$25,000,000
SENIOR SECURED, SUPER-PRIORITY
DEBTOR-IN-POSSESSION
LOAN AND SECURITY AGREEMENT
by and among
VISTA EYECARE, INC.
(f/k/a National Vision Associates, Ltd.),
INTERNATIONAL VISION ASSOCIATES, LTD., NVAL HEALTHCARE
SYSTEMS , INC., MIDWEST VISION, INC., FRAME-N-LENS OPTICAL, INC.,
FAMILY VISION CENTERS, INC., VISION ADMINISTRATORS, INC.,
NEW WEST EYEWORKS, INC., ALEXIS HOLDING COMPANY, INC.
VISTA EYECARE NETWORK, LLC, VISTA OPTICAL EXPRESS, INC.,
and
FOOTHILL CAPITAL CORPORATION
Dated as of April 6, 2000
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<TABLE>
TABLE OF CONTENTS
<S> <C> <C> <C>
Page
ATL/689137.6 i
1. DEFINITIONS AND CONSTRUCTION...................................................................2
1.1 Definitions...........................................................................2
1.2 Accounting Terms.....................................................................24
1.3 Code.................................................................................25
1.4 Construction.........................................................................25
1.5 Schedules and Exhibits...............................................................25
2. LOAN AND TERMS OF PAYMENT.....................................................................25
2.1 Revolving Advances...................................................................25
2.2 Letters of Credit....................................................................27
2.3 Term Loan............................................................................29
2.4 [Intentionally Omitted]..............................................................30
2.5 Overadvances.........................................................................30
2.6 Interest and Letter of Credit Fees...................................................30
2.7 Collection of Accounts...............................................................32
2.8 Crediting Payments; Application of Collections.......................................34
2.9 Designated Account...................................................................34
2.10 Maintenance of Loan Account; Statements of Obligations...............................35
2.11 Fees.................................................................................35
2.12 Eurodollar Rate Advances.............................................................36
2.13 Illegality...........................................................................37
2.14 Requirements of Law..................................................................38
2.15 Indemnity............................................................................39
2.16 Super-Priority Nature of Obligations.................................................40
3. CONDITIONS; TERM OF AGREEMENT.................................................................40
3.1 Conditions Precedent to the Initial Advance, Letter of Credit and the Term Loans.....40
3.2 Conditions Precedent to all Advances, all Letters of Credit and the Term Loans.......42
3.3 Condition Subsequent.................................................................43
3.4 Term.................................................................................44
3.5 Effect of Termination................................................................44
3.6 Early Termination by Borrowers.......................................................44
4. CREATION OF SECURITY INTEREST.................................................................45
4.1 Grant of Security Interest...........................................................45
4.2 Negotiable Collateral................................................................45
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral...............45
4.4 Delivery of Additional Documentation Required........................................45
4.5 Power of Attorney....................................................................46
4.6 Right to Inspect.....................................................................46
4.7 Grants, Rights and Remedies..........................................................46
4.8 No Filings Required..................................................................46
4.9 Survival.............................................................................47
5. REPRESENTATIONS AND WARRANTIES................................................................48
5.1 Corporate Existence and Power........................................................48
5.2 Corporate Authorization; No Contravention............................................48
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5.3 Governmental Authorization...........................................................49
5.4 Binding Effect.......................................................................49
5.5 Litigation...........................................................................49
5.6 [Intentionally Omitted]..............................................................49
5.7 ERISA Compliance.....................................................................49
5.8 Use of Proceeds; Margin Regulations..................................................50
5.9 Title to Properties..................................................................50
5.10 Taxes................................................................................50
5.11 Financial Condition..................................................................51
5.12 Environmental Matters................................................................51
5.13 Loan Documents.......................................................................52
5.14 Regulated Entities...................................................................53
5.15 No Burdensome Restrictions...........................................................53
5.16 Copyrights, Patents, Trademarks and Licenses, Etc....................................53
5.17 Subsidiaries.........................................................................53
5.18 Insurance............................................................................53
5.19 Intentionally Omitted................................................................53
5.20 Full Disclosure......................................................................53
5.21 Accounts and Inventory...............................................................54
5.22 Leases...............................................................................54
5.23 Compliance With Laws.................................................................54
5.24 Year 2000 Compatibility..............................................................55
5.25 Material Contracts...................................................................55
5.26 Appointment of Trustee or Examiner; Liquidation......................................55
6. AFFIRMATIVE COVENANTS.........................................................................55
6.1 Financial Statements.................................................................55
6.2 Certificates; Other Information......................................................56
6.3 Notices..............................................................................58
6.4 Preservation of Corporate Existence, Etc.............................................59
6.5 Maintenance of Property..............................................................60
6.6 Insurance............................................................................60
6.7 Payment of Obligations...............................................................62
6.8 Compliance with Laws.................................................................62
6.9 Compliance with ERISA................................................................62
6.10 Inspection of Property and Books and Records.........................................62
6.11 Environmental Laws...................................................................63
6.12 Use of Proceeds......................................................................63
6.13 Further Assurances...................................................................63
6.14 Bank Accounts........................................................................64
6.15 Intentionally Omitted................................................................64
6.16 Covenants Regarding Formation of Subsidiaries........................................64
6.17 Tax Returns..........................................................................64
6.18 Returns..............................................................................64
6.19 Title to Equipment...................................................................64
6.20 Leases...............................................................................64
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7. NEGATIVE COVENANTS............................................................................65
7.1 Limitation on Liens..................................................................65
7.2 Disposition of Assets................................................................67
7.3 Consolidations and Mergers...........................................................67
7.4 Loans and Investments................................................................68
7.5 Limitation on Indebtedness...........................................................68
7.6 Transactions with Affiliates.........................................................69
7.7 Use of Proceeds......................................................................69
7.8 Contingent Obligations...............................................................69
7.9 Joint Ventures.......................................................................70
7.10 Restricted Payments..................................................................70
7.11 ERISA................................................................................70
7.12 Change in Business; Change of Name...................................................70
7.13 Accounting Changes...................................................................71
7.14 Financial Covenants..................................................................71
7.15 Amendments...........................................................................71
7.16 No Other Negative Pledges............................................................71
7.17 Prepayments..........................................................................71
7.18 Real Estate; Store Locations.........................................................71
7.19 Capital Expenditures.................................................................72
7.20 [Intentionally omitted.].............................................................72
7.21 Minimum Availability.................................................................72
8. EVENTS OF DEFAULT.............................................................................72
9. LENDER'S RIGHTS AND REMEDIES..................................................................76
9.1 Rights and Remedies..................................................................76
9.2 Remedies Cumulative..................................................................79
10. TAXES AND EXPENSES............................................................................79
11. WAIVERS; INDEMNIFICATION......................................................................79
11.1 Demand; Protest; etc.................................................................79
11.2 Lender's Liability for Collateral....................................................80
11.3 Indemnification......................................................................80
12. NOTICES.......................................................................................80
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER....................................................81
14. DESTRUCTION OF BORROWERS' DOCUMENTS...........................................................82
15. GENERAL PROVISIONS............................................................................82
15.1 Effectiveness........................................................................82
15.2 Successors and Assigns...............................................................82
15.3 Section Headings.....................................................................83
15.4 Interpretation.......................................................................83
15.5 Severability of Provisions...........................................................83
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15.6 Amendments in Writing................................................................83
15.7 Counterparts; Facsimile Execution....................................................83
15.8 Revival and Reinstatement of Obligations.............................................83
15.9 Integration..........................................................................84
15.10 Time is of the Essence...............................................................84
15.11 Pre-Relief Date Loan Agreement.......................................................84
</TABLE>
SCHEDULES AND EXHIBITS
Schedule B-1...... Business Plan
Schedule E-1...... Eligible Inventory Locations
Schedule S-1...... Senior Claims
Schedule S-2...... Sub-Concentration Accounts
Schedule 5.5...... Litigation
Schedule 5.10..... Taxes
Schedule 5.11..... Financial Condition
Schedule 5.12..... Environmental Matters
Schedule 5.17..... Subsidiaries
Schedule 5.18..... Insurance
Schedule 5.25 .... Material Contracts
Schedule 6.14..... Bank Accounts
Schedule 7.1...... Permitted Liens
Schedule 7.5...... Permitted Indebtedness
Schedule 7.8...... Contingent Obligations
Exhibit A......... Form of Compliance Certificate
Exhibit B......... Form of Credit Card Agreement
Exhibit C......... Form of Wal-Mart Lease
Exhibit D......... Form of Sam's Club Lease
Exhibit E......... Form of Fred Meyer, Inc. Lease
Exhibit F......... Fee Letter
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SENIOR SECURED, SUPER-PRIORITY
DEBTOR-IN-POSSESSION
LOAN AND SECURITY AGREEMENT
THIS SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION LOAN AND SECURITY
AGREEMENT (this "Agreement"), is entered into as of April 6, 2000, between
FOOTHILL CAPITAL CORPORATION, a California corporation, as lender and as agent
for itself and each Person that purchases any portion of Foothill Capital
Corporation's rights and obligations under this Agreement pursuant to Section
15.2 (collectively, "Lender"), with a place of business located at Northpark
Town Center, Building 400, 1000 Abernathy Road, N.E., Suite 1450, Atlanta,
Georgia 30328, and VISTA EYECARE, INC. (f/k/a National Vision Associates, Ltd.),
INTERNATIONAL VISION ASSOCIATES, LTD., NVAL HEALTHCARE SYSTEMS , INC., MIDWEST
VISION, INC., FRAME-N-LENS OPTICAL, INC., FAMILY VISION CENTERS, INC., VISION
ADMINISTRATORS, INC., NEW WEST EYEWORKS, INC., ALEXIS HOLDING COMPANY, INC.,
VISTA EYECARE NETWORK, LLC and VISTA OPTICAL EXPRESS, INC., as debtors and
debtor-in-possessions (each a "Borrower" and collectively, "Borrowers"), each
with its chief executive office located at 296 Grayson Highway, Lawrenceville,
Georgia 30045-5737.
RECITALS
WHEREAS, on April 5, 2000 (the "Relief Date"), each Borrower filed a
petition for relief pursuant to Chapter 11 of the United States Bankruptcy Code
in the United States Bankruptcy Court for the Northern District of Georgia,
Atlanta Division (the "Court"), which cases are being jointly administered under
lead Case No. 00-65214 (the "Case"). Each Borrower continues to operate its
business and manage its properties as a debtor-in-possession pursuant to
Sections 1107 and 1108 of the United States Bankruptcy Code;
WHEREAS, prior to the Relief Date, Lender and certain other lenders
(the "Pre-Petition Lenders") provided financing to Vista Eyecare, Inc. (f/k/a
National Vision Associates, Ltd.) ("Parent") pursuant to that certain Amended
and Restated Credit Agreement dated as of November 12, 1999 (as modified and
amended, the "Pre-Relief Date Loan Agreement");
WHEREAS, Pre-Petition Lenders' commitment to provide ongoing financing
to Parent under the Pre-Relief Date Loan Agreement has been terminated; and
WHEREAS, Borrowers have requested that Lender provide a senior secured,
super-priority revolving credit and term facility up to $25,000,000 to fund the
ongoing working capital requirements of Borrowers. Lender is willing to provide
such financing in the manner and pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
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1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have the
following definitions:
"Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account.
"Accounts" means all currently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to Borrowers arising
out of the sale or lease of goods or the rendition of services by Borrowers,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.
"Acquisition" means, with respect to any Person, any transaction or series
of related transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of any other
Person, or of any business or division of any other Person, (b) the acquisi-tion
of more than fifty percent (50%) of the capital stock, partnership interests,
membership interests or equity of any other Person, or otherwise causing any
other Person to become a Subsidiary of such Person, or (c) a merger or
consolidation or any other combination with any other Person (other than a
Person that is an existing Subsidiary of such Person) provided that such Person
or a Subsidiary of such Person is the surviving entity. The term "Acquisition"
shall not include the formation by any Borrower of a new Subsidiary provided
that its Investment therein does not violate Section 7.4 hereof.
"Adjusted Eurodollar Rate" means, with respect to each Interest Period for
any Eurodollar Rate Advance, the rate per annum (rounded upwards, if necessary,
to the next 1/16%) determined by dividing (a) Eurodollar Rate for such Interest
Period by (b) a percentage equal to (i) one hundred percent (100%) minus (ii)
the Reserve Percentage. The Adjusted Eurodollar Rate shall be adjusted on and as
of the effective day of any change in the Reserve Percentage.
"Adjustment Date" has the meaning set forth in Section 2.3(a).
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who directly
or indirectly controls, is controlled by, is under common control with or is a
director or officer of such Person. For purposes of this definition, "control"
means the possession, directly or indirectly, of the power to vote five percent
(5%) or more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a Person.
"Agreement" has the meaning set forth in the preamble hereto.
"Assignment of Notes" means that certain Assignment of Notes dated the date
hereof by and among Parent and Lender, in form and substance satisfactory to
Lender.
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"Authorized Person" means any officer or other employee of Parent.
"Availability" means, as of the date of determination, the result (so long
as such result is a positive number) of (a) the lesser of the Borrowing Base or
the Maximum Revolving Amount, less (b) the Revolving Facility Usage.
"Average Unused Portion of Maximum Revolving Amount" means, as of any date
of determination, (a) the lesser of the Borrowing Base or the Maximum Revolving
Amount, less (b) the sum of (i) the average Daily Balance of Advances that were
outstanding during the immediately preceding month, plus (ii) the average Daily
Balance of the undrawn Letters of Credit that were outstanding during the
immediately preceding month.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C. ' 101
et seq.), as amended, and any successor statute.
"Blocked Account Agreements" means those certain Blocked Account
Agreements, in form and substance reasonably satisfactory to Lender, each of
which is among Parent, Lender and a bank at which a Retail Store Account is
located.
"Borrower" has the meaning set forth in the preamble to this Agreement.
"Borrower Representative" shall mean Parent in its capacity as Borrower
Representative pursuant to the provisions of Section 2.9.
"Books and Records" means all books and records of Borrowers and each of
their Subsidiaries, including: ledgers; records indicating, summarizing, or
evidencing Borrowers' or such Subsidiary's properties or assets (including the
Collateral) or liabilities; all information relating to Borrowers' or such
Subsidiary's business operations or financial condition; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared
information.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Business Day" means any day that is not a Saturday, Sunday, or other day
on which national banks located in Atlanta, Georgia, New York, New York or Los
Angeles, California are authorized or required to close.
"Business Plan" means the Borrowers' business plan relative to Borrowers'
operations in the Chapter 11 Case, as presented to and accepted by Lender,
attached as Schedule B-1 hereto.
"Capitalized Lease Obligations" shall mean, with respect to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP, and for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date as determined in accordance with GAAP.
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"Carve-Out Amount" has the meaning set forth in Section 2.16.
"Carve-Out Expenses" has the meaning set forth in Section 2.16.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
"Change of Control" means (a) any "person" or "group" (within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than thirty-five percent (35%) of the total voting power of
all classes of stock then outstanding of any Borrower entitled to vote in the
election of directors or (b) during any period of twenty-four (24) consecutive
months, individuals who at the beginning of such period constituted the Board of
Directors of Borrower (together with any new directors whose election by such
Board or whose nomination for election by the stockholders of such Borrower was
approved by a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of such Board of Directors then in office.
"Chapter 11 Case" means collectively the voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code filed by each Borrower in the Court on
the Relief Date and administered as Chapter 11 Case Nos. 00-65214 - 00-65224.
"Closing Date" means the date of the first to occur of the making of the
initial Advance or the issuance of the initial Letter of Credit under this
Agreement.
"Code" means the Uniform Commercial Code, as in effect in the State of
Georgia from time to time.
"Collateral" means all of the real and personal property of each Borrower,
whether now existing or hereafter acquired, including without limitation, each
of the following:
(a) the Accounts,
(b) Borrowers' Books and Records,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) the Equity Interests,
(g) the Negotiable Collateral,
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(h) the Real Property Collateral,
(i) any money, or other assets of Borrowers that now or hereafter come
into the possession, custody, or control of Lender, and
(j) the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of
the Collateral, and any and all Accounts, Borrowers' Books and Records,
Equipment, General Intangibles, Inventory, Equity Interests, Negotiable
Collateral, Real Property, money, deposit accounts, or other tangible or
intangible property resulting from the sale, exchange, collection, or other
disposition of any of the foregoing, or any portion thereof or interest
therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, mortgagee waiver,
bailee letter, or acknowledgment agreement of any warehouseman, processor,
lessor, consignee, or other Person in possession of, having a Lien upon, or
having rights or interests in the Equipment or Inventory, in each case, in form
and substance satisfactory to Lender.
"Collections" means all cash, checks, notes, instruments, and other items
of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Committee" means the official committee of unsecured
creditors formed, appointed or approved by the United States Trustee in the
Chapter 11 Case.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit A and delivered by the chief accounting officer of Parent to Lender.
"Concentration Accounts" means, collectively, the Sub-Concentration
Accounts and the Master Concentration Account, and each such Concentration
Account shall be referred to herein as a "Concentration Account".
"Concentration Account Agreement" means a Blocked Account Agreement among
Parent, the Concentration Account Bank and Lender, in form and substance
satisfactory to Lender, applicable to one or more of the Concentration Accounts.
"Concentration Account Bank" means First Union, or such other Person or
Persons as Lender and Parent may designate from time to time.
"Contingent Obligation" means, with respect to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of any
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such primary obligation, or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument (other than any Letter of Credit) issued for
the account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings or payments; or (c) to purchase any materials,
supplies or other property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation requires that
payment for such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever performed or
tendered.
"Contractual Obligation" means, with respect to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its property
is bound.
"Cost" means, with respect to any Eligible Inventory of each Borrower, the
lower of cost or market value of such Eligible Inventory as determined on a
basis consistent with each Borrower's current and historical accounting
practices.
"Court" has the meaning set forth in the first recital paragraph hereto.
"Credit Card Agreement" means each letter agreement between Parent and a
credit card processor, substantially in the form of Exhibit B.
"Daily Balance" means the amount of an Obligation owed at the end of a
given day.
"Default" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
"Deficiency" has the meaning set forth in Section 7.16.
"Designated Account" means account number 2090003164485 of Parent
maintained with Parent's Designated Account Bank, or such other deposit account
of Parent (located within the United States) which has been designated, in
writing and from time to time, by Parent to Lender.
"Designated Account Bank" means First Union, whose office is located at
Charlotte, North Carolina, and whose ABA number is 061000227 or such other bank
as may be determined by Lender and Parent from time to time.
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"Dilution" means, in each case based upon the experience of the immediately
prior three (3) month, the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, advertising, returns, promotions, credits, or other
dilution with respect to the Accounts during such period, by (b) Collections
(excluding extraordinary items) of Borrowers plus the Dollar amount of clause
(a).
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce Lender's advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
five percent (5%).
"Disbursement Letter" means an instructional letter executed and delivered
by Parent to Lender regarding the extensions of credit to be made on the Closing
Date, the form and substance of which shall be satisfactory to Lender.
"Disposition" means (i) the sale, lease, conveyance or other disposition of
property (other than sales or other dispositions expressly permitted under
Section 7.2(a) or Section 7.2(b), operating leases or subleases entered into in
the ordinary course of business or Investments permitted under Section 7.4 or
Liens permitted under Section 7.1), and (ii) the sale or transfer to any Person
(other than Borrowers) by Borrowers or any Subsidiary of Borrowers of any equity
securities issued by any Subsidiary of Borrowers and held by such transferor
Person.
"Dollars or $" means United States dollars.
"Early Termination Premium" has the meaning set forth in Section 3.6.
"EBITDA" means, with respect to Borrowers on a consolidated basis with its
Subsidiaries for any period, the Net Income of Borrowers for such period, (a)
plus, without duplication and to the extent deducted in computing Net Income for
such period, the sum of (i) income taxes, (ii) Interest Expense, (iii)
depreciation and amortization expense, (iv) restructuring charges, including
professional fees, store closing expenses and employee retention payments, (v)
non-cash charges associated with the cumulative effect of changes in accounting
principles, (vi) extraordinary losses to the extent included in the Borrowers'
fiscal year 1999 financial statements, and (vii) other non-cash charges
reasonably acceptable to Lender, (b) minus, to the extent included in Net Income
for such period, extraordinary gains; provided, however, that the EBITDA with
respect to any Person or substantially all of the assets of a Person that became
a Subsidiary of, or was merged with or consolidated into, Borrowers or any
Subsidiary of Borrowers during such period shall include the EBITDA of such
Person or the EBITDA attributable to such assets for such period.
"Eligible Accounts" means those Accounts created by Borrowers in the
ordinary course of business, that arise out of Borrowers' sale of goods or
rendition of services, that strictly comply with each and all of the
representations and warranties respecting Accounts made by Borrowers to Lender
in the Loan Documents, and that are and at all times continue to be acceptable
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to Lender in its reasonable credit judgment in all respects; provided, however,
that standards of eligibility may be fixed and revised from time to time by
Lender in Lender's reasonable credit judgment. Eligible Accounts shall not
include the following:
(a) Accounts that the Account Debtor has failed to pay within ninety
(90) days of invoice date or one hundred twenty (120) days of date of
service;
(b) retail customer Accounts;
(c) Accounts owed by an Account Debtor or its Affiliates where fifty
percent (50%) or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above;
(d) Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of any Borrower or any Subsidiary of any Borrower;
(e) Accounts with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, bill and hold, or other
terms by reason of which the payment by the Account Debtor may be
conditional;
(f) Accounts that are not payable in Dollars or with respect to which
the Account Debtor: (i) does not maintain its chief executive office in the
United States, or (ii) is not organized under the laws of the United States
or any State thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Lender (as to
form, substance, and issuer or domestic confirming bank) that has been
delivered to Lender and is directly drawable by Lender, or (z) the Account
is covered by credit insurance in form and amount, and by an insurer,
satisfactory to Lender;
(g) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which any
Borrower has complied, to the satisfaction of Lender, with the Assignment
of Claims Act, 31 U.S.C. ' 3727), or (ii) any State of the United States
(exclusive, however, of Accounts owed by any State that does not have a
statutory counterpart to the Assignment of Claims Act);
(h) Accounts with respect to which the Account Debtor is a creditor of
any Borrower or any Subsidiary of any Borrower, has or has asserted a right
of setoff, has disputed its liability, or has made any claim with respect
to the Account (but only to the extent of such setoff, dispute or claim);
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(i) Accounts with respect to an Account Debtor whose total obligations
owing to any Borrower, taken as a whole, exceed ten percent (10%) of all
Eligible Accounts, to the extent of the obligations owing by such Account
Debtor in excess of such percentage;
(j) Accounts with respect to which the Account Debtor is subject to
any Insolvency Proceeding, or becomes insolvent, or goes out of business;
(k) Accounts the collection of which Lender, in its reasonable credit
judgment, believes to be doubtful by reason of the Account Debtor's
financial condition;
(l) Accounts with respect to which the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, the
services giving rise to such Account have not been performed and accepted
by the Account Debtor, or the Account otherwise does not represent a final
sale;
(m) Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota or West Virginia (or any other state
that requires a creditor to file a Business Activity Report or similar
document in order to bring suit or otherwise enforce its remedies against
such Account Debtor in the courts or through any judicial process of such
state), unless such Borrower has qualified to do business in New Jersey,
Minnesota, West Virginia, or such other states, or has filed a Notice of
Business Activities Report with the applicable division of taxation, the
department of revenue, or with such other state offices, as appropriate,
for the then-current year, or is exempt from such filing requirement;
(n) Accounts that represent progress payments or other advance
billings that are due prior to the completion of performance by any
Borrower of the subject contract for goods or services;
(o) Accounts arising other than from the sale of goods or rendition of
services in the ordinary course of any Borrower's business;
(p) Accounts representing lease payments due from doctors or
optometrists;
(q) Accounts with respect to which Lender does not have a valid and
perfected first priority security interest; and
(r) to the extent determined appropriate by Lender in its reasonable
credit judgment, Accounts subject to collection by an outside claims
processor where such Account has not yet been billed by such processor, and
credit card Accounts.
"Eligible Inventory" means Inventory owned by Borrowers consisting of first
quality finished goods (including eyeglass frames, eyeglass lenses, contact
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lenses, sunglasses and related accessories) held for sale in the ordinary course
of Borrowers' business and raw materials for such finished goods, that are
located at or in-transit between Borrowers' premises identified on Schedule E-1
(as supplemented from time to time upon at least ten (10) days' prior written
notice to Lender), that strictly comply with each and all of the representations
and warranties respecting Inventory made by such Borrower to Lender in the Loan
Documents, and that are and at all times continue to be acceptable to Lender in
its reasonable credit judgment in all respects; provided, however, that
standards of eligibility may be fixed and revised from time to time by Lender in
Lender's reasonable credit judgment. An item of Inventory shall not be included
in Eligible Inventory if:
(a) it is not owned solely by a Borrower, or a Borrower does not have
good, valid, and marketable title thereto;
(b) it is not located in the United States at one of the locations set
forth on Schedule E-1 (as supplemented from time to time upon at least ten
(10) days' prior written notice to Lender);
(c) it is Inventory located within a Sam's Club, a Meijers store or
another leased department within a retail store (i.e., not a
"free-standing" store) which is not subject to a Collateral Access
Agreement in form and substance satisfactory to Lender;
(d) it is not subject to a valid and perfected first priority security
interest in favor of Lender;
(e) it consists of goods returned or rejected by customers of a
Borrower, or goods in transit;
(f) it is used, obsolete or slow moving, a restrictive or custom item,
work-in-process, packaging and shipping materials, supplies used or
consumed in a Borrower's business, Inventory subject to a Lien in favor of
any third Person, bill and hold goods, defective goods, "seconds," or
Inventory acquired on consignment;
(g) it is located on property within a United States military base or
on property leased by a Borrower from the United States government;
(h) to the extent determined appropriate by Lender in its reasonable
credit judgment, (i) it is Inventory classified by a Borrower on its
general ledger, prepared in a manner consistent with a Borrower's general
ledgers disclosed to Lender prior to the Closing Date, as either "close
out" or "discontinued" Inventory and which "close out" or "discontinued"
Inventory has been owned by a Borrower for an aggregate of more than six
(6) months after being so classified, (ii) it is Inventory constituting
non-retail supplies, or (iii) it is not located on property owned or leased
by a Borrower or in a contract warehouse, in each case, subject to a
Collateral Access Agreement executed by the mortgagee, lessor, the
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warehouseman, or other third party, as the case may be, and segregated or
otherwise separately identifiable from goods of others, if any, stored on
the premises; or
(i) it is Inventory bearing a servicemark, trademark or name of any
Person other than a Borrower, unless it is Inventory which is sold to a
Borrower in the ordinary course of a Borrower's business for distribution
and is not subject to any licensing, patent, royalty, trademark, trade name
or copyright agreement between a Borrower and any other Person which
prohibits or restricts Lender's sale or other disposition of such Inventory
pursuant to Loan Documents.
"Entry Date" means the date upon which the Interim Order is entered on the
docket of the Chapter 11 Case.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental, placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by any Borrower or any Subsidiary.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters; including
CERCLA, the Clean Air Act, the Federal Water Pollution Control Act of 1972, the
Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act,
the Toxic Substances Control Act, the Emergency Planning and Community
Right-to-Know Act, the California Hazardous Waste Control Law, the California
Solid Waste Management, Resource, Recovery and Recycling Act, the California
Water Code and the California Health and Safety Code.
"Environmental Permits" has the meaning set forth in Section 5.12(b).
"Equipment" means all present and hereafter acquired machinery, machine
tools, motors, equipment, furniture, furnishings, fixtures, vehicles (including
motor vehicles and trailers), tools, parts and goods (other than consumer goods,
farm products, or Inventory), of any Borrower, wherever located, including, (a)
any interest of Borrower in any of the foregoing and (b) all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
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"Equity Interests" means all equity interests of the Borrowers and any
Subsidiary or other Person (other than the Parent), including without limitation
the Investment Property and any partnership interests, limited partnership
interests, limited liability company membership interests and similar interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with a Borrower within the meaning of Section 414(b) or (c)
of the IRC (and Sections 414(m) and (o) of the IRC for purposes of provisions
relating to Section 412 of the IRC).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by a Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by a Borrower or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon a Borrower or
any ERISA Affiliate.
"Eurodollar Rate" means, with respect to the Interest Period for a
Eurodollar Rate Advance, the interest rate per annum at which United States
dollar deposits are offered to Wells Fargo Bank, National Association, by major
banks in the London interbank market (or other Eurodollar Rate market selected
by Lender) on or about 11:00 a.m. (Eastern time) two (2) Business Days prior to
the commencement of such Interest Period in amounts comparable to the amount of
the Eurodollar Rate Advances requested by and available to Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrowers.
"Eurodollar Rate Advances" means any Advance (or any portion thereof) made
or outstanding hereunder during any period when interest on such Advance (or
portion thereof) is payable based on the Adjusted Eurodollar Rate.
"Event of Default" has the meaning set forth in Article 8.
"Excess Availability" means, as of any date of determination, the result
(so long as such result is a positive number) of (a) Availability, less (b) the
accounts payable of each Borrower over sixty (60) days past due.
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"Exchange Act" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.
"Fee Letter" means that certain commitment letter dated as of March 31,
2000, setting forth the applicable fees for Lender relating to this Agreement
and the Loans, a copy of which is attached hereto Exhibit F.
"FEIN" means Federal Employer Identification Number.
"Final Order" means the order of the Court entered in the Chapter 11 Case
after a final hearing under Bankruptcy Rule 4001(c)(2), satisfactory in form and
substance to Lender, and from which no appeal has been timely filed, or if
timely filed, such appeal has been dismissed (unless Lender waives such
requirement), together with all extensions, modifications and amendments
thereto, which, among other matters but not by way of limitation, authorizes
Borrowers to obtain credit, incur indebtedness, and grant Liens under this
Agreement and the other Loan Documents, as the case may be, and provide for the
super-priority of Lender's claims, all as set forth in such order.
"Final Order Entry Date" means the date upon which the Final Order is
entered on the docket in the Chapter 11 case.
"Foothill" means Foothill Capital Corporation, a California corporation.
"Foreign Subsidiary" means any Subsidiary of a Borrower which is organized
or incorporated under the laws of a jurisdiction other than the United States or
any state or territory thereof.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means all of Borrowers' present and future general
intangibles and other personal property (including contract rights, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, trade secrets,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, literature, reports,
catalogs, deposit accounts, insurance premium rebates, tax refunds, and tax
refund claims), other than goods, Accounts, and Negotiable Collateral.
"GOB Rate" means the percentages determined, from time to time, by an
appraiser acceptable to Foothill and using a methodology acceptable to Foothill
in its reasonable credit judgment as the percentage of Cost of Inventory
recoverable on a going-out of business basis, multiplied by eighty-five percent
(85%).
"Governing Documents" means the certificate or articles of incorporation,
by-laws, or other organizational or governing documents of any Person.
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"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning set forth in the definition of
"Contingent Obligation."
"Hazardous Materials" means all those substances that are regulated by, or
which may form the basis of liability under, any Environmental Law, including
any substance identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"Indebtedness" means, with respect to any Person, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes, or other similar instruments and all reimbursement or
other obligations of such Person in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations of such Person under capital leases, (d) all obligations or
liabilities of others secured by a Lien on any property or asset of such Person,
irrespective of whether such obligation or liability is assumed, and (e) any
obligation of such Person guaranteeing or intended to guarantee (whether
guaranteed, endorsed, co-made, discounted, or sold with recourse to such Person)
any indebtedness, lease, dividend, letter of credit, or other obligation of any
other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture" that certain Indenture dated as of October 8, 1998 among
Parent, as issuer, the guarantors named therein and State Street Bank and Trust
Company, as trustee.
"Independent Auditor" has the meaning set forth in Section 6.1(a).
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other bankruptcy
or insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that portion of the
book value of all of such Person's assets that would be treated as intangibles
under GAAP.
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"Interest Expense" means, with respect to any Person on a consolidated
basis for any period, interest expense and loan fees determined in accordance
with GAAP, and including capitalized and non-capitalized interest and the
interest component of Capitalized Lease Obligations. Unless the context clearly
provides otherwise, any reference to Interest Expense in this Agreement shall be
to the Interest Expense of each Borrower and its Subsidiaries on a consolidated
basis.
"Interest Period" means, for any Eurodollar Rate Advance, the period
commencing on the Business Day such Eurodollar Rate Advance is disbursed or
continued, or on the Business Day on which a Reference Rate Advance is converted
to such Eurodollar Rate Advance, and ending on the date thirty (30) days
thereafter.
"Interim Order" means the order of the Court entered in the Chapter 11 Case
after a hearing, satisfactory in form and substance to Lender, which, among
other matters but not by way of limitation, authorizes the Borrowers to obtain
credit, incur indebtedness, and grant Liens under this Agreement and the other
Loan Documents, as the case may be, and provide for the super-priority of
Lender's claims, all as set forth in such order.
"Inventory" means all present and future inventory in which a Borrower has
any interest, including goods held for sale or lease or to be furnished under a
contract of service and all of Borrowers' present and future raw materials, work
in process, finished goods, and packing and shipping materials, wherever
located.
"Investment Property" means all "investment property", as such term is
defined in the Code, now owned or hereafter acquired by each Borrower and, in
any event, including, without limitation, all securities, whether certificated
or uncertificated, security entitlements, securities accounts, commodity
contracts and commodity accounts.
"Inventory Reserves" means reserves (determined from time to time by Lender
in its discretion) for the estimated reclamation claims of unpaid sellers of
Inventory sold to any Borrower.
"Investments" has the meaning specified in Section 7.4.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"IRS" means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the IRC.
"Joint Venture" means a single-purpose corporation, partnership, limited
liability company, joint venture or other similar legal arrangement (whether
created by contract or conducted through a separate legal entity) now or
hereafter formed by any Borrower or any of its Subsidiaries with another Person
(other than a Borrower) in order to conduct a common venture or enterprise with
such Person.
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"L/C" has the meaning set forth in Section 2.2(a).
"L/C Guaranty" has the meaning set forth in Section 2.2(a).
"Lender" has the meaning set forth in the preamble to this Agreement.
"Lender Account" has the meaning set forth in Section 2.7.
"Lender Expenses" means all: costs or expenses (including taxes, and
insurance premiums) required to be paid by Borrowers or any Subsidiary of a
Borrower under any of the Loan Documents that are paid or incurred by Lender;
fees or charges paid or incurred by Lender in connection with Lender's
transactions with Borrowers and their Subsidiaries, including, fees or charges
for photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and UCC searches and
including searches with the patent and trademark office, the copyright office,
or the department of motor vehicles), filing, recording, publication, and
appraisal (including periodic Collateral appraisals); costs and expenses
incurred by Lender in the disbursement of funds to Borrowers (by wire transfer
or otherwise); charges paid or incurred by Lender resulting from the dishonor of
checks; costs and expenses paid or incurred by Lender to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated; costs and expenses paid or
incurred by Lender (including any costs and expenses to engage outside parties)
in examining the Books and Records and in monitoring and analyzing the
Collateral; costs and expenses of third party claims or any other suit paid or
incurred by Lender in enforcing or defending the Loan Documents or in connection
with the transactions contemplated by the Loan Documents or Lender's
relationship with Borrowers or any guarantor; and Lender's reasonable attorneys'
fees and expenses, actually incurred in advising, structuring, drafting,
reviewing, administering, amending, terminating, enforcing (including, without
limitation, reasonable attorneys' fees and expenses actually incurred in
connection with the Chapter 11 Case or in any other "workout," a
"restructuring," or any other Insolvency Proceeding concerning Borrowers or any
guarantor of the Obligations), defending, or concerning the Loan Documents,
irrespective of whether suit is brought.
"Letter of Credit" means an L/C or an L/C Guaranty, as the context
requires.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, any Person other than the owner of the property, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
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assignment, deposit arrangement, security agreement, adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also including reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Orders, the Disbursement Letter,
the Fee Letter, the Letters of Credit, the Trademark Security Agreement, the
Pledge Agreement, any note or notes executed by Borrowers and payable to Lender,
and any other agreement entered into, now or in the future, in connection with
this Agreement.
"Loans" means, collectively, the Advances and the Term Loans.
"Lockbox Account" shall mean a depositary account established pursuant to
one of the Lockbox Agreements.
"Lockbox Agreements" means those certain Lockbox Operating Procedural
Agreements and those certain Depository Account Agreements, in form and
substance satisfactory to Lender, each of which is among Parent, Lender and one
of the Lockbox Banks. "Lockbox Banks" means First Union, or such other Person or
Persons as Lender and Parent may designate from time to time.
"Managed Care Subsidiary" shall mean (a) NVAL VisionCare Systems of
California, Inc., ProCare Eye Exam, Inc. and NVAL VisionCare Systems of North
Carolina, Inc. and (b) any other Subsidiary of a Borrower formed or acquired
after the Closing Date whose financial condition or activities are regulated
under the laws of any state in connection with its provision of health or vision
care products or services (or related administrative services) and shall
include, and without limitation, a health maintenance organization (whether
single or multi service), third party administrator or any entity similar to any
of the foregoing.
"Margin Stock" means "margin stock" as such term is defined in Regulation U
or X of the Board of Governors of the Federal Reserve System.
"Master Concentration Account" means account number 2080000695022 of Parent
maintained at the Concentration Account Bank, or such other deposit account of
Parent (located in the United States), into which cash received in the Lockbox,
the other Concentration Accounts and certain Retail Store Accounts is wire
transferred as provided in Section 2.7.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of Borrowers or of Borrowers and their
Subsidiaries taken as a whole; (b) a material impairment of the ability of any
Borrower to perform under any Loan Document; or (c) a material adverse effect
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upon (i) the legality, validity, binding effect or enforceability against any
Borrower of any Loan Document, or (ii) the perfection or priority of any Lien
granted under any of the Loan Documents.
"Material Contracts" has the meaning set forth in Section 5.25.
"Maturity Date" means May 31, 2001.
"Maximum Amount" means $25,000,000.
"Maximum Revolving Amount" means, as of any date of determination, the
result of (a) the Maximum Amount, minus (b) the then outstanding aggregate
principal balance of the Term Loans.
"Meijer" means Meijer, Inc.
"Multiemployer Plan" means a "multiemployer plan", within the meaning of
Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate makes,
is making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"Negotiable Collateral" means all of Borrowers' present and future letters
of credit, notes, drafts, instruments, investment property, security
entitlements, securities (including the shares of stock of Subsidiaries of
Borrowers), documents, personal property leases (wherein any Borrower is the
lessor), chattel paper, and Books and Records relating to any of the foregoing.
"Net Income" means, with respect to any Person on a consolidated basis for
any period, its net income (or deficit) determined in accordance with GAAP.
Unless the context clearly provides otherwise, any reference to Net Income in
this Agreement shall be to the Net Income of Borrowers and their Subsidiaries on
a consolidated basis.
"Net Proceeds" means, as to any Disposition by a Person, proceeds in cash,
checks or other cash equivalent financial instruments as and when received by
such Person, net of: (a) the direct costs relating to such Disposition excluding
amounts payable to such Person or any Affiliate of such Person, (b) income,
sale, use or other transaction taxes paid or payable by such Person as a direct
result thereof, and (c) amounts required to be applied to repay principal,
interest and prepayment premiums and penalties on Indebtedness secured by a Lien
on the asset which is the subject of such Disposition and (d) appropriate
amounts to be set aside by such Person as a reserve, in accordance with GAAP,
against any liabilities associated with such Disposition and retained by such
Person after such Disposition, including without limitation pension and other
post-employment benefit liabilities, liabilities related to environment matters
and liabilities under any indemnification obligations associated with such
Disposition.
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"Obligations" means all Loans, debts, principal, interest (including any
interest that, but for the provisions of the Bankruptcy Code, would have
accrued), contingent reimbursement obligations under any outstanding Letters of
Credit, premiums (including Early Termination Premiums), liabilities (including
all amounts charged to Borrowers' Loan Account pursuant hereto), obligations,
fees, charges, costs, or Lender Expenses (including any fees or expenses that,
but for the provisions of the Bankruptcy Code, would have accrued), lease
payments, guaranties, covenants, and duties owing by Borrowers to Lender of any
kind and description (whether pursuant to or evidenced by the Loan Documents or
pursuant to any other agreement between Lender and Borrowers, and irrespective
of whether for the payment of money), whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including any debt, liability, or obligation owing from Borrowers to others that
Lender may have obtained by assignment or otherwise, and further including all
interest not paid when due and all Lender Expenses that Borrowers are required
to pay or reimburse by the Loan Documents, by law, or otherwise.
"Orders" means the Interim Order and the Final Order.
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the second recital paragraph hereof.
"Participant" means any Person to which Lender has sold a participation
interest in its rights under the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which any Borrower sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"Permitted Liens" has the meaning set forth in Section 7.1.
"Permitted Protest" means the right of any Borrower to protest any Lien
other than any such Lien that secures the Obligations, pro-vided that (a) a
reserve with respect to such obligation is established on the books of such
Borrower in an amount that is reasonably satisfactory to Lender in its
reasonable credit judgment, (b) any such protest is instituted and diligently
prosecuted by such Borrower in good faith, and (c) Lender is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Liens of Lender in and to
the Collateral.
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"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Borrower sponsors or maintains or to which any Borrower makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Pledge Agreement" means that certain Debtor-in-Possession Pledge Agreement
of even date herewith among Borrowers, the Administrative Agent and Lender, in
form and substance satisfactory to Lender, together with any supplement thereto
executed and delivered after the date hereof between Borrowers and Lender.
"Pledged Collateral" has the meaning specified in the Pledge Agreement.
"Pre-Petition Lenders" has the meaning set forth in the second recital to
this Agreement.
"Pre-Relief Date Loan Agreement" has the meaning set forth in the second
recital paragraph hereto.
"Pre-Relief Date Obligations" means all indebtedness, obligations and
liabilities of the Borrowers to the Pre-Petition Lenders incurred prior to the
Relief Date arising from or related to the Pre-Relief Date Loan Agreement or the
"Loan Documents" as defined therein, plus interest thereon accruing both before
and after the Relief Date, whether such indebtedness, obligations or liabilities
are direct or indirect, joint or several, absolute or contingent, due or to
become due, whether for payment or performance, now existing or hereafter
arising.
"Purchase Money Indebtedness" means any Indebtedness of any Borrower
incurred for the purpose of financing all or any part of the purchase price or
the cost of installation, construction or improvement of any property.
"Qualified Proceeds" means any of the following or any combination of the
following: (i) cash, (ii) cash equivalents, (iii) assets that are used or usable
in the business of any Borrower as existing on the Closing Date or a business
reasonably related or complimentary thereto and (iv) capital stock of any Person
engaged primarily in the business of any Borrower as existing on the Closing
Date or a business reasonably related or complimentary thereto so long as, in
connection with the receipt by any Borrower of such capital stock, such Person
is merged with or into or transfers or conveys substantially all or all of its
assets to, or is liquidated into, any Borrower.
"Real Property" means any estates or interests in real property,
specifically including, without limitation, all leaseholds and other such real
property interests, now owned or hereafter acquired by Borrowers.
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"Real Property Collateral" means any parcel or parcels of real property and
the related improvements thereto owned by Borrowers, and all leaseholds now or
hereafter occupied by any Borrwer, and any Real Property hereafter acquired by
Borrowers.
"Reference Rate" means the variable rate of interest, per annum, most
recently announced by Wells Fargo Bank, National Association, or any successor
thereto, as its "base rate," irrespective of whether such announced rate is the
best rate available from such financial institution.
"Relief Date" has the meaning set forth in the first recital paragraph
hereto.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Reserve Percentage" means and refers to, as of the date of determination
thereof; the maximum percentage (rounded upward, if necessary to the nearest
1/100th of one percent (1%)), as determined by Lender (or its Affiliates) in
accordance with its (or their ) usual procedures (which determination shall be
conclusive in the absence of manifest error), that is in effect on such date as
prescribed by the Federal Reserve Board for determining the reserve requirements
(including supplemental, marginal, and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as "eurocurrency
liabilities") by Lender or its Affiliates.
"Responsible Officer" means the chief executive officer, the chief
financial officer or the president of Parent, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer, the controller
or the treasurer of Parent, or any other officer having substantially the same
authority and responsibility.
"Restricted Payments" has the meaning set forth in Section 7.10.
"Retail Store Accounts" means those bank accounts set forth on Schedule
6.14 other than the Lockbox Account or the Concentration Accounts.
"Revolving Facility Usage" means, as of any date of determination, the
aggregate amount of Advances and undrawn or unreimbursed Letters of Credit
outstanding.
"Sam's Club" means Sam's Club, a division of Wal-Mart.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
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"Senior Claims" means (a) those pre-Relief Date claims or liens set forth
on Schedule S-1 attached hereto, if any, that have priority over, or are pari
passu with, the claims and Liens of Lender, to the extent allowed by the
Bankruptcy Court and (b) all Permitted Liens (other than Liens permitted under
paragraphs (c), (d) and (g) of Section 7.1).
"Senior Notes" means those certain senior unsecured notes due 2005 issued
by Parent pursuant to the Indenture.
"Solvent" means, as to any Person at any time, that (a) the fair value of
the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
property of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its property and pay its debts
and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Sub-Concentration Accounts" means those bank accounts of Parent at the
Concentration Account Bank set forth on Schedule S-2.
"Subsidiary"of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock, membership interests or other
equity interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of a Borrower.
"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Term A Rate" has the meaning set forth in Section 2.6(a)(iii).
"Term B Rate" has the meaning set forth in Section 2.6(a)(iv).
"Term Loan A" has the meaning set forth in Section 2.3(a).
"Term Loan B" has the meaning set forth in Section 2.3(b).
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"Term Loans" means, collectively, Term Loan A and Term Loan B.
"Termination Date" has the meaning set forth in Section 3.4.
"Trademark License" means any oral or written agreement now or hereafter in
existence granting to any Borrower any right to use any trademark, as the same
may be amended and in effect from time to time.
"Trademarks" means collectively all of the following now owned or hereafter
created or acquired by any Borrower: (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos, other business identifiers, prints and labels on which any
of the foregoing have appeared or appear, all registrations and recordings
thereof, and all applications in connection therewith including, without
limitation, those listed in the schedules to the Trademark Security Agreement;
(b) all renewals thereof; (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing including, without limitation, damages and payments for past,
present and future infringements of any of the foregoing; (d) the right to sue
for past, present and future infringements of any of the foregoing; (e) all
rights corresponding to any of the foregoing throughout the world; and (f) all
goodwill associated with and symbolized by any of the foregoing.
"Trademark Security Agreement" means the trademark security agreement
executed and delivered, if applicable, by Parent, Frame-n-Lens Optical, Inc. and
New West Eyeworks, Inc., to Lender as the same may be amended and in effect from
time to time.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the IRC for the applicable plan
year.
"Voidable Transfer" has the meaning set forth in Section 15.8.
"Wachovia Swap Obligations" has the meaning set forth in Section 7.5(e).
"Wal-Mart" means Wal-Mart Stores, Inc., a Delaware corporation.
"Wal-Mart Master Lease Agreement" means that certain Vision Center Master
License Agreement dated as of June 16, 1994, by and between Wal-Mart and Parent,
and all Addenda and Attachments thereto.
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrowers" is used in respect of a financial covenant or
a related definition, it shall be understood to mean Borrowers on a
consolidated basis with Subsidiaries unless the context clearly requires
otherwise.
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1.3 Code. Any terms used in this Agreement that are defined in the Code shall
be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement. An Event of
Default shall "exist", "continue" or be "continuing" until such Event of
Default has been waived in writing by Lender. Section, subsection, clause,
schedule, and exhibit references are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the Loan Documents to this
Agreement or any of the Loan Documents shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, and supplements, thereto and thereof, as applicable.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolving Advances.
(a) Subject to the terms and conditions of this Agreement, Lender agrees to
make advances ("Advances") to Borrowers in an aggregate amount outstanding not
to exceed at any one time the lesser of (i) the Maximum Revolving Amount less
the aggregate outstanding balance of all undrawn or unreimbursed Letters of
Credit, (ii) the Borrowing Base less the aggregate outstanding balance of all
undrawn or unreimbursed Letters of Credit. For purposes of this Agreement,
"Borrowing Base", as of any date of determination, shall mean the result of:
(I) the lowest of:
(v) seventy-five percent (75%) of EBITDA for the most recent twelve
(12) month period for which financial statements have been provided to
Lender pursuant to Section 6.1(c);
(w) one hundred fifty percent (150%) of EBITDA for the most recent
twelve (12) month period for which financial statements have been provided
to Lender pursuant to Section 6.1(c), less the aggregate principal amount
of the Term Loans then outstanding; and
(x) the sum of:
(A) the lowest of (i) $7,500,000, (ii) eighty-five percent (85%)
of Eligible Accounts, less the amount, if any, of the Dilution
Reserve, and (iii) an amount equal to one-sixth (1/6) of Collections
of each Borrower with respect to Accounts for the immediately
preceding sixty (60) day period, plus
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(B) the lowest of (i) $12,500,000, (ii) thirty percent (30%) of
the Cost of Eligible Inventory, less the aggregate amount of the
Inventory Reserves, and (iii) the GOB Rate of the Cost of Eligible
Inventory as determined based on the most recent appraisals thereof
less the aggregate amount of the Inventory Reserves; and
(y) an amount equal to one-third (1/3) of Collections of each Borrower
with respect to Accounts for the immediately preceding sixty (60) day
period; and
(z) an amount equal to two-thirds (2/3) of Collections of each
Borrower with respect to Accounts for the immediately preceding sixty (60)
day period, less the aggregate principal amount of the Term Loans then
outstanding,
minus,
(II) (without duplication) the aggregate amount of reserves, if any,
established by Lender under Section 2.1(b), Section 2.1(c) and Article 10
hereof.
(b) Anything to the contrary in this Section notwithstanding, Lender shall
have the right to establish reasonable reserves against the Borrowing Base or
adjust the standards of eligibility in such amounts as Lender, in its reasonable
judgment -(from the perspective of an asset-based lender) shall deem necessary
or appropriate, including (x) reserves on account of (i) sums that Borrowers are
required to pay (such as taxes, assessments, insurance premiums, or, in the case
of leased assets, rents or other amounts payable under such leases other than
leases or other executory contracts with respect to which the Borrowers intend
to file a motion to reject under section 365 of the Bankruptcy Code) and has
failed to pay under any Section of this Agreement or any other Loan Document,
(ii) without duplication of the foregoing, amounts owing by any Borrower to any
Person to the extent secured by a Lien on, or trust over, any of the Collateral,
which Lien or trust, in the reasonable determination of Lender (from the
perspective of an asset-based lender), would be likely to have a priority
superior to the Liens of Lender (such as landlord liens, ad valorem taxes, or
sales taxes where given priority under applicable law) in and to such item of
Collateral, (y) reserves to the extent that the final audit and appraisal
referenced in Section 3.3(c) received by Foothill after the Closing Date reveal
any material negative variances from the preliminary results of such reports
delivered to Lender prior to the Closing Date, and (z) a reserve for the
Carve-Out Expenses in the Carve-Out Amount, for anticipated statutorily mandated
fees payable to the United States Trustee in respect of the Case pursuant to 28
U.S.C. ss. 1930, and for any fees payable to the clerk of the Court in the Case.
(c) Lender shall have no obligation to make Advances hereunder to the
extent they would cause the outstanding Obligations to exceed the Maximum
Revolving Amount.
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(d) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement. The principal amount of all Advances shall be
repaid in full on the date this Agreement is terminated.
2.2 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, Lender agrees to
issue letters of credit for the account of Borrowers (each, an "L/C") or to
issue guarantees of payment (each such guaranty, an "L/C Guaranty") with respect
to letters of credit issued by an issuing bank for the account of Borrowers.
Lender shall have no obligation to issue a Letter of Credit if any of the
following would result:
(i) The aggregate amount of all types of undrawn and unreimbursed
Letters of Credit would exceed the Borrowing Base less the amount of
outstanding Advances less the aggregate amount of Inventory Reserves and
reserves established under Section 2.1(b) and Section 2.1(c); or
(ii) the aggregate amount of all undrawn or unreimbursed Letters of
Credit would exceed the lower of: (x) the Maximum Revolving Amount less the
amount of outstanding Advances less the aggregate amount of Inventory
Reserves and reserves established under Section 2.1(b), Section 2.1(c) and
Article 10 hereof; or (y) $4,000,000; or
(iii) the outstanding Obligations would exceed the Maximum Amount.
Borrowers expressly understand and agree that Lender shall have no
obligation to arrange for the issuance by issuing banks of the letters of credit
that are to be the subject of L/C Guaranties. Borrowers and Lender acknowledge
and agree that certain of the letters of credit that are to be the subject of
L/C Guaranties may be outstanding on the Closing Date. Each Letter of Credit
shall have an expiry date no later than sixty (60) days prior to the date on
which this Agreement is scheduled to terminate under Section 3.4 (without regard
to any potential renewal term) and all such Letters of Credit shall be in form
and substance acceptable to Lender in its sole discretion. If Lender is
obligated to advance funds under a Letter of Credit, Borrowers immediately shall
reimburse such amount to Lender and, in the absence of such reimbursement, the
amount so advanced immediately and automatically shall be deemed to be an
Advance hereunder and, thereafter, shall bear interest at the rate then
applicable to Advances under Section 2.6.
(b) Borrowers hereby agree to indemnify, save, defend, and hold Lender
harmless from any loss, cost, expense, or liability, including payments made by
Lender, expenses, and actual and reasonable attorneys' fees incurred by Lender
arising out of or in connection with any Letter of Credit, except to the extent
arising from Lender's own gross negligence or wilful misconduct. Borrowers agree
to be bound by the issuing bank's regulations and interpretations of any Letters
of Credit guaranteed by Lender and opened to or for Borrowers' account or by
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Lender's interpretations of any L/C issued by Lender to or for Borrowers'
account, even though this interpretation may be different from Borrowers' own,
and Borrowers understand and agree that Lender shall not be liable for any
error, negligence, or mistake, whether of omission or commission, in following
Borrowers instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Borrowers understand that the
L/C Guaranties may require Lender to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrowers against such issuing
bank. Borrowers hereby agree to indemnify, save, defend, and hold Lender
harmless with respect to any loss, cost, expense (including, without limitation,
actual and reasonable attorneys' fees), or liability incurred by Lender under
any L/C Guaranty as a result of Lender's indemnification of any such issuing
bank, except to the extent arising from Lender's own gross negligence or wilful
misconduct.
(c) Borrowers hereby authorize and direct any bank that issues a letter of
credit guaranteed by Lender to deliver to Lender all instruments, documents, and
other writings and property received by the issuing bank pursuant to such letter
of credit, and to accept and rely upon Lender's instructions and agreements with
respect to all matters arising in connection with such letter of credit and the
related application. Borrowers may or may not be the "applicant" or "account
party" with respect to such letter of credit.
(d) Any and all charges, commissions, fees, and costs incurred by Lender
relating to the letters of credit guaranteed by Lender shall be considered
Lender Expenses for purposes of this Agreement and shall be reimbursable by
Borrowers to Lender on demand.
(e) Immediately upon the termination of this Agreement, Borrowers agree to
either (i) provide cash collateral to be held by Lender in an amount equal to
one hundred five percent (105%) of the maximum amount of Lender's obligations
under outstanding Letters of Credit, or (ii) cause to be delivered to Lender
releases of all of Lender's obligations under outstanding Letters of Credit.
Such cash collateral shall be returned to Borrowers when there are no longer any
Letters of Credit outstanding, all Obligations have been paid in full in cash
and this Agreement has been terminated. At Lender's discretion, any proceeds of
Collateral received by Lender after the occurrence and during the continuation
of an Event of Default may be held as the cash collateral required by this
Section 2.2(e).
(f) If by reason of (i) any change in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application by any
governmental authority of any such applicable law, treaty, rule, or regulation,
or (ii) compliance by the issuing bank or Lender with any direction, request, or
requirement (irrespective of whether having the force of law) of any
governmental authority or monetary authority including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System as from
time to time in effect (and any successor thereto):
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(A) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letters of Credit issued hereunder,
or
(B) there shall be imposed on the issuing bank or Lender any other
condition regarding any letter of credit, or Letter of Credit, as
applicable, issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the issuing bank or Lender of issuing, making, guaranteeing, or maintaining
any letter of credit, or Letter of Credit, as applicable, or to reduce the
amount receivable in respect thereof by such issuing bank or Lender, then, and
in any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrowers,
and Borrowers shall pay on demand such amounts as the issuing bank or Lender may
specify to be necessary to compensate the issuing bank or Lender for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate set forth in
Section 2.6(a)(i) or (c)(i), as applicable. The determination by the issuing
bank or Lender, as the case may be, of any amount due pursuant to this Section
2.2(f), as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.3 Term Loan.
(a) Term Loan A. Subject to the terms and conditions of this Agreement,
Lender has agreed to make a Term Loan on the Final Order Entry Date (the "Term
Loan A") to Borrowers in the original principal amount of $2,500,000. The
outstanding unpaid principal balance and all accrued and unpaid interest under
the Term Loan A shall be due and payable on the earlier of (x) the Maturity Date
and (y) the termination of this Agreement, whether by its terms, by prepayment,
by acceleration, or otherwise. All amounts outstanding under the Term Loan A
shall constitute Obligations. Notwithstanding anything otherwise contained in
this Agreement, Lender shall not make any Term Loans to Borrowers until the
Final Order Entry Date.
(b) Term Loan B. Subject to the terms and conditions of this Agreement,
Lender has agreed to make a Term Loan on the Final Order Entry Date (the "Term
Loan B") to Borrowers in the original principal amount of $10,000,000. The
outstanding unpaid principal balance and all accrued and unpaid interest under
the Term Loan B shall be due and payable on the earlier of (x) the Maturity Date
and (y) the termination of this Agreement, whether by its terms, by prepayment,
by acceleration, or otherwise. All amounts outstanding under the Term Loan B
shall constitute Obligations. Notwithstanding anything otherwise contained in
this Agreement, Lender shall not make any Term Loans to Borrowers until the
Final Order Entry Date.
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(c) Prepayments. The unpaid principal balance of the Term Loans may be
voluntarily prepaid by Borrowers in whole or in part without penalty or premium
at any time during the term of this Agreement so long as (i) at the time of such
prepayment no Default or Event of Default then exists or would be caused
thereby, and (ii) immediately before and after giving effect to such prepayment,
Availability (less a reasonable reserve for past due accounts payable) shall be
not less than $2,000,000. All prepayments of the Term Loans shall be in an
amount not less than $500,000. Notwithstanding anything to the contrary
contained herein, so long as no Default or Event of Default then exists, all
prepayments of the Term Loans shall be applied pro rata between the Term Loan A
and the Term Loan B.
2.4 [Intentionally Omitted].
2.5 Overadvances.
Lender may, in its sole discretion, make Advances hereunder in excess of
the amount set forth in Section 2.1 hereof. If, at any time or for any reason,
the amount of Obligations owed by Borrowers to Lender pursuant to Sections 2.1
and 2.2 is greater than the applicable Dollar or percentage limitations set
forth in Sections 2.1 or 2.2 (an "Overadvance"), Borrowers immediately shall pay
to Lender on demand, in cash, the amount of such excess to be used by Lender
first, to repay Advances outstanding under Section 2.1 and, thereafter, to be
held by Lender as cash collateral to secure Borrowers' obligation to repay
Lender for all amounts paid pursuant to Letters of Credit.
2.6 Interest and Letter of Credit Fees: Rates, Payments, and Calculations;
Promise to Pay.
(a) Interest Rate. Except as provided in clause (b) below, (i) all Advances
which are Eurodollar Rate Advances shall bear interest on the Daily Balance
thereof at a per annum rate of three and one-quarter percentage points (3.25%)
above the Adjusted Eurodollar Rate, (ii) all Advances which are Reference Rate
Advances shall bear interest on the Daily Balance thereof at a per annum rate of
two percent (2.00%) above the Reference Rate, (iii) the Term Loan A shall bear
interest on the Daily Balance thereof at a per annum rate of fifteen percent
(15.00%) (the "Term A Rate"); and (iv) the Term Loan B shall bear interest on
the Daily Balance thereof at a per annum rate of fifteen percent (15.00%) (the
"Term B Rate").
(b) Letter of Credit Fee. Borrowers shall pay Lender a fee (in addition to
the charges, commissions, fees, and costs set forth in Section 2.2(d)) equal to
one and one-half percent (1.50%) per annum times the aggregate undrawn amount of
all Letters of Credit that were outstanding during the immediately preceding
month.
(c) Default Rate. Upon the occurrence and during the continuation of an
Event of Default, (i) all Obligations (except for undrawn Letters of Credit and
the Term Loan) shall bear interest on the Daily Balance thereof at a per annum
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rate equal to four percentage points (4.00%) percentage points above the
Reference Rate, (ii) the Term Loan A shall bear interest on the Daily Balance
thereof at a per annum rate equal to two percentage points (2.00%) above the
Term A Rate, (iii) the Term Loan B shall bear interest on the Daily Balance
thereof at a per annum rate equal to two percentage points (2.00%) above the
Term B Rate, and (iv) the Letter of Credit fee provided in Section 2.6(b) shall
be increased to three and one-half percent (3.50%) per annum times the amount of
the undrawn Letters of Credit that were outstanding during the immediately
preceding month.
(d) [Intentionally Omitted].
(e) Payments. Interest and Letter of Credit fees payable hereunder shall be
due and payable, in arrears, on the first day of each month during the term
hereof. Borrowers hereby authorize Lender, at its option, without prior notice
to Borrowers, to charge such interest and Letter of Credit fees, all Lender
Expenses (as and when incurred), the charges, commissions, fees, and costs
provided for in Section 2.2(d) (as and when accrued or incurred), the fees and
charges provided for in Section 2.11 (as and when accrued or incurred), and all
installments or other payments due under the Term Loans or any Loan Document to
Borrowers' Loan Account, which amounts thereafter shall accrue interest at the
rate then applicable to Advances hereunder.
(f) Computation. The Reference Rate as of the date of this Agreement is
nine percent (9.0%) per annum. In the event the Reference Rate is changed from
time to time hereafter, the applicable rate of interest hereunder automatically
and immediately shall be increased or decreased by an amount equal to such
change in the Reference Rate. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate. Borrowers and Lender
hereby agree and stipulate that the only charges imposed upon Borrowers for the
use of money in connection with this Agreement are and shall be the specific
interest and fees described in this Article 2 and in any other Loan Document.
Notwithstanding the foregoing, Borrowers and Lender further agree and stipulate
that all agency fees, syndication fees, facility fees, underwriting fees,
default charges, late charges, funding or "breakage" charges, increased cost
charges, the Early Termination Premium, "float" or "clearance" charges,
attorneys' fees and reimbursement for costs and expenses paid by Lender to third
parties or for damages incurred by Lender are charges to compensate Lender for
underwriting and administrative services and costs or losses performed or
incurred, and to be performed and incurred, by Lender in connection with this
Agreement and the other Loan Documents and shall under no circumstances be
deemed to be charges for the use of money pursuant to Official Code of Georgia
Annotated Sections 7-4-2 and 7-4-18. In no event shall the amount of interest
and other charges for the use of money payable under this Agreement exceed the
maximum amounts permissible under any law that a court of competent jurisdiction
shall, in a final determination, deem applicable. Borrowers and Lender, in
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executing and delivering this Agreement, intend legally to agree upon the rate
or rates of interest and other charges for the use of money and manner of
payment stated within it; provided, however, that, anything contained herein to
the contrary notwithstanding, if the amount of such interest and other charges
for the use of money or manner of payment exceeds the maximum amount allowable
under applicable law, then, ipso facto as of the date of this Agreement,
Borrowers are and shall be liable only for the payment of such maximum as
allowed by law, and payment received from Borrowers in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
the Obligations to the extent of such excess.
(h) Promise to Pay. Borrowers hereby promise to pay in full to Lender the
amount of all Obligations, including the principal amount of all Advances,
together with accrued interest, fees and other amounts due thereon, all in
accordance with the terms of this Agreement.
2.7 Collection of Accounts.
(a) Collections. To the extent not already done prior to the Relief Date,
Borrowers shall have (but in no event later than April 30, 2000) instructed all
Account Debtors (other than retail customers and optometrists) with respect to
the Accounts, General Intangibles and Negotiable Collateral of Borrowers to
remit, on each Business Day, all Collections in respect thereof directly to the
Lockbox or to a Concentration Account via electronic funds transfer (including,
but not limited to ACH transfers). From and after the Closing Date, Borrowers
shall cause all Collections and other amounts received by any Borrower at any
retail store location to be deposited on a daily basis into a Retail Store
Account or a Concentration Account. In addition, Borrowers agree that all other
Collections and other amounts received directly by any Borrower from any Account
Debtor or any other source immediately upon receipt shall be deposited into a
Concentration Account. Borrowers shall cause all funds in excess of $500 on
deposit in each Retail Store Account to be sent by electronic funds transfer
(including, but not limited to, ACH transfers) on each Business Day to a
Concentration Account.
(b) Lockbox and Concentration Accounts. With respect to each Lockbox,
Parent, Lender and the applicable Lockbox Bank shall have entered into a Lockbox
Agreement, which among other things shall provide (i) for the opening or
maintenance of a Lockbox Account at such Lockbox Bank into which all Collections
received in such Lockbox shall be deposited on a daily basis and (ii) that all
cash deposited into such Lockbox Account shall be sent by electronic funds
transfer (including, but not limited to ACH transfers) on each Business Day to
the Master Concentration Account. With respect to the Sub-Concentration
Accounts, Parent, Lender and First Union shall have entered into a Concentration
Account Agreement, which among other things shall provide that all cash
deposited into each Sub-Concentration Account shall be sent by electronic funds
transfer (including, but not limited to ACH transfers) on each Business Day to
the Master Concentration Account. Upon the terms and subject to the conditions
set forth in the Concentration Account Agreement with respect to the Master
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Concentration Account, all amounts received in the Master Concentration Account
shall be wired each Business Day into an account (the "Lender Account")
maintained by Lender at a depository selected by Lender.
(c) Retail Store Accounts. Borrowers shall, with respect to each Retail
Store Account, have delivered to Lender either (i) a Blocked Account Agreement
with respect to such Retail Store Account or (ii) evidence that Borrowers have
provided to the bank at which such Retail Store Account is located notice in
writing of Lender's security interest in such Retail Store Account and
irrevocable directions in writing, in form and substance satisfactory to Lender,
to send by electronic funds transfer (including, but not limited to, ACH
transfers) on each Business Day to a Concentration Account all funds in excess
of $500 on deposit in such Retail Store Account and that each bank has agreed to
do so. Notwithstanding the foregoing, promptly upon the request of Lender,
Borrowers shall deliver a Blocked Account Agreement to Lender with respect to
any Retail Store Account identified by Lender (which shall include, without
limitation, each Retail Store Account with Wells Fargo Bank, National
Association). Each Blocked Account Agreement shall provide, among other things,
that all cash in excess of $500 deposited into the Retail Store Accounts covered
thereby shall be sent by electronic funds transfer (including, but not limited
to ACH transfers) on each Business Day to a Concentration Account.
(d) Miscellaneous. No Lockbox Agreement, Concentration Account Agreement,
Blocked Account Agreement or other arrangement contemplated in this Section 2.7
shall be modified by any Borrower without the prior written consent of Lender.
2.8 Crediting Payments; Application of Collections.
The receipt of any Collections by Lender (whether from transfers to Lender
by the Concentration Account Bank pursuant to the Concentration Account
Agreement or otherwise) immediately shall be applied provisionally to reduce the
Obligations herein and any unpaid Advances under the Pre-Relief Date Loan
Agreement in the order as determined by Lender, in its sole discretion, but
shall not be considered a payment on account unless such Collection item is a
wire transfer of immediately available federal funds and is made to the Lender
Account or unless and until such Collection item is honored when presented for
payment. From and after the Closing Date, Lender shall be entitled to charge
Borrowers for two (2) Business Days of 'clearance' or 'float' at the rate set
forth in Section 2.6(a)(i), Section 2.6(a)(ii) or Section 2.6(c)(i), as
applicable, on all Collections that are received by Lender (regardless of
whether forwarded by the Concentration Account Bank to Lender, whether
provisionally applied to reduce the Obligations under Section 2.1, or
otherwise). This across-the-board two (2) Business Day clearance or float charge
on all Collections is acknowledged by the parties to constitute an integral
aspect of the pricing of Lender's financing of Borrowers, and shall apply
irrespective of the characterization of whether receipts are owned by Borrowers
or Lender, and whether or not there are any outstanding Advances, the effect of
such clearance or float charge being the equivalent of charging two (2) Business
Days of interest on such Collections. Should any Collection item not be honored
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when presented for payment, then Borrowers shall be deemed not to have made such
payment, and interest shall be recalculated accordingly. Notwithstanding
anything herein which may be construed to the contrary, no Collections will be
remitted to Borrowers unless and until such Collections are fully collected.
Anything to the contrary contained herein notwithstanding, any Collection item
shall be deemed received by Lender only if it is received into the Lender
Account on a Business Day on or before 2:00 p.m. (Eastern time). If any
Collection item is received into the Lender Account on a non-Business Day or
after 2:00 p.m. (Eastern time) on a Business Day, it shall be deemed to have
been received by Lender as of the opening of business on the immediately
following Business Day. Notwithstanding the foregoing, (i) any Collections or
other amounts received by Lender prior to the occurrence of an Event of Default
that are not directed to be applied to the Loans in any particular order by
Borrowers or elsewhere in this Agreement shall be applied to the Obligations as
Lender, in its sole discretion, shall determine, and (ii) any Collections or
other amounts received by Lender after the occurrence of an Event of Default
shall be applied to the Obligations as Lender, in its sole discretion, shall
determine.
2.9 Designated Account.
Lender is authorized to make the Advances, the Letters of Credit and the
Term Loans under this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Person, or without
instructions if pursuant to Section 2.6(e). Borrowers agree to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Lender hereunder. Unless otherwise agreed by Lender and Borrowers, any Advance
requested by Borrowers and made by Lender hereunder shall be made to the
Designated Account. Each Borrower hereby designates Parent as its representative
and agent on its behalf for the purposes of requesting Advances, giving
instructions with respect to the disbursement of the proceeds of the Loans,
selecting interest rate options, requesting Letters of Credit, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower under the Loan Documents. Borrower
Representative hereby accepts such appointment. Lender may regard any notice or
other communication pursuant to any Loan Document from Borrower Representative
as a notice or communication from all Borrowers, and may give any notice or
communication received or permitted to be such to any Borrower hereunder to
Borrower Representative on behalf of such Borrower. Each Borrower agrees that
each notice, election, representation and warranty, covenant, agreement and
undertaking made on its behalf by Borrower Representative shall be deemed for
all purposes to have been made by such Borrower and shall be binding upon and
enforceable against such Borrower to the same extent as if the same had been
made directly by such Borrower.
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2.10 Maintenance of Loan Account; Statements of Obligations.
Lender shall maintain an account on its books in the name of Borrowers (the
"Loan Account") on which Borrowers will be charged with all Advances and the
Term Loans made by Lender to Borrowers or for Borrowers' account, including,
accrued interest, Lender Expenses, and any other payment Obligations of
Borrowers. In accordance with Section 2.8, the Loan Account will be credited
with all payments received by Lender from Borrowers or for Borrowers' account,
including all amounts received in the Lender Account from the Concentration
Account Bank. Lender shall render statements regarding the Loan Account to
Borrowers, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Expenses owing, and such statements
shall be conclusively presumed to be correct and accurate and constitute an
account stated between Borrowers and Lender unless, within forty-five (45) days
after receipt thereof by Borrowers, Borrowers shall deliver to Lender written
objection thereto describing the error or errors contained in any such
statements.
2.11 Fees.
(a) Fee Letter. Borrowers shall pay to Lender the fees, if any, set forth
in the Fee Letter.
(b) Unused Line Fee. On the first day of each month during the term of this
Agreement, Borrowers shall pay to Lender, in arrears, an unused line fee in an
amount equal to one-half of one percent (0.50%) per annum times the Average
Unused Portion of the Maximum Revolving Amount.
(c) Miscellaneous. The fees set forth above shall be fully earned when due
and non-refundable when paid and, if applicable, computed on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed.
2.12 Eurodollar Rate Advances.
Any other provisions herein to the contrary notwithstanding, the following
provisions shall govern with respect to Eurodollar Rate Advances as to the
matters covered:
(a) Borrowing; Conversion; Continuation. Borrowers may from time to time,
on or after the Closing Date, request in written or telephonic communication
with Lender: (i) Advances to constitute Eurodollar Rate Advances; (ii) that
Reference Rate Advances be converted into Eurodollar Rate Advances; or (iii)
that existing Eurodollar Rate Advances continue for an additional Interest
Period. Any such request shall specify the aggregate amount of the requested
Eurodollar Rate Advances, the proposed funding date therefor (which shall be a
Business Day, and with respect to continued Eurodollar Rate Advances shall be
the last day of the Interest Period of the existing Eurodollar Rate Advances
being continued), and the proposed Interest Period, in each case subject to the
limitations set forth below. Eurodollar Rate Advances may only be made,
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continued, or extended if, as of the proposed funding date therefor each of the
following conditions is satisfied:
(v) no Event of Default exists;
(w) no more than five (5) Eurodollar Rate Advances may be in effect at
any one time;
(x) the amount of each Eurodollar Rate Advance borrowed, converted, or
continued must be in an amount not less than $1,000,000 and integral
multiples of $500,000 in excess thereof;
(y) Lender shall have determined that the Adjusted Eurodollar Rate is
available to Lender and can be readily determined as of the date of the
request for such Eurodollar Rate Advance by Borrowers; and
(z) Lender shall have received such request at least three (3)
Business Days prior to the proposed funding date therefor.
Any request by Borrowers to borrow Eurodollar Rate Advances, to convert
Reference Rate Advances to Eurodollar Rate Advances, or to continue any existing
Eurodollar Rate Advances shall be irrevocable, except to the extent that Lender
shall determine under Sections 2.12(a), 2.13 or 2.14 that such Eurodollar Rate
Advances cannot be made or continued.
(b) Determination of Interest Period. Eurodollar Rate Advances shall only
be available for Interest Periods of thirty (30) days. The determination of
Interest Periods shall be subject to the following provisions:
(i) in the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day which is
not a Business Day, the Interest Period shall be extended to expire on the
next succeeding Business Day; provided, however, that if the next
succeeding Business Day occurs in the following calendar month, then such
Interest Period shall end on the last Business Day of the calendar month at
the end of such Interest Period;
(iii) if any Interest Period begins on the last Business Day of a
month or on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period, then the Interest
Period shall end on the last Business Day of the calendar month at the end
of such Interest Period; and
(iv) Borrowers may not request a Eurodollar Rate Advance with an
Interest Period which expires later than the applicable Renewal Date.
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(c) Automatic Conversion; Optional Conversion by Lender. Any Eurodollar
Rate Advance shall automatically convert to a Reference Rate Advance upon (x)
the occurrence of any Event of Default, or (y) the last day of the applicable
Interest Period, unless Lender has received a request to continue such
Eurodollar Rate Advance at least three (3) Business Days prior to the end of
such Interest Period in accordance with the terms of Section 2.12 (a). Any
Eurodollar Rate Advance shall, at Lender's option, upon notice to Borrowers,
convert to a Reference Rate Advance in the event that (i) an Event of Default
shall have occurred and be continuing as of the last day of the Interest Period
for such Eurodollar Rate Advance, or (ii) this Agreement shall terminate, and
Borrowers shall pay to Lender any amounts required by Section 2.15 as a result
thereof.
2.13 Illegality.
Any other provision herein to the contrary notwithstanding, if the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for Lender to make or maintain
Eurodollar Rate Advances as contemplated by this Agreement, (a) the obligation
of Lender hereunder to make Eurodollar Rate Advances, continue Eurodollar Rate
Advances as such, and convert Reference Rate Advances to Eurodollar Rate
Advances shall forthwith be suspended and (b) Lender's then outstanding
Eurodollar Rate Advances, if any, shall be converted automatically to Reference
Rate Advances on the respective last days of the then current Interest Periods
with respect thereto or within such earlier period as required by law; provided,
however, that before making any such demand, Lender agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be disadvantageous to it, in
its reasonable discretion, in any legal, economic, or regulatory manner) to
designate a different lending office if the making of such a designation would
allow Lender or its lending office to continue to perform its obligations to
make Eurodollar Rate Advances. If any such conversion of a Eurodollar Rate
Advance occurs on a day which is not the last day of the then current Interest
Period with respect thereto, Borrowers shall pay to Lender such amounts, if any,
as may be required pursuant to Section 2.15. If circumstances subsequently
change so that Lender shall determine that it is no longer so affected, Lender
will promptly notify Borrowers, and upon receipt of such notice, the obligations
of Lender to make or continue Eurodollar Rate Advances or to convert Reference
Rate Advances into Eurodollar Rate Advances shall be reinstated.
2.14 Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by Lender with any request
or directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the date hereof:
(i) shall subject Lender to any tax, levy, charge, fee, reduction, or
withholding of any kind whatsoever with respect to this Agreement or any
Advance, or change the basis of taxation of payments to Lender in respect
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thereof (except for the establishment of a tax based on the net income of
Lender or changes in the rate of tax on the net income of Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan, or similar requirement against assets held by,
deposits or other liabilities in or for the account of, Eurodollar Rate
Advances or other extensions of credit by, or any other acquisition of
funds by, any office of Lender; or
(iii) shall impose on Lender any other condition with respect to this
Agreement or any Eurodollar Rate Advance;
and the result of any of the foregoing is to increase the cost to Lender of
making, converting into, continuing, or maintaining Eurodollar Rate Advances or
to reduce any amount receivable hereunder in respect of such Advances, or to
forego any other sum payable thereunder or make any payment on account thereof,
then, in any such case, Borrowers shall promptly pay Lender, upon its demand,
any additional amounts necessary to compensate Lender for such increased cost or
reduced amount receivable; provided, however, that before making any such
demand, Lender agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, in its reasonable discretion, in any legal,
economic, or regulatory manner) to designate a different Eurodollar lending
office if the making of such designation would allow Lender or its Eurodollar
lending office to continue to perform its obligations to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances and avoid
the need for, or materially reduce the amount of, such increased cost. If Lender
becomes entitled to claim any additional amounts pursuant to this Section 2.14,
Lender shall notify Borrowers of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
Section 2.14 submitted by Lender to Borrowers shall be conclusive in the absence
of manifest error. If Borrowers so notify Lender within five (5) Business Days
after Lender notifies Borrowers of any increased cost pursuant to the foregoing
provisions of this Section 2.14 and reimburses Lender for any cost in accordance
with Section 2.15, Borrowers may convert all Eurodollar Rate Advances then
outstanding into Reference Rate Advances in accordance with Section 2.12. This
covenant shall survive the termination of this Agreement and the payment of the
Obligations.
(b) If Lender shall have determined that the adoption of or any change in
any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by Lender or any Person controlling Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof does or shall have the effect of increasing the amount of capital
required to be maintained or reducing the rate of return on Lender's or such
Person's capital as a consequence of its obligations hereunder to a level below
that which such Lender or such Person could have achieved but for such change or
compliance (taking into consideration Lender's or such Person's policies with
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respect to capital adequacy) by an amount deemed by Lender to be material, then
from time to time, after submission by Lender to Borrowers of a prompt written
request therefor, Borrowers shall pay to Lender such additional amount or
amounts as will compensate Lender or such Person for such reduction. This
covenant shall survive the termination of this Agreement and the payment of the
Obligations.
2.15 Indemnity.
Borrowers agree to indemnify Lender and to hold Lender harmless from any
loss or expense which Lender may sustain or incur as a consequence of (a) a
default by Borrowers in payment when due of the principal amount of or interest
on any Eurodollar Rate Advance, (b) a default by Borrowers in making a borrowing
of, conversion into, or continuation of Eurodollar Rate Advances after Borrowers
have given a notice requesting the same in accordance with the provisions of
this Agreement, (c) a default by Borrowers in making any prepayment of any
Eurodollar Rate Advance after Borrowers have given a notice thereof in
accordance with the provisions of this Agreement, or (d) the making of a
prepayment of Eurodollar Rate Advances on a day which is not the last day of an
Interest Period with respect thereto (whether due to the termination of this
Agreement upon an Event of Default or otherwise), including, in each case, any
such loss or expenses arising from the reemployment of funds obtained by it or
from fees payable to terminate the deposits from which such funds were obtained.
Calculation of all amounts payable to Lender under this Section 2.15 shall be
made as though Lender had actually funded the relevant Eurodollar Rate Advance
through the purchase of a deposit bearing interest at the Eurodollar Rate in an
amount equal to the amount of such Eurodollar Rate Advance and having a maturity
comparable to the relevant Interest Period; provided, however, that Lender may
fund each of the Eurodollar Rate Advances in a manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under this Section 2.15. This covenant shall survive the termination of
this Agreement and the payment of the Obligations.
2.16 Super-Priority Nature of Obligations.
Each Borrower hereby agrees that all Obligations under the Loan Documents
shall constitute administrative expenses of Borrower in the Chapter 11 Case with
priority under Section 364(c)(1) of the Bankruptcy Code over any and all other
administrative expenses of the kind specified in Sections 105, 326, 330, 331,
503, 507 and 726 of the Bankruptcy Code, and shall also have priority over any
claims now existing or hereafter arising under Section 506(c) of the Bankruptcy
Code, subject and subordinate only to the following (hereinafter referred to as
the "Carve-Out Expenses"): fees and disbursements incurred on and after the
Closing Date by professionals retained pursuant to Court order in the Chapter 11
Case pursuant to Section 327 or 1103 of the Bankruptcy Code by Borrowers or the
Committee, and any statutorily mandated costs and fees of the United States
Trustee with respect to the Chapter 11 Case, up to a maximum aggregate amount
outstanding and unpaid not to exceed $750,000 (such dollar amount being referred
to herein as the "Carve-Out Amount") (in addition to fees and expenses which may
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be paid on an interim basis) provided that the Carve-Out Expenses shall not
include any other claims that are or may be senior to or pari passu with any of
the Carve-Out Expenses. No other claim having a priority superior or pari passu
to that granted to Lender by the Interim Order or the Final Order, as the case
may be, shall be granted or approved while any Obligations under this Agreement
remain outstanding. Anything to the contrary herein notwithstanding, neither the
liens nor the superpriority claims granted herein shall apply to proceeds of
bankruptcy avoidance actions.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance, Letter of Credit and the Term
Loans.
The obligation of Lender to make the initial Advance, to issue the initial
Letter of Credit or to make the Term Loans is subject to the fulfillment, to the
satisfaction of Lender and its counsel, of each of the following conditions on
or before the Closing Date:
(a) the Closing Date shall occur on or before April 7, 2000;
(b) Lender shall have received each of the following documents, duly
executed, and each such document shall be in full force and effect:
a. the Lockbox Agreements, or the inclusion of such findings and
decretal portions in and of the Interim Order as Lender, in its sole
discretion, may deem equivalent to, and acceptable in lieu of, the
execution and delivery of the above-referenced Lockbox Agreements;
b. the Concentration Account Agreements, or the inclusion of such
findings and decretal portions in and of the Interim Order as Lender, in
its sole discretion, may deem equivalent to, and acceptable in lieu of, the
execution and delivery of the above-referenced Concentration Account
Agreements;
c. the Disbursement Letter; and
d. the Pledge Agreement; and
e. the Trademark Security Agreement; and
f. the Assignment of Notes; and
(c) Lender shall have received a certificate of insurance, together with
the endorsements thereto, as are required by Section 6.6, the form and substance
of which shall be satisfactory to Lender and its counsel;
(d) Lender shall have received duly executed certificates of title with
respect to that portion of the Collateral that is subject to certificates of
title;
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(e) Lender shall have received such Collateral Access Agreements from
lessors, warehousemen, bailees and other third persons as Lender may require or
the inclusion of such findings and decretal portions in and of the Interim Order
as Lender, in its sole discretion, may deem equivalent to, and acceptable in
lieu of, the execution and delivery of the above-referenced Collateral Access
Agreements.
(f) [intentionally omitted];
(g) Lender shall have received the financial projections and Business Plan
of Borrowers for the period ending December 31, 2000, in form and substance
satisfactory to Lender in its sole discretion;
(h) [intentionally omitted];
(i) Lender shall have received evidence satisfactory to it that, after
making the initial Advance hereunder on the Closing Date, Borrowers shall have
on the Closing Date cash on hand or Excess Availability in an amount equal to or
greater than $2,000,000;
(j) the Interim Order, in form and substance satisfactory to Lender,
approving the transactions contemplated hereby and granting a first priority
perfected security interest in the Collateral subject only to Senior Claims
shall have been entered by the Court and Lender shall have received a certified
copy of such Interim Order;
(k) the automatic stay shall have been modified to permit the creation and
perfection of Lender's Liens and security interests and shall have been
automatically vacated to permit enforcement of Lender's rights and remedies
under the Loan Documents;
(l) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender and its
counsel; and
(m) with respect to Lender's obligation to make the Term Loans, the Final
Order approving in full the transactions contemplated hereby and granting a
first priority, perfected security interest in the Collateral subject only to
the Senior Claims, shall have been entered by the Court and Lender shall have
received a certified copy of such Final Order.
3.2 Conditions Precedent to all Advances, all Letters of Credit and the Term
Loans.
The following shall be conditions precedent to all Advances, all Letters of
Credit and the Term Loans hereunder:
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(a) the representations and warranties contained in this Agreement and the
other Loan Documents shall be true and correct in all respects on and as of the
date of such extension of credit, as though made on and as of such date (except
to the extent that such representations and warranties relate solely to an
earlier date);
(b) no Default or Event of Default shall have occurred and be continuing on
the date of such extension of credit, nor shall either result from the making
thereof;
(c) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the extending of such credit shall have
been issued and remain in force by any Governmental Authority against any
Borrower, Lender, or any of their Affiliates;
(d) Lender shall have a first priority perfected security interest in the
Collateral, except for Senior Claims;
(e) Borrowers shall be in compliance with Section 7.21 hereof; and
(f) (1) on or prior to the date of such Advance or issuance of such Letter
of Credit or funding of such Term Loan, the Interim Order or the Final Order, as
the case may be, shall have been signed and entered by the Bankruptcy Court, and
(2) on or prior to the date of the funding of such Term Loans, the Final Order
shall have been signed and entered by the Bankruptcy Court, and Lender shall
have received a copy of the same and such order shall be in full force and
effect and shall not have been reversed, stayed, modified or amended absent the
express written joinder or consent of Lender, and unless Lender shall have
expressly joined therein or expressly consented thereto in writing, there shall
be no motion pending (i) to reverse, modify or amend the Final Order, (ii) to
permit any administrative expense against any Borrower to have administrative
priority equal to or superior to the priority of the Lender in respect of the
Obligations or (iii) to grant or permit the grant of a Lien on any of the
Collateral;
(g) with respect to any Advance or issuance of any Letter of Credit or
funding of a Term Loan to be made on or after the thirtieth (30th) day following
the Entry Date, the Final Order shall be in full force and effect and shall not
have been reversed, stayed, modified or amended absent the express written
joinder or consent of Lender; and
(h) the Borrowers shall have paid all fees, costs, expenses and taxes then
payable by the Borrowers to the Lenders hereunder.
3.3 Condition Subsequent.
As a condition subsequent to initial closing hereunder, Borrowers shall
perform or cause to be performed the following (the failure by Borrowers to so
perform or cause to be performed constituting an Event of Default):
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(a) Within thirty (30) days of the Closing Date, Borrowers shall deliver to
Lender the certified copies of the policies of insurance, as are required by
Section 6.6, the form and substance of which shall be satisfactory to Lender and
its counsel; provided, however, that copies of all endorsements to such
insurance policies shall be delivered within thirty (30) days after the Closing
Date.
(b) Within thirty (30) days after the Closing Date, Lender shall have
received appraisals of the Inventory satisfactory to Lender in its sole
discretion.
(c) [intentionally omitted]
(d) On or before April 30, 2000, Borrowers will provide a reconciliation
between the year end (December 31, 1999) perpetual inventory and the year end
(December 31, 1999) general ledger.
(e) Within forty-five (45) days of the Entry Date, the Final Order Entry
Date shall have occurred and Borrowers shall have delivered to Lender a
certified copy of such Final Order. .
(f) Within fifteen (15) days of the Closing Date, Borrowers shall correct
or supplement, as necessary, the Schedules to this Agreement as required in
Section 5.13(c).
3.4 Term.
This Agreement shall become effective upon the execution and delivery
hereof by Borrowers and Lender and shall continue in full force and effect for a
term ending on the date that is the earlier of (a) the Maturity Date, (b) the
sale of all or substantially all of Borrowers' assets, whether under Section 363
of the Bankruptcy Code, a plan of reorganization or otherwise, (c) the effective
date of a confirmed plan or plans of reorganization of Borrowers, (d) the
appointment of a trustee in any of Borrower's Chapter 11 Cases, (e) the
conversion of any Borrower's of Chapter 11 Cases to a case under Chapter 7 of
the Bankruptcy Code, (f) forty-five (45) days from the Entry Date if the Final
Order shall not have been entered during such thirty-day period, and (g) the
date of termination of this Agreement in accordance with its terms after the
occurrence and during the continuation of an Event of Default (the earliest to
occur of the foregoing being the "Termination Date"). The foregoing
notwithstanding, Lender shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 Effect of Termination.
On the date of termination of this Agreement, all Obligations (including
contingent reimbursement obligations of Borrowers with respect to any
outstanding Letters of Credit) immediately shall become due and payable without
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notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrowers of Borrower's duties, Obligations, or covenants hereunder,
and Lender's continuing security interests in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged and Lender's
obligation to provide additional credit hereunder is terminated.
3.6 Early Termination by Borrowers.
Borrowers have the option, at any time upon ninety (90) days' prior written
notice to Lender, to terminate this Agreement prior to the Maturity Date by
paying to Lender, in cash, the Obligations (including an amount equal to one
hundred five percent (105%) of the undrawn amount of the Letters of Credit), in
full, together with a premium (the "Early Termination Premium") equal to the sum
of (a) one percent (1.00%) of the Maximum Revolving Amount, and (b) one percent
(1.00%) of the outstanding balance of the Term Loans, each as determined
immediately prior to termination. If this Agreement is terminated prior to the
Maturity Date (including without limitation upon any of the events described in
Sections 3.4(b) through (f)), in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of Lender's lost profits as a result thereof,
Borrowers shall pay to Lender upon the effective date of such termination, a
premium in an amount equal to the Early Termination Premium. The Early
Termination Premium shall be presumed to be the amount of damages sustained by
Lender as the result of the early termination and Borrowers agree that it is
reasonable under the circumstances currently existing. The Early Termination
Premium provided for in this Section 3.7 shall be deemed included in the
Obligations. Upon termination of this Agreement by Borrowers prior to the
Maturity Date, or by its terms prior to or upon the Maturity Date as a result of
Borrowers' reorganization, Lender shall have the right of first refusal to
extend post-reorganization financing to Borrowers on equivalent terms to any
valid competing offer in effect as of the date of confirmation of any plan of
reorganization in the Case.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest.
Borrowers hereby grant to Lender a continuing security interest in all
currently existing and hereafter acquired or arising Collateral in order to
secure prompt repayment of any and all Obligations and in order to secure prompt
performance by each Borrower of each of its covenants and duties under the Loan
Documents. Lender's security interests in the Collateral shall attach to all
Collateral without further act on the part of Lender or any Borrower. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for the sale of Inventory to buyers in the ordinary
course of business, Borrowers have no authority, express or implied, to dispose
of any item or portion of the Collateral, and except for sales under section 363
of the Bankruptcy Code as approved by the Court and consented to by Lender.
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4.2 Negotiable Collateral.
In the event that any Collateral, including proceeds, is evidenced by or
consists of Negotiable Collateral, Borrowers, immediately upon the request of
Lender, shall endorse and deliver physical possession of such Negotiable
Collateral to Lender.
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.
At any time when an Event of Default has occurred and is continuing, Lender
or Lender's designee may (a) notify customers or Account Debtors of Borrowers
that the Accounts, General Intangibles, or Negotiable Collateral have been
assigned to Lender or that Lender has a security interest therein, and (b)
collect the Accounts, General Intangibles, and Negotiable Collateral directly
and charge the collection costs and expenses to the Loan Account. Each Borrower
agrees that it will hold in trust for Lender, as Lender's trustee, any
Collections that it receives and immediately will deliver said Collections to
Lender in their original form as received by Borrowers.
4.4 Delivery of Additional Documentation Required.
At any time upon the request of Lender, Borrowers shall execute and deliver
to Lender all financing statements, continuation financing statements, fixture
filings, security agreements, pledges, assignments, endorsements of certificates
of title, applications for title, affidavits, reports, notices, schedules of
accounts, letters of authority, and all other documents that Lender reasonably
may request, in form satisfactory to Lender, to perfect and continue perfected
Lender's security interests in the Collateral, and in order to fully consummate
all of the transactions contemplated hereby and under the other the Loan
Documents.
4.5 Power of Attorney.
Each Borrower hereby irrevocably makes, constitutes, and appoints Lender
(and any of Lender's officers, employees, or agents designated by Lender) as
each Borrower's true and lawful attorney, with power to (a) if Borrower refuses
to, or fails timely to execute and deliver any of the documents described in
Section 4.4, sign the name of such Borrower on any of the documents described in
Section 4.4, (b) at any time that an Event of Default has occurred and is
continuing, sign such Borrower's name on any invoice or bill of lading relating
to any Account, drafts against Account Debtors, schedules and assignments of
Accounts, verifications of Accounts, and notices to Account Debtors, (c) send
requests for verification of Accounts, (d) endorse such Borrower's name on any
Collection item that may come into Lender's possession, (e) at any time that an
Event of Default has occurred and is continuing, notify the post office
authorities to change the address for delivery of such Borrower's mail to an
address designated by Lender, to receive and open all mail addressed to such
Borrower, and to retain all mail relating to the Collateral and forward all
other mail to such Borrower, (f) at any time that an Event of Default has
occurred and is continuing, make, settle, and adjust all claims under such
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Borrower's policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (g) at any time that an Event of
Default has occurred and is continuing, settle and adjust disputes and claims
respecting the Accounts directly with Account Debtors, for amounts and upon
terms that Lender determines to be reasonable, and Lender may cause to be
executed and delivered any documents and releases that Lender determines to be
necessary. The appointment of Lender as each Borrower's attorney, and each and
every one of Lender's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and Lender's obligation to extend credit hereunder is terminated.
4.6 Right to Inspect.
Lender (through any of its officers, employees, or agents) shall have the
right, from time to time hereafter to inspect Borrowers' Books and Records and
to check, test, and appraise the Collateral in order to verify Borrowers'
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral. Lender, two times each calendar year, or
more frequently as determined by Lender in its reasonable good faith judgment as
being necessary, may obtain appraisal reports and updates in form and substance
satisfactory to Lender.
4.7 Grants, Rights and Remedies.
The Liens and security interests granted by each Borrower to Lender by and
pursuant to Section 4.1 hereof and administrative priority granted by and
pursuant to Section 2.16 hereof may be independently granted by the Loan
Documents and by other Loan Documents hereafter entered into. This Agreement,
the Interim Order, the Final Order and such other Loan Documents supplement each
other, and the grants, priorities, rights and remedies of Lender hereunder and
thereunder are cumulative.
4.8 No Filings Required.
The Liens and security interests granted by each Borrower to Lender herein
shall be deemed valid, binding, continuing, enforceable and fully-perfected
first priority Liens on the Collateral by entry of the Interim Order and the
Final Order, as the case may be. Lender shall not be required to file any
financing statements, notice of Lien or similar instruments in any jurisdiction
or filing office or to take any other action in order to validate or perfect the
Liens and security interests granted by or pursuant to this Agreement, the
Interim Order, the Final Order or any other Loan Document.
4.9 Survival.
The Liens and security interests granted to Lender, the priority of such
Liens and security interests, and the administrative priorities and other rights
and remedies granted to Lender pursuant to this Agreement, the Interim Order,
the Final Order and the other Loan Documents (specifically including but not
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limited to the existence, perfection and priority of the Liens and security
interest provided herein and therein) and the administrative priority provided
herein and therein shall not be modified, altered or impaired in any manner by
any other financing or extension of credit or incurrence of debt by any Borrower
(pursuant to Section 364 of the Bankruptcy Code or otherwise), or by any
dismissal or conversion of the Chapter 11 Case, or by financing, extension,
incurrence, dismissal, conversion, act or omission:
(a) except for Carve-Out Expenses having a priority over the Obligations to
the extent set forth in Section 2.16, no costs or expenses of administration
which have been or may be incurred in the Chapter 11 Case or any conversion of
the same or in any other proceedings related thereto, and no priority claims,
are or will be prior to or on a parity with any claim of Lender against the
Borrowers in respect of any Obligation;
(b) the Liens and security interests granted by each Borrower to Lender by
and pursuant to Section 4.1 hereof shall constitute valid, binding, continuing,
enforceable and fully-perfected first priority Liens, subject only to Senior
Claims, to which such Liens and security interests shall or may be subordinate
and junior, and shall be prior to all other Liens and interests, now existing or
hereafter arising, in favor of any other creditor or any other Person
whatsoever; and
(c) The Liens and security interests granted by each Borrower to Lender by
and pursuant to Section 4.1 hereof shall continue to be valid, binding,
continuing, enforceable and fully-perfected without the necessity for Lender to
file any financing statements or to otherwise perfect such Liens and security
interests under applicable non-bankruptcy law.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement, Borrowers make the
following representations and warranties which shall be true, correct, and
complete in all respects as of the date hereof, and shall be true, correct, and
complete in all respects as of the Closing Date, and at and as of the date of
the making of each Advance, Letter of Credit or Term Loan made thereafter, as
though made on and as of the date of such Advance, Letter of Credit or Term Loan
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 Corporate Existence and Power.
The Governing Documents of each Borrower delivered to Lender in connection
with the Pre-Relief Date Loan Agreement have not been amended or modified since
that delivery, and continue in full force and effect as of the date hereof.
Further, each Borrower and each of its Subsidiaries:
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(a) is a corporation or limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and, as applicable, to execute, deliver, and perform its obligations under the
Loan Documents;
(c) is duly qualified as a foreign corporation or limited liability company
and is licensed and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of its business
requires such qualification or license and where the failure to be so qualified
or licensed could reasonably be expected to have a Material Adverse Effect,
including all jurisdictions in which it was so qualified as of the date of the
Pre-Relief Date Loan Agreement; and
(d) is in compliance in all material respects with all Requirements of Law;
5.2 Corporate Authorization; No Contravention.
The execution, delivery and performance by each Borrower of this Agreement
and each other Loan Document to which such Person is party, have been duly
authorized by all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's Governing Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject; or
(c) violate any Requirement of Law.
5.3 Governmental Authorization.
Other than the entry of the Interim Order, no approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Borrower of
the Agreement or any other Loan Document.
5.4 Binding Effect.
This Agreement and each other Loan Document to which each Borrower is a
party constitute the legal, valid and binding obligations of Borrower to the
extent it is a party thereto, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by equitable
principles.
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5.5 Litigation.
Except for the Chapter 11 Case and claims to be asserted therein, and as
specifically disclosed in Schedule 5.5, there are no actions, suits,
proceedings, claims or disputes pending, or to the best knowledge of each
Borrower, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against each Borrower or its Subsidiaries or
any of their respective properties, which, if determined adversely to any
Borrower or any of its Subsidiaries, could reasonably be expected to have a
Material Adverse Effect. None of the items disclosed on Schedule 5.5:
(a) purport to affect this Agreement or any other Loan Document, or any of
the transactions contemplated hereby or thereby; or
(b) if determined adversely to any Borrower or any of its Subsidiaries,
could reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature
has been issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery or performance of this Agreement or
any other Loan Document, or directing that the transactions provided for herein
or therein not be consummated as herein or therein provided.
5.6 [Intentionally omitted.]
5.7 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the IRC and other federal or state law. Each Plan which is
intended to qualify under Section 401(a) of the IRC has received a favorable
determination letter from the IRS and, to the best knowledge of each Borrower,
nothing has occurred which would cause the loss of such qualification. Each
Borrower and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the IRC, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the IRC
has been made with respect to any Plan;
(b) There are no pending or, to the best knowledge of each Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect; and
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither any
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
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than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section 4201
or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither any
Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA, which in the case of any occurrence
described in any of clauses (i) through (v) above has resulted in or could
reasonably be expected to result in a liability of any Borrower and its
Subsidiaries in excess of $250,000.
5.8 Use of Proceeds; Margin Regulations.
The proceeds of the Loans are to be used solely for the purposes set forth
in and permitted by Section 6.12 and not prohibited by Section 7.7. Neither any
Borrower nor any Subsidiary is generally engaged in the business of purchasing
or selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
5.9 Title to Properties.
Each Borrower has good record and marketable title in fee simple to, or
valid leasehold interests in, all real property necessary or used in the
ordinary conduct of its businesses, except for such defects in title as could
not reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, the property of each Borrower is subject to no Liens, other than Permitted
Liens.
5.10 Taxes.
Each Borrower has filed all Federal and other material tax returns and
reports required to be filed, and has paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or imposed upon it or
its properties, income or assets otherwise due and payable, except those which
are subject to a Permitted Protest. There is no material proposed tax assessment
against any Borrower. The amounts and types of all estimated accrued and unpaid
taxes (including, without limitation, any sales or ad valorem taxes) owing by
any Borrower is set forth, as of November 12, 1999, on Schedule 5.10.
5.11 Financial Condition.
(a) The audited consolidated financial statements of the Borrowers and
their Subsidiaries dated January 1, 2000, and the related consolidated
statements of income or operations, shareholders' equity and cash flows for the
fiscal year ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
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(ii) fairly present the financial condition of the Borrower and their
Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) except as specifically disclosed in Schedule 5.11, show all
material indebtedness and other liabilities, direct or contingent, of each
Borrower and its consolidated Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Contingent
Obligations.
(b) Except for the commencement of the Case, and except as expressly set
forth in the financial statements provided in accordance with subparagraph (a)
above, since January 1, 2000, there has occurred no event which has had a
Material Adverse Effect.
(c) Each Borrower's and its Subsidiaries' fiscal year end is a 52/53 week
retail calendar year ending on the Saturday closest to December 31st (except
that certain of the Managed Care Subsidiaries and the Foreign Subsidiaries may
have a calendar year end).
5.12 Environmental Matters.
(a) Except as specifically disclosed in Schedule 5.12, the on-going
operations of each Borrower and each of its Subsidiaries comply in all respects
with all Environmental Laws, except such non-compliance which would not (if
enforced in accordance with applicable law) result in liability in excess of
$250,000 in the aggregate.
(b) Except as specifically disclosed in Schedule 5.12, each Borrower and
each of its Subsidiaries have obtained all material licenses, permits,
authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for their respective ordinary course
operations, all such Environmental Permits are in good standing, and each
Borrower and each of its Subsidiaries are in compliance with all material terms
and conditions of such Environmental Permits.
(c) Except as specifically disclosed in Schedule 5.12, none of Borrowers,
any of their Subsidiaries or any of their respective present property or
operations, is subject to any outstanding written order from or agreement with
any Governmental Authority, nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material, which would reasonably be expected to give rise to
Environmental Claims with potential liability of Borrowers and their
Subsidiaries in excess of $250,000 in the aggregate.
(d) Except as specifically disclosed in Schedule 5.12, there are no
Hazardous Materials or other conditions or circumstances existing with respect
to any property of any Borrower or any of its Subsidiaries, or arising from
operations prior to the Closing Date, of any Borrower or any of its Subsidiaries
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that would reasonably be expected to give rise to Environmental Claims with a
potential liability of any Borrower and its Subsidiaries in excess of $250,000
in the aggregate for any such condition, circumstance or property. In addition,
(i) neither any Borrower nor any of its Subsidiaries has any underground storage
tanks (x) that are not properly registered or permitted under applicable
Environmental Laws, or (y) that are leaking or disposing of Hazardous Materials
off-site, and which in the case of any occurrence described in clause (x) or (y)
could reasonably be expected to give rise to Environment Claims with potential
liability of any Borrower and its Subsidiaries in excess of $250,000 in the
aggregate, and (ii) each Borrower and its Subsidiaries have notified all of
their respective employees of the existence, if any, of any health hazard
arising from the conditions of their employment and have met all notification
requirements under Title III of CERCLA and all other Environmental Laws.
5.13 Loan Documents.
(a) The provisions of each of the Loan Documents are effective to create in
favor of Lender, acting on its own behalf and for its own benefit, a legal,
valid and enforceable first priority security interest in all right, title and
interest of Borrowers and their Subsidiaries in the Collateral described
therein, subject to Permitted Liens, if any, which are not subordinated to the
Liens under the Loan Documents.
(b) All representations and warranties of each Borrower party thereto
contained in the Loan Documents are true and correct. .
(c) All of the Schedules attached hereto are identical to the Schedules
attached to the Pre-Relief Date Loan Agreement, and such Schedules remain true
and correct in all material respects. To the extent the Schedules contain any
immaterial discrepancies or are incomplete in any material respect, Borrowers
shall supplement or replace such Schedules within fifteen (15) days after the
Closing Date.
5.14 Regulated Entities.
None of any Borrower, any Person controlling any Borrower, or any
Subsidiary of any Borrower, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. Borrower is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
5.15 No Burdensome Restrictions.
Neither any Borrower nor any of its Subsidiaries is a party to or bound by
any Contractual Obligation, or subject to any restriction in any Governing
Document, or any Requirement of Law, which could reasonably be expected to have
a Material Adverse Effect.
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5.16 Copyrights, Patents, Trademarks and Licenses, Etc.
Each Borrower and its Subsidiaries own or are licensed or otherwise have
the right to use all of the material patents, trademarks, service marks, trade
names, copyrights, contractual franchises, authorizations and other rights that
are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person. To the best knowledge of
each Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by each Borrower or any of its Subsidiaries infringes upon any rights
held by any other Person which could reasonably be expected to result in a claim
by any other Person in excess of $250,000. Except as specifically disclosed in
Schedule 5.5, no claim or litigation regarding any of the foregoing is pending
or threatened, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the knowledge
of any Borrower, proposed.
5.17 Subsidiaries.
Each Borrower has no Subsidiaries other than those specifically disclosed
in part (a) of Schedule 5.17 hereto and has no equity investments in any other
corporation or entity other than those specifically disclosed in part (b) of
Schedule 5.17.
5.18 Insurance.
Except as specifically disclosed in Schedule 5.18, the properties of each
Borrower and its Subsidiaries are insured with financially sound and reputable
insurance companies which are not Affiliates of any Borrower, in such amounts,
with such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where such Borrower or such Subsidiary operates.
5.19 Intentionally Omitted.
5.20 Full Disclosure.
None of the representations or warranties made by Borrowers in the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of Borrowers in connection with the Loan
Documents contains any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not misleading
as of the time when made or delivered.
5.21 Accounts and Inventory.
(a) (i) The Eligible Accounts are and will continue to be bona fide
existing obligations created by the sale of goods, the rendering of services, or
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the furnishing of other good and sufficient consideration to the relevant
Account Debtors in the regular course of business; (ii) all shipping and
delivery receipts and other documents furnished or to be furnished to Lender in
connection therewith are and will be genuine; and (iii) none of the Accounts
identified or included on any schedule, certificate or report as Eligible
Accounts will, to each Borrower's knowledge, fail at the time so identified or
included to satisfy any of the requirements for eligibility set forth in the
definition of Eligible Accounts.
(b) As to each schedule of Inventory delivered to Lender, to each
Borrower's knowledge:
(i) the descriptions, origins, sizes, qualities, quantities, weights,
and markings of all goods stated thereon, or on any attachment thereto, are
true and correct in all material respects; and
(ii) none of the goods are defective, of second quality, used, or
goods returned after shipment, except where described as such.
5.22 Leases.
(a) Each of the supplements to the master lease between Wal-Mart and Parent
with respect to retail locations of Parent or any of its Subsidiaries located in
a Wal-Mart retail store is substantially in the form of Exhibit C;
(b) Each of the leases between Wal-Mart and Parent with respect to retail
locations of Parent or any of its Subsidiaries located in a Sam's Club retail
store is substantially in the form of Exhibit D; and
(c) Each of the leases between Fred Meyer, Inc. and Parent is substantially
in the form of Exhibit E.
5.23 Compliance With Laws.
Each Borrower and its Subsidiaries has timely filed all material reports,
documents and other materials required to be filed by it under all applicable
Requirements of Law with any Governmental Authority, has retained all material
records and documents required to be retained by it under all applicable
Requirements of Law, and is otherwise in material compliance with all applicable
Requirements of Law in respect of the conduct of its business and the ownership
and operation of its properties.
5.24 Year 2000 Compatibility.
Any reprogramming by or on behalf of each Borrower or any of its
Subsidiaries, required to permit the proper functioning after January 1, 2000,
of each Borrower's and its Subsidiaries' (i) computer-based systems and (ii)
equipment containing embedded microchips (including systems and equipment
supplied by others or with which each Borrower's or any of its Subsidiaries'
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systems interface), and the testing of all such systems and equipment, as so
reprogrammed, has been completed. The computer and management information
systems of each Borrower and its Subsidiaries are and, with ordinary course
upgrading and maintenance will continue for the term of this Agreement to be,
sufficient to permit each Borrower and its Subsidiaries to conduct their
respective businesses without a Material Adverse Effect.
5.25 Material Contracts.
Schedule 5.25 lists, as of the Closing Date, each "material contract"
(within the meaning of Item 601(b)(10) of Regulation S-K under the Exchange Act)
to which each Borrower or any of its Subsidiaries is a party, by which any of
them or their respective properties is bound or to which any of them is subject
(collectively, "Material Contracts"). As of the Closing Date, (i) each Material
Contract is in full force and effect and is enforceable in all material respects
by each Borrower or the Subsidiary of each Borrower that is a party thereto in
accordance with its terms, and (ii) neither any Borrower nor any of its
Subsidiaries (nor, to the knowledge of any Borrower, any other party thereto) is
in breach of or default under any Material Contract in any material respect or
has given notice of termination or cancellation of any Material Contract.
Schedule 5.25 also lists, as of the Closing Date, all of the Credit Card
Agreements then in effect.
5.26 Appointment of Trustee or Examiner; Liquidation.
No order has been entered in this Chapter 11 Case (i) for the appointment
of a chapter 11 trustee, (ii) for the appointment of an examiner with enlarged
powers (beyond those set forth in Sections 1106(a)(3) and (4) of the Bankruptcy
Code) under Section 1106(b) of the Bankruptcy Code or (iii) to convert the
Chapter 11 Case to a chapter 7 case or to dismiss the Chapter 11 Case.
6. AFFIRMATIVE COVENANTS.
Borrowers covenant and agree that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, and unless Lender
shall otherwise consent in writing, Borrowers shall do all of the following:
6.1 Financial Statements. Borrowers shall deliver to Lender:
(a) as soon as available, but not later than ninety (90) days after the end
of each fiscal year, a copy of the audited consolidated and unaudited
consolidating balance sheet of Borrowers and their Subsidiaries as at the end of
such year and the related audited consolidated and unaudited consolidating
statements of income or operations, shareholders' equity and cash flows for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of a nationally-recognized
independent public accounting firm ("Independent Auditor") which report shall
state that such consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP applied on a basis
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consistent with prior fiscal years. Such opinion shall not be qualified or
limited because of a restricted or limited examination by the Independent
Auditor of any material portion of any Borrower's or any Subsidiary's records
and shall be delivered to Lender;
(b) as soon as available, but not later than forty-five (45) days after the
end of each of the first three (3) fiscal quarters of each fiscal year
(commencing with the fiscal quarter ended closest to September 30, 2000), a copy
of the unaudited consolidated and consolidating balance sheet of Borrowers and
their Subsidiaries, as of the end of such quarter and the related unaudited
consolidated and consolidating statements of income, shareholders' equity and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of each
Borrower and its Subsidiaries;
(c) as soon as available, but not later than thirty (30) days after the end
of each month (commencing with the month ended April 30, 2000), a copy of the
unaudited consolidated and consolidating balance sheets of Borrowers and their
Subsidiaries and the related consolidating statements of income, shareholders'
equity and cash flows for such month and a statement of EBITDA for the twelve
(12) month period then ended, all certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of operations of each
Borrower and its Subsidiaries.
6.2 Certificates; Other Information. Borrowers shall furnish to Lender:
(a) The following documents at the fol-lowing times in form satisfactory to
Lender: (i) on each Business Day, a flash sales report, collection journal, and
credit register, (ii) on a monthly basis and, in any event, by no later than the
thirtieth (30th) day of each month during the term of this Agreement, (x) a
detailed calculation of the Borrowing Base, and (y) a detailed aging, by total,
of the Accounts, (iii) on a monthly basis and, in any event, by no later than
the thirtieth (30th) day of each month during the term of this Agreement, a
summary aging, by vendor, of the accounts payable and any book overdraft of
Borrowers, (iv) on a weekly basis, Inventory reports specifying Borrowers' cost
of its Inventory by category, with additional detail showing additions to and
deletions from the Inventory, (v) to the extent not delivered under clause (i)
above, on each Business Day, notice of all returns, disputes, or claims, (vi)
upon request, copies of invoices in connection with the Accounts, customer
statements, credit memos, remittance advices and reports, deposit slips,
shipping and delivery documents in connection with the Accounts and for
Inventory and Equipment acquired by any Borrower, purchase orders and invoices,
(vii) a monthly basis, a calculation of the Dilution for the prior month; (viii)
promptly upon the opening of any new location of any Borrower, a report
detailing the address of such new location and whether such Borrower has
delivered to Lender (A) a Uniform Commercial Code financing statement with
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respect to the jurisdiction in which such location is situated and (B) a
Collateral Access Agreement with respect to such location; (ix) promptly when
filed with the Court or delivered to the United States Trustee for the Chapter
11 Case or the Committee, all pleadings, motions, applications, monthly reports,
projections or other information respecting Borrowers' business or financial
condition or prospects filed with the Court or delivered to the United States
Trustee for the Chapter 11 Case or the Committee; and (x) such other reports,
including, without limitation, electronic data, as to the Collateral as Lender
may request from time to time;
(b) concurrently with the delivery of the financial statements referred to
in Section 6.1(a), a certificate of the Independent Auditor stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default under Section 7.14, except as specified in such
certificate;
(c) concurrently with the delivery of the financial statements referred to
in Section 6.1(a) and Section 6.1(b), a Compliance Certificate executed by a
Responsible Officer;
(d) concurrently with the delivery of the financial statements referred to
in Section 6.1(b), a certificate executed by a Responsible Officer setting forth
dividends and other distributions any Subsidiaries to Borrowers for the
immediately preceding fiscal quarter;
(e) no later than sixty (60) days prior to the end of Borrowers' fiscal
year, an updated and extended Business Plan which shall go out at least through
the Maturity Date. Such updated and extended Business Plan shall be provided in
the same form as Schedule B-1 hereto and be approved by Lender.
(f) promptly, copies of all financial statements and reports that Borrowers
send to their shareholders, and copies of all financial statements and regular,
periodical or special reports (including Forms 10K, 10Q and 8K) that any
Borrower or any Subsidiary may make to, or file with, the SEC;
(g) promptly upon receipt, a copy of any "management letter" received by it
that has been prepared by its internal or outside accountants;
(h) promptly, such additional information regarding the business, financial
or corporate affairs of any Borrower or any Subsidiary as Lender may from time
to time reasonably request; and
(i) with respect to store closings not previously disclosed to Lender prior
to the date hereof, at least fifteen (15) days prior to the closing of any
retail store location, notice of the closing of such retail store location,
together with an estimate of reasonably anticipated cash closing expenses for
such closing and a calculation of the total cash closing expenses for all retail
store closings from the Closing Date.
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6.3 Notices. Borrowers shall promptly notify Lender:
(a) of the occurrence of any Default or Event of Default;
(b) of (i) any breach or non-performance of, or any default under, any
Contractual Obligation of any Borrower or any of its Subsidiaries which could
reasonably be expected to result in a Material Adverse Effect; and (ii) any
dispute, litigation, investigation, proceeding or suspension which may exist at
any time between any Borrower or any of its Subsidiaries and any Governmental
Authority which could reasonably be expected to result in a Material Adverse
Effect;
(c) other than actions or proceedings in the Case, of the commencement of,
or any material development in, any litigation or proceeding affecting any
Borrower or any of its Subsidiaries (i) in which the amount of damages claimed
is $250,000 (or its equivalent in another currency or currencies) or more, (ii)
in which injunctive or similar relief is sought and which, if adversely
determined, would reasonably be expected to have a Material Adverse Effect, or
(iii) in which the relief sought is an injunction or other stay of the
performance of this Agreement or any Loan Document;
(d) upon, but in no event later than ten (10) days after, becoming aware of
(i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against any Borrower or
any of its Subsidiaries or any of their respective properties pursuant to any
applicable Environmental Laws, (ii) all other Environmental Claims, and (iii)
any environmental or similar condition on any real property adjoining or in the
vicinity of the property of any Borrower or any of its Subsidiaries that could
reasonably be anticipated to cause such property or any part thereof to be
subject to any restrictions on the ownership, occupancy, transferability or use
of such property under any Environmental Laws, and which in the case of any
event described in clause (i), (ii) or (iii) above has resulted or could
reasonably be expected to result in liability of Borrowers and their
Subsidiaries in excess of $250,000 in the aggregate;
(e) of any other litigation or proceeding affecting any Borrower or any of
its Subsidiaries which any Borrower would be required to report to the SEC
pursuant to the Exchange Act, within four (4) days after reporting the same to
the SEC;
(f) of the occurrence of any of the following events affecting any Borrower
or any ERISA Affiliate which has resulted or could reasonably be expected to
result in liability of any Borrower and its Subsidiaries in excess of $250,000
in the aggregate (but in no event more than ten (10) days after such event), and
deliver to Lender a copy of any notice with respect to such event that is filed
with a Governmental Authority and any notice delivered by a Governmental
Authority to any Borrower or any ERISA Affiliate with respect to such event:
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(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of any
Pension Plan;
(iii) the adoption of, or the commencement of contributions to, any
Plan subject to Section 412 of the IRC by any Borrower or any ERISA
Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section 412 of
the IRC, if such amendment results in a material increase in contributions
or Unfunded Pension Liability.
(g) of any material change in accounting policies or financial reporting
practices by any Borrower or any of its consolidated Subsidiaries; and
(h) at least thirty (30) days prior thereto, that any Borrower or any of
its Subsidiaries intends to change its name or address from that disclosed to
Lender as of the Closing Date, together with disclosures of such new name or
address.
Each notice under this Section shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action such Borrower or any affected Subsidiary of
Borrower proposes to take with respect thereto and at what time. Each notice
under Section 6.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
6.4 Preservation of Corporate Existence, Etc.
Borrowers shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its corporate existence
and good standing under the laws of its state or jurisdiction of incorporation.
(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business except in connection with
transactions permitted by Section 7.3 and sales of assets permitted by Section
7.2;
(c) use reasonable efforts, in the ordinary course of business, to preserve
its business organization and goodwill; and
(d) preserve or renew all of its material registered patents, trademarks,
trade names and service marks.
Nothing in this Section 6.4 shall prohibit the liquidation or dissolution
of any Subsidiary into any Borrower or another Subsidiary of a Borrower.
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6.5 Maintenance of Property.
Each Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain, and preserve all its property which is used or useful in its business
in good working order and condition, ordinary wear and tear excepted, except as
permitted by Section 7.2. Each Borrower and each Subsidiary shall use the
standard of care typical in the industry in the operation and maintenance of its
facilities; provided, however, that nothing in this Section 6.5 shall prevent
any Borrower or any of its Subsidiaries from discontinuing the use, operation or
maintenance of any of its properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of such
Borrower or of the Board of Directors of the Subsidiary concerned, or of an
officer (or other agent employed by such Borrower or any of its Subsidiaries) of
such Borrower or such Subsidiary having managerial responsibility for such
property, desirable in the conduct of the business of such Borrower or such
Subsidiary; provided further, however, that any disposal of any property
pursuant to the immediately preceding proviso shall be subject to the terms and
conditions of Article 7 of this Agreement.
6.6 Insurance.
(a) At Borrowers' expense, Borrowers and their Subsidiaries shall keep the
Collateral insured against loss or damage by fire, theft, explosion, sprinklers,
and all other hazards and risks, and in such amounts, as are ordinarily insured
against by other owners in similar businesses. Borrowers and their Subsidiaries
also shall maintain business interruption, public liability, product liability,
and property damage insurance relating to their ownership and use of the
Collateral, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such insurance shall contain an endorsement showing Lender
as an additional insured or loss payee, as applicable.
(b) All such policies of insurance shall be in such form, with such
companies, and in such amounts as may be reasonably satisfactory to Lender. All
insurance required herein shall be written by companies which are authorized to
do insurance business in the State of California. All hazard insurance and such
other insurance as Lender shall specify, shall contain a California Form 438BFU
(NS) mortgagee endorsement, or an equivalent endorsement satisfactory to Lender,
showing Lender as sole loss payee thereof, and shall contain a waiver of
warranties. Every policy of insurance referred to in this Section 6.6 shall
contain an agreement by the insurer that it will not cancel such policy except
after thirty (30) days prior written notice to Lender and that any loss payable
thereunder shall be payable notwithstanding any act or negligence of any
Borrower, any of its Subsidiaries or Lender which might, absent such agreement,
result in a forfeiture of all or a part of such insurance payment. Borrowers
shall deliver to Lender certified copies of such policies of insurance and
evidence of the payment of all premiums therefor within ninety (90) days of the
Closing Date.
(c) Original policies or certificates thereof satisfactory to Lender
evidencing such insurance shall be delivered to Lender at least thirty (30) days
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prior to the expiration of the existing or preceding policies. Borrowers shall
give Lender prompt notice of any loss in excess of $250,000 covered by such
insurance, and Lender shall have the right to adjust any loss. Lender shall have
the exclusive right to adjust all losses payable under any such insurance
policies without any liability to any Borrower or any of its Subsidiaries
whatsoever in respect of such adjustments. Any monies received as payment for
any loss in excess of $250,000 under any insurance policy including the
insurance policies mentioned above, shall be paid over to Lender to be applied
at the option of Lender either to the prepayment of the Obligations without
premium, in such order or manner as Lender may elect, or shall be disbursed to
Borrowers or any of their Subsidiaries under stage payment terms satisfactory to
Lender for application to the cost of repairs, replacements, or restorations;
provided, however, that all insurance proceeds received by any Borrower after
the occurrence and during the continuation of an Event of Default shall be
promptly paid over to Lender to be applied to the Obligations as determined by
Lender in its sole discretion. All repairs, replacements, or restorations shall
be effected with reasonable promptness and shall be of a value at least equal to
the value of the items or property destroyed prior to such damage or
destruction. Upon the occurrence of an Event of Default, Lender shall have the
right to apply all prepaid premiums to the payment of the Obligations in such
order or form as Lender shall determine.
(d) Neither any Borrower nor any of its Subsidiaries shall take out
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained under this Section 6.6, unless Lender is included
thereon as named insured with the loss payable to Lender under a standard
California 438BFU (NS) Mortgagee endorsement, or its local equivalent. Each
Borrower immediately shall notify Lender whenever such separate insurance is
taken out, specifying the insurer thereunder and full particulars as to the
policies evidencing the same, and originals of such policies immediately shall
be provided to Lender.
6.7 Payment of Obligations.
Except as permitted by the Bankruptcy Code and to the extent included in
the Business Plan, each Borrower shall, and shall cause each of its Subsidiaries
to, pay and discharge as the same shall become due and payable, all of the
following obligations and liabilities:
(a) all tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are the subject of a
Permitted Protest; and
(b) all lawful claims which, if unpaid, would by law become a Lien upon its
property, unless the same are the subject of a Permitted Protest.
6.8 Compliance with Laws.
Each Borrower shall comply, and shall cause each of its Subsidiaries to
comply, in all material respects with all Requirements of Law of any
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Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist.
6.9 Compliance with ERISA.
Each Borrower shall, and shall cause each of its ERISA Affiliates to: (a)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the IRC and other federal or state law; (b) cause each Plan
which is qualified under Section 401(a) of the IRC to maintain such
qualification; and (c) make all required contributions to any Plan subject to
Section 412 of the IRC, except where such Borrower's failure to comply with the
requirements of (a), (b) and (c) hereof has not resulted or could not reasonably
be expected to result in liability of such Borrower and its Subsidiaries in
excess of $250,000 in the aggregate.
6.10 Inspection of Property and Books and Records.
Each Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain, proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of such
Borrower and such Subsidiary (which shall include, without limitation, accurate
records of all intercompany transfers among such Borrower and its Subsidiaries).
Each Borrower shall permit, and shall cause each of its Subsidiaries to permit,
representatives and independent contractors of Lender to visit and inspect any
of their respective Books and Records, properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, and to
check, test and appraise the Collateral (including, but not limited to,
appraisals for the purpose of determining the GOB Rate) in order to verify their
respective financial condition or the amount, quality, value, condition of, or
any other matter relating to, the Collateral, all at the expense of Borrowers
and at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to Borrowers; provided,
however, when an Event of Default exists Lender may do any of the foregoing at
the expense of Borrowers at any time during normal business hours and without
advance notice.
6.11 Environmental Laws.
(a) Each Borrower shall, and shall cause each of its Subsidiaries to,
conduct its operations and keep and maintain its property in compliance in all
material respects with all Environmental Laws.
(b) Upon the written request of Lender, each Borrower shall submit and
cause each of its Subsidiaries to submit, to Lender, at Borrowers' sole cost and
expense, at reasonable intervals, a report providing an update of the status of
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any environmental, health or safety compliance, hazard or liability issue
identified in any notice or report required pursuant to Section 6.3(d), that
could, individually or in the aggregate, result in liability in excess of
$250,000.
6.12 Use of Proceeds.
Borrowers shall use the proceeds of the Loans to finance capital
expenditures and for working capital and other general corporate purposes and,
only upon the Final Order Entry Date, to repay in full all Obligations
outstanding under the Pre-Relief Date Loan Agreement.
6.13 Further Assurances.
(a) Borrowers shall ensure that all written information, exhibits and
reports furnished to Lender do not and will not contain any untrue statement of
a material fact and do not and will not omit to state any material fact or any
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which made, and will promptly disclose to Lender and
correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgment or recordation thereof.
(b) Promptly upon request by Lender, each Borrower shall (and shall cause
any of its Subsidiaries to) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register, any and all such further
acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel
certificates, financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates, assurances and other
instruments Lender may reasonably require from time to time in order (i) to
carry out more effectively the purposes of this Agreement or any other Loan
Document, (ii) to subject to the Liens created by any of the Loan Documents any
of the properties, rights or interests covered by any of the Loan Documents,
(iii) to perfect and maintain the validity, effectiveness and priority of any of
the Loan Documents and the Liens intended to be created thereby, and (iv) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm to
Lender the rights granted or now or hereafter intended to be granted to Lender
under any Loan Document or under any other document executed in connection
therewith.
(c) Original sales invoices evidencing daily sales shall be mailed by each
Borrower to each Account Debtor (other than retail customers) and, at Lender's
direction after the occurrence and during the continuation of an Event of
Default, the invoices shall indicate on their face that the Account has been
assigned to Lender and that all payments are to be made directly to Lender.
6.14 Bank Accounts.
Each Borrower shall not open or maintain any deposit or investment account
with any bank or other financial institution other than the accounts described
on Schedule 6.14 as supplemented on a quarterly basis by notice of Lender.
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6.15 Intentionally Omitted.
6.16 Covenants Regarding Formation of Subsidiaries.
Borrowers shall not form or organize any new Subsidiaries.
6.17 Tax Returns.
Each Borrower shall deliver to Lender copies of each of Borrower's and its
Subsidiaries' future federal income tax returns, and any amendments thereto,
within thirty (30) days of the filing thereof with the IRS.
6.18 Returns.
Cause returns and allowances, if any, as between each Borrower and its
respective Account Debtors to be on the same basis and in accordance with the
usual customary practices of each Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower, such Person promptly shall determine the reason for such return and,
if such Person accepts such return, issue a credit memorandum in the appropriate
amount to such Account Debtor. If, at a time when an Event of Default has
occurred and is continuing, any Account Debtor (other than a retail customer)
returns any Inventory to any Borrower, such Person promptly shall determine the
reason for such return, issue a credit memorandum (with a copy to be sent to
Lender) in the appropriate amount to such Account Debtor.
6.19 Title to Equipment.
Upon Lender's request, each Borrower immediately shall deliver to Lender,
properly endorsed, any and all certificates of title or applications for
certificates of title to any items of Equipment of such Borrower.
6.20 Leases.
Except as permitted by the Bankruptcy Code or with respect to any leases
the Borrowers intend to reject in the Case, pay when due all rents and other
amounts payable under any leases to which any Borrower is a party or by which
Borrowers' properties and assets are bound, unless such payments are the subject
of a Permitted Protest. To the extent that any Borrower fails timely to make
payment of such rents and other amounts payable when due under its leases,
Lender shall be entitled, in its discretion, to reserve an amount equal to such
unpaid amounts against the Borrowing Base. Each Borrower shall promptly notify
Lender of the assumption or rejection of any such leases by any Borrower under
the Bankruptcy Code.
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7. NEGATIVE COVENANTS.
Borrowers covenant and agree that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, Borrowers will
not do any of the following without Lender's prior written consent:
7.1 Limitation on Liens.
Each Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist any Lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien (other than a Lien on the Collateral) existing on property of
any Borrower or any of its Subsidiaries on the Relief Date and set forth in
Schedule 7.1 securing Indebtedness outstanding on such date or any extension,
renewal or refinancing thereof so long as the Indebtedness secured by such Lien
is not increased and the terms of such extension, renewal or refinancing are not
more onerous on such Borrower and its Subsidiaries than the Indebtedness so
extended, renewed or refinanced;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges which
are not delinquent or remain payable without penalty, or to the extent that
non-payment thereof is permitted by Section 6.7, provided that no notice of lien
has been filed or recorded under the IRC;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA and other than on the
Collateral) consisting of pledges or deposits required in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other social security legislation;
(f) Liens on the property of any Borrower or any of its Subsidiaries
securing (i) the non-delinquent performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, (ii) contingent obligations
on surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of business, provided all
such Liens in the aggregate would not (even if enforced) cause a Material
Adverse Effect;
(g) Liens consisting of judgment or judicial attachment liens that do not
constitute Events of Default under Section 8.1(i);
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(h) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the businesses of any Borrower and its Subsidiaries;
(i) Liens on assets of corporations which become Subsidiaries after the
date of this Agreement; provided, however, that such Liens existed at the time
the respective corporations became Subsidiaries and were not created in
anticipation thereof, and the Indebtedness secured thereby shall be permitted
under Section 7.5(f);
(j) purchase money security interests on any property acquired or held by
any Borrower or its Subsidiaries securing Indebtedness incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such property;
provided that (i) any such Lien attaches to such property concurrently with or
within forty-five (45) days after the acquisition thereof, (ii) such Lien
attaches solely to the property so acquired in such transaction, (iii) the
principal amount of the debt secured thereby does not exceed one hundred percent
(100%) of the cost of such property, and (iv) the Purchase Money Indebtedness
secured by any and all such purchase money security interests shall be permitted
under Section 7.5(f);
(k) Liens securing Capitalized Lease Obligations on assets subject to such
leases, provided that the Indebtedness secured thereby shall be permitted under
Section 7.5(f);
(l) Liens arising solely by virtue of any statutory or common law provision
relating to banker's liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution; provided that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by any
Borrower in excess of those set forth by regulations promulgated by the Board of
Governors of the Federal Reserve System, and (ii) such deposit account is not
intended by any Borrower or any of its Subsidiaries to provide collateral to the
depository institution;
(m) Liens on any Managed Care Subsidiary pursuant to the applicable rules
and regulations of, or undertakings made to, any regulatory entity having
jurisdiction and authority over such Managed Care Subsidiary; and
(n) Liens on intercompany Indebtedness permitted under Section 7.5(c)
hereof.
The prohibition provided for in this Section 7.1 specifically includes,
without limitation, any motion filed by Borrowers, the Committee or any other
party-in-interest in the Chapter 11 Case, which is not dismissed within 30 days
of the date of filing thereof, to "prime" or create pari passu to any claims or
interests of Lender any Lien irrespective of whether such claims or interests
may be "adequately protected."
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7.2 Disposition of Assets.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to,
directly or indirectly, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) any property (including
accounts and notes receivable, with or without recourse) or enter into any
agreement to do any of the foregoing, except:
(a) dispositions of (i) Inventory in the ordinary course of business, or
(ii) used, worn-out or surplus Equipment in the ordinary course of business in
an amount not to exceed $250,000 in the aggregate during the term of this
Agreement;
(b) the sale of Equipment, in an amount not to exceed $250,000 in the
aggregate during the term of this Agreement, to the extent that such Equipment
is exchanged for credit against the purchase price of similar replacement
Equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement Equipment; provided, that (i) Lender shall
have a first priority perfected Lien on such replacement Equipment and (ii) any
cash proceeds remaining after the purchase of such Replacement Equipment shall
be applied as a repayment of the Obligations;
(c) Dispositions not otherwise permitted hereunder which are made for fair
market value; provided, that (i) at the time of any disposition, no Event of
Default shall exist or shall result from such Disposition, (ii) the aggregate
sales price from such disposition shall be paid in Qualified Proceeds, (iii) (x)
the aggregate value of all assets so sold by Borrowers and their Subsidiaries,
together, shall not exceed $100,000, or (y) such Disposition shall constitute a
Disposition of a retail store location permitted under Section 7.18(b), and (iv)
the cash portion of Net Proceeds relating to any such Disposition promptly shall
be used to make a prepayment of the Loans and the non-cash portion of any such
Net Proceeds promptly shall be pledged to Lender to secure the Obligations
pursuant to documentation reasonably acceptable to Lender;
(d) subleases of real property and Equipment in the ordinary course of
business to independent eye care professionals; and
(e) sales contemplated in connection with the store closings disclosed to
Lender prior to the date hereof.
7.3 Consolidations and Mergers.
Each Borrower shall not, and shall not suffer or permit any of its
Subsidiaries to, merge, reorganize, recapitalize, reclassify its capital stock
or other equity interests, consolidate with or into, or convey, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, form any new subsidiary, or
liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except:
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(a) any Subsidiary may merge with any Borrower, provided that such Borrower
shall be the continuing or surviving corporation; and
(b) any Subsidiary may sell or transfer all or substantially all of its
assets (upon voluntary liquidation or otherwise), to any Borrower.
7.4 Loans and Investments.
Each Borrower shall not purchase or acquire, or suffer or permit any
Subsidiary to purchase or acquire, or make any commitment therefor, any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or make or commit to make any Acquisitions, or make or
commit to make any advance, loan, extension of credit or capital contribution to
or any other investment in, any Person including any Affiliate of any Borrower
(together, "Investments"), except for:
(a) Investments held by any Borrower or any Subsidiary in the form of cash
equivalents;
(b) extensions of credit in the nature of accounts receivable arising from
the sale or lease of goods or services in the ordinary course of business;
(c) Investments by any Borrower in any of its Subsidiaries; and
(d) Loans to employees of any Borrower or its Subsidiaries not to exceed
$200,000 at any time outstanding.
7.5 Limitation on Indebtedness.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to,
create, incur, assume, suffer to exist, or otherwise become or remain directly
or indirectly liable with respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted pursuant to
Section 7.8;
(c) Intercompany Indebtedness issued to any Borrower by another Borrower;
(d) Indebtedness existing on the Relief Date and set forth in Schedule 7.5;
(e) [intentionally omitted];
(f) Indebtedness in an aggregate amount not to exceed $1,000,000 at any
time secured by Liens otherwise permitted by Section 7.1(i), (j) and (k);
(g) Indebtedness outstanding under the Senior Notes; and
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(h) Any extension, renewal or refinancing of any of the foregoing
Indebtedness so long as the principal amount thereof is not increased as a
result thereof and the terms thereof are no more adverse to any Borrower and its
Subsidiaries or Lender than the Indebtedness so extended, renewed or refinanced.
7.6 Transactions with Affiliates.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to,
enter into any transaction with any Affiliate of any Borrower, except upon fair
and reasonable terms no less favorable to such Borrower or such Subsidiary than
would obtain in a comparable arm's-length transaction with a Person not an
Affiliate of such Borrower or such Subsidiary.
7.7 Use of Proceeds.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to,
use any portion of the proceeds of the Loans or any Letter of Credit, directly
or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance Indebtedness of any Borrower or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act, except in compliance with such
Sections.
7.8 Contingent Obligations.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to,
create, incur, assume or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) [intentionally omitted];
(c) Contingent Obligations of any Borrower and its Subsidiaries existing as
of the Closing Date and listed in Schedule 7.8;
(d) Contingent Obligations with respect to Surety Instruments incurred to
provide security for workers' compensation claims, payment obligations in
connection with self-insurance or similar requirements, in each case incurred in
the ordinary course of business and securing obligations not constituting
Indebtedness;
(e) Contingent Obligations with respect to Surety Instruments incurred in
respect of trade letters of credit, standby letters of credit or performance,
surety or appeal bonds, in each case incurred in the ordinary course of business
and securing obligations not constituting Indebtedness and not exceeding at any
time $250,000 in the aggregate in respect of Borrower and its Subsidiaries
together; and
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(f) Contingent Obligations with respect to any liability of any Borrower
which is otherwise permitted under this Agreement.
7.9 Joint Ventures.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to
enter into any Joint Venture, except that each Borrower and its Subsidiaries may
enter into alliances with other retailers or managed care companies to solicit
and perform managed care contracts which agreements must be reasonably
acceptable to Lender.
7.10 Restricted Payments.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to,
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any shares of
any class of its capital stock, or purchase, redeem or otherwise acquire for
value any shares of its capital stock or any warrants, rights or options to
acquire such shares, now or hereafter outstanding (all such dividends,
distributions, purchases, redemptions or acquisitions are herein referred to as
"Restricted Payments"), except that any Borrower may:
(a) declare and make dividend payments or other distributions payable
solely in its common stock; and
(b) make repurchases of the common stock of any Borrower from employees of
any Borrower or any of its Subsidiaries or their authorized representatives or
successors upon the death, disability or termination of employment of such
employees in an aggregate amount not to exceed $100,000 in any calendar year as
long as no Default or Event of Default shall have occurred and be continuing or
result therefrom.
7.11 ERISA.
Each Borrower shall not, and shall not suffer or permit any of its ERISA
Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
could reasonably expected to result in liability of Borrowers in an aggregate
amount in excess of $250,000; or (b) engage in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA which has resulted or could
reasonably be expected to result in liability by Borrowers in an aggregate
amount in excess of $250,000.
7.12 Change in Business; Change of Name.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to,
engage in any material line of business which is not reasonably related or
complimentary to those lines of business carried on by each Borrower and its
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Subsidiaries on the Closing Date. Each Borrower shall not, and shall not suffer
or permit any Subsidiary to, change its corporate or other organizational
structure (within the meaning of Section 11-9-402(7) of the Code) without
Lender's prior written consent. Each Borrower shall not, and shall not suffer or
permit any Subsidiary to, change its name, or identity, or add any new
fictitious name, without thirty (30) days' prior written notice to Lender.
7.13 Accounting Changes.
Each Borrower shall not, and shall not suffer or permit any Subsidiary to,
make any significant change in accounting treatment or reporting practices,
except as required by GAAP, or change the fiscal year of any Borrower or of any
Subsidiary.
7.14 Financial Covenants.
Minimum EBITDA. Borrowers shall maintain, on a consolidated basis, EBITDA,
measured on the last day of each fiscal month and based on the rolling
twelve-month period ending therewith, of not less than Fifteen Million Dollars
($15,000,000).
7.15 Amendments.
Each Borrower shall not, and shall not permit any Subsidiary to, permit or
suffer any material amendments, modifications, supplements, or restatements of
(a) its certificate of incorporation, by-laws, or other governing documents, as
applicable, or (b) in any manner adverse to Lender, the Senior Notes, the
Indenture, any leases referred to in Section 5.22 or any of its other Material
Contracts, or any Indebtedness permitted under Section 7.5.
7.16 No Other Negative Pledges.
Each Borrower will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
agreement or restriction that prohibits or conditions the creation, incurrence
or assumption of any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or agree to do any of the
foregoing, other than as set forth in (i) this Agreement, the Orders or the
Indenture, (ii) any agreement or instrument creating a Permitted Lien (but only
to the extent such agreement or restriction applies to the assets subject to
such Permitted Lien), and (iii) operating leases of real or personal property
entered into by each Borrower or any of its Subsidiaries as lessee in the
ordinary course of business.
7.17 Prepayments.
Except in connection with a refinancing permitted by Section 7.5(h),
prepay, redeem, retire, defease, purchase, or otherwise acquire any Indebtedness
owing to any third Person, other than the Obligations in accordance with this
Agreement.
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7.18 Real Estate; Store Locations.
Each Borrower will not, and will not permit or cause any of its
Subsidiaries to, (a) purchase any real property or (b) close any of its retail
store locations without the prior written consent of Lender which shall not be
unreasonably withheld, except for store closings disclosed to Lender prior to
the date hereof.
7.19 Capital Expenditures.
Each Borrower shall not, and shall not permit any of its Subsidiaries to,
make capital expenditures in excess of $2,500,000 in any of the second, third,
or fourth quarters of fiscal year 2000, or in excess of $3,500,000 in the first
quarter of fiscal year 2001, but in any event not to exceed $8,100,000 in the
aggregate during the term of this Agreement.
7.20 [Intentionally omitted.]
7.21 Minimum Availability.
The Borrowers shall at all times, before and after giving effect to all
Advances and Letters of Credit made hereunder, but not deducting amounts paid as
the Waiver Fee under the Fee Letter, maintain minimum Availability of
$2,000,000.
8. EVENTS OF DEFAULT.
Any of the following shall constitute an "Event of Default":
8.1 Non-Payment.
If Borrowers fail to pay when due and payable or when declared due and
payable, any portion of the Obligations (whether of principal, interest, fees
and charges due Lender, reimbursement of Lender Expenses, or other amounts
constituting Obligations); or
8.2 Representation or Warranty.
Any representation or warranty by any Borrower or any of its Subsidiaries
made or deemed made herein (other than in Section 5.20), in any other Loan
Document or which is contained in any certificate, document or financial or
other statement by any Borrower, any of its Subsidiaries or any Authorized
Person, furnished at any time under this Agreement, or in or under any other
Loan Document, is incorrect in any material respect on or as of the date made or
deemed made; or
8.3 Specific Defaults.
Borrowers fail or neglect to perform or observe any term, covenant or
agreement contained in any of Sections 6.1, 6.2, 6.3, 6.6, 6.9 or 6.12 or in
Article 7; or
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<PAGE> 8.4 Other Defaults.
Borrowers or any of their Subsidiaries party thereto fail to perform or
observe any other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of five (5)
Business Days after the date upon which an Authorized Person knew or reasonably
should have known of such failure; or
8.5 Cross-Default.
Borrowers or any of their Subsidiaries (A) shall have received notice of
termination with respect to, or notice of an intent to terminate, the Wal-Mart
Master Lease Agreement, (B) shall be in default with respect to fifteen (15) or
more leases of real property related to retail store locations within Wal-Mart
stores to the extent the defaults under such leases would permit termination
thereof, or (c) shall be in default with respect to twenty-five (25) or more
leases of real property related to retail store locations (other than locations
within Wal-Mart stores ) to the extent the defaults under such leases would
permit termination thereof, other than leases the Borrowers intend to reject in
the Case; or
8.6 Intentionally Omitted.
8.7 Intentionally Omitted.
8.8 ERISA.
(i) An ERISA Event shall occur with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $250,000; or
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $250,000; or (iii) any Borrower or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$250,000; or
8.9 Monetary Judgments.
One or more non-interlocutory judgments, non-interlocutory orders, decrees
or arbitration awards (other than restructuring charges) is entered against any
Borrower or any Subsidiary after the Relief Date involving in the aggregate a
liability (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) as to any single or related series
of transactions, incidents or conditions, of $250,000 or more, and which
liability constitutes an administrative or other priority claim against the
Borrowers' estates, and the same shall remain unsatisfied, unvacated and
unstayed pending appeal for a period of twenty (20) days after the entry
thereof; or
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8.10 Non-Monetary Judgments.
Any non-monetary judgment, order or decree is entered against any Borrower
or any Subsidiary which does or would reasonably be expected to have a Material
Adverse Effect, and there shall be any period of twenty (20) consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
8.11 Change of Control. There occurs any Change of Control; or
8.12 Loss of Licenses.
Any Governmental Authority revokes or fails to renew any material license,
permit or franchise of any Borrower or any Subsidiary, or any Borrower or any
Subsidiary for any reason loses any material license, permit or franchise, or
any Borrower or Subsidiary suffers the imposition of any restraining order,
escrow, suspension or impound of funds in connection with any proceeding
(judicial or administrative) with respect to any material license, permit or
franchise, provided that such event results in or could reasonably be expected
to result in a loss of annual revenue or potential revenue of at least the
lesser of (i) $3,000,000 or (ii) one percent (1%) of the gross revenues of any
Borrower (on a consolidated basis with its Subsidiaries) for the most recently
ended twelve (12) month period; or
8.13 Adverse Change.
There occurs a Material Adverse Effect; or
8.14 Collateral.
(a) any material provision of any Loan Document shall for any reason cease
to be valid and binding on or enforceable against Borrowers or any of their
Subsidiaries party thereto or any Borrower or any of its Subsidiaries shall so
state in writing or bring an action to limit its obligations or liabilities
thereunder; or
(b) any Loan Document shall for any reason (other than pursuant to the
terms thereof) cease to create a valid security interest in the Collateral
purported to be covered thereby or such security interest shall for any reason
cease to be a perfected and first priority security interest subject only to
Permitted Liens; or
8.15 James W. Krause shall cease to be the chairman and chief executive officer
of Parent and shall not have been replaced by a new officer reasonably
acceptable to Lender within ninety (90) days; or
8.16 Any Borrower or any Subsidiary shall at any time disavow any of its
obligations under, or shall assert the invalidity or enforceability of, any of
the Loan Documents; or
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8.17 If any Borrower or any Subsidiary is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs; or
8.18 If any Borrower or any Subsidiary makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness.
8.19 (a) If a notice of Lien, levy, or assessment is filed of record with
respect to any Borrower's or any Subsidiary's properties or assets in an amount
in excess of $150,000 by the United States government, or any department,
agency, or instrumentality thereof, or by any state, county, municipal or
governmental agency (except with respect to any taxes which are the subject of a
Permitted Protest), or (b) if any taxes or debts owing at any time hereafter to
any one or more of such entities becomes a Lien in an amount in excess of
$150,000, whether choate or otherwise, upon any Borrower's or any Subsidiary's
properties or assets and the same is not paid on the payment date thereof
(except with respect to any taxes which are the subject of a Permitted Protest);
provided that Lender shall have the right to establish a reserve against the
Borrowing Base in an amount of any such Lien without waiving its rights and
remedies with respect to an Event of Default arising under this Section 8.20.
8.20 If any party to this Agreement or any other Person brings a motion, which
is not dismissed within 30 days of the filing thereof, in the Case: (a) to
obtain additional financing under Section 364(c) or (d) of the Bankruptcy Code;
(b) to grant any Lien upon or affecting any Collateral; or (c) except as
provided in the Interim Order or the Final Order, as the case may be, to use
cash collateral of Lender under Section 363(c) of the Bankruptcy Code without
Lender's consent;
8.21 If any claim or claims under Section 506(c) of the Bankruptcy Code against
or with respect to any of the Collateral is allowed;
8.22 If any of the following occur (i) a post-Relief Date judgment is entered or
liability incurred that would constitute an administrative expense (other than
trade payables, professional fees and other such expenses incurred in the
ordinary course of business) in excess of $250,000 (other than trade payables
incurred in the ordinary course of business), or (ii) any post-Relief Date
judgments are entered or liabilities are incurred, including but not limited to
any occurrences specified in subpart (i) of this Section 8.22, that would
individually or in the aggregate result in a Material Adverse Change;
8.23 If the Final Order is not entered within 45 days after the Entry Date;
8.24 The filing of any plan of reorganization or disclosure statement attendant
thereto by any Borrower or any other Person which does not require payment in
full of the Obligations under this Agreement;
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8.25 The entry of an order confirming a plan of reorganization that does not
require repayment in full of all of the Borrowers' Obligations under this
Agreement and the obligations of Borrowers to Lender under the Pre-Relief Date
Loan Agreement on the earlier of the effective date of such plan of
reorganization or thirty (30) days following entry of the order confirming such
plan of reorganization;
8.26 The entry of an order amending, supplementing, staying, vacating or
otherwise modifying the Loan Documents or the Interim Order or the Final Order
without the written consent of Lender;
8.27 The payment of, or application for authority to pay, any pre-petition
claim, other than those of trade creditors and other than those required to be
paid with the initial Advance pursuant to the terms of this Agreement, without
Lender's prior written consent or pursuant to an order of the Court after notice
and hearing;
8.28 The sale without Lender's consent, of all or substantially all of any
Borrower's assets either through a sale under Section 363 of the Bankruptcy
Code, through a confirmed plan of reorganization in the Chapter 11 Case, or
otherwise, unless such sale results in the payment in full of all Obligations;
8.29 The dismissal of the Chapter 11 Case, or the conversion of the Chapter 11
Case from one under Chapter 11 to one under Chapter 7 of the Bankruptcy Code;
8.30 The commencement of a suit or action against Lender and, as to any suit or
action brought by any Person other than any Borrower or an officer or employee
of any Borrower, the continuation thereof without dismissal for thirty (30) days
after service thereof on Lender, that assert, by or on behalf of any Borrower,
or any official committee in the Chapter 11 Case, any claim or legal or
equitable remedy which seeks subordination of the claim or Lien of Lender;
8.31 If, without Lender's consent, an interim or permanent trustee is appointed
in the Chapter 11 Case, or an examiner with expanded powers to operate or manage
the financial affairs, the business, or reorganization of Borrowers is appointed
in the Chapter 11 Case; or
8.32 If an order by the Court is entered granting relief from or modifying the
automatic stay of Section 362 of the Bankruptcy Code (i) to allow any creditor
to execute upon or enforce a Lien on any Collateral, or (ii) with respect to any
Lien of or the granting of any Lien on any Collateral to any state or local
environmental or regulatory agency or authority.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, Lender may, at its election, without notice of its election
and without demand, do any one or more of the following, all of which are
authorized by Borrowers:
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(a) Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and Lender;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of Lender, but without affecting Lender's rights
and security interests in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Lender considers advisable, and in such cases,
Lender will credit Borrowers' Loan Account with only the net amounts received by
Lender in payment of such disputed Accounts after deducting all Lender Expenses
incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in trust for Lender,
segregate all returned Inventory from all other property of Borrowers or in
Borrowers' possession and conspicuously label said returned Inventory as the
property of Lender;
(f) Without notice to or demand upon Borrowers or any guarantor, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interests in the Collateral. Borrowers agree to assemble the
Collateral if Lender so requires, and to make the Collateral available to Lender
as Lender may reasonably designate. Borrowers authorize Lender to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or Lien that in Lender's determination appears to conflict
with its security interests and to pay all expenses incurred in connection
therewith. With respect to any of Borrowers' owned or leased premises, Borrowers
hereby grant Lender a license to enter into possession of such premises and to
occupy the same, without charge, for up to one hundred twenty (120) days in
order to exercise any of Lender's rights or remedies provided herein, at law, in
equity, or otherwise;
(g) Without notice to Borrowers (such notice being expressly waived), and
without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of Section 11-9-505 of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Borrower
held by Lender (including any amounts received in the Blocked Accounts), or (ii)
indebtedness at any time owing to or for the credit or the account of any
Borrower held by Lender;
(h) Hold, as cash collateral, any and all balances and deposits of any
Borrower held by Lender, and any amounts received in the Blocked Accounts, to
secure the full and final repayment of all of the Obligations;
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(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Lender is hereby granted a non-exclusive license or other right to
use, without charge, Borrowers' labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and Borrowers' rights under all licenses and all franchise agreements shall
inure to Lender's benefit(to the extent it does not cause a violation or
forfeiture thereof);
(j) Sell the Collateral at either a public or private sale, or both, by way
of one or more contracts or transactions, for cash or on terms, in such manner
and at such places (including Borrowers' premises) as Lender determines is
commercially reasonable. It is not necessary that the Collateral be present at
any such sale;
(k) Lender shall give notice of the disposition of the Collateral as
follows:
(1) Lender shall give Borrowers and each holder of a security interest
in the Collateral who has filed with Lender a written request for notice, a
notice in writing of the time and place of public sale, or, if the sale is
a private sale or some other disposition other than a public sale is to be
made of the Collateral, then the time on or after which the private sale or
other disposition is to be made;
(2) The notice shall be personally delivered or mailed, postage
prepaid, to Borrowers as provided in Section 12, at least five (5) days
before the date fixed for the sale, or at least five (5) days before the
date on or after which the private sale or other disposition is to be made;
no notice needs to be given prior to the disposition of any portion of the
Collateral that is perishable or threatens to decline speedily in value or
that is of a type customarily sold on a recognized market. Notice to
Persons other than Borrowers claiming an interest in the Collateral shall
be sent to such addresses as they have furnished to Lender;
(3) If the sale is to be a public sale, Lender also shall give notice
of the time and place by publishing a notice one time at least five (5)
days before the date of the sale in a newspaper of general circulation in
the county in which the sale is to be held;
(l) Lender may credit bid and purchase at any public sale;
(m) Any deficiency that exists after disposition of the Collateral as
provided above will be paid immediately by Borrowers. Any excess will be
returned, without interest and subject to the rights of third Persons, by Lender
to Borrowers; and
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(n) Borrowers acknowledge that the Obligations arose out of a commercial
transaction, and agree that if an Event of Default shall occur, Lender shall
have the right to an immediate writ of possession without notice of a hearing
provided, however, that notwithstanding the foregoing, Lender agrees to give to
Borrowers and counsel approved by the Court for the Committee, at least five (5)
Business Days' notice prior to the exercise of any remedy in the nature of
liquidation of all or substantially all of the Collateral; provided further,
however, that such notice need only indicate that Lender intends to exercise one
or more remedies under one or more of the Loan Documents, at law or in equity,
and Lender shall not be required to specify any particular remedy or the timing
thereof, nor shall such notice limit in any way Lender's discretion with respect
to the pursuit and timing of any available remedy, nor shall Lender be required
to give more than one such notice.
9.2 Remedies Cumulative.
Lender's rights and remedies under this Agreement, the Loan Documents, the
Interim Order, the Final Order and all other agreements shall be cumulative.
Lender shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Lender of one
right or remedy shall be deemed an election, and no waiver by Lender of any
Event of Default shall be deemed a continuing waiver. No delay by Lender shall
constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrowers fail to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, to the extent that Lender determines that such
failure by Borrowers could reasonably be expected to have a Material Adverse
Effect, in its discretion and without prior notice to Borrowers, Lender may do
any or all of the following: (a) make payment of the same or any part thereof;
(b) set up such reserves in Borrowers' Loan Account as Lender deems necessary to
protect Lender from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type described in Section 6.6, and take any
action with respect to such policies as Lender deems prudent. Any such amounts
paid by Lender shall constitute Lender Expenses. Any such payments made by
Lender shall not constitute an agreement by Lender to make similar payments in
the future or a waiver by Lender of any Event of Default under this Agreement.
Lender need not inquire as to, or contest the validity of, any such expense,
tax, or Lien and the receipt of the usual official notice for the payment
thereof shall be conclusive evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
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<PAGE> 11.1 Demand; Protest; etc.
Borrowers waive demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Lender on which
Borrowers may in any way be liable.
11.2 Lender's Liability for Collateral.
So long as Lender complies with its obligations, if any, under Section
11-9-207 of the Code, Lender shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person. All risk of loss,
damage, or destruction of the Collateral shall be borne by Borrowers.
11.3 Indemnification.
Borrowers shall pay, indemnify, defend, and hold Lender, each Participant,
and each of their respective officers, directors, employees, counsel, agents,
and attorneys-in-fact (each, an "Indemnified Person") harmless (to the fullest
extent permitted by law) from and against any and all claims, demands, suits,
actions, investigations, proceedings, and damages, and all reasonable attorneys'
fees and disbursements and other costs and expenses actually incurred in
connection therewith (as and when they are incurred and irrespective of whether
suit is brought), at any time asserted against, imposed upon, or incurred by any
of them in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions contemplated herein, and with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). Borrowers shall have no
obligation to any Indemnified Person under this Section 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by any
party relating to this Agreement or any other Loan Document shall be in writing
and (except for financial statements and other informational documents which may
be sent by first-class mail, postage prepaid) shall be personally delivered or
sent by registered or certified mail (postage prepaid, return receipt
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requested), overnight courier, or facsimile to Borrower or to Lender, as the
case may be, at its address set forth below:
If to Borrower: VISTA EYECARE, INC.
296 Grayson Highway
Lawrenceville, Georgia 30045-5737
Attn: Chief Financial Officer
Fax No. (770) 822-2027
with copies to: VISTA EYECARE, INC.
296 Grayson Highway
Lawrenceville, Georgia 30045-5737
Attn: General Counsel
Fax No. (770) 822-2029
with copies to: Kilpatrick Stockton LLP
1100 Peachtree Street
Suite 2800
Atlanta, Georgia 30309
Attn: Joel Piassick, Esq.
Fax No. (404) 815-6555
If to Lender: FOOTHILL CAPITAL CORPORATION
60 State Street
Suite 1150
Boston, Massachussetts 02109
Attn: Account Executive
Fax: (617) 722-9493
with copies to: Paul, Hastings, Janofsky & Walker LLP
600 Peachtree Street, N.E., Suite 2400
Atlanta, Georgia 30308
Attn: Jesse H. Austin, III, Esq.
Fax No. (404) 815-2424
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. All notices or demands sent in accordance with this Section 12, other
than notices by Lender in connection with Sections 11-9-504 or 11-9-505 of the
Code, shall be deemed received on the earlier of the date of actual receipt or
three (3) Business Days after the deposit thereof in the mail. Borrowers
acknowledge and agree that notices sent by Lender in connection with Sections
11-9-504 or 11-9-505 of the Code shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted facsimile or
other similar method set forth above.
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANY OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA. THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE
COURT.
14. DESTRUCTION OF BORROWERS' DOCUMENTS.
All documents, schedules, invoices, agings, or other papers delivered to
Lender may be destroyed or otherwise disposed of by Lender four (4) months after
they are delivered to or received by Lender, unless Borrowers request, in
writing, the return of said documents, schedules, or other papers and makes
arrangements, at Borrowers' expense, for their return.
15. GENERAL PROVISIONS.
15.1 Effectiveness.
This Agreement shall be binding and deemed effective when executed by
Borrowers and Lender.
15.2 Successors and Assigns.
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties, including, with respect to the
Borrowers, the estates of Borrowers, any trustee or successor in interest of
Borrowers in the Chapter 11 Case or any subsequent case or cases commenced under
Chapter 7 of the Bankruptcy Code; provided, however, that Borrowers may not
assign this Agreement or any rights or duties hereunder without Lender's prior
written consent and any prohibited assignment shall be absolutely void. No
consent to an assignment by Lender shall release Borrowers from their
Obligations. Lender may assign this Agreement and its rights and duties
hereunder and no consent or approval by Borrowers is required in connection with
any such assignment. Lender reserves the right to sell, assign, transfer,
negotiate, or grant participations in all or any part of, or any interest in
Lender's rights and benefits hereunder. In connection with any such assignment
or participation, Lender may disclose all documents and information which Lender
now or hereafter may have relating to Borrowers or Borrowers' business. To the
extent that Lender assigns its rights and obligations with respect to the Loans
and the commitment hereunder to a third Person, Lender thereafter shall be
released from such assigned obligations to Borrowers and such assignment shall
effect a novation between Borrowers and such third Person. With respect to any
Person that purchases any portion of Lender's rights and obligations under this
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Agreement pursuant to the terms of this Section 15.2, such Person shall be
entitled (i) to all of the benefits of Section 11.3 hereof and (ii) to the
payment of all Lender Expenses and expenses of the type described in paragraph
(c) of the Fee Letter as if such Person were the "Lender" as defined herein and
in the Fee Letter.
15.3 Section Headings.
Headings and numbers have been set forth herein for convenience only.
Unless the contrary is compelled by the context, everything contained in each
section applies equally to this entire Agreement.
15.4 Interpretation.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against Lender or Borrowers, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.
15.5 Severability of Provisions.
Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
15.6 Amendments in Writing.
This Agreement can only be amended by a writing signed by Lender and
Borrowers.
15.7 Counterparts; Facsimile Execution.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by facsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by facsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
15.8 Revival and Reinstatement of Obligations.
If the incurrence or payment of the Obligations by Borrowers or any
guarantor of the Obligations or the transfer by either or both of such parties
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to Lender of any property of either or both of such parties should for any
reason subsequently be declared to be void or voidable under any state or
federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, and other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Lender is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so
upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys' fees of Lender
related thereto, the liability of Borrowers or such guarantor automatically
shall be revived, reinstated, and restored and shall exist as though such
Voidable Transfer had never been made.
15.9 Integration.
This Agreement, together with the other Loan Documents, reflects the entire
understanding of the parties with respect to the transactions contemplated
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, before the date hereof.
15.10 Time is of the Essence. Time is of the essence of this Agreement.
15.11 Pre-Relief Date Loan Agreement.
Borrowers hereby agree that this Agreement is separate and distinct from
the Pre-Relief Date Loan Agreement, the Pre-Relief Date Loan Agreement is in
full force and effect, and by entering into this Agreement Lender does not waive
any Defaults or Events of Default under the Pre-Relief Date Loan Agreement;
provided, however, that so long as Section 2.11 of this Agreement is in full
force and effect, the fees described in Section 2.11 of the Pre-Relief Date Loan
Agreement shall not be owed by any Borrower. In the event that the adequate
protection allowances granted pursuant to either the Interim Order or the Final
Order are inadequate, Lender reserves its right to seek relief from the
automatic stay to exercise its remedies under the Pre-Relief Date Loan
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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SIGNATURE PAGE TO SENIOR SECURED, SUPER-PRIORITY
DEBTOR-IN-POSSESSION LOAN AND SECURITY AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Atlanta, Georgia.
VISTA EYECARE, INC.,
a Georgia corporation, as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
INTERNATIONAL VISION ASSOCIATES, LTD.,
as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
NVAL HEALTHCARE SYSTEMS, INC.,
as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title Vice President
MIDWEST VISION, INC., as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
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<PAGE>
FRAME-N-LENS OPTICAL, INC., as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
FAMILY VISION CENTERS, INC., as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
VISION ADMINISTRATORS, INC., as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
NEW WEST EYEWORKS, INC., as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
ALEXIS HOLDING COMPANY, INC., as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
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<PAGE>
VISTA EYECARE NETWORK, LLC, as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
VISTA OPTICAL EXPRESS, INC., as Debtor and
Debtor-in-Possession
By: /s/ Peter Socha
Name: Peter Socha
Title: Vice President
FOOTHILL CAPITAL
CORPORATION, a
California corporation
with an office in
Atlanta, Georgia, as
lender and as agent
for itself and certain
other Persons
By: /s/ Todd W. Colpitts
Name: Todd W. Colpitts
Title: Vice President
Page S-3
