<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
------------------------------------------
FORM 8-K
Current Report
Pursuant to
Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report (date of Earliest Event Reported): February 20, 1997
------------------------------------------
SIGHT RESOURCE CORPORATION
(Exact name of Registrant as specified in charter)
Delaware 1-1196 ###-##-####
-------- ------ -----------
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification No.)
------------------------------------------
67 South Bedford Street, Burlington, MA 01803
--------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(617) 229-1100
--------------
Registrant's Telephone number including area code
<PAGE> 2
ITEM 5. OTHER EVENTS
------------
a) On February 20, 1997, the Registrant entered into a Credit Agreement (the
"Agreement") with Creditanstalt Corporate Finance Corporation, Inc. (the
"Bank") pursuant to which the Registrant can borrow $5,000,000 on a term loan
basis and $5,000,000 on a revolving credit basis, subject to certain
performance criteria, which loans are secured by all assets of the Registrant
and its wholly owned subsidiaries. Amounts borrowed under the Agreement will
be used to refinance existing debt, finance future acquisitions, provide
ongoing working capital and for other general corporate purposes. As part of
the Agreement, the Registrant issued to the Bank warrants to purchase 150,000
shares of the Company's common stock at a purchase price of $4.625 per share.
The warrants expire December 31, 2003.
The information contained in the Registrant's press release dated February
25, 1997 and the Agreement are incorporated by reference and filed as
exhibits 99.1 and 10.1 hereto, respectively.
<PAGE> 3
ITEM 7. EXHIBITS
--------
EXHIBIT NUMBER TITLE
- -------------- -----
99.1 Press Release re: Credit Agreement
10.1 Credit Agreement between Sight Resource
Corporation and Creditanstalt Corporate
Finance, Inc. dated February 20, 1997
10.2 $5,000,000 Term Loan Note between Sight
Resource Corporation and Creditanstalt
Corporate Finance, Inc. dated February
20, 1997
10.3 $5,000,000 Revolving Credit Note
between Sight Resource Corporation and
Creditanstalt Corporate Finance, Inc.
dated February 20, 1997
10.4 Warrant Agreement between Sight
Resource Corporation and Creditanstalt
Corporate Finance, Inc. dated February
20, 1997
10.5 Borrower Security Agreement between
Sight Resource Corporation and
Creditanstalt Corporate Finance, Inc.
dated February 20, 1997
10.6 Borrower Stock Pledge Agreement between
Sight Resource Corporation and
Creditanstalt Corporate Finance, Inc.
dated February 20, 1997
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIGHT RESOURCE CORPORATION
Date: March 5, 1997 /s/ ALAN MACDONALD
------------- ------------------------------------------
Alan MacDonald,Vice President of Finance &
Administration (principal financial and
chief accounting officer)
<PAGE> 1
Exhibit 10.1
- --------------------------------------------------------------------------------
SIGHT RESOURCE CORPORATION
-----------------------------
$10,000,000
CREDIT AGREEMENT
dated as of February 20, 1997
-----------------------------
CREDITANSTALT CORPORATE FINANCE, INC.,
as Lender
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. DEFINITIONS................................................... 1
1.1 Defined Terms............................................... 1
1.2 Other Definitional Provisions............................... 18
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS..................... 19
2.1 Term Loan................................................... 19
2.2 Procedure for Term Loan Borrowing........................... 19
2.3 Amortization of Term Loan................................... 20
2.4 Use of Proceeds of Term Loan................................ 20
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS............................................................... 20
3.1 Revolving Credit Commitments................................ 20
3.2 Procedure for Revolving Credit Borrowing.................... 21
3.3 Use of Proceeds of Revolving Credit Loans................... 21
SECTION 4. PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT;
FEES AND PAYMENTS......................................................... 21
4.1 Repayment of Loans; Evidence of Debt........................ 21
4.2 Commitment Fee.............................................. 22
4.3 Optional Prepayments........................................ 22
4.4 Optional Termination or Reduction of Commitments............ 22
4.5 Mandatory Reduction of Commitments and Prepayments.......... 23
4.6 Prepayment Premium.......................................... 24
4.7 Conversion and Continuation Options......................... 24
4.8 Minimum Amounts and Maximum Number of Tranches.............. 24
4.9 Interest Rates and Payment Dates............................ 25
4.10 Computation of Interest and Fees........................... 25
4.11 Inability to Determine Interest Rate....................... 26
4.12 Illegality................................................. 26
4.13 Requirements of Law........................................ 26
4.14 Taxes...................................................... 28
4.15 Indemnity.................................................. 29
4.16 Change of Lending Office................................... 29
SECTION 5. REPRESENTATIONS AND WARRANTIES................................ 29
5.1 Financial Condition......................................... 29
5.2 No Change................................................... 30
5.3 Disclosure.................................................. 30
5.4 Corporate Existence; Compliance with Law.................... 30
5.5 Corporate Power; Authorization; Enforceable Obligations..... 31
5.6 No Legal Bar................................................ 31
-i-
<PAGE> 3
5.7 No Material Litigation...................................... 31
5.8 No Default.................................................. 31
5.9 Ownership of Property; Liens................................ 32
5.10 Intellectual Property...................................... 32
5.11 No Burdensome Restrictions................................. 32
5.12 Taxes...................................................... 32
5.13 Federal Regulations........................................ 32
5.14 ERISA...................................................... 32
5.15 Investment Company Act; Other Regulations.................. 33
5.16 Subsidiaries............................................... 33
5.17 Environmental Matters...................................... 33
5.18 Pledge Agreements.......................................... 35
5.19 Security Agreements........................................ 35
5.20 Guarantees................................................. 35
5.21 Solvency................................................... 35
5.22 Cambridge Eye Doctors of New Hampshire, Inc................ 36
5.23 Fixtures................................................... 36
SECTION 6. CONDITIONS PRECEDENT.......................................... 36
6.1 Conditions to Initial Extensions of Credit.................. 36
6.2 Conditions to Each Extension of Credit...................... 38
SECTION 7. AFFIRMATIVE COVENANTS......................................... 39
7.1 Financial Statements........................................ 39
7.2 Certificates; Other Information............................. 40
7.3 Payment of Obligations...................................... 41
7.4 Conduct of Business and Maintenance of Existence............ 41
7.5 Maintenance of Property; Insurance.......................... 41
7.6 Inspection of Property; Books and Records; Discussions...... 42
7.7 Notices..................................................... 42
7.8 Environmental Laws.......................................... 43
7.9 Further Assurances.......................................... 43
7.10 Additional Collateral...................................... 44
7.11 Cambridge Eye Doctors of New Hampshire, Inc................ 45
SECTION 8. NEGATIVE COVENANTS............................................ 45
8.1 Financial Condition Covenants............................... 45
8.2 Limitation on Indebtedness and Preferred Stock.............. 48
8.3 Limitation on Liens......................................... 49
8.4 Limitation on Guarantee Obligations......................... 50
8.5 Limitation on Fundamental Changes........................... 50
8.6 Limitation on Sale of Assets................................ 51
8.7 Limitation on Dividends..................................... 52
8.8 Limitation on Capital Expenditures.......................... 52
8.9 Limitation on Investments, Loans and Advances............... 52
-ii-
<PAGE> 4
8.10 Limitation on Lease Expenditures........................... 53
8.11 Limitation on Transactions with Affiliates................. 53
8.12 Limitation on Sales and Leasebacks......................... 53
8.13 Limitation on Changes in Fiscal Year....................... 54
8.14 Limitation on Negative Pledge Clauses...................... 54
8.15 Limitation on Lines of Business............................ 54
SECTION 9. EVENTS OF DEFAULT............................................. 54
SECTION 10. MISCELLANEOUS................................................ 57
10.1 Amendments and Waivers..................................... 57
10.2 Notices.................................................... 57
10.3 No Waiver; Cumulative Remedies............................. 58
10.4 Survival of Representations and Warranties................. 58
10.5 Payment of Expenses and Taxes.............................. 58
10.6 Successors and Assigns; Participations and Assignments..... 59
10.7 Counterparts............................................... 61
10.8 Severability............................................... 61
10.9 Integration................................................ 61
10.10 Governing Law............................................. 61
10.11 Submission To Jurisdiction; Waivers....................... 61
10.12 Acknowledgments........................................... 62
10.13 Waivers of Jury Trial..................................... 62
-iii-
<PAGE> 5
SCHEDULES
---------
Schedule I Addresses for Notices
Schedule II Subsidiaries
Schedule III UCC Financing Statements
Schedule IV Indebtedness
Schedule V Liens
Schedule VI Guarantees
Schedule VII Environmental Matters
Schedule VIII Existing Investments
Schedule IX Landlord Consents
Schedule X Warrants, Etc.
Schedule XI Sale of Certain Assets
EXHIBITS
--------
Exhibit A Form of Term Loan Note
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Borrower Security Agreement
Exhibit D Form of Borrower Stock Pledge Agreement
Exhibit E Form of Subsidiaries Guarantee
Exhibit F Form of Subsidiaries Security Agreement
Exhibit G Form of Subsidiaries Stock Pledge Agreement
Exhibit H Form of Opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
Exhibit I Form of Borrowing Base Certificate
Exhibit J-1 Form of Notice of Borrowing (Drawings)
Exhibit J-2 Form of Notice of Borrowing (Continuations)
Exhibit J-3 Form of Notice of Borrowing (Conversions)
Exhibit K Form of Term Loan Value Certificate
Exhibit L Warrant Agreement
Exhibit M-1 Form of Lock-box Agreement
Exhibit M-2 Form of Lock-box Agreement (Government
Healthcare Receivables)
Exhibit N Form of Landlord Consent
-4-
<PAGE> 6
CREDIT AGREEMENT, dated as of February 20, 1997, between:
(a) SIGHT RESOURCE CORPORATION, a Delaware corporation (the "Borrower"); and
(b) CREDITANSTALT CORPORATE FINANCE, INC., a Delaware corporation, (the
"Lender").
WITNESSETH:
-----------
WHEREAS, the Borrower has requested that the Lender make available to it
credit facilities of up to $10,000,000 in the aggregate upon the terms, and
subject to the conditions, set forth herein to refinance existing debt, finance
future acquisitions, provide ongoing working capital and for other general
corporate purposes permitted by this Agreement;
WHEREAS, the Lender is willing to provide such financing to the Borrower
only upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the greater of (i) the Prime Rate in effect on such
day and (ii) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. If for any reason the Lender shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability or failure
of the Lender to obtain sufficient quotations in accordance with the terms
thereof, the ABR shall be determined without regard to clause (ii) of the first
sentence of this definition, until the circumstances giving rise to such
inability no longer exist. Any change in the ABR due to a change in the Prime
Rate or Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate or Federal Funds Effective Rate, respectively.
"ABR LOANS": Loans the rate of interest applicable to which is based upon
the ABR.
"AFFILIATE": as to any Person, any other Person (other than a Subsidiary)
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition, "control" of
a Person means the power, directly or indirectly, either to (a) vote 5% or more
of the securities having ordinary voting power for the election of directors of
such Person or (b) direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.
2
<PAGE> 7
"AGGREGATE OUTSTANDING EXTENSIONS OF CREDIT": at any time, an amount equal
to the aggregate principal amount of all Revolving Credit Loans made by the
Lender then outstanding.
"AGREEMENT": this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.
"APPLICABLE MARGIN": for each Type of Loan outstanding under each Facility,
the rate per annum set forth below:
(a) for the Term Loan Facility:
ABR Eurodollar Rate
--- ---------------
1.50% 3%
(b) for the Revolving Credit Facility:
ABR Eurodollar Rate
--- ---------------
1.25% 2.75%
"ASSIGNEE": as defined in subsection 10.6(c).
"AVAILABLE REVOLVING CREDIT COMMITMENT": an amount equal to the excess, if
any, of (a) the lesser of the Revolving Credit Commitment and the Loan Value of
Eligible Collateral over (b) the Lender's Aggregate Outstanding Extensions of
Credit.
"AVAILABLE TERM LOAN COMMITMENT:" an amount equal to the excess, if any, of
(a) the Lender's Term Loan Commitment over (b) the aggregate principal amount of
all Term Loans then outstanding hereunder.
"BORROWER STOCK PLEDGE AGREEMENT": the Borrower Stock Pledge Agreement to
be executed and delivered by the Borrower, substantially in the form of Exhibit
D, as the same may be amended, supplemented or otherwise modified from time to
time.
"BORROWER SECURITY AGREEMENT": the Security Agreement to be executed and
delivered by the Borrower, substantially in the form of Exhibit C, as the same
may be amended, supplemented or otherwise modified from time to time.
"BORROWER SECURITY DOCUMENTS": the collective reference to the Borrower
Security Agreement and the Borrower Stock Pledge Agreement.
"BORROWING BASE CERTIFICATE": a certificate in substantially the form of
Exhibit I hereto, duly completed and certified by a Responsible Officer of the
Borrower.
"BUSINESS": as defined in subsection 5.17(b).
3
<PAGE> 8
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close;
PROVIDED that, with respect to matters relating to Eurodollar Loans, the term
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or London, England, are authorized or
required by law to close.
"CAPITAL EXPENDITURES": for any period, the sum of, without duplication,
(a) all cash expenditures made, directly or indirectly, by the Borrower or any
of its Subsidiaries during such period for equipment, fixed assets, real
property or improvements, or for replacements or substitutions therefor or
additions thereto, that have been or should be, in accordance with GAAP,
reflected as additions to property, plant or equipment on a consolidated balance
sheet of the Borrower (other than the use of insurance proceeds for any such
expenditure for the replacement of any item listed in this clause (a)) PLUS (b)
the aggregate principal amount of all Indebtedness (including obligations under
Capitalized Leases and obligations secured by purchase money Liens permitted
under subsection 8.3(k)) assumed or incurred in connection with any such
expenditures less (c) the aggregate principal amount of any Investments
permitted under subsection 8.9(g) made after the date hereof that would
otherwise qualify as Capital Expenditures.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
"CAPITALIZED LEASES": all leases that have been or should be recorded as
capitalized leases in accordance with GAAP.
"CASH EQUIVALENTS": (a) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of the Lender or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of the Lender or of any commercial bank or investment bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days with respect to securities issued or fully guaranteed or insured by the
United States Government or any agency thereof, (d) commercial paper issued in
the United States which is rated at least A-2 by S&P or P-2 by Moody's, (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government are rated at least A by S&P or A by Moody's, (f) securities
with maturities of one year or less from the date of acquisition backed by
standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money market
mutual or similar funds which invest substantially exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
4
<PAGE> 9
"CLOSING DATE": the date on which the conditions precedent set forth in
subsection 6.1 shall be satisfied.
"CODE": the Internal Revenue Code of 1986, as amended from time to time.
"COLLATERAL": all assets of the Loan Parties (including but not limited to
the following tangible and intangible assets of the Borrower and any of its
Subsidiaries: accounts receivable, inventory, fixed assets, investments and 100%
of the stock of all Subsidiaries), now owned or hereinafter acquired, upon which
a Lien is purported to be created by any Security Document.
"COMMITMENT": the Revolving Credit Commitment or Term Loan Commitment, as
the context shall require.
"COMMITMENT FEES": as defined in subsection 4.2.
"COMMITMENT PERIOD": the period from and including the date hereof to but
not including the Termination Date or such earlier date on which a Revolving
Credit Commitment shall terminate as provided herein.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated, which
is under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group which includes the Borrower and which is treated as
a single employer under Section 414 of the Code.
"CONSOLIDATED CURRENT ASSETS": for any fiscal period, at a particular date,
the amounts which, in conformity with GAAP would be set forth opposite the
caption "current assets" on a consolidated balance sheet of the Borrower and its
Subsidiaries as at such date.
"CONSOLIDATED CURRENT LIABILITIES": for any fiscal period, at a particular
date, all amounts which, in conformity with GAAP, would be set forth opposite
the caption "current liabilities" on a consolidated balance sheet of the
Borrower and its Subsidiaries as at such date, excluding any portion of the
Loans otherwise so included.
"CONSOLIDATED FIXED CHARGES": for any period, the sum (without duplication)
of (a) the amount of interest expense, both expensed and capitalized, of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, for such period on the aggregate principal amount of their
consolidated Indebtedness and (b) required cash amortization of Indebtedness for
such period and discount or premium relating to any such Indebtedness for such
period, whether expensed or capitalized.
"CONSOLIDATED NET INCOME" or "CONSOLIDATED NET LOSS": for any fiscal
period, the amount which, in conformity with GAAP, would be set forth opposite
the caption "net income" (or any like caption) or "net loss" (or any like
caption), as the case may be, on a consolidated statement of earnings of the
Borrower and its Subsidiaries for such fiscal period.
5
<PAGE> 10
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
"CONVERSION DATE": means the last Business Day of the calendar month in the
month that is 24 months following the Closing Date.
"DEFAULT": any of the events specified in Section 9, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"E.B. BROWN ACQUISITION": the acquisition of certain assets of E.B. Brown
Opticians, Inc. by the Borrower pursuant to the Asset, Transfer and Merger
Agreement dated as of July 31, 1996.
"EBITDA": for any fiscal period, the Consolidated Net Income or
Consolidated Net Loss, as the case may be, for such fiscal period, after
restoring thereto amounts deducted for (a) extraordinary losses (or deducting
therefrom any amounts included therein on account of extraordinary gains) and
special charges (b) depreciation and amortization (including write-offs or
write-downs of amortizable and depreciable items), (c) the amount of interest
expense of the Borrower and its Subsidiaries, determined on a consolidated basis
in accordance with GAAP, for such period on the aggregate principal amount of
their consolidated Indebtedness, (d) the amount of tax expense of the Borrower
and its Subsidiaries, determined on a consolidated basis in accordance with
GAAP, for such period and (e) the aggregate amount of fixed and contingent
rentals payable by the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, for such period with respect to
leases of real and personal property.
"ELIGIBLE COLLATERAL": Eligible Receivables, Eligible Inventory and
Eligible Equipment.
"ELIGIBLE EQUIPMENT": means any functional Opthamalic Excimer Laser owned
by the Borrower or its Subsidiaries free and clear of all Liens (other than
Liens permitted herein and Liens in favor of the Lender securing the Secured
Obligations), excluding any such Opthamalic Excimer Laser determined by the
Lender to be unacceptable in accordance with the Lender's standard practices for
the evaluation of equipment including, without limitation, such Opthamalic
Excimer Lasers as listed on SCHEDULE XI as attached hereto.
"ELIGIBLE INVENTORY": means any Inventory owned by the Borrower and its
Subsidiaries free and clear of all Liens (other than the Liens permitted herein
and Liens in favor of the Lender securing the Secured Obligations) other than
the following:
(a) Inventory consisting of "perishable agricultural commodities" within
the meaning of the Perishable Agricultural Commodities Act of 1930, as amended,
and the regulations thereunder, or on which a Lien has arisen or may arise in
favor of agricultural producers under comparable state or local laws;
6
<PAGE> 11
(b) Inventory located on leaseholds as to which the lessor has not entered
into a consent and agreement providing the Lender with the right to receive
notice of default, the right to repossess such Inventory at any reasonable time
pursuant to such consent and agreement and such other rights as may be
reasonably acceptable to the Lender;
(c) Inventory that is obsolete, unusable or otherwise unavailable for sale;
(d) Inventory with respect to which the representatives and warranties set
forth in Section 5 of the Borrower Security Agreement or Section 3 of the
Subsidiary Security Agreement applicable to Inventory are not true and correct;
(e) Inventory consisting of promotional, marketing, packaging or shipping
materials and supplies;
(f) Inventory that fails to meet all standards imposed by any governmental
agency, or department or division thereof, having regulatory authority over such
Inventory or its use or sale;
(g) Inventory that is subject to any licensing, patent, royalty, trademark,
trade name or copyright agreement with any third party from whom the Borrower
has received written notice of a dispute in respect of any such agreement;
(h) Inventory located outside the United States;
(i) Inventory that is not in the possession of or under the sole control of
the Borrower or not in a leased facility in respect of which the owner has
entered into a consent and agreement providing the Lender with the right to
receive notice of default, the right to repossess such Inventory at any
reasonable time pursuant to such consent and agreement and such other rights as
may be reasonably acceptable to the Lender;
(j) Inventory consisting of work in progress;
(k) Inventory in respect of which the Borrower Security Agreement and/or
the Subsidiaries Security Agreement, after giving effect to the related filings
of financing statements that have then been made, if any, does not or has ceased
to create a valid and perfected first priority lien or security interest in
favor of the Secured Parties securing the Secured Obligations and as to which no
other Liens exist, other than Permitted Liens;
(l) After twelve (12) months from the Closing Date, Inventory not recorded
under a perpetual inventory system reasonably acceptable to the Lender; and
(m) Inventory reasonably determined by the Lender to be unacceptable in
accordance with the Lender's standard practices for the evaluation of Inventory.
The value of such Eligible Inventory shall be its book value determined in
accordance with GAAP on a basis consistent with current practice of the Borrower
or in accordance with the
7
<PAGE> 12
"average cost" method of accounting in accordance with GAAP unless the Lender
determines, in its reasonable discretion that such Eligible Inventory shall be
valued at a lower value.
"ELIGIBLE RECEIVABLES": means any Receivables owned by the Borrower and its
Subsidiaries free and clear of all Liens (other than the Liens permitted herein
and Liens in favor of the Lender securing the Secured Obligations) other than
the following:
(a) Receivables that do not arise out of sales of goods or rendering of
services in the ordinary course of the Borrower's business;
(b) Receivables on terms other than those normal or customary in the
Borrower's business;
(c) Receivables owing from any Person that is an Affiliate of the Borrower
(other than any Receivable owed by any Person that is a professional or medical
corporation or which provides services to the Borrower or any Subsidiary);
(d) Receivables, which are Medicaid Receivables or Medicare Receivables,
more than 150 days past original invoice date;
(e) Receivables (other than Medicaid Receivables or Medicare Receivables)
more than 120 days past original invoice date;
(f) Receivables owing from any Person from which an aggregate amount of
more than 50% of the Receivables owing are more than 120 days (150 days with
respect to Medicaid Receivables or Medicare Receivables) past original invoice
date;
(g) Receivables owing from any Person that has asserted any claim, demand
or liability, by action, suit, counterclaim or other judicial or arbitral
proceeding;
(h) Receivables owing from any Person that shall take or be the subject of
any action or proceeding of a type described in subsection 9(f);
(i) Receivables (i) owing from any Person that is also a supplier to or
creditor of the Borrower (to the extent such Person has any right of setoff but
only to the extent of such setoff) unless such Person has waived any right of
set-off in a manner acceptable to the Lender or (ii) representing any
manufacturer's or supplier's credits, discounts, incentive plans or similar
arrangements entitling the Borrower to discounts on future purchase therefrom;
(j) Receivables arising out of sales to account debtors outside the United
States;
(k) Receivables arising out of sales on a bill-and-hold, guaranteed sale,
sale-or-return, sale on approval or consignment basis or subject to any right of
return, set-off or charge-back;
8
<PAGE> 13
(l) Receivables (other than Medicaid or Medicare Receivables) owing from an
account debtor that is an agency, department or instrumentality of the United
States or any State thereof;
(m) Receivables in respect of which the Borrower Security Agreement and/or
the Subsidiaries Security Agreement, after giving effect to the related filings
of financing statements that have then been made, if any, does not or has ceased
to create a valid and perfected first priority lien or security interest in
favor of the Secured Parties securing the Secured Obligations or as to which any
other Lien exists, other than Permitted Liens;
(n) Receivables owing from any Person to the extent that such Receivables
exceed 15% of all Eligible Receivables; and
(o) Receivables reasonably determined by the Lender to be unacceptable in
accordance with the Lender's standard practices for the evaluation of
Receivables.
The value of such Eligible Receivables shall be their book value determined
in accordance with GAAP unless the Lender determines, in its reasonable
discretion, that such Eligible Receivables shall be valued at a lower value.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or other Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of human health
or the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a Eurodollar
Loan, the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"EURODOLLAR BASE RATE": the rate per annum determined by the Lender to be
the average of the respective rates per annum posted by each of the principal
London office of banks posting rates as displayed on the Telerate screen, page
3750 or such other page as may replace such page on such service for the purpose
of displaying the London interbank offered rate of major banks for deposits in
US dollars at approximately 11:00 A.M. (London Time) two Business Days prior to
the beginning of the relevant Interest Period, as specified in the Notice of
Borrowing (and rounded upward to the next whole multiple of 1/16 of 1%);
PROVIDED that, to the extent an interest rate is not ascertainable pursuant to
the foregoing provisions of this definition, the "Eurodollar Base Rate" shall be
the interest rate per annum determined by the Lender to be the
9
<PAGE> 14
average (rounded, if necessary, upward to the nearest whole multiple of 1/16th
of 1% per annum, if such average is not such a multiple) of the rates per annum
at which deposits in Dollars are offered for such relevant Interest Period to
major banks in the London interbank market in London, England by such other
major banks in the London interbank market in London, England at approximately
11:00 A.M. (London time) on the date which is two Business Days prior to the
beginning of such Interest Period.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is based
upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded, if necessary, upward to the
nearest whole multiple of 1/16th of 1%).
Eurodollar Base Rate
--------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT": any of the events specified in Section 9, provided that
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"EXCESS CASH FLOW": for any fiscal year of the Borrower, the amount equal
to: (a) the sum of (i) EBITDA of the Loan Parties for such fiscal year minus (b)
the sum (without duplication) of (i) interest paid in cash during such period,
(ii) the aggregate principal payments on the Loans and seller paper which is
repaid during such period pursuant to scheduled reductions and amortization's
thereof, (iii) the aggregate amount of capital expenditures made in cash during
such period, (iv) the aggregate amount of cash taxes paid during such period and
(v) the net cash component of any acquisitions.
"EXPENDITURE LIMIT": an aggregate amount equal to (a) $2,000,000 for the
Borrower's fiscal year ended December 27, 1997, (b) $2,500,000 for the
Borrower's fiscal year ended December 26, 1998, and (c) $3,000,000 for the
Borrower's fiscal year ended December 25, 1999.
"FACILITY": the Term Loan Facility and the Revolving Credit Facility.
"FACILITY FEE": as defined in the proposal letter issued by the Lender on
September 9, 1996.
"FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the
10
<PAGE> 15
average of the quotations for the day of such transactions received by the
Lender from three Federal funds brokers of recognized standing selected by it.
"GAAP": generally accepted accounting principles in the United States of
America as in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GOVERNMENT HEALTHCARE RECEIVABLES": Medicare Receivables, Medicaid
Receivables or any other Receivables of which the obligor is the United States,
or any of its states, and which arises out of charges reimbursable to the
Borrower or any of its Subsidiaries under any U.S. government or state
government healthcare program, policy, rule or regulation.
"GUARANTEES": the collective reference to the Subsidiaries Guarantee and
each other guarantee from time to time made in favor of the Lender to secure all
or any part of the obligations of the Borrower hereunder.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"), any
obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counter indemnity
or similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person incurred for the purpose of providing credit support,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof, PROVIDED, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
11
<PAGE> 16
"GUARANTOR": any Person delivering a Guarantee.
"INDEBTEDNESS": of any Person at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person, (e) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof and (f) all Indebtedness of the
types referred to in clauses (a) through (e) above which is guaranteed directly
or indirectly by such Person.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST PAYMENT DATE": (a) as to any ABR Loan, the last Business Day of
each March, June, September and December, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such Interest Period
and (c) as to any Eurodollar Loan having an Interest Period of six months, the
day which is three months (or a whole multiple thereof) after the first day of
such Interest Period and the last day of such Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar Loan: (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in a Notice of Borrowing delivered to
the Lender by 10:00 A.M., New York City time, not less than three Business Days
prior to the last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would otherwise
end on a day that is not a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the Termination
Date or beyond the date final payment is due on the Term Loan shall end on the
Termination Date or such date of final payment, as the case may be;
12
<PAGE> 17
(3) any Interest Period pertaining to a Eurodollar Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(4) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period for such
Loan.
"INVENTORY": means all Inventory referred to in Section 5 of the Borrower
Security Agreement and Section 3 of the Subsidiary Security Agreement.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Capitalized Lease
having substantially the same economic effect as any of the foregoing).
"LOAN": a Term Loan or a Revolving Credit Loan, as the context shall
require; collectively, the "LOANS".
"LOAN DOCUMENTS": this Agreement, the Notes, the Guarantees, the Lock-box
Agreements, the Security Documents and the Warrant Agreement.
"LOAN PARTIES": the Borrower and any of its Subsidiaries.
"LOAN VALUE": means (a) with respect to Eligible Inventory up to 30% of the
value of the Eligible Inventory, (b) with respect to Eligible Receivables up to
70% of the value of the Eligible Receivables and (c) with respect to Eligible
Equipment, the value of each unit of Eligible Equipment not to exceed $200,000
for such unit of Equipment, each as determined based on the most recent
Borrowing Base Certificate delivered to the Lender hereunder, provided; however,
that the Lender in its reasonable discretion based on an analysis of changes in
the Borrower's expectations or credit and collection experience arising after
the date hereof, may dilute the value of the Eligible Collateral that shall be
used in determining Loan Value.
"LOCK-BOX AGREEMENT": the Lock-box Agreement to be executed by the
Borrower, substantially in the form of EXHIBIT M-1 (or in an alternative form,
mutually accepted by the Lender and the Borrower), as the same may be amended,
supplemented or otherwise modified from time to time.
"LOCK-BOX AGREEMENT (GOVERNMENT HEALTHCARE RECEIVABLES)": the Lock-box
Agreement with respect to Government Healthcare Receivables to be executed by
the Borrower, substantially in the form of EXHIBIT M-2 (or an alternative form
as mutually accepted by the Lender and the Borrower) as the same may be amended,
supplemented or otherwise modified from time to time.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the business,
operations, property, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries
13
<PAGE> 18
taken as a whole, (b) the validity or enforceability of this or any of the other
Loan Documents or (c) the rights or remedies of the Lender hereunder or under
any of the other Loan Documents.
"MATERIAL ENVIRONMENTAL AMOUNT": an amount payable by the Borrower and/or
its Subsidiaries in excess of $100,000 for remedial costs, non-routine
compliance costs, compensatory damages, punitive damages, fines, penalties or
any combination thereof.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any hazardous or
toxic substances, materials or wastes, defined or regulated as such in or under
any Environmental Law, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"MEDICAID RECEIVABLES": Receivables of which the obligor is the United
States or any of its states and which arises out of charges reimbursable to the
Borrower or any of its Subsidiaries under Medicaid.
"MEDICARE RECEIVABLES": Receivables of which the obligor is the United
States or any of its states and which arises out of changes reimbursable to the
Borrower or any of its Subsidiaries under Medicare.
"MOODY'S": Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET PROCEEDS": with respect to any Net Proceeds Event, (a) the gross cash
consideration, and all cash proceeds (as and when received) of non-cash
consideration (including, without limitation, any such cash proceeds in the
nature of principal and interest payments on account of promissory notes or
similar obligations), received by the Borrower and its Subsidiaries in
connection with such Net Proceeds Event, minus the sum, without duplication, of
(i) any taxes which are paid or actually payable to any federal, state, local or
foreign taxing authority by the Borrower and its Subsidiaries and are directly
attributable to the receipt of such Net Proceeds, (ii) the amount of fees and
commissions (including reasonable investment banking fees), legal, accounting,
consulting, survey, title and recording tax expenses and other costs and
expenses directly incident to such Net Proceeds Event which are paid or payable
by the Borrower and its Subsidiaries, (iii) the amount of any reserve reasonably
maintained by the Borrower and its Subsidiaries with respect to indemnification
obligations owing pursuant to the definitive documentation pursuant to which the
Net Proceeds Event is consummated (with any unused portion of such reserve to
constitute Net Proceeds on the date upon which the indemnification obligations
terminates) and (iv) the amount of Indebtedness (other than intercompany
Indebtedness), if any, which is required to be repaid at the time or as a result
of such Net Proceeds Event out of the proceeds thereof.
14
<PAGE> 19
"NET PROCEEDS EVENT": (a) the incurrence by the Borrower or any of its
Subsidiaries of any Indebtedness (other than Indebtedness permitted pursuant to
clauses (a) through (j) of subsection 8.2);
(b) the issuance or sale of any equity securities by the Borrower or any of
its Subsidiaries to any Person, other than (i) the issuance or sale of any such
equity securities to the Borrower or any of its Subsidiaries, (ii) the issuance
of Capital Stock upon the sale or exercise of stock options, (iii) the issuance
and sale of Capital Stock under employee stock purchase plans, (iv) the issuance
and sale of Capital Stock and/or stock options under employee stock ownership
and incentive plans and similar programs or individual arrangements, (v) the
issuance and sale of Capital Stock in connection with an acquisition permitted
pursuant to subsection 8.9(g) or (vi) the issuance of Capital Stock pursuant to
the Warrant Agreement or any of the warrants as listed on SCHEDULE X;
(c) the sale, transfer or other disposition by the Borrower or any of its
Subsidiaries of any real or personal, tangible or intangible, property
(including, without limitation, any capital stock, but other than inventory
sold, transferred or otherwise disposed of in the ordinary course of business)
of the Borrower or such Subsidiary to any Person (other than (i) to the Borrower
or any of its Subsidiaries, (ii) sale of up to four (4) Opthamalic Excimer
Lasers, as listed on SCHEDULE XI, or (iii) the sale of certain real property, as
listed on SCHEDULE XI, acquired by the Borrower in connection with the E.B.
Brown Acquisition; and
(d) the recovery by the Borrower of amounts owing to it under property
insurance policies.
"NON-EXCLUDED TAXES": as defined in subsection 4.14(a).
"NOTES": the collective reference to the Term Note and the Revolving Credit
Note.
"NOTICE OF BORROWING": means (a) with respect to a request for a borrowing
hereunder, a request in the form of EXHIBIT J-1 hereto, (b) with respect to a
request for continuation of a Eurodollar Loan hereunder, a request in the form
of EXHIBIT J-2 hereto and (c) with respect to a request for conversion of or to
a Eurodollar Loan hereunder, a request in the form of EXHIBIT J-3 hereto, in
each case delivered by a Responsible Officer of the Borrower to the Lender
hereunder.
"PARTICIPANT": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which is covered by
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were
15
<PAGE> 20
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"PRIME RATE": the rate of interest per annum publicly announced from time
to time by the Lender at its principal office in Greenwich, Connecticut as its
prime rate on a particular day in effect for domestic (United States) commercial
loans; such rate is not necessarily intended to be the lowest rate of interest
charged by the Lender in connection with extensions of credit. Each change in
the Prime Rate shall be effective on the date such change is publicly announced.
"PROPERTIES": as defined in subsection 5.17(a).
"RECEIVABLES": means all Receivables referred to in Section 7 of the
Borrower Security Agreement and Section 5 of the Subsidiaries Security
Agreement.
"REGULATION G": Regulation G of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .22, .25, .27 or .28 of PBGC Reg. ss.4043.
"REQUIREMENT OF LAW": as to any Person, the Certificate of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"RESPONSIBLE OFFICER": the chief executive officer, the president, any
executive vice president, the chief financial officer and the treasurer of the
Borrower.
"RESTRICTED PAYMENT": as defined in subsection 8.7.
"REVOLVING CREDIT COMMITMENT": the obligation of the Lender to make
Revolving Credit Loans to the Borrower hereunder in an aggregate principal
and/or face amount at any one time outstanding not to exceed $5,000,000, as the
same may be reduced from time to time pursuant to subsections 4.4 and 4.5.
"REVOLVING CREDIT COMMITMENT FEE": a fee of 0.25% of the average daily
unused portion of the Revolving Credit Facility from the Closing Date until the
Termination Date.
16
<PAGE> 21
"REVOLVING CREDIT FACILITY": The Revolving Credit Facility provided for in
Section 3 hereof.
"REVOLVING CREDIT LOANS": as defined in subsection 3.1.
"REVOLVING CREDIT NOTE": as defined in subsection 4.1(d).
"S&P": Standard and Poor's Services, a division of McGraw Hill Companies
Inc.
"SECURED OBLIGATIONS": as defined in the Borrower Security Agreement.
"SECURITY AGREEMENTS": the collective reference to the Borrower Security
Agreement and each Subsidiary's Security Agreement.
"SECURITY DOCUMENTS": the collective reference to the Security Agreements,
the Stock Pledge Agreements and all other security documents hereafter delivered
to the Lender granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower hereunder and under any of the other
Loan Documents or to secure any guarantee of any such obligations and
liabilities.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan.
"STOCK PLEDGE AGREEMENTS": the collective reference to the Borrower Stock
Pledge Agreement and the Subsidiaries Stock Pledge Agreements.
"SUBSIDIARIES GUARANTEE": each Guarantee to be executed and delivered by
one or more Subsidiaries, substantially in the form of EXHIBIT E, as the same
may be amended, supplemented or otherwise modified from time to time.
"SUBSIDIARIES SECURITY AGREEMENT": each Security Agreement to be executed
and delivered by a Subsidiary in favor of the Lender, substantially in the form
of Exhibit F, as the same may be amended, supplemented or otherwise modified
from time to time.
"SUBSIDIARIES STOCK PLEDGE AGREEMENT": each Subsidiaries Stock Pledge
Agreement to be executed and delivered by a Subsidiary, substantially in the
form of EXHIBIT G, as the same may be amended, supplemented or otherwise
modified from time to time.
"SUBSIDIARY": as to any Person, a corporation, partnership or other entity
of which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.
17
<PAGE> 22
"TERMINATION DATE": December 31, 2002.
"TERM LOAN": as defined in subsection 2.1.
"TERM LOAN COMMITMENT": the obligation of the Lender to make a Term Loan to
the Borrower hereunder in an aggregate principal amount at any one time not to
exceed $5,000,000, as the same may be reduced from time to time pursuant to
subsections 4.4 and 4.5.
"TERM LOAN COMMITMENT FEE": a fee of 0.25% of the average daily unused
portion of the Term Loan Facility from the Closing Date to the termination of
the availability of the Term Loan.
"TERM LOAN FACILITY": the Term Loan Facility provided for in Section 2
hereof.
"TERM LOAN VALUE CERTIFICATE": a certificate substantially in the form of
EXHIBIT K hereto, only completed and certified by a Responsible Officer of the
Borrower.
"TERM NOTE": as defined in subsection 4.1(d).
"TRANCHE": the collective reference to Eurodollar Loans having then current
Interest Periods which began on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same day).
"TRANSFEREE": as defined in subsection 10.6(d).
"TYPE": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.
"WARRANT AGREEMENT": the Warrant Agreement to be executed by the Borrower,
substantially in the form of EXHIBIT L, as the same may be amended, supplemented
or otherwise modified from time to time.
1.2. Other Definitional Provisions:
-----------------------------
(a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in any Notes or any certificate or
other document made or delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Borrower and
its Subsidiaries not defined in subsection 1.1 and accounting terms partly
defined in subsection 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
18
<PAGE> 23
(d) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each mean "to but excluding". Periods of days referred to in this
Agreement shall be counted in calendar days unless Business Days are expressly
prescribed. Any period determined hereunder by reference to a month or months or
year or years shall end on the day in the relevant calendar month in the
relevant year, if applicable, immediately preceding the date numerically
corresponding to the first day of such period, PROVIDED, that if such period
commences on the last day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month during which such period is
to end), such period shall, unless otherwise expressly required by the other
provisions of this Agreement, end on the last day of the calendar month.
(e) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1. TERM LOAN. Subject to the terms and conditions hereof, the Lender
agrees to make term loans (the "TERM LOANS") to the Borrower from time to time
during the period from the date hereof until the Conversion Date in an amount
not to exceed the lesser of the Available Term Loan Commitment and 6.5 times the
sum of the Borrower's trailing three-month EBITDA plus, if the proceeds of such
Term Loan are to be used for an acquisition permitted by the terms of this
Agreement, the trailing three-month EBITDA of each company to be so acquired,
subject to any adjustments required by the Lender at its discretion. The Term
Loans may from time to time be (a) Eurodollar Loans, (b) ABR Loans or (c) a
combination thereof, as determined by the Borrower and notified to the Lender in
accordance with subsections 2.2 and 4.7. Amounts borrowed under this subsection
2.1 and repaid or prepaid may not be reborrowed.
2.2. PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give the Lender
its irrevocable Notice of Borrowing (which notice must be received by the Lender
prior to 10:00 A.M., New York City time, (x) three Business Days prior to the
requested borrowing date, if all or any part of the requested Term Loan is to be
initially Eurodollar Loans or (y) one Business Day prior to the requested
borrowing date, otherwise) together with a completed Term Loan Value
Certificate, requesting that the Lender make the Term Loan on the requested
borrowing date and specifying the amount to be borrowed. The Lender will make
the amount of the Term Loan available to the Borrower prior to 11:00 A.M., New
York City time, on the requested borrowing date, by transferring to the account
directed by the Borrower (which account need not be maintained by the Lender)
the amounts made available.
2.3. Amortization of Term Loan.
-------------------------
(a) The Borrower shall repay the Term Loan on the following dates (or, if
such date is not a Business Day, on the immediately preceding Business Day) in
the amounts indicated, determined as a percentage of the aggregate amount of
Term Loans outstanding on the Conversion Date (after giving effect to any
prepayments required by subsection 4.5 and which amount shall be reduced as a
result of the application of further prepayments by subsection 4.3):
19
<PAGE> 24
Period Amount
------ ------
March 31, 1999 6.25%
June 30, 1999 6.25%
September 30, 1999 6.25%
December 31, 1999 6.25%
March 31, 2000 8.75%
June 30, 2000 8.75%
September 30, 2000 8.75%
December 31, 2000 8.75%
March 31, 2001 5%
June 30, 2001 5%
September 30, 2001 5%
December 31, 2001 5%
March 31, 2002 5%
June 30, 2002 5%
September 30, 2002 5%
December 31, 2002 5%
(b) The Borrower shall repay any then-outstanding Term Loan on the
Termination Date.
2.4. Use of Proceeds of Term Loan. The proceeds of the Term Loan shall be
utilized by the Borrower to (a) refinance existing indebtedness of the Loan
Parties, (b) finance any future acquisitions permitted hereunder of the Loan
Parties, (c) provide working capital to the Loan Parties and (d) for other
general corporate purposes of the Loan Parties.
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1. Revolving Credit Commitments.
----------------------------
(a) Subject to the terms and conditions hereof, the Lender agrees to make
revolving credit loans ("REVOLVING CREDIT LOANS") to the Borrower from time to
time during the Commitment Period in an aggregate principal amount at any one
time outstanding which does not exceed the Available Revolving Credit
Commitment. During the Commitment Period the Borrower may use the Revolving
Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole
or in part, and reborrowing, all in accordance with the terms and conditions
hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Lender in accordance with subsections 3.2 and 4.7,
PROVIDED that no Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Termination Date.
20
<PAGE> 25
3.2. PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrower may borrow
under the Revolving Credit Commitments during the Commitment Period on any
Business Day, provided that the Borrower shall deliver to the Lender the
Borrower's irrevocable Notice of Borrowing prior to 10:00 A.M., New York City
time, (a) three Business Days prior to the requested borrowing date, if all or
any part of the requested Revolving Credit Loans are to be initially Eurodollar
Loans or (b) one Business Day prior to the requested borrowing date, otherwise.
The Lender will make the amount in funds available to the Borrower by 11:00
A.M., New York City time, on the borrowing date, by transferring to the account
directed by the Borrower (which account need not be maintained by the Lender)
the amounts made available.
3.3. USE OF PROCEEDS OF REVOLVING CREDIT LOANS. The proceeds of the
Revolving Credit Loans shall be utilized by the Borrower to (a) refinance
existing indebtedness of the Loan Parties and (b) finance any future
acquisitions permitted hereunder of the Loan Parties, (c) provide working
capital of the Loan Parties and (d) for other general corporate purposes of the
Loan Parties.
SECTION 4. PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT; FEES AND
PAYMENTS
4.1. Repayment of Loans; Evidence of Debt.
------------------------------------
(a) The Borrower hereby unconditionally promises to pay to the Lender (i)
the then unpaid principal amount of each Revolving Credit Loan on the
Termination Date (or such earlier date on which the Revolving Credit Loans
become due and payable pursuant to Section 9), and (ii) the principal amount of
the Term Loan on the dates and in the amounts set forth in subsection 2.3 (or
the then unpaid principal amount of such Term Loan, on the date that the Term
Loan become due and payable pursuant to Section 9). The Borrower hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date hereof until payment in full thereof at the rates
per annum, and on the dates, set forth in subsection 4.9.
(b) The Lender shall record (i) the amount of each Revolving Credit Loan
and Term Loan made hereunder, the Type thereof and each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to the Lender hereunder and (iii)
the amount of any sum received by the Lender hereunder from the Borrower.
(c) The entries recorded by the Lender shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of the Lender to record or any error in any record shall not in any
manner affect the obligation of the Borrower to repay (with applicable interest)
the Loans made to such Borrower by the Lender in accordance with the terms of
this Agreement.
(d) The Borrower shall execute and deliver to the Lender (i) a promissory
note of the Borrower evidencing the Term Loan of the Lender, substantially in
the form of EXHIBIT A with
21
<PAGE> 26
appropriate insertions as to date and principal amount (the "TERM NOTE") and
(ii) a promissory note of the Borrower evidencing the Revolving Credit Loans,
substantially in the form of EXHIBIT B with appropriate insertions as to date
and principal amount (a "REVOLVING CREDIT NOTE").
4.2. Commitment Fee.
--------------
(a) The Borrower agrees to pay (i) the Term Loan Commitment Fee and (ii)
the Revolving Credit Commitment Fee (together, the "COMMITMENT FEES").
(b) Such Commitment Fees shall be (i) calculated on the basis of a 365/366
day year and (ii) payable quarterly, in arrears, on the last Business Day of
each March, June, September and December and on the Termination Date or such
earlier date as the Revolving Credit Commitments shall terminate as provided
herein, commencing on the first of such dates to occur after the date hereof.
4.3. OPTIONAL PREPAYMENTS. The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty (except
as provided in subsection 4.6), upon at least three Business Days' (or, in the
case of prepayments of ABR Loans, one Business Day's) irrevocable notice to the
Lender (which notice must be received by the Lender prior to 10:00 A.M., New
York City time, on the date upon which such notice is due), specifying the date
and amount of prepayment and whether the prepayment is of Eurodollar Loans, ABR
Loans or a combination thereof, and, if of a combination thereof, the amount
allocable to each. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with any
amounts payable pursuant to subsection 4.15 and, except in the case of
prepayments of Revolving Credit Loans that are ABR Loans, accrued interest to
such date on the amount prepaid. Partial prepayments shall be in an aggregate
principal amount of $100,000 or an integral multiple thereof or in the amount of
the outstanding Revolving Credit Loans or Term Loans.
4.4. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. The Borrower shall
have the right, upon not less than five Business Days' notice to the Lender, to
terminate the Commitments or, from time to time, to reduce the amount of the
Commitments; PROVIDED that no such termination or reduction shall be permitted
(i) with respect to the Revolving Credit Commitment if after giving effect
thereto and to any prepayments of the Revolving Credit Loans made on the
effective date thereof, the aggregate principal amount of the Revolving Credit
Loans then outstanding, would exceed the Revolving Credit Commitments then in
effect and (ii) with respect to the Term Loan Commitment if, after giving effect
thereto and to any prepayments of the Term Loans made on the effective date
thereof, the aggregate principal amount of the Term Loans then outstanding would
exceed the Term Loan Commitment then in effect. Any such reduction shall be in
an amount equal to $500,000 or an integral multiple in excess thereof and shall
reduce permanently the affected Commitments then in effect.
4.5. Mandatory Reduction of Commitments and Prepayments.
--------------------------------------------------
22
<PAGE> 27
(a) If at any time the Aggregate Outstanding Extensions of Credit exceed
the lesser of the Loan Value of Eligible Collateral and the Revolving Credit
Commitment, the Borrower shall immediately repay the Revolving Credit Loans,
such repayments to be in an aggregate amount equal to such excess.
(b) Commencing with the Borrower's fiscal year ending December 30, 1999,
the Borrower shall, as promptly as is practicable (and, in any event, within 90
days following the end of the Borrower's fiscal year) repay the Term Loan and
reduce the Term Loan Commitment by the amount equal to 75% of Excess Cash Flow
for each such fiscal year.
(c) The Borrower shall, as promptly as is practicable (and, in any event,
within one Business Day following the receipt thereof), repay the Loans and
reduce the Commitments by the amount equal to the aggregate amount of Net
Proceeds received from any Net Proceeds Event; PROVIDED that no such repayment
and reduction shall be due pursuant to this subsection 4.5(c) with respect to
any Net Proceeds Event on account of:
(i) the sale, transfer or other disposition by the Borrower or any of
its Subsidiaries of any real or personal, tangible or intangible, property
of the Borrower and its Subsidiaries, to the extent that the Net Proceeds
from such sale, transfer or other disposition (in the aggregate with the
Net Proceeds from all other sales, transfers and other dispositions
occurring during such fiscal year) is less than $100,000; or
(ii) the recovery by the Borrower of amounts owing to it under
property insurance policies except, to the extent that (1) such recoveries
exceed the reasonably estimated cost of replacing the property on account
of which such amounts were paid to the Borrower and its Subsidiaries or (2)
the Borrower and its Subsidiaries are not diligently proceeding with such
replacement.
(d) Any payments of the Loans and reductions of the Commitments made
pursuant to (i) subsection 4.5(b) shall be applied in inverse order of maturity
to the then outstanding installments of the Term Loan or (ii) subsection 4.5(c)
shall be applied, first, to the prepayment of the Term Loan (with such
prepayment being applied in inverse order of maturity to the then outstanding
installments thereof) and, second, to repay Revolving Credit Loans and reduce
the Revolving Credit Commitments. Unless the Borrower otherwise elects, the
application of prepayments made pursuant to this subsection 4.5 shall be made,
first, to ABR Loans and, SECOND, to Eurodollar Loans.
4.6. PREPAYMENT PREMIUM. If, on or before the Conversion Date, the Borrower
prepays any portion of the Loans with the proceeds of a loan from another
lender, the Borrower shall pay to the Lender, on or before the date of such
prepayment, a prepayment premium of 1% on any outstanding obligations so repaid,
PROVIDED, HOWEVER, that such prepayment premium shall not be due and payable if
the Borrower prepays the Loans with the proceeds of a loan from another lender
(a) if the Lender fails to designate a different lending office under
circumstances described in subsection 4.16.
23
<PAGE> 28
4.7. Conversion and Continuation Options.
-----------------------------------
(a) The Borrower may elect from time to time to convert Eurodollar Loans to
ABR Loans by delivering to the Lender an irrevocable Notice of Borrowing by
10:00 A.M., New York City time, at least one Business Day prior to the requested
date of conversion; PROVIDED that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by
delivering to the Lender an irrevocable Notice of Borrowing by 10:00 A.M., New
York City time, at least three Business Days prior to the requested conversion
date. Any such Notice of Borrowing with respect to a conversion to Eurodollar
Loans shall specify the length of the initial Interest Period or Interest
Periods therefor. All or any part of outstanding Eurodollar Loans and ABR Loans
may be converted as provided herein, PROVIDED that (i) no Loan may be converted
into a Eurodollar Loan when any Default or Event of Default has occurred and is
continuing and the Lender has determined that such a conversion is not
appropriate and (ii) no Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the Termination Date (in the case of conversions
of Revolving Credit Loans) or the date of the final installment of principal of
the Term Loan.
(b) Any Eurodollar Loans may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower delivering
to the Lender an irrevocable Notice of Borrowing, in accordance with the
applicable provisions of the term "INTEREST PERIOD" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Loans,
PROVIDED that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Lender has determined that such a
continuation is not appropriate or (ii) after the date that is one month prior
to the Termination Date (in the case of continuations of Revolving Credit Loans)
or the date of the final installment of principal of the Term Loan and PROVIDED,
FURTHER, that if the Borrower shall fail to give such notice or if such
continuation is not permitted such Loans shall be automatically converted to ABR
Loans on the last day of such then expiring Interest Period.
4.8. MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All borrowings,
conversions and continuations of Eurodollar Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Eurodollar Loans comprising each Tranche shall be equal to
$500,000 or a whole multiple of $250,000 in excess thereof. In no event shall
there be more than 5 Tranches of Eurodollar Loans outstanding at any time.
4.9. Interest Rates and Payment Dates.
--------------------------------
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day plus the then Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR
plus the then Applicable Margin.
24
<PAGE> 29
(c) If all or a portion of (i) any principal of any Loan, (ii) any interest
payable thereon, (iii) any commitment fee or (iv) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this subsection
4.9(c) plus 2% or (y) in the case of any such overdue interest, commitment fee
or other amount, the rate described in paragraph (b) of this subsection plus 2%,
in each case from the date of such non-payment until such overdue principal,
interest, commitment fee or other amount is paid in full (as well after as
before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
PROVIDED that interest accruing pursuant to paragraph (c) of this subsection
shall be payable from time to time on demand.
(e) Notwithstanding anything to the contrary contained herein, in no event
shall the Borrower be obligated to pay interest in excess of the maximum amount
which is chargeable under applicable law.
4.10. Computation of Interest and Fees.
--------------------------------
(a) Commitment Fees and, whenever it is calculated on the basis of the ABR,
interest shall be calculated on the basis of a 365- (or 366-, as the case may
be) day year for the actual days elapsed; and, otherwise, interest shall be
calculated on the basis of a 360-day year for the actual days elapsed. The
Lender shall as soon as practicable notify the Borrower of each determination of
a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective.
(b) Each determination of an interest rate by the Lender pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower in
the absence of manifest error. The Lender shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the Lender in
determining any interest rate pursuant to subsection 4.9(a).
4.11. INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Interest Period:
(a) the Lender shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Lender shall have determined that the Eurodollar Rate determined
(which determination shall be conclusive and binding upon the Borrower) for such
Interest Period will not adequately and fairly reflect the cost to the Lender of
making or maintaining their affected Loans during such Interest Period,
25
<PAGE> 30
the Lender shall give telecopy or telephonic notice thereof to the Borrower as
soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
ABR Loans, (y) any Loans that were to have been converted on the first day of
such Interest Period to Eurodollar Loans shall be converted to or continued as
ABR Loans and (z) any outstanding Eurodollar Loans shall be converted, on the
first day of such Interest Period, to ABR Loans. Until such notice has been
withdrawn by the Lender, no further Eurodollar Loans shall be made or continued
as such, nor shall the Borrower have the right to convert Loans to Eurodollar
Loans.
4.12. ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for the Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of the
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert ABR Loans to Eurodollar Loans shall forthwith be canceled and (b) the
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to ABR Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Loan occurs on a day
which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to the Lender such amounts, if any, as may be
required pursuant to subsection 4.15.
4.13. 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 the 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 the Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loan made by it, or
change the basis of taxation of payments to the Lender in respect thereof
(except for Non-Excluded Taxes covered by subsection 4.14 and changes in
the rate of net income taxes or franchise taxes (imposed in lieu of net
income taxes) of the 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, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of the Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the
26
<PAGE> 31
Borrower shall promptly pay the Lender such additional amount or amounts as will
compensate the Lender for such increased cost or reduced amount receivable.
(b) If the 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 the Lender or any corporation controlling
the Lender with any request or directive regarding capital adequacy (whether or
not having the force of law, if compliance therewith is a customary banking
practice) from any Governmental Authority made subsequent to the date hereof
shall have the effect of reducing the rate of return on the Lender's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which such corporation could have achieved but for such adoption,
change or compliance (taking into consideration the Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
the Lender to be material, then from time to time, the Borrower shall promptly
pay to the Lender such additional amount or amounts as will compensate the
Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional amounts pursuant
to this subsection 4.13, it shall promptly notify the Borrower (with a copy to
the Lender) of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this subsection
4.13 submitted by the Lender to the Borrower (with a copy to the Lender) shall
be conclusive in the absence of manifest error. The agreements in this
subsection 4.13 shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
4.14. Taxes.
-----
(a) All payments made by the Borrower under this Agreement and any Notes
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Lender as a result of a present or former connection between the
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any Note). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("NON-EXCLUDED TAXES") are required to
be withheld from any amounts payable to the Lender hereunder or under any Note,
the amounts so payable to the Lender shall be increased to the extent necessary
to yield to the Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Lender for its
own account a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to the
Lender the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lender for any incremental taxes,
27
<PAGE> 32
interest or penalties that may become payable by the Lender as a result of any
such failure. The agreements in this subsection 4.14 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) If the Lender shall receive a credit or refund from a taxing authority
with respect to, and actually resulting from, an amount of Non-Excluded Taxes
actually paid to or on behalf of the Lender by the Borrower (a "TAX CREDIT"),
the Lender shall promptly notify the Borrower of such Tax Credit. If such Tax
Credit is received by the Lender in the form of cash, the Lender shall promptly
pay to the Borrower the amount so received with respect to the Tax Credit. If
such Tax Credit is not received by the Lender in the form of cash, the Lender
shall pay the amount of such Tax Credit not later than the time prescribed by
applicable Law for filing the return (including extensions of time) for the
Lender's taxable period which includes the period in which the Lender receives
the economic benefit of such Tax Credit. In any event, the amount of any Tax
Credit payable by a Lender to the Borrower pursuant to this clause (c) shall not
exceed the actual amount of cash refunded to, or credits received and usable (in
accordance with the actual practices then in use by the Lender) by, the Lender
from a taxing authority. In determining the amount of any Tax Credit, a Lender
may use such apportionment and attribution rules as the Lender customarily
employs in allocating taxes among its various operations and income sources and
such determination shall be conclusive absent manifest error. The Borrower
further agrees promptly to return to a Lender the amount paid to the Borrower
with respect to a Tax Credit by the Lender if the Lender is required to repay,
or is determined to be ineligible for, a Tax Credit for such amount.
Notwithstanding anything to the contrary contained herein, the Borrower hereby
acknowledges and agrees that (i) the Lender shall not be obligated to provide
the Borrower with details of the tax position of the Lender and (ii) the
Borrower shall have no right to inspect any records (including tax returns) of
the Lender.
4.15. INDEMNITY. The Borrower agrees to indemnify the Lender and to hold
the Lender harmless from any loss or expense which the Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount of
interest (as reasonably determined by the Lender) which would have accrued to
the Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
28
<PAGE> 33
4.16. CHANGE OF LENDING OFFICE. The Lender agrees that if it makes any
demand for payment under subsection 4.13 or 4.14(a), or if any adoption or
change of the type described in subsection 4.12 shall occur with respect to it,
it will 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, as determined in its good faith discretion) to designate
a different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 4.13 or
4.14(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 4.12.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loans the
Borrower hereby represents and warrants to the Lender that:
5.1. FINANCIAL CONDITION. The consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at December 30, 1995 and the related
consolidated statements of income and cash flows for the fiscal year ended on
such date, reported on by KPMG Peat Marwick LLP, copies of which have heretofore
been furnished to the Lender, are complete and correct and present fairly in all
material respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended. The
unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at November 23, 1996 and the related unaudited consolidated
statements of income and of cash flows for the eleven-month period ended on such
date, certified by a Responsible Officer, copies of which have heretofore been
furnished to the Lender, are complete and correct and present fairly in all
material respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the eleven-month period then
ended (subject to normal year-end audit adjustments and the absence of
footnotes). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). Neither the
Borrower nor any of its consolidated Subsidiaries had, at the date of the most
recent balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the foregoing statements or in the notes thereto. Except (i) to the extent
permitted under this Agreement (ii) for the write down of specific Opthamalic
Excimer Lasers, owned by the Borrower or its Subsidiaries as of the date hereof,
in an aggregate amount of $2,500,000, as disclosed to the Lender prior to the
date hereof, or (iii) as otherwise separately disclosed to the Lender in writing
prior to the date hereof, there has been no sale, transfer or other disposition
by the Borrower or any of its consolidated Subsidiaries of any material part of
its business or property and except for the E.B. Brown Acquisition, no purchase
or other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the consolidated financial condition
of the Borrower and its consolidated
29
<PAGE> 34
Subsidiaries at December 30, 1995 during the period from December 30, 1995 and
including the date hereof.
5.2. NO CHANGE. Since December 30, 1995, there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect.
5.3. DISCLOSURE. No information, schedule, exhibit or report or other
document furnished by the Borrower or any of its Subsidiaries to the Lender in
connection with the negotiation of this Agreement or any other Loan Document (or
pursuant to the terms hereof or thereof), as such information, schedule, exhibit
or report or other document has been amended, supplemented or superseded by any
other information, schedule, exhibit or report or other document later delivered
to the same parties receiving such information, schedule, exhibit or report or
other document, contained any material misstatement of fact or omitted to state
a material fact or any fact necessary to make the statements contained therein,
in light of the circumstances when made, not materially misleading.
5.4. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrower and its
Subsidiaries (i) is duly organized, validly existing and (in the case of the
Borrower and its Subsidiaries) in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(iii) in the case of the Borrower and its Subsidiaries, is duly qualified as a
foreign corporation 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, except to the extent that all failures to
be so qualified could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect and (iv) is in compliance with all Requirements of Law
except to the extent that all failures to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.5. CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The Borrower
has the corporate power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and to borrow hereunder and
has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and any Notes and to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party. No consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which the
Borrower is a party, except as required to comply with federal or state
securities law in connection with the Warrant Agreement for which such consents
authorizations, filings, notices, or other actions have been obtained or made.
This Agreement has been, and each other Loan Document to which it is a party
will be, duly executed and delivered on behalf of the Borrower. This Agreement
constitutes, and each other Loan Document to which it is a party when executed
and delivered will constitute, a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws
30
<PAGE> 35
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5.6. NO LEGAL BAR. The execution, delivery and performance of the Loan
Documents to which the Borrower is a party, the borrowings hereunder and the use
of the proceeds thereof will not violate any material Requirement of Law or
material Contractual Obligation of the Borrower or of any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien on
any of its or their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
5.7. NO MATERIAL LITIGATION. No litigation, investigation or proceeding of
or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected to
have a Material Adverse Effect.
5.8. NO DEFAULT. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
5.9. OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by subsection 8.3.
5.10. INTELLECTUAL PROPERTY. The Borrower and each of its Subsidiaries
owns, or is licensed to use, all trademarks, trade names, copyrights,
technology, know-how and processes necessary for the conduct of its business as
currently conducted, except for those the failure to own or license which could
not reasonably be expected to have a Material Adverse Effect (the "INTELLECTUAL
PROPERTY"). No claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property which, if accurate, could
reasonably be expected to have a Material Adverse Effect, nor does the Borrower
know of any valid basis for any such claim. To the best knowledge of the
Borrower, the use of such Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.11. NO BURDENSOME RESTRICTIONS. No Requirement of Law applicable to the
Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
5.12. TAXES. Each of the Borrower and its Subsidiaries has filed or caused
to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of
31
<PAGE> 36
its property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or its Subsidiaries, as the case may be);
no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is
being asserted, with respect to any such tax, fee or other charge.
5.13. FEDERAL REGULATIONS. No part of the proceeds of any Loans will be
used in any manner which would violate, or result in the violation of,
Regulation D, Regulation G or Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. If
requested by the Lender, the Borrower will furnish to the Lender a statement to
the foregoing effect in conformity with the requirements of FR Form G-3 or FR
Form U-1 referred to in said Regulation G or Regulation U, as the case may be.
5.14. ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Borrower and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(l) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits by an amount in excess of $250,000.
5.15. INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
32
<PAGE> 37
5.16. SUBSIDIARIES. Schedule II hereto sets forth all of the Subsidiaries
of the Borrower at the date hereof, together with the ownership, jurisdiction
and gross assets as of November 23, 1996 of each.
5.17. Environmental Matters.
---------------------
(a) Except as otherwise disclosed to the Lender, as listed on SCHEDULE VII,
the facilities and properties owned, leased or operated by the Borrower, any of
its Subsidiaries (the "PROPERTIES") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
which (i) constitute or constituted a violation of, or (ii) could reasonably be
expected to give rise to liability under, any Environmental Law, except in
either case insofar as such violation or liability, or any aggregation thereof,
is not reasonably likely to result in the payment of a Material Environmental
Amount.
(b) The Properties and all operations at the Properties are in compliance,
and have in the last 3 years been in compliance, in all material respects with
all applicable Environmental Laws, and there is no contamination at or under
(or, to the knowledge of the Borrower, about) the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by the
Borrower or any of its Subsidiaries (the "Business") except insofar as such
violation or failure to be in compliance or contamination, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(c) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does the Borrower have
knowledge or reason to believe that any such notice will be received or is being
threatened, except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that is or are
reasonably likely to result in the payment of a Material Environmental Amount.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could reasonably be expected to give rise
to liability under, any applicable Environmental Law, except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower, any of its Subsidiaries is or will be
named as a party with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to the Properties or the Business, except
insofar as such
33
<PAGE> 38
proceeding, action, decree, order or other requirement, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably give rise to liability under
Environmental Laws, except insofar as any such violation or liability referred
to in this paragraph, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
(g) With respect to the Subsidiary, E.B. Brown Opticians, Inc., the
provisions of this subsection 5.17 are true and correct, PROVIDED, that, for
such matters that occurred prior to the E.B. Brown Acquisition, the provisions
of this subsection 5.17 are true and correct to the best of the Borrower's
knowledge.
5.18. Pledge Agreements.
-----------------
(a) Each Stock Pledge Agreement constitutes a legal, valid and binding
obligation of the Loan Party who is party thereto, enforceable against it in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
(b) Upon delivery to the Lender of the stock certificates evidencing the
pledged stock of which the issuer is a corporation organized under the laws of
any jurisdiction within the United States, the security interests granted
pursuant to the Stock Pledge Agreements will constitute a valid, perfected first
priority security interest on such pledged stock, enforceable as such against
all creditors of the respective pledgor and any Persons purporting to purchase
any such pledged stock from the respective pledgor.
5.19. Security Agreements.
-------------------
(a) Each Security Agreement constitutes a legal, valid and binding
obligation of the grantor party thereto, enforceable against it in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles.
(b) Upon filing by the Lender of the financing statements at the locations
listed on SCHEDULE III hereto (and, after the Closing Date, any additional
filings required to be made pursuant to the Loan Documents) the security
interests granted pursuant to the Security Agreements will constitute a valid,
perfected first priority security interest on the Collateral (as defined
therein) enforceable as such against all creditors of any grantor and any
Persons purporting to purchase any such Collateral from the Loan Party who is
the grantor with respect thereto (except purchasers of Inventory in the ordinary
course of business).
34
<PAGE> 39
5.20. GUARANTEES. The provisions of each Guarantee are effective to create
a legal, valid, binding and enforceable guarantee of the obligations described
therein, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
5.21. SOLVENCY. The aggregate value of all of the assets of the Borrower
and its Subsidiaries on a consolidated basis, at a fair valuation, exceeds the
total liabilities of the Borrower and its Subsidiaries on a consolidated basis
(including contingent, subordinated, unmatured and unliquidated liabilities).
The Borrower and its Subsidiaries have the ability to pay their respective debts
as they mature and do not have unreasonably small capital with which to conduct
their respective businesses. For purposes of this subsection 5.21, the "fair
valuation" of such assets shall be determined on the basis of that amount which
may be realized within a reasonable time, in any manner through realization of
the value of or dispositions of such assets at the regular market value,
conceiving the latter as the amount which could be obtained for the properties
in question within such period by a capable and diligent business person from an
interested buyer who is willing to purchase under ordinary selling conditions.
5.22. CAMBRIDGE EYE DOCTORS OF NEW HAMPSHIRE, INC.. The assets of the
Subsidiary, Cambridge Eye Doctors of New Hampshire, Inc., shall not exceed
$100,000, unless such Subsidiary complies with the provisions of subsection 7.10
as required by the provisions of subsection 7.11.
5.23. FIXTURES. No Opthamalic Excimer Laser constitutes a good so related
to particular real estate that an interest arises in it under real estate law of
the applicable state, such that, any such Opthamalic Excimer Laser constitutes a
fixture under the Uniform Commercial Code as in effect under applicable state
law.
SECTION 6. CONDITIONS PRECEDENT
6.1. CONDITIONS TO INITIAL EXTENSIONS OF CREDIT. The agreement of the
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, immediately prior to or concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:
(a) LOAN DOCUMENTS. The Lender shall have received (i) this Agreement,
executed and delivered by a duly authorized officer of the Borrower, (ii) each
Stock Pledge Agreement, executed and delivered by a duly authorized officer of
the party thereto, (iii) each Subsidiaries Guarantee, executed and delivered by
a duly authorized officer of the party thereto, (iv) each Security Agreement,
executed and delivered by a duly authorized officer of the party thereto, (v)
the Warrant Agreement, executed and delivered by a duly authorized officer of
the Borrower and (vi) within 30 days from the Closing Date, each Lock-box
Agreement, executed and delivered by a duly authorized officer of the party
thereto.
35
<PAGE> 40
(b) AGREEMENTS. The Lender shall have received true and correct copies,
certified as to authenticity by the Borrower, of such documents or instruments
as may be reasonably requested by the Lender.
(c) CLOSING CERTIFICATE OF BORROWER. The Lender shall have received a
certificate of the President or any Vice President and the Secretary or an
Assistant Secretary of the Borrower, dated the Closing Date, (i) attaching the
Charter and By-laws of the Borrower, (ii) attaching the resolutions of the Board
of Directors of the Borrower with respect to the transactions contemplated
hereby, (iii) certifying that such resolutions have not been amended, modified,
revoked or rescinded as of the date of such certificate and (iv) certifying as
to the incumbency and signature of the officers of the Borrower executing any
Loan Document; such certificate (and the attachments thereto) shall be in form
and substance satisfactory to the Lender.
(d) CLOSING CERTIFICATE OF LOAN PARTIES. The Lender shall have received a
certificate of the President or any Vice President and the Secretary or an
Assistant Secretary of each Loan Party (other than the Borrower), dated the
Closing Date, (i) attaching the Charter and By-Laws of such Loan Party, (ii)
attaching the resolutions of the Board of Directors of such Loan Party with
respect to the transactions contemplated hereby to which it is a party, (iii)
certifying that such resolutions have not been amended, modified, revoked or
rescinded as of the date of such certificate and (iv) certifying as to the
incumbency and signature of the officers of such Loan Party executing any Loan
Document; such certificate (and the attachments thereto) shall be in form and
substance satisfactory to the Lender.
(e) CORPORATE STRUCTURE. The Lender shall be satisfied with the corporate
and legal structure and capitalization of the Loan Parties, including the terms
and conditions of the charter, bylaws and each class of capital stock of the
Loan Parties and of each agreement or instrument relating to such structure or
capitalization.
(f) FEES. The Lender shall have received, for its own account, the Facility
Fee, together with all other accrued fees and expenses owing hereunder or in
connection herewith (including, without limitation, accrued fees and
disbursements of counsel to the Lender), to the extent that such fees and
expenses have been presented for payment a reasonable time prior to the Closing
Date.
(g) LEGAL OPINIONS. The Lender shall have received an executed legal
opinion of - Mintz, Levin, Coh, Ferris, Glovsky and Popeo, P.C., counsel to the
Borrower and the other Loan Parties, substantially in the form of EXHIBIT H. The
legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Lender may reasonably require.
(h) PLEDGED STOCK; STOCK POWERS. The Lender shall have received the
certificates representing the shares pledged pursuant to each of the Stock
Pledge Agreements, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof.
36
<PAGE> 41
(i) ACTIONS TO PERFECT LIENS. The Lender shall have received evidence in
form and substance reasonably satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the filing of
duly executed financing statements on form UCC-1, necessary or, in the
reasonable opinion of the Lender, desirable to perfect the Liens created by the
Security Documents shall have been completed.
(j) LIEN SEARCHES. The Lender shall have received the results of a recent
search by a Person reasonably satisfactory to the Lender, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed with
respect to personal property of the Borrower, and the results of such search
shall be reasonably satisfactory to the Lender.
(k) TERMINATION OF EXISTING CREDIT AGREEMENTS. The Lender shall have
received evidence reasonably satisfactory to it of (i) the termination by the
Borrower of the credit agreement, dated as of February 14, 1995 (as the same has
been amended, supplemented or otherwise modified from time to time), between
Arab Bank as lender and Cambridge Eye Associates, Inc. as Borrower, (ii) the
payment of all amounts which are then due and payable thereunder and (iii) all
Liens related thereto shall have been terminated and released.
(l) REVIEW OF OPERATIONS. The Lender shall have completed a review of the
operations of the Loan Parties (including, without limitation, a review of the
financial statements, financial reporting and computer systems and inventory and
receivables, from RAS Management Advisors, Inc. and appraisals of all Eligible
Equipment), each in scope, and with results, satisfactory to the Lender; without
limiting the generality of the foregoing, the Lender shall have been given such
access to the management, records, books of account, contracts and properties of
each Loan Party as it shall have requested.
(m) INSURANCE. The Lender shall have received evidence in form and
substance satisfactory to the Lender of the existence of the insurance required
under subsection 7.5(d).
(n) BORROWING BASE CERTIFICATE. The Lender shall have received a Borrowing
Base Certificate dated as of the Closing Date.
(o) SIGNATURE CARDS. The Lender shall have received signature cards, as
executed on behalf of the Borrower in form satisfactory to the Lender provided
to the Borrower by the Lender on a date reasonably in advance of the date of
this Agreement.
(p) LANDLORD CONSENTS. Within 150 days from the Closing Date, the Lender
shall have received landlord consents from the Persons listed in Schedule IX in
form and substance satisfactory to the Lender.
(q) ADDITIONAL INFORMATION. The Lender shall have received such additional
agreements, opinions, certifications, instruments, documents, orders, consents,
financing statements, reports, studies, audits and other information in form and
substance satisfactory to the Lender, as the Lender may reasonably request;
PROVIDED, that the Borrower shall be permitted to provide a Good Standing
Certificate for E.B. Brown Opticians, Inc. from the proper authorities in
37
<PAGE> 42
Ohio State not later than 75 days after the Closing Date (on or before that day,
E.B. Brown Opticians, Inc. may fail to qualify under subsection 5.4 but so shall
qualify under the name E.B. Brown Acquisition Corp.).
6.2. CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of the Lender to
make any extension of credit requested to be made by it on any date (including,
without limitation, its initial extension of credit) is subject to the
satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Borrower and each other Loan Party in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
this subsection 6.2 have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to the Lender hereunder or under any other Loan
Document, the Borrower shall and (except in the case of delivery of financial
information, reports and notices) shall cause each of its Subsidiaries to:
7.1. Financial Statements. Furnish to the Lender:
--------------------
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of the Borrower, a copy of the consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such year and
the related consolidated statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, by KPMG Peat Marwick LLP or other independent certified public
accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 30 days after the
end of each month of the fiscal year of the Borrower, the unaudited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the end of
such month and the related unaudited consolidated statements of income and
retained earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such month and the portion of the Borrower's fiscal year
through the end of such month, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments);
38
<PAGE> 43
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
7.2. Certificates; Other Information. Furnish to the Lender:
-------------------------------
(a) concurrently with the delivery of the financial statements referred to
in subsection 7.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefore no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred to
in subsections 7.1(a) and (b), a certificate of a Responsible Officer (i)
stating that, to the best of such Officer's knowledge, during such period (A) no
Subsidiary has been formed or acquired (or, if any such Subsidiary has been
formed or acquired, the Borrower has complied with the requirements of
subsection 7.10 with respect thereto), (B) neither the Borrower nor any of its
Subsidiaries has changed its name, its principal place of business, its chief
executive office or the location of any material item of tangible Collateral
without complying with the requirements of this Agreement and the Security
Documents with respect thereto and (C) the Borrower has observed or performed
all of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Loan Documents to be observed,
performed or satisfied by it, and that such Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate and (ii)
setting forth the computations used by the Borrower in determining (as of the
end of such fiscal period) compliance with the covenants contained in subsection
8.1;
(c) concurrently with the delivery of the financial statements referred to
in subsection 7.1(a), the consolidated financial report of the fiscal year as
customarily prepared by the management of the Borrower for internal use together
with a narrative description of any financial variances;
(d) not later than 45 days after the end of each fiscal year of the
Borrower, a copy of the projections by the Borrower of the operating budget and
cash flow budget of the Borrower and its Subsidiaries for the succeeding fiscal
year as adopted by the Board of Directors of the Borrower, such projections to
be accompanied by a certificate of a Responsible Officer to the effect that such
projections have been prepared on the basis of sound financial planning practice
and that such Officer has no reason to believe they are incorrect or misleading
in any material respect;
(e) concurrently with the delivery of the projections referred to in
subsection 7.2(d) the consolidated financial plan and financial forecasts as
customarily prepared by the management of the Borrower for internal use together
with a narrative description of the assumptions used in such projections;
39
<PAGE> 44
(f) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders, and within
five days after the same are filed, copies of all financial statements and
reports which the Borrower may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental Authority;
(g) as soon as available and in any event within 10 days after the end of
each month, a Borrowing Base Certificate, as at the end of such month, certified
by a Responsible Officer of the Borrower; and
(h) promptly, such additional financial and other information as the Lender
may from time to time reasonably request.
7.3. PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity in accordance with customary terms or before they become
delinquent, as the case may be, all of its material obligations of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.
7.4. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to engage
in business of the same general type as now conducted by it and preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
(in the reasonable judgment of the Borrower) desirable in the normal conduct of
its business except as otherwise permitted pursuant to subsection 8.5; comply
with all Contractual Obligations and Requirements of Law except to the extent
that failure to comply therewith could not, in the aggregate, be reasonably
expected to have a Material Adverse Effect.
7.5. Maintenance of Property; Insurance.
----------------------------------
(a) Keep all property useful and necessary in its business in good working
order and condition;
(b) maintain with financially sound and reputable insurance companies'
insurance policies on all its material property (including, in any event, all
Collateral) and business in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business;
(c) maintain professional liability insurance by using best efforts to
cause all of its professional independent contractors and professional employees
to maintain professional liability insurance with financially sound and
reputable insurance companies in at least such amounts and against such risks as
are usually insured against in the same general area by companies engaged in the
same or similar business; and
40
<PAGE> 45
(d) cause each insurance policy described in subsection 7.5(b) to contain
endorsements, in form satisfactory to the Lender, providing that the insurance
shall not be cancelable, except upon thirty (30) days prior written notice to
the Lender. In the event of any termination or notice of non-payment by any
insurer with respect to any policy or any lapse in the coverage thereunder, the
Borrower shall cause such insurer to give prompt written notice to Johanna
Connor or Insurance Department, Creditanstalt Corporate Finance, Inc., 2
Greenwich Plaza, Fourth Floor, Greenwich, CT 06830-6832 of the occurrence of
such termination, nonpayment or lapse.
7.6. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time (upon reasonable advance notice, when no Default or Event of Default has
occurred and is continuing) and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Borrower and its Subsidiaries with officers and employees of the Borrower
and its Subsidiaries and with its independent certified public accountants.
7.7. Notices. Promptly give notice to the Lender of:
-------
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual Obligation of
the Borrower or any of its Subsidiaries or (ii) litigation, investigation or
proceeding which may exist at any time between the Borrower or any of its
Subsidiaries and any Governmental Authority, which in either case, if not cured
or if adversely determined, as the case may be, could reasonably be expected to
have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $100,000 or more and not covered by
insurance or in which injunctive or similar relief is sought which could have a
Material Adverse Effect;
(d) the following events, as soon as possible and in any event within 30
days after the Borrower knows or has reason to know thereof: (i) the occurrence
or expected occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Borrower or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan;
(e) the acquisition or creation of any Subsidiary which has Capital Stock
that is owned directly or indirectly by the Borrower or any Subsidiary;
41
<PAGE> 46
(f) the occurrence of (i) any material adverse change in the business,
operations, property, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole or (ii) any development or event
which could reasonably be expected to have a Material Adverse Effect on the
rights or remedies of the Lender hereunder or under any of the other Loan
Documents; and
(g) any (I) Lien (other than the Liens permitted in subsection 8.3) on any
of the Collateral or (ii) other event which could reasonably be expected to have
a Material Adverse Effect on the aggregate value of Collateral or on the
security interests created hereby.
Each notice pursuant to this subsection 7.7 shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
7.8. Environmental Laws.
------------------
(a) Comply with, and use reasonable efforts to ensure compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and use reasonable efforts to ensure that
all tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, except to the extent that failure to do so could
not be reasonably expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and testing,
and all remedial, removal and other actions required under Environmental Laws
and promptly comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws, except
to the extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect.
7.9. Further Assurances.
------------------
(a) Upon the request of the Lender, promptly perform or cause to be
performed any and all acts and execute or cause to be executed any and all
documents (including, without limitation, financing statements and continuation
statements) for filing under the provisions of the Uniform Commercial Code or
any other Requirement of Law which are necessary or reasonably advisable to
maintain in favor of the Lender, for the benefit of the Lender, Liens on the
Collateral that are duly perfected in accordance with all applicable
Requirements of Law.
(b) Upon request of the Lender, promptly provide such documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby as the Lender shall reasonably request.
7.10. Additional Collateral.
---------------------
42
<PAGE> 47
(a) With respect to any assets (other than assets having a de minimis
value) acquired after the Closing Date by the Borrower or any of its
Subsidiaries that are intended to be subject to the Lien created by any of the
Security Documents but which are not so subject (other than (y) any assets
described in paragraph (b) or (c) of this subsection 7.10 and (z) immaterial
assets a Lien on which cannot be perfected by filing UCC-1 financing
statements), promptly (and in any event within 30 days after the acquisition
thereof): (i) if requested by the Lender, execute and deliver to the Lender such
amendments to the relevant Security Documents or such other documents as the
Lender may deem necessary or advisable to grant to the Lender a Lien on such
assets, (ii) if requested by the Lender, take all actions necessary or advisable
to cause such Lien to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be requested by the Lender, and (iii) if
requested by the Lender, deliver to the Lender legal opinions relating to the
matters described in clauses (i) and (ii) immediately preceding, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Lender.
(b) With respect to any Person that, subsequent to the Closing Date,
becomes a Subsidiary, promptly (i) cause such new Subsidiary to become a party
to a Subsidiaries Security Agreement pursuant to documentation which is in form
and substance satisfactory to the Lender and (ii) deliver to the Lender legal
opinions relating to due authorization, execution, delivery of such Subsidiaries
Security Agreement by such new Subsidiary and the enforceability against it of
such Subsidiaries Security Agreement, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Lender.
(c) With respect to any Person that, subsequent to the Closing Date,
becomes a Subsidiary, promptly (i) cause such new Subsidiary to become a party
to a Subsidiaries Guarantee pursuant to documentation which is in form and
substance satisfactory to the Lender and (ii) deliver to the Lender legal
opinions relating to due authorization, execution, delivery of such Subsidiaries
Guarantee by such new Subsidiary and the enforceability against it of such
Subsidiaries Guarantee, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Lender.
(d) With respect to any Person that, subsequent to the Closing Date,
becomes a Subsidiary, promptly cause such new Subsidiary to (i) execute and
deliver to the Lender a new stock pledge agreement or such amendments to the
relevant Stock Pledge Agreement as the Lender shall deem necessary or reasonably
advisable to grant to the Lender, for the benefit of the Lender, a Lien on the
Capital Stock of such Subsidiary which is owned by the Borrower or any of its
Subsidiaries, (ii) deliver to the Lender the certificates representing such
Capital Stock, together with undated stock powers executed and delivered in
blank by a duly authorized officer of the Borrower or such Subsidiary, as the
case may be, (iii) cause such new Subsidiary to take all actions necessary or
advisable to cause the Lien created by the relevant Subsidiary Security
Agreement to be duly perfected in accordance with all applicable Requirements of
Law, including, without limitation, the filing of financing statements in such
jurisdictions as may be requested by the Lender and (iv) deliver to the Lender
legal opinions relating to the matters described in clauses
43
<PAGE> 48
(i), (ii) and (iii) immediately preceding, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Lender.
7.11. CAMBRIDGE EYE DOCTORS OF NEW HAMPSHIRE, INC.. In the event that
Cambridge Eye Doctors of New Hampshire, Inc. acquires any assets in excess of
$100,000, after the date hereof, the Borrower shall cause such Subsidiary to
promptly comply with the provisions of 7.10 as if such Subsidiary had become a
Subsidiary on such date.
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to the Lender hereunder or under any other Loan
Document, the Borrower shall not, and (except with respect to subsection 8.1)
shall not permit any of its Subsidiaries to, directly or indirectly:
8.1. Financial Condition Covenants.
-----------------------------
(a) EBITDA. Permit, for any of the "Test Periods" ending on the dates set
forth below, EBITDA to equal less than the amount set forth opposite such period
below:
Test Periods Amount
------------ ------
3 months ended 6/30/97 $ 600,000
6 months ended 9/30/97 $1,450,000
9 months ended 12/31/97 $1,900,000
12 months ended 3/31/98 $2,450,000
12 months ended 6/30/98 $2,635,000
12 months ended 9/30/98 $2,835,000
12 months ended 12/31/98 $3,000,000
12 months ended 3/31/99 $3,000,000
12 months ended 6/30/99 $3,000,000
12 months ended 9/30/99 $3,000,000
12 months ended 12/31/99 $3,000,000
and thereafter $3,000,000
(b) INDEBTEDNESS TO EBITDA. Permit, for any of the "Test Periods" set forth
below, the ratio of Indebtedness of the Borrower and its Subsidiaries determined
on a consolidated basis in accordance with GAAP to EBITDA to be greater than the
ratio set forth opposite such period below:
Test Periods Ratio
------------ -----
3 months ended on 6/30/97 4.25
6 months ended on 9/30/97 4.25
9 months ended on 12/31/97 4.25
12 months ended 3/31/98 4.25
12 months ended 6/30/98 4
44
<PAGE> 49
12 months ended 9/30/98 4
12 months ended 12/31/98 3.75
12 months ended 3/31/99 3.75
12 months ended 6/30/99 3.50
12 months ended 9/30/99 3.50
12 months ended 12/31/99 3.25
and thereafter 3
Notwithstanding the foregoing, for purposes of this subsection 8.1(b),
EBITDA for the Borrower and its Subsidiaries as of (i) June 30, 1997 shall be
equal to the product of four (4) and EBITDA for the three months ending June 30,
1997; (ii) September 30, 1997 shall be equal to the product of two (2) and
EBITDA for the six months ending September 30, 1997; and (iii) December 31, 1997
shall be equal to the product of one and one-third (1.333) and EBITDA for the
nine (9) months ending December 31, 1997.
(c) INTEREST COVERAGE. Permit, for any of the "Test Periods" ending on the
dates set forth below, the ratio of (i) EBITDA for such period to (ii) the
amount of interest expense of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, for such period on the aggregate
principal amount of their consolidated Indebtedness, to be less than the ratio
set forth opposite such period below:
Test Periods Ratio
------------ -----
3 months ended 6/30/97 2.50
6 months ended 9/30/97 3.00
9 months ended 12/31/97 3.00
12 months ended 3/31/98 3.50
12 months ended 6/30/98 3.50
12 months ended 9/30/98 3.50
12 months ended 12/31/98 3.50
12 months ended 3/31/99 4.00
12 months ended 6/30/99 4.00
12 months ended 9/30/99 4.00
12 months ended 12/31/99 4.00
and thereafter 4.00
(d) FIXED CHARGE COVERAGE. Permit, for any of the "Test Periods" ending on
the dates set forth below, the ratio of (i) the amount of EBITDA for such period
to (ii) the sum of (A) cash Capital Expenditures for such period and (B)
Consolidated Fixed Charges for such period, to be less than the ratio set forth
opposite such period below:
Test Periods Ratio
------------ -----
3 months ended 6/30/97 1.10
6 months ended 9/30/97 1.10
9 months ended 12/31/97 1.10
12 months ended 3/31/98 1.10
45
<PAGE> 50
12 months ended 6/30/98 1.10
12 months ended 9/30/98 1.10
12 months ended 12/31/98 1.10
12 months ended 3/31/99 1.25
12 months ended 6/30/99 1.25
12 months ended 9/30/99 1.25
12 months ended 12/31/99 1.25
and thereafter 1.25
(e) CURRENT RATIO. Permit, for any time during any of the "Test Periods"
the ratio of (i) Consolidated Current Assets for such period to (ii)
Consolidated Current Liabilities for such period to be less than 1.0:
Test Periods
------------
12 months ended 12/31/97
12 months ended 12/31/98
12 months ended 12/31/99
and thereafter
(f) MINIMUM NET WORTH. Permit, for any time during any of the "Test
Periods", the net worth of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP to be less than the amount set forth
opposite such period below:
Test Periods Amount
------------ ------
3 months ended 6/30/97 $24,500,000
6 months ended 9/30/97 $24,500,000
9 months ended 12/31/97 $24,500,000
12 months ended 3/31/98 $25,000,000
12 months ended 6/30/98 $25,500,000
12 months ended 9/30/98 $26,000,000
12 months ended 12/31/98 $26,500,000
12 months ended 3/31/99 $26,500,000
12 months ended 6/30/99 $26,500,000
12 months ended 9/30/99 $26,500,000
12 months ended 12/31/99 $26,500,000
and thereafter $26,500,000
8.2. LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK. Create, incur, assume
or suffer to exist any Indebtedness or preferred stock (other than preferred
stock which, by its terms, does not require the payment of any cash dividends
thereon or impose any cash penalties for the failure to declare cash dividends
thereon), except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of any Subsidiary to the Borrower or any other Subsidiary;
46
<PAGE> 51
(c) Indebtedness outstanding on the date hereof and listed on SCHEDULE IV
(including, without limitation, the seller's note with respect to the E.B. Brown
Acquisition of an aggregate principal amount equal to $1,400,000) and any
refinancings, refundings, renewals or extensions thereof in an amount not to
exceed the then current principal amount thereof;
(d) Indebtedness of a corporation which becomes a Subsidiary after the date
hereof, PROVIDED that (i) such Indebtedness existed at the time such corporation
became a Subsidiary and was not created in anticipation thereof and (ii)
immediately after giving effect to the acquisition of such corporation by the
Borrower no Default or Event of Default shall have occurred and be continuing;
(e) additional Indebtedness not exceeding $1,500,000 in aggregate principal
amount at any one time outstanding; and
(f) Guarantee Obligations permitted pursuant to subsection 8.4;
(g) Indebtedness assumed or incurred in connection with Capital
Expenditures secured by Liens as described in subsection 8.3(k);
(h) Capitalized Leases of the Borrower and its Subsidiaries which in an
aggregate amount shall not exceed $1,000,000;
(i) Indebtedness for acquisitions permitted hereunder; and
(j) additional Indebtedness the Net Proceeds of which are applied in
accordance with the provisions of subsection 4.5(c).
8.3. LIMITATION ON LIENS. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good faith
by appropriate proceedings, PROVIDED that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 90 days or which are being contested in good
faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
47
<PAGE> 52
(e) 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 materially interfere with the ordinary
conduct of the business of the Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on SCHEDULE V, securing
Indebtedness permitted by subsection 8.2(c), PROVIDED that no such Lien is
spread to cover any additional property after the date hereof and that the
amount of Indebtedness secured thereby is not increased;
(g) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by subsection
8.2(d), PROVIDED that (i) such Liens existed at the time such corporation became
a Subsidiary and were not created in anticipation thereof, (ii) any such Lien is
not spread to cover any additional property or assets of such corporation after
the time such corporation becomes a Subsidiary, and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens (not otherwise permitted hereunder) which secure obligations not
exceeding (as to the Borrower and all Subsidiaries) $500,000 in aggregate amount
at any time outstanding;
(i) Liens created pursuant to the Security Documents;
(j) Liens created pursuant to Capitalized Leases permitted by subsection
8.2(h); PROVIDED that no such Lien shall extend to or cover any Collateral or
assets other than the assets subject to such Capitalized Leases; and
(k) Purchase money Liens upon or in real property or equipment or any
other property the purchase of which constitutes a Capital Expenditure acquired
or held by the Borrower or any of its Subsidiaries in the ordinary course of
business to secure the purchase price of such property or equipment or to secure
Indebtedness incurred solely for the purpose of financing the acquisition of any
such property or equipment to be subject to such Liens, or Liens existing on any
such property or equipment at the time of acquisition (other than any such Liens
created in contemplation of such acquisition that do not secure the purchase
price), or such Liens placed on such property or equipment within six months of
the time of such acquisition (so long as such transactions are consistent with
past business practices), or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount; PROVIDED, HOWEVER, that no such Lien
shall extend to or cover any property other than the property or equipment being
acquired, and no such extension, renewal or replacement shall extend to or cover
any property not theretofore subject to the Lien being extended, renewed or
replaced; so long as the aggregate principal amount of such Liens outstanding at
any time PLUS the aggregate principal amount of Capitalized Leases permitted
pursuant by subsection 8.2(h) outstanding shall not exceed $1,500,000
8.4. LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or suffer
to exist any Guarantee Obligation, except:
48
<PAGE> 53
(a) Guarantee Obligations in existence on the date hereof and listed on
Schedule VI;
(b) Guarantee Obligations incurred after the date hereof in an aggregate
amount not to exceed $1,000,000 at any one time outstanding;
(c) guarantees made by the Borrower of obligations of any of its
Subsidiaries, which obligations are otherwise permitted under this Agreement;
(d) guarantees made by Subsidiaries of the Borrower of obligations of the
Borrower or any of its other Subsidiaries, which obligations are otherwise
permitted under this Agreement;
(e) the Guarantees.
8.5. LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with or
into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned Subsidiaries
of the Borrower (provided that the wholly owned Subsidiary or Subsidiaries shall
be the continuing or surviving corporation);
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
the Borrower or any other wholly owned Subsidiary of the Borrower; and
(c) any Subsidiary of the Borrower may enter into any transaction permitted
by subsections 8.6 or 8.9.
8.6. LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary's Capital Stock to any Person other than the Borrower or any wholly
owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property
(including, without limitation, any property which is no longer used or useful
in the business of the Borrower and its Subsidiaries) in the ordinary course of
business; PROVIDED that the Net Proceeds of each such transaction are applied to
the prepayment of the Loans as provided in subsection 4.5;
(b) the sale or other disposition of any property, PROVIDED that (other
than inventory) the fair market value of all assets so sold or disposed of in
any period of twelve consecutive months shall not exceed $500,000;
49
<PAGE> 54
(c) the sale of inventory (including, without limitation, "out-of-date" and
"less than first quality" inventory) in the ordinary course of business;
(d) the sale or discount without recourse of accounts receivable arising in
the ordinary course of business in connection with the compromise or collection
thereof;
(e) the sale, transfer or other disposition of assets, and the issuance of
Capital Stock, the Net Proceeds of which are applied in accordance with the
provisions of subsection 4.5; PROVIDED that, in the event that the aggregate
consideration to be received by the Borrower and its Subsidiaries on account of
such sale, transfer, other disposition or issuance is more than $350,000 in the
aggregate, at least 75% of such consideration shall be paid in cash; and
(f) the sale of one or more Opthamalic Excimer Lasers as listed on SCHEDULE
XI; and
(g) the sale, transfer or other disposition of certain real property
acquired in connection with the E.B. Brown Acquisition as listed on SCHEDULE XI.
8.7. LIMITATION ON DIVIDENDS. Except as permitted by the Warrant Agreement,
as required pursuant to any employee stock option plan declare or pay any
dividend on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or any warrants or options to purchase any such Stock, whether now
or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
the Borrower or any Subsidiary (such declarations, payments, setting apart,
purchases, redemptions, defeasances, retirements, acquisitions and distributions
being herein called "RESTRICTED PAYMENTS"), PROVIDED; however, that any
Subsidiary may declare and pay dividends, payments or other distributions to the
Borrower and the Borrower may make dividends of stock to its stockholders.
8.8. LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any expenditure
in respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations), except for:
(a) expenditures in the ordinary course of business for any fiscal year of
the Borrower, in an aggregate amount not to exceed the Expenditure Limit for
such year plus any unused Expenditure Limit in an amount not to exceed
$1,000,000 from the immediately preceding fiscal year of the Borrower;
(b) expenditures made to repair or replace assets which are damaged or
destroyed, in an aggregate amount not to exceed the amount (if any) of any
proceeds of insurance received on account of such damage or destruction; and
50
<PAGE> 55
(c) expenditures on account of the making of any investment permitted
pursuant to subsection 8.9(g).
8.9. LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its Subsidiaries in
the ordinary course of business;
(d) investments by the Borrower in, and loans by the Borrower to, its
Subsidiaries and investments by such Subsidiaries in, and loans by Subsidiaries
to other Subsidiaries, in existence on the date hereof or hereafter acquired
pursuant to subsection 8.9(g);
(e) loans by the Borrower to its employees in an aggregate amount not to
exceed $500,000;
(f) investments in existence on the date hereof which are described on
Schedule VIII hereof; and
(g) during such time as no Default or Event of Default has occurred and is
continuing or would result therefrom investments in Capital Stock or assets of
wholly owned domestic Subsidiaries of the Borrower organized under the laws of
any jurisdiction within the United States, PROVIDED that: (i) such investments
shall be in an aggregate amount not to exceed $12,000,000 in any fiscal year of
the Borrower (ii) such investments shall be in the same lines of business in
which the Borrower is involved on the date hereof; (iii) the Borrower shall
provide a review by (A) a certified public accountant acceptable to the Lender
for any investment in an amount equal to or exceeding $2,500,000 but less than
an amount that would exceed 10 percent of the total assets of the Borrower and
its subsidiaries as listed on the consolidated balance sheet of the Borrower
(the "TEN PERCENT THRESHOLD") or (B) KPMG Peat Marwick LLP or other independent
certified public accountants of nationally recognized standing for any
investment in an amount equal to or exceeding the Ten Percent Threshold; (iv)
any such investment in an amount equal to or exceeding $2,500,000 shall be
approved in writing by the Lender, such approval to be in the Lender's
discretion; and (v) any such investment requiring Loans hereunder or other
Indebtedness in an aggregate principal amount equal to or exceeding $2,500,000
shall be approved in writing by the Lender, such approval to be in the Lender's
discretion.
8.10. LIMITATION ON LEASE EXPENDITURES. Create, incur, assure or suffer to
exist any non-real estate operating lease if at such time the aggregate annual
rents payable pursuant to all such leases would in an aggregate exceed $250,000
in any fiscal year of the Borrower.
51
<PAGE> 56
8.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
8.12. LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary, PROVIDED, that the
Borrower or any Subsidiary may sell any real property acquired as part of an
acquisition of a business and lease such property from the buyer if such real
property is a retail store location.
8.13. LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of the
Borrower to end on a day other than the last Saturday of December of any year.
8.14. LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any Person any
agreement, other than this Agreement, purchase money mortgages, Financing Leases
and other similar fixed asset financings permitted by this Agreement (in which
cases, any prohibition or limitation shall only be effective against the assets
financed thereby), which prohibits or limits the ability of the Borrower or any
of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired.
8.15. LIMITATION ON LINES OF BUSINESS. Enter into any business, either
directly or through any Subsidiary, except for (a) the businesses in which the
Borrower and its Subsidiaries are engaged on the date hereof and businesses of a
similar type and (b) other activities relating thereto.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due in
accordance with the terms thereof or hereof, or the Borrower shall fail to pay
any interest on any Loan, or any other amount payable hereunder, within ten (10)
Business Days after any such interest or other amount becomes due in accordance
with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower or
any other Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
52
<PAGE> 57
(c) The Borrower or any other Loan Party shall default in the observance or
performance of any agreement contained in Section 8 or any negative covenant
contained in any other Loan Document; or
(d) The Borrower or any other Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any other Loan
Document (other than as PROVIDED in paragraphs (a) through (c) of this Section
9), and such default shall continue unremedied for a period of 30 days after the
earlier of (i) the date upon which an executive officer of the Borrower has
actual knowledge thereof and (ii) the date upon which the Lender gives notice to
the Borrower thereof; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the Loans)
or in the payment of any Guarantee Obligation, beyond the period of grace (not
to exceed 60 days), if any, PROVIDED in the instrument or agreement under which
such Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
Lender on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice or the passage of time if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; PROVIDED, HOWEVER, that no Default or Event of
Default shall exist under this paragraph unless the aggregate amount of
Indebtedness and/or Guarantee Obligations in respect of which any default or
other event or condition referred to in this paragraph shall have occurred shall
be equal to at least $500,000; or
(f) (i) The Borrower or any Subsidiary shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or the
Borrower or any Subsidiary shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower or any
Subsidiary any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against the
Borrower or any Subsidiary any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof, or (iv) the
Borrower or any Subsidiary shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or
53
<PAGE> 58
any Subsidiary shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii)
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Lender, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Lender is likely
to, incur any liability in connection with a withdrawal from, or the Insolvency
or Reorganization of, a Multiemployer Plan or (vi) any other adverse event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all other
such events or conditions, if any, could reasonably be expected to involve an
aggregate amount of liability to the Borrower or any Subsidiary in excess of
$1,000,000; or
(h) One or more judgments or decrees shall be entered against the Borrower
or any Subsidiaries involving in the aggregate a liability (not paid or fully
covered by insurance) of $500,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof; or
(i) (A) any of the Security Documents shall cease, for any reason, to be in
full force and effect, or the Borrower or any other Loan Party which is a party
to any of the Security Documents shall so assert, (B) the Lien created by any of
the Security Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby or (C) any Guarantee shall cease, for
any reason, to be in full force and effect or any Guarantor shall so assert;
(j) (i) Any Person or "group" (within the meaning of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended) (A) shall have acquired
beneficial ownership of 20% or more of any outstanding class of Capital Stock
having ordinary voting power in the election of directors of the Borrower or (B)
shall obtain the power (whether or not exercised) to elect a majority of the
Borrower's directors or (ii) the Board of Directors of the Borrower shall not
consist of a majority of Continuing Directors; "CONTINUING DIRECTORS" shall mean
the directors of the Borrower on the date hereof and each other director, if
such other director's nomination for election to the Board of Directors of the
Borrower is recommended by a majority of the then Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section 9 with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other
54
<PAGE> 59
amounts owing under this Agreement shall immediately become due and payable, and
(B) if such event is any other Event of Default, either or both of the following
actions may be taken: (i) the Lender may by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) the Lender may, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Except as expressly PROVIDED
above in this Section 9, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.
SECTION 10. MISCELLANEOUS
10.1. AMENDMENTS AND WAIVERS. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection 10.1. The
Lender may, from time to time, (a) enter into with the Borrower written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lender or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the Lender
may specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences.
Any such waiver and any such amendment, supplement or modification shall be
binding upon the Borrower and the Lender and all future holders of the Loans. In
the case of any waiver, the Borrower and the Lender shall be restored to their
former positions and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
10.2. NOTICES. All notices, requests and demands to or upon the respective
parties hereto to be EFFECTIVE shall be in writing (including by facsimile
transmission) and, unless otherwise expressly PROVIDED herein, shall be deemed
to have been duly given or made (a) in the case of delivery by hand, when
delivered, (b) in the case of delivery by mail, three days after being deposited
in the mails, postage prepaid, or (c) in the case of delivery by facsimile
transmission, when sent and receipt has been confirmed, addressed as follows in
the case of the Borrower and the Lender, and as set forth in SCHEDULE I in the
case of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
The Borrower: Sight Resource Corporation
67 South Bedford Street
Burlington, Massachusetts 01803
Attention: Alan MacDonald
Phone: (617) 229-1100
Fax: (617) 229-1155
copy to: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
55
<PAGE> 60
Boston, Massachusetts 02111
Attention: Lewis Geffen, Esq.
Phone: (617) 542-6000
Fax: (617) 542-2241
The Lender: Creditanstalt Corporate Finance, Inc.
2 Greenwich Plaza
P.O. Box 1300
Greenwich, Connecticut 06836-1300
Attention: Gregory F. Mathis
Phone: (203) 861-6587
Fax: (203) 861-6594
copy to: Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20037
Attention: M. David Krohn, Esq.
Phone: (202) 663-8520
Fax: (202) 663-8007
PROVIDED that any notice, request or demand to or upon the Lender pursuant to
subsection 2.2, 3.2, 4.3, 4.4 or 4.7 shall not be effective until received.
10.3. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising on the part of the Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein PROVIDED are cumulative and not exclusive of any
rights, remedies, powers and privileges PROVIDED by law.
10.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5. PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or
reimburse the Lender for all of its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Lender, (b) to pay or reimburse the Lender for
all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the reasonable fees
56
<PAGE> 61
and disbursements of counsel to the Lender and of counsel to the Lender, (c) to
pay, indemnify, and hold the Lender harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold the Lender harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents or
the use of the proceeds of the Loans and any such other documents, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower, any of its Subsidiaries or any of the Properties
(all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), PROVIDED that the Borrower shall have no obligation hereunder to
the Lender with respect to indemnified liabilities to the extent arising from
the gross negligence or willful misconduct of the Lender. The agreements in this
subsection 10.5 shall survive repayment of the Loans and all other amounts
payable hereunder.
10.6. Successors and Assigns; Participations and Assignments.
------------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lender, and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Lender.
(b) The Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other financial institutions ("PARTICIPANTS") participating interests
in any Loan owing to the Lender, any Commitment of the Lender or any other
interest of the Lender hereunder and under the other Loan Documents. In the
event of any such sale by the Lender of a participating interest to a
Participant, the Lender's obligations under this Agreement shall remain
unchanged, the Lender shall remain solely responsible for the performance
thereof, the Lender shall remain the holder of any such Loan for all purposes
under this Agreement and the other Loan Documents, and the Borrower shall
continue to deal solely and directly with the Lender in connection with the
Lender's rights and obligations under this Agreement and the other Loan
Documents. The Lender shall not be entitled to create in favor of any
Participant, in the participation agreement pursuant to which such Participant's
participating interest shall be created or otherwise, any right to vote on,
consent to or approve any matter relating to this Agreement or any other Loan
Document. The Borrower agrees that if amounts outstanding under this Agreement
are due or unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall, to
the maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement, PROVIDED that, in
purchasing such participating interest, such
57
<PAGE> 62
Participant shall be deemed to have agreed to share with the Lender the proceeds
thereof as fully as if it were a Lender hereunder. The Borrower also agrees that
each Participant shall be entitled to the benefits of subsections 4.13, 4.14 and
4.15 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; PROVIDED that, in the case
of subsection 4.14, such Participant shall have complied with the requirements
of said subsection and PROVIDED, FURTHER, that no Participant shall be entitled
to receive any greater amount pursuant to any such subsection than the Lender
would have been entitled to receive in respect of the amount of the
participation transferred by the Lender to such Participant had no such transfer
occurred.
(c) The Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any affiliate of the Lender or, with the consent of the Borrower
(which in each case shall not be unreasonably withheld), to an additional bank
or financial institution (an "ASSIGNEE") all or any part of its rights and
obligations under this Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, in form and substance acceptable to the Lender,
executed by such Assignee, (and, in the case of an Assignee that is not an
affiliate thereof, by the Borrower) and delivered to the Lender for its
acceptance and recording, PROVIDED that, in the case of any such assignment to
an additional bank or financial institution, (x) the sum of the aggregate
principal amount of the Term Loan (or, prior to the Closing Date, Term Loan
Commitment) and the aggregate amount of the Revolving Credit Commitment being
assigned are not less than $1,000,000 (or such lesser amount as may be agreed to
by the Borrower and the Lender) and (y) if such assignment is of less than all
of the rights and obligations of the Lender, the sum of the aggregate principal
amount of the Term Loan (or, prior to the Closing Date, Term Loan Commitment)
and the aggregate amount of the Revolving Credit Commitment remaining with the
Lender is not less than 20% of the sum of the Term Loans then outstanding and
the Revolving Credit Commitments (or Aggregate Outstanding Extensions of Credit,
as the case may be) then in effect (or such lesser amount as may be agreed to by
the Borrower and the Lender). Upon such execution, delivery, acceptance and
recording (and the payment of the registration and processing fee described in
clause (e) below), from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent PROVIDED in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the Lender thereunder shall, to the extent PROVIDED in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of the Lender's rights and obligations under this Agreement, such assigning
Lender shall cease to be a party hereto). Notwithstanding any provision of this
paragraph (c) of this subsection, the consent of the Borrower shall not be
required for any assignment which occurs at any time when any of the events
described in subsection 9(f) shall have occurred and be continuing.
(d) The Borrower authorizes the Lender to disclose to any Participant or
Assignee (each, a "TRANSFEREE") and any prospective Transferee any and all
financial information in the Lender's possession concerning the Borrower and its
Affiliates which has been delivered to the Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered
58
<PAGE> 63
to the Lender by or on behalf of the Borrower in connection with the Lender's
credit evaluation of the Borrower and its Affiliates prior to becoming a party
to this Agreement.
(e) For avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this subsection 10.6 concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by the Lender of any Loan or Note to any Federal Reserve
Bank in accordance with applicable law.
10.7. COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Lender.
10.8. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.9. INTEGRATION. This Agreement and the other Loan Documents represent
the agreement of the Borrower, and the Lender with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.10. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.11. SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof,
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
59
<PAGE> 64
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in subsection 10.3 or at such other address of which the
Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and
(e) waives, except in the case of extreme bad faith (and otherwise to the
maximum extent not prohibited by law), any right it may have to claim or recover
in any legal action or proceeding referred to in this subsection 10.11 any
special, exemplary, punitive or consequential damages.
10.12. Acknowledgments. The Borrower hereby acknowledges that:
---------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) the Lender has no fiduciary relationship with or duty to the Borrower
arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between Lender and the Borrower, in connection
herewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Borrower and the Lender.
10.13. WAIVERS OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
CREDITANSTALT CORPORATE FINANCE, INC.
as Lender
By:
------------------------------------
Gregory F. Mathis
Vice President
60
<PAGE> 65
By:
------------------------------------
Fiona McKone
Senior Associate
SIGHT RESOURCE CORPORATION,
as Borrower
By:
------------------------------------
Alan MacDonald
Vice President, Finance
and Administration
61
<PAGE> 66
SCHEDULE I
ADDRESSES FOR NOTICES
---------------------
To be inserted as necessary.
62
<PAGE> 67
SCHEDULE II
-----------
<TABLE>
SUBSIDIARIES OF SIGHT RESOURCE CORPORATION:
<CAPTION>
Name Jurisdiction of Incorporation Ownership Percentage Gross Assets
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cambridge Eye Associates, Inc. Delaware 100% $8,620,000
Douglas Vision World, Inc. Delaware 100% $2,938,000
E.B. Brown Opticians, Inc. Delaware 100% $9,303,000
</TABLE>
<TABLE>
SUBSIDIARIES OF CAMBRIDGE EYE ASSOCIATES, INC.:
<CAPTION>
Name Jurisdiction of Incorporation Ownership Percentage Gross Assets
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cambridge Eye Doctors of New
Hampshire, Inc. New Hampshire 100% $0.
</TABLE>
<PAGE> 68
SCHEDULE III
------------
UCC FINANCING STATEMENTS
------------------------
SIGHT RESOURCE CORPORATION
- --------------------------
Illinois State
Commonwealth of Massachusetts
Burlington Town Clerk
Holliston Town Clerk
Commonwealth of Pennsylvania
Philadelphia County Prothonotary
Rhode Island State
New York State
New York City Filing Officer
Texas State
CAMBRIDGE EYE ASSOCIATES, INC.
- ------------------------------
Commonwealth of Massachusetts
Burlington Town Clerk
Holliston Town Clerk
New Hampshire State
Salem Town Clerk
DOUGLAS VISION WORLD
- --------------------
Rhode Island State
Commonwealth of Massachusetts
Burlington Town Clerk
Holliston Town Clerk
E.B. BROWN OPTICIANS, INC.
- --------------------------
Commonwealth of Massachusetts
Burlington Town Clerk
Holliston Town Clerk
Ohio State
Cuyahoga County
Commonwealth of Pennsylvania
Erie County Prothonotary
<PAGE> 69
CAMBRIDGE EYE DOCTORS OF NEW HAMPSHIRE INC.
- -------------------------------------------
Commonwealth of Massachusetts
Burlington Town Clerk
Holliston Town Clerk
New Hampshire State
Salem Town Clerk
<PAGE> 70
SCHEDULE IV
-----------
<TABLE>
SIGHT RESOURCE CORPORATION
LONG TERM DEBT
AS OF NOVEMBER 23, 1996
ATTACHED HERETO
<CAPTION>
ENTITY ISSUE TYPE BANK ISSUE MATURITY RATE Q296
DATE DATE AMOUNT
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 71
SCHEDULE V
----------
LIENS
-----
lien search results attached hereto.
<PAGE> 72
SCHEDULE VI
-----------
SIGHT RESOURCE CORPORATION
GUARANTEES
AS OF NOVEMBER 23, 1996
NONE.
<PAGE> 73
SCHEDULE VII
------------
ENVIRONMENTAL MATTERS
---------------------
Process rinsewater used in the predecessor to Cambridge Eye Associate,
Inc.'s lens grinding operations was previously discharged to an on-site septic
tank after passing through a settling tank and a centrifuge designed to remove
particles of plastic and/or glass which were generated in the grinding process.
Such a process, in the absence of a groundwater discharge permit issued by the
Department of Environmental Protection, may have been in violation of the
Department's regulations 310 C.M.R. 15.8(2) and 314 C.M.R. 5, and M.G.L. c. 21,
ss.43. Cambridge Eye Associates has eliminated this process from its operations
and is informed and believes, that it is not currently in violation of any law,
rule or regulation.
<PAGE> 74
SCHEDULE VIII
-------------
EXISTING INVESTMENTS
attached hereto.
<PAGE> 75
SCHEDULE IX
-----------
LANDLORD CONSENT
----------------
list of landlords providing such consents is attached hereto.
<PAGE> 76
SCHEDULE X
----------
WARRANTS, ETC.
--------------
The Borrower has issued certain warrants and granted certain other options
to purchase shares of its Common Stock pursuant to certain prior public
offerings and private placements (the "Existing Warrants and Options"),
including, without limitation, the following:
1. In connection with the Company's initial public offering in March 1993,
the Company sold to Noble Investment Co. of Palm Beach warrants to purchase
85,000 units, each consisting of one share of Common Stock and one warrant (the
"IPO Representative's Warrants").
2. In connection with the Company's public offering in August 1994 (the
"Second Public Offering"), the Company issued 2,472,500 units (the "Units"),
consisting of one share of Common Stock and one Warrant, issued pursuant to the
terms of a Warrant Agreement between the Company and American Stock Transfer &
Trust Company, as Warrant Agent.
3. In connection with the Secondary Public Offering, the Company sold to
D.Blech & Company, Incorporated, and to Alan R. Ackerman 182,750 and 32,250
options (the "Unit Purchase Options") respectively, to purchase an aggregate of
215,000 units (the "UPO Units").
4. In connection with the Company's private placement of $1,100,000 of
Bridge Notes in March 1994, the Company issued Class A Warrants to purchase
110,000 shares of Common Stock.
5. In connection with the Company's latest public offering in June 1996,
the Company sold to Commonwealth Associates warrants to purchase an aggregate of
170,000 shares of Common Stock (the "Representative's Warrants").
<PAGE> 77
SCHEDULE XI
-----------
SALE OF CERTAIN ASSETS
----------------------
Three Opthamalic Excimer Lasers, serial numbers 5000, 5037 and 5047 currently
located at the Summit Technologies Warehouse in Ireland and one such Opthamalic
Excimer Laser, serial number 5141, currently located at Massachusetts Eye and
Ear and which will be moved to a warehouse where it will be held for sale.
Real Property located at 641 North Park, Warren, Ohio.
<PAGE> 1
Exhibit 10.2
TERM LOAN NOTE
$5,000,000
New York, New York
February 20, 1997
FOR VALUE RECEIVED, the undersigned, SIGHT RESOURCE CORPORATION, a Delaware
Corporation (the "BORROWER"), hereby unconditionally promises to pay to the
order of CREDITANSTALT CORPORATE FINANCE, INC., a Delaware corporation (the
"LENDER") at the office located at 2 Greenwich Plaza, P.O. Box 1300, Greenwich,
CT 06830-1300 in lawful money of the United States of America and in immediately
available funds, the principal amount of FIVE MILLION DOLLARS AND NO/100
($5,000,000), or, if less, the unpaid principal amount of the Term Loan made by
the Lender pursuant to subsection 2.1 of the Credit Agreement, as hereinafter
defined. The principal amount shall be paid in the amounts and on the dates
specified in subsection 2.3. The Borrower further agrees to pay interest in like
money at such office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in subsections 4.9 and 4.10
of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of the Term
Loan and the date and amount of each payment or prepayment of principal with
respect thereto, each conversion of all or a portion thereof to another Type,
each continuation of all or a portion thereof as the same Type and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto.
Each such endorsement shall constitute PRIMA FACIE evidence of the accuracy of
the information endorsed. The failure to make any such endorsement shall not
affect the obligations of the Borrower in respect of such Term Loan.
This Note (a) is the Term Note referred to in the Credit Agreement dated as
of February 20, 1997 (as amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), between the Borrower and the Lender, (b) is
subject to the provisions of the Credit Agreement and (c) is subject to optional
and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Note is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Loan Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the rights
of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
1
<PAGE> 2
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
SIGHT RESOURCE CORPORATION
By:
-------------------------
Name: Alan MacDonald
Title: Vice President, Finance and
Administration
2
<PAGE> 1
Exhibit 10.3
REVOLVING CREDIT NOTE
$5,000,000 New York, New York
February 20, 1997
FOR VALUE RECEIVED, the undersigned, SIGHT RESOURCE CORPORATION, a Delaware
corporation (the "BORROWER"), hereby unconditionally promises to pay to the
order of CREDITANSTALT CORPORATE FINANCE, INC. a Delaware corporation (the
"LENDER") at the office located at 2 Greenwich Plaza, P.O. Box 1300, Greenwich,
CT 06836-1300 in lawful money of the United States of America and in immediately
available funds, on the Termination Date the principal amount of (a) FIVE
MILLION DOLLARS AND NO/100 ($5,000,000) or, if less, (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by the Lender to the
Borrower pursuant to subsection 3.1 of the Credit Agreement, as hereinafter
defined. The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time outstanding at
the rates and on the dates specified in subsections 4.9 and 4.10 of such Credit
Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute PRIMA FACIE evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Borrower in respect of such Revolving
Credit Loan.
This Note (a) is the Revolving Credit Note referred to in the Credit
Agreement dated as of February 20, 1997 (as amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"), among the Borrower and the
Lender, (b) is subject to the provisions of the Credit Agreement and (c) is
subject to optional and mandatory prepayment in whole or in part as provided in
the Credit Agreement. This Note is secured and guaranteed as provided in the
Loan Documents. Reference is hereby made to the Loan Documents for a description
of the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the rights
of the holder of this Note in respect thereof.
1
<PAGE> 2
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
SIGHT RESOURCE CORPORATION
By:
--------------------------------
Name: Alan MacDonald
Title: Vice President, Finance and
Administration
2
<PAGE> 1
Exhibit 10.4
WARRANT AGREEMENT
THIS WARRANT AGREEMENT dated as of February 20, 1997 (as amended,
supplemented or modified from time to time, the "Warrant Agreement") between
SIGHT RESOURCE CORPORATION, a Delaware corporation (the "Issuer"), and
CREDITANSTALT CORPORATE FINANCE, INC., a Delaware corporation (the "Lender").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Credit Agreement dated as of the date hereof (as
the same may be amended, supplemented or otherwise modified from time to time,
the "Credit Agreement") between the Issuer and Lender, Lender has agreed to make
certain loans (the "Loans") to the Issuer upon the terms, and subject to the
conditions, set forth in the Credit Agreement; and
WHEREAS, in order to induce the Lender to provide the Loans, the Issuer has
agreed to execute and deliver to Lender or an Affiliate (as hereinafter defined)
thereof the Warrants hereinafter described;
NOW, THEREFORE, in consideration of the premises the parties hereto agree
as follows:
Section 1. Definitions. (a) As used in this Warrant Agreement, unless
otherwise defined herein, terms defined in the Credit Agreement (as in effect on
the date hereof, whether or not the Credit Agreement is thereafter terminated or
expires according to its terms) shall have such defined meanings when used
herein and the following terms shall have the following meanings, unless the
context otherwise requires:
"AFFILIATE" shall have the meaning given to such term in the Credit
Agreement. For purposes of this Agreement, "Affiliate" shall not include Lender
or any Affiliate of Lender which is a holder of any Warrants.
"CLOSING DATE" shall mean February 20, 1997, the date of the closing of the
Credit Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission or any
entity succeeding to any or all of its functions under the Securities Act and
the Exchange Act.
"COMMON STOCK" shall mean the Common Stock, par value .001 per share, of
the Issuer, and shall include any stock into which such Common Stock shall have
been changed or any stock resulting from any reclassification of such Common
Stock and all other stock of any class or classes (however designated) of the
Issuer the registered holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference.
<PAGE> 2
"CURRENT MARKET PRICE PER SHARE" shall mean, with respect to any shares of
the Common Stock, as of any particular date of determination:
(i) if the Common Stock is then reported on the Composite Transactions
Tape, the average of the daily closing prices for the 30 consecutive
trading days immediately prior to such date as reported on the Composite
Transactions Tape (as adjusted for any stock dividend, split, combination
or reclassification that occurred during such 30-day period); or
(ii) if the Common Stock is not then reported on the Composite
Transaction Tape but is then listed or admitted to trading on a national
securities, the average of the daily last sale prices regular way of the
Common Stock, for the 30 consecutive trading days immediately prior to such
date (as adjusted for any stock dividend, split, combination or
reclassification that occurred during such 30-day period), on the principal
national securities exchange on which the Common Stock is traded or, in
case no such sale takes place on any such day, the average of the closing
bid and asked prices regular way, in either case on such national
securities exchange; or
(iii) if the Common Stock is not then reported on the Composite
Transaction Tape but is then traded in the over-the-counter market, the
average of the daily closing sales prices, or, if there is no closing sales
price, the average of the closing bid and asked prices, in the
over-the-counter market, for the 30 consecutive trading days immediately
prior to such date (as adjusted for any stock dividend, split, combination
or reclassification that occurred during such 30-day period), as reported
by the National Association of Securities Dealers' Automated Quotation
System, or, if not so reported, as reported by the National Quotation
Bureau, Incorporated or any successor thereof, or, if not so reported the
average of the closing bid and asked prices as furnished by any member of
the National Association of Securities Dealers, Inc. selected from time to
time by the Board of Directors of the Issuer for that purpose; or
(iv) if no such prices are then furnished, the higher of (x) the
Exercise Price and (y) the fair market value of a share of Common Stock as
reasonably determined by the Board of Directors of the Issuer and
reasonably acceptable to the holders of a majority of the Warrants.
"EQUITY OF THE ISSUER" shall mean the total shareholders' equity of the
Issuer, determined in accordance with generally accepted accounting principles.
The amount of Equity of the Issuer represented by any Warrant Shares shall be
determined by subtracting from total Equity of the Issuer the aggregate amount
distributable as a preference upon dissolution of the Issuer to the holders of
any then outstanding shares of any class or series of preferred stock, dividing
the balance obtained by the number of shares of Common Stock then outstanding
and multiplying that per share amount by the aggregate number of Warrant Shares.
2
<PAGE> 3
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute.
"EXERCISE PRICE" shall mean the exercise price of a Warrant, which
shall be $4.625 per Warrant.
"EXPIRATION DATE" shall mean December 31, 2003.
"NON-ATTRIBUTABLE STOCK" shall mean shares of Common Stock which have been
previously sold, or were issued pursuant to the exercise of Warrants which were
previously sold, either (a) in a widely dispersed public offering; (b) in a
private placement in which no purchaser, individually or in concert with others,
acquired Warrants or Common Stock or any combination thereof, representing (upon
exercise for Common Stock, in the case of the Warrants) more than 2% of the
outstanding Common Stock; (c) in compliance with Rule 144 (or any rule which is
a successor thereto) of the Securities Act or (d) into the secondary market in a
market transaction executed through a registered broker-dealer in blocks of no
more than 2% of the shares outstanding of the Issuer in any six month period.
"NON-PUBLIC WARRANT SHARES" shall mean Warrant Shares that have not been
sold to the public and bear the legend set forth in subsection 14(b).
"NON-SURVIVING COMBINATION" shall mean any merger, consolidation or other
business combination by the Issuer with one or more Persons in which the Issuer
is not the survivor, or a sale of all or substantially all of the assets of the
Issuer to one or more such other Persons.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any
successor federal statute and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.
"WARRANT CERTIFICATE" shall mean a certificate evidencing one or more
Warrants, substantially in the form of Exhibit A attached hereto, with such
changes therein as may be required to reflect any adjustments made pursuant to
Section 12.
"WARRANT HOLDERS" shall mean Lender or an Affiliate thereof and such other
Persons to whom Lender or an Affiliate thereof transfers Warrants in compliance
with the terms of this Warrant Agreement, and for purposes of Section 15 shall
include holders of Non-Public Warrant Shares.
"WARRANT OFFICE" shall mean the office or agency of the Issuer at which the
Warrant Register shall be maintained and where the Warrants may be presented for
exercise, exchange, substitution and transfer, which office or agency will be
the office of the Issuer at 67 South Bedford Street, Burlington MA 01803, which
office or agency may be changed by the Issuer
3
<PAGE> 4
pursuant to notice in writing to the Persons named in the Warrant Register as
the holders of the Warrants.
"WARRANT REGISTER" shall mean the register, substantially in the form of
Exhibit B attached hereto, maintained by the Issuer at the Warrant Office.
"WARRANT SHARES" shall mean the shares of Common Stock issued or issuable
upon exercise of the Warrants as the number of such shares may be adjusted from
time to time pursuant to Section 12 and the provisions of the Issuer's Articles
of Incorporation.
"WARRANTS" shall mean the stock purchase warrants issued pursuant to this
Warrant Agreement entitling the record holders thereof to purchase from the
Issuer at the Warrant Office an aggregate of 150,000 shares of Common Stock (in
the percentages and to the extent provided in subsections 6(e) and 6(f) hereof
and subject in each case to adjustment as provided in Section 12) at the
Exercise Price at any time after the Closing Date and before 5:00 P.M., New York
time, on the Expiration Date; individually, a "Warrant."
(b) For all purposes of this Warrant Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(i) "Herein", "hereof" and "hereunder" and other words of similar
import refer to this Warrant Agreement as a whole and not to any particular
Section or other subdivision;
(ii) Any uses of the masculine, feminine or neuter gender shall also
be deemed to include any other gender as appropriate;
(iii) The exhibits and schedules to this Warrant Agreement shall be
deemed an integral part of this Warrant Agreement;
(iv) Except as specifically set forth in such representation, each of
the representations and warranties of the Issuer in Section 3 hereof is
separate and is not limited, qualified or modified by the existence,
wording or satisfaction of any other representation of the Issuer in
Section 3 or otherwise;
(v) All references herein (in covenants or otherwise) to any action(s)
which are to be taken (or which are prohibited from being taken) by any
Person, the Issuer or any Subsidiary shall apply to such Person, the Issuer
or such Subsidiary, as the case may be, whether such action is taken
directly or indirectly; and
(vi) All references herein to actions by the Issuer or any Subsidiary
(including, without limitation, actions denoted by terms such as "create",
"sell", "transfer" or "dispose of") mean such action whether voluntary or
involuntary, by operation of law or otherwise.
4
<PAGE> 5
Section 2. ISSUANCE OF WARRANTS. The Issuer hereby agrees to issue and
deliver to Lender or, at the option of Lender, an Affiliate thereof, on the
Closing Date, the Warrants and one or more Warrant Certificates evidencing the
Warrants. No payment shall be required from Lender or its Affiliate in
consideration of its receipt of the Warrants.
Section 3. REPRESENTATIONS AND WARRANTIES. The Issuer hereby represents and
warrants to Lender, for the benefit of Lender and any other Warrant Holder, as
follows:
(a) The Issuer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, has the corporate power
and authority to conduct its business as presently conducted and as intended to
be conducted, has the corporate power and authority to execute and deliver this
Warrant Agreement and the Warrant Certificates, to issue the Warrants and to
perform its obligations under this Warrant Agreement and the Warrant
Certificates, has the corporate power and authority and legal right to own and
lease its properties and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which it owns or leases real property or in
which the conduct of its business requires such qualification, except where
failure to be so qualified could not be reasonably expected to have a material
adverse effect on the business, properties, financial condition or results of
operations of the Issuer and its Subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Issuer of this Warrant
Agreement and the Warrant Certificates, the issuance of the Warrants and the
issuance of the Warrant Shares upon the exercise of the Warrants have been duly
authorized by all necessary corporate action and do not and will not violate, or
result in a breach of, or constitute a default under, or require any consent
under, or result in the creation of any lien, charge or encumbrance upon the
assets of the Issuer pursuant to, any law, statute, ordinance, rule, regulation,
order or decree of any court, governmental body or regulatory authority or
administrative agency having jurisdiction over the Issuer or its Subsidiaries or
the Issuer's Articles of Incorporation or any contract, mortgage, loan
agreement, note, lease or other instrument binding upon the Issuer or its
Subsidiaries or by which their properties are bound.
(c) This Warrant Agreement has been duly executed and delivered by the
Issuer and constitutes a legal, valid, binding and enforceable obligation of the
Issuer. When the Warrants and Warrant Certificates have been issued as
contemplated hereby, (i) the Warrants and the Warrant Certificates will
constitute legal, valid, binding and enforceable obligations of the Issuer and
(ii) the Warrant Shares, when issued upon exercise of the Warrants in accordance
with the terms hereof will be duly authorized, validly issued, fully paid and
nonassessable shares of the Common Stock with no personal liability attaching to
the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 20,000,000 shares
of Common Stock, par value $.01 per share, of which 8,648,768 shares are issued
and outstanding and 5,000,000 shares of undesignated preferred stock, par value
$.01 per share, of which no shares are issued and outstanding. To the Issuer's
best knowledge, there are no voting
5
<PAGE> 6
agreements, voting trusts, proxies or other agreements or understandings with
respect to the voting of any capital stock of the Issuer or any Subsidiary.
Section 4. REGISTRATION, TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Issuer shall maintain, at the Warrant Office, the Warrant Register
for registration of the Warrants and Warrant Certificates and transfers thereof.
On the Closing Date, the Issuer shall register the Warrants and Warrant
Certificates in the Warrant Register in the name of Lender or an Affiliate
thereof, as the case may be. The Issuer may deem and treat the registered
holders of the Warrant Certificates as the absolute owners thereof and the
Warrants represented thereby (notwithstanding any notation of ownership or other
writing on the Warrant Certificates made by any person) for the purpose of any
exercise thereof or any distribution to the holders thereof, and for all other
purposes, and the Issuer shall not be affected by any notice to the contrary.
(b) Subject to Section 14, the Issuer shall register the transfer of any
outstanding Warrants in the Warrant Register upon surrender of the Warrant
Certificates evidencing such Warrants to the Issuer at the Warrant Office,
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof. Upon any
such registration of transfer, new Warrant Certificates evidencing such
transferred Warrants shall be issued to the transferee and the surrendered
Warrant Certificates shall be canceled. If less than all the Warrants evidenced
by Warrant Certificates surrendered for transfer are to be transferred, new
Warrant Certificates shall be issued to the holder surrendering such Warrant
Certificates evidencing such remaining number of Warrants.
(c) Warrant Certificates may be exchanged at the option of the holders
thereof, when surrendered to the Issuer at the Warrant Office, for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange except for
any tax or other governmental charge imposed in connection therewith. Except as
provided in subsection 14(b) each Warrant Certificate issued upon transfer or
exchange shall bear the legend set forth in subsection 14(b) if the Warrant
Certificate presented for transfer or exchange bore such legend.
Section 5. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Issuer of such loss, theft or destruction of such Warrant
Certificate and, if requested, indemnity satisfactory to it. The Issuer
acknowledges that a written indemnity by Lender or, if an Affiliate of Lender is
the holder of such lost, stolen or destroyed Warrant Certificate, by such
6
<PAGE> 7
Affiliate shall be satisfactory to the Issuer for such purpose. No service
charge shall be made for any such substitution, but all expenses and reasonable
charges associated with procuring such indemnity and all stamp, tax and other
governmental duties that may be imposed in relation thereto shall be borne by
the holder of such Warrant Certificate. Each Warrant Certificate issued in any
such substitution shall bear the legend set forth in subsection 14(b) if the
Warrant Certificate for which such substitution was made bore such legend.
Section 6. DURATION AND EXERCISE OF WARRANTS.
(a) The Warrants evidenced by a Warrant Certificate shall be exercisable in
whole or in part by the registered holder thereof on any Business Day after the
Closing Date and on or before 5:00 P.M., New York time, on the Expiration Date.
(b) Subject to the provisions of this Warrant Agreement, the Warrants
evidenced by a Warrant Certificate may be exercised by the registered holder
thereof by the surrender of the Warrant Certificate evidencing the Warrants to
be exercised, with the form of election to purchase on the reverse thereof or
attached thereto duly completed and signed, to the Issuer at the Warrant Office,
and upon payment of the aggregate Exercise Price for the number of Warrant
Shares in respect of which such Warrants are being exercised in lawful money of
the United States of America and/or by surrender to the Issuer of shares of
Common Stock then owned by the Warrant Holder and valued for purposes hereof at
their Current Market Price Per Share at the time of exercise. In lieu of
exercising Warrants pursuant to the immediately preceding sentence, the Warrant
Holder shall have the right to require the Issuer to convert the Warrants, in
whole or in part and at any time or times (the "Conversion Right"), into Warrant
Shares, by surrendering to the Issuer the Warrant Certificate evidencing the
Warrants to be converted, accompanied by the form of conversion notice on the
reverse thereof or attached thereto which has been duly completed and signed.
Upon exercise of the Conversion Right, the Issuer shall deliver to the Warrant
Holder (without payment by the Warrant Holder of any Exercise Price) that number
of Warrant Shares which is equal to the quotient obtained by dividing (x) the
value of the number of Warrants being converted at the time the Conversion Right
is exercised (determined by subtracting the aggregate Exercise Price for all
such Warrants immediately prior to the exercise of the Conversion Right from the
aggregate current market price (determined on the basis of the Current Market
Price Per Share) of that number of Warrant Shares purchasable upon exercise of
such Warrants immediately prior to the exercise of the Conversion Right (taking
into account all applicable adjustments pursuant to Section 12 by (y) the
Current Market Price Per Share of one share of Common Stock immediately prior to
the exercise of the Conversion Right. Any references in this Warrant Agreement
to the "exercise" of any Warrants, and the use of the term "exercise" herein,
shall be deemed to include (without limitation) any exercise of the Conversion
Right. Any exercise of a Warrant hereunder may be made subject to the
satisfaction of one or more conditions (including, without limitation, the
consummation of a sale of the capital stock of the Issuer or a merger or other
business combination involving the Issuer) which are set forth in a writing
which is made a part of or is appended to the aforementioned form of election to
purchase or conversion notice (as the case may be) by the Warrant Holder.
7
<PAGE> 8
(c) Upon exercise of any Warrants hereunder, the Issuer shall issue and
cause to be delivered to or upon the written order of the registered holders of
such Warrants and in such name or names as such registered holders may
designate, a certificate for the Warrant Share or Warrant Shares issued upon
such exercise of such Warrants. Any Persons so designated to be named therein
shall be deemed to have become holders of record of such Warrant Share or
Warrant Shares as of the date of exercise of such Warrants.
(d) If less than all of the Warrants evidenced by a Warrant Certificate are
exercised at any time, a new Warrant Certificate or Certificates shall be issued
for the remaining number of Warrants evidenced by such Warrant Certificate. Each
new Warrant Certificate so issued shall bear the legend set forth in subsection
14(b) if the Warrant Certificate presented in connection with partial exercise
thereof bore such legend unless the transfer restrictions referred to in such
legend are no longer applicable pursuant to subsection 14(d). All Warrant
Certificates surrendered upon exercise of Warrants shall be canceled.
(e) A Warrant Holder shall not have the right to have issued to it upon
exercise Common Stock which, when aggregated with the shares of Common Stock
(other than shares of Non-Attributable Stock) previously issued as Warrant
Shares will exceed 4.99 % of the then outstanding Common Stock unless such
Warrant Holder certifies that such Warrants have previously been transferred
either (i) in a widely dispersed public offering of the Warrants, or (ii) in a
private placement in which no purchaser, individually or in concert with others,
would have acquired more than 2% of the outstanding Common Stock if the Warrants
so transferred had been exercised for Common Stock, or (iii) in compliance with
Rule 144 (or any rule which is a successor thereto) of the Securities Act, or
(iv) into the secondary market in a market transaction executed through a
registered broker-dealer in blocks of no more than 2% of the shares outstanding
of the Issuer in any six month period. In the event two or more Warrant Holders
attempt to exercise Warrants for Common Stock simultaneously and, if permitted,
such exercises would cause the 4.99% limitation to be exceeded, then the Issuer
shall notify the Warrant Holders who had attempted to exercise Warrants for
Common Stock and each such Warrant Holder shall be entitled to exercise for
Common Stock only such number of Warrants as shall equal the product of (i) the
number of Warrants the Warrant Holder sought to exercise for Common Stock times
(ii) a fraction, the numerator of which is the maximum number of Warrants which
may be exercised for Common Stock without exceeding the 4.99% limitation and the
denominator of which is the maximum number of Warrants sought to be exercised
for Common Stock by such Warrant Holders.
(f) Notwithstanding the foregoing provisions of this Section 6, in no event
shall any Warrant be exercisable for shares of Common Stock which, when
aggregated with all other Warrant Shares then held by Lender or its Affiliates,
would, upon issuance, represent in excess of 24.99% of the Equity of the Issuer
unless such shares, when issued, would constitute Non-Attributable Stock.
Section 7. NO FRACTIONAL SHARES. The Issuer shall not be required to issue
fractional shares of Common Stock upon exercise of the Warrants but shall pay
for any such fraction of a
8
<PAGE> 9
share an amount in cash equal to the then Current Market Price Per Share of one
share of Common Stock multiplied by such fraction.
Section 8. PAYMENT OF TAXES. The Issuer will pay all taxes attributable to
the initial issuance of Warrant Shares upon the exercise of the Warrants,
provided that the Issuer shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue of any Warrant
Certificate or any certificate for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Issuer shall not be required to issue or deliver such
certificate unless or until the person or persons requesting the issuance
thereof shall have paid to the Issuer the amount of such tax or shall have
established to the satisfaction of the Issuer that such tax has been paid.
Section 9. STOCKHOLDER RIGHTS.
(a) Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as a stockholder in respect of the
meetings of stockholders or the election of directors of the Issuer or any other
matter, or any rights whatsoever as a stockholder of the Issuer.
(b) Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as imposing any obligation on the registered
holders thereof to purchase any securities or as imposing any liabilities on
such holders as stockholders of the Issuer, whether such obligation or
liabilities are asserted by the Issuer or by creditors of the Issuer.
Section 10. RESERVATION AND ISSUANCE SHARES; CERTAIN CORPORATE ACTIONS.
(a) The Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon the exercise of the
Warrants, the number of shares of Common Stock deliverable upon exercise of all
outstanding Warrants.
(b) The Issuer covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant Agreement and the Issuer's Articles of
Incorporation, be fully paid and nonassessable and free from all taxes (except
as otherwise contemplated in Section 8 hereof) with respect to the issuance
thereof and from all liens, charges and security interests (other than any
created by or on behalf of any Warrant Holder).
(c) The Issuer will not, by amendment of its Articles of Incorporation or
through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant
Agreement or the Warrant Certificates. Without limiting the generality of the
foregoing, the Issuer (a) will not permit the par value or the determined or
stated value of any shares of the Issuer's Common Stock receivable upon the
exercise of the Warrants to exceed the amount payable therefor upon such
exercise, (b) will take all such action as may be necessary or
9
<PAGE> 10
appropriate in order that the Issuer may validly and legally issue fully paid
and nonassessable shares of the Issuer's Common Stock, upon the exercise of the
Warrants from time to time outstanding, including, without limitation, amending
its Articles of Incorporation to reduce or eliminate the par value of the Common
Stock and (c) will not take any action which results in an adjustment in the
number of Warrant Shares obtainable upon the exercise of any Warrants if the
total number of shares of the Issuer's Common Stock (or other securities)
issuable after such action upon the exercise of all of the then-outstanding
Warrants would exceed the total number of shares of the Issuer's Common Stock
(or other securities) then authorized by the Issuer's Articles of Incorporation
and available for purpose of issuance upon such exercise.
(d) The Issuer agrees that it will not enter into an agreement providing
for a Non-Surviving Combination or effect any such Non-Surviving Combination
unless the party to such transaction that is the surviving entity thereof or the
purchaser or purchasers of substantially all of the assets of the Issuer (the
"Survivor") (i) shall be obligated to distribute or pay to each Warrant Holder,
upon payment of the Exercise Price prior to the Expiration Date, the number of
shares of stock or other securities or other property (including any cash) of
the Survivor that would have been distributable or payable on account of the
Warrant Shares if such Warrant Holder's Warrants had been exercised immediately
prior to such Non-Surviving Combination (or, if applicable, the record date
therefor), as such number of shares or other securities or other property may
thereafter be adjusted pursuant to Section 12 of this Warrant Agreement and (ii)
shall assume by written instrument all of the obligations of the Issuer under
this Warrant Agreement.
(e) The Issuer will take no action with respect to its capital stock
(including without limitation any purchase of its shares or any combination of
shares or reverse stock split and elimination of fractional shares) which would
cause the sum of the number of Warrant Shares theretofore issued, if any, plus
the number of Warrant Shares then issuable in respect of Warrants then
outstanding to exceed 4.99% of the aggregate issued and outstanding shares of
the Issuer after giving effect to such action, unless in any such case the
holders of a majority of the outstanding Warrants and Warrant Shares shall have
given their prior written consent to such action.
Section 11. OBTAINING OF GOVERNMENTAL APPROVALS AND STOCK EXCHANGE
Listings. Subject, in the case of any registration under the Securities Act, to
the limitations set forth in Section 15, the Issuer will, at its own expense,
from time to time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities which are or become requisite in connection with the issuance,
sale, transfer and delivery of the Warrant Certificates and the exercise of the
Warrants and the issuance, sale, transfer and delivery of the Warrant Shares and
all action which may be necessary so that such Warrant Shares, immediately upon
their issuance upon the exercise of Warrants will be listed on each securities
exchange, if any, on which the Common Stock is then listed.
Section 12. ADJUSTMENT OF NUMBER OF WARRANT SHARES PURCHASABLE.
10
<PAGE> 11
(a) The number of shares of Common Stock purchasable upon the exercise of
each Warrant is subject to adjustment from time to time upon the occurrence of
any of the events enumerated in this Section 12 at any time or from time to time
after the date hereof and prior to the Expiration Date.
(b) If the Issuer shall (i) declare a dividend on the Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (ii) split or subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, each
Warrant outstanding at the time of the record date for such dividend or of the
effective date of such split, subdivision or combination shall thereafter
entitle the holder of such Warrant to receive the aggregate number and kind of
shares which, if such Warrant had been exercised immediately prior to such time,
such holder would have owned or have become entitled to receive by virtue of
such dividend, subdivision or combination. Such adjustment shall be made
successively whenever any event listed above shall occur and, if a dividend
which is declared is not paid, each Warrant outstanding shall again entitle the
holder thereof to receive the number of shares of Common Stock as would have
been the case had such dividend not been declared. If at any time, as a result
of an adjustment made pursuant to this subsection 12(b), the holder of any
Warrant thereafter exercised shall become entitled to receive any shares of
capital stock of the Issuer other than shares of Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in this Section 12, and the provisions of this Warrant Agreement with
respect to the Warrant Shares shall apply on like terms to such other shares.
(c) In case the Issuer shall make a distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the issuer is the continuing corporation) of evidences of its
indebtedness, cash or other assets, other than ordinary cash dividends payable
to all holders of Common Stock, each Warrant outstanding on the date of such
distribution shall thereafter entitle the holder of such Warrant to receive a
number of shares of Common Stock equal to the product of (i) the number of
shares of Common Stock to which the holder of such Warrant was entitled
immediately prior to such date of distribution and (ii) a fraction of which the
numerator shall be the then Current Market Price Per Share of Common Stock on
such date and of which the denominator shall be the then Current Market Price
Per Share of Common Stock on such date less the fair market value, as reasonably
determined by the Board of Directors of the Issuer and reasonably acceptable to
the holders of a majority of the Warrants of the portion of the assets or
evidences of indebtedness, or the portion of the cash, so to be distributed
applicable to one share of then-outstanding Common Stock. Such adjustment shall
be made successively whenever a date for such distribution is fixed (which date
of distribution shall be the record date for such distribution if a record date
therefor is fixed) and, if such distribution is not so made, each Warrant
outstanding shall again entitle the holder thereof to receive the number of
shares of Common Stock as would have been the case had such date of distribution
not been fixed.
11
<PAGE> 12
(d) In the event that the Issuer pays a cash dividend to the holders of its
Common Stock, it shall also pay a cash dividend to all holders of Warrants which
dividend shall be calculated as if the Warrants had been exercised.
(e) In the event of any capital reorganization of the Issuer, or of any
reclassification of the Common Stock (other than a subdivision or combination of
outstanding shares of Common Stock), or in case of the consolidation of the
Issuer with or the merger of the Issuer with or into any other corporation or of
the sale of the properties and assets of the Issuer as, or substantially as, an
entirety to any other corporation, each Warrant shall after such capital
reorganization, reclassification of Common Stock, consolidation, merger or sale
be exercisable upon the terms and conditions specified in this Warrant
Agreement, for the number of shares of stock or other securities or assets to
which a holder of the number of Warrant Shares purchasable (at the time of such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale) upon exercise of such Warrant would have been entitled upon such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale; and in any such case, if necessary, the provisions set forth in this
Section 12 with respect to the rights thereafter of the holders of the Warrants
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or assets thereafter
deliverable on the exercise of the Warrants.
(f) If any event occurs, as to which, in the good faith opinion of the
Board of Directors of the Issuer, the other provisions of this Section 12 are
not strictly applicable or (if strictly applicable) would not fairly protect the
purchase rights of the Warrants in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
decreasing the number of shares of Common Stock purchasable upon the exercise of
each Warrant from that which would otherwise be determined pursuant to this
Section 12.
(g) No adjustment in the number of Warrant Shares purchasable shall be
required unless such adjustment would require an increase or decrease in the
aggregate number of Warrant Shares purchasable of at least 1%, provided that any
adjustments which by reason of this subsection 12(g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 12 shall be made to the nearest cent or to
the nearest hundredth of a share, as the case may be.
(h) Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrant, Warrant Certificates theretofore
or thereafter issued may continue to express the same number and kind of shares
as are stated on the Warrant Certificates initially issuable pursuant to this
Warrant Agreement.
(i) If any question shall at any time arise with respect to the number of
Warrant Shares purchasable following any adjustment pursuant to this Section 12,
such question shall be
12
<PAGE> 13
determined by agreement between the holders of a majority of the Warrants and
the Issuer or, in the absence of such an agreement, by an independent investment
banking firm or an independent appraiser engaged by the Issuer (in either case
the cost of which engagement will be borne by the Issuer) and reasonably
acceptable to the Issuer and the holders of a majority of Warrants and such
determination shall be binding upon the Issuer and the holders of the Warrants.
(j) Anything in this Section 12 to the contrary notwithstanding:
(1) the Issuer shall be entitled to make such increases in the number
of Warrant Shares purchasable upon the exercise of each Warrant, in
addition to those adjustments required by this Section 12, as it in its
sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, or any issuance wholly
for cash or any shares of Common Stock at less than the Current Market
Price Per share, or any issuance wholly for cash or shares of Common Stock
or securities which by their terms are convertible into or exchangeable for
shares of Common Stock or any stock dividend, or any issuance of rights,
options or warrants referred to hereinabove in this Section 12, hereinafter
made by the Issuer to the holders of its Common Stock shall not be taxable
to them; and
(2) no adjustment in the number of Warrant Shares purchasable shall be
required in the event the Issuer pays a cash dividend to holders of Common
Stock; provided that the Issuer also pays a cash dividend to all holders of
Warrants which dividend shall be calculated as if the Warrants had been
exercised.
Section 13. NOTICES TO WARRANT HOLDERS; NOTICES OF ISSUANCES AND DIVIDENDS.
(a) Upon any adjustment of the number of Warrant Shares purchasable upon
exercise of a Warrant pursuant to Section 12, the Issuer shall promptly but in
any event within 20 days thereafter, cause to be given to each of the registered
holders of the Warrants at its address appearing on the Warrant Register by
registered mail, postage prepaid, return receipt requested a certificate signed
by its chairman, president or chief financial officer setting forth the number
of Warrant Shares purchasable upon exercise of a Warrant as so adjusted and
describing in reasonable detail the facts accounting for such adjustment and the
method of calculation used. Where appropriate, such certificate may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 13.
(b) The Issuer shall deliver to each of the registered holders of the
Warrants at its address appearing on the Warrant Register, copies of all
information provided to holders of Common Stock concurrently with the delivery
thereof to such holders of Common Stock.
Section 14. RESTRICTIONS ON TRANSFER.
(a) Each of Lender and its Affiliates who are issued Warrants pursuant to
this Agreement (i) represents that it is acquiring the Warrants for its own
account for investment and not with a view to any distribution or public
offering within the meaning of the Securities Act,
13
<PAGE> 14
except in any case pursuant to the registration of such Warrants or Warrant
Shares under the Securities Act or pursuant to a valid exemption from such
registration requirement, (ii) acknowledges that the Warrants and the Warrant
Shares issuable upon exercise thereof have not been registered under the
Securities Act and (iii) agrees that it will not sell or otherwise transfer any
of its Warrants or Warrant Shares except upon the terms and conditions specified
herein and that it will cause any transferee thereof to agree to take and hold
the same subject to the terms and conditions specified herein, provided that the
Warrant Holders may sell the Warrants or the Warrant Shares purchased upon
exercise of the Warrants in one or more private transactions not requiring
registration under the Securities Act.
(b) Except as provided in subsection 14(d) hereof each Warrant Certificate
and each certificate for the Warrant Shares issued to Lender or an Affiliate
thereof or to a subsequent transferee thereof pursuant to subsection 14(c) shall
include a legend in substantially the following form (with such changes therein
as may be appropriate to reflect whether such legend refers to Warrants or
Warrant Shares), provided that such legend shall not be required if such
transfer is being made in connection with a sale which is exempt from
registration pursuant to Rule 144 under the Securities Act or if the opinion of
counsel referred to in subsection 14(c) is to the further effect that neither
such legend nor the restrictions on transfer in this Section 14 are required in
order to ensure compliance with the Securities Act:
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH
ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT TO OTHER
PROVISIONS OF THE WARRANT AGREEMENT, DATED AS OF FEBRUARY 20, 1997,
BETWEEN THE ISSUER AND CREDITANSTALT CORPORATE FINANCE, INC., A
COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER
HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
(c) Prior to or promptly after any assignment, transfer or sale of any
Warrant or any Warrant Shares (other than a transfer among Lender and/or its
Affiliates), the holder thereof shall give written notice to the Issuer of such
holder's intention to effect such assignment, transfer or sale, which notice
shall set forth the date of such proposed assignment, transfer or sale and the
identity of the proposed transferee. Each holder wishing to effect such a
transfer of any Warrant or Warrant Shares shall also furnish to the Issuer an
agreement by the transferee thereof that it is taking and holding the same
subject to the terms and conditions specified herein and, unless the transferee
is an Affiliate of such holder, a written opinion of such holder's counsel, in
form reasonably satisfactory to the Issuer, to the effect that the proposed
transfer may be effected without registration under the Securities Act.
14
<PAGE> 15
(d) The restrictions set forth in this Section 14 shall terminate and cease
to be effective with respect to any Warrants or Warrant Shares which are
registered under the Securities Act or upon receipt by the Issuer of an opinion
of counsel, in form reasonably satisfactory to the Issuer, to the effect that
compliance with such restrictions is not necessary in order to comply with the
Securities Act with respect to the transfer of the Warrants and the Warrant
Shares; provided, however, that after three (3) years from the date of issuance
of any Warrants, such restrictions will automatically terminate (without the
necessity of any opinion of counsel) as to such Warrants and as to any Warrant
Shares issued in respect of such Warrants upon exercise of the Conversion Right
set forth in subsection 6(b) above. Whenever such restrictions shall so
terminate the holder of such Warrants and/or Warrant Shares shall be entitled to
receive from the Issuer, without expense (other than transfer taxes, if any),
Warrant Certificates or certificates for such Warrant Shares not bearing the
legend set forth in subsection 14(b) at which time the Issuer will rescind any
transfer restrictions relating thereto.
(e) With a view to making available to Lender and its Affiliates and
subsequent holders of the Warrant Shares the benefits of certain rules and
regulations of the Securities and Exchange Commission (including, without
limitation, Rules 144 and 144A under the Securities Act) which may permit the
sale of Warrants and Warrant Shares to the public or certain other institutions
without registration, the Issuer agrees to take any and all such actions as may
be required of it to make available to Lender and its Affiliates and such
subsequent holders such benefits, including without limitation, to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act or any
successor provision thereto from and after the date the Issuer first
becomes subject to the provisions of Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Commission in a timely manner all reports and other
documents required of the Issuer under the Securities Act and the Exchange
Act from and after the date the Issuer first becomes subject to the
provisions of Section 13 or 15(d) of the Exchange Act; and
(iii) so long as Lender or an Affiliate thereof owns any Warrants or
Warrant Shares, furnish to Lender forthwith upon request a written
statement by the Issuer as to its compliance with the reporting
requirements of Rule 144 or any successor provision thereto, and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Issuer filed with the Commission, in each case from
and after the date the Issuer first becomes subject to the provisions of
Section 13 or 15(d) of the Exchange Act, and such other reports and
documents of the Issuer and other information in the possession of or
reasonably obtainable by the Issuer as Lender and its Affiliates and
subsequent holders of the Warrants may reasonably request in availing
itself of any rule or regulation of the Commission allowing Lender and its
Affiliates and subsequent holders of the Warrants to sell any such
securities without registration.
15
<PAGE> 16
Section 15. REGISTRATION.
(a) If, at any time after the date hereof, the Issuer proposes to register
any of its securities under the Securities Act (except pursuant to a
registration statement filed on Form S-8 or Form S-4 or such other form as shall
be prescribed under the Act for the same purposes), it will at each such time
give written notice to all holders of outstanding Warrants and Non-Public
Warrant Shares of its intention to do so and upon the written request of any
holder thereof given within 10 days after the Issuer's giving of such notice,
the Issuer will use its reasonable best efforts to effect the registration of
the Warrants and/or Non-Public Warrant Shares which it shall have been so
requested to register by including the same in such registration statement all
to the extent required to permit the sale or other disposition thereof in
accordance with the intended method of sale or other disposition given in each
such request. If the registration of which the Issuer gives notice pursuant to
this subsection 15(a) is for an underwritten public offering, only Warrants or
Non-Public Warrant Shares which are to be included in the underwriting may be
included in such registration, and the Issuer shall have the right to designate
the managing underwriter(s) in any such underwritten public offering; provided
that (i) the Issuer shall use its best efforts to cause the managing
underwriter(s) to include the Warrants or Non-Public Warrant Shares requested to
be included in the registration in the underwriting; and (ii) if the managing
underwriter(s) determine(s) and advises the Issuer that the inclusion of some of
the Non-Public Warrant Shares requested to be included in the registration
concurrently with the securities being registered by the Issuer would interfere
with the successful marketing of such securities, then the number of Non-Public
Warrant Shares otherwise to be included in the registration statement by the
holders of the Non-Public Warrant Shares shall be reduced to the required level,
as follows: (A) first, in the event that the shares of capital stock being
registered in such proposed registration include shares of Common Stock to be
sold by the Company for its own account or shares of a securityholder (other
than such holders) who is selling such shares pursuant to "demand" registration
rights granted by the Company to such securityholder, by excluding the
Non-Public Warrant Shares proposed to be sold by the holders thereof, (B)
second, in the event that the shares of capital stock being registered in such
proposed registration include shares ("Priority Shares") of capital stock to be
sold in connection with a securityholder's exercise of the registration rights
granted by the Issuer to D. Blech & Company, Incorporated ("Blech") and to Alan
R. Ackerman ("Ackerman"), or their successors, pursuant to separate agreements
dated September 1, 1994 between the Issuer and each of Blech and Ackerman
(copies of which have been furnished to the Holders), by excluding the
Non-Public Warrant Shares proposed to be sold by such holders, (C) third, in the
event that the shares of capital stock being registered in such proposed
registration include shares of capital stock to be sold in connection with the
exercise by a securityholder (other than such holders) of "piggyback"
registration rights granted by the Company, by excluding, on a pro rata basis,
the shares of capital stock to be sold by such securityholder(s) and the
Non-Public Warrant Shares proposed to be sold by the holders thereof, and (D)
fourth, by reducing the participation of such Holders in such offering pro rata
among the Holders requesting such registration, based upon the number of
Non-Public Warrant Shares then owned by such Holders. Any registration statement
filed pursuant to this subsection 15(a) may be withdrawn at any time at the
discretion of the Issuer.
16
<PAGE> 17
(b) If a registration under subsection 15(a) shall be in connection with an
underwritten public offering, each holder of Warrants or Non-Public Warrant
Shares shall be deemed to have agreed by acquisition of such Warrants or
Non-Public Warrant Shares not to effect any sale or distribution, including any
sale pursuant to Rule 144 or Rule 144A, of any Warrants or Non-Public Warrant
Shares, and to use such holder's reasonable best efforts not to effect any such
sale or distribution of any other equity security of the Issuer or of any
security convertible into or exchangeable or exercisable for any equity security
of the Issuer (other than as part of such underwritten public offering) within
seven days before or 180 days after the effective date of such registration
statement (and the Issuer hereby also so agrees and agrees to cause each holder
of any equity security, or of any security convertible into or exchangeable or
exercisable for any equity security, of the Issuer purchased from the Issuer at
any time other than in a public offering, so to agree).
(c) As a condition to the inclusion of a holder's Warrants or Non-Public
Warrant Shares in any registration statements, each such holder of Warrants or
Non-Public Warrant Shares requesting registration thereof will furnish to the
Issuer such information with respect to such holder as is required to be
disclosed in the registration statement (and the prospectus included therein) by
the applicable rules, regulations and guidelines of the Commission. Failure of a
holder to furnish such information or agreement shall not affect the obligation
of the Issuer under this Section 15 to the remaining holders who furnish such
information.
(d) If and whenever the Issuer is required under this Section 15 to use its
reasonable best efforts to effect the registration of Warrants or Non-Public
Warrant Shares under the Securities Act, the Issuer shall:
(i) as expeditiously as possible and subject to the limitations set
forth in subsection 15(a), prepare and file with the Commission a
registration statement on the appropriate form with respect to such
Warrants or Non-Public Warrant Shares and use its best efforts to cause
such registration statement to become effective as soon as practicable
after such filing;
(ii) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements (including post-effective
amendments and supplements) to the registration statement covering such
Warrants or Non-Public Warrant Shares and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
and usable for resale for a period necessary to complete the distribution
of such securities, but in no event in excess of 90 days plus any period
during which the holders of Warrants or Warrant Shares are obligated to
refrain from selling because the Issuer is required to amend or supplement
the prospectus under subsection 15(d)(iv), and to comply with the
provisions of the Securities Act with respect to the disposition of all
Warrants or Non-Public Warrant Shares covered by such registration
statement during such period in accordance with the intended method of
disposition of the sellers set forth therein;
17
<PAGE> 18
(iii) as expeditiously as possible, furnish to each seller of such
Warrants or Non-Public Warrant Shares registered, or to be registered under
the Securities Act, and to each underwriter, if any, of such Warrants or
Non-Public Warrant Shares such number of copies of a prospectus and
preliminary prospectus in conformity with the requirements of the
Securities Act, and such other documents as such seller or underwriter may
reasonably request in order to facilitate the public sale or other
disposition of such Warrants or Non-Public Warrant Shares;
(iv) as expeditiously as possible, notify each seller of such Warrants
or Non-Public Warrant Shares if, at any time when a prospectus relating to
such Warrants or Non-Public Warrant Shares, is required to be delivered
under the Securities Act, any event shall have occurred as a result of
which the prospectus then in use with respect to such Warrants or
Non-Public Warrant Shares would include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or for any other
reason it shall be necessary to amend or supplement such prospectus in
order to comply with the Securities Act and prepare and furnish to all
sellers as promptly as possible, and in any event within ninety (90) days
of such notice, a reasonable number of copies of a supplement to or an
amendment of such prospectus which will correct such statement or omission
or effect such compliance;
(v) as expeditiously as possible, use its reasonable best effort to
register or qualify such Warrants or Non-Public Warrant Shares under such
other securities or blue sky laws of such jurisdictions as such seller
shall reasonably request and do any and all other acts and things which may
be reasonably necessary to enable such seller to consummate the public sale
or other disposition in each such jurisdiction of the Warrants or
Non-Public Warrant Shares owned by such seller and included in such
registration statement, provided that the Issuer shall not be required to
consent to the general service of process or to qualify to do business in
any jurisdiction where it is not then qualified;
(vi) use its reasonable best efforts to keep the holders of such
Warrants or Non-Public Warrant Shares informed of the Issuer's best
estimate of the earliest date on which such registration statement or any
post-effective amendment or supplement thereto will become effective and
will promptly notify such holders and the managing underwriters, if any,
participating in the distribution pursuant to such registration statement
of the following: (A) when such registration statement or any
post-effective amendment or supplement thereto becomes effective or is
approved; (B) of the issuance by any competent authority of any stop order
suspending the effectiveness or qualification of such registration
statement or the prospectus then in use or the initiation or threat of any
proceeding for that purpose; and (C) of the suspension of the qualification
of any Warrants or Non-Public Warrant Shares included in such registration
statement for sale in any jurisdiction;
18
<PAGE> 19
(vii) make available to its security holders, as soon as practicable,
an earnings statement covering a period of at least twelve months which
satisfies the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder;
(viii) cooperate with the sellers of such Warrants or Non-Public
Warrant Shares and the underwriters, if any, of such Warrants or Non-Public
Warrant Shares in the event that Warrants or Non-Public Warrant Shares are
to be sold in an underwritten offering, enter into an underwriting
agreement containing customary representations and warranties, covenants,
conditions and indemnification provisions, including without limitation the
furnishing to the underwriters of a customary opinion of independent
counsel to the Issuer and a customary "comfort" letter from the Issuer's
independent public accountants;
(ix) as to all registrations, pay all costs and expenses incident to
the performance and compliance by the Issuer of this Section 15 other than
underwriting discounts and commissions, including without limitation (A)
all registration and filing fees; (B) all printing expenses; (C) all fees
and disbursements of counsel and independent public accountants for the
Issuer; (D) all blue sky fees and expenses (including fees and expenses of
counsel in connection with blue sky surveys); (E) all transfer taxes; (F)
the entire expense of any special audits required by the rules and
regulations of the Commission; (G) the cost of distributing prospectuses in
preliminary and final form as well as any supplements thereto and (H) the
fees and expenses of one counsel for the holders of the Warrants or
Non-Public Warrant Shares being registered; and
(e) (i)The Issuer will indemnify and hold harmless each seller of Warrants
or Non-Public Warrant Shares, each director, officer, employee and agent of each
seller, and each other person, if any, who controls such seller within the
meaning of the Securities Act or the Exchange Act from and against any and all
losses, claims, damages, liabilities and legal and other expenses (including
costs of investigation) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such Warrants or Non-Public Warrant Shares were registered under the Securities
Act, any prospectus or preliminary prospectus contained therein or any amendment
or supplement thereto, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to such seller and furnished to the Issuer in writing by such seller expressly
for use therein, and provided that the Issuer will not be liable to any Person
who participates as an underwriter in the offering or sale of Warrants or
Non-Public Warrant Shares or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act under the indemnity
agreement in this subsection 15(e) with respect to any preliminary prospectus or
the final prospectus or the final prospectus as amended or supplemented, as the
case may be, to the extent that any such loss, claim, damage or liability of
such underwriter or controlling Person results from
19
<PAGE> 20
the sale by such underwriter of Warrants or Non-Public Warrant Shares to a
Person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the final prospectus or of the final
prospectus as then amended or supplemented, whichever is most recent, if the
Issuer has previously furnished copies thereof to such underwriter, or from a
sale to a Person in a state where the offering has not been registered or
qualified, if the Issuer has notified the seller and any underwriter involved in
such sale of the states where the offering has been registered or qualified.
(ii) It shall be a condition to the obligation of the Issuer to effect
a registration of Warrants or Non-Public Warrant Shares under the
Securities Act pursuant hereto that (X) each seller, severally and not
jointly, indemnify and hold harmless the Issuer and each person, if any,
who controls the Issuer within the meaning of the Securities Act or the
Exchange Act to the same extent as the indemnity from the Issuer in the
foregoing paragraph, but only with reference to any breach by such seller
of any agreement between such seller, and the Issuer with respect to the
offering and with reference to information relating to such seller
furnished to the Issuer in writing by such seller expressly for use in the
registration statement, any prospectus or preliminary prospectus contained
therein or any amendment or supplement thereto and (Y) each seller, in the
event that Warrants or Non-Public Warrant Shares are to be sold in an
underwritten offering, enters into an underwriting agreement containing
customary representations and warranties, covenants, conditions and
indemnification provisions.
(iii) In case any claim shall be made or any proceeding (including any
governmental investigation) shall be instituted involving any indemnified
party in respect of which indemnity may be sought pursuant to this
subsection 15(e), such indemnified party shall promptly notify the
indemnifying party in writing of the same, provided that failure to notify
the indemnifying party shall not relieve it from any liability it may have
to an indemnified party otherwise than under this subsection 15(e). The
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party in such proceeding and shall pay the fees and
disbursements of such counsel. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (A) the indemnifying party shall have failed to retain counsel
for the indemnified party as aforesaid, (B) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such
counsel or (C) representation of such indemnified party by the counsel
retained by the indemnifying party would, in the reasonable opinion of the
indemnified party, be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding, provided that the Issuer shall not be
liable for the fees and disbursements of more than one additional counsel
for all indemnified parties. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to
20
<PAGE> 21
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(f) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subsection 15(e) is
due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Issuer or the applicable
sellers, as the case may be, shall contribute to the aggregate losses, claims,
damages and liabilities incurred (including legal or other expenses reasonably
incurred in connection with the investigating or defending of same) by the other
and for which such indemnification was sought. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the offering of the
securities included in the registration statement (taking into account the
portion of the proceeds of the offering realized by each), the parties' relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances; provided, however, that (i) in no case shall any seller of
Warrants or Non-Public Warrant Shares be required to contribute any amount in
excess of the total public offering price of the Warrants or Non-Public Warrant
Shares sold by him and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this subsection 15(f), each person who
controls any seller of Warrants or Non-Public Warrant Shares or the Issuer shall
have the same rights to contribution as such seller or the Issuer. Any party
entitled to contribution shall, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against the Issuer or the seller of Warrants or
Non-Public Warrant Shares under this subsection 15(f), notify the Issuer or such
seller, as the case may be, but the omission to so notify the Issuer or such
seller, as the case may be, shall not relieve it from any other obligation it
may have hereunder or otherwise.
(g) After the date hereof, the Issuer shall not grant to any holder of
securities of the Issuer any registration rights which have a priority greater
than or equal to those granted to holders of Warrants or Non-Public Warrant
Shares pursuant to this Section 15 without the prior written consent of the
holders of at least a majority of the aggregate outstanding Warrants and
Non-Public Warrant Shares, voting as a single group.
Section 16. AMENDMENTS AND WAIVERS. Any provision of this Warrant Agreement
may be amended, supplemented, waived, discharged or terminated by a written
instrument signed by the Issuer and the holders of not less than a majority of
the outstanding Warrants (or in the case of Sections 14 and 15, the holders of a
majority of the aggregate outstanding Warrants and Non-Public Warrant Shares,
voting as a single group), provided that (i) this Agreement may not be amended,
supplemented or waived so as to increase the Exercise Price, reduce the number
of Warrant Shares issuable upon exercise of any Warrants, alter the period
during which any Warrants may be exercised, (except to provide for a later
Expiration Date) or in each case without the consent of the holders of all
outstanding Warrants and (ii) this Section 16 may not be amended
21
<PAGE> 22
or supplemented without the consent of the holders of all outstanding Warrants
and Non-Public Warrant Shares, voting as a single group, and no waiver of the
requirements of this Section 16 shall be binding upon any such holder without
its consent.
Section 17. SPECIFIC PERFORMANCE. The parties agree that irreparable damage
will result in the event that the obligations of the Issuer under this Warrant
Agreement are not specifically enforced, and that any damages available at law
for a breach of any such obligations would be inadequate. Therefore, the holders
of the Warrants and/or Non-Public Warrant Shares shall have the right to
specific performance by the Issuer of the provisions of this Warrant Agreement,
and appropriate injunctive relief may be applied for and granted in connection
therewith. The Issuer hereby irrevocably waives, to the extent that it may do so
under applicable law, any defense based on the adequacy of a remedy at law which
may be asserted as a bar to the remedy of specific performance in any action
brought against the Issuer for specific performance of this Warrant Agreement by
the holders of the Warrants and/or Non-Public Warrant Shares. Such remedies and
all other remedies provided for in this Warrant Agreement shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which may be available under this Warrant Agreement.
Section 18. NOTICES.
(a) Any notice or demand to be given or made by the Warrant Holders or the
holders of Warrant Shares to or on the Issuer pursuant to this Warrant Agreement
shall be sufficiently given or made if sent by registered mail, return receipt
requested, postage prepaid, addressed to the Issuer at the Warrant Office.
(b) Any notice to be given by the Issuer to the Warrant Holders or the
holders of Warrant Shares shall be sufficiently given or made if sent by
registered mail, return receipt requested, postage prepaid, addressed to such
holder as such holder's name and address shall appear on the Warrant Register or
the Common Stock registry of the Issuer, as the case may be.
Section 19. BINDING EFFECT. This Warrant Agreement shall be binding
upon and inure to the sole and exclusive benefit of the Issuer, its successors
and assigns, Lender, Affiliates of Lender and the registered holders from time
to time of the Warrants and the Warrant Shares.
Section 20. CONTINUED VALIDITY. A holder of Warrant Shares shall
continue to be entitled with respect to such Warrant Shares to all rights and
subject to all obligations to which it would have been entitled or subject as a
Warrant Holder under Sections 14 through 23 of this Warrant Agreement. The
Issuer will, at the time of each exercise of any Warrant, in whole or in part,
upon the request of the holder of the Warrant Shares issued upon such exercise
thereof, acknowledge in writing, in form reasonably satisfactory to such holder,
its continuing obligation to afford to such holder all such rights, provided,
however, that if such holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Issuer to afford to such
holder all such rights.
22
<PAGE> 23
Section 21. COUNTERPARTS. This Warrant Agreement may be executed in one or
more separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 22. NEW YORK LAW. THIS WARRANT AGREEMENT AND EACH WARRANT
CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 23. BENEFITS OF THIS WARRANT AGREEMENT. Nothing in this Warrant
Agreement shall be construed to give to any Person other than the Issuer and the
registered holders of the Warrants and the Warrant Shares any legal or equitable
right, remedy or claim under this Warrant Agreement.
Section 24. VOTING AND CONSENTS TO BE ON A FULLY CONVERTED BASIS. Wherever
this Warrant Agreement calls for the written consent or vote of any combinations
of the holders of the Warrants, any of the Warrant Shares, voting as a single
group, the Warrants shall be counted as if they had been exercised for Common
Stock.
Section 25. ENTIRE AGREEMENT. This Warrant Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior negotiations, understandings and agreements between
such parties in respect of such subject matter.
[Remainder of page intentionally left blank]
23
<PAGE> 24
IN WITNESS WHEREOF the parties hereto have caused this Warrant Agreement to
be duly executed and delivered by their proper and duly authorized officers, as
of the date and year first above written.
SIGHT RESOURCE CORPORATION
By:
Alan MacDonald
Vice President, Finance
and Administration
CREDITANSTALT CORPORATE FINANCE,
INC.
By:
Gregory F. Mathis
Vice President
By:
----------------------------------
Fiona McKone
Senior Associate
24
<PAGE> 25
Exhibit A
Warrant Agreement
-----------------
WARRANT CERTIFICATE
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS AND
SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN
AND ARE SUBJECT TO OTHER PROVISIONS OF THE WARRANT AGREEMENT, DATED AS OF
FEBRUARY 20, 1997, BETWEEN THE ISSUER AND CREDITANSTALT CORPORATE FINANCE, INC.,
A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
EXCHANGE RIGHTS MORE FULLY SET FORTH IN THE WARRANT AGREEMENT.
EXERCISABLE ONLY ON OR BEFORE
December 31, 2003
Warrant Certificate
This Warrant Certificate certifies that CREDITANSTALT CORPORATE FINANCE,
INC., or registered assigns, is the registered holder of 150,000 Warrants (the
"Warrants") to purchase Common Stock of SIGHT RESOURCE CORPORATION, a Delaware
corporation (the "Issuer"). Each Warrant entitles the holder, but only subject
to the conditions set forth herein and in the Warrant Agreement referred to
below, to purchase from the Issuer before 5:00 P.M., New York time, on December
31, 2003 (the "Expiration Date"), one (1) fully paid and nonassessable share of
the Common Stock of the Issuer (the "Warrant Shares") in the percentages and to
the extent set forth in the Warrant Agreement, at a price (the "Exercise Price")
of $4.625 per Warrant payable in lawful money of the United States of America,
upon surrender of this Warrant Certificate, execution of the annexed Form of
Election to Purchase and payment of the Exercise Price at the office of the
Issuer at 67 South Bedford Street, Burlington, Massachusetts 01803 or such other
address as the Issuer may specify in writing to the registered holder of the
Warrants evidenced hereby (the "Warrant Office"). In lieu of exercising Warrants
pursuant to the immediately preceding sentence, the Warrant holder shall have
the right to require the Issuer to convert the Warrants, in whole or in part and
at any time or times, into Warrant Shares, by surrendering to the Issuer the
Warrant Certificate evidencing the Warrants to be converted, accompanied by the
annexed Form of Notice of Conversion which has been duly completed and signed.
The Exercise Price and number of Warrant Shares purchasable upon exercise of the
Warrants are subject to adjustment prior to the Expiration Date as set forth in
the Warrant Agreement. In no event shall this Warrant be exercisable for shares
of Common Stock which,
<PAGE> 26
when aggregated with all other Warrant Shares (as defined in the Warrant
Agreement) previously issued (other than Non-Attributable Stock (as defined in
the Warrant Agreement)) would, upon issuance, represent in excess of 24.99% of
the Equity of the Issuer (defined in the Warrant Agreement) unless such shares,
when issued, would constitute Non-Attributable Stock (as defined in the Warrant
Agreement).
No Warrant may be exercised after 5:00 P.M., New York time, on the
Expiration Date and (except as otherwise provided in the Warrant Agreement) all
rights of the registered holders of the Warrants shall cease after 5:00 P.M.,
New York time, on the Expiration Date.
The Issuer may deem and treat the registered holders of the Warrants
evidenced hereby as the absolute owners thereof (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof and of any distribution to the holders hereof and for all other
purposes, and the Issuer shall not be affected by any notice to the contrary.
Warrant Certificates, when surrendered at the office of the Issuer at the
above-mentioned address by the registered holder hereof in person or by a legal
representative duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Issuer at the above-mentioned address, a new
Warrant Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued in exchange for this Warrant
Certificate to the transferee(s) and, if less than all the Warrants evidenced
hereby are to be transferred, to the registered holder hereof, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
This Warrant Certificate is one of the Warrant Certificates referred to in
the Warrant Agreement, dated as of February 20, 1997, between the Issuer and
Creditanstalt Corporate Finance, Inc. Said Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Issuer and the holders.
IN WITNESS WHEREOF the Issuer has caused this Warrant Certificate to be
signed by its duly authorized officer.
SIGHT RESOURCE CORPORATION
A-2
<PAGE> 27
By:
------------------------------------------
Alan MacDonald
Vice President, Finance and Administration
A-3
<PAGE> 28
ANNEX to Form
of Warrant
Certificate
-----------
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ___ Warrant Shares* and
herewith tenders payment for such Warrant Shares to the order of the Issuer in
the amount of $__________ in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
___________________________________________________ whose address is
_____________________________________________________ and that such certificate
be delivered to _________________ whose address is
____________________________________. If said number of Warrant Shares is less
than all of the Warrant Shares purchasable hereunder, the undersigned requests
that a new Warrant Certificate representing the remaining balance of the Warrant
Shares be registered in the name of ____________________________ whose address
is __________________________________________________ and that such Warrant
Certificate be delivered to __________________________________ whose address is
_________________ _____________________________________.
Signature:
- --------------------------------
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date: __________
* Consisting of:
____ shares of Common Stock
A-4
<PAGE> 29
ANNEX to Form
of Warrant
----------
Certificate
FORM OF NOTICE OF CONVERSION
(To be executed upon conversion of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to convert Warrants represented hereby
into ____ Warrant Shares* in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
________________________________________________ whose address is
______________________________________________________________ and that such
certificate be delivered to ____________________________ whose address is
__________________________________________________. If said number of Warrant
Shares is less than all of the Warrant Shares obtainable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of the Warrant Shares be registered in the name of
____________________________________ whose address is ______________
__________________________________________ and that such Warrant Certificate be
delivered to ____________________________________ whose address is
- ----------------- ----------------------------------. Signature:
- -------------------------------- (Signature must conform in all respects to name
of holder as specified on the face of the Warrant Certificate.)
Date: __________
* Consisting of:
____ shares of Common Stock
A-5
<PAGE> 30
EXHIBIT B to
Warrant Agreement
-----------------
WARRANT REGISTER
----------------
Original Number of Number of Names and
Warrant Warrants and Warrant Warrants Addresses of
Shares Expired Warrant Holders
Certificate
Number
B-1
<PAGE> 1
Exhibit 10.5
BORROWER SECURITY AGREEMENT
BORROWER SECURITY AGREEMENT, dated as of February 20, 1997, made by SIGHT
RESOURCE CORPORATION, a Delaware corporation (the "BORROWER"), in favor of
CREDITANSTALT CORPORATE FINANCE, INC., a Delaware corporation (the "LENDER") as
the holder of the Secured Obligations described below.
WITNESSETH:
WHEREAS, the Borrower is a party to the Credit Agreement, dated as of the
date hereof (as amended, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), between the Borrower and the Lender;
WHEREAS, pursuant to the Credit Agreement, the Lender has agreed to make
certain extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the Lender to
make its extensions of credit to the Borrower under the Credit Agreement that
the Borrower shall have executed and delivered this Security Agreement to the
Lender;
NOW, THEREFORE, in consideration of the premises and to induce the Lender
to enter into the Credit Agreement and to induce the Lender to make its
extensions of credit under the Credit Agreement, the Borrower hereby agrees as
follows:
1. Defined Terms.
-------------
1.1 Definitions.
-----------
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the
Credit Agreement, and the following terms which are defined in the
Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper,
Documents, Equipment, Farm Products, General Intangibles, Instruments,
Inventory and Proceeds.
(b) The following terms shall have the following meanings:
"AGREEMENT": this Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"CODE": the Uniform Commercial Code as from time to time in effect in
the State of New York.
"COLLATERAL": as defined in Section 2.
<PAGE> 2
"COLLATERAL ACCOUNT": the Collateral Account as defined in Section 3.
"COPYRIGHTS": means all of the following to the extent that the
Borrower now or hereafter has any right, title or interest therein: (i) all
United States copyrights in all Works, whether published or unpublished,
now existing or hereafter created or acquired, including, without
limitation, the copyrights in the Works listed in SCHEDULE 1 hereto, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, registrations, recordings and
applications in the United States Copyright Office, and (ii) all renewals
thereof.
"COPYRIGHT LICENSES": means any written agreement, naming the Borrower
as licensor or licensee, granting any right under any Copyright, including,
without limitation, the agreements described in SCHEDULE 1 hereto, as the
same may be amended, supplemented or otherwise modified from time to time,
including, without limitation, (i) all rights of the Borrower to receive
moneys due and to become due to it thereunder or in connection therewith,
(ii) all rights of the Borrower to damages arising out of or for breach or
default in respect thereof and (iii) all rights of the Borrower to exercise
all remedies thereunder; provided that the term "Copyright Licenses" shall
not include any license (or any contract or agreement giving rise thereto)
by the Borrower of property of another Person where such contract or
agreement prohibits the assignment or encumbrance of such license (or the
contract or agreement giving rise thereto), except to the extent that such
prohibition would be ineffective pursuant to Section 9-318(4) of the UCC.
"PATENTS": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in SCHEDULE 2, and (b) all applications
for letters patent of the United States or any other country and all
divisions, continuations and continuations-in-part thereof, including,
without limitation, any thereof referred to in SCHEDULE 2.
"PATENT LICENSE": any written agreement providing for the grant by or
to the Borrower of any right to manufacture, use or sell any invention
covered by a Patent, including, without limitation, any thereof referred to
in SCHEDULE 2.
"RECEIVABLE": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"SECURED OBLIGATIONS": shall be the collective reference to the unpaid
principal of and interest on the Notes and all other obligations and
liabilities (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the
Loans and interest accruing at the then applicable rate provided in the
Credit Agreement after the filing of any
2
<PAGE> 3
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not
a claim for post-filing or post-petition interest is allowed in such
proceeding), of the Borrower to the Lender whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Credit
Agreement, this Agreement, the Notes, the Warrant Agreement, the other Loan
Documents or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
the Lender that are required to be paid by the Borrower pursuant to the
terms of the Credit Agreement, this Agreement or any other Loan Document).
"TERMINATION DATE": the date which all Secured Obligations shall have
been irrevocably paid in full and the Commitments shall have been
terminated.
"TRADEMARKS": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in
SCHEDULE 3, and (b) all renewals thereof.
"TRADEMARK LICENSE": means any written agreement providing for the
grant by or to the Borrower of any right to use any Trademark, including,
without limitation, any thereof referred to in SCHEDULE 3.
"WORKS": any tangible expression of an idea of any Person.
1.2. Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein", "hereto" and "hereunder" and
words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and Section, subsection and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations, the Borrower hereby
grants to the
3
<PAGE> 4
Lender a security interest in all of the following property now owned or at any
time hereafter acquired by the Borrower or in which the Borrower now has or at
any time in the future may acquire any right, title or interest (collectively,
together with all amounts on deposit in the Collateral Account from time to
time, the "COLLATERAL"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Copyrights;
(d) all Copyright Licenses;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Inventory;
(j) all Patents;
(k) all Patent Licenses;
(l) all Trademarks;
(m) all Trademark Licenses;
(n) all books and records pertaining to the Collateral; and
(o) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing.
3. Collateral Account.
------------------
3.1. ESTABLISHMENT OF COLLATERAL ACCOUNT. At the request of the
Lender, there shall be established and at all times thereafter there shall
be maintained by the Borrower, a non-interest bearing cash collateral
account with Creditanstalt-Bankverein, Greenwich, Connecticut Branch, or as
designated by the Lender, (and as long as no Default or Event of Default
has occurred and is continuing, with the consent of the Borrower, not to be
unreasonably withheld), any other United States Depository institution or
subsidiary or branch of a foreign bank licensed under the laws of the
United States or any state thereof, or any successor thereto (the
"COLLATERAL ACCOUNT") subject to the terms of this Agreement.
4
<PAGE> 5
3.2. RIGHTS, TITLE AND INTEREST OF COLLATERAL ACCOUNT. All right,
title and interest in and to the Collateral Account shall vest exclusively
in the Lender. The Borrower shall have no rights with respect to the
Collateral Account and the Lender shall have sole dominion and control over
the Collateral Account and the monies deposited therein. Monies deposited
in the Collateral Account shall constitute security for the Secured
Obligations. The Borrower hereby pledges and assigns to the Lender and
hereby grants to the Lender a security interest in, all right, title or
interest (if any) which the Borrower now has or may hereafter have or
purport or claim to have in or to the Collateral Account and all monies
held therein, any investments made with such monies and any and all
certificates or instruments from time to time representing or evidencing
such investments (and all proceeds thereof).
3.3. MAINTAINING THE COLLATERAL ACCOUNT. Until the Termination Date of
this Agreement, all monies received by the Lender while a Default or an
Event of Default has occurred and is continuing, all monies received
pursuant to subsection 4.5(a) and Section 9 of the Credit Agreement, and
any monies received as a result of investments made as contemplated by
Section 4 hereof, shall be deposited in the Collateral Account.
4. INVESTMENT OF MONIES. Pending the disbursement thereof pursuant to the
terms of this Agreement, all monies in the Collateral Account shall (to the
extent it is practical to do so) be invested by the Lender in Cash Equivalents
(as defined in the Credit Agreement). All such investments shall be evidenced
either (a) by negotiable certificates or instruments which are held by or for
the account of the Lender or (b) by book entries maintained in a State in which
the Lender may be granted by book entries a security interest in the securities
relating thereto. In the absence of its gross negligence or willful misconduct,
the Lender shall not have any ability out of or in connection with any
investment made in accordance with the provisions herein or for any loss or
decline in value of any investment or from any loss resulting directly or
indirectly from any investment made pursuant to and in accordance with the
provisions hereof.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants that:
5.1. TITLE; NO OTHER LIENS. Except for the security interest granted
to the Lender pursuant to this Agreement and the other Liens permitted to
exist on the Collateral pursuant to the Credit Agreement, the Borrower owns
each item of the Collateral free and clear of any and all Liens or claims
of others. No financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public
office, except such as have been filed in favor of the Lender pursuant to
this Agreement or as are permitted pursuant to the Credit Agreement.
5.2. PERFECTED FIRST PRIORITY LIENS. The security interests granted
pursuant to this Agreement (a) constitute perfected security interests in
the Collateral in favor of the Lender, as collateral security for the
Secured Obligations and (b) are prior to all other Liens on the Collateral
in existence on the date hereof except as set forth on SCHEDULE V to the
Credit Agreement.
5
<PAGE> 6
5.3. INVENTORY AND EQUIPMENT. The Inventory and the Equipment are kept
at the locations listed on SCHEDULE 4.
5.4. CHIEF EXECUTIVE OFFICE. The Borrower's chief executive office is
located at 67 South Bedford Street, Burlington, MA
5.5. FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
6. COVENANTS. The Borrower covenants and agrees with the Lender that, from
and after the date of this Agreement until the Secured Obligations shall have
been paid in full and the Commitments shall have expired or otherwise been
terminated:
6.1 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER. If any amount payable
under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Lender, duly indorsed in a
manner satisfactory to the Lender, to be held as Collateral pursuant to
this Agreement.
6.2. Maintenance of Insurance.
------------------------
(a) The Borrower will maintain, with financially sound and
reputable companies, insurance policies insuring the Inventory and
Equipment against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Lender, such
policies to be in such form and amounts and having such coverage as
may be reasonably satisfactory to the Lender, with losses payable to
the Borrower and the Lender as their respective interests may appear.
(b) All such insurance shall (1) provide that no cancellation,
material reduction in amount or material change in coverage thereof
shall be effective until at least 30 days after receipt by the Lender
of written notice thereof, (2) name the Lender as an insured party and
(3) be reasonably satisfactory in all other respects to the Lender.
(c) The Borrower shall deliver to the Lender a report of a
reputable insurance broker with respect to such insurance in each
calendar year and such supplemental reports with respect thereto as
the Lender may from time to time reasonably request.
6.3. MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION.
(a) The Borrower shall maintain the security interest created by
this Agreement as a perfected security interest having at least the
priority described in subsection 5.2 and shall defend such security
interest against the claims and demands of all Persons whomsoever.
6
<PAGE> 7
(b) At any time and from time to time, upon the written request
of the Lender, and at the sole expense of the Borrower, the Borrower
will promptly and duty execute and deliver such further instruments
and documents and take such further actions as the Lender may
reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in
any jurisdiction with respect to the security interests created
hereby.
6.4. CHANGES IN LOCATIONS, NAME, ETC. The Borrower will not unless it
shall have given the Lender at least 30 days prior written notice of such
change (or, in the case of Inventory and Equipment, at least 10 days prior
written notice, to the extent that the Borrower has taken such action as
reasonably may be required of it to maintain the continuous perfection of
the Lender's security interest in such Inventory or Equipment, as the case
may be):
(a) permit any of the Inventory (other than goods-in-transit and
immaterial amounts of goods in temporary locations in the ordinary
course of business) or Equipment to be kept at a location other than
those listed on SCHEDULE 4; or
(b) change the location of its chief executive office from that
specified in subsection 5.4;
(c) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Lender in connection
with this Agreement would become seriously misleading.
6.5. FURTHER IDENTIFICATION OF COLLATERAL. The Borrower will furnish
to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Lender may reasonably request, all in
reasonable detail.
6.6 NOTICES. The Borrower will advise the Lender promptly, in
reasonable detail, at its address provided in subsection 11.2 of the Credit
Agreement of (a) any Lien (other than security interests created hereby or
Liens permitted under the Credit Agreement) on any of the Collateral and
(b) the occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the Collateral or
on the security interests created hereby.
7. PROVISIONS RELATING TO RECEIVABLES.
---------------------------------
7.1 BORROWER REMAINS LIABLE UNDER RECEIVABLES. Anything herein to the
contrary notwithstanding, the Borrower shall remain liable under each of
the Receivables to observe and perform all the conditions and obligations
to be observed and
7
<PAGE> 8
performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Receivable. The Lender shall not have
any obligation or liability under any Receivable (or any agreement giving
rise thereto) by reason of or arising out of this Agreement or the receipt
by the Lender of any payment relating to such Receivable pursuant hereto,
nor shall the Lender be obligated in any manner to perform any of the
obligations of the Borrower under or pursuant to any Receivable (or any
agreement giving rise thereto), to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Receivable (or any
agreement giving rise thereto), to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any
time or times.
7.2 ANALYSIS OF RECEIVABLES. The Lender shall have the right to make
test verifications of the Receivables in any manner and through any medium
that it reasonably considers advisable, and the Borrower shall furnish all
such assistance and information as the Lender may reasonably require in
connection with such test verifications. At any time and from time to time,
upon the Lender's reasonable request and at the expense of the Borrower,
the Borrower shall cause independent public accountants or others
satisfactory to the Lender to furnish to the Lender reports showing
reconciliations, aging and test verifications of, and trial balances for,
the Receivables. The Lender, in its own name or in the name of others, may
during such time as a Default or an Event of Default shall have occurred
and be continuing, communicate with the obligors on the Receivables to
verify with them to the Lender's satisfaction the existence, amount and
terms of any Receivables.
7.3 Collections On Receivables.
--------------------------
(a) The Lender hereby authorizes the Borrower to collect the
Receivables subject to the Lender's direction and control, and the
Lender may curtail or terminate said authority at any time when a
Default or an Event of Default has occurred and is continuing and may
then direct that payments on the Receivables be made directly to the
Lender in accordance with the provisions of subsection 11.1. If
required by the Lender at any time when a Default or an Event of
Default has occurred and is continuing any payments of Receivables,
when collected by the Borrower, (1) shall be forthwith (and, in any
event, within two Business Days) deposited by the Borrower in the
exact form received, duly indorsed by the Borrower to the Lender if
required, in a Collateral Account maintained under the sole dominion
and control of the Lender, subject to withdrawal by the Lender only as
provided in subsection 10.3 and (2) until so turned over, shall be
held by the Borrower in trust for the Lender, segregated from other
funds of the Borrower.
(b) Each such deposit of Proceeds of Receivables shall be
accompanied by a report (in the form customarily prepared by the
8
<PAGE> 9
Borrower for its internal purposes) identifying in reasonable detail
the nature and source of the payments included in the deposit.
(c) At the Lender's request at any time when a Default or an
Event of Default has occurred and is continuing the Borrower shall
deliver to the Lender all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the
Receivables, including, without limitation, all original orders,
invoices and shipping receipts.
7.4. Representations and Warranties.
------------------------------
(a) No amount payable to the Borrower under or in connection with
any Receivable is evidenced by any Instrument or Chattel Paper which
has not been delivered to the Lender.
(b) None of the obligors on any material portion of the
Receivables is a Governmental Authority.
(c) The amounts represented by the Borrower to the Lender from
time to time as owing to the Borrower in respect of the Receivables
will at such times be accurate in all material respects.
7.5. Covenants.
---------
(a) Other than in the ordinary course of business consistent with
its past practice, the Borrower will not (i) grant any extension of
the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any
Receivable, (iv) allow any credit or discount whatsoever on any
Receivable, (v) amend, supplement or modify any Receivable in any
manner that could adversely affect the value thereof or (vi) fail to
exercise promptly and diligently each and every material right which
it may have under each agreement giving rise to a Receivable (other
than any right of termination).
(b) The Borrower will deliver to the Lender a copy of each
material demand, notice or document received by it that questions the
validity or enforceability of more than 5% of the aggregate amount of
the then outstanding Receivables.
(8) Provisions Relating to Patents and Trademarks.
---------------------------------------------
8.1 Representations and Warranties.
------------------------------
(a) SCHEDULE 2 refers to all Patents and material Patent Licenses
owned by the Borrower in its own name on the date hereof.
9
<PAGE> 10
(b) SCHEDULE 3 refers to all Trademarks registered with
Governmental Authorities and material Trademark Licenses owned by the
Borrower in its own name on the date hereof.
(c) To the best of the Borrower's knowledge, each Patent and
Trademark is on the date hereof valid, subsisting, unexpired,
enforceable and has not been abandoned, except where such abandonment
would not reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth in either SCHEDULE 2 or SCHEDULE 3, none
of such Patents and Trademarks is on the date hereof the subject of
any exclusive licensing or franchise agreement.
(e) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the
validity or enforceability of any Patent or Trademark in any respect
that could reasonably be expected to have a Material Adverse Effect.
(f) No action or proceeding is pending on the date hereof seeking
to limit, cancel or question the validity of any Patent or Trademark,
which, if adversely determined, would have a Material Adverse Effect
on the value of any material Patent or Trademark.
8.2. Covenants.
---------
(a) The Borrower (either itself or through licensees) will (1)
maintain each material Trademark in full force free from any claim of
abandonment for non-use, (2) maintain as in the past the quality of
products and services offered under such Trademark, (3) employ such
Trademark with the appropriate notice of registration (if deemed
advisable by management in its reasonable discretion) and (4) not (and
not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such Trademark may become
invalidated.
(b) The Borrower will not knowingly do any act, or omit to do any
act, whereby any material Patent may become abandoned or dedicated.
(c) The Borrower will notify the Lender immediately if it knows,
or has reason to know, that any application or registration relating
to any material Patent or Trademark may become abandoned or dedicated,
or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country) regarding
the Borrower's ownership of any material Patent or Trademark or its
right to register the same or to keep and maintain the same.
10
<PAGE> 11
(d) Whenever the Borrower, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, the Borrower shall
report such filing to the Lender within five Business Days after the
last day of the fiscal quarter in which such filing occurs. Upon
request of the Lender, the Borrower shall execute and deliver any and
all agreements, instruments, documents, and papers as the Lender may
request to evidence the Lender security interest in any Patent or
Trademark and the goodwill and general intangibles of the Borrower
relating thereto or represented thereby.
(e) The Borrower will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United
States Patent and Trademark Office, or any similar office or agency in
any other country or any political subdivision thereof, to maintain
and pursue each material application (and to obtain the relevant
registration) and to maintain each registration of the material
Patents and Trademarks, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
(f) In the event that any Patent or Trademark is infringed,
misappropriated or diluted by a third party, the Borrower shall (i)
take such actions as the Borrower shall reasonably deem appropriate
under the circumstances to protect such Patent or Trademark and (ii)
if such Patent or Trademark is of material economic value, promptly
notify the Lender after it learns thereof and where appropriate in
accordance with its reasonable business judgment, sue for
infringement, misappropriation or dilution, to seek injunctive relief,
and to recover any and all damages for such infringement,
misappropriation or dilution.
9. Copyrights.
----------
9.1. Representations and Warranties.
------------------------------
(a) SCHEDULE 1 refers to all material Copyrights registered with
or applied for a Governmental Authority and material Copyright
Licenses owned by the Borrower in its own name on the date hereof.
(b) To the best of the Borrower's knowledge, each material
Copyright is on the date hereof valid, subsisting, unexpired,
enforceable and has not been abandoned.
(c) Except as set forth in SCHEDULE 1, none of such Copyrights is
on the date hereof the subject of any exclusive licensing or franchise
agreement.
11
<PAGE> 12
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the
validity of any Copyright in any respect that could reasonably be
expected to have a Material Adverse Effect.
(e) No action or proceeding is pending on the date hereof seeking
to cancel or question the validity of any Copyright which, if
adversely determined, would have a Material Adverse Effect.
9.2 Covenants.
---------
(a) The Borrower (either itself or through licensees) will (i)
employ the appropriate notice of copyright for each work subject to
copyright protection to the extent necessary to protect any material
registered Copyright relating to such work and (ii) not (and not
permit any licensee or sublicensee thereof to) do any act or knowingly
omit to do any act whereby any material Copyright may become
invalidated.
(b) The Borrower will not knowingly (either itself or through
licensees) do any act, or omit to do any act, whereby any material
Copyright may become injected into the public domain.
(c) The Borrower will notify the Lender immediately if it knows,
or has reason to know, that any material Copyright may become injected
into the public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any court or tribunal in the United
States or any political subdivision thereof) regarding the Borrower's
ownership of any such Copyright or its validity.
(d) On each January 31 following the date hereof (or, if the
Lender reasonably so requests in writing, more often), if the Borrower
owns any registered Copyrights, the Borrower either itself or through
any agent, employee, licensee or designee, shall provide to the Lender
a document confirming the Lender's security interest in each
registered Copyright with respect to which the Borrower acquires an
interest during the two preceding calendar quarters, duly executed and
in proper form for filing in the United States Copyright Office or
other applicable United States Governmental Authority. Upon request of
the Lender, the Borrower shall execute and deliver any and all
additional agreements, instruments, documents, and papers as the
Lender may reasonably request to confirm the Lender's security
interest in such Copyright, and the Borrower hereby constitutes the
Lender as its attorney-in-fact to file all such writings for the
foregoing purposes, all lawful acts of such attorney being hereby
ratified and confirmed; such power being coupled with an interest is
irrevocable until the Termination Date (as defined herein).
12
<PAGE> 13
(e) The Borrower will take all necessary steps, as it shall deem
appropriate under the circumstances, in accordance with its reasonable
business judgment, to maintain and pursue each material application
filed (and to obtain the relevant registration) and to maintain to the
extent permitted by law each registration of each material Copyright
owned by the Borrower including, without limitation, filing of
applications for renewal, where necessary.
(f) The Borrower will promptly notify the Lender of any material
infringement of any material Copyright owned by it of which it becomes
aware and will take such actions as it shall reasonably deem
appropriate under the circumstances to protect such Copyright,
including, where appropriate in accordance with its reasonable
business judgment, the bringing of suit or the settling of actual or
potential suits for infringement, seeking injunctive relief and
seeking to recover any and all damages for such infringement.
10 Remedies.
--------
10.1. NOTICE TO OBLIGORS. Upon the request of the Lender at any time
when a Default or an Event of Default has occurred and is continuing the
Borrower shall notify obligors on the Receivables that the Receivables have
been assigned to the Lender and that payments in respect thereof shall be
made directly to the Lender.
10.2. PROCEEDS TO BE TURNED OVER TO THE LENDER. In addition to the
rights of the Lender specified in subsection 7.3 with respect to payments
of Receivables, when a Default or an Event of Default has occurred and is
continuing all Proceeds received by the Borrower consisting of cash, checks
and other near-cash items shall be held by the Borrower in trust for the
Lender, segregated from other funds of the Borrower, and shall, forthwith
upon receipt by the Borrower, be turned over to the Lender in the exact
form received by the Borrower (duly indorsed by the Borrower to the Lender,
if required) and held by the Lender in the Collateral Account. All Proceeds
while held by the Lender in the Collateral Account (or by the Borrower in
trust for the Lender) shall continue to be held as collateral security for
all the Secured Obligations and shall not constitute payment thereof until
applied as provided in subsection 10.3.
10.3. APPLICATION OF PROCEEDS. At such intervals as may be agreed upon
by the Borrower and the Lender, or, if an Event of Default has occurred and
is continuing at any time at the Lender's election, the Lender may apply
all or any part of Proceeds held in any Collateral Account in payment of
the Secured Obligations in such order as the Lender may elect, and any part
of such funds which the Lender elects not so to apply and deems not
required as collateral security for the Secured Obligations shall be paid
over from time to time by the Lender to the Borrower or to whomsoever may
be lawfully entitled to receive the same. Any balance of such Proceeds when
no Default or Event of Default is continuing shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same. Any
balance of such Proceeds remaining after the
13
<PAGE> 14
Secured Obligations shall have been paid in full and the Commitments under
(and as defined in) the Credit Agreement shall have expired or otherwise
been terminated shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive the same.
10.4. CODE REMEDIES. If an Event of Default has occurred and is
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Lender, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange, broker's board
or office of the Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Borrower, which right or equity is hereby
waived or released. The Borrower further agrees, at the Lender's request,
to assemble the Collateral and make it available to the Lender at places
which the Lender shall reasonably select, whether at the Borrower's
premises or elsewhere. To the extent permitted by applicable law, the
Borrower waives all claims, damages and demands it may acquire against the
Lender arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given
at least 10 days before such sale or other disposition.
11. LENDER APPOINTMENT AS ATTORNEY-IN-FACT; LENDER PERFORMANCE OF
BORROWER'S OBLIGATIONS.
11.1. POWERS. The Borrower hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Borrower and in the name
of the Borrower or in its own name, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without
limiting the generality of the foregoing, the Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without notice to or
assent by the Borrower, to do any or all of the following:
(a) at any time when a Default or an Event of Default has
occurred and is continuing in the name of the Borrower or its own
name,
14
<PAGE> 15
or otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Lender for the purpose of collecting any and all such moneys due under
any Receivable or with respect to any other Collateral whenever
payable;
(b) in the case of any Copyright, Patent or Trademark, execute
and deliver any and all agreements, instruments, documents and papers
as the Lender may request to evidence the Lender's security interest
in such Copyright, Patent or Trademark and the goodwill and general
intangibles of the Borrower relating thereto or represented thereby;
(c) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof;
(d) execute, in connection with any sale provided for in
subsection 12.4, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(e) at any time when a Default or an Event of Default has
occurred and is continuing (1) direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Lender or as the Lender
shall direct; (2) ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(3) sign and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection
with any of the Collateral; (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (5) defend any suit,
action or proceeding brought against the Borrower with respect to any
Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, to give such discharges or
releases as the Lender may deem appropriate; (7) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which
any such Copyright, Patent or Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such manner,
as the Lender shall in its sole discretion determine; and (8)
generally, sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute
15
<PAGE> 16
owner thereof for all purposes, and do, at the Lender's option and the
Borrower's expense, at any time, or from time to time, all acts and
things which the Lender deems necessary to protect, preserve or
realize upon the Collateral and the Lender's security interests
therein and to effect the intent of this Agreement, all as fully and
effectively as the Borrower might do.
11.2. PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS. If the Borrower
fails to perform or comply with any of its agreements contained herein, the
Lender, at its option, but without any obligation so to do, may perform or
comply, or otherwise cause performance or compliance, with such agreement.
11.3 BORROWER'S REIMBURSEMENT OBLIGATION. The expenses of the Lender
incurred in connection with actions undertaken as provided in this Section,
together with interest thereon at a rate equal to the rate per annum at
which interest would then be payable on past due ABR Loans under the Credit
Agreement, from the date of payment by the Lender to the date reimbursed by
the Borrower, shall be payable by the Borrower to the Lender on demand.
11.4. RATIFICATION; POWER COUPLED WITH AN INTEREST. The Borrower
hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof in accordance with the terms of this Agreement. All
powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and
the security interests created hereby are released.
12. DUTY OF THE LENDER. The Lender's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to use reasonable care in the
custody and preservation of such Collateral. Neither the Lender, nor any of its
respective officers, directors, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Borrower or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Lender hereunder are solely to protect the Lender's
interests in the Collateral and shall not impose any duty upon the Lender to
exercise any such powers. The Lender shall be accountable only for amounts that
its actually receives as a result of the exercise of such powers, and neither it
nor any of its officers, directors, employees or agents shall be responsible to
the Borrower for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
13. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of the
Code, the Borrower authorizes the Lender to file financing statements with
respect to the Collateral without the signature of the Borrower in such form and
in such filing offices as the Lender reasonably determines appropriate to
perfect the security interests of the Lender under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
16
<PAGE> 17
14. NOTICES. All notices, requests and demands to or upon the Lender or the
Borrower hereunder shall be effected in the manner provided for in subsection
10.2 of the Credit Agreement.
15. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
16. Amendments in Writing; No Waiver; Cumulative Remedies.
-----------------------------------------------------
16.1 AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the Borrower and the Lender, provided
that any provision of this Agreement imposing obligations on the Borrower
may be waived by the Lender in a written instrument executed by the Lender.
16.2 NO WAIVER BY COURSE OF CONDUCT. The Lender shall not by any act
(except by a written instrument pursuant to subsection 16.1), delay,
indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or in any breach of
any of the terms and conditions hereof. No failure to exercise, nor any
delay in exercising, on the part of the Lender any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by the Lender of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy
which the Lender would otherwise have on any future occasion.
16.3 REMEDIES CUMULATIVE. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any other rights or remedies provided by law.
17. SECTION HEADINGS. The Section and subsection headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Borrower and shall inure to the benefit of the
Lender and its successors and assigns.
19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
17
<PAGE> 18
20. RELEASE OF COLLATERAL AND TERMINATION. The Lender shall release the
Collateral from the Lien created hereby, and this Agreement and all obligations
of the Lender and the Borrower hereunder shall terminate on the Termination
Date.
IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
SIGHT RESOURCE CORPORATION
By:
-----------------------
Alan MacDonald
Vice President, Finance and
Administration
18
<PAGE> 19
Schedule 1
----------
COPYRIGHTS AND COPYRIGHT LICENSES
None.
<PAGE> 20
Schedule 2
----------
PATENTS AND PATENT LICENSES
None.
<PAGE> 21
Schedule 3
----------
TRADEMARKS AND TRADEMARK LICENSES
Mark Jurisdiction Number Date Issued or Filed
- ---- ------------ ------ --------------------
Sight Resource USA Ser. No. 74/730,677 08/19/95
<PAGE> 22
Schedule 4
----------
Page 1 of 2
-----------
INVENTORY AND EQUIPMENT
SIGHT RESOURCE CORPORATION
67 South Bedford Street
Burlington, MA 01803
Massachusetts Eye and Ear Infirmary
243 Charles Street
Boston, MA 02114
Koch Eye Associates
566 Tollgate Road
Warwick, RI 02886
The R.I. Eye Institute
150 East Manning Street
Providence, RI 02906
Allegheny University
216 Broad Street
Philadelphia, PA 19102-1192
RK Care Associates
345 East 37th Street
New York, NY 10016
St. George Eye Center
4145 West Peterson
Suite 200
Chicago, IL 60646
International EyeCare
301 Lindberg, Suite B
McAllan, TX 78501
International EyeCare
9055 Kary Freeway, Suite 100
Houston, TX 77024
<PAGE> 23
Schedule 4
----------
Page 2 of 2
-----------
Lahey Clinic - North
1 Essex Center Drive
Peabody, MA 01960
Advanced Eye Care
300 N. Milwaukee, Suite L
Lake Villa, IL 60046
Cambridge Eye Associates, Inc.
100 Jeffrey Avenue
Holliston, MA 01746
<PAGE> 1
Exhibit 10.6
BORROWER STOCK PLEDGE AGREEMENT
BORROWER STOCK PLEDGE AGREEMENT, dated as of February 20, 1997, made by
SIGHT RESOURCE CORPORATION, a Delaware corporation (the "Borrower") in favor of
CREDITANSTALT CORPORATE FINANCE, INC., a Delaware corporation (the "Lender"),
parties to the Credit Agreement described below.
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower is a party to the Credit Agreement, dated as of the
date hereof (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), between the Borrower and the Lender;
WHEREAS, pursuant to the Credit Agreement, the Lender has agreed to make
certain extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein;
WHEREAS, the Borrower is the legal and beneficial owner of the shares of
Pledged Stock (as hereinafter defined) issued by the Issuers (as hereinafter
defined); and
WHEREAS, it is a condition precedent to the obligation of the Lender to
make its extensions of credit to the Borrower under the Credit Agreement that
the Borrower shall have executed and delivered this Pledge Agreement to the
Lender;
NOW, THEREFORE, in consideration of the premises and to induce the Lender
to enter into the Credit Agreement and to induce the Lender to make its
extensions of credit under the Credit Agreement, the Borrower hereby agrees with
the Lender, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
(b) The following terms shall have the following meanings:
"AGREEMENT": this Borrower Pledge Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"BANKRUPTCY EVENT OF DEFAULT": an Event of Default pursuant to
Section 9(f) of the Credit Agreement.
"CODE": the Uniform Commercial Code from time to time in effect
in the State of New York.
"COLLATERAL": the Pledged Stock and all Proceeds.
"COLLATERAL ACCOUNT": as defined in the Borrower Security
Agreement.
<PAGE> 2
"ISSUERS": the collective reference to the companies identified
on Schedule 1 attached hereto as the issuers of the Pledged Stock;
individually, each an "Issuer."
"PLEDGED STOCK": the shares of capital stock listed on Schedule 1
hereto, together with all stock certificates, options or rights of any
nature whatsoever that may be issued or granted by any Issuer to the
Borrower while this Agreement is in effect.
"PROCEEDS": all "proceeds" as such term is defined in Section
9-306(l) of the Code in effect on the date hereof and, in any event,
shall include, without limitation, all dividends or other income from
the Pledged Stock, collections thereon or distributions with respect
thereto.
"SECURED OBLIGATIONS": shall be the collective reference to the
unpaid principal of and interest on the Notes and all other
obligations and liabilities (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement
after the maturity of the Loans and interest accruing at the then
applicable rate provided in the Credit Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in
such proceeding), of the Borrower to the Lender whether direct or
indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, this Agreement, the Notes, the
Warrant Agreement, the other Loan Documents or any other document
made, delivered or given in connection therewith, in each case whether
on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Lender that
are required to be paid by the Borrower pursuant to the terms of the
Credit Agreement, this Agreement or any other Loan Document);
"SECURITIES ACT": the Securities Act of 1933, as amended.
"TERMINATION DATE": the date which all Secured Obligations shall
have been irrevocably paid in full and the Commitments shall have been
terminated.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section and paragraph
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2
<PAGE> 3
2. PLEDGE; GRANT OF SECURITY INTEREST. The Borrower hereby delivers to
the Lender, all the Pledged Stock and hereby grants to the Lender, a first
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations.
3. STOCK POWERS. Concurrently with the delivery to the Lender of each
certificate representing one or more shares of Pledged Stock, the Borrower shall
deliver an undated stock power covering such certificate, duly executed in blank
by the Borrower.
4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
that:
(a) The shares of Pledged Stock constitute all the issued and outstanding
shares of all classes of the capital stock of each Issuer owned by the Borrower.
(b) All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable.
(c) The Borrower is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock, free of any and all Liens or options in
favor of, or claims of, any other Person, except the security interest created
by this Agreement.
(d) Upon delivery to the Lender of the stock certificates evidencing the
Pledged Stock, the security interest created by this Agreement will constitute a
valid, perfected first priority security interest in the Collateral, enforceable
in accordance with its terms against all creditors of the Borrower and any
Persons purporting to purchase any Collateral from the Borrower, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
5. COVENANTS. The Borrower covenants and agrees with the Lender that,
from and after the date of this Agreement until this Agreement is terminated and
the security interests created hereby are released:
(a) If the Borrower shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect thereof,
the Borrower shall accept the same as the agent of the Lender, hold the same in
trust for the Lender and deliver the same forthwith to the Lender in the exact
form received, duly indorsed by the Borrower to the Lender, if required,
together with an undated stock power covering such certificate duly executed in
blank by the Borrower, to be held by the Lender, subject to the terms hereof, as
additional collateral security for the Secured Obligations. At any time when a
Default or an Event of Default has occurred and is continuing, any sums paid
upon or in respect of the Pledged Stock upon the liquidation or dissolution of
any Issuer shall be paid over to the Lender to be held by it hereunder as
additional collateral security for the Secured Obligations, and at any time when
a Default or an Event of Default has
3
<PAGE> 4
occurred and is continuing, in case any distribution of capital shall be made on
or in respect of the Pledged Stock or any property shall be distributed upon or
with respect to the Pledged Stock pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, the property so distributed shall be delivered to the Lender to be held
by it hereunder as additional collateral security for the Secured Obligations.
If any sums of money or property so paid or distributed in respect of the
Pledged Stock shall be received by the Borrower, the Borrower shall, until such
money or property is paid or delivered to the Lender, hold such money or
property in trust for the Lender, segregated from other funds of the Borrower,
as additional collateral security for the Secured Obligations.
(b) Without the prior written consent of the Lender, the Borrower will not
(1) except to the extent not prohibited by the Credit Agreement, vote to enable,
or take any other action to permit, any Issuer to issue any stock or other
equity securities of any nature or to issue any other securities convertible
into or granting the right to purchase or exchange for any stock or other equity
securities of any nature of any Issuer, (2) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral, (3)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Collateral, or any interest therein,
except for the security interests created by this Agreement or (4) enter into
any agreement or undertaking restricting the right or ability of the Borrower or
the Lender to sell, assign or transfer any of the Collateral.
(c) The Borrower shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such security
interest against claims and demands of all Persons whomsoever. At any time and
from time to time, upon the written request of the Lender, and at the sole
expense of the Borrower, the Borrower will promptly and duly execute and deliver
such further instruments and documents and take such further actions as the
Lender may reasonably request for the purposes of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted. If
any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note, other instrument or chattel paper, such
note, instrument or chattel paper shall be immediately delivered to the Lender,
duly endorsed in a manner satisfactory to the Lender, to be held as Collateral
pursuant to this Agreement.
(d) The Borrower shall pay, and save the Lender harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.
6. CASH DIVIDENDS; VOTING RIGHTS. Unless a Default or an Event of Default
has occurred and is continuing and the Lender shall have given notice to the
Borrower of the Lender's intent to exercise its corresponding rights pursuant to
Section 7 below (except in the case of a
4
<PAGE> 5
Bankruptcy Event of Default, in which case no such notice shall be required),
the Borrower shall be permitted to receive all cash dividends paid in the normal
course of business of the Issuers and consistent with past practice, to the
extent permitted in the Credit Agreement, in respect of the Pledged Stock and to
exercise all voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which, in the Lender's reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Credit Agreement, the Notes, this Agreement or any other Loan
Document.
7. RIGHTS OF THE LENDER. (a) All money Proceeds received by the Lender
hereunder shall be held by the Lender in the Collateral Account. All Proceeds
while held by the Lender in the Collateral Account (or by any Pledgor in trust
for the Lender) shall continue to be held as collateral security for all the
Secured Obligations and shall not constitute payment thereof until applied as
provided in paragraph 8(a) provided that any balance of such proceeds when no
Default is or Event of Default is continuing shall be paid over to the Borrower
or to whomever may be lawfully entitled to receive the same.
(b) (1) If an Event of Default has occurred and is continuing and the
Lender shall give notice of its intent to exercise such rights to the Borrower
(except in the case of a Bankruptcy Event of Default, in which case no such
notice shall be required), the Lender shall have the right to receive any and
all cash dividends paid in respect of the Pledged Stock and make application
thereof to the Secured Obligations in such order as the Lender may determine,
and (2) if a Default or an Event of Default has occurred and is continuing and
the Lender shall give notice of its intent to exercise such rights to the
Borrower (except in the case of a Bankruptcy Event of Default, in which case no
such notice shall be required), all shares of the Pledged Stock shall be
registered in the name of the Lender or its nominee, and the Lender or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of shareholders of
any Issuer or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
shares of the Pledged Stock as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the
Pledged Stock upon the merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of any Issuer, or upon
the exercise by the Borrower or the Lender of any right, privilege or option
pertaining to such shares of the Pledged Stock, and in connection therewith, the
right to deposit and deliver any and all of the Pledged Stock with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Lender may determine), all without liability
(to the extent permitted by law) except to account for property actually
received by it, but the Lender shall have no duty to the Borrower to exercise
any such right, privilege or option and shall not be responsible for any failure
to do so or delay in so doing.
(c) In order to permit the Lender to exercise the voting and other rights
which it is entitled to exercise pursuant to paragraph 7(b)(2) and to receive
the dividends and distributions which it is authorized to receive and retain
pursuant to paragraph 7(b)(1), the Borrower shall, if necessary, upon written
notice from the Lender (except in the case of a
5
<PAGE> 6
Bankruptcy Event of Default, in which case no such notice shall be required),
from time to time execute and deliver (or cause to be executed and delivered) to
the Lender all such proxies, dividend payment orders and other instruments as
the Lender may reasonably request.
(d) The rights of the Lender hereunder shall not be conditioned or
contingent upon the pursuit by the Lender of any right or remedy against the
Issuers or against any other Person which may be or become liable in respect of
all or any part of the Secured Obligations or against any collateral security
therefor, guarantee thereof or right of offset with respect thereto. The Lender
shall not be liable for any failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so, nor shall the Lender be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Borrower or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
8. REMEDIES. (a) If an Event of Default has occurred and is continuing,
at any time at the Lender's election, the Lender may apply all or any part of
Proceeds held in any Collateral Account in payment of the Secured Obligations in
such order as the Lender may elect.
(b) If an Event of Default has occurred and is continuing the Lender may
exercise, in addition to all other rights and remedies granted in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Lender, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange, broker's
board or office of the Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in the
Borrower, which right or equity is hereby waived or released. The Lender shall
apply any Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale (after
deducting all reasonable costs and expenses of every kind incurred in respect
thereof or incidental to the care or safekeeping of any of the Collateral or in
any way relating to the Collateral or its rights of the Lender hereunder,
including, without limitation, reasonable attorneys' fees and disbursements of
counsel to the Lender), to the payment in whole or in part of the Secured
Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9-504(l)(c) of the
Code, need the Lender account for the surplus, if any, to the Borrower. To the
extent permitted by applicable law, the Borrower waives all claims, damages and
demands it may acquire
6
<PAGE> 7
against the Lender arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition. The Borrower shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorneys employed by the Lender.
9. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the Lender shall determine
to exercise its right to sell any or all of the Pledged Stock pursuant to
Section 8 hereof, and if in the opinion of the Lender it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Borrower will cause
the Issuer thereof to (1) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Lender, necessary or advisable to register the Pledged Stock, or
that portion thereof to be sold, under the provisions of the Securities Act, (2)
to use its best efforts to cause the registration statement relating thereto to
become effective and to remain effective for a period of one year from the date
of the first public offering of the Pledged Stock, or that portion thereof to be
sold, and (3) to make all amendments thereto and/or to the related prospectus
which, in the opinion of the Lender, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. The
Borrower agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Lender
shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Borrower recognizes that the Lender may be unable to effect a
public sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Borrower acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Lender shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
(c) The Borrower further agrees to use its best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this Section valid and
binding and in compliance with any and all other applicable Requirements of Law.
The Borrower further agrees that a breach of any of the covenants contained in
this Section will cause irreparable injury to the Lender and that the Lender
7
<PAGE> 8
has no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section shall be specifically
enforceable against the Borrower, and the Borrower hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Default or Event of Default had occurred
and was continuing at the time that the Lender gave notice pursuant to paragraph
7(b) hereof.
10. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUERS. The Borrower
hereby authorizes and instructs each Issuer to comply with any instruction
received by it from the Lender in writing that (a) states that a Default or an
Event of Default has occurred and is continuing and (b) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from the Borrower, and the Borrower agrees that each Issuer shall
be fully protected in so complying.
11. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT. (a) The Borrower hereby
irrevocably constitutes and appoints the Lender and any officer or agent of the
Lender, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of the Borrower
and in the name of the Borrower or in the Lender's own name, from time to time
in the Lender's discretion, for the purpose of carrying out the terms of this
Agreement and to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, including, without limitation, any financing
statements, endorsements, assignments or other instruments of transfer.
(b) The Borrower hereby ratifies all that said attorneys shall lawfully do
or cause to be done pursuant to the power of attorney granted in paragraph 11(a)
in accordance with the terms of this Agreement. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
12. DUTY OF LENDER. The Lender's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the same
manner as the Lender deals with similar securities and property for its own
account, except that the Lender shall have no obligation to invest funds held in
any Collateral Account and may hold the same as demand deposits. Neither the
Lender, nor any of its respective directors, officers, employees or agents shall
be liable for failure to demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Borrower or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
13. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of the
Code, the Borrower authorizes the Lender to file financing statements with
respect to the Collateral without the signature of the Borrower in such form and
in such filing offices as the Lender reasonably determines appropriate to
perfect the security interests of the Lender under this Agreement. A
8
<PAGE> 9
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement for filing in any jurisdiction.
14. NOTICES. All notices, requests and demands to or upon the Lender or
the Borrower to be effective shall be in writing (or by fax or similar
electronic transfer confirmed in writing) and shall be deemed to have been duly
given or made (1) when delivered by hand or (2) if given by mail, when deposited
in the mails by certified mail, return receipt requested, or (3) if by fax or
similar electronic transfer, when sent and receipt has been confirmed, addressed
to the Lender or the Borrower at its address or transmission number for notices
provided in the Credit Agreement. The Lender and the Borrower may change their
addresses and transmission numbers for notices by notice in the manner provided
in this Section.
15. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
16. AMENDMENTS IN WRITING; No Waiver; Cumulative Remedies. (a) None of the
terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Borrower and
the Lender, provided that any provision of this Agreement may be waived by the
Lender in a letter or agreement executed by the Lender or by facsimile
transmission from the Lender.
(b) The Lender shall not by any act (except by a written instrument
pursuant to paragraph 16(a) hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Lender would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
17. SECTION HEADINGS. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Borrower and shall inure to the benefit of the
Lender and its successors and assigns.
9
<PAGE> 10
19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10
<PAGE> 11
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
SIGHT RESOURCE CORPORATION
By:_______________________________
Alan MacDonald
Vice President, Finance and
Administration
11
<PAGE> 12
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Borrower
Pledge Agreement, dated as of February 20, 1997 (as amended, supplemented or
otherwise modified from time to time, the "PLEDGE AGREEMENT"), made by SIGHT
RESOURCE CORPORATION for the benefit of CREDITANSTALT CORPORATE FINANCE, INC.
(the "LENDER"). The undersigned agrees for the benefit of the Lender as follows:
1. The undersigned will be bound by the terms of the Pledge Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Lender promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement.
3. The terms of paragraph 9(c) of the Pledge Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
under or pursuant to or arising out of Section 9 of the Pledge Agreement.
Cambridge Eye Associates, Inc.,
a Delaware corporation
By:_______________________________
Alan MacDonald
Treasurer
Address for Notices: c/o Sight Resource Corporation
67 South Bedford Street
Burlington, Massachusetts 01803
Attention: Alan MacDonald
copy to: Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Lewis Geffen, Esq.
12
<PAGE> 13
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Borrower
Pledge Agreement, dated as of February 20, 1997 (as amended, supplemented or
otherwise modified from time to time, the "PLEDGE AGREEMENT"), made by SIGHT
RESOURCE CORPORATION for the benefit of CREDITANSTALT CORPORATE FINANCE, INC.
(the "LENDER"). The undersigned agrees for the benefit of the Lender as follows:
1. The undersigned will be bound by the terms of the Pledge Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Lender promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement.
3. The terms of paragraph 9(c) of the Pledge Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
under or pursuant to or arising out of Section 9 of the Pledge Agreement.
Douglas Vision World, Inc.,
a Delaware corporation
(formerly known as VW
Acquisition Corp.)
By:_______________________________
Alan MacDonald
Treasurer
Address for Notices: c/o Sight Resource Corporation
67 South Bedford Street
Burlington, Massachusetts 01803
Attention: Alan MacDonald
copy to: Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Lewis Geffen, Esq.
13
<PAGE> 14
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Borrower
Pledge Agreement, dated as of February 20, 1997 (as amended, supplemented or
otherwise modified from time to time, the "PLEDGE AGREEMENT"), made by SIGHT
RESOURCE CORPORATION for the benefit of CREDITANSTALT CORPORATE FINANCE, INC.
(the "LENDER"). The undersigned agrees for the benefit of the Lender as follows:
1. The undersigned will be bound by the terms of the Pledge Agreement and
will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Lender promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement.
3. The terms of paragraph 9(c) of the Pledge Agreement shall apply to it,
mutatis mutandis, with respect to all actions that may be required of it under
or pursuant to or arising out of Section 9 of the Pledge Agreement.
E. B. Brown Opticians, Inc., a Delaware
corporation (formerly known as
E. B. Brown Acquisition Corp.)
By:_______________________________
Alan MacDonald
Treasurer
Address for Notices: c/o Sight Resource Corporation
67 South Bedford Street
Burlington, Massachusetts 01803
Attention: Alan MacDonald
copy to: Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Lewis Geffen, Esq.
14
<PAGE> 15
SCHEDULE 1
to Borrower
Pledge Agreement
----------------
DESCRIPTION OF PLEDGED STOCK
Stock No.
Issuer Class of Stock Certificate No. of Shares
------ -------------- --------------- ---------
Common C0002 100.00
Cambridge Eye Associates, Inc.
Douglas Vision World, Inc. Common C0001 100.00
(formerly known as VW
Acquisition Corp.)
E.B. Brown Opticians, Inc. Common 1.00 100.00
(formerly known as E.B.
Acquisition Corp.)
<PAGE> 1
Exhibit 99.1
NEWS RELEASE
February 25, 1997
SIGHT RESOURCE OBTAINS NEW $10 MILLION CREDIT FACILITY
(Burlington, Massachusetts)-Sight Resource Corporation (NASDAQ Symbol:
VISN-Common and VISNZ-Warrant), a leading provider of primary eye care services
and innovative managed vision care programs, today announced that it has
obtained a new $10 million credit facility from Creditanstalt Corporate Finance
Inc. of Connecticut.
The credit facility will be used to refinance existing debt, finance future
acquisitions, provide ongoing working capital and for other general corporate
purposes.
When combined with the Company's existing cash balance, the credit facility
provides Sight Resource with approximately $20 million in available capital to
implement its plans.
William G. McLendon, President and Chief Executive Officer stated "The
additional access to capital strengthens our already strong balance sheet and
gives us tremendous flexibility to grow our business and meet the expanding
opportunities in managed vision care. Since we plan to utilize cash to partially
fund acquisitions, this credit facility will help us to meet our growth plans
for 1997."
In the last two years Sight Resource has expanded to include 72 eye care
centers, ten new laser vision correction centers and a managed vision care
program that services third party payor plans with approximately 850,000
enrollees. These business operations have positioned Sight Resource as one of
the twenty largest primary eye care delivery companies in the country and one of
the largest providers of laser vision correction services.
Sight Resource provides a complete range of eye care products and services
through its eye care and laser vision correction centers, its managed vision
care plans and its integrated networks of opticians, optometrists and
ophthalmologists.
CONTACT: Nils Bonde-Henriksen, Manager of Corporate Communications,
617-229-1100.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: Statements contained in this news release which are not historical fact
are forward-looking statements based upon management's current expectations that
are subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements.
These risks are described in the Company's Form 10K for the fiscal year ended
1995 filed with the Securities and Exchange Commission.
