms and conditions set forth in the
- -------
technical services and supply agreement attached as Exhibit 5 hereto (the
---------
"Supply Agreement"). Notwithstanding any provision to the contrary contained in
- -----------------
this Agreement, the License Agreements or the Supply
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<PAGE>
Agreement, Seller and its Affiliates shall have the right to produce and/or sell
for themselves and to produce and/or sell for or to any other Person any Opaque
Contact Lenses using polymacon or any other product developed by Seller, its
Affiliates or any other Person, including without limitation, any Opaque Contact
Lenses similar to the Supplied Product, so long as such products do not infringe
any patent or other proprietary right of the Buyer (including the patents to be
licensed and the Assigned Trademarks to be transferred to Buyer by Seller
pursuant to this Agreement). Notwithstanding the foregoing nor any term of the
Color Patent License Agreement, Seller shall have the right to sell or offer for
sale disposable (30 day or less wear before recommended replacement) Opaque
Contact Lenses in the Licensed Territory utilizing a limbal ring as described
and claimed in U.S. Patent No. 5,302,978 on the earlier of: (i) 42 months after
the Closing Date and (ii) the date on which Buyer obtains an alternative
supplier or commences manufacture of the Supplied Products or the Licensed
Products (as such term is defined in the License Agreements).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
--------------------------------------------
and warrants to the Buyer as follows:
3.1.1 Corporate Status. Each of W-J and PBH is a corporation duly
----------------
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.1.2 Authorization. Each of W-J and PBH has the corporate power and
-------------
authority to execute and deliver this Agreement, the License Agreements, the
Escrow Agreement and the Supply Agreement and to perform fully its obligations
hereunder and thereunder. The execution and delivery by each of W-J and PBH of
this Agreement, the License Agreements, the Escrow Agreement and the Supply
Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all requisite corporate action on the part
of each of W-J and PBH. Each of W-J and PBH has duly executed and delivered this
Agreement. This Agreement is a legal, valid and binding obligation of each of W-
J and PBH, enforceable against each of them in accordance with its terms, except
as such enforceability may be limited by (a) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (b) applicable equitable principles (whether considered in a
proceeding at law or in equity).
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<PAGE>
3.1.3 No Conflicts. The execution, delivery and performance by each
------------
of W-J and PBH of this Agreement, the License Agreements, the Escrow Agreement
and the Supply Agreement, and the consummation of the transactions contemplated
hereby and thereby, do not and will not conflict with or result in a violation
of or a default under (with or without the giving of notice or the lapse of time
or both) (a) any Applicable Law applicable to PBH's Opaque Lens Business or (b)
the certificate of incorporation or by-laws or other organizational documents of
either W-J or PBH.
3.1.4 Litigation. There is no material action, claim, suit,
----------
judgment, injunction, order (other than the Consent Order), investigation,
proceeding or decree pending or, to Seller's Knowledge, threatened against W-J
or PBH which relates to PBH's Opaque Lens Business or the transactions
contemplated by this Agreement nor, to Seller's Knowledge, is there any
reasonable basis for any such action, proceeding or investigation.
3.1.5 Title to Purchased Assets. Seller has good title to, or a
-------------------------
valid license to use, all of the assets to be conveyed as part of PBH's Opaque
Lens Business, free and clear of any and all Liens other than Permitted Liens.
3.1.6 Compliance with Laws. Since April 1, 1996, to Seller's
--------------------
Knowledge, Seller has not received any notice with respect to PBH's Opaque Lens
Business alleging any violation of Applicable Law.
3.1.7 Intellectual Property Rights. To Seller's Knowledge, Section
----------------------------
1.1(c) and Exhibit A to each of the License Agreements contains a complete and
correct list of all of the intellectual property rights used in connection with
PBH's Opaque Lens Business (other than trade names or corporate names, none of
which are being conveyed to Buyer) and all licenses and other rights granted to
any third party with respect to such intellectual property rights. To Seller's
Knowledge, (i) the Seller owns and possesses, and upon consummation of the
transactions contemplated hereby the Buyer will own and possess, all right,
title and interest in and to, or has (or will have) a valid license to use, all
of the intellectual property rights necessary for the operation of PBH's Opaque
Lens Business as currently conducted; (ii) no claim by any third party
contesting the validity, enforceability, use or ownership of any such
intellectual property rights has been made since October 1, 1996, is currently
outstanding or is threatened; (iii) neither the Seller nor any registered agent
thereof has received any written notices of an allegation of, any infringement
or misappropriation by, or conflict with, any intellectual property rights of
any third party; and (iv) no infringement,
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<PAGE>
misappropriation or conflict will occur as a result of the transactions
contemplated by this Agreement.
3.1.8 No Knowledge of Material Facts. To Seller's Knowledge, there
------------------------------
is no material fact, circumstance or condition existing as of the date hereof
(other than the consents and approvals contemplated by this Agreement) that
would prohibit or interfere with the performance by Seller of the transactions
contemplated by this Agreement or which would be reasonably likely to have a
Material Adverse Effect on PBH's Opaque Lens Business.
3.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
-------------------------------------------
warrants to the Seller as follows:
3.2.1 Corporate Status. The Buyer is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Delaware.
3.2.2 Authorization. The Buyer has the corporate power and authority
-------------
to execute and deliver this Agreement and the other agreements contemplated
hereby, to perform fully its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by the Buyer of this Agreement and the other agreements contemplated
hereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all requisite corporate action of the
Buyer. The Buyer has duly executed and delivered this Agreement and the other
agreements contemplated hereby. This Agreement and each of the other agreements
contemplated hereby is a legal, valid and binding obligation of the Buyer,
enforceable against it in accordance with its respective terms, except as such
enforceability may be limited by (a) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (b) applicable equitable principles (whether considered in a
proceeding at law or in equity).
3.2.3 No Conflicts. The execution, delivery and performance by the
------------
Buyer of this Agreement and the other agreements contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not conflict with or result in a violation of or a default under (with or
without the giving of notice or the lapse of time or both) (a) any Applicable
Law applicable to the Buyer or (b) the certificate of incorporation or by-laws
or other organizational documents of the Buyer.
3.2.4 Litigation. There is no action, claim, suit, judgment,
----------
injunction, order or decree pending, or to the Buyer's
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<PAGE>
Knowledge threatened, against Buyer which relates to the transactions
contemplated by this Agreement.
3.2.5 Available Funds. The Buyer has, or will have on the Closing
---------------
Date, sufficient funds available to pay the purchase price on the Closing Date.
ARTICLE IV
COVENANTS
4.1 COVENANTS OF THE SELLER.
-----------------------
4.1.1 Pre-Closing Access and Information. From the date hereof to
----------------------------------
the Closing Date, the Seller will give the Buyer and its accounting and legal
representatives, reasonable access, during normal business hours and upon
reasonable notice, to all documents, records, work papers and information with
respect to all of the Seller's properties, assets, books, contracts,
commitments, reports and records which are reasonably related to PBH's Opaque
Lens Business (except for confidential or privileged documents), as the Buyer
shall from time to time reasonably request. In addition, the Seller will permit
the Buyer and its accounting and legal representatives reasonable access to such
personnel of the Seller during normal business hours and upon reasonable notice
as may be reasonably related to the Buyer's review of PBH's Opaque Lens
Business.
4.1.2 Further Actions.
---------------
(a) The Seller agrees to use best efforts to take all actions and to
do all things necessary, proper or advisable to consummate the transactions
contemplated hereby as soon as practicable after the date hereof.
(b) The Seller will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by the Seller pursuant to Applicable Law in
connection with this Agreement and the consummation of the other transactions
contemplated hereby including, without limitation, using its best efforts to
diligently and expeditiously submit to the FTC all filings, applications,
notifications and information required in order for the FTC to designate Buyer
as the approved divestiture candidate pursuant to the Consent Order or as
otherwise required in order to obtain the approvals referred to in Section
5.1.1. hereof.
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<PAGE>
4.1.3 Conduct of Business. From the date hereof through the Closing
-------------------
Date, the Seller covenants and agrees that:
(a) the Seller will conduct PBH's Opaque Lens Business in the
ordinary course of business;
(b) notwithstanding anything herein to the contrary, Seller shall not
enter into any "dealing" or "dating" arrangements with customers outside the
ordinary course of business (as such terms are used in the industry) in order to
increase sales or increase customer inventory levels beyond their normal
requirements;
(c) the Seller will use its reasonable efforts in good faith to
preserve the goodwill, reputation and present relationships of PBH's Opaque Lens
Business with suppliers, customers, lessors, licensors and others having
business relations with PBH's Opaque Lens Business;
(d) the Seller will (i) maintain and keep in full force all insurance
currently in place relating to PBH's Opaque Lens Business, (ii) cause the books
and records of PBH's Opaque Lens Business to be maintained in the ordinary
course of business on a basis consistent with past practices, (iii) perform and
comply in all material respects with its obligations under all material
contracts related to PBH's Opaque Lens Business, (iv) maintain levels and types
of inventory of PBH's Opaque Lens Business in the ordinary course of business;
and
(e) the Seller will not (i) sell, lease, transfer or otherwise
dispose of any of the assets comprising PBH's Opaque Lens Business, other than
the use or sale or other transfer or disposal of such assets in the ordinary
course of PBH's Opaque Lens Business, (ii) enter into any joint venture,
partnership or other similar arrangement for the operation of the assets
comprising PBH's Opaque Lens Business, (iii) modify, amend or supplement the
Consent Order, if such modification, amendment or supplement could reasonably be
expected to have a Material Adverse Effect on PBH's Opaque Lens Business or (iv)
without Buyer's prior consent, enter into any material contract which is
primarily related to PBH's Opaque Lens Business.
4.1.4 Announcement. Promptly following the Closing Date, Seller
------------
shall send an announcement, in form and substance reasonably satisfactory to
Buyer, to all of the current customers of PBH's Opaque Lens Business informing
such customers of the sale of PBH's Opaque Lens Business to Buyer.
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<PAGE>
4.2 COVENANTS OF THE BUYER.
----------------------
4.2.1 Further Actions.
---------------
(a) The Buyer agrees to use best efforts to take all actions and to
do all things necessary, proper or advisable to consummate the transactions
contemplated hereby as soon as practicable after the date hereof.
(b) The Buyer will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by the Buyer pursuant to Applicable Law in
connection with this Agreement and the consummation of the other transactions
contemplated hereby including, without limitation, using its best efforts to
diligently and expeditiously submit to the FTC all filings, applications,
notifications and information required in order for the FTC to designate Buyer
as the approved divestiture candidate pursuant to the Consent Order or as
otherwise required in order to obtain the approvals referred to in Section
5.1.1. hereof.
4.2.2 Use of Business Names by the Buyer. Except with respect to the
----------------------------------
trademarks, service marks or brand names being conveyed as part of PBH's Opaque
Lens Business, to the extent the trademarks, service marks, trade, corporate or
business names of the Seller or of any of the Seller's Affiliates are used by
PBH's Opaque Lens Business on stationery, invoices, receipts, forms, packaging,
advertising and promotional materials, products, training and service literature
and materials constituting part of PBH's Opaque Lens Business ("Marked
------
Materials"), the Buyer may use such Marked Materials after the Closing Date for
- ---------
a period of one (1) year without altering or modifying such Marked Materials, or
removing or rendering illegible all such trademarks, service marks, or trade,
corporate or business names, but the Buyer shall not thereafter use such
trademarks, service marks, brand names or trade, corporate or business names in
any other manner without the prior written consent of the Seller. Except with
respect to the trademarks, service marks or brand names being conveyed as part
of PBH's Opaque Lens Business, immediately upon the expiration of such one (1)
year period, the Buyer shall remove or render illegible such trademarks, service
marks, brand names or trade, corporate or business names therefrom or clearly
and prominently mark the name of the Buyer thereon and indicate that the Buyer
is not affiliated with the Seller or any Affiliate thereof. Notwithstanding the
foregoing, Buyer shall be under no obligation to remove or render illegible any
such trademarks, service marks, brand names or trade, corporate or business
names from any product information, instructions or materials which are included
in product manufactured by Seller.
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<PAGE>
4.2.3 Post-Closing Access and Information.
-----------------------------------
(a) After the Closing Date, the Buyer will (and will cause each of
its Affiliates and its Affiliates' respective accountants, counsel, consultants,
employees and agents to) give the Seller's accountants and consultants,
reasonable access, during normal business hours and upon reasonable notice, to
all employees, documents, records, work papers and information with respect to
all of such Person's properties, assets, books, contracts, commitments, reports
and records relating to PBH's Opaque Lens Business, as the Seller shall from
time to time reasonably request (to the extent necessary to comply with any
request of any competent governmental authority or to verify compliance pursuant
to this Agreement of any of the agreements contemplated hereby). In addition,
the Buyer shall permit the Seller to make copies at its own expense of any of
the above-mentioned documents, records and information. In addition, the Buyer
will permit the Seller and its accountants, counsel, consultants, employees and
agents, reasonable access to such personnel of the Buyer during normal business
hours and upon reasonable notice as may be necessary or useful to the Seller in
its review of the properties, assets and business affairs of PBH's Opaque Lens
Business and the above-mentioned documents, records and information.
(b) The Buyer will retain all books and records relating to PBH's
Opaque Lens Business for at least five years.
(c) Notwithstanding any provision to the contrary in this Section
4.2.3, Seller shall not be required to provide, disclose or otherwise make
available to any department of Seller other than the accounting and legal
departments any Information Relating to Licensing of Patents. Further, Seller
shall use any Information Relating to Licensing of Patents obtained by Seller
only in Seller's capacity a licensor of the patents described in the Knapp
License Agreement, in order to collect royalties due and owing pursuant to the
Knapp License Agreement.
4.2.4 Employees. No employees of Seller nor any of its Affiliates
---------
shall be transferred to Buyer or any of its Affiliates in connection with the
transactions contemplated by this Agreement. In addition, for a period of
eighteen (18) months after the date of this Agreement, without the prior written
approval of Seller, neither Buyer nor any of its Affiliates will directly or
indirectly, solicit, encourage, entice or induce any person who is or was
employed by the Seller or any of its Affiliates as of the date hereof or at any
time hereafter during such eighteen (18) month period and with whom Buyer has
had contact in connection with the assessment of the technologies, patents and
other know-how during Buyer's consideration of the purchase of PBH's Opaque Lens
-13-
<PAGE>
Business or the administration of this Agreement, the Supply Agreement or the
License Agreements, to terminate his or her employment with Seller or any of its
Affiliates or hire any such person. Buyer agrees that any remedy at law for any
breach by it of this Section 4.2.4 would be inadequate, and Seller would be
entitled to injunctive relief in such a case. If it is ever held that the
restrictions placed on Buyer by this Section 4.2.4 are too onerous and are not
necessary for the protection of Seller, the Parties hereto agree that any court
of competent jurisdiction may reduce the duration or scope hereof, or delete
specific words or phrases, and in its reduced form such provision will then be
enforceable and will be enforced.
4.2.5 FTC Compliance.
--------------
(a) Buyer shall submit to the trustee to be appointed pursuant to the
Consent Order (including any successor thereto, the "Trustee"), periodic
-------
verified written reports setting forth in detail the efforts of Buyer to sell in
the United States PBH's Opaque Lens Products supplied by PBH and to obtain all
FDA approvals necessary to manufacture or have manufactured on its behalf PBH's
Opaque Lens Products for sale in the United States. Such reports shall be
submitted 60 days after the date this Agreement is approved by the FTC and every
90 days thereafter until all necessary FDA approvals are obtained by the Buyer
to manufacture PBH's Opaque Contact Lenses for sale in the United States. In
addition, the Buyer shall report to the FTC and the Trustee at least thirty (30)
days prior to its ceasing the manufacture or sale of PBH's Opaque Lens Products
in the United States for any time period exceeding sixty (60) days or abandoning
its efforts to obtain all necessary FDA approvals to manufacture on its own
PBH's Opaque Lens Products for sale in the United States.
(b) In furtherance of the terms and conditions of the Consent Order
(i) with respect to the Trustee's powers, duties, authorities and
responsibilities, the Buyer shall cooperate with and permit the Trustee to
monitor Buyer's compliance under this Agreement, the License Agreements and the
Supply Agreement and (ii) the Buyer shall cooperate with each of the FTC and the
Trustee in order to fully achieve the purposes thereof (including, without
limitation, entering into a trust agreement with the trustee, if the trustee or
the FTC so requests).
(c) As soon as reasonably practicable after the date hereof, Buyer
will use its best efforts to submit to the FTC, along with its application to be
the approved divestiture candidate pursuant to the Consent Order, (i) a
certification attesting to Buyer's good faith intention and including an actual
plan by Buyer to obtain in an expeditious manner all necessary FDA approvals to
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manufacture or have manufactured PBH's Opaque Lens Products for sale in the
United States and (ii) any other documents or other information requested of
Buyer by the FTC in order to obtain the approvals referred to in Section 5.1.1
hereof.
4.3 MUTUAL COVENANTS OF THE PARTIES.
-------------------------------
4.3.1 Confidentiality.
---------------
(a) Each of the Parties hereto, on behalf of itself and its
Affiliates, agrees to refrain from using in any manner and to keep confidential
in the same manner as it protects the confidentiality of similar information and
data of its own, any and all confidential information and confidential data
which it has received as a result of this Agreement (whether prior to, on or
after the Closing Date) or any investigation made in connection herewith, except
to the extent that such Party can demonstrate that the information and/or data
(i) was already known to it or in its possession on a non-confidential basis on
the date of receipt, (ii) is subsequently disclosed to it on a non-confidential
basis by a third party which does not have an obligation of confidentiality with
the non-disclosing Party with respect to such information or (iii) is otherwise
publicly available on a nonconfidential basis. Notwithstanding the foregoing,
each of the Parties and their respective Affiliates shall be free (A) to
disclose any such information or data to the extent (i) required by law, (ii)
required by a Governmental Authority in a duly authorized investigation or (iii)
during the course of a proceeding or other legally required filing (including,
without limitation, with respect to taxes or regulatory compliance) and (B) to
use all information and data in their possession on the Closing Date hereof (and
not received from the other Party) and all information and data developed by
them during the term of this Agreement following any termination of this
Agreement. Prior to any disclosure by either Party pursuant to the preceding
sentence, the Party proposing such disclosure shall be required to give the non-
disclosing Party reasonable prior notice of such intended disclosure and, if
requested by the non-disclosing Party, use reasonable best efforts to assist the
non-disclosing Party's efforts to obtain a protective order or similar
protection.
(b) If this Agreement is terminated for any reason whatsoever, Buyer
will return (or, if requested by Seller, destroy) to the Seller all tangible
embodiments (and all copies) of all confidential information and data which are
in Buyer's possession and Buyer will not, nor will it permit any of its
employees, agents or representatives to, use or disclose to any third party any
such confidential information or data (except to the extent such information
becomes publicly available through no fault of Buyer,
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its affiliates or representatives or disclosure thereof is required by law).
(c) In addition, neither Buyer nor Seller shall disclose the
existence or terms of this Agreement to any Person without prior written consent
of the other Party, except that each of the Parties and their respective
Affiliates shall be free to disclose any such information or data to the extent
(i) required by law, (ii) required by a Governmental Authority in a duly
authorized investigation or (iii) that during the course of a proceeding or
other legally required filing (including, without limitation, with respect to
taxes or regulatory compliance). Notwithstanding the foregoing, Seller shall be
permitted (subject to a customary confidentiality agreement) to disclose the
existence and terms of this Agreement to a prospective purchaser of all or any
part of Seller's or its Affiliates' contact lens business to which this
Agreement relates. Buyer may disclose (subject to a customary confidentiality
agreement to be supplied to Buyer by Seller) the existence and terms of this
Agreement to a third party only in the course of negotiations for the potential
sale or transfer of Buyer's contact lens business which would be permitted under
Section 7.15 hereof.
4.3.2 Further Assurances. Following the Closing, the Parties shall,
------------------
and shall cause their Affiliates to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by any other
Party, to confirm and assure the rights and obligations provided for in this
Agreement and render effective the consummation of the transactions contemplated
hereby.
4.3.3 FDA Reporting. So long as Buyer is selling Supplied Product,
-------------
each Party agrees to notify the other Party within forty-eight (48) hours of
learning of an MDR reportable event (as defined in the FDA Medical Device
Reporting regulation) relating to the Supplied Product or the failure of any
Supplied Product to meet standards found in said Supplied Product's PMA ("PMA
---
Standards"), unless earlier notification is required pursuant to Applicable Law,
- ---------
including applicable FDA regulations.
4.3.4 Compliance with Consent Order. Subject to the terms of the
Supply Agreement and the License Agreements, after the Closing Date, each of
Buyer and Seller shall make all reasonable efforts to comply with the terms and
provisions of the Consent Order.
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ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligations of the
---------------------------------------
Parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
5.1.1 FTC Approval. (i) The Parties shall have received the final
------------
approval and consent of the FTC to Buyer as an independent competitor in the
research, development, manufacture, distribution and sale of Opaque Contact
Lenses; and (ii) the Parties shall have received the final approval and consent
of the FTC to the terms and conditions of this Agreement, the License Agreements
and the Supply Agreement.
5.1.2 No Injunction, etc. Consummation of the transactions
------------------
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any order, injunction, decree or judgment of any court or other
Governmental Authority.
5.1.3 No Litigation. No suit, action, investigation, inquiry or
other proceeding by any Person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby or
which would materially and adversely affect the operation by Buyer of PBH's
Opaque Lens Business after the Closing Date.
ARTICLE VI
TERMINATION
6.1 ABILITY TO TERMINATE PRIOR TO CLOSING. (a) The Parties may
-------------------------------------
terminate this Agreement as follows:
(i) the Buyer and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing; or
(ii) either the Seller or Buyer may terminate this Agreement by giving
written notice to the other if the Closing shall not have occurred on or prior
to March 17, 1997, by reason of the failure of any condition precedent under
Section 5.1. Notwithstanding the foregoing, neither Party may terminate this
Agreement pursuant to Section 6.1(ii) if such Party is in material default
hereunder, or if a delay in any decision or determination by the FTC with
respect to the approvals contemplated by Section
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5.1.1 has been caused or materially contributed to by such Party's action or
inaction.
6.2 ABILITY TO TERMINATE POST-CLOSING. The FTC may require Buyer to
---------------------------------
divest of PBH's Opaque Lens Business upon the occurrence of any of the
following:
(i) if the Buyer ceases for sixty (60) days or more the sale of PBH's
Opaque Lens Products in the United States prior to obtaining all necessary FDA
approvals to manufacture on its own PBH's Opaque Lens Products for sale in the
United States;
(ii) if the Buyer abandons its efforts to obtain all necessary FDA
approvals to manufacture on its own PBH's Opaque Lens Products for sale in the
United States; or
(iii) if the Buyer fails to obtain all necessary FDA approvals to
manufacture on its own PBH's Opaque Lens Products for sale in the United States
within eighteen (18) months from the date the FTC approves this Agreement with
the Buyer; provided that the aforementioned eighteen (18) month period may be
extended for a period not to exceed twenty-four (24) months (computed as from
the date the FTC approves this Agreement with the Buyer) if the FTC determines
that the Buyer has made good faith efforts to obtain all necessary FDA approvals
for manufacturing PBH's Opaque Contact Lens Products for sale in the United
States and that such FDA approvals appear likely to be obtained within the
extended time period.
Upon the occurrence of any such divestiture required by the FTC, Buyer
shall seek a New Acquirer (as such term is defined in the Consent Order) and the
proceeds and liabilities of such divestiture shall be for Buyer's account.
6.3 EFFECT OF PRE-CLOSING TERMINATION. If this Agreement is
---------------------------------
terminated pursuant to Section 6.1, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to the other Party;
provided that the provisions contained in Sections 4.2.4, 4.3.1 and 7.4 hereof
shall survive such termination.
ARTICLE VII
MISCELLANEOUS
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------------------
warranties made by Buyer and Seller in this Agreement shall survive the Closing
Date until the first
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<PAGE>
anniversary of this Agreement; provided that Seller's representation and
warranty as to title to the purchased assets shall survive until the expiration
of the relevant statute of limitations applicable to such representation and
warranty; provided further that neither Buyer nor Seller will be liable for any
breach of any of the representations or warranties contained in this Agreement
unless written notice of a possible claim for indemnification with respect to
such breach is given by either Party to the other on or before the first
anniversary of the date of this Agreement; provided further that neither Buyer
nor Seller will have any liability for any breach of any representation or
warranty contained in this Agreement until Buyer or Seller, as the case may be,
and their respective Affiliates, have suffered Losses by reason of all such
breaches (or alleged breaches) in excess of $100,000, and then only to the
extent that such Losses exceed such amount. Notwithstanding any provision to the
contrary contained herein, in no event will Seller or Buyer be liable for any
Losses of the other Party or its Affiliates in excess of $7,500,000.
7.2 INDEMNIFICATION.
---------------
7.2.1 Indemnification of the Seller. Subject to the limitations set
-----------------------------
forth in this Section 7.1, 7.2 and 7.3, Buyer shall indemnify and hold harmless
Seller and its Affiliates and their respective directors, shareholders,
officers, employees, agents, consultants, representatives, successors and
permitted assigns (collectively, "Seller Indemnified Parties") from and against
any and all Losses caused by, arising out of, or resulting from (i) Buyer's
failure to perform any of its covenants, obligations or agreements hereunder,
including, without limitation, any failure to pay and discharge the Assumed
Liabilities and (ii) Buyer's ownership, use or operation of PBH's Opaque Lens
Business on or after the Closing Date.
7.2.2 Indemnification of the Buyer. Subject to the limitations set
----------------------------
forth in Sections 7.1, 7.2 and 7.3, Seller shall indemnify and hold harmless
Buyer and its Affiliates and their respective directors, shareholders, officers,
employees, agents, consultants, representatives, successors and permitted
assigns (collectively, "Buyer Indemnified Parties") from and against any and all
Losses caused by, arising out of, or resulting from (i) Seller's failure to
perform any of its covenants, obligations or agreements hereunder, including
without limitation any failure to pay and discharge the Retained Liabilities and
(ii) the Seller's ownership, use or operation of PBH's Opaque Lens Business
prior to the Closing Date.
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<PAGE>
7.2.3 Notice of Claims.
----------------
(a) Any Buyer Indemnified Party or Seller Indemnified Party (the
"Indemnified Party") seeking indemnification hereunder shall, within the
relevant limitation period provided for in Section 7.1 above, give to the party
obligated to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice (a "Claim Notice") describing in reasonable detail the
facts giving rise to any claims for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any agreement, document or instrument executed pursuant hereto or in connection
herewith upon which such claim is based; provided, that a Claim Notice in
respect of any action at law or suit in equity by or against a third Person as
to which indemnification will be sought shall be given promptly after the action
or suit is commenced; and provided further, that failure to give such notice
shall not relieve the Indemnitor of its obligations hereunder except to the
extent that Indemnitor shall have been prejudiced by such failure.
(b) The Indemnitor shall have thirty (30) days after the giving of
any Claim Notice pursuant hereto to (i) agree to the amount or method of
determination set forth in the Claim Notice and to pay such amount to such
Indemnified Party in immediately available funds or (ii) to provide such
Indemnified Party with notice that it disagrees with the amount or method of
determination set forth in the Claim Notice (the "Dispute Notice"). Within
thirty (30) days after the giving of the Dispute Notice, a representative of
Indemnitor and such Indemnified Party shall negotiate in a bona fide attempt to
resolve the matter. In the event that the controversy is not resolved within
sixty (60) days of the giving of the Dispute Notice, the parties shall proceed
to binding arbitration administered by the American Arbitration Association in
accordance with such association's rules and procedures.
7.2.4 Third Person Claims. If a claim by a third Person is made
-------------------
against an Indemnified Party, and if such Party intends to seek indemnity with
respect thereto under this Article VII (subject to the limitations contained
herein), such Indemnified Party shall promptly notify the Indemnitor in writing
of such claims, setting forth such claims in reasonable detail. The Indemnitor
shall have thirty (30) days after receipt of such notice to commence to
undertake, conduct and control, through counsel of its own choosing and at its
own expense, the settlement or defense thereof, and the Indemnified Party shall
cooperate with it in connection therewith; provided that the Indemnified Party
may participate in such settlement or defense through counsel chosen by
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<PAGE>
such Indemnified Party and paid at its own expense. So long as the Indemnitor is
reasonably contesting any such claim in good faith, the Indemnified Party shall
not pay or settle any such claim without the consent of the Indemnitor. If the
Indemnitor does not notify the Indemnified Party within thirty (30) days after
receipt of the Indemnified Party's notice of a claim of indemnity hereunder that
it elects to undertake the defense thereof, the Indemnified Party shall have the
right to contest, settle or compromise the claim but shall not thereby waive any
right to indemnity therefore pursuant to this Agreement. The Indemnitor shall
not, except with the consent of the Indemnified Party, enter into any settlement
that does not include as an unconditional term thereof the giving by the person
or persons asserting such claim to all Indemnified Parties (i.e. the Seller
Indemnified Parties or the Buyer Indemnified Parties, as the case may be) of an
unconditional release from all liability with respect to such claim or consent
to entry of any judgment.
7.3 LIMITATIONS ON DAMAGES.
----------------------
7.3.1 Waiver of Non-Compensatory Damages. No Party shall be entitled
----------------------------------
to recover from the other Party for any Losses under this Agreement any amount
in excess of the actual compensatory damages, court costs and reasonable
attorney fees suffered by such Party; and the Buyer and the Seller waive any
right to recover consequential damages arising in connection with or with
respect to Losses under this Agreement.
7.3.2 Mitigation Obligation. Each Person entitled to recover any
---------------------
Losses pursuant to this Agreement shall take all reasonable steps to mitigate
all Losses after becoming aware of any event which could reasonably be expected
to give rise to any Losses that are recoverable hereunder or in connection
herewith.
7.3.3 Post-Closing Actions. Notwithstanding anything in this
--------------------
Agreement to the contrary, the Seller shall not be responsible for any liability
or obligation resulting from the failure of the Buyer to comply with Applicable
Law or the rights of third parties after the Closing even if PBH's Opaque Lens
Business is operated after the Closing in the same manner in which PBH's Opaque
Lens Business was operated prior to Closing.
7.4 EXPENSES.
--------
(a) Generally. Except as otherwise provided herein, the Seller, on
---------
the one hand, and the Buyer, on the other hand, shall bear their respective
expenses, costs and fees (including attorneys' and accountants' fees) in
connection with the
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transactions contemplated hereby, including the preparation, execution and
delivery of this Agreement and compliance herewith, whether or not the
transactions contemplated hereby are consummated.
(b) Transfer Taxes. Buyer and Seller shall bear equally all sales,
--------------
use, value added, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar taxes and fees
("Transfer Taxes"), arising out of or in connection with or attributable to the
--------------
transactions effected pursuant to this Agreement. Seller shall be responsible
for the timely payment to Governmental Authorities of, and shall prepare and
timely file all tax returns required to be filed in respect of, all Transfer
Taxes.
7.5 SPECIFIC PERFORMANCE; NO LIQUIDATED DAMAGES. Because the assets of
-------------------------------------------
PBH's Opaque Lens Business are unique, the Parties agree that money damages
would not be an adequate remedy for any breach on the part of either Party to
this Agreement which could result in a failure of the transactions contemplated
herein to close. Therefore, in the event of a breach or threatened breach of
this Agreement which could result in a failure of the transactions contemplated
hereby to close, either Party may, in addition to other rights or remedies
existing in their favor, apply to any court of competent jurisdiction for
specific performance and/or other injunctive relief to enforce the provisions
herein (without posting a bond or other security). SELLER'S RIGHT TO RETAIN THE
$1,000,000 DEPOSIT DESCRIBED IN SECTION 2.1(a) ABOVE SHALL NOT BE CONSTRUED AS
LIQUIDATED DAMAGES OR IN ANY WAY LIMIT THE SELLER'S RIGHT TO SEEK MONETARY
DAMAGES AND/OR SPECIFIC PERFORMANCE OF THE TERMS OF THIS AGREEMENT.
7.6 SEVERABILITY. If any covenant, agreement, provision or term of this
------------
Agreement is held to be invalid for any reason whatsoever, then such covenant,
agreement, provision or term will be deemed severable from the remaining
covenants, agreements, provisions and terms of this Agreement and will in no way
affect the validity or enforceability of any other provision of this Agreement.
7.7 NOTICES. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (i) delivered
personally, (ii) mailed by registered or certified mail, return receipt
requested, postage prepaid, (iii) sent by reputable overnight courier or (iv)
sent by telecopy (with confirmation of receipt).
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<PAGE>
If to the Seller:
----------------
Wesley-Jessen Corporation
PBH, Inc.
333 East Howard Avenue
Des Plaines, Illinois 60028-5904
Attn: President
Fax No. (847) 294-3058
Confirm No. (847) 294-3000
with a copy, which will
-----------------------
not constitute notice to
------------------------
the Seller, to:
--------------
Sweeney, Lev & Blinkoff
460 Bloomfield Avenue
Montclair, New Jersey 07042
Attn: Gerald B. Sweeney
Fax No. (201) 509-1074
Confirm No. (201) 509-1800
If to the Buyer:
---------------
The Cooper Companies, Inc.
6140 Stoneridge Mall Road, Suite 590
Pleasanton, CA 94588
Attention: Robert S. Weiss/Carol R. Kaufman
Fax No. (510) 460-3662
Confirm. No. (510) 460-3660
and with a copy to:
------------------
CooperVision, Inc.
200 Willowbrook Office Park
Fairport, New York 14450
Attn: John Calcagno, Vice President General Manager
Fax No. (716) 264-3278
Confirm. No. (716) 385-6810
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<PAGE>
with a copy, which will
-----------------------
not constitute notice to
------------------------
the Buyer, to:
-------------
Latham & Watkins
505 Montgomery St.; Suite 1900
San Francisco, CA 94111
Attention: Tracy K. Edmonson
Fax No. (415) 395-8095
Confirm. No. (415) 391-0600
or, in each case, at such other address as may be specified in writing to the
other Parties.
All such notices, requests, demands, waivers and other communications shall be
deemed to have been received (i) if by personal delivery on the date after such
delivery, (ii) if by certified or registered mail, on the seventh business day
after the mailing thereof, (iii) if by overnight courier, on the day delivered,
(iv) if by telecopy, on the day on which such telecopy was sent and the
transmission thereof confirmed.
7.8 HEADINGS. The headings used in this Agreement are for the purpose of
--------
reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
7.9 ENTIRE AGREEMENT. This Agreement (including the Schedules and
----------------
Exhibits hereto) and other agreements and documents contemplated hereby (when
executed and delivered) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the Parties with
respect to the subject matter hereof. The representations and warranties made
by the Seller in this Agreement and the Schedules that accompany this Agreement,
supersede, replace and nullify in every respect the data set forth in any other
document, material or statement, whether written or oral, made available to the
Buyer (the "Other Material") and the Buyer shall not rely on any data contained
--------------
in the Other Material for any purpose whatsoever, including, without limitation,
as a promise, projection, guaranty, representation, warranty or covenant.
7.10 COUNTERPARTS. The Parties may execute this Agreement in separate
------------
counterparts (no one of which need contain the signatures of all Parties), each
of which will be an original and all of which together will constitute one and
the same instrument.
7.11 DISCLOSURE. Any information set forth in any Schedule attached to
----------
this Agreement or incorporated in any Section of this
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Agreement shall be considered to have been set forth in each other Schedule to
this Agreement.
7.12 LIMITATION OF WARRANTIES. THE EXPRESS REPRESENTATIONS OF THE SELLER
------------------------
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF, AND THE SELLER
EXPRESSLY DISCLAIMS AND NEGATES AND THE BUYER HEREBY WAIVES, ANY REPRESENTATION
OR WARRANTY WITH RESPECT TO THE QUALITY, QUANTITY OR CONDITION OF THE ASSETS
COMPRISING PBH'S OPAQUE LENS BUSINESS OR THE OWNERSHIP OR OPERATION OF PBH'S
OPAQUE LENS BUSINESS OR ANY PART THEREOF, EXCEPT AS OTHERWISE SET FORTH HEREIN.
THE SELLER DOES NOT MAKE OR PROVIDE, AND THE BUYER HEREBY WAIVES, ANY WARRANTY
OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE QUALITY, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, CONFORMITY TO SAMPLES, OR CONDITION OF ANY OF
THE ASSETS COMPRISING PBH'S OPAQUE LENS BUSINESS OR ANY PART THERETO, EXCEPT AS
OTHERWISE SET FORTH HEREIN. THE SELLER DISCLAIMS AND NEGATES, AND THE BUYER
HEREBY WAIVES, ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED OR
STATUTORY. THE ITEMS OF PERSONAL PROPERTY, EQUIPMENT, IMPROVEMENTS, FIXTURES
AND APPURTENANCES CONVEYED AS PART OF THE ASSETS COMPRISING PBH'S OPAQUE LENS
BUSINESS ARE SOLD, AND THE BUYER ACCEPTS SUCH ITEMS "AS IS, WITH ALL FAULTS",
EXCEPT AS OTHERWISE SET FORTH HEREIN. THERE ARE NO WARRANTIES THAT EXTEND
BEYOND THE FACE OF THIS AGREEMENT.
7.13 GOVERNING LAW, ETC. This Agreement will be governed by and construed
------------------
in accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict provision or rule (whether of the State
of Illinois or any other jurisdiction) that would cause the laws of any
jurisdiction other than the State of Illinois to be applied.
7.14 BINDING EFFECT. This Agreement shall be binding upon and inure to
--------------
the benefit of the Parties and their respective successors and permitted
assigns.
7.15 ASSIGNMENT. Seller may assign its rights and delegate its duties
----------
under this Agreement. Buyer may not convey, assign, dispose or transfer
(whether directly or indirectly, by operation of law, change in control or
otherwise) its rights or delegate its duties under this Agreement without the
prior written consent of the Seller, which consent may be withheld in Seller's
sole discretion; provided that notwithstanding the foregoing, Buyer may assign
its rights or delegate its duties under this Agreement as part of a sale,
transfer or other disposition (whether by asset sale, stock sale, merger,
reorganization or otherwise) of all or any portion of Buyer's contact lens
business. Any conveyance, assignment, disposal or transfer (whether directly or
indirectly, by operation of law, change in control or otherwise) of Buyer's
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<PAGE>
rights or duties under this Agreement to any Person, except as otherwise
specifically permitted in this Section 7.15, shall cause this Agreement to
automatically and immediately terminate upon the occurrence of such event,
except for Buyer's obligations to pay any amounts due and owing or which later
become due and owing pursuant to this Agreement, the License Agreements or the
Supply Agreement.
7.16 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall confer
----------------------------
any rights upon any person or entity other than the Parties and their respective
successors and permitted assigns.
7.17 BULK TRANSFER LAWS. The Buyer acknowledges that the Seller will not
------------------
comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement and,
notwithstanding anything to the contrary set forth herein, the failure to so
comply will not constitute a breach under any representation, warranty or of any
covenant of the Seller contained herein; provided, however, that Seller hereby
agrees to indemnify and hold Buyer and its Affiliates or assigns harmless from
any loss, liability, obligation or cost suffered by Buyer, its Affiliates or
assigns as a result of the failure by Seller to comply with any applicable bulk
sales laws (which indemnification shall not be subject to the indemnification
limitations set forth in Section 7.1 hereof).
7.18 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
---------------------------------------
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party (unless such Party is legally required to do so on the advice of
counsel).
7.19 AMENDMENT, WAIVERS, ETC. No amendment, modification or discharge of
-----------------------
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the Party against whom enforcement of the
amendment, modification, discharge or waiver is sought (or the FTC or the
Trustee, as the case may be, in the case of any provision of this Agreement for
the benefit of the FTC or the Trustee). Any such waiver shall constitute a
waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the Party (or the FTC or the Trustee, as
the case may be, in the case of any provision of this Agreement for the benefit
of the FTC or the Trustee) granting such waiver in any other respect or at any
other time. Neither the waiver by any of the Parties (or the FTC or the
Trustee, as the case may be, in the case of any provision of this Agreement for
the benefit of the FTC or the Trustee) of a breach of or a default under any of
the provisions of this Agreement, nor the failure by any of the Parties (or the
FTC or the
-26-
<PAGE>
Trustee, as the case may be, in the case of any provision of this Agreement for
the benefit of the FTC or the Trustee), on one or more occasions, to enforce any
of the provisions of this Agreement or to exercise any right or privilege
hereunder, shall be construed as a waiver of any other breach or default of a
similar nature, or as a waiver of any of such provisions, rights or privileges
hereunder.
7.20 FORCE MAJEURE. Neither Party shall be responsible for any
-------------
failure to comply with the terms of this Agreement where such failure is due to
force majeure, which shall include, without limitation, fire, flood, explosion,
strike, labor disputes, labor shortages, picketing, lockout, transportation
embargo or failures or delays in transportation, strikes or labor disputes
affecting supplies, acts of God, civil riot or insurrection or acts of any
Governmental Authority.
ARTICLE VII
DEFINITIONS
8.1 DEFINITION OF CERTAIN TERMS. The terms defined in this Section 8.1,
---------------------------
whenever used in this Agreement (including in the Schedules), shall have the
respective meanings indicated below for all purposes of this Agreement:
"Affiliate" of a Person means a Person that directly or indirectly
---------
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first Person. "Control" (including the terms
-------
"controlled by" and "under common control with") means the possession, directly
- -------------- -------------------------
or indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
"Agreement" means this Asset Purchase Agreement, including the
---------
Schedules and Exhibits hereto.
"Applicable Law" means all applicable provisions of all (i)
--------------
constitutions, treaties, statutes, laws, regulations, ordinances or orders of
any Governmental Authority and (ii) Governmental Approvals.
"Governmental Approval" means any consent, approval, authorization,
---------------------
waiver or permit from any Governmental Authority.
-27-
<PAGE>
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Information Relating to Licensing of Patents" means any information
--------------------------------------------
not in the public domain disclosed by the Buyer to Seller relating to the
license of the patents pursuant to the Knapp License Agreement.
"Known" or "Knowledge" means the actual personal knowledge, without
----- ---------
imputation of any other person and without independent investigation, of an
individual employed by a Party for whom a significant portion of his or her
duties relates to matters as to which the applicable representation or warranty
is made hereunder.
"Licensed Territory" means the United States and its territories and
------------------
possessions.
"Lien" means any mortgage, pledge, security interest or encumbrance.
----
"Loss" means any loss, liability, deficiency, damage or expense
----
(including reasonable legal fees and expenses) which either Party may suffer,
sustain or become subject to.
"Material Adverse Effect" means a material adverse effect on the
-----------------------
financial condition and operating results of PBH's Opaque Lens Business.
"Opaque Contact Lenses" means contact lenses containing opaque
---------------------
materials that cover the iris and that are designed to change the apparent color
of the eye.
"PBH's Opaque Lens Products" means Opaque Contact Lenses researched,
--------------------------
developed, manufactured, distributed, and sold by Seller in the United States,
including, but not limited to, those marketed and sold under the brand name
Natural Touch(TM).
"Permitted Liens" means (i) Liens for taxes not yet due and payable or
---------------
which are being contested in good faith and by appropriate proceedings, (ii)
recorded Liens, (iii) liens of carriers, warehousemen, mechanics and materialmen
and incurred in the ordinary course of business, that in the aggregate do not
have a material adverse effect upon the assets comprising PBH's Opaque Lens
Business, or (iv) Liens that, in the aggregate, do not materially detract from
the value of any of the property or assets
-28-
<PAGE>
of PBH's Opaque Lens Business or materially interfere with the use thereof as
currently used or contemplated to be used.
"Person" means an individual, a partnership, a corporation, an
------
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"reasonable efforts" means reasonable efforts which are commercially
------------------
reasonable under the circumstances, excluding the payment of any money or other
consideration to any third party or the commencement of any litigation.
8.2 OTHER DEFINITIONAL PROVISIONS.
-----------------------------
(a) "Hereof," etc. The terms "hereof," "herein" and "hereunder" and
-------------
terms of similar import are references to this Agreement as a whole and not to
any particular provision of this Agreement. Section, clause, Schedule and
Exhibit references contained in this Agreement are references to Sections,
clauses, Schedules and Exhibits in or to this Agreement, unless otherwise
specified.
(b) Successor Laws. Any reference to any particular law or
--------------
regulation will be interpreted to include any revision of or successor to that
section regardless of how it is numbered or classified.
* * * * *
-29-
<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed this Asset Purchase
Agreement as of the date first above written.
WESLEY-JESSEN CORPORATION
By: /s/ Kevin J. Ryan
-------------------------------
Its: President & CEO
-------------------------------
PBH, INC.
By: /s/ Kevin J. Ryan
--------------------------------
Its: President & CEO
-------------------------------
THE COOPER COMPANIES, INC.
By: /s/ Robert Weiss
-------------------------------
Its: EVP - CFO
-------------------------------
-30-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-29-1997
<CASH> 7,362
<SECURITIES> 0
<RECEIVABLES> 58,634
<ALLOWANCES> 18,136<F1>
<INVENTORY> 56,995<F2>
<CURRENT-ASSETS> 139,409
<PP&E> 12,635
<DEPRECIATION> 518
<TOTAL-ASSETS> 169,637
<CURRENT-LIABILITIES> 70,967
<BONDS> 0
0
0
<COMMON> 171
<OTHER-SE> 12,166
<TOTAL-LIABILITY-AND-EQUITY> 169,637
<SALES> 64,071
<TOTAL-REVENUES> 64,071
<CGS> 34,967<F3>
<TOTAL-COSTS> 69,649
<OTHER-EXPENSES> (196)
<LOSS-PROVISION> 1,590
<INTEREST-EXPENSE> 1,860
<INCOME-PRETAX> (8,832)
<INCOME-TAX> 3,003
<INCOME-CONTINUING> (5,829)
<DISCONTINUED> 0
<EXTRAORDINARY> (4,902)
<CHANGES> 0
<NET-INCOME> (10,731)
<EPS-PRIMARY> (0.70)
<EPS-DILUTED> 0
<FN>
<F1> Allowances netted against trade Receivables include both bad debt reserves
and sales return reserves.
<F2> Inventory includes adjustments made in accordance with APB Business 16,
Combinations.
<F3> Cost of goods sold includes the flow through of the previously mentioned
inventory adjustments.
</FN>
</TABLE>
