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 11, 1997
Serengeti Eyewear, Inc.
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(Exact name of Registrant as Specified in Charter)
New York 0-26022 11-2396918
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8125 25th Court East
Sarasota, Florida 34243
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (941) 359-3599
Solar-Mates, Inc.
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On February 13, 1997, Serengeti Eyewear, Inc. (formerly known as
Solar-Mates, Inc.), a New York corporation (the "Company"), acquired (the
"Acquisition") certain of the assets of the Serengeti Eyewear division of
Corning Incorporated ("Corning") used in the design, manufacture and
distribution of Serengeti brand sunglasses. The Company acquired the Serengeti
assets for a purchase price of $27.5 million. The Company financed the purchase
price and related transaction expenses with the net proceeds from the sale of
shares of its Preferred Stock (as hereinafter defined), as well as borrowings
under its New Credit Facility (as hereinafter defined). See Items 5 and 9. The
Company's Board of Directors has received an opinion dated October 4, 1996 from
Barrington Business & Engineering Solutions to the effect that, based upon and
subject to the various considerations set forth in such opinion, as of October
29, 1996, the date the acquisition agreement was entered into, the terms of the
transaction were fair, from a financial point of view, to the Company.
Serengeti raw lens blanks are currently manufactured by Corning in the
United States or Brazil and then shipped to Japan and other locations overseas
for finishing. Among the purchased assets are the manufacturing equipment
located at the Serengeti facility in Fukui, Japan which are used to apply a
unique process on the lenses known as hydrogen firing. Completed sunglasses are
sent to a warehouse facility in Horseheads, New York for distribution. The
Company intends to continue to utilize its warehouse facility in Sarasota,
Florida for the warehousing of all of its finished sunglasses including the
finished Serengeti sunglasses and to phase out the Horseheads facility. The
Company also intends to utilize its relationships overseas with existing lens
manufacturers for the finishing of all lenses, including the hydrogen firing
process.
Concurrently with the closing of the Acquisition, the Company changed
its name from Solar-Mates, Inc. to Serengeti Eyewear, Inc.
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Item 4. Changes in Registrant's Certifying Accountant.
On February 11, 1997, Winter, Scheifley & Associates, P.C. declined to
stand for re-election as the Company's independent auditors, and on the same
date the Company appointed Bartnick, P.A. as its new independent auditors
commencing with the audit of the Company's consolidated financial statements for
the year ended December 31, 1996. The Company's financial statements for the
past two fiscal years did not contain an adverse opinion or disclaimer of
opinion, nor were they modified as to uncertainty, audit scope or accounting
principles. The decision to change auditors was approved by the Company's Board
of Directors at a meeting duly held on February 6, 1997. There were no
disagreements with such former auditors on any matters of accounting principles
or practices, financial statement disclosure or auditing scope or procedure
during the past two fiscal years. The Company did not consult with its new
independent auditors regarding any matters relating to periods prior to their
engagement. The Company has requested from its former auditors a letter
addressed to the Securities and Exchange Commission (the "Commission") stating
their agreement with the statements made by the Company in response to this Item
4. Such letter is attached hereto as Exhibit 16.
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Item 5. Other Events.
Concurrently with the closing of the Acquisition, the Company entered
into a Revolving Line of Credit and Term Loan Agreement with SunTrust Bank,
Central Florida, National Association, individually and as agent, and
Creditanstalt-Bankverein pursuant to which the Company refinanced its then
existing senior credit facility (the "Old Credit Facility") with a new senior
credit facility (the "New Credit Facility") which provides the Company with the
ability to borrow up to $17.5 million in the form of (i) a three year revolving
credit facility in the amount of $7.5 million (the "Revolver Facility") and (ii)
a five year amortizing term loan facility in the amount of $10.0 million (the
"Term Facility").
The Company borrowed the entire $10.0 million of availability under the
Term Facility to finance a portion of the Acquisition purchase price, to repay
in full the outstanding principal indebtedness and accrued interest
(approximately $1.5 million) under the Old Credit Facility and to pay related
fees and expenses.
The Revolver Facility has a $2 million sublimit for the issuance of
stand-by letters of credit. Pursuant to the Revolver Facility, the Company is
able to borrow up to 85% of eligible accounts receivable and up to 50% of the
value of the Company's eligible inventory. Undrawn amounts under the Revolver
Facility are available for the working capital and general corporate needs of
the Company.
The New Credit Facility is secured by a first priority lien on all of
the assets of the Company and its subsidiaries, as well as by the pledge of all
the stock of certain material subsidiaries of the Company.
Pursuant to the New Credit Facility, interest is payable at the LIBOR
rate or the "Base Rate." In addition to applicable margins, the Company pays a
floating percentage tied to the Company's ratio of funded debt to "EBITDA".
The New Credit Facility requires the Company to maintain certain
financial ratios. Pursuant to the New Credit Facility, the Company is required
to apply 75% of its "Excess Cash Flow" for the preceding completed fiscal year,
the net proceeds from any sale of assets other than in the ordinary course and
the net proceeds of certain equity issuances and permitted debt issuances to
prepay outstanding amounts under the Term Facility. The New Credit Facility also
contains a number of customary covenants, including, among others, limitations
on liens, affiliate transactions, mergers, acquisitions, asset sales, dividends
and advances.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
Appendix A to the Company's definitive Notice of and Proxy Statement for
Special Meeting of Shareholders filed with the Commission on January 10,
1997 in connection with the Company's Special Meeting of Shareholders held
on February 6, 1997 is incorporated herein by reference.
(b) Pro Forma Financial Information.
Pages 8 through 12 of the Company's definitive Notice of and Proxy Statement
for Special Meeting of Shareholders filed with the Commission on January 10,
1997 in connection with the Company's Special Meeting of Shareholders held
on February 6, 1997 is incorporated herein by reference.
(c) Exhibits.
Exhibit Number Exhibit Description
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10 Revolving Line of Credit and Term Loan
Agreement dated as of February 13, 1997 by
and among the Company, SunTrust Bank, Central
Florida, National Association, individually
and as agent, and Creditanstalt-Bankverein
(Exhibits omitted; Registrant agrees to
furnish supplementally a copy of any exhibits
to the Commission upon request)
16 Letter on change in certifying accountant
<PAGE>
Item 9. Sales of Equity Securities Pursuant to Regulation S.
On October 4, 1996, the Company issued 7,500 shares of its Series A
6.5% Convertible Preferred Stock, $.001 par value (the "Series A Shares"), to
RBB Bank Aktiengesellschaft ("RBB"), a banking institution whose principal
offices are located in Austria, in a private offshore offering pursuant to
Regulation S under the Securities Act of 1933, as amended. RBB purchased the
Series A Shares for a purchase price equal to their aggregate stated value of
$7.5 million. Concurrently with the closing of the Acquisition, RBB purchased,
pursuant to said Regulation S, 7,500 shares of the Company's Series B 6%
Convertible Preferred Stock, $.001 par value (the "Series B Shares"), and 7,500
of the Company's Series C 6% Convertible Preferred Stock, $.001 par value (the
"Series C Shares"; together with the Series A Shares and the Series B Shares,
the "Preferred Shares"), for a purchase price equal to their aggregate stated
value of $15.0 million. The proceeds to the Company from the sale of the
Preferred Shares was an aggregate amount of approximately $20.9 million (net of
commissions and the estimated expenses of such sale).
Concurrently with the issuance of the Series A Shares, the Company also
issued to RBB a Series A Warrant of the Company (the "Series A Warrant") to
purchase up to an aggregate of 150,000 shares of Common Stock at an exercise
price of $5.5625 per share. The Series A Warrant is exercisable at any time
commencing January 1, 1999 and on or prior to December 31, 2002. In addition,
concurrently with the issuance of the Series B Shares and the Series C Shares,
the Company issued to RBB a Series B Warrant of the Company (the "Series B
Warrant") and a Series C Warrant of the Company (the "Series C Warrant"), each
of which entitles RBB to purchase up to an aggregate of 300,000 shares of the
Company's Common Stock, $.001 par value ("Common Stock"), at a per share
exercise price of (i) $7.50 with respect to the Series B Warrant and (ii) $10.00
with respect to the Series C Warrant. Each of the Series B Warrant and the
Series C Warrant is exercisable at any time commencing January 1, 1999 and on or
prior to December 31, 2002.
The Company has also issued, as part of the commission payable to a
third party in connection with the sale of the Series A Shares, a Series D
Warrant of the Company (the "Series D Warrant"; together with the Series A
Warrant, the Series B Warrant and the Series C Warrant, the "Warrants") to
purchase up to an aggregate of 200,000 shares of Common Stock at an exercise
price of $5.50 per share. The Series D Warrant is immediately exercisable and
expires on or prior to September 30, 2001.
In accordance with the corporate governance rules of the National
Association of Securities Dealers, Inc. relating to issuers listed on The Nasdaq
National Market, such as the Company, the Company obtained shareholder approval
for the issuance of (i) shares of Common Stock issuable upon conversion of the
Series A Shares and upon exercise of the Series A Warrant and the Series D
<PAGE>
Warrant, (ii) the Series B Shares and the Series C Shares, and (iii) the Series
B Warrant and the Series C Warrant.
Each of the Series A Shares may be converted by the holder thereof into
shares of Common Stock at any time. Each Series A Share is convertible into such
number of shares of Common Stock as is determined by dividing its stated value
of $1,000 by a conversion rate equal to the lower of (i) $5.50 and (ii) 80% of
the average Market Price for the 10 consecutive trading days ending three days
prior to the giving by the holder of such Series A Shares of a notice of
conversion.
Each of the Series B Shares may be converted by the holder thereof into
shares of Common Stock at any time. Each Series B Share is convertible into such
number of shares of Common Stock as is determined by dividing the stated value
of $1,000 by a conversion rate equal to the lower of (i) $6.75 and (ii) 80% of
the average Market Price for the 10 consecutive trading days ending three days
prior to the giving by the holder of such Series B Shares of a notice of
conversion.
Each of the Series C Shares may be converted by the holder thereof into
shares of Common Stock at any time after July 1, 1997. Each Series C Share is
convertible into such number of shares of Common Stock as is determined by
dividing the stated value of $1,000 by a conversion rate equal to the lower of
(i) $8.25 and (ii) 80% of the average Market Price for the 10 consecutive
trading days ending three days prior to the giving by the holder of such Series
C Shares of a notice of conversion.
For purposes of the conversion rates for the Preferred Shares, "Market
Price" has the following meaning. As long as the Common Stock is listed on The
Nasdaq National Market, "Market Price" will be equal to the closing high bid
price of the Common Stock, as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"). If the Common Stock is no longer
listed on The Nasdaq National Market, "Market Price" will be equal to the
closing bid price of the Common Stock, as reported by NASDAQ (assuming that the
Common Stock is listed on The Nasdaq SmallCap Market or is included in the "pink
sheets" or other inter-dealer quotation service or publication) or the closing
price for the Common Stock (assuming that the Common Stock is listed on a
national securities exchange). On February 18, 1997, the closing high bid price
for the Common Stock was $5.75 per share.
The terms of the Preferred Shares and Warrants include customary anti-
dilution protections. At any time after September 30, 2000, the Company will
have the right, in its sole and absolute discretion, to force the conversion
into Common Stock of all outstanding Preferred Shares.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 19, 1997 SERENGETI EYEWEAR, INC.
By: /s/ Stephen Nevitt
----------------------------------
Stephen Nevitt
President
Exhibit 10
REVOLVING LINE OF CREDIT AND TERM LOAN AGREEMENT
Dated as of February 13, 1997
By And Among
SERENGETI EYEWEAR, INC.
and
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION,
individually and as Agent
and
CREDITANSTALT-BANKVEREIN
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TABLES OF CONTENTS
Page
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ARTICLE I DEFINITIONS; CONSTRUCTION
Section 1.1 Definitions ............................................ 1
Section 1.2 Accounting Terms and Determination .....................15
Section 1.3 Other Definitional Terms ...............................16
Section 1.4 Exhibits and Schedules .................................16
ARTICLE II REVOLVING LOANS
Section 2.1 Revolving Loan Commitments; Use of Proceeds ............16
Section 2.2 Revolving Notes; Repayment of Principal ................17
Section 2.3 Mandatory Prepayments/Borrowing Base ...................17
Section 2.4 Issuance of Letter of Credit ...........................17
Section 2.5 Reduction of Revolving Loan Commitments ................18
ARTICLE III TERM LOANS
Section 3.1 Term Loan Commitments; Use of Proceeds .................19
Section 3.2 Term Notes; Repayment of Principal .....................19
Section 3.3 Mandatory Prepayments ..................................20
ARTICLE IV GENERAL LOAN TERMS
Section 4.1 Funding Notices ........................................20
Section 4.2 Disbursement of Funds ..................................22
Section 4.3 Interest ...............................................22
Section 4.4 Interest Periods .......................................23
Section 4.5 Fees ...................................................24
Section 4.6 Voluntary Prepayments of Borrowings ....................24
Section 4.7 Payments, etc ..........................................25
Section 4.8 LIBOR Rate Not Ascertainable, etc ......................27
Section 4.9 Illegality .............................................27
Section 4.10 Increased Costs ........................................27
Section 4.11 Lending Offices ........................................29
Section 4.12 Funding Losses .........................................29
Section 4.13 Assumptions Concerning Funding of Eurodollar Advances ..29
Section 4.14 Apportionment of Payments ..............................30
Section 4.15 Sharing of Payments, Etc ...............................30
Section 4.16 Capital Adequacy .......................................30
Section 4.17 Benefits to Guarantors .................................30
Section 4.18 Limitation on Certain Payment Obligations ..............30
Section 4.19 Change from One Type of Borrowing to Another ...........31
ARTICLE V. CONDITIONS TO BORROWINGS
Section 5.1 Conditions Precedent to Initial Loans ..................31
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Section 5.2 Conditions to All Loans ................................35
Section 5.3 Certification for each Borrowing .......................36
ARTICLE VI REPRESENTATIONS AND WARRANTIES
Section 6.1 Organization and Qualification .........................36
Section 6.2 Corporate Authority ....................................36
Section 6.3 Serengeti Financial Statements .........................36
Section 6.4 Borrower Financial Statements ..........................37
Section 6.5 Tax Returns ............................................37
Section 6.6 Actions Pending ........................................37
Section 6.7 Representations; No Defaults ...........................37
Section 6.8 Title to Properties ....................................37
Section 6.9 Enforceability of Agreement ............................38
Section 6.10 Consent ................................................38
Section 6.11 Use of Proceeds; Federal Reserve Regulations ...........38
Section 6.12 ERISA ..................................................38
Section 6.13 Subsidiaries ...........................................39
Section 6.14 Outstanding Indebtedness ...............................39
Section 6.15 Conflicting Agreements .................................39
Section 6.16 Pollution and Other Regulations ........................39
Section 6.17 Possession of Franchises, Licenses, Etc ................40
Section 6.18 Patents, Etc ...........................................40
Section 6.19 Governmental Consent ...................................40
Section 6.20 Disclosure .............................................40
Section 6.21 Insurance Coverage .....................................41
Section 6.22 Labor Matters ..........................................41
Section 6.23 Intercompany Loans; Dividends ..........................41
Section 6.24 Burdensome Restrictions ................................42
Section 6.25 Solvency ...............................................42
Section 6.26 Compliance with Laws ...................................42
Section 6.27 Permitted Investments ..................................42
Section 6.28 First, Perfected Security Interest in Collateral .......42
Section 6.29 Serengeti Purchase .....................................42
Section 6.30 Capital Stock ..........................................42
Section 6.31 Places of Business .....................................43
Section 6.32 Preferred Stock ........................................43
ARTICLE VII AFFIRMATIVE COVENANTS
Section 7.1 Corporate Existence, Etc ...............................43
Section 7.2 Compliance with Laws, Etc. .............................43
Section 7.3 Payment of Taxes and Claims, Etc .......................44
Section 7.4 Keeping of Books .......................................44
Section 7.5 Visitation, Inspection, Etc. ...........................44
Section 7.6 Insurance; Maintenance of Properties ...................44
Section 7.7 Reporting Covenants ....................................44
Section 7.8 Financial Covenants ....................................48
Section 7.9 Notices Under Certain Other Indebtedness ...............48
Section 7.10 Additional Guarantors/Credit Parties/Collateral ........49
Section 7.11 Ownership of Guarantors ................................49
Section 7.12 Interest Rate Protection Strategy ......................49
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Section 7.13 Life Insurance Policy ..................................49
Section 7.14 Post-Closing Requirements ..............................49
ARTICLE VIII NEGATIVE COVENANTS
Section 8.1 Indebtedness ...........................................50
Section 8.2 Liens ..................................................51
Section 8.3 Sales, Etc .............................................52
Section 8.4 Mergers, Acquisitions, etc. ............................52
Section 8.5 Investments, Loans, Etc. ...............................52
Section 8.6 Sale and Leaseback Transactions ........................53
Section 8.7 Transactions with Affiliates ...........................53
Section 8.8 Optional Prepayments ...................................53
Section 8.9 Changes in Business ....................................53
Section 8.10 ERISA ..................................................53
Section 8.11 Additional Negative Pledges ............................54
Section 8.12 Limitation on Payment Restrictions Affecting
Consolidated Companies .................................54
Section 8.13 Actions Under Certain Documents ........................54
Section 8.14 Financial Statements; Fiscal Year ......................54
Section 8.15 Change of Management ...................................54
Section 8.16 Change of Control ......................................54
Section 8.17 Guaranties .............................................54
Section 8.18 Changes in Debt Instruments ............................54
Section 8.19 No Cash Dividends on Capital or Preferred Stock ........55
Section 8.20 No Issuance of Capital Stock ...........................55
Section 8.21 No Payments on the Subordinated Debt ...................55
ARTICLE IX EVENTS OF DEFAULT
Section 9.1 Payments ...............................................55
Section 9.2 Covenants Without Notice ...............................55
Section 9.3 Other Covenants ........................................55
Section 9.4 Representations ........................................56
Section 9.5 Non-Payments of Other Indebtedness .....................56
Section 9.6 Defaults Under Other Agreements ........................56
Section 9.7 Bankruptcy .............................................56
Section 9.8 ERISA ..................................................56
Section 9.9 Money Judgment .........................................57
Section 9.10 Ownership of Credit Parties and Pledged Entities .......57
Section 9.11 Change in Control of Borrower ..........................57
Section 9.12 Default Under Other Credit Documents ...................57
Section 9.13 Management .............................................57
Section 9.14 Attachments ............................................58
Section 9.15 Indebtedness of Borrower ...............................58
Section 9.16 Default Under Subordinated Debt ........................58
Section 9.17 Post-Closing Requirements ..............................58
ARTICLE X THE AGENT
Section 10.1 Appointment of Agent ..................................58
Section 10.2 Nature of Duties of Agent .............................59
Section 10.3 Lack of Reliance on the Agent .........................59
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Section 10.4 Certain Rights of the Agent ...........................59
Section 10.5 Reliance by Agent .....................................59
Section 10.6 Indemnification of Agent ..............................60
Section 10.7 The Agent in its Individual Capacity ..................60
Section 10.8 Holders of Notes ......................................60
Section 10.9 Successor Agent .......................................60
ARTICLE XI MISCELLANEOUS
Section 11.1 Notices ...............................................61
Section 11.2 Amendments, Etc .......................................61
Section 11.3 No Waiver; Remedies Cumulative ........................61
Section 11.4 Payment of Expenses, Etc. .............................62
Section 11.5 Right of Set-Off ......................................63
Section 11.6 Benefit of Agreement ..................................64
Section 11.7 Governing Law; Submission to Jurisdiction .............65
Section 11.8 Independent Nature of Lenders' Rights .................66
Section 11.9 Collateral to Benefit All Lenders .....................66
Section 11.10 Counterparts ..........................................66
Section 11.11 Effectiveness; Survival ...............................66
Section 11.12 Severability ..........................................67
Section 11.13 Independence of Covenants .............................67
Section 11.14 Change in Accounting Principles, Fiscal Year or
Tax Laws ..............................................67
Section 11.15 Headings Descriptive; Entire Agreement ................67
Section 11.16 Time is of the Essence ................................67
Section 11.17 Usury .................................................67
Section 11.18 Construction ..........................................67
Section 11.19 Complete Agreement ....................................68
SCHEDULES
Schedule 6.1 Organization and Ownership of Subsidiaries
Schedule 6.5 Tax Filings and Payments
Schedule 6.6 Certain Pending and Threatened Litigation
Schedule 6.8 Liens on Assets
Schedule 6.12 Employee Benefit Matters
Schedule 6.14 Outstanding Indebtedness and Defaults
Schedule 6.15 Conflicting Agreements
Schedule 6.16(a) Environmental Compliance
Schedule 6.16(b) Environmental Notices
Schedule 6.16(c) Environmental Permits
Schedule 6.18 Patent, Trademark, License, and Other Intellectual
Property Matters
Schedule 6.22 Labor and Employment Matters
Schedule 6.23 Intercompany Loans
Schedule 6.24 Burdensome Restrictions
Schedule 6.26 Compliance with Laws
Schedule 6.27 Permitted Investments
Schedule 6.31(a) Places of Business
Schedule 6.31(b) Material Places of Business
Schedule 7.14 Post Closing Requirements
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Schedule 8.1(b) Existing Indebtedness
Schedule 8.2 Existing Liens
Schedule 9.13 Senior Management
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Term Note
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Notice of Conversion/Continuation
Exhibit E Form of Pledge Agreement
Exhibit F Form of Security Agreement
Exhibit G Form of Guaranty Agreement
Exhibit H Form of Closing Certificate
Exhibit I Form of Assignment and Acceptance
Exhibit J Form of Opinion of Borrower's Counsel
Exhibit K Form of Contribution Agreement
Exhibit L Form of Borrowing Base Certificate
Exhibit M Form of Letter of Credit Application
Exhibit N Form of Confirmation of Borrowing
Exhibit O Form of Confirmation of Conversion/Continuation
<PAGE>
REVOLVING LINE OF CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING LINE OF CREDIT AND TERM LOAN AGREEMENT, dated as of
February 13, 1997 (the "Agreement") by and among SERENGETI EYEWEAR, INC. (f/k/a
Solar-Mates, Inc.) (the "Borrower"), a New York corporation, SUNTRUST BANK,
CENTRAL FLORIDA, NATIONAL ASSOCIATION, ("SunTrust") a national banking
association, and CREDITANSTALT-BANKVEREIN, an Australian banking corporation
(collectively, the "Lenders" and, individually, a "Lender") and SunTrust, as
Agent for the Lenders.
W I T N E S S E T H:
THAT for and in consideration of the mutual covenants made herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.1 Definitions. As used in this Agreement, and in any instrument,
certificate, document or report delivered pursuant thereto, the following terms
shall have the following meanings (to be equally applicable to both the singular
and plural forms of the term defined):
"Advance" shall mean any principal amount advanced and remaining
outstanding at any time under the Revolving Loan or the Term Loan, which Advance
shall be made or outstanding as a Base Rate Advance or a Eurodollar Advance, as
the case may be.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person, whether
through the ownership of voting securities, by contract or otherwise. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person.
"Agent" shall mean SunTrust Bank, Central Florida, National Association,
as agent for the Lenders hereunder and under the other Credit Documents, and
each successor Agent.
"Agreement" shall mean this Revolving Line of Credit And Term Loan
Agreement, as originally executed and as it may be from time to time
supplemented, amended, restated, renewed or extended and in effect.
"Applicable Margin" shall mean:
(a) Until December 31, 1997:
(i) With respect to Revolving Loans, 2.75% for a
Eurodollar Advance and 1.25% for a Base Rate Advance; and
(ii) With respect to Term Loans, 3.25% for a Eurodollar
Advance and 1.75% for a Base Rate Advance.
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(b) After December 31, 1997, the Applicable Margin shall be the
percentage designated below based on the ratio of the Borrower's Funded
Debt to Consolidated EBITDA, measured quarterly:
A. For Revolving Loans
=============================================================
Funded Debt/EBITDA LIBOR Base Rate Commitment Fee
-------------------------------------------------------------
>3.00 2.75% 1.25% .50%
-------------------------------------------------------------
>2.25 and <3.00 2.50% 1.00% .50%
-
-------------------------------------------------------------
>1.50 and <2.25 2.00% .50% .375%
-
-------------------------------------------------------------
<1.50 1.50% .00% .375%
-
=============================================================
B. For Term Loans
============================================
Funded Debt/EBITDA LIBOR Base Rate
--------------------------------------------
>3.00 3.25% 1.75%
--------------------------------------------
>2.25 and <3.00 3.00% 1.50%
-
--------------------------------------------
>1.50 and <2.25 2.50% 1.00%
-
--------------------------------------------
<1.50 2.00% .50%
-
============================================
Note: The Applicable Margin is the applicable percentage number
designated above for the Eurodollar Advance or Base Rate Advance,
as the case may be.
provided, however, that:
(c) Adjustments, if any, to the Applicable Margin based on changes
in the ratios set forth in subparagraph (b) above shall be made and
become effective on the first day of the second fiscal quarter after the
Statement Date. (For example, the financial performance of the Borrower
for the third quarter ending September 30, 1997 (with September 30, 1997
being the Statement Date) shall be used to determine the Applicable
Margin for the quarter beginning January 1, 1998. In this example,
January 1 is the first day of the second fiscal quarter after the
September 30, 1997 Statement Date.)
"Asset Value" shall mean, with respect to any property or asset of any
Consolidated Company as of any particular date, an amount equal to the greater
of (i) the then book value of such property or asset as established in
accordance with GAAP, and (ii) the then fair market value of such property or
asset as determined in good faith by the board of directors of such Consolidated
Company.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an Eligible Assignee in accordance with the terms
of this Agreement and substantially in the form of Exhibit I attached hereto.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as amended
and in effect from time to time (11 U.S.C. ss.5101 et seq.).
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"Base Advance Rate" shall mean, with respect to a Base Rate Advance,
the rate obtained by adding (i) the Base Rate, and (ii) the Applicable Margin
for a Base Rate Advance.
"Base Rate" shall mean (with any change in the Base Rate to be
effective as of the date of change of either of the following rates) the higher
of (i) the rate which the Agent designates from time to time to be its prime
lending rate, as in effect from time to time, and (ii) the Federal Funds Rate,
as in effect from time to time, plus one-half of one percent (0.50%) (i.e. 50
basis points) per annum. The Agent's prime lending rate is a reference rate and
does not necessarily represent the lowest or best rate charged to its customers;
the Agent may make commercial loans or other loans at rates of interest at,
above or below the Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance bearing interest based on
the Base Rate.
"Base Rate Loan" shall mean a Loan which bears interest at the Base
Advance Rate.
"Borrowing" shall mean the making of a Loan, the extension of an
Advance, the issuance of the Letter of Credit, or the conversion of a Loan of
one Type into a Loan of another Type.
"Borrowing Base" shall mean as of any particular time, the sum of (i)
fifty percent (50%) of Eligible Inventory, plus (ii) eighty-five percent (85%)
of Eligible Accounts.
"Borrowing Base Certificate" shall mean a Certificate in the form
attached hereto as Exhibit L setting forth from time to time the Borrowing Base,
the form of which Certificate shall be acceptable to the Agent, and which
Certificate shall be executed by an Executive Officer.
"Business Day" shall mean, with respect to Eurodollar Advances, any
day other than a day on which commercial banks are closed or required to be
closed for domestic and international business, including dealings in Dollar
deposits on the London Interbank Market, and with respect to all other Loans and
matters, any day other than Saturday, Sunday and a day on which commercial banks
are required to be closed for business in Orlando, Florida.
"Capitalized Lease Obligations" shall mean all lease obligations which
have been or are required to be, in accordance with GAAP, capitalized on the
books of the lessee.
"Capital Stock" of any Person shall mean any shares, equity or profits
interests, participations or other equivalents (however designated) of capital
stock and any rights, warrants or options, or other securities convertible into
or exercisable or exchangeable for any such shares, equity or profits interest,
participations or other equivalents, directly or indirectly (or any equivalent
ownership interest, in the case of a Person which is not a Corporation.
"CERCLA" has the meaning set forth in Section 6.16(a) of this
Agreement.
"Closing Date" shall mean the date on or before March 31, 1997, on
which the initial Loans are made and the conditions set forth in Section 5.1 are
satisfied or waived in accordance with Section 11.3.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the assets, real and personal, intangible
and tangible, of the Consolidated Companies, now owned or hereafter acquired,
including, but not limited to, all accounts, chattel paper, equipment,
inventory, general intangibles, and real property, and a pledge of all the
Capital Stock of each Material Subsidiary, now owned or hereafter acquired, and
the Life Insurance Policy.
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"Commitment" shall mean, for any Lender at any time, its Revolving
Loan Commitment and Term Commitment.
"Commitment Fee" shall mean a fee based upon the unused portion of the
Revolving Loan Commitments of the Lenders. Such fee shall be equal to the
applicable Commitment Fee set forth in the table under Applicable Margin per
annum for the Applicable Margin then in effect, on the average daily unused
portion of the Revolving Loan Commitments, and shall be payable to the Agent
quarterly in arrears on the last calendar day of each fiscal quarter of Borrower
and on the Maturity Date. The Commitment Fee will be calculated on the basis of
a 360-day year for the actual number of days elapsed. For the fiscal year ending
December 31, 1997, the Commitment Fee will be 0.50% and will be due and payable
on March 31, 1997, June 30, 1997, September 30, 1997 and on December 31, 1997.
"Confirmation of Borrowing" shall mean a confirmation from the Agent
to the Borrower confirming an Advance or Borrowing, in the form attached hereto
as Exhibit N.
"Confirmation of Conversion/Continuation" shall mean a confirmation
from the Agent to the Borrower confirming the conversion or continuation of a
Borrowing, in the form attached hereto as Exhibit O.
"Consent by Lessor" shall mean the written agreement to the Agent by a
landlord for any Material Place of Business which is leased by any Consolidated
Company by which said landlord agrees that any landlord's lien, security
interest, or any other encumbrance which the landlord may at any time have in or
to any property of the Consolidated Company as a tenant for said Material Place
of Business is subordinate in all respects to the lien granted SunTrust in any
personal property of said Consolidated Company.
"Consolidated Companies" shall mean, collectively, Borrower and all of
its Material Subsidiaries.
"Consolidated EBIT" shall mean, for any fiscal period of the Borrower,
an amount equal to the sum of (i) its Consolidated Net Income (Loss), plus, (ii)
to the extent deducted in determining Consolidated Net Income (Loss), (i)
provisions for taxes based on income, and (ii) Consolidated Interest Expense.
"Consolidated EBITDA" shall mean, for any fiscal period of the
Borrower, an amount equal to the sum of (i) its Consolidated EBIT, plus (ii)(A)
depreciation and (B) amortization, of the Consolidated Companies.
"Consolidated Interest Expense" shall mean, for any fiscal period of
Borrower, total interest expense of the Consolidated Companies (including
without limitation, interest expense attributable to Capitalized Lease
Obligations, all capitalized interest, all commissions, discounts and other fees
and charges owed with respect to banker's acceptance financing, and total
interest expense (whether shown as interest expense or as a loss and expense on
sale of receivables) under a receivables purchase facility) determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any fiscal period of
Borrower, the net income (or loss) of the Consolidated Companies on a
consolidated basis for such period (taken as a single accounting period)
determined in conformity with GAAP; provided that there shall be excluded
therefrom (i) any items of gain or loss, together with any related provision for
taxes, which were included in determining such consolidated net income and were
not realized in the ordinary course of business or the result of a sale of
assets other than in the ordinary course of business; and (ii) the income (or
loss) of any Person accrued prior to the date such Person becomes a Material
Subsidiary of Borrower or (in the case of a Person other than a Material
Subsidiary) is merged into or consolidated with any Consolidated Company, or
such Person's assets are acquired by any Consolidated Company.
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"Consolidated Net Worth" shall mean as of the date of determination,
the Borrower's total Shareholders' Equity as determined in accordance with GAAP.
"Consolidated Subsidiary" shall mean, as at any particular time, any
corporation included as a consolidated Subsidiary of Borrower in Borrower's most
recent financial statements.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking
under which such Person is obligated or by which it or any of the property owned
by it is bound.
"Corning" shall mean Corning Incorporated, a New York corporation,
with its principal place of business at One Riverfront Plaza, Corning, New York,
and which prior to the Closing hereunder and the purchase by the Borrower of the
Serengeti Business, owned and operated the Serengeti Business.
"Credit Documents" shall mean, collectively, this Agreement, the
Notes, the Guaranty Agreements, the Mortgage Documents, the Pledge Agreements
and all other Security Documents.
"Credit Parties" shall mean, collectively, each of Borrower, the
Guarantors, and every other Person who from time to time executes (or is
obligated to execute) a Credit Document with respect to all or any portion of
the Obligations.
"Default" shall mean any condition or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"Default Rate" shall mean the rate of interest set forth in Section
4.3(b) hereof.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"Domestic Collateral" shall mean any of the Collateral which (i) in
the case of tangible personal property is located from time to time physically
within the United States of America, and (ii) in the case of intangible personal
property (e.g., patents, trademarks, etc.) an appropriate filing has been made
under the laws of the United States of America or any State to protect or create
such rights; thus, for example, the tradename "Serengeti" shall be deemed to be
Domestic Collateral in regard to any filings made with any federal or state
agencies.
"Eligible Accounts" shall mean, generally those accounts receivable of
the Consolidated Companies in which the Lenders have a first security interest,
and which are less than ninety-one (91) days past due from the invoice date.
There will be excluded from Eligible Accounts (i) all delinquent accounts (i.e.,
all accounts more than ninety (90) days past due from the invoice date), (ii)
all accounts from any Affiliate, (iii) all accounts from any account debtor for
which thirty percent (30%) or more of all accounts are otherwise delinquent
(i.e. more than ninety (90) days past due from the invoice date), and (iv) all
accounts not arising from the normal and ordinary course of business.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States, or any state thereof, having total assets in
excess of $1,000,000,000 or any commercial finance or asset based lending
Affiliate of any such commercial bank, and (ii) any Lender or any Affiliate of
any Lender, provided, however, for any such Person to be an Eligible Assignee,
the written approval of the Borrower and the Agent must be obtained, such
approval not to be unreasonably withheld or delayed.
"Eligible Inventory" shall mean inventory, finished goods (i.e.
eyeglasses) and lens blanks of
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the Consolidated Companies in which the Lenders have a first, perfected security
interest, and which are in good condition and not otherwise obsolete or out of
date provided, however, in regard to any Japanese Inventory, the fact that the
security interest is said inventory is not perfected shall not disqualify said
Inventory from being Eligible Inventory solely by virtue of the fact that the
security interest granted to the Lenders therein is not perfected provided the
other qualifications set forth herein are met and provided, further, in regard
to all Japanese Inventory, said security interest must in any event be perfected
on and after April 13, 1997 for the Japanese Inventory to be considered Eligible
Inventory after April 13, 1997. Lens blanks means lens (whether or not hydrogen
fired), that have not yet been cut, edged or hardened. Eligible Inventory shall
be valued at the lower of cost or market. Work in process shall not be
considered Eligible Inventory.
"Environmental Laws" shall mean all federal, state, local and foreign
statutes and codes or regulations, rules or ordinances issued, promulgated, or
approved thereunder, now or hereafter in effect (including, without limitation,
those with respect to asbestos or asbestos containing material or exposure to
asbestos or asbestos containing material), relating to pollution or protection
of the environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous Substance,
petroleum including crude oil or any fraction thereof, any petroleum product or
other waste, chemicals or substances regulated by any Environmental Law into the
environment (including without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), or (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of any Hazardous Substance, petroleum including crude oil or any
fraction thereof, any petroleum product or other waste, chemicals or substances
regulated by any Environmental Law, and (iii) underground storage tanks and
related piping, and emissions, discharges and releases or threatened releases
therefrom, such Environmental Laws to include, without limitation (i) the Clean
Air Act (42 U.S.C. '7401 et seq.), (ii) the Clean Water Act (33 U.S.C. '1251 et
sec.), (iii) the Resource Conservation and Recovery Act (42 U.S.C. '6901 et
seq.), (iv) the Toxic Substances Control Act (15 U.S.C. '2601 et seq.) and (v)
the Comprehensive Environmental Response Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act (42 U.S.C. '9601 et
seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, each trade
or business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is either within a controlled group of
corporations or under common control within the meaning of the regulations
promulgated under Section 414 of the Code and the regulations promulgated
thereunder.
"Eurodollar Advance" shall mean an Advance bearing interest based on
LIBOR.
"Event of Default" shall have the meaning set forth in Article IX
hereof.
"Excess Cash Flow" is defined as Consolidated EBITDA less (i) Fixed
Charges, total capital expenditures, and taxes actually paid in cash, plus or
minus (ii) the net change in consolidated working capital.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute thereto.
"Executive Officer" shall mean with respect to any Person (other than
a Guarantor), the President, any Vice President, Chief Financial Officer,
Treasurer, Secretary and any Person holding comparable offices or duties, and
with respect to a Guarantor, the President.
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"Existing Indebtedness" shall mean the existing indebtedness of the
Borrower to SunTrust Bank, Gulf Coast, N.A., in the approximate principal amount
of $1,500,000.
"Existing Warrants" shall only mean (i) the 1,174,000 redeemable
common stock purchase warrants issued by the Borrower during August 1995 in
connection with its public offering of its common stock, and outstanding prior
to the Closing Date, and (ii) the 96,000 warrants contained in the Underwriter
Option. The term "Existing Warrants" does not include any other warrants and
specifically does not include any warrants that may be issued in connection with
the issuance of the Preferred Stock.
"Facility" or "Facilities" shall mean the Revolving Loan Commitments
and Revolving Loans, the Letters of Credit, and/or the Term Loan Commitments and
Term Loans, as the context may indicate.
"Facing Fee" shall mean in regard to Letters of Credit, a fee to be
paid to Agent by the Borrower for acting as the facing bank for Letters of
Credit, said fee to be in the amount of 0.125% (i.e., 12.5 basis points) on the
total amount of each Letter of Credit, with said fee to be paid one time in
advance on each Letter of Credit. Said Facing Fee is in addition to the Letter
of Credit Fee.
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of Atlanta, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"Fixed Charges" shall mean Consolidated Interest Expense for the
period of determination (including both capitalized and non-capitalized interest
and the interest component of Capitalized Lease Obligations) plus minimum rent
payments under operating leases for such period, calculated on a consolidated
basis in accordance with GAAP, plus (i) consolidated current maturities of long
term debt, and (ii) capital expenditures.
"Foreign Collateral" shall mean any of the Collateral which (i) in the
case of tangible personal property is physically located outside the United
States of America, and (ii) in the case of intangible personal property, relates
to filings made with any state or governmental agency located outside the United
States of America.
"Funded Debt" shall mean all Indebtedness for money borrowed,
Indebtedness evidenced or secured by purchase money liens, Capitalized Lease
Obligations, outstandings under asset securitization vehicles, conditional sales
contracts and similar title retention debt instruments, including any current
maturities of such indebtedness, which by its terms matures more than one year
from the date of any calculation thereof and/or which is renewable or extendable
at the option of the obligor to a date beyond one year from such date. The
calculation of Funded Debt shall include (without duplication) (i) all Funded
Debt of the Consolidated Companies, (ii) all Funded Debt of other Persons, other
than Material Subsidiaries, which has been Guaranteed by a Consolidated Company,
which is supported by a letter of credit issued for the account of a
Consolidated Company, or as to which and to the extent a Consolidated Company or
its assets have otherwise become liable for payment thereof, and (iii) all
Indebtedness for money borrowed by the Consolidated Companies pursuant to lines
of credit or revolving credit facilities (regardless of the term thereof), and
(iv) all Subordinated Debt.
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants
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and statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligation") of any other Person (the "primary obligor") in
any manner including, without limitation, any obligation or arrangement of such
Person (i) to purchase or repurchase any such primary obligation; (ii) to
advance or supply funds (a) for the purchase or payment of any such primary
obligation, or (b) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor; (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation; (iv) to indemnify the owner of such primary obligation against loss
in respect thereof; (v) by which and to the extent said Person or its assets
have otherwise become liable for payment of any such primary obligation; or (vi)
supporting a letter of credit issued for the account of said primary obligor.
"Guarantors" shall mean, collectively, all present and future Material
Subsidiaries, and their respective successors and permitted assigns.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect to which said Guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Guaranty Agreements" shall mean, collectively, the Guaranty Agreement
executed by each of the Guarantors from time to time in favor of the Lenders and
the Agent, substantially in the form of Exhibit G as the same may be amended,
restated or supplemented from time to time.
"Hazardous Materials" shall mean oil, petroleum or chemical liquids or
solids, liquid or gaseous products, asbestos, or any other hazardous waste or
Hazardous Substances, including, without limitation, hazardous medical waste or
any other substance described in any Hazardous Materials Law.
"Hazardous Materials Law" shall mean the CERCLA and RCRA, the state
hazardous waste laws, as such laws may from time to time be in effect, and
related regulations, and all similar laws and regulations.
"Hazardous Substances" has the meaning assigned to that term in
CERCLA.
"Incidental Contracts" shall mean those contracts to which a
Consolidated Company is a party or by which its assets are bound, and as to
which (i) the assets or services provided to the Consolidated Company under said
contract are not material, (ii) the assets or services so provided under said
contract are generic in nature and can readily be replaced on substantially
comparable terms, or (iii) the loss of said assets or services would not have a
Materially Adverse Effect.
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"Indebtedness" of any Person shall mean, without duplication (i) all
obligations of such Person which in accordance with GAAP would be shown on the
balance sheet of such Person as a liability (including, without limitation,
obligations for borrowed money and for the deferred purchase price of property
or services, obligations evidenced by bonds, debentures, notes or other similar
instruments, and contingent reimbursement obligations under undrawn letters of
credit); (ii) all Capitalized Lease Obligations; (iii) all Guaranteed
Indebtedness of such Person; (iv) Indebtedness of others secured by any Lien
upon property owned by such Person, whether or not assumed; and (v) obligations
or other liabilities under currency contracts, interest rate hedging contracts,
or similar agreements or combinations thereof.
"Intercompany Credit Documents" shall mean, collectively, the
promissory notes and all related loan, subordination, and other agreements, to
the extent that they exist, relating in any manner to the Intercompany Loans.
"Intercompany Loans" shall mean, collectively, (i) the loans more
particularly described on Schedule 6.23, and (ii) those loans or other
extensions of credit from time to time made by any Consolidated Company to
another Consolidated Company satisfying the terms and conditions set forth in
Section 8.1(e) or as may otherwise be approved in writing by the Agent and the
Required Lenders.
"Interest Period" shall mean with respect to Eurodollar Advances, the
period of one (1), two (2), three (3) or six (6) months selected by the Borrower
under Section 4.4 hereof.
"Investment" shall mean, when used with respect to any Person, any
direct or indirect advance, loan or other extension of credit (other than the
creation of receivables in the ordinary course of business) or capital
contribution by such Person (by means of transfers of property to others or
payments for property or services for the account or use of others, or
otherwise) to any Person, or any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in, capital stock,
partnership interests, bonds, notes, debentures or other securities issued by
any other Person.
"Japanese Collateral" shall mean the inventory and equipment of the
Borrower located from time to time at the Borrower's Place of Business in Fukui,
Japan.
"Japanese Inventory" shall mean that inventory of the Borrower located
from time to time in Fukui, Japan.
"Lender" or "Lenders" shall mean SunTrust Bank, Central Florida,
National Association, the other banks and lending institutions listed on the
signature pages hereof, and each Eligible Assignee thereof, if any.
"Lending Office" shall mean for each Lender the office such Lender may
designate in writing from time to time to Borrower and the Agent with respect to
each Type of Loan. In regard to any Notice of Borrowing or Notice of
Conversion/Continuation, the Lending Office for the Agent shall, unless
otherwise designated in writing by the Agent, be the Lending Office of the Agent
in Atlanta, Georgia.
"Letter of Credit Fee" shall mean the fee to be paid to the Agent for
the issuance of each Letter of Credit, which fee, although calculated on an
annual basis, shall be payable quarterly in advance on the issuance of the
Letter of Credit and quarterly thereafter. This Fee is equal to the Applicable
Margin then in effect for Eurodollar Advances under Revolving Loans multiplied
by the amount of the Letter of Credit outstanding at the time the Fee is to be
paid.
"Letter of Credit" shall mean a stand-by Letter of Credit issued from
time to time by the Agent at the request of the Borrower for the benefit of the
Borrower in accordance with Section 2.4 hereof. Solely for purposes of
determining Borrowing availability, all outstanding Letters of Credit shall be
deemed to be an
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outstanding Revolving Loan and part of the Revolving Loan Commitments of the
Lenders under this Agreement. The maximum face amount on all outstanding Letters
of Credit shall not exceed in the aggregate $2,000,000.
"Letter of Credit Application" shall mean the form of Application and
Agreement for Standby Letter of Credit to be used to obtain each Letter of
Credit, substantially in the form attached hereto as Exhibit M. The Letter of
Credit Application shall be deemed to be a Notice of Borrowing by the Borrower.
"LIBOR" shall mean, for any Interest Period, the offered rates for
deposits in U.S. Dollars for a period comparable to the Interest Period
appearing on the Reuters Screen LIBOR Page as of 11:00 a.m., (London, England
time), on the day that is two Business Days prior to the first day of the
Interest Period. If two or more of such rates appear on the Reuters Screen LIBOR
Page, the rate for that Interest Period will be the arithmetic mean of such
rates, rounded, if necessary, to the next higher 1/16 of 1.0%; and in either
case as such rates may be adjusted for any applicable reserve requirements. If
the foregoing rate is unavailable from the Reuters Screen for any reason, then
such rate shall be determined by the Agent from Telerate Page 3750 or, if such
rate is also unavailable on such service, then on any other interest rate
reporting service of recognized standing designated in writing by the Agent to
Borrower and the Lenders; in any such case rounded, if necessary, to the next
higher 1/16 of 1.0%, if the rate is not such a multiple.
"LIBOR Advance Rate" shall mean, with respect to each Interest Period
for a Eurodollar Advance, the rate obtained by adding (i) LIBOR for such
Interest Period, and (ii) the Applicable Margin for a Eurodollar Advance.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind or description and shall include,
without limitation, any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any capitalized lease in the nature
thereof including any lease or similar arrangement with a public authority
executed in connection with the issuance of industrial development revenue bonds
or pollution control revenue bonds, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction.
"Life Insurance Policy" shall mean a key man life insurance policy on
Stephen Nevitt in the initial amount of $2,000,000 and reduced from time to time
in amount as set forth in Section 7.13 below.
"Loans" shall mean, collectively, the Revolving Loans and the Term
Loans.
"Margin Regulations" shall mean Regulation G, Regulation T, Regulation
U and Regulation X of the Board of Governors of the Federal Reserve System, as
the same may be in effect from time to time.
"Material Place of Business" shall mean a Place of Business which is
either (i) owned by a Consolidated Company, or (ii) leased by a Consolidated
Company, at which the Consolidated Company manufactures or assembles any of its
inventory or equipment, or undertakes any administrative or management
functions, which current Material Places of Business are set forth in Schedule
6.31(b) hereto.
"Materially Adverse Effect" shall mean the occurrence of an event
which could reasonably be expected to cause a materially adverse change in (i)
the business, results of operations, financial condition, assets or prospects of
the Consolidated Companies, taken as a whole, (ii) the ability of the Borrower
to perform its obligations under this Agreement, or (iii) the ability of the
Credit Parties (taken as a whole) to perform their respective obligations under
the Credit Documents.
"Material Subsidiary" shall mean each Subsidiary of Borrower, now
existing or hereinafter established or acquired, that at any time, has or
acquires total assets in excess of $250,000 or that accounted for or produced
more than 10% of the Consolidated EBIT of Borrower on a consolidated basis
during any of
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the three most recently completed fiscal years of Borrower.
"Maturity Date" shall mean the earlier of (i) (a) February 13, 2000,
with respect to the Revolving Loans, (b) February 13, 2002 with respect to the
Term Loans, (c) February 13, 2000, with respect to all Letters of Credit, and
(ii) the date on which all amounts outstanding under this Agreement have been
declared or have automatically become due and payable pursuant to the provisions
of Article IX hereof.
"Mortgage Documents" shall mean such mortgage documents as are
necessary to grant to the Agent, as agent for the Lenders, a first, priority
mortgage lien on each Material Place of Business, whether owned or leased by any
Consolidated Company and related documents such as owner's affidavit, collateral
assignment of loans, rents, and profit, financing statements and environmental
indemnification agreements.
"Multi-Employer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Proceeds" shall mean, (i) with respect to any asset sale, all
cash received in connection with the sale, including (A) cash proceeds collected
pursuant to a promissory note, a receivable or otherwise (other than interest
payable thereon), and (B) with respect to asset sales resulting from the loss,
damage, obsolescence, destruction or taking of property, the proceeds of
insurance settlements and condemnation awards and other proceeds (other than the
portion of the proceeds of such settlements and such awards that are used to
repair, replace, improve or restore the item of property in respect of which
such settlement or award or other proceeds was paid provided that the recipient
of such proceeds enters into a binding contractual obligation to effect such
repair, replacement, improvement or restoration within six months of such loss,
damage or destruction and completes such repair, replacement, improvement or
restoration within twelve months of such loss, damage, obsolescence, destruction
or taking) as and when received in cash, in either case, received by any
Consolidated Company as a result of or in connection with such transaction, net
of reasonable sale expenses, fees and commissions incurred, and taxes paid or
expected to be payable within the succeeding twelve month period in connection
therewith, and net of any payment required to be made with respect to the
outstanding principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) secured by a Lien (to the extent permitted
by Section 8.1) upon the asset sold in such asset sale, and (ii) in regard to
the offering by the Borrower of any debt and/or equity securities or amounts
received from the exercise of any warrants or options, all cash received in
connection with said transaction less underwriter's fees, if any, and the actual
expenses associated with said transaction.
"Note" shall mean any of the Revolving Credit Notes or the Term Notes,
as originally executed and as the same may be from time to time supplemented,
modified, amended, renewed or extended.
"Notice of Borrowing" shall have the meaning provided in Section 4.1
hereof, the form of which is attached hereto as Exhibit C.
"Notice of Conversion/Continuation" shall have the meaning provided in
Section 4.1 hereof, the form of which is attached hereto as Exhibit D.
"Obligations" shall mean all amounts owing to the Agent or any Lender
pursuant to the terms of this Agreement or any other Credit Document, including
without limitation, all Loans (including all principal and interest payments due
thereunder), fees (including reasonable attorneys' fees as permitted under any
Credit Document), expenses, indemnification and reimbursement payments
(including any reimbursement obligation with respect to the Letter of Credit, if
drawn upon after any Event of Default which has occurred and is continuing), all
obligations due under any interest rate swap or hedge agreement described in
Section 7.12 below, indebtedness, liabilities, and obligations of the Credit
Parties, direct or indirect, absolute or contingent, liquidated or unliquidated,
now existing or hereafter arising, together with all renewals, extensions,
modifications or refinancings thereof.
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"Permitted Liens" shall mean those Liens expressly permitted by
Section 8.2 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, and any
successor thereto.
"Permitted Acquisitions" shall mean only an acquisition (whether by
merger, consolidation, purchase or otherwise, including the deposit by any
Consolidated Company of any downpayment with respect thereto), by any
Consolidated Company of any Person or substantially all the assets of said
Person which has been approved in writing by the Agent.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, trust, unincorporated association, government or any department or
agency thereof, and any other entity whatsoever.
"Places of Business" shall mean those locations owned or leased by any
Consolidated Company or at which any assets of any Consolidated Company are
located, as set forth in Schedule 6.31(a) hereto.
"Plan" shall mean any employee benefit plan, program, arrangement,
practice or contract, maintained by or on behalf of the Borrower or an ERISA
Affiliate, which provides benefits or compensation to or on behalf of employees
or former employees, whether formal or informal, whether or not written,
including but not limited to, the following types of plans:
(a) Executive Arrangements - any bonus, incentive compensation,
stock option, deferred compensation, commission, severance, "golden
parachute", "rabbi trust", or other executive compensation plan,
program, contract, arrangement or practice;
(b) ERISA Plans - any "employee benefit plan" defined in Section
3(3) of ERISA, including, but not limited to, any defined benefit
pension plan, profit sharing plan, money purchase pension plan, savings
or thrift plan, stock bonus plan, employee stock ownership plan,
Multi-Employer Plan, or any plan, fund, program, arrangement or practice
providing for medical (including post-retirement medical),
hospitalization, accident, sickness, disability, or life insurance
benefits; and
(c) Other Employee Fringe Benefits - any stock purchase, vacation,
scholarship, day care, prepaid legal services, severance pay or other
fringe benefit plan, program, arrangement, contract or practice.
"Pledge Agreement" shall mean, collectively, that certain Pledge
Agreement executed in favor of the Agent, substantially in the form of Exhibit E
providing for the grant of first, perfected Liens on the Pledged Stock as the
same may be amended, restated or supplemented from time to time.
"Pledged Stock" shall mean, collectively, 100% of all the issued and
outstanding Capital Stock, together with all warrants, stock options, and other
purchase and conversion right with respect to such Capital Stock, of each
Material Subsidiary at any time outstanding.
"Post Closing Requirements" shall mean those matters to be
accomplished, completed or performed by the Borrower on or before the dates
noted, all as set forth in Schedule 7.14 attached hereto.
"Preferred Stock" shall have the meaning set forth in Section 6.30(a).
"Preferred Stock Purchase Agreement" shall mean that certain Preferred
Stock Subscription Agreement (noted as the Regulation S Offshore Subscription
Agreement) dated as of September 26, 1996 among the Borrower and the purchaser
of all the Preferred Stock referred to therein.
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"Private Placement" shall mean the offering and sale by the Borrower
of $22,500,000 of Preferred Stock pursuant to the Preferred Stock Purchase
Agreement.
"Pro Rata Share" shall mean, with respect to each of the Commitments
of each Lender and each Loan to be made by and each payment (including, without
limitation, any payment of principal, interest or fees) to be made to each
Lender, including the Letter of Credit Fee, the percentage designated as such
Lender's Pro Rata Share of such Commitments, such Loans, such Letter of Credit
Fee, or such payments, as applicable, set forth under the name of such Lender on
the respective signature page for such Lender, in each case as such Pro Rata
Share may change from time to time as a result of assignments or amendments made
pursuant to this Agreement.
"RCRA" shall mean the meaning set forth in Section 6.16(a) of this
Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be in effect from time to time.
"Required Lenders" shall mean, at any time, not less than two Lenders
holding at least 66 2/3% of the Total Commitments.
"Requirement of Law" for any Person shall mean the articles or
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.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuter Monitor
Money Rates Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to LIBOR).
"Revolving Credit Notes" shall mean, collectively, the promissory
notes evidencing the Revolving Loans in the form attached hereto as Exhibit A.
"Revolving Loans" shall mean, collectively, the revolving credit loans
made to Borrower by the Lenders pursuant to Section 2.1 hereof.
"Revolving Loan Commitment" shall mean, at any time for any Lender,
the amount of such Lender's commitment for Revolving Loans set forth opposite
such Lender's name on the signature pages hereof, as the same may be decreased
from time to time as a result of any reduction thereof pursuant to Section 2.5
hereof, any assignment thereof pursuant to Section 11.6 hereof, or any amendment
thereof pursuant to Section 11.2 hereof.
"Security Agreement" shall mean, collectively, that certain Security
Agreement executed in favor of the Agent, substantially in the form of Exhibit F
providing for the grant of first, perfected Liens on such of the Collateral not
constituting Pledged Stock or real property, as the same may be amended,
restated or supplemented from time to time, subject only to Liens permitted
under Section 8.2 below.
"Security Documents" shall mean such Security Agreements, financing
statements, collateral assignment of life insurance policy, Pledge Agreements,
blank stock powers, Mortgage Documents and other documents as are necessary to
grant to the Agent, as agent for the Lenders, a first, perfected security
interest in the Collateral.
"Serengeti" shall mean that certain operating or business division of
Corning Incorporated, a New
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York corporation, which is presently engaged in the business of the design,
manufacture and distribution of sunglasses.
"Serengeti Business" shall mean all the assets of Serengeti used in
its business, and as defined in the Serengeti Purchase Agreement.
"Serengeti Purchase" shall mean the purchase by Borrower of
substantially all the assets of the Serengeti Business.
"Serengeti Purchase Agreement" shall mean that certain Agreement of
Purchase and Sale dated as of October 29, 1996, by and between Corning, as the
Seller, and the Borrower, as the Buyer, relating to the sale of the Serengeti
Business, as amended.
"Serengeti Purchase Documents" shall mean the closing and related
documents, instruments and agreements executed and/or delivered in connection
with the closing under the Serengeti Purchase Agreement.
"Statement Date" shall mean the last day of the fiscal quarter of
Borrower to which the quarterly financial statements relate as delivered from
time to time by the Borrower under Section 7.7(b) hereof.
"Stock Options" shall mean options granted by the Borrower from time
to time to its employees pursuant to the Borrower's stock option plan.
"Subordinated Debt" shall mean all present and future Indebtedness of
Borrower and its Subsidiaries to any Person other than to the Lenders under this
Agreement, and which Indebtedness is subordinated to all Obligations due the
Lenders under this Agreement on terms and conditions satisfactory in all
respects to the Agent and the Required Lenders, including without limitation,
with respect to interest rates, payment terms, maturities, amortization
schedules, covenants, defaults, remedies, collateral and subordination
provisions, as evidenced by the written approval of the Agent and Required
Lenders. As of the Closing Date, there is no Subordinated Debt.
"Subordinated Letter Agreement" shall mean a letter addressed to the
Lenders by the holders of any Subordinated Debt to the effect that said Debt and
all amounts due thereunder (whether in the nature of principal, interest, or
otherwise) are subordinate to the Obligations in the manner as agreed to in
writing by the Agent, the form of which Letter Agreement shall be acceptable to
the Agent.
"Subsidiary" shall mean, with respect to any Person, any corporation
or other entity (including, without limitation, partnerships, joint ventures,
and associations) regardless of its jurisdiction of organization or formation,
at least a majority of the total combined voting power of all classes of voting
stock or other ownership interests of which shall, at the time as of which any
determination is being made, be owned by such Person, either directly or
indirectly through one or more other Subsidiaries.
"SunTrust Affiliate" shall mean SunTrust Bank, Gulf Coast, N.A., or
such other affiliate of SunTrust as may be agreed upon between the Borrower and
the Agent.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
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"Telerate" shall mean, when used in connection with any designated
page and the "Certificate of Deposit Rate" or "LIBOR,," the display page so
designated on the Dow Jones Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying rates comparable to the
"Certificate of Deposit Rate" or "LIBOR").
"Term Loan Commitment" shall mean, as of the Closing Date for any
Lender, the amount of such Lender's commitment for Term Loans set forth opposite
each Lender's name on the signature page hereof.
"Term Loans" shall mean, collectively, the term loans made to Borrower
by the Lenders pursuant to Article III hereof.
"Term Notes" shall mean the promissory notes evidencing the Term Loans
in the form attached hereto as Exhibit B.
"Total Capital" shall mean the sum of Funded Debt and Consolidated Net
Worth of the Consolidated Companies.
"Total Commitment" shall mean, for any Lender at any time, the sum of
such Lender's Revolving Loan Commitment and the outstanding amount of such
Lender's Term Loan, and "Total Commitments" shall mean for all Lenders at any
time, the sum of the Total Commitments of Lenders as such Commitment may be
reduced by voluntary reduction or prepayment of a Lender's Commitment as
provided herein.
"Total Revolving Loan Commitment" shall mean the total of all the
Revolving Loan Commitments of all the Lenders, as reduced from time to time
under Section 2.5.
"Type" of Borrowing shall mean a Borrowing consisting of Base Rate
Advances or Eurodollar Advances.
"Underwriter Option" shall mean that certain option granted by the
Borrower in August 1995 to the underwriter of its common stock to purchase an
aggregate of 96,000 units, with each unit consisting of one (1) share of common
stock of the Borrower and one (1) warrant for one (1) share of the Borrower's
common stock.
"Upfront Fees" shall mean the fees paid by the Borrower to the Agent
on or before the Closing Date, and are in addition to Commitment Fees, Letter of
Credit Fees, Facing Fees and any other administrative fees due the Agent.
"Wholly Owned Subsidiary" shall mean any Subsidiary, all the stock or
ownership interest of every class of which, except directors' qualifying shares,
shall, at the time as of which any determination is being made, be owned by
Borrower either directly or indirectly.
Section 1.2 Accounting Terms and Determination. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared, and all financial records
shall be maintained in accordance with, GAAP.
Section 1.3 Other Definitional Terms. 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 Article, Section, Schedule, Exhibit and like references are to
this Agreement unless otherwise specified.
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Section 1.4 Exhibits and Schedules. All Exhibits and Schedules
attached hereto are by reference made a part hereof.
ARTICLE II
REVOLVING LOANS
Section 2.1 Revolving Loan Commitments; Use of Proceeds.
(a) Subject to and upon the terms and conditions herein set forth,
each Lender severally agrees to make to Borrower from time to time on and
after the Closing Date, but prior to the Maturity Date, Revolving Loans in
an aggregate amount outstanding at any time not to exceed such Lender's
Revolving Loan Commitment. Borrower shall be entitled to borrow, repay and
reborrow Revolving Loans in accordance with the provisions hereof.
(b) Each Revolving Loan shall, at the option of Borrower, be made or
continued as, or converted into, part of one or more Borrowings that shall
consist entirely of Base Rate Advances or Eurodollar Advances. The
aggregate principal amount of each Borrowing of Revolving Loans shall in
the case of Eurodollar Advances be not less than $250,000 or a greater
integral multiple of $100,000, and in the case of Base Rate Advances shall
be not less than $100,000 or a greater integral multiple of $100,000, or
in such lesser amounts as shall then equal the unused amount of the total
Revolving Loan Commitments. At no time shall the number of Borrowings made
as Eurodollar Advances then outstanding under this Article II exceed six;
provided that, for the purpose of determining the number of Borrowings
outstanding and the minimum amount for Borrowings resulting from
continuations, all Borrowings of Base Rate Advances under the Revolving
Loan shall be considered as one Borrowing. The parties hereto agree that
(i) the aggregate principal balance of the Revolving Loans of the Lenders
as a group shall not exceed the Total Revolving Commitments, and (ii) no
Lender shall be obligated to make Revolving Loans in excess of the
Revolving Loan Commitment of such Lender.
(c) The proceeds of the Revolving Loans shall be used solely for the
following purposes:
(i) To finance the Serengeti Purchase;
(ii) With the written consent of the Agent, the payment of all
transaction fees and expenses incurred in connection with the
Serengeti Purchase;
(iii) To finance Permitted Acquisitions as described herein;
(iv) For working capital and for other general corporate
purposes, including capital expenditures of the Consolidated
Companies;
(v) To pay all transaction fees and expenses incurred in
connection with this financing including Closing Fees and costs and
expenses, including attorneys' fees, of the Agent, and, with the
written consent of the Agent, costs and expenses, including
attorneys' fees, of the
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Borrower;
(vi) To pay and discharge in full the Existing Indebtedness;
and
(vii) To pay other fees to the Agent or Lenders from time to
time under this Agreement including Commitment Fees, Letter of
Credit Fees, Facing Fees, Upfront Fees and any administrative fees
due the Agent.
Section 2.2 Revolving Notes; Repayment of Principal.
(a) Borrower's obligations to pay the principal of, and interest on,
the Revolving Loans to each Lender shall be evidenced by the records of
the Agent and such Lender and by the Revolving Credit Note payable to such
Lender completed in conformity with this Agreement.
(b) Subject to the provisions of Section 2.3 below, all outstanding
principal amounts under the Revolving Loans shall be due and payable in
full on the Maturity Date.
Section 2.3 Mandatory Prepayments/Borrowing Base. The aggregate
amount of all outstanding Advances under the Revolving Loans may never be
greater than the Borrowing Base, which is to be reported monthly. In the event
that the amounts outstanding exceed the Borrowing Base, the Borrower will
immediately pay on the Revolving Loans said principal payment as is sufficient
to maintain compliance with the requirements of this Section.
Section 2.4 Issuance of Letters of Credit
(a) Subject to and upon the terms and conditions herein set forth,
the Agent agrees to issue for and on behalf of the Borrower from time to
time but prior to the Maturity Date one or more Letters of Credit.
(b) Each Letter of Credit shall, except as otherwise expressly set
forth in this Agreement, be a part of the Revolving Loan Commitments of
each Lender according to its Pro Rata Share; provided, however, (i) the
Letter of Credit may with the consent of the Agent remain outstanding in
accordance with its terms beyond the Maturity Date, and (ii) the Letter of
Credit shall be deemed to be an outstanding Revolving Loan and outstanding
Indebtedness for purposes of any financial covenants in Section 7.8
hereof.
(c) The Borrower shall submit to the Agent the Letter of Credit
Application for each Letter of Credit. The right of the Borrower to obtain
said Letter of Credit shall be subject to the same terms and conditions as
the right of the Borrower to obtain any other Advance under this
Agreement.
(d) As a condition to the issuance of a Letter of Credit, the
Borrower shall pay to Agent the Letter of Credit Fee and, quarterly
thereafter, the Borrower shall continue to pay to Agent the Letter of
Credit Fee to the extent the Letter of Credit then remains outstanding.
(e) Upon the issuance of a Letter of Credit, the Borrower shall also
pay to the Agent the Facing Fee.
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(f) Letters of Credit shall have an expiration date as agreed to
between the Borrower and the Agent, provided, however, without the
agreement of the Agent in no event may a Letter of Credit have an
expiration date beyond the Maturity Date.
(g) If no Event of Default has occurred and is continuing at the
time the Letter of Credit is drawn upon, the amount paid by the Agent
thereunder (on behalf of all the Lenders) shall be deemed to be an Advance
then made to the Borrower as a Revolving Loan. Interest on said Advance
shall then accrue from the date of said Advance, and the principal amount
advanced along with interest shall be paid in the same manner as an
Advance under the Revolving Loan is paid pursuant to Sections 2.2 and 2.3
hereof. The Lenders shall immediately after receiving notice from the
Agent that the Letter of Credit is drawn upon, pay to the Agent its Pro
Rata Share of the amount so drawn in the manner set forth in Section 4.2
below.
(h) If any Event of Default has occurred and is continuing at the
time the Letter of Credit is drawn upon, the Borrower shall immediately
repay to the Agent as a reimbursement obligation under the Letter of
Credit Application the entire amount so drawn on the Letter of Credit
together with interest at the Default Rate, and, the Lenders shall at the
time the Letter of Credit is drawn upon purchase from the Agent a
participation in the reimbursement obligation of the Borrower, according
to each Lender's Pro Rata Share.
Section 2.5 Reduction of Revolving Loan Commitments.
(a) The Borrower prior to the Maturity Date shall have the right in
the manner set forth below to reduce (but not increase) or cancel entirely
the Total Revolving Loan Commitment.
(b) The Borrower, if it desires to reduce the Total Revolving Loan
Commitment, must (i) give five Business Day's notice to the Lenders
setting forth the amount which the Borrower desires to have as the Total
Revolving Loan Commitment, which said amount may not be less than the
total principal amount then outstanding on the Revolving Loans, and (ii)
pay to the Agent within said five day period any Commitment Fee due at the
time of said reduction on that portion of the Total Revolving Loan
Commitment which is being so reduced. Said reduction shall be effective at
the end of said five (5) Business Day period and upon the payment of said
Commitment Fee.
(c) Any reduction must be in the minimum amount of $1,000,000 or a
greater integral multiple of $500,000.
ARTICLE III
TERM LOANS
Section 3.1 Term Loan Commitments; Use of Proceeds.
(a) Subject to and upon the terms and conditions herein set forth,
each Lender severally agrees to make to Borrower on the Closing Date Term
Loans in an aggregate amount equal to such Lender's Term Loan Commitment.
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(b) Each Term Loan shall, at the option of Borrower, be made or
continued as, or converted into, part of one or more Borrowings that shall
consist entirely of Base Rate Advances or Eurodollar Advances. The
aggregate principal amount of each Borrowing of Term Loans shall be not
less than $2,000,000 or a greater integral multiple of $500,000, provided
that each Borrowing of Term Loans comprised of Base Rate Advances shall be
not less than $500,000 or a greater integral multiple of $100,000. At no
time shall the number of Borrowings outstanding under this Article III
exceed three; provided that, for the purpose of determining the number of
Borrowings outstanding and the minimum amount for Borrowings resulting
from conversions or continuations, all Borrowings of Base Rate Advances
under this Article III shall be considered as one Borrowing. The parties
hereto agree that the aggregate principal balance of all Term Loans of the
Lenders shall not exceed $10,000,000, and no Lender shall be obligated to
make Term Loans in excess of the Term Loan Commitment of such Lender.
(c) The proceeds of the Term Loan shall be used solely for the
following purposes:
(i) To finance the Serengeti Purchase;
(ii) With the written consent of the Agent, the payment of all
transaction fees and expenses incurred in connection with the
Serengeti Purchase;
(iii) To pay all transaction fees and expenses incurred in
connection with this financing including Closing Fees and costs and
expenses, including attorneys' fees, of the Agent, and, with the
written consent of the Agent, costs and expenses, including
attorneys' fees, of the Borrower; and
(iv) To pay and discharge in full the Existing Indebtedness.
Section 3.2 Term Notes; Repayment of Principal.
(a) Borrower's obligations to pay the principal of, and interest on,
the Term Loans to each Lender shall be evidenced by the records of the
Agent and such Lender and by the Term Note payable to such Lender
completed in conformity with this Agreement.
(b) All outstanding amounts under the Term Loans shall be due and
payable as follows:
(i) Interest shall be due and payable in such amounts and at
the end of such periods as set forth in Sections 4.3 and 4.4 hereof;
(ii) Subject to the further provisions of Section 3.3 below,
Principal shall be payable at the end of each fiscal quarter in
quarterly principal payments beginning March 31, 1997 in the
following amounts:
Calendar Year Quarterly Payment
------------- -----------------
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1997 $312,500 per quarter
1998 $437,500 per quarter
1999 - 2002 $583,333 per quarter
(iii) All unpaid principal and accrued but unpaid interest
shall be due and payable in full on the Maturity Date.
Section 3.3 Mandatory Prepayments. The Borrower shall in addition to
the amounts set forth in Section 3.2 above, also pay to the Lenders in
accordance with their Pro Rata Shares for application on the Term Loans the
following amounts:
(a) Subject to paragraph (b) below, 100% of all Net Proceeds
excluding, however, (i) any Net Proceeds arising out of the sale of
inventory in the ordinary course of business, and (ii) any Net Proceeds
arising out of the sale of equipment if and only to the extent the Net
Proceeds are within thirty (30) days thereafter used to purchase
replacement equipment;
(b) 50% of the Net Proceeds received by the Borrower from the
exercise of the Existing Warrants; and
(c) 75% of Excess Cash Flow for each fiscal year.
Any prepayments made under this Section shall be made by the Borrower
immediately after its receipt of said Net Proceeds and shall be applied pro rata
to the reduction of the remaining scheduled principal payments under Section
3.2(b)(ii) above.
ARTICLE IV
GENERAL LOAN TERMS
Section 4.1 Funding Notices.
(a) Subject to paragraph (e) below, whenever Borrower desires to
make a Borrowing with respect to the Revolving Loan Commitments or the
Term Loan Commitments, it shall give the Agent prior written notice (or
telephonic notice promptly confirmed in writing) of such Borrowing (a
"Notice of Borrowing"), such Notice of Borrowing to be given prior to
11:00 A.M. (local time for the Agent) at its Lending Office (i) on the
requested date of such Borrowing in the case of Base Rate Advances, and
(ii) three Business Days prior to the requested date of such Borrowing in
the case of Eurodollar Advances. Notices received after 11:00 A.M. shall
be deemed received on the next Business Day. Each Notice of Borrowing
shall be irrevocable and shall specify the aggregate principal amount of
the Borrowing, the date of Borrowing (which shall be a Business Day), and
whether the Borrowing is to consist of Base Rate Advances or Eurodollar
Advances and (in the case of Eurodollar Advances) the Interest Period to
be applicable thereto. All Notice of Borrowing shall be executed by the
Borrower outside the State of Florida and shall be delivered to the Agent
outside the State of Florida at its Atlanta Lending Office.
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(b) Subject to paragraph (e) below, whenever Borrower desires to
convert one or more Borrowings of one Type into Borrowing of another Type,
or to continue outstanding a Borrowing consisting of Eurodollar Advances
for a new Interest Period, it shall give Agent prior written notice (or
telephonic notice promptly confirmed in writing) of each such Borrowing to
be converted or continued, such Notice of Conversion/Continuation to be
given prior to 11:00 a.m. (local time for the Agent) at its Lending Office
(i) on the requested date of such Borrowing in the case of the
continuation into a Base Rate Advance, and (ii) three Business Days prior
to the requested date of such Borrowing in the case of a continuation of
or conversion into Eurodollar Advances. Notices received after 11:00 a.m.
shall be deemed received on the next Business Day. Each such Notice of
Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Borrowing to be converted or continued,
the date of such conversion or continuation (which shall be a Business
Day), whether the Borrowing is being converted into or continued as
Eurodollar Advances and (in the case of Eurodollar Advances) the Interest
Period applicable thereto. If, upon the expiration of any Interest Period
in respect of any Borrowing, Borrower shall have failed to deliver the
Notice of Conversion/Continuation, Borrower shall be deemed to have
elected to convert or continue such Borrowing to a Borrowing consisting of
Base Rate Advances. No conversion of any Borrowing of Eurodollar Advances
shall be permitted except on the last day of the Interest Period in
respect thereof. The Borrower shall execute each Notice of
Conversion/Continuation outside the State of Florida and shall deliver
said Notice to the Agent outside the State of Florida at its Atlanta
Lending Office.
(c) Without in any way limiting Borrower's obligation to confirm in
writing any telephonic notice, the Agent and the Lenders may act without
liability upon the basis of telephonic notice believed by the Agent or the
Lender in good faith to be from Borrower prior to receipt of written
confirmation. In each such case, Borrower hereby waives the right to
dispute the Agent's and the Lender's record of the terms of such
telephonic notice.
(d) The Agent shall promptly give each Lender notice by telephone
(confirmed in writing) or by telex, telecopy or facsimile transmission of
the matters covered by the notices given to the Agent pursuant to this
Section 4.1 with respect to the Revolving Loan Commitments and Term Loans
Commitments.
(e) Unless the Agent directs otherwise in writing, no Notice of
Borrowing under paragraph (a) above, and no Notice of
Conversion/Continuation under paragraph (b) above shall be applicable. If
and when the Borrower desires any Borrowing under paragraph (a) above or a
conversion/continuation of an existing Borrowing under paragraph (b)
above, the Borrower will only give telephonic notice to the Agent as set
forth in said paragraphs. The Agent will be under no duty to verify the
authority of the person giving any telephonic instructions to the Agent.
The Agent will then furnish to the Borrower a Confirmation of Borrowing or
a Confirmation of Conversion/Continuation, as the case may be. Absent
manifest error or gross negligence, the Confirmation of Borrowing and
Confirmation of Conversion/Continuation shall be conclusive.
Section 4.2 Disbursement of Funds.
(a) No later than 1:00 P.M. (local time for the Agent) on the date
of each Borrowing pursuant to the Revolving Loan Commitments or the Term
Loan Commitments, each Lender will make available its Pro Rata Share of
the amount of such Borrowing in immediately available funds at the Lending
Office of the Agent. The Agent will make
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available to Borrower the aggregate of the amounts (if any) so made
available by the Lenders to the Agent in a timely manner by crediting such
amounts to Borrower's demand deposit account maintained with the Agent or
SunTrust Affiliate, by the close of business on such Business Day. In the
event that the Lenders do not make such amounts available to the Agent by
the time prescribed above, but such amount is received later that day,
such amount may be credited to Borrower in the manner described in the
preceding sentence on the next Business Day (with interest on such amount
to begin accruing hereunder on such next Business Day).
(b) Unless the Agent shall have been notified by any Lender prior to
the date of a Borrowing that such Lender does not intend to make available
to the Agent such Lender's portion of the Borrowing to be made on such
date, the Agent may assume that such Lender has made such amount available
to the Agent on such date and the Agent may make available to Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Agent by such Lender on the date of Borrowing, the Agent
shall be entitled to recover such corresponding amount on demand from such
Lender together with interest at the Federal Funds Rate. If such Lender
does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify Borrower, and Borrower shall
immediately pay such corresponding amount to the Agent together with
interest at the rate specified for the Borrowing. Nothing in this section
shall be deemed to relieve any Lender from its obligation to fund its
Commitments hereunder or to prejudice any rights which Borrower may have
against any Lender as a result of any default by such Lender hereunder.
(c) All Borrowings under the Revolving Loan Commitments and Term
Loan Commitments shall be loaned by the Lenders on the basis of their Pro
Rata Share. No Lender shall be responsible for any default by any other
Lender in its obligations hereunder, and each Lender shall be obligated to
make the Loans provided to be made by it hereunder, regardless of the
failure of any other Lender to fund its obligations hereunder.
Section 4.3 Interest.
(a) Borrower agrees to pay interest in respect of all unpaid
principal amounts of the Revolving Loans and Term Loans from the
respective dates such principal amounts were advanced to maturity (whether
by acceleration, notice of prepayment or otherwise) at rates per annum
(computed on the basis of a 360-day year for Eurodollar Advances and a
365-day year for Base Rate Advances, based upon the actual number of days
elapsed) equal to the applicable rates indicated below:
(i) For Base Rate Advances -- The Base Advance Rate in effect
from time to time; and
(ii) For Eurodollar Advances -- The applicable LIBOR Advance
Rate.
(b) Overdue principal and, to the extent not prohibited by
applicable law, overdue interest, in respect of the Revolving Loans, Term
Loans and all other overdue amounts owing hereunder, shall bear interest
from each date that such amounts are overdue, at the higher of the
following rates:
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(i) Base Advance Rate plus an additional two percent (2.0%)
per annum; or
(ii) The interest rate otherwise applicable to said amount
plus an additional two percent (2.0%) per annum.
provided, however, for any Eurodollar Advance not paid at the end of the
Applicable Interest Period, interest shall accrue at the Base Rate plus an
additional two percent (2.0%) per annum.
(c) Interest on each Loan shall accrue from and including the date
of such Loan to but excluding the date of any repayment thereof; provided
that, if a Loan is repaid on the same day made, one day's interest shall
be paid on such Loan. Interest on all outstanding Base Rate Advances shall
be payable quarterly in arrears on the last calendar day of each fiscal
quarter of Borrower in each year. Interest on all outstanding Eurodollar
Advances shall be payable on the last day of each Interest Period
applicable thereto, and, in the case of Eurodollar Advances having an
Interest Period in excess of three months, on each day which occurs every
three months after the initial date of such Interest Period. In addition
to the foregoing, interest on all Loans shall be payable on any conversion
of any Advances comprising such Loans into Advances of another Type,
prepayment (on the amount prepaid), at the Maturity Date and, after the
Maturity Date, on demand. Interest in regard to any Letter of Credit shall
accrue on the date said Letter of Credit is drawn on, which draw shall
constitute an Advance under the Revolving Loan Commitments.
(d) The Agent, upon determining the LIBOR Advance Rate for any
Interest Period, shall promptly notify by telephone (confirmed in writing)
or in writing Borrower and the other Lenders. Any such determination
shall, absent manifest error, be final, conclusive and binding for all
purposes.
Section 4.4 Interest Periods.
(a) In connection with the making or continuation of, or conversion
into, each Eurodollar Advances, Borrower shall select an Interest Period
to be applicable to such Eurodollar Advances, which Interest Period shall
be either a one (1), two (2), three (3) or six (6) month period; provided
that:
(i) The initial Interest Period for any Borrowing of
Eurodollar Advances shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing consisting of
Advances of another Type) and each Interest Period occurring
thereafter in respect of such Borrowing shall commence on the day on
which the next preceding Interest Period expires;
(ii) If any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day, provided that if any Interest
Period in respect of Eurodollar Advances would otherwise expire on a
day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day;
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(iii) Any Interest Period in respect of Eurodollar Advances
which begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period shall, subject to part (iv) below, expire on the last
Business Day of such calendar month; and
(iv) No Interest Period shall extend beyond any date upon
which any principal payment is due with respect to the Revolving
Loans or Term Loans.
Section 4.5 Fees.
(a) Borrower shall pay to the Agent, for the account of and
distribution of the respective Pro Rata Share to each Lender, the
Commitment Fee for the period commencing on the Closing Date to and
including the Maturity Date, such Commitment Fee being payable (i)
quarterly in arrears on the last calendar day of each fiscal quarter of
Borrower and on the Maturity Date, and (ii) at the time of any reduction
in the Total Revolving Loan Commitment under Section 2.5 hereof on the
amount of said reduction.
(b) Borrower shall pay to the Agent for the Agent's own account, an
annual administrative fee, in advance, in the amount previously agreed in
writing by Borrower with the Agent commencing on the Closing Date and each
anniversary date thereafter.
(c) Borrower shall pay to Agent on or prior to Closing Date, the
balance of the Upfront Fees.
(d) Borrower shall pay to Agent, for the account of and distribution
of the respective Pro Rata Share to each Lender, the Letter of Credit Fee
upon the issuance of each Letter of Credit and quarterly thereafter so
long as the Letter of Credit is then outstanding. Borrower shall pay to
Agent, for the Agent's own account, a Facing Fee upon the issuance of each
Letter of Credit.
Section 4.6 Voluntary Prepayments of Borrowings.
(a) Borrower may, at its option, prepay Borrowings consisting of
Base Rate Advances at any time in whole, or from time to time in part, in
amounts aggregating $500,000 or any greater integral multiple of $100,000,
by paying the principal amount to be prepaid together with interest
accrued and unpaid thereon to the date of prepayment. Those Borrowings
consisting of Eurodollar Advances may be prepaid, at Borrower's option, in
whole, or from time to time in part, in amounts aggregating $500,000 or
any greater integral multiple of $100,000, by paying the principal amount
to be prepaid, together with interest accrued and unpaid thereon to the
date of prepayment, if such prepayment is made on the last day of an
Interest Period applicable thereto. No Eurodollar Advance may be prepaid
prior to the end of the Interest Period applicable thereto. Each such
optional prepayment shall be applied in accordance with Section 4.6(c) and
(d) below.
(b) Borrower shall give written notice (or telephonic notice
confirmed in writing) to the Agent of any intended prepayment of the
Revolving Loans or Term Loans (i) not less than one (1) Business Day prior
to any prepayment of Base Rate Advances, and (ii) not less than three (3)
Business Days prior to any prepayment of Eurodollar Advances. Such notice,
once given, shall be irrevocable. Upon receipt of such notice of
prepayment
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pursuant to the first sentence of this paragraph (b), the Agent shall
promptly notify each Lender of the contents of such notice and of such
Lender's share of such prepayment.
(c) Borrower, when providing notice of prepayment pursuant to
Section 4.6(b) may designate the Types of Advances and the specific
Borrowing or Borrowings which are to be prepaid, provided that (i) if any
prepayment of Eurodollar Advances made pursuant to a single Borrowing of
the Revolving Loans or Term Loans shall reduce the outstanding Advances
made pursuant to such Borrowing to an amount less than $250,000.00, such
Borrowing shall immediately be converted into Base Rate Advances, and (ii)
each prepayment made pursuant to a single Borrowing shall be applied pro
rata among the Loans comprising such Borrowing.
(d) All voluntary prepayments shall be applied first to the payment
of any unpaid interest before application to principal. Payments applied
to principal on Term Loans shall be applied pro-rata to the reduction of
the remaining scheduled principal payments on the Term Loan.
(e) In regard to any Revolving Loan, nothing contained herein shall
preclude the Borrower from prepaying said Loan and thereafter and prior to
the Maturity Date from obtaining any additional or future Advances as a
Revolving Loan under Section 2.1 above up to the Total Revolving Loan
Commitment.
Section 4.7 Payments, etc.
(a) Except as otherwise specifically provided herein, all payments
under this Agreement and the other Credit Documents, other than the
payments specified in clause (b) below, shall be made without demand,
defense, set-off or counterclaim to the Agent, not later than 1:00 p.m.
(local time for the Agent) on the date when due and shall be made in
Dollars in immediately available funds to the Agent at the Agent's Lending
Office. The Agent shall then pay to each Lender that Lender's Pro Rata
Share of said payment.
(b) (i) All such payments shall be made free and clear of and
without deduction or withholding for any Taxes in respect of this
Agreement, the Notes or other Credit Documents, or any payments of
principal, interest, fees or other amounts payable hereunder or
thereunder (but excluding any Taxes imposed on the overall net
income of the Lenders pursuant to the laws of any jurisdiction). If
any Taxes are so levied or imposed (other than excluded Taxes based
on income as set forth above), Borrower agrees (A) to pay the full
amount of such Taxes, and such additional amounts as may be
necessary so that every net payment of all amounts due hereunder and
under the Notes and other Credit Documents, after withholding or
deduction for or on account of any such Taxes (including additional
sums payable under this Section 4.7), will not be less than the full
amount provided for herein had no such deduction or withholding been
required, (B) to make such withholding or deduction, and (C) to pay
the full amount deducted to the relevant authority in accordance
with applicable law. Borrower will furnish to the Agent and each
Lender, within thirty days after the date the payment of any Taxes
is due pursuant to applicable law, certified copies of tax receipts
evidencing such payment by Borrower. Borrower will indemnify and
hold harmless the Agent and each Lender and reimburse
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the Agent and each Lender upon written request for the amount of any
such Taxes (exclusive of any taxes imposed on the overall net income
of any Lender) so levied or imposed and paid by the Agent or Lender
and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes
were correctly or illegally asserted. A certificate as to the amount
of such payment by such Lender or the Agent, absent manifest error,
shall be final, conclusive and binding for all purposes.
(ii) Each Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State
thereof (including the District of Columbia) agrees to furnish to
Borrower and the Agent, prior to the time it becomes a Lender
hereunder, two copies of either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001 or any successor
forms thereto (wherein such Lender claims entitlement to complete
exemption from or reduced rate of U.S. Federal withholding tax on
interest paid by Borrower hereunder) and to provide to Borrower and
the Agent a new Form 4224 or Form 1001 or any successor forms
thereto if any previously delivered form is found to be incomplete
or incorrect in any material respect or upon the obsolescence of any
previously delivered form; provided, however, that no Lender shall
be required to furnish a form under this paragraph (ii) if it is not
entitled to claim an exemption from or a reduced rate of withholding
under applicable law. A Lender that is not entitled to claim an
exemption from or a reduced rate of withholding under applicable
law, shall promptly upon written request of Borrower, so inform
Borrower in writing.
(c) Subject to Section 4.4(a)(ii), whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day which is
not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal,
interest thereon shall be payable at the applicable rate during such
extension.
(d) All computations of interest and fees shall be made on the basis
of a year of 360 days for Eurodollar Advances and 365 days for Base Rate
Advances, each based on the actual number of days elapsed (including the
first day but excluding the last day) occurring in the period for which
such interest or fees are payable (to the extent computed on the basis of
days elapsed)
(e) Payment by Borrower to the Agent in accordance with the terms of
this Agreement shall, as to Borrower, constitute payment to the Lenders
under this Agreement.
Section 4.8 LIBOR Rate Not Ascertainable, etc. In the event that the
Agent shall have determined (which determination shall be made in good faith
and, absent manifest error, shall be final, conclusive and binding upon all
parties) that on any date for determining LIBOR for any Interest Period, by
reason of any changes arising after the date of this Agreement affecting the
London interbank market or the Agent's position in such markets, adequate and
fair means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of LIBOR then, and in any such event, the
Agent shall forthwith give notice (by telephone confirmed in writing) to
Borrower and to the Lenders of such determination and a summary of the basis for
such determination. Until the Agent notifies Borrower that the circumstances
giving
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rise to the suspension described herein no longer exist (which Agent agrees to
give as soon as conditions warrant), the obligations of the Lenders to make or
permit portions of the Revolving Loans or Term Loans to remain outstanding past
the last day of the then current Interest Periods as Eurodollar Advances, shall
be suspended, and such affected Advances shall bear the same rate of interest as
Base Rate Advances.
Section 4.9 Illegality.
(a) In the event that any Lender shall have determined (which
determination shall be made in good faith and, absent manifest error,
shall be final, conclusive and binding upon all parties) at any time that
the making or continuance of any Eurodollar Advance has become unlawful by
compliance by such Lender in good faith with any applicable law,
governmental rule, regulation, guideline or order (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful), then, in any such event, the Lender shall give prompt notice
(by telephone confirmed in writing) to Borrower and to the Agent of such
determination and a summary of the basis for such determination (which
notice the Agent shall promptly transmit to the other Lenders).
(b) Upon the giving of the notice to Borrower referred to in
paragraph (a) above, (i) Borrower's right to request and such Lender's
obligation to make Eurodollar Advances, shall be immediately suspended,
and such Lender shall make an Advance as part of the requested Borrowing
of Eurodollar Advances as a Base Rate Advance, which Base Rate Advance
shall, for all other purposes, be considered part of such Borrowing, and
(ii) if the affected Eurodollar Advance or Advances are then outstanding,
Borrower shall immediately, or if permitted by applicable law, no later
than the date permitted thereby, upon at least one Business Day's written
notice to the Agent and the affected Lender, convert each such Advance
into an Advance or Advances of a different Type with an Interest Period
ending on the date on which the Interest Period applicable to the affected
Eurodollar Advances expires, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 4.9(b).
Section 4.10 Increased Costs.
(a) If, by reason of after the date hereof, (x) the introduction of
or any change (including, without limitation, any change by way of
imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (y) the compliance with any
guideline or request from any central bank or other governmental authority
or quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
(i) any Lender (or its applicable Lending Office) shall be
subject to any tax, duty or other charge with respect to its
Eurodollar Advances or its obligation to make Eurodollar Advances,
or the basis of taxation of payments to any Lender of the principal
of or interest on its Eurodollar Advances or its obligation to make
Eurodollar Advances shall have changed (except for changes in the
tax on the net income or profits of such Lender or its applicable
Lending Office imposed by any jurisdiction); or
(ii) any reserve (including, without limitation, any imposed
by the Board of Governors of the Federal Reserve System), special
deposit or similar requirement against assets of, deposits with or
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for the account of, or credit extended by, any Lender's applicable
Lending Office shall be imposed or deemed applicable or any other
condition affecting its Eurodollar Advances or its obligation to
make Eurodollar Advances shall be imposed on any Lender or its
applicable Lending Office or the London interbank market or the
United States secondary certificate of deposit market;
and as a result thereof there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining Eurodollar
Advances (except to the extent already included in the determination of
the applicable LIBOR Advance Rate for Eurodollar Advances), or there shall
be a reduction in the amount received or receivable by such Lender or its
applicable Lending Office, then Borrower shall from time to time (subject,
in the case of certain Taxes, to the applicable provisions of Section
4.7(b) above), upon written notice from and demand by such Lender on
Borrower (with a copy of such notice and demand to the Agent), pay to the
Agent for the account of such Lender within five Business Days after the
date of such notice and demand, additional amounts sufficient to indemnify
such Lender against such increased cost. A certificate as to the amount of
such increased cost, submitted to Borrower and the Agent by such Lender in
good faith and accompanied by a statement prepared by such Lender
describing in reasonable detail the basis for and calculation of such
increased cost, shall, except for manifest error, be final, conclusive and
binding for all purposes.
(b) If any Lender shall advise the Agent that at any time, because
of the circumstances described in clauses (x) or (y) in Section 4.10(a) or
any other circumstances beyond such Lender's reasonable control arising
after the date of this Agreement affecting such Lender or the London
interbank market or such Lender's position in such markets, the LIBOR
Advance Rate, as determined by the Agent, will not adequately and fairly
reflect the cost to such Lender of funding its Eurodollar Advances, then,
and in any such event:
(i) The Agent shall forthwith give notice (by telephone
confirmed in writing) to Borrower and to the other Lenders of such
advice;
(ii) Borrower's right to request and such Lender's obligation
to make or permit portions of the Loans to remain outstanding past
the last day of the then current Interest Periods as Eurodollar
Advances, shall be immediately suspended; and
(iii) Such Lender shall make a Loan as part of any requested
Borrowing of Eurodollar Advances, as a Base Rate Advance, which such
Base Rate Advance shall, for all other purposes, be considered part
of such Borrowing.
Section 4.11 Lending Offices.
(a) Each Lender agrees that, if requested by Borrower, it will use
reasonable efforts (subject to overall policy considerations of such
Lender) to designate an alternate Lending Office with respect to any of
its Eurodollar Advances affected by the matters or circumstances described
in Sections 4.7(b), 4.8, 4.9 or 4.10 to reduce the liability of Borrower
or avoid the results provided thereunder, so long as such designation is
not disadvantageous to such Lender as reasonably determined by such
Lender, which
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determination if made in good faith, shall be conclusive and binding on
all parties hereto. Nothing in this Section 4.11 shall affect or postpone
any of the obligations of Borrower or any right of any Lender provided
hereunder.
(b) If any Lender that is organized under the laws of any
jurisdiction other than the United States of America or any State thereof
(including the District of Columbia) issues a public announcement with
respect to the closing of its lending offices in the United States such
that any withholdings or deductions and additional payments with respect
to Taxes may be required to be made by Borrower thereafter pursuant to
Section 4.7(b) hereof, such Lender shall use reasonable efforts to furnish
Borrower notice thereof as soon as practicable thereafter; provided,
however, that no delay or failure to furnish such notice shall in any
event release or discharge Borrower from its obligations to such Lender
pursuant to said Section 4.7(b) or otherwise result in any liability of
such Lender.
Section 4.12 Funding Losses. Borrower shall compensate each Lender,
upon its written request to Borrower (which request shall set forth the basis
for requesting such amounts in reasonable detail and which request shall be made
in good faith and, absent manifest error, shall be final, conclusive and binding
upon all of the parties hereto), for all losses, expenses and liabilities
(including, without limitation, any interest paid by such Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Advances, in either case to
the extent not recovered by such Lender in connection with the reemployment of
such funds and including loss of anticipated profits), which the Lender may
sustain: (i) if for any reason (other than a default by such Lender) a borrowing
of, or conversion to or continuation of, Eurodollar Advances to Borrower does
not occur on the date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation (whether or not withdrawn), (ii) if any repayment
(including mandatory prepayments and any conversions pursuant to Section 4.9(b)
hereof) of any Eurodollar Advances to Borrower occurs on a date which is not the
last day of an Interest Period applicable thereto, or (iii), if, for any reason,
Borrower defaults in its obligation to repay its Eurodollar Advances when
required by the terms of this Agreement.
Section 4.13 Assumptions Concerning Funding of Eurodollar Advances.
Calculation of all amounts payable to a Lender under this Article IV shall be
made as though that Lender had actually funded its relevant Eurodollar Advances
through the purchase of deposits in the relevant market bearing interest at the
rate applicable to such Eurodollar Advances in an amount equal to the amount of
the Eurodollar Advances and having a maturity comparable to the relevant
Interest Period and through the transfer of such Eurodollar Advances from an
offshore office of that Lender to a domestic office of that Lender in the United
States of America; provided, however, that each Lender may fund each of its
Eurodollar Advances in any manner it sees fit and the foregoing assumption shall
be used only for calculation of amounts payable under this Article IV.
Section 4.14 Apportionment of Payments. Aggregate principal and
interest payments in respect of Loans and payments in respect of Commitment Fees
and Letter of Credit Fees (but not Facing Fee and Upfront Fees) shall be
apportioned among all outstanding Commitments and Loans to which such payments
relate, proportionately to the Lenders' respective Pro Rata share of such
Commitments and outstanding Loans. The Agent shall promptly distribute to each
Lender at its payment office set forth beside its name on the appropriate
signature page hereof or such other address as any Lender may request its share
of all such payments received by the Agent.
Section 4.15 Sharing of Payments, Etc. If any Lender shall obtain
any payment or reduction (including, without limitation, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code) of the Obligations (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) in excess of its pro rata portion of
payments or reductions on account of such obligations obtained by all the
Lenders, such Lender shall forthwith (i) notify each of the other Lenders and
Agent of such receipt, and (ii) purchase from the other Lenders such
participations in the affected
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obligations as shall be necessary to cause such purchasing Lender to share the
excess payment or reduction, net of costs incurred in connection therewith,
ratably with each of them, provided that if all or any portion of such excess
payment or reduction is thereafter recovered from such purchasing Lender or
additional costs are incurred, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery or such additional costs, but
without interest unless the Lender obligated to return such funds is required to
pay interest on such funds. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 4.15 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
Section 4.16 Capital Adequacy. Without limiting any other provision
of this Agreement, in the event that any Lender shall have determined that the
adoption of any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy not currently in
effect or fully applicable as of the Closing Date, or any change therein or in
the interpretation or application thereof after the Closing Date, or compliance
by such Lender with any request or directive regarding capital adequacy not
currently in effect or fully applicable as of the Closing Date (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) from a central bank or governmental authority or body having
jurisdiction, does or shall have the effect of reducing the rate of return on
such Lender's capital as a consequence of its obligations hereunder to a level
below that which such Lender could have achieved but for such law, treaty, rule,
regulation, guideline or order, or such change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy by an
amount deemed by such Lender to be material, then within ten Business Days after
written notice and demand by such Lender (with copies thereof to the Agent),
Borrower shall from time to time pay to such Lender additional amounts
sufficient to compensate such Lender for such reduction (but, in the case of
outstanding Base Rate Advances, without duplication of any amounts already
recovered by such Lender by reason of an adjustment in the applicable Base
Rate). Each certificate as to the amount payable under this Section 4.16 (which
certificate shall set forth the basis for requesting such amounts in reasonable
detail), submitted to Borrower by any Lender in good faith, shall, absent
manifest error, be final, conclusive and binding for all purposes.
Section 4.17 Benefits to Guarantors. In consideration for the
execution and delivery by the Guarantors of their respective Guaranty Agreement,
Borrower agrees to make the benefit of extensions of credit hereunder available
to the Guarantors.
Section 4.18 Limitation on Certain Payment Obligations.
(a) Each Lender or Agent shall make written demand on Borrower for
indemnification or compensation pursuant to Section 4.7 hereof no later
than ninety (90) days after the earlier of (i) the date on which such
Lender or Agent makes payment of such Taxes, and (ii) the date on which
the relevant taxing authority or other governmental authority makes
written demand upon such Lender or Agent for payment of such Taxes.
(b) Each Lender or Agent shall make written demand on Borrower for
indemnification or compensation pursuant to Sections 4.12 and 4.13 hereof
no later than ninety days after the event giving rise to the claim for
indemnification or compensation occurs.
(c) Each Lender or Agent shall make written demand on Borrower for
indemnification or compensation pursuant to Sections 4.10 and 4.16 no
later than ninety days after such Lender or Agent receives actual notice
or obtains actual knowledge of the promulgation of a law, rule, order or
interpretation or occurrence of another event giving rise to a claim
pursuant to such sections.
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(d) In the event that the Lenders or Agent fail to give Borrower
notice within the time limitations prescribed in paragraphs (a) or (b)
above, Borrower shall not have any obligation to pay such claim for
compensation or indemnification. In the event that the Lender or Agent
fail to give Borrower notice within the time limitation prescribed in
paragraph (c) above, Borrower shall not have any obligation to pay any
amount with respect to claims accruing prior to the ninetieth day
preceding such written demand.
Section 4.19 Change from One Type of Borrowing to Another. Subject
to the limitations set forth in this Agreement, the Borrower shall have the
right from time to time to change from one Type of Borrowing to another by
giving appropriate Notice of Conversion/Continuation in the manner set forth in
Section 4.1 hereof.
ARTICLE V.
CONDITIONS TO BORROWINGS
The obligations of each Lender to make Advances to Borrower
hereunder and to accept a Term Note on the Closing Date or as a result of the
drawing of the Letter of Credit is subject to the satisfaction of the following
conditions:
Section 5.1 Conditions Precedent to Initial Loans. At the time of
the making of the initial Loans hereunder on the Closing Date and the issuance
of any Letters of Credit on the Closing Date, all obligations of Borrower
hereunder incurred prior to the initial Loans and the issuance of the Letter of
Credit (including, without limitation, Borrower's obligations to reimburse the
reasonable fees and expenses of counsel to the Agent and any fees and expenses
payable to the Agent and the Lenders as previously agreed with Borrower), shall
have been paid in full, and the Agent shall have received the following, in form
and substance reasonably satisfactory in all respects to the Agent:
(a) The duly executed counterparts of this Agreement;
(b) The duly executed Revolving Notes evidencing the Revolving Loan
Commitments and the duly executed Term Notes evidencing the Term Loan
Commitments;
(c) The duly executed Credit Documents, to the extent not otherwise
specifically identified herein;
(d) Duly executed Closing Certificate of Borrower in substantially
the form of Exhibit H attached hereto and appropriately completed;
(e) Duly executed Certificates of the Secretary or Assistant
Secretary of each of the Credit Parties attaching and certifying copies of
the resolutions of the boards of directors of the Credit Parties,
authorizing as applicable the execution, delivery and performance of the
Credit Documents;
(f) Duly executed Certificates of the Secretary or an Assistant
Secretary of each of the Credit Parties certifying (i) the name, title and
true signature of each officer of such entities executing the Credit
Documents, and (ii) the bylaws or comparable governing documents of such
entities;
(g) Certified copies of the certificate or articles of incorporation
of each Credit Party certified by the Secretary of State or the Secretary
or Assistant Secretary of
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such Credit Party, together with certificates of good standing or
existence, as may be available from the Secretary of State of the
jurisdiction of incorporation or organization of such Credit Party;
(h) Copies of all documents and instruments, including all consents,
authorizations and filings, required or advisable under any Requirement of
Law or by any material Contractual Obligation of the Credit Parties, in
connection with the execution, delivery, performance, validity and
enforceability of the Credit Documents and the other documents to be
executed and delivered hereunder, and such consents, authorizations,
filings and orders shall be in full force and effect and all applicable
waiting periods shall have expired;
(i) Certified copies of the Intercompany Credit Documents, to the
extent that they exist;
(j) The duly executed copy of the Contribution Agreement by the
Borrower and the Guarantors, in the form attached hereto as Exhibit K, if
there are any Guarantors;
(k) Certified copies of uniform commercial code searches, tax lien
searches, judgment lien searches, and other searches as the Agent may
require, on the Consolidated Companies and Serengeti and its subsidiaries,
reflecting no Liens against the Consolidated Companies or Serengeti or its
subsidiaries, other than those to be paid in full as result of the
Serengeti Purchase and Permitted Liens;
(l) Certified copies of indentures, credit agreements, leases,
capital leases, instruments, and other documents evidencing or securing
Indebtedness of any Consolidated Company described on Schedule 8.1(b)
attached hereto, in any single case in an amount not less than $100,000;
(m) Certificates, reports and other information as the Agent may
reasonably request from any Consolidated Company in order to satisfy the
Lenders as to the absence of any material liabilities or obligations
arising from matters relating to employees of the Consolidated Companies,
including employee relations, collective bargaining agreements, Plans, and
other compensation and employee benefit plans;
(n) Certificates, reports, environmental audits and investigations,
and other information as the Agent may reasonably request from any
Consolidated Company in order to satisfy the Lenders as to the absence of
any material liabilities or obligations arising from environmental and
employee health and safety exposures to which the Consolidated Companies
may be subject, and the plans of the Consolidated Companies with respect
thereto;
(o) Certificates, reports and other information as the Agent may
reasonably request from any Consolidated Company in order to satisfy the
Lenders as to the absence of any material liabilities or obligations
arising from litigation (including without limitation, products liability
and patent infringement claims) pending or threatened against the
Consolidated Companies;
(p) A summary, set forth in format and detail reasonably acceptable
to the Agent, of the types and amounts of insurance (property and
liability) maintained by the Consolidated Companies;
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(q) The duly executed favorable opinion of Cooperman Levitt Winikoff
Lester & Newman, P.C., counsel to the Credit Parties, substantially in the
form of Exhibit J attached hereto addressed to the Agent and each of the
Lenders;
(r) No Default or Event of Default has occurred, and there has been
delivered to the Agent the Closing Certificate in the form attached hereto
as Exhibit H attached hereto to this effect;
(s) There has been no Materially Adverse Effect in the Borrower's
financial condition and operations as reflected in the Borrower's
financial statements referenced and set forth in Section 6.4 below; all
Existing Indebtedness has been paid in full, and any other financing or
other credit commitments from said third party has been terminated, and
there is not outstanding from any other party any commitments to provide
financing to the Borrower;
(t) The following financial information on Serengeti:
(i) Financial statements of the Serengeti Business, audited
for the fiscal years ended January 1, 1995 and December 31, 1995;
and
(ii) Financial statements of the Serengeti Business,
internally prepared and unaudited, for the nine (9) month period
ended September 30, 1996;
indicating financial performance consistent with the existing pro-forma
financial information provided to the Agent by the Company on the
Serengeti Business, and, in the case of the audited statements, prepared
by an independent certified public accountants reasonably acceptable to
the Agent;
(u) In regard to the Serengeti Purchase:
(i) The Serengeti Purchase (contemporaneously herewith) has
closed on terms set forth in the Serengeti Purchase Agreement;
(ii) The total purchase price for the Serengeti Business does
not exceed $27,500,000 plus transaction expenses;
(iii) Copies of all Serengeti Purchase Documents, certified by
the Secretary or Assistant Secretary of the Borrower as being true
and correct, have been furnished to the Agent;
(iv) The Agent has been furnished with a satisfactory
evaluation of the "Serengeti" brand name by a third party appraisal
firm acceptable to the Agent;
(v) There has been furnished to the Agent a summary of the
fixed assets being purchased as a part of the Serengeti Purchase
with proper environmental reviews, if any, along with an audit or
certification of the existing Serengeti inventory acceptable to the
Agent showing a
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combined valuation of not less than $10,000,000; and
(vi) Since the date of the most recent financial statements of
the Serengeti Business described in Section 6.3 hereof, there shall
have been no change which has had or could reasonably be expected to
have a Materially Adverse Effect assuming that the Serengeti
Purchase had previously occurred.
(v) There has been furnished to the Agent an executed agreement
between the Borrower and Corning, providing for Corning to supply lens
blanks to the Borrower, satisfactory to the Agent.
(w) A letter of intent or memorandum of understanding with Swank
International Manufacturing Co., Ltd. or other manufacturer acceptable to
Agent regarding the operation of the hydrogen firing process currently
located at a facility in Fukui, Japan, satisfactory to the Agent. As set
forth in Section 7.14 below, it will be a Post Closing Requirements that
said letter of intent or memorandum of understanding be finalized in a
definitive agreement and that Swank take over and operate the equipment
and produce the hydrogen fired lenses all by May 31, 1997, with said
definitive agreement being satisfactory to the Agent.
(x) The assembly by the Borrower of a senior management team
satisfactory to the Agent.
(y) The establishment of $2,000,000 in key man life insurance on Mr.
Stephen Nevitt, as set forth in Section 7.13 hereof.
(z) The duly executed Consents by Lessor.
(aa) In regard to the Private Placement:
(i) The Borrower has closed on the Private Placement and
received therefrom an amount not less than $22,500,000, less the
expenses of that offering; and
(ii) Copies of the Preferred Stock Purchase Agreement
including any other documents relating to the issuance of any
Preferred Stock, certified by the Secretary of the Borrower as being
true and correct, and the further certification by an Executive
Officer that the Borrower has received not less than $20,900,000
from the issuance of the Preferred Stock.
In addition to the foregoing, the following conditions shall have been satisfied
or shall exist, all to the reasonable satisfaction of the Agent, as of the time
the initial Loans are made hereunder:
(ab) The Loans to be made on the Closing Date and the use of
proceeds thereof shall not contravene, violate or conflict with, or
involve the Agent or any Lender in a violation of, any law, rule,
injunction, or regulation, or determination of any court of law or other
governmental authority;
(ac) All corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and enforceability
of the Credit Documents shall be reasonably satisfactory in form and
substance to the Agent;
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(ad) The status of all pending and threatened litigation (including
products liability and patent claims) which might result in a Materially
Adverse Effect, including a description of any damages sought and the
claims constituting the basis therefor, shall have been reported in
writing to the Agent, the Agent shall have reported such matters to the
Lenders, and the Lenders shall be satisfied with such status; and
(ae) All fees required to be paid on or prior to the Closing Date by
the Borrower to the Lenders or Agent have been paid.
Section 5.2 Conditions to All Loans. At the time of the making of
all Loans (before as well as after giving effect to such Loans and to the
proposed use of the proceeds thereof), the following conditions shall have been
satisfied or shall exist:
(a) There shall then exist no Default or Event of Default;
(b) All representations and warranties by Borrower contained herein
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the
date of such Loans (except to the extent that such representations and
warranties expressly relate to an earlier date or are affected by
transactions permitted under this Agreement);
(c) There shall be no action or proceeding instituted or pending
before any court or other governmental authority or, to the knowledge of
Borrower, threatened (i) which reasonably could be expected to have a
Materially Adverse Effect, or (ii) seeking to prohibit or restrict one or
more Credit Party's ownership or operation of any portion of its business
or assets, or to compel one or more Credit Party to dispose of or hold
separate all or any portion of its businesses or assets , where said
action if successful would have a Materially Adverse Effect;
(d) The Loans to be made and the use of proceeds thereof shall not
contravene, violate or conflict with, or involve the Agent or any Lender
in a violation of, any law, rule, injunction, or regulation, or
determination of any court of law or other governmental authority
applicable to Borrower; and
(e) The Agent shall have received such other documents or legal
opinions as the Agent or any Lender may reasonably request, all in form
and substance reasonably satisfactory to the Agent.
Section 5.3 Certification For Each Borrowing. Each Notice of
Borrowing, Notice of Conversion/Continuation, any draw under the Letter of
Credit, any other request for a Borrowing, and the acceptance by Borrower of the
proceeds thereof shall constitute a representation and warranty by Borrower, as
of the date of each said Notice, draw request or acceptance, as the case may be,
that the applicable conditions specified in Sections 5.1 and 5.2 hereof have
been satisfied or are true and correct, as the case may be.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower represents, warrants and covenants to Lenders that:
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Section 6.1 Organization and Qualification. Borrower is a
corporation duly organized and existing in good standing under the laws of the
State of New York. Each Subsidiary of Borrower is a corporation duly organized
and existing under the laws of the jurisdiction of its incorporation. Borrower
and each of its Subsidiaries are duly qualified to do business as a foreign
corporation and are in good standing in each jurisdiction in which the character
of their properties or the nature of their business makes such qualification
necessary, except for such jurisdictions in which a failure to qualify to do
business would not have a Materially Adverse Effect. Borrower and each of its
Subsidiaries have the corporate power to own their respective properties and to
carry on their respective businesses as now being conducted. The jurisdiction of
incorporation or organization for Borrower and each Subsidiary as of the date of
this Agreement is accurately described on Schedule 6.1 attached hereto.
Section 6.2 Corporate Authority. The execution and delivery by
Credit Parties of and the performance by Credit Parties of their obligations
under the Credit Documents have been duly authorized by all requisite corporate
action and all requisite shareholder action, if any, on the part of Credit
Parties and do not and will not (i) violate any provision of any law, rule or
regulation, any judgment, order or ruling of any court or governmental agency,
the organizational papers or bylaws of Credit Parties, or except for any
Incidental Contracts, any indenture, agreement or other instrument to which
Credit Parties are a party or by which Credit Parties or any of their properties
is bound, or (ii) except for any Incidental Contracts be in conflict with,
result in a breach of, or constitute with notice or lapse of time or both a
default under any such indenture, agreement or other instrument.
Section 6.3 Serengeti Financial Statements. Borrower has furnished
Lenders with the following financial statements, identified by the Treasurer of
Borrower: balance sheets and statements of income, stockholders' equity and cash
flow of the Serengeti Business as of and for the fiscal years ended on January
1, 1995 and December 31, 1995 certified by Price Waterhouse, and the nine (9)
month balance sheet and statements of income and stockholder equity of the
Serengeti Business as and for the nine (9) months ended on September 30, 1996.
To Borrower's knowledge, after inquiry, such Serengeti financial statements
(including any related schedules and notes), have been prepared in accordance
with GAAP consistently applied throughout the period or periods in question
(subject, as to interim statements, to omissions or condensations as stated in
the notes thereto, and to changes resulting from audits and year end
adjustments) and show, in the case of audited statements, all liabilities,
direct or contingent, of Serengeti required to be shown in accordance with GAAP
consistently applied throughout the period or periods in question and fairly
present in all material respects the financial position and the results of
operations of the Serengeti Business for the periods indicated therein. To
Borrower's knowledge, after inquiry, there has been no change in the business,
condition or operations, financial or otherwise, of Serengeti since September
30, 1996 which could reasonably be expected to have a Materially Adverse Effect.
Section 6.4 Borrower Financial Statements. Borrower has furnished
Lenders with the following financial statements, identified by the Treasurer of
Borrower: consolidated balance sheets and consolidated statements of income,
stockholders' equity and cash flow of Borrower as of and for the fiscal years
ended on the last day in December 1994 and 1995 certified by Winter, Scheifley &
Associates, P.C., and the nine (9) month consolidated balance sheets and
consolidated statements of income and stockholder equity of Borrower as and for
the nine (9) months ended on September 30, 1996. Such Borrower financial
statements (including any related schedules and notes) are true and correct in
all material respects, have been prepared in accordance with GAAP consistently
applied throughout the period or periods in question (subject, as to interim
statements, to omissions or condensations as stated in the notes thereto, and to
changes resulting from audits and year end adjustments) and show, in the case of
audited statements, all liabilities, direct or contingent, of Borrower and its
subsidiaries, required to be shown in accordance with GAAP consistently applied
throughout the period or periods in question and fairly present in all material
respects the consolidated financial position and the consolidated results of
operations of Borrower and its Subsidiaries for the periods indicated therein.
To Borrower's knowledge, after inquiry, there has been no change in the
business,
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condition or operations, financial or otherwise, of Borrower and its
Subsidiaries (taken as a whole) since September 30, 1996 which could reasonably
be expected to have a Materially Adverse Effect.
Section 6.5 Tax Returns. Except as set forth on Schedule 6.5
attached hereto, each of Borrower and its Subsidiaries has filed all federal,
state and other income tax returns which, to the best knowledge of Borrower and
its Subsidiaries, are required to have been filed, and each has paid all taxes
as shown on said returns and on all assessments received by it to the extent
that such taxes have become due or except such as are being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP.
Section 6.6 Actions Pending. Except as disclosed on Schedule 6.6
attached hereto, there is no action, suit, investigation or proceeding pending
or, to the knowledge of Borrower, threatened against or affecting Borrower or
any of its Subsidiaries or any of their properties or rights, by or before any
court, arbitrator or administrative or governmental body, which could reasonably
be expected to result in any Materially Adverse Effect.
Section 6.7 Representations; No Defaults. At the time of each
Borrowing, there shall exist no Default or Event of Default.
Section 6.8 Title to Properties. Each of Borrower and its
Subsidiaries has (i) good and marketable fee simple title to its respective real
properties (other than real properties which it leases from others), including
all such real properties reflected in the consolidated balance sheet of Borrower
and its Subsidiaries as of December 31, 1995 hereinabove described (other than
real properties disposed of in the ordinary course of business), subject to no
Lien of any kind except as set forth on Schedule 6.8 attached hereto or as
permitted by Section 8.2 hereof, and (ii) good title to all of its other
respective properties and assets (other than properties and assets which it
leases from others), including the other material properties and assets
reflected in the balance sheet of the Serengeti Business at September 30, 1996
hereinabove described (other than properties and assets disposed of in the
ordinary course of business or sold in accordance with Section 8.3 below),
subject to no Lien of any kind except as set forth on said Schedule 6.8, or as
permitted by Section 8.2 hereof. Each of Borrower and its Subsidiaries enjoys
peaceful and undisturbed possession under all leases necessary in any material
respect for the operation of its respective properties and assets, none of which
contains any unusual or burdensome provisions which might materially affect or
impair the operation of such properties and assets, and all such leases are
valid and subsisting and in full force and effect.
Section 6.9 Enforceability of Agreement. This Agreement is the
legal, valid and binding agreement of Borrower enforceable against Borrower in
accordance with its terms, and the Notes, and all other Credit Documents, when
executed and delivered, will be similarly legal, valid, binding and enforceable
as against all applicable Credit Parties, except as the enforceability of the
Notes and other Credit Documents may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditor's rights and
remedies in general and by general principles of equity, whether considered in a
proceeding at law or in equity.
Section 6.10 Consent. Except for such consents of parties to any
Incidental Contracts, no consent, permission, authorization, order or license of
any governmental authority or Person is necessary in connection with the
execution, delivery, performance or enforcement of the Credit Documents.
Section 6.11 Use of Proceeds; Federal Reserve Regulations. The
proceeds of the Notes will be used solely for the purposes specified in Section
2.1(c) and 3.1(c) and none of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin security" or
"margin stock" or for the purpose of reducing or retiring any indebtedness that
originally was incurred to purchase or carry a "margin security" or "margin
stock" or for any other purpose that might constitute this transaction a
"purpose
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credit" within the meaning of the regulations of the Board of Governors of the
Federal Reserve System.
Section 6.12 ERISA.
(a) Identification of Certain Plans. Schedule 6.12 attached hereto
sets forth all Plans of Borrower and its Subsidiaries in effect on the
date of this Agreement;
(b) Compliance. Each Plan is being maintained, by its terms and in
operation, in accordance with all applicable laws, except such
noncompliance (when taken as a whole) that will not have a Materially
Adverse Effect;
(c) Liabilities. Neither the Borrower nor any Subsidiary is
currently or will become subject to any liability (including withdrawal
liability), tax or penalty whatsoever to any person whomsoever with
respect to any Plan including, but not limited to, any tax, penalty or
liability arising under Title I or Title IV of ERISA or Chapter 43 of the
Code, except such liabilities (when taken as a whole) as will not have a
Materially Adverse Effect; and
(d) Funding. The Borrower and each ERISA Affiliate have made full
and timely payment of all amounts (i) required to be contributed under the
terms of each Plan and applicable law and (ii) required to be paid as
expenses of each Plan, except where such non-payment would not have a
Materially Adverse Effect. As of the date of this Agreement, no Plan has
an "amount of unfunded benefit liabilities" (as defined in Section
4001(a)(18) of ERISA) except as disclosed on said Schedule 6.12. No Plan
is subject to a waiver or extension of the minimum funding requirements
under ERISA or the Code, and no request for such waiver or extension is
pending.
Section 6.13 Subsidiaries. Schedule 6.1 attached hereto sets forth
each Subsidiary of the Borrower as of the date of this Agreement, designating
which are Material Subsidiaries, if any. All the outstanding shares of Capital
Stock of each such Subsidiary have been validly issued and are fully paid and
nonassessable and all such outstanding shares, except as noted on said Schedule
6.1 hereto, are owned by Borrower or a Wholly Owned Subsidiary of Borrower free
of any Lien or claim (other than those in favor of the Agent).
Section 6.14 Outstanding Indebtedness. Except as set forth on
Schedule 6.14 attached hereto, as of the Closing Date and after giving effect to
the transactions contemplated by this Agreement, no Credit Party has outstanding
any Indebtedness except as permitted by Section 8.1 hereof and as of the Closing
Date there exists no default under the provisions of any instrument evidencing
such Indebtedness or of any agreement relating thereto except as noted on said
Schedule 6.14.
Section 6.15 Conflicting Agreements. Except as set forth on Schedule
6.15 attached hereto, none of Borrower or any of its Subsidiaries is a party to
any contract or agreement or other burdensome restrictions or subject to any
charter or other corporate restriction which could reasonably be expected to
have a Materially Adverse Effect. Assuming the consummation of the transactions
contemplated by this Agreement, neither the execution or delivery of this
Agreement or the Credit Documents, nor fulfillment of or compliance with the
terms and provisions hereof and thereof, will except as set forth in said
Schedule 6.15, conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties or assets of
Borrower or any of its Subsidiaries (other than those in favor of the Agent) the
charter or ByLaws of Borrower or any of its Subsidiaries, any award of any
arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
Borrower or any of its
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Subsidiaries is subject, and none of Borrower or any of its Subsidiaries is a
party to, or otherwise subject to any provision contained in, any instrument
evidencing Indebtedness of Borrower or any of its Subsidiaries in an amount
exceeding $100,000, any agreement relating thereto or any other contract or
agreement (including its charter but excluding Incidental Contracts) which
limits the amount of, or otherwise imposes restrictions on the incurring of,
Indebtedness of the type to be evidenced by the Notes or contains dividend or
redemption limitations on Common Stock of Borrower, except for this Agreement,
Borrower's Certificate of Incorporation, and those matters listed on said
Schedule 6.15.
Section 6.16 Pollution and Other Regulations.
(a) Except as set forth on Schedule 6.16(a) attached hereto, each of
the Borrower and its Subsidiaries has to the best of its knowledge
complied in all material respects with all applicable Environmental Laws,
including without limitation, compliance with permits, licenses,
standards, schedules and timetables issued pursuant to Environmental Laws,
and is not in violation of, and does not presently have outstanding any
liability under, has not been notified that it is or may be liable under
and does not have knowledge of any material liability or potential
material liability (including any liability relating to matters set forth
on said Schedule 6.16(a)), under any applicable Environmental Law,
including without limitation, the Resource Conservation and Recovery Act
of 1976, as amended ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("CERCLA"), the Federal Water
Pollution Control Act, as amended ("FWPCA"), the Federal Clean Air Act, as
amended ("FCAA"), and the Toxic Substance Control Act ("TSCA"), which
violation, liability or potential liability could reasonably be expected
to have a Materially Adverse Effect.
(b) Except as set forth on Schedule 6.16(b) attached hereto, as of
the date of this Agreement, neither the Borrower nor any of its
Subsidiaries has received a written request for information under CERCLA,
any other Environmental Laws or any comparable state law, or any public
health or safety or welfare law or written notice that any such entity has
been identified as a potential responsible party under CERCLA, and other
Environmental Laws, or any comparable state law, or any public health or
safety or welfare law, nor has any such entity received any written
notification that any Hazardous Materials that it or any of its respective
predecessors in interest has generated, stored, treated, handled,
transported, or disposed of, has been released or is threatened to be
released at any site at which any Person intends to conduct or is
conducting a remedial investigation or other action pursuant to any
applicable Environmental Law.
(c) Except as set forth on Schedule 6.15(c) attached hereto, each of
the Borrower and its Subsidiaries has obtained all material permits,
licenses or other authorizations required for the conduct of their
respective operations under all applicable Environmental Laws and each
such authorization is in full force and effect, except where the failure
to do so would not have a Materially Adverse Effect.
Section 6.17 Possession of Franchises, Licenses, Etc. Each of
Borrower and its Subsidiaries possesses all material franchises, certificates,
licenses, permits and other authorizations from governmental political
subdivisions or regulatory authorities, free from burdensome restrictions, the
failure of which to possess would have a Materially Adverse Effect and neither
Borrower nor any of its Subsidiaries is in violation of any thereof in any
material respect.
Section 6.18 Patents, Etc. Except as set forth on Schedule 6.18
attached hereto, each of
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Borrower and its Subsidiaries owns or has the right to use all patents,
trademarks, service marks, trade names, copyrights, licenses and other rights,
free from burdensome restrictions, which are necessary for the operation of its
business as presently conducted. Nothing has come to the attention of Borrower
or any of its Subsidiaries to the effect that (i) any product, process, method,
substance, part or other material presently contemplated to be sold by or
employed by Borrower or any of its Subsidiaries in connection with its business
may infringe any patent, trademark, service mark, trade name, copyright, license
or other right owned by any other Person, (ii) there is pending or threatened
any claim or litigation against or affecting Borrower or any of its Subsidiaries
contesting its right to sell or use any such product, process, method,
substance, part or other material or (iii) there is, or there is pending or
proposed, any patent, invention, device, application or principle or any
statute, law, rule, regulation, standard or code, which would in any case
prevent, materially inhibit or render obsolete the production or sale of any
products of, or substantially reduce the projected revenues of, or otherwise
have a Materially Adverse Effect.
Section 6.19 Governmental Consent. Neither the nature of Borrower or
any of its Subsidiaries nor any of their respective businesses or properties,
nor any relationship between Borrower and any other Person, nor any circumstance
in connection with the execution and delivery of the Credit Documents and the
consummation of the transactions contemplated thereby is such as to require on
behalf of Borrower or any of its Subsidiaries any consent, approval or other
action by or any notice to or filing with any court or administrative or
governmental body in connection with the execution and delivery of this
Agreement and the Credit Documents, except for such filings with the Securities
and Exchange Commission as may be required by applicable law (which filings the
Borrower agrees to make promptly and diligently pursue to completion) or such
filings as are necessary to perfect the Agent's Liens.
Section 6.20 Disclosure. Neither this Agreement nor the Credit
Documents nor any other document, certificate or written statement furnished to
Lenders by or on behalf of Borrower in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading. There is no fact
peculiar to Borrower which materially adversely affects or in the future may (so
far as Borrower can now foresee) materially adversely affect the business,
property or assets, financial condition or prospects of Borrower which has not
been set forth in this Agreement or in the Credit Documents, other documents,
certificates and written statements furnished to Lenders by or on behalf of
Borrower prior to the date hereof in connection with the transactions
contemplated hereby.
Section 6.21 Insurance Coverage. Each property of Borrower or any of
its Subsidiaries is insured in amounts deemed adequate by Borrower's management
and no less than those amounts customary in the industry in which Borrower and
its Subsidiaries operate against risks usually insured against by Persons
operating businesses similar to those of Borrower or its Subsidiaries in the
localities where such properties are located.
Section 6.22 Labor Matters.
(a) Except as set forth on Schedule 6.22 attached hereto for the
period ending on the Closing Date, the Borrower and the Borrower's
Subsidiaries have experienced no strikes, labor disputes, slow downs or
work stoppages due to labor disagreements which have had, or would
reasonably be expected to have, a Materially Adverse Effect, and, to the
best knowledge of Borrower, there are no such strikes, disputes, slow
downs or work stoppages threatened against any Borrower or any of
Borrower's Subsidiaries, the result of which could have a Materially
Adverse Effect.
(b) The hours worked and payment made to employees of the Borrower
and Borrower's Subsidiaries have not been in violation in any material
respect of the Fair
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Labor Standards Act or any other applicable law dealing with such matters.
(c) All payments due from the Borrower and Borrower's Subsidiaries,
or for which any claim may be made against the Consolidated Companies, on
account of wages and employee health and welfare insurance and other
benefits have been paid or accrued as liabilities on the books of the
Borrower and Borrower's Subsidiaries where the failure to pay or accrue
such liabilities would reasonably be expected to have a Materially Adverse
Effect.
(d) Each of Borrower and its Subsidiaries complies in all material
respects with all laws and regulations relating to equal employment
opportunity and employee safety in all jurisdictions in which it is
presently doing business, and Borrower will use its best efforts to
comply, and to cause each of its Subsidiaries to comply, with all such
laws and regulations which may be legally imposed in the future in
jurisdictions in which Borrower or any of its Subsidiaries may then be
doing business, except where the failure to do so would not have a
Materially Adverse Effect.
Section 6.23 Intercompany Loans; Dividends. The Intercompany Loans
and the Intercompany Credit Documents, to the extent that they exist, have been
duly authorized and approved by all necessary corporate and shareholder action
on the part of the parties thereto, and constitute the legal, valid and binding
obligations of the parties thereto, enforceable against each of them in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally, and by general principles of equity. Except as set
forth in the Credit Documents, there are no restrictions on the power of any
Consolidated Company to repay any Intercompany Loan or to pay dividends on the
Capital Stock. Intercompany loans as of the Closing Date are described in
Schedule 6.23 attached hereto.
Section 6.24 Burdensome Restrictions. Except as set forth on
Schedule 6.24, on the Closing Date none of the Consolidated Companies is a party
to or bound by any Contractual Obligation or Requirement of Law which has had or
would reasonably be expected to have a Materially Adverse Effect.
Section 6.25 Solvency. Each of the Consolidated Companies is solvent
and able to pay its debts as and when they accrue and are due.
Section 6.26 Compliance with Laws. Except as set forth on Schedule
6.26 attached hereto, each Consolidated Company is in compliance with all laws,
statutes, orders, rules, regulations, or judgments entered by any court, the
failure of which could reasonably be expected to have a Material Adverse Effect.
Section 6.27 Permitted Investments. Except as set forth in Schedule
6.27 attached hereto, no Consolidated Company has any Investment, either equity
or long-term indebtedness, in any other Person not Affiliated with the Borrower.
Section 6.28 First, Perfected Security Interest in Collateral. The
Agent, for and in behalf of the Lenders, has a first, perfected security
interest in the Collateral to secure the Obligations subject to no other Liens
except as permitted in Sections 7.14 and 8.2 hereof.
Section 6.29 Serengeti Purchase.
(a) The Serengeti Purchase has occurred in substantial accordance
with the terms of the Serengeti Purchase Agreement and the Borrower has
acquired substantially all the assets of the Serengeti Business.
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(b) The Serengeti Purchase Documents are in accordance with the
Serengeti Purchase Agreement.
(c) Assuming the Serengeti Purchase had occurred prior to the
Closing Date, to the Borrower's knowledge the representations and
warranties contained in this Article VI would be true and correct in all
material respects with the same effect.
Section 6.30 Capital Stock.
(a) The authorized Capital Stock of the Borrower consists of (i)
10,000,000 shares of common stock, $.001 par value, of which 2,384,000
shares are issued and outstanding and (ii) 1,000,000 shares of preferred
stock, par value $.001 per share, of which (giving effect to shares issued
to fund the Serengeti Purchase) 7,500 shares of Series A 6.5% Convertible
Preferred Stock, 7,500 shares of Series B 6% Convertible Preferred Stock
and 7,500 shares of Series C 6% Convertible Preferred Stock are issued and
outstanding on the Closing Date (collectively, the "Preferred Stock"). All
outstanding Capital Stock of the borrower is validly issued, fully paid
and nonassessable.
(b) Except for (i) the issuance by the Borrower of Preferred Stock
under the Private Placement and as referred to in the Financial Statements
of Borrower identified in Section 6.4 above, (ii) the Existing Warrants,
(iii) the Underwriter Option and (iv) the Stock Options, both existing on
the Closing Date and as may be issued from time to time in accordance with
the Borrower's stock option plan, none of the Borrower or any Subsidiary
of the Borrower has outstanding any options, warrants or similar rights to
acquire its Capital Stock, any securities convertible into or exchangeable
for such Capital Stock, or any stock appreciation rights or phantom stock
plans.
(c) None of the Borrower or any subsidiary of the Borrower is
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its Capital Stock or any warrants,
options or other securities or rights directly or indirectly convertible
into or exercisable or exchangeable for its Capital Stock.
Section 6.31 Places of Business.
(a) The Places of Business identified in Schedule 6.31(a) attached
hereto constitute all the Places of Business for the Consolidated
Companies.
(b) The Places of Business identified in Schedule 6.31(b) attached
hereto as Material Places of Business are the only Places of Business
which are Material Places of Business.
Section 6.32 Preferred Stock. In regard to the Preferred Stock:
(a) The Preferred Stock has been issued in accordance with the
Preferred Stock Purchase Agreement.
(b) The copies of the documents regarding the purchase of the
Preferred Stock furnished to the Agent and the Lenders are true, correct
and complete copies of said documents.
(c) The Borrower has received from the sale of the Preferred Stock
gross
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proceeds not less than $22,500,000, less expenses of the offering, and
with respect to which the Borrower has furnished the Agent a correct
listing of all of said expenses.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as it may borrow
under this Agreement or so long as any indebtedness remains outstanding under
the Notes that it will:
Section 7.1 Corporate Existence, Etc. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its corporate
existence, its material rights, franchises, and licenses, and its material
patents and copyrights (for the scheduled duration thereof), trademarks, trade
names, and service marks, necessary or desirable in the normal conduct of its
business, and its qualification to do business as a foreign corporation in all
jurisdictions where it conducts business or other activities making such
qualification necessary, in each case where the failure to do so could
reasonably be expected to have a Materially Adverse Effect.
Section 7.2 Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, with all Requirements of Law (including, without
limitation, the Environmental Laws, subject to the exception set forth in
Section 7.7(g) below where the penalties, claims, fines, and other liabilities
resulting from noncompliance with such Environmental Laws do not involve amounts
in excess of $250,000. in the aggregate) and material Contractual Obligations
applicable to or binding on any of them where the failure to comply with such
Requirements of Law and material Contractual Obligations would reasonably be
expected to have a Materially Adverse Effect.
Section 7.3 Payment of Taxes and Claims, Etc. Pay, and cause each of
its Subsidiaries to pay, (i) all taxes, assessments and governmental charges
imposed upon it or upon its property, and (ii) all claims (including, without
limitation, claims for labor, materials, supplies or services) which might, if
unpaid, become a Lien upon its property, unless, in each case, the validity or
amount thereof is being contested in good faith by appropriate proceedings and
adequate reserves are maintained with respect thereto.
Section 7.4 Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, containing complete
and accurate entries of all their respective financial and business
transactions.
Section 7.5 Visitation, Inspection, Etc. Permit, and cause each of
its Subsidiaries to permit, any representative of the Agent or any Lender to
visit and inspect any of its properties, to examine its books and records and to
make copies and take extracts therefrom, and to discuss its affairs, finances
and accounts with its officers, all at such reasonable times and as often as the
Agent or such Lender may reasonably request after reasonable prior notice to
Borrower; provided, however, that at any time following the occurrence and
during the continuance of a Default or an Event of Default, no prior notice to
Borrower shall be required.
Section 7.6 Insurance; Maintenance of Properties.
(a) Maintain or cause to be maintained with financially sound and
reputable insurers, insurance with respect to its properties and business,
and the properties and business of the Borrower and each of its
Subsidiaries, against loss or damage of the kinds customarily insured
against by reputable companies in the same or similar businesses, such
insurance to be of such types and in such amounts, including such
self-insurance and deductible provisions, as is customary for such
companies under similar circumstances;
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provided, however, that in any event Borrower shall use its best
commercial efforts to maintain, or cause to be maintained, insurance in
amounts and with coverages not materially less favorable to any
Consolidated Company as in effect on the date of this Agreement, except
where the costs of maintaining such insurance would, in the judgment of
both Borrower and the Agent, be excessive. Unless otherwise agreed by
Agent, insurance shall be for the insurable value of all inventory and
equipment.
(b) Cause, and cause each of the Consolidated Companies to cause,
all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, settlements and improvements
thereof, all as in the judgment of Borrower may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in
this Section shall prevent Borrower from discontinuing the operation or
maintenance of any such properties if such discontinuance is, in the
judgment of Borrower, desirable in the conduct of its business or the
business of any Consolidated Company.
Section 7.7 Reporting Covenants. Furnish to each Lender:
(a) Monthly Borrowing Base Certificate. As soon as available and in
any event within thirty days after the end of each month of Borrower, a
Borrowing Base Certificate of the Consolidated Companies as at the end of
such month.
(b) Monthly Financial Statements. As soon as available and in any
event within thirty days after the end of each month, balance sheets of
the Consolidated Companies as at the end of such month presented on a
consolidated basis and the related statements of income, shareholders'
equity, and cash flows (if available) of the Consolidated Companies for
such month and for the portion of Borrower's fiscal year ended at the end
of such month, presented on a consolidated basis setting forth in each
case in comparative form the figures for the corresponding month of the
corresponding portion of Borrower's previous fiscal year, all in
reasonable detail and certified by the chief financial officer or
principal accounting officer of Borrower that such financial statements
fairly present in all material respects the financial condition of the
Consolidated Companies as at the end of such month on a consolidated
basis, and the results of operations and statements of cash flows of the
Consolidated Companies for such month and such portion of Borrower's
fiscal year, in accordance with GAAP consistently applied (subject to
normal year end audit adjustments and the absence of footnotes, and to any
change in accounting treatment which the Borrower may give to accounting
for leases of property provided, however, if the Borrower changes its
accounting treatment for said leases, the Borrower shall notify the Agent
and the Lenders of said change and the impact of said change).
(c) Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) days after the end of each fiscal quarter,
balance sheets of the Consolidated Companies as at the end of such fiscal
quarter presented on a consolidated basis and the related statements of
income, shareholders' equity, and cash flows (if available) of the
Consolidated Companies for such fiscal quarter and for the portion of
Borrower's fiscal year ended at the end of such fiscal quarter, presented
on a consolidated basis setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the corresponding portion
of Borrower's previous fiscal year, all in reasonable
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detail and certified by the chief financial officer or principal
accounting officer of Borrower that such financial statements fairly
present in all material respects the financial condition of the
Consolidated Companies as at the end of such fiscal quarter on a
consolidated basis, and the results of operations and statements of cash
flows of the Consolidated Companies for such fiscal quarter and such
portion of Borrower's fiscal year, in accordance with GAAP consistently
applied (subject to normal year end audit adjustments and the absence of
footnotes, and to any change in accounting treatment which the Borrower
may give to accounting for leases of property provided, however, if the
Borrower changes its accounting treatment for said leases, the Borrower
shall notify the Agent and the Lenders of said change and the impact of
said change).
(d) Annual Financial Statements. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of
Borrower, balance sheets of the Consolidated Companies as at the end of
such year, presented on a consolidated basis, and the related statements
of income, shareholders' equity, and cash flows of the Consolidated
Companies for such fiscal year, presented on a consolidated basis, setting
forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail. For the fiscal years beginning January 1,
1997, said reports shall be accompanied by a report thereon are
independent public accountants of either (i) recognized national standing,
or (ii) of recognized regional standing, and capable of performing the
same services as an independent public accounting firm of national
standing and reasonably acceptable to the Agent, which such report shall
be unqualified as to going concern and scope of audit and shall state that
such financial statements present fairly in all material respects the
financial condition as at the end of such fiscal year on a consolidated
basis, and the results of operations and statements of cash flows of the
Consolidated Companies for such fiscal year in accordance with GAAP and
that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with GAAP,
and where said financial statements are not consistently applied with the
prior fiscal year statements and the impact of said difference.
(e) No Default/Compliance Certificate. Together with the financial
statements required pursuant to subsections (c) and (d) above, a
certificate of the president, chief financial officer or principal
accounting officer of Borrower, and in the case of audited financial
statements, the certificate from the auditors, (i) to the effect that,
based upon a review of the activities of the Consolidated Companies and
such financial statements during the period covered thereby, there exists
no Event of Default and no Default under this Agreement, or if there
exists an Event of Default or a Default hereunder, specifying the nature
thereof and the proposed response thereto, and (ii) demonstrating in
reasonable detail compliance as at the end of such fiscal year (in the
case of the last month of a fiscal quarter) or such fiscal quarter with
Section 7.8 and Sections 8.1 through 8.4; provided, in the case of a
certificate to be delivered with respect to the end of a fiscal quarter,
that part demonstrating compliance with Section 7.8 and Sections 8.1
through 8.4 may be delivered within forty-five (45) days after the end of
such quarter.
(f) Notice of Default. Promptly after Borrower has notice or
knowledge of the occurrence of an Event of Default or a Default, a
certificate of the chief financial officer or principal accounting officer
of Borrower specifying the nature thereof and the proposed response
thereto.
(g) Litigation. Promptly after (i) the occurrence thereof, notice of
the
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institution of or any adverse development in any action, suit or
proceeding or any governmental investigation or any arbitration, before
any court or arbitrator or any governmental or administrative body, agency
or official, against any Consolidated Company, or any material property
thereof, in any case which could reasonably be expected to have a
Materially Adverse Effect, or (ii) actual knowledge thereof, notice of the
threat of any such action, suit, proceeding, investigation or arbitration.
(h) Environmental Notices. Promptly after receipt thereof, notice of
any actual or alleged violation, or notice of any action, claim or request
for information, either judicial or administrative, from any governmental
authority relating to any actual or alleged claim, notice of potential
responsibility under or violation of any Environmental Law, or any actual
or alleged spill, leak, disposal or other release of any Hazardous
Material by any Consolidated Company which could result in penalties,
fines, claims or other liabilities to any Consolidated Company in amounts
in excess of $250,000.00 individually or in the aggregate.
(i) ERISA.
(i) Promptly after the occurrence thereof with respect to any
Plan of any Consolidated Company or any ERISA Affiliate thereof, or
any trust established thereunder, notice of (x) a "reportable event"
described in Section 4043 of ERISA and the regulations issued from
time to time thereunder (other than a "reportable event" not subject
to the provisions for thirty day notice to the PBGC under such
regulations), or (y) any other event which could subject any
Consolidated Company to any tax, penalty or liability under Title I
or Title IV of ERISA or Chapter 43 of the Code, or any tax or
penalty resulting from a loss of deduction under Sections 162, 404
or 419 of the Code, where any such taxes, penalties or liabilities
exceed or could exceed $250,000 in the aggregate;
(ii) Promptly after such notice must be provided to the PBGC,
or to a Plan participant, beneficiary or alternative payee, any
notice required under Section 101(d), 302(f)(4), 303, 307,
4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or under Section 401(a)(29)
or 412 of the Code with respect to any Plan of any Consolidated
Company or any ERISA Affiliate thereof;
(iii) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning the
intent of the PBGC or any other governmental authority to terminate
a Plan of such Company or ERISA Affiliate thereof which is subject
to Title IV of ERISA, to impose any liability on such Company or
ERISA Affiliate under Title IV of ERISA or Chapter 43 of the Code;
(iv) Upon the request of the Agent, promptly upon the filing
thereof with the Internal Revenue Service ("IRS") or the Department
of Labor ("DOL"), a copy of IRS Form 5500 or annual report for each
Plan of any Consolidated Company or ERISA Affiliate thereof which is
subject to Title IV of ERISA; and
(v) Upon the request of the Agent, (A) true and complete
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copies of any and all documents, government reports and IRS
determination or opinion letters or rulings for any Plan of any
Consolidated Company from the IRS, PBGC or DOL, (B) any reports
filed with the IRS, PBGC or DOL with respect to a Plan of the
Consolidated Companies or any ERISA Affiliate thereof, or (C) a
current statement of withdrawal liability for each Multi-Employer
Plan of any Consolidated Company or any ERISA Affiliate thereof.
(j) Liens. Promptly upon any Consolidated Company becoming aware
thereof, notice of the filing of any federal statutory Lien, tax or other
state or local government Lien or any other Lien affecting their
respective properties, other than Permitted Liens except as expressly
required by Section 8.2 hereof.
(k) Public Filings, Etc. Promptly upon the filing thereof or
otherwise becoming available, copies of all financial statements, annual,
quarterly and special reports, proxy statements and notices sent or made
available generally by Borrower to its public security holders, of all
regular and periodic reports and all registration statements and
prospectuses, if any, filed by any of them with any securities exchange,
and of all press releases and other statements made available generally to
the public containing material developments in the business or financial
condition of Borrower and the other Consolidated Companies.
(l) Accountants' Reports. Promptly upon receipt thereof, copies of
all financial statements of, and all reports submitted by, independent
public accountants to Borrower in connection with each annual, interim, or
special audit of Borrower's consolidated financial statements.
(m) Burdensome Restrictions, Etc. Promptly upon the existence or
occurrence thereof, notice of the existence or occurrence of (i) any
Contractual Obligation or Requirement of Law described in Section 6.24
hereof , (ii) failure of any Consolidated Company to hold in full force
and effect those material trademarks, service marks, patents, trade names,
copyrights, licenses and similar rights necessary in the normal conduct of
its business, and (iii) any strike, labor dispute, slow down or work
stoppage as described in Section 6.22.
(n) New Material Subsidiaries. Within thirty days after the
formation or acquisition of any Material Subsidiary, or any other event
resulting in the creation of a new Material Subsidiary, notice of the
formation or acquisition of such Material Subsidiary or such occurrence,
including a description of the assets of such entity, the activities in
which it will be engaged, and such other information as the Agent may
request.
(o) Intercompany Asset Transfers. Promptly upon the occurrence
thereof, notice of the transfer of any assets from Borrower or any
Guarantor to any other Consolidated Company that is not the Borrower or a
Guarantor (in any transaction or series of related transactions),
excluding sales or other transfers of assets in the ordinary course of
business, where the Asset Value of such assets is less than $100,000.
(p) Other Information. With reasonable promptness, such other
information about the Borrower or Consolidated Companies as the Agent or
any Lender may reasonably request from time to time.
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Section 7.8 Financial Covenants.
(a) The ratio of (i) Funded Debt divided by (ii) Consolidated
EBITDA, calculated on an annualized rolling four quarters basis at the end
of each fiscal quarter, shall not be greater than:
Period Ratio
------ -----
Closing Date through 12/31/97 4.00 to 1
1/1/98 through 12/31/98 3.00 to 1
1/1/99 and thereafter 2.50 to 1
(b) The ratio of (i) Consolidated EBITDA plus rent expense i.e.,
rent paid for its Places of Business divided by (ii) Fixed Charges,
calculated on an annualized rolling four quarters basis at the end of each
fiscal quarter shall not be less than 2.0 to 1.0.
(c) The ratio of (i) Funded Debt divided by (ii) Total Capital,
measured at the end of each fiscal quarter, shall never exceed 0.40 to
1.0.
(d) Consolidated Net Worth shall at all times be greater than
$8,500,000 plus (i) 75% of all positive Net Income after December 31,
1996, and (ii) the net proceeds, less appropriate expenses of any future
stock equity issues.
Section 7.9 Notices Under Certain Other Indebtedness. Immediately
upon its receipt thereof, Borrower shall furnish the Agent a copy of any notice
received by it, or any other Consolidated Company from the holder(s) of
Indebtedness referred to in Section 8.1 hereof (or from any trustee, agent,
attorney, or other party acting on behalf of such holder(s)) in an amount which,
in the aggregate, exceeds $250,000, where such notice states or claims the
existence or occurrence of any default or event of default with respect to such
Indebtedness under the terms of any indenture, loan or credit agreement,
debenture, note, or other document evidencing or governing such Indebtedness.
Borrower agrees to take such actions as may be necessary to request the
holder(s) of any Indebtedness (or any trustee or agent acting on their behalf)
in an amount exceeding $250,000 incurred pursuant to documents executed or
amended and restated after the Closing Date, to furnish copies of all such
notices directly to the Agent simultaneously with the furnishing thereof to
Borrower, and that such requirement may not be altered or rescinded without the
prior written consent of the Agent. In any event, the Borrower shall agree to
immediately furnish to the Agent copies of any such notices.
Section 7.10 Additional Guarantors/Credit Parties/Collateral.
Promptly after (i) the formation or acquisition (provided that nothing in this
Section shall be deemed to authorize the acquisition of any entity) nor any
Material Subsidiary not listed on Schedule 6.1 attached hereto, (ii) the
transfer of assets to any Consolidated Company if notice thereof is required to
be given pursuant to Section 7.7(n) and as a result thereof the recipient of
such assets becomes a Material Subsidiary, (iii) the occurrence of any other
event creating a new Material Subsidiary, Borrower shall cause to be executed
and delivered a Guaranty Agreement from each such Material Subsidiary in the
form attached hereto as Exhibit G, the joinder to the Contribution Agreement in
the form attached hereto as Exhibit K by such Material Subsidiary, a certificate
to be added to the Pledge Agreement by the Person owning the Capital Stock of
said Material Subsidiary by which all of said Capital Stock is pledged to the
Agent, and a certificate to be added to the Security Agreement from said
Material Subsidiary whereby a first, perfected security interest in the assets
of said Material Subsidiary is granted to the Agent.
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Section 7.11 Ownership of Guarantors. Borrower shall maintain its
percentage of ownership existing as of the date hereof of all Guarantors, and
shall not decrease its ownership percentage in each Person which becomes a
Guarantor after the date hereof, as such ownership exists at the time such
Person becomes a Guarantor or may be increased thereafter.
Section 7.12 Interest Rate Protection Strategy. The Borrower shall
enter into interest rate exchange agreements and/or other appropriate interest
rate hedging transactions on terms acceptable to the Agent such that 75% of the
Term Loan is covered by interest rate protection agreements for at least three
(3) years. Any obligations due the Lenders under said agreements shall be
included within the term "Obligations" herein and shall be secured by the
Collateral.
Section 7.13 Life Insurance Policy. In regard to the Life Insurance
Policy, the Borrower will maintain in full force and effect, and pay all
premiums upon, said Policy. In this regard, the Policy will be in an initial
amount not less than $2,000,000, which amount may be reduced by the Borrower
from time to time with the amount of the reduction equal to fifty percent (50%)
of the total principal payments made by the Borrower on the Term Loans provided,
however, the amount of the Policy shall never be less than $1,000,000.00.
Section 7.14 Post Closing Requirements. Set forth in Schedule 7.14
attached hereto are a list of all Post Closing Requirements. In this regard:
(a) The fact that a matter set forth in said Schedule 7.14 has not
been accomplished, completed or performed as of the Closing Date or are as
otherwise required under the Credit Documents shall not constitute a
Default thereunder provided, however, said Post Closing Requirement is
fulfilled in any event by the date required on said Schedule 7.14.
(b) The Borrower will accomplish, complete and perform each Post
Closing Requirement by the date indicated on said Schedule 7.14.
(c) As each Post Closing Requirement is accomplished, completed or
performed, the Borrower shall furnish to the Agent a certificate to said
effect signed by an Executive Officer, and further providing to the Agent
such documents as may be necessary to conclude said Post Closing
Requirement or to evidence said compliance.
(d) The failure of the Borrower to accomplish, complete or perform
any Post Closing Requirement by the date set forth in Schedule 7.14 shall
constitute a default.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Commitment remains in effect hereunder or any Note
shall remain unpaid, Borrower will not and will not permit any Subsidiary to:
Section 8.1 Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, other than:
(a) Indebtedness under this Agreement.
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(b) Indebtedness outstanding on the date hereof or pursuant to lines
of credit in effect on the date hereof and described on Schedule 8.1(b)
attached hereto, together with all extensions, renewals and refinancings
thereof, provided, however, any such extensions, renewals and refinancings
shall not, without the written consent of the Agent and Required Lenders,
increase any such Indebtedness or modify the terms of said Indebtedness on
terms less favorable to the maker or obligor.
(c) Purchase money Indebtedness to the extent secured by a Lien
permitted by Section 8.2(b) hereof provided such purchase money
Indebtedness does not at any one time exceed in the aggregate $250,000.
(d) Unsecured current liabilities (other than liabilities for
borrowed money or liabilities evidenced by promissory notes, bonds or
similar instruments) incurred in the ordinary course of business (whether
now outstanding or hereafter arising or incurred) and either (i) not more
than 30 days past due, or (ii) being disputed in good faith by appropriate
proceedings with reserves for such disputed liability maintained in
conformity with GAAP and Indebtedness in the nature of contingent
repayment obligations arising in the ordinary and normal course of
business with respect to deposits and downpayments.
(e) The Intercompany Loans described on Schedule 6.23 attached
hereto and any other loans between Consolidated Companies provided that no
loan or other extension of credit may be made by a Guarantor to another
Consolidated Company that is not a Guarantor hereunder and all such loans
and extensions of credit shall not exceed $100,000 in the aggregate at any
one time outstanding (excluding Intercompany Loans listed on said Schedule
6.23) unless otherwise agreed in writing by the Agent and the Required
Lenders.
(f) Subordinated Debt in form and substance acceptable to the Agent
and the Required Lenders, and evidenced by their written consent thereto.
(g) Indebtedness arising under interest rate exchange agreements
referred to in Section 7.12 hereof.
(h) Indebtedness arising from Letters of Credit entered into in the
ordinary course of business.
Section 8.2 Liens. Create, incur, assume or suffer to exist any Lien
on any of its property now owned or hereafter acquired to secure any
Indebtedness other than:
(a) Liens existing on the date hereof disclosed on Schedule 8.2
attached hereto, and provided no Event of Default has occurred and is then
continuing, any renewal, extension or refunding of such Lien in an amount
not exceeding the amount thereof remaining unpaid immediately prior to
such renewal, extension or refunding,
(b) Any Lien on any property securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the acquisition
cost of such property and any refinancing thereof, provided that such Lien
does not extend to any other property, and provided further that the
aggregate principal amount of Indebtedness secured by all such Liens at
any time does not exceed $250,000.
(c) Liens for taxes not yet due, and Liens for taxes or Liens
imposed by
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ERISA which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves are being maintained.
(d) Statutory Liens of carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law (excluding any landlords liens
in regard to any Material Place of Business, which said landlords liens
are not permitted under this Section 8.2) created in the ordinary course
of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves are being maintained.
(e) Liens incurred or deposits made in the ordinary course of
business in connection with workers or workmans compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money).
(f) Liens securing the Facilities.
(g) Liens reserved or invested in governmental authority (including
without limitation zoning laws) which do not materially impair the use of
such property.
(h) Easements, licenses, covenants and other restrictions affecting
the use of real property which do not in any material respect interfere
with the use of such real property.
Section 8.3 Sales, Etc. Subject to Section 3.3 hereof, sell, lease,
or otherwise dispose of its accounts, property or other assets (including
Capital Stock of Subsidiaries); provided, however, that the foregoing
restrictions on asset sales shall not be applicable to (i) sales of equipment or
other personal property being replaced by other equipment or other personal
property purchased as a capital expenditure item, (ii) sales of inventory in the
ordinary course of business and (iii) dispositions of obsolete, damages or
unusable assets.
Section 8.4 Mergers, Acquisitions, Etc. Merge or consolidate with
any other Person, or acquire by purchase any other person or all or
substantially all of its assets, provided further, that the foregoing
restrictions shall not apply to (i) Permitted Acquisitions, (ii) mergers between
a Subsidiary of Borrower and Borrower or a Material Subsidiary, or between
Material Subsidiaries of Borrower, or (iii) mergers between a third party and
the Borrower where the Borrower is the surviving corporation provided that said
merger, purchase, etc. is a Permitted Acquisition, provided, however, that no
transaction pursuant to clauses (i), (ii), or (iii) shall be permitted if any
Default or Event of Default otherwise exists at the time of such transaction or
would otherwise exist as a result of such transaction.
Section 8.5 Investments, Loans, Etc. Make, permit or hold any
Investments in any Person, or otherwise acquire or hold any Subsidiaries, other
than:
(a) Investments in Subsidiaries that are Guarantors under this
Agreement, whether such Subsidiaries are Guarantors on the Closing Date or
become Guarantors in accordance with Section 7.10 hereof after the Closing
Date; provided, however, nothing in this Section 8.5 shall be deemed to
authorize an investment pursuant to this paragraph (a) in any entity that
is not a Subsidiary and a Guarantor prior to such investment.
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(b) Investments in Subsidiaries, other than those Subsidiaries that
are or become Guarantors under this Agreement, made after the Closing
Date, in an aggregate amount not to exceed $250,000 unless otherwise
consented to in writing by the Agent and the Required Lenders.
(c) Direct obligations of the United States or any agency thereof,
or obligations guaranteed by the United States or any agency thereof, in
each case supported by the full faith and credit of the United States and
maturing within one year from the date of creation thereof.
(d) Commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by a nationally recognized
credit rating agency.
(e) Time deposits maturing within one year from the date of creation
thereof with, including certificates of deposit issued by any Lender and
any office located in the United States of any bank or trust company which
is organized under the laws of the United States or any state thereof and
has total assets aggregating at least $500,000,000, including without
limitation, any such deposits in Eurodollars issued by a foreign branch of
any such bank or trust company.
(f) Investments made by Plans.
(g) Permitted Intercompany Loans on terms and conditions acceptable
to the Agent.
(h) Investments in stock or assets of another entity which thereby
becomes a Subsidiary, which transaction constitutes a Permitted
Acquisition.
(i) Advances made to employees in the ordinary and normal course of
business consistent with past practice and for business purposes, and
which advances are repaid by the employee within thirty days provided,
however, individual employee advances may not exceed $10,000 and the
aggregate of all said advances at any time outstanding shall not exceed
$50,000.
Section 8.6 Sale and Leaseback Transactions. Sell or transfer any
property, real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which any Consolidated
Company intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
Section 8.7 Transactions with Affiliates. Except as otherwise
approved in writing by the Agent and Required Lenders:
(a) Enter into any material transaction or series of related
transactions which in the aggregate would be material, whether or not in
the ordinary course of business, with any Affiliate of any Consolidated
Company (but excluding any Affiliate which is also a Material Subsidiary),
other than on terms and conditions substantially as favorable to such
Consolidated Company as would be obtained by such Consolidated Company at
the time in a comparable arm's length transaction with a Person other than
an Affiliate.
(b) Convey or transfer to any other Person (including any other
Consolidated Company) any real property, buildings, or fixtures used in
the manufacturing
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or production operations of any Consolidated Company, or convey or
transfer to any other Consolidated Company any other assets (excluding
conveyances or transfers in the ordinary course of business) if at the
time of such conveyance or transfer any Default or Event of Default exists
or would exist as a result of such conveyance or transfer.
Section 8.8 Optional Prepayments. Directly or indirectly, prepay,
purchase, redeem, retire, defease or otherwise acquire, or make any optional
payment on account of any principal of, interest on, or premium payable in
connection with the optional prepayment, redemption or retirement of, any of its
Indebtedness, or give a notice of redemption with respect to any such
Indebtedness, or make any payment in violation of the subordination provisions
of any Subordinated Debt, except with respect to (i) the Obligations under this
Agreement and the Notes, (ii) prepayments of Indebtedness outstanding pursuant
to revolving credit, overdraft and line of credit facilities permitted pursuant
to Section 8.1 (c) and (d), (iii) Intercompany Loans made or outstanding
pursuant to Section 8.1(e), (iv) Intercompany Loans where both Consolidated
Companies are not Credit Parties made or outstanding pursuant to Section 8.1
upon the prior written consent of the Agent and the Required Lenders, and (v)
Subordinated Debt, upon the prior written consent of the Agent and the Required
Lenders.
Section 8.9 Changes in Business. Enter into any business which is
substantially different from that presently conducted (or which is to be
conducted immediately after concluding the Serengeti Purchase) by the
Consolidated Companies taken as a whole.
Section 8.10 ERISA. Take or fail to take any action with respect to
any Plan of any Consolidated Company or, with respect to its ERISA Affiliates,
any Plans which are subject to Title IV of ERISA or to continuation health care
requirements for group health plans under the Code, including without limitation
(i) establishing any such Plan, (ii) amending any such Plan (except where
required to comply with applicable law), (iii) terminating or withdrawing from
any such Plan, or (iv) incurring an amount of unfunded benefit liabilities, as
defined in Section 4001(a)(18) of ERISA, or any withdrawal liability under Title
IV of ERISA with respect to any such Plan, without first obtaining the written
approval of the Agent and the Required Lenders, to the extent that such actions
or failures could reasonably be expected to result in a Materially Adverse
Effect.
Section 8.11 Additional Negative Pledges. Create or otherwise cause
or suffer to exist or become effective, directly or indirectly, any prohibition
or restriction on the creation or existence of any Lien upon any asset of any
Consolidated Company, other than pursuant to (i) the terms of any agreement,
instrument or other document pursuant to which any Indebtedness permitted by
Section 8.2(b) hereof is incurred by any Consolidated Company, so long as such
prohibition or restriction applies only to the property or asset being financed
by such Indebtedness, and (ii) any requirement of applicable law or any
regulatory authority having jurisdiction over any of the Consolidated Companies.
Section 8.12 Limitation on Payment Restrictions Affecting
Consolidated Companies. Create or otherwise cause or suffer to exist or become
effective, except for the Credit Documents, any consensual encumbrance or
restriction on the ability of any Consolidated Company to (i) pay dividends or
make any other distributions on such Consolidated Company's stock, or (ii) pay
any indebtedness owed to Borrower or any other Consolidated Company, or (iii)
transfer any of its property or assets to Borrower or any other Consolidated
Company, except any consensual encumbrance or restriction existing under the
Credit Documents and the Preferred Stock.
Section 8.13 Actions Under Certain Documents. Without the prior
written consent of the Agent (which consent shall not be unreasonably withheld),
modify, amend, cancel or rescind the Intercompany Loans or Intercompany Credit
Documents (except that a loan between Consolidated Companies as permitted by
Section 8.1(e) hereof may be modified or amended so long as it otherwise
satisfies the requirements of Section 8.1), or make demand of payment or accept
payment on any Intercompany Loans permitted by Section
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8.1(e) hereof, except that current interest accrued thereon as of the date of
this Agreement and all interest subsequently accruing thereon (whether or not
paid currently) may be paid unless a Default or Event of Default has occurred
and is continuing.
Section 8.14 Financial Statements; Fiscal Year. Borrower shall make
no change in the dates of the fiscal year now employed for accounting and
reporting purposes without the prior written consent of the Required Lenders,
which consent shall not be unreasonably withheld.
Section 8.15 Change of Management. Allow or suffer to occur any
change of management of the Borrower which creates an Event of Default under
Section 9.13.
Section 8.16 Change of Control. Allow or suffer to occur any change
of control of the Borrower in violation of Section 9.11.
Section 8.17 Guaranties. Without the prior written consent of the
Agent, extend or permit Borrower or any Subsidiary to execute any Guaranty other
than (i) endorsements of instruments for deposit or collection in the ordinary
and normal course of business, and (ii) Guaranties acceptable in writing to the
Agent and Required Lenders.
Section 8.18 Changes in Debt Instruments. Without the prior written
consent of the Agent and Required Lenders, enter into any amendment, change or
modification of any agreement relating to any Indebtedness provided, however,
the foregoing restrictions shall not prohibit any such amendment, change or
modification where (i) it relates solely to an extension of a maturity date if
said Indebtedness is not already in default, and (ii) other changes in said
agreements which are not material, provided, however if said amendment, change
or modification constitutes the waiver of any default condition under said
agreement, notice of said matter along with a copy of said amendment, change or
modification shall be given to the Agent and the Lenders.
Section 8.19 No Cash Dividends on Capital or Preferred Stock.
Without the prior written consent of the Agent and Required Lender, (which
consent may be withheld in their absolute discretion), declare or pay any cash
dividends or make any other cash distributions whatsoever on any Capital or
Preferred Stock. Dividends on Preferred Stock may only be paid in Capital Stock.
Section 8.20 No Issuance of Capital Stock. Without the prior written
consent of the Agent and Required Lenders, issue, or permit any Subsidiary to
issue, any additional Capital Stock except for (i) the issuance of Capital Stock
upon the exercise of any Existing Warrant, Stock Option or Underwriter Option,
and (ii) the issuance of any Capital Stock in the nature of the payment of
dividend on the Preferred Stock, (iii) the issuance of any Common Stock upon the
conversion of the Preferred Stock, and (iv) the issuance of any Common Stock
upon the exercise of any warrants issued in connection with the Preferred Stock.
Section 8.21 No Payments on Subordinated Debt. Without the prior
written consent of the Agent and Required Lenders:
(a) The Borrower shall not make or cause any payment of principal to
be made on any Subordinated Debt unless and until all Obligations due the
Lenders hereunder are paid in full; and
(b) Upon the occurrence and continuation of an Event of Default and,
as a result of which, the Agent has elected to exercise any of the
remedies under Article IX, the Borrower shall not thereafter make or
permit any payments of any nature whatsoever to be made on any
Subordinated Debt.
In regard to this Section 8.21, there is no Subordinated Debt as of the Closing
Date, and this Section shall only be applicable if and to the extent any
Subordinated Debt exists hereafter and, in such event, any such Subordinated
Debt may only be incurred in strict compliance with the terms of this Agreement.
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ARTICLE IX
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the
following specified events (each an "Event of Default"):
Section 9.1 Payments. Borrower shall fail to make promptly when due
(including, without limitation, by mandatory prepayment) any principal payment
with respect to the Loans, or Borrower shall fail to make within five (5)
Business Days after the due date thereof any payment of interest, fee or other
amount payable hereunder.
Section 9.2 Covenants Without Notice. Borrower shall fail to observe
or perform any covenant or agreement contained in Sections 7.8, 7.11, 8.1
through 8.21.
Section 9.3 Other Covenants. Borrower shall fail to observe or
perform any covenant or agreement contained in this Agreement, other than those
referred to in Sections 9.1 and 9.2 hereof, and, if capable of being remedied,
such failure shall remain unremedied for thirty days after the earlier of (i)
Borrower's obtaining actual knowledge thereof, or (ii) written notice thereof
shall have been given to Borrower by Agent or any Lender.
Section 9.4 Representations. Any representation or warranty made or
deemed to be made by Borrower or any other Credit Party under this Agreement or
any other Credit Document (including the Schedules attached thereto), or any
certificate or other document submitted to the Agent or the Lenders by any such
Person pursuant to the terms of this Agreement or any other Credit Document,
shall be incorrect in any material respect when made or deemed to be made or
submitted.
Section 9.5 Non-Payments of Other Indebtedness. Any Consolidated
Company shall fail to make when due (whether at stated maturity, by
acceleration, on demand or otherwise, and after giving effect to any applicable
grace period) any payment of principal of or interest on any Indebtedness (other
than the Obligations) exceeding $250,000 in the aggregate.
Section 9.6 Defaults Under Other Agreements. Any Consolidated
Company shall fail to observe or perform any covenants or agreements contained
in any agreements or instruments relating to any of its Indebtedness exceeding
$250,000 in the aggregate, or any other event shall occur in respect of
Indebtedness exceeding $250,000 if the effect of such failure or other event is
to accelerate, or to permit the holder of such Indebtedness or any other Person
to accelerate, the maturity of such Indebtedness; or any such Indebtedness shall
be required to be prepaid (other than by a regularly scheduled required
prepayment) in whole or in part prior to its stated maturity.
Section 9.7 Bankruptcy. Borrower, any Consolidated Company, or any
Credit Party shall commence a voluntary case concerning itself under the
Bankruptcy Code or an involuntary case for bankruptcy is commenced against any
Consolidated Company and the petition is not controverted within twenty (20)
days, or is not dismissed within sixty days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or any substantial part of the property of any Consolidated
Company; or any Consolidated Company commences proceedings of its own bankruptcy
or to be granted a suspension of payments or any other proceeding under any
reorganization, arrangement,
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adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction, whether now or hereafter in effect, relating to
any Consolidated Company or there is commenced against any Consolidated Company
any such proceeding which remains undismissed for a period of sixty days; or any
Consolidated Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or any
Consolidated Company suffers any appointment of any custodian or the like for it
or any substantial part of its property to continue undischarged or unstayed for
a period of sixty days; or any Consolidated Company makes a general assignment
for the benefit of creditors; or any Consolidated Company shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or any Consolidated Company shall call a meeting
of its creditors with a view to arranging a composition or adjustment of its
debts; or any Consolidated Company shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate action is taken by any Consolidated Company for the purpose of
effecting any of the foregoing.
Section 9.8 ERISA. A Plan of a Consolidated Company or a Plan
subject to Title IV of ERISA of any of its ERISA Affiliates:
(a) shall fail to be funded in accordance with the minimum funding
standard required by applicable law, the terms of such Plan, Section 412
of the Code or Section 302 of ERISA for any plan year or a waiver of such
standard is sought or granted with respect to such Plan under applicable
law, the terms of such Plan or Section 412 of the Code or Section 303 of
ERISA; or
(b) is being, or has been, terminated or the subject of termination
proceedings under applicable law or the terms of such Plan; or
(c) shall require a Consolidated Company to provide security under
applicable law, the terms of such Plan, Section 401 or 412 of the Code or
Section 306 or 307 of ERISA; or
(d) results in a liability to a Consolidated Company under
applicable law, the terms of such Plan, or Title IV of ERISA;
and there shall result from any such failure, waiver, termination or other event
a liability to the PBGC or a Plan that could reasonably be expected to have a
Materially Adverse Effect.
Section 9.9 Money Judgment. A judgment or order for the payment of
money in excess of $250,000 or otherwise having a Materially Adverse Effect
shall be rendered against Borrower, any other Consolidated Company, or any other
Credit Party and such judgment or order shall continue unsatisfied (in the case
of a money judgment) and in effect for a period of thirty (30) days during which
execution shall not be effectively stayed or deferred (whether by action of a
court, by agreement or otherwise).
Section 9.10 Ownership of Credit Parties and Pledged Entities. If
Borrower shall at any time fail to own and control the required percentage of
the voting stock of any Guarantor, either directly or indirectly through a
wholly-owned Subsidiary of Borrower, as of the date that Person became or was
required to become a Guarantor.
Section 9.11 Change in Control of Borrower.
(a) Any "person" or "group" (within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act), other than stockholders existing on the
Closing Date or their affiliates and the Persons set forth in Schedule
9.11 shall become the "beneficial owner(s)"
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(as defined in said Rule 13d-3) of more than forty percent (40%) of the
shares of the outstanding Capital Stock of Borrower entitled to vote for
members of Borrower's board of directors; or
(b) Any event or condition shall occur or exist which, pursuant to
the terms of any change in control provision, requires or permits the
holder(s) of Indebtedness of any Consolidated Company to require that such
Indebtedness be redeemed, repurchased, defeased, prepaid or repaid, in
whole or in part, or the maturity of such Indebtedness to be accelerated
in any respect.
For the purposes of determining a change in control, the existing holder of the
Preferred Stock shall be deemed to have fully converted the Preferred Stock into
voting common stock of the Borrower immediately prior to the date of Closing.
Section 9.12 Default Under Other Credit Documents. There shall exist
or occur any "Event of Default" as provided under the terms of any other Credit
Document (after giving effect to any applicable grace period), or any Credit
Document ceases to be in full force and effect or the validity or enforceability
thereof is disaffirmed by or on behalf of Borrower or any other Credit Party, or
at any time it is or becomes unlawful for Borrower or any other Credit Party to
perform or comply with its obligations under any Credit Document, or the
obligations of Borrower or any other Credit Party under any Credit Document are
not or cease to be legal, valid and binding on Borrower or any such Credit
Party;
Section 9.13 Management. In the event a member of the Borrower's
senior management team as set forth in Schedule 9.13 attached hereto no longer
fills that particular position with the Borrower for any reason whatsoever and
the Borrower fails within ninety days thereafter to find a successor(s) thereto
reasonably acceptable to the Lenders; provided however that during said ninety
day period, the failure to obtain any successor could not reasonably be expected
to have a Materially Adverse Effect, in which case the Borrower shall
immediately locate said successor. If for any reason Stephen Nevitt ceases to be
involved with the Borrower in any of his current positions, the Borrower agrees
that the Lenders would be entitled to determine that said change is not
satisfactory to the Lenders.
Section 9.14 Attachments. An attachment or similar action shall be
made on or taken against any of the assets of any Consolidated Company with an
Asset Value exceeding $500,000 in aggregate and is not removed, suspended or
enjoined within thirty days of the same being made or any suspension or
injunction being lifted.
Section 9.15 Indebtedness of Borrower. If any Consolidated Company
without the prior written consent of the Agent and Required Lenders, incurs any
Indebtedness whatsoever (other than Indebtedness permitted by Section 8.1) or
declares any cash dividends on its Capital Stock or Preferred Stock.
Section 9.16 Default Under Subordinated Debt. An event of default
occurs and is continuing under any Subordinated Debt.
Section 9.17 Post-Closing Requirements. Borrower fails to
accomplish, complete or preform any Post-Closing Requirement by the date set
forth in Schedule 7.14 attached hereto:
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Agent may, and upon the written request of the
Required Lenders, shall, by written notice to Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent, any Lender or
the holder of any Note to enforce its claims against Borrower or any other
Credit Party: (i) declare all Commitments terminated, whereupon the Commitments
of each Lender shall terminate immediately and any fees due under
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this Agreement shall forthwith become due and payable without any other notice
of any kind; (ii) declare the principal of and any accrued interest on the
Loans, and all other obligations owing hereunder, to be due and payable,
whereupon the same shall become forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
Borrower (iii) exercise such other remedies as are provided to the Lenders or
the Agent under any other Credit Document; (iv) exercise such other rights as
may be provided by applicable law; and (v) declare that all Obligations shall
thereafter bear interest at the Default Rate; provided, that, if an Event of
Default specified in Section 9.7 shall occur, the result which would occur upon
the giving of written notice by the Agent to any Credit Party, as specified in
clauses (i), (ii), (iii) or, (iv) or (v) above, shall occur automatically
without the giving of any such notice.
ARTICLE X
THE AGENT
Section 10.1 Appointment of Agent. Each Lender hereby designates
SunTrust, as Agent, to administer all matters concerning the Loans and to act as
herein specified. Each Lender hereby irrevocably authorizes, and each holder of
any Note by the acceptance of a Note shall be deemed irrevocably to authorize,
the Agent to take such actions on its behalf under the provisions of this
Agreement, the other Credit Documents, and all other instruments and agreements
referred to herein or therein, and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent may perform any of its duties hereunder
by or through its agents or employees. The provisions of this Section 10.1 are
solely for the benefit of the Agent, and Borrower and the other Consolidated
Companies shall not have any rights as third party beneficiaries of any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Lenders and does not assume and shall
not be deemed to have assumed any obligations towards or relationship of agency
or trust with or for the Borrower and the other Consolidated Companies.
Section 10.2 Nature of Duties of Agent. The Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and the other Credit Documents. None of the Agent nor any of its respective
officers, directors, employees or agents shall be liable for any action taken or
omitted by it as such hereunder or in connection herewith, unless caused by its
or their gross negligence or willful misconduct. The duties of the Agent shall
be ministerial and administrative in nature; the Agent shall not have by reason
of this Agreement a fiduciary relationship in respect of any Lender; and nothing
in this Agreement, express or implied, is intended to or shall be so construed
as to impose upon the Agent any obligations in respect of this Agreement or the
other Credit Documents except as expressly set forth herein.
Section 10.3 Lack of Reliance on the Agent.
(a) Independently and without reliance upon the Agent, each Lender,
to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and
affairs of the Credit Parties in connection with the taking or not taking
of any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of the Credit Parties, and, except as expressly provided
in this Agreement, the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times
thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or
in any document,
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certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes, the
Guaranty Agreements, or any other documents contemplated hereby or
thereby, or the financial condition of the Credit Parties, or be required
to make any inquiry concerning either the performance or observance of any
of the terms, provisions or conditions of this Agreement, the Notes, the
Guaranty Agreements, or the other documents contemplated hereby or
thereby, or the financial condition of the Credit Parties, or the
existence or possible existence of any Default or Event of Default;
provided, however, to the extent that the Agent has been advised that a
Lender has not received any information formally delivered to the Agent
pursuant to Section 7.7, the Agent shall deliver or cause to be delivered
such information to such Lender.
Section 10.4 Certain Rights of the Agent. If the Agent shall request
instructions from the Required Lenders with respect to any action or actions
(including the failure to act) in connection with this Agreement, the Agent
shall be entitled to refrain from such act or taking such act, unless and until
the Agent shall have received instructions from the Required Lenders; and the
Agent shall not incur liability in any Person by reason of so refraining.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders.
Section 10.5 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message, cable
gram, radiogram, order or other documentary, teletransmission or telephone
message believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person. The Agent may consult with legal counsel
(including counsel for any Credit Party), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
Section 10.6 Indemnification of Agent. To the extent the Agent is
not reimbursed and indemnified by the Credit Parties, each Lender will reimburse
and indemnify the Agent, ratably according to the respective amounts of the
Loans outstanding under all Facilities (or if no amounts are outstanding,
ratably in accordance with the Total Commitments), in either case, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in performing its duties
hereunder, in any way relating to or arising out of this Agreement or the other
Credit Documents; provided that no Lender shall be liable to the Agent for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
Section 10.7 The Agent in its Individual Capacity. With respect to
its obligation to lend under this Agreement, the Loans made by it and the Notes
issued to it, the Agent shall have the same rights and powers hereunder as any
other Lender or holder of a Note and may exercise the same as though it were not
performing the duties specified herein; and the terms "Lenders", "Required
Lenders", "Holders of Notes", or any similar terms shall, unless the context
clearly otherwise indicates, include the Agent in its individual capacity. The
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust, financial advisory or other business with the Consolidated
Companies or any affiliate of the Consolidated Companies as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Consolidated Companies for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.
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Section 10.8 Holders of Notes. The Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any Person who, at the time
of making such request or giving such authority or consent, is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
Section 10.9 Successor Agent.
(a) The Agent may resign at any time by giving written notice
thereof to the Lenders and Borrower and may be removed at any time with or
without cause by the Required Lenders; provided, however, the Agent may
not resign or be removed until a successor Agent has been appointed and
shall have accepted such appointment. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor
Agent subject to Borrower's prior written approval. If no successor Agent
shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or the Required Lenders' removal of the
retiring Agent, then the retiring Agent shall have no further duties or
obligations whatsoever as Agent hereunder.
(b) Upon the acceptance of any appointment as the Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article
X shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was an Agent under this Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex, telecopy
or similar teletransmission or writing) and shall be given to such party at its
address or applicable teletransmission number set forth on the signature pages
hereof, or such other address or applicable teletransmission number as such
party may hereafter specify by notice to the Agent and Borrower. Each such
notice, request or other communication shall presumptively be effective (i) if
given by telex, when such telex is transmitted to the telex number specified in
this Agreement and the appropriate answerback is received, (ii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, (iii) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in this Section
and the appropriate confirmation is received, or (iv) if given by any other
means (including, without limitation, by air courier), when delivered or
received at the address specified in this Agreement; provided that notices to
the Agent shall not be deemed effective until received.
Section 11.2 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the other Credit Documents, nor consent to any
departure by any Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders do any of the following:
(i) waive any of the conditions specified in Sections 5.1 or 5.2 hereof, (ii)
increase the Commitments
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or other contractual obligations to Borrower under this Agreement, (iii) reduce
the principal of, or interest on, the Notes or any fees hereunder, (iv) postpone
any date fixed for the payment in respect of principal of, or interest on, the
Notes or any fees hereunder, (v) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Notes, or the number or identity of
Lenders which shall be required for the Lenders or any of them to take any
action hereunder, (vi) release any Guarantor from its obligations under any
Guaranty Agreement, (vii) modify the definition of "Required Lenders," or (viii)
modify this Section 11.2. Notwithstanding the foregoing, no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Lenders required hereinabove to take such action, affect the rights or duties of
the Agent under this Agreement or under any other Credit Document.
Section 11.3 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Agent, any Lender or any holder of a Note in exercising any
right or remedy hereunder or under any other Credit Document, and no course of
dealing between any Credit Party and the Agent, any Lender or the holder of any
Note shall operate as a waiver thereof, nor shall any single or partial exercise
of any right or remedy hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right or remedy
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Agent, any
Lender or the holder of any Note would otherwise have. No notice to or demand on
any Credit Party not required hereunder or under any other Credit Document in
any case shall entitle any Credit Party to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Agent, the Lenders or the holder of any Note to any other or further action in
any circumstances without notice or demand.
Section 11.4 Payment of Expenses, Etc. Borrower shall:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses
(including travel costs and attorneys' fees) of the Agent in the
administration (both before and after the execution hereof and including
reasonable expenses actually incurred relating to advice of counsel as to
the rights and duties of the Agent and the Lenders with respect thereto)
of, and in connection with the preparation, execution and delivery of,
preservation of rights under, enforcement of, and, after a Default or
Event of Default, refinancing, renegotiation or restructuring of, this
Agreement and the other Credit Documents and the documents and instruments
referred to therein, and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees actually incurred and
disbursements of counsel for the Agent), and in the case of enforcement of
this Agreement or any Credit Document after the occurrence and during the
continuance of an Event of Default, all such reasonable, out-of-pocket
costs and expenses (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel), for any of the Lenders.
As of the Closing, but excluding all Upfront Fees, the out-of-pocket costs
and expenses (including travel costs and attorneys fees) to close the
transactions shall not exceed $75,000.;
(b) subject, in the case of certain Taxes, to the applicable
provisions of Section 4.7(b), pay and hold each of the Lenders harmless
from and against any and all present and future stamp, documentary,
intangible and other similar Taxes with respect to this Agreement, the
Notes and any other Credit Documents, any collateral described therein, or
any payments due thereunder, including interest and penalties and save
each Lender harmless from and against any and all liabilities with respect
to or resulting from any delay or omission of Borrower to pay such Taxes,
provided, however, nothing contained in this subsection shall obligate the
Borrower to pay any taxes based on the overall income of the Lenders; and
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(c) indemnify the Agent and each Lender, and their respective
officers, directors, employees, representatives and agents from, and hold
each of them harmless against, any and all costs, losses, liabilities,
claims, damages or expenses incurred by any of them (whether or not any of
them is designated a party thereto) (an "Indemnitee") arising out of or by
reason of any investigation, litigation or other proceeding related to any
actual or proposed use of the proceeds of any of the Loans or any Credit
Party's entering into and performing of the Agreement, the Notes, or the
other Credit Documents, including, without limitation, the reasonable fees
actually incurred and disbursements of counsel (including foreign counsel)
incurred in connection with any such investigation, litigation or other
proceeding; provided, however, Borrower shall not be obligated to
indemnify any Indemnitee for any of the foregoing arising out of such
Indemnitee's gross negligence or willful misconduct or the breach by the
Indemnitee of its obligations under this Agreement;
(d) without limiting the indemnities set forth in subsection (c)
above, indemnify each Indemnitee for any and all expenses and costs
(including without limitation, remedial, removal, response, abatement,
cleanup, investigative, closure and monitoring costs), losses, claims
(including claims for contribution or indemnity and including the cost of
investigating or defending any claim and whether or not such claim is
ultimately defeated, and whether such claim arose before, during or after
any Credit Party's ownership, operation, possession or control of its
business, property or facilities or before, on or after the date hereof,
and including also any amounts paid incidental to any compromise or
settlement by the Indemnitee or Indemnitees to the holders of any such
claim), lawsuits, liabilities, obligations, actions, judgments, suits,
disbursements, encumbrances, liens, damages (including without limitation
damages for contamination or destruction of natural resources), penalties
and fines of any kind or nature whatsoever (including without limitation
in all cases the reasonable fees actually incurred, other charges and
disbursements of counsel in connection therewith) incurred, suffered or
sustained by that Indemnitee based upon, arising under or relating to
Environmental Laws based on, arising out of or relating to in whole or in
part, the existence or exercise of any rights or remedies by any
Indemnitee under this Agreement, any other Credit Document or any related
documents (but excluding those incurred, suffered or sustained by any
Indemnitee as a result of any action taken by or on behalf of the Lenders
with respect to Borrower or any Subsidiary of Borrower (or the assets
thereof) owned or controlled by the Lender). The indemnity permitted in
this clause (d) shall (i) not apply as to any Indemnity to any costs or
expenses in connection with any condition, suspected condition, threatened
condition or alleged condition which first arises and occurs after said
Indemnitee Lender succeeds to the ownership of, takes possession of or
operates the business or any property of the Borrower or any of its
Subsidiaries, and (ii) in the case of cleanup, investigative, closure and
monitoring costs concerning or relating to Hazardous Materials or any
Environmental Laws shall only apply after an Event of Default has occurred
and is continuing provided that the Credit Party is then undertaking and
fulfilling all its obligations under this Agreement and Environmental Laws
with respect to said cleanup, investigation, closure and monitoring.
(e) If any claim for which an Indemnitee is entitled to indemnity is
asserted against such Indemnitee by a third party, such Indemnitee shall
promptly give Borrower notice thereof and give Borrower an opportunity to
defend the same with counsel of Borrower's choice subject to the Agent's
approval, which will not be unreasonably withheld, at Borrower's expense.
All Indemnitees shall provide reasonable cooperation in connection with
such defense. In the event that Borrower desires to compromise or
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settle any such claim, all Indemnitee shall have the right to consent to
such settlement or compromise; provided, however, that if such compromise
or settlement is for money damages only (paid by Borrower in full) and
will include a full release and discharge of such Indemnitee, and such
Indemnitee withholds its consent to such compromise or settlement, such
Indemnitee and Borrower agree that (1) Borrower's liability shall be
limited to the amount of the proposed settlement and Borrower shall
thereupon be relieved of any further liability with respect to such claim,
and (2) from and after such date, such Indemnitee will undertake all legal
costs and expenses in connection with any such claim.
If and to the extent that the obligations of Borrower under this Section 11.4
are unenforceable for any reason, Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
Section 11.5 Right of Set-Off. In addition to and not in limitation
of all rights of off-set that any Lender or other holder of a Note may have
under applicable law, each Lender or other holder of a Note shall, upon the
occurrence and during the continuance of any Event of Default and whether or not
such Lender or such holder has made any demand or any Credit Party's obligations
are matured, have the right to appropriate and apply to the payment of any
Credit Party's obligations hereunder and under the other Credit Documents, all
deposits of any Credit Party (general or special, time or demand, provisional or
final, other than escrow or trust accounts denoted as such) then or thereafter
held by and other indebtedness or property then or thereafter owing by such
Lender or other holder to any Credit Party, whether or not related to this
Agreement or any transaction hereunder. Each Lender shall promptly notify
Borrower of any off-set hereunder.
Section 11.6 Benefit of Agreement.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto, provided that Borrower may not assign or transfer any of its
interest hereunder without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of
such Lender. A Lender may participate any of its Commitments to any of its
Affiliates.
(c) Each Lender may assign all or a portion of its interests, rights
and obligations under this Agreement (including all or a portion of any of
its Commitments and the Loans at the time owing to it and the Notes held
by it) to any Eligible Assignee; provided, however, that (i) the Agent and
Borrower must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld or delayed) unless such
assignment is to an Affiliate of the assigning Lender, (ii) the amount of
the Commitments, in the case of the Revolving Loan Commitments and the
Term Loan Commitments, or Loans, in the case of assignment of Loans, of
the assigning Lender subject to each assignment (determined as of the date
the assignment and acceptance with respect to such assignment is delivered
to the Agent) shall not be less than $5,000,000, (iii) the parties to each
such assignment shall execute and deliver to the Agent an Assignment and
Acceptance, together with a Note or Notes subject to such assignment and,
unless such assignment is to an Affiliate of such Lender, a processing and
recordation fee of $3,000, and (iv) the Eligible Assignee has the ability
to satisfy the obligations of said Lender hereunder. Borrower shall not be
responsible for such processing and recordation fee or any costs or
expenses incurred by any Lender or the Agent in connection with such
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assignment. From and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five (5) Business
Days after the execution thereof, the assignee thereunder shall be a party
hereto and to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this
Agreement. Within five (5) Business Days after receipt of the notice and
the Assignment and Acceptance, Borrower, at its own expense, shall execute
and deliver to the Agent, in exchange for the surrendered Note or Notes
(which shall be marked "cancelled" and delivered to Borrower), a new Note
or Notes to the order of such assignee in a principal amount equal to the
applicable Commitments or Loans assumed by it pursuant to such Assignment
and Acceptance and new Note or Notes to the assigning Lender in the amount
of its retained Commitment or Commitments or amount of its retained Loans.
Such new Note or Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Note or Notes, shall be
dated the date of the surrendered Note or Notes which they replace, and
shall otherwise be in substantially the form attached hereto. The
provisions of this paragraph (c) shall not apply to any participations by
any Lender to any of its Affiliates under subparagraph (b) above.
(d) Any Lender or participant may, in connection with the assignment
or participation or proposed assignment or participation, pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to Borrower or the other Consolidated
Companies furnished to such Lender by or on behalf of Borrower or any
other Consolidated Company. With respect to any disclosure of
confidential, non-public, proprietary information, such proposed assignee
or participant shall agree to use the information only for the purpose of
making any necessary credit judgments with respect to this credit facility
and not to use the information in any manner prohibited by any law,
including without limitation, the securities laws of the United States.
The proposed participant or assignee shall agree not to disclose any of
such information except (i) to directors, employees, auditors or counsel
to whom it is necessary to show such information, each of whom shall be
informed of the confidential nature of the information, (ii) in any
statement or testimony pursuant to a subpoena or order by any court,
governmental body or other agency asserting jurisdiction over such entity,
or as otherwise required by law (provided prior notice is given to
Borrower and the Agent unless otherwise prohibited by the subpoena, order
or law), and (iii) upon the request or demand of any regulatory agency or
authority with proper jurisdiction. The proposed participant or assignee
shall further agree to return all documents or other written material and
copies thereof received from any Lender, the Agent or Borrower relating to
such confidential information unless otherwise properly disposed of by
such entity.
(e) Any Lender may at any time assign all or any portion of its
rights in this Agreement and the Notes issued to it to a Federal Reserve
Bank; provided that no such assignment shall release the Lender from any
of its obligations hereunder.
(f) If (i) any Taxes referred to in Section 4.7(b) hereof have been
levied or imposed so as to require withholdings or deductions by Borrower
and payment by Borrower of additional amounts to any Lender as a result
thereof, (ii) any Lender shall make demand for payment of any material
additional amounts as compensation for increased costs pursuant to Section
4.10 hereof or for its reduced rate of return pursuant to Section 4.16
hereof, or (iii) any Lender shall decline to consent to a modification or
waiver of the terms of this Agreement or the other Credit Documents
requested by Borrower, then and in such event, upon request from Borrower
delivered to such Lender and the Agent, such Lender shall assign, in
accordance with the provisions of Section
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11.6(c) hereof, all of its rights and obligations under this Agreement and
the other Credit Documents to another Lender or an Eligible Assignee
selected by Borrower, in consideration for the payment by such assignee to
the Lender of the principal of, and interest on, the outstanding Loans
accrued to the date of such assignment, and the assumption of such
Lender's Total Commitment hereunder, together with any and all other
amounts owing to such Lender under any provisions of this Agreement or the
other Credit Documents accrued to the date of such assignment.
Section 11.7 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF) OF THE STATE OF FLORIDA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT,
THE NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE CIRCUIT COURT
OF ORANGE COUNTY, FLORIDA, OR ANY OTHER COURT OF THE STATE OF FLORIDA OR
OF THE UNITED STATES OF AMERICA FOR THE MIDDLE DISTRICT OF FLORIDA, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE TRIAL BY JURY, AND, TO THE EXTENT PERMITTED BY LAW,
BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(c) BORROWER HEREBY IRREVOCABLY DESIGNATES THE PRESIDENT OF THE
BORROWER, AS SO DESIGNATED FROM TIME TO TIME, AT THE ADDRESS SET FORTH ON
THE BORROWER'S SIGNATURE PAGE TO THIS AGREEMENT AS ITS DESIGNEE, APPOINTEE
AND LOCAL AGENT TO RECEIVE, FOR AND ON BEHALF OF BORROWER, SERVICE OF
PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR THE NOTES OR ANY DOCUMENT RELATED
THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH LOCAL
AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF
SUCH PROCESS BY MAIL TO BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, BUT, TO THE EXTENT PERMITTED BY LAW, THE FAILURE OF
BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the Agent, any Lender,
any holder of a Note or any Credit Party to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise
proceed against Borrower in any other jurisdiction.
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Section 11.8 Independent Nature of Lenders' Rights. The amounts
payable at any time hereunder to each Lender shall be a separate and independent
debt, and each Lender shall be entitled to protect and enforce its rights
pursuant to this Agreement and its Notes, and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.
Section 11.9 Collateral to Benefit All Lenders. The security
interest in the Collateral has been granted to the Agent, for the benefit of all
the Lenders, to the extent of each Lender's Commitment.
Section 11.10 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
Section 11.11 Effectiveness; Survival.
(a) This Agreement shall become effective on the date (the
"Effective Date") on which all of the parties hereto shall have signed a
counterpart hereof (whether the same or different counterparts) and shall
have delivered the same to the Agent pursuant to Section 11.1 or, in the
case of the Lenders, shall have given to the Agent written or telex notice
(actually received) that the same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 4.7(b), 4.10, 4.12,
4.13, and 4.16 above hereof shall survive for ninety days after the
payment in full of the Notes after the Maturity Date. Provided, however,
in regard to documentary stamp taxes and intangible taxes, if any,
obligations for reimbursement of those amounts shall continue for the
applicable statute of limitations. All representations and warranties made
herein, in the certificates, reports, notices, and other documents
delivered pursuant to this Agreement shall survive the execution and
delivery of this Agreement, the other Credit Documents, and such other
agreements and documents, the making of the Loans hereunder, and the
execution and delivery of the Notes.
Section 11.12 Severability. In case any provision in or obligation
under this Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 11.13 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitation of, another covenant,
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
Section 11.14 Change in Accounting Principles, Fiscal Year or Tax
Laws. If (i) any preparation of the financial statements referred to in Section
7.7 hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accounts (or successors
thereto or agencies with similar functions) result in a material change in the
method of calculation of financial covenants, standards or terms found in this
Agreement, (ii) there is any change in Borrower's fiscal quarter or fiscal year,
or (iii) there is a material change in federal tax laws which materially affects
any of the Consolidated Companies' ability to comply with the financial
covenants, standards or terms found in this Agreement, Borrower and the Required
Lenders agree to enter into negotiations in order to amend such provisions so as
to equitably reflect such changes with the desired result that the criteria for
evaluating any of the Consolidated Companies' financial condition shall be the
same after such changes as if such changes had not been made. Unless and until
such provisions have
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been so amended, the provisions of this Agreement shall govern.
Section 11.15 Headings Descriptive; Entire Agreement. The headings
of the several sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
Section 11.16 Time is of the Essence. Time is of the essence in
interpreting and performing this Agreement and all other Credit Documents.
Section 11.17 Usury. It is the intent of the parties hereto not to
violate any federal or state law, rule or regulation pertaining either to usury
or to the contracting for or charging or collecting of interest, and Borrower
and Lenders agree that, should any provision of this Agreement or of the Notes,
or any act performed hereunder or thereunder, violate any such law, rule or
regulation, then the excess of interest contracted for or charged or collected
over the maximum lawful rate of interest shall be applied to the outstanding
principal indebtedness due to Lenders by Borrower under this Agreement.
Section 11.18 Construction. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be more strictly construed against the
party who itself or through its agents prepared the same, it being agreed that
Borrower, Agent, Lenders and their respective agents have participated in the
preparation hereof.
Section 11.19 Complete Agreement. This Agreement, along with each
and every other Credit Document, collectively constitutes the complete agreement
between the Borrower, the Lenders and the Agent as to the matters set forth
herein, and incorporate all prior discussions, representations and other
agreements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their duly authorized officers as of the day
and year first above written.
Signatures Begin On Following Page.
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[SIGNATURE PAGE TO
REVOLVING CREDIT AND LINE OF CREDIT AGREEMENT
BETWEEN SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, AS AGENT,
AND SERENGETI EYEWEAR, INC. (F/K/A SOLAR-MATES, INC.)]
BORROWER:
SERENGETI EYEWEAR, INC.
(f/k/a SOLAR-MATES, INC.)
Address For Notices: By:___________________________________
8125 25th Court East Stephen Nevitt,
Sarasota, Florida 34243 President
Attention: Stephen Nevitt
Telephone No.: (941) 359-3599
Telecopy No.: (941) 359-3598
In the case of Notices to the Borrower, copies shall be sent to:
COOPERMAN LEVITT WINIKOFF LESTER
& NEWMAN, P.C.
800 Third Avenue
New York, New York 10022
Attention: Robert Winikoff, Esquire
Telephone No.: (212) 688-7000
Telecopy No.: (212) 755-2839
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[SIGNATURE PAGE TO
REVOLVING CREDIT AND LINE OF CREDIT AGREEMENT
BETWEEN SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, AS AGENT,
AND SERENGETI EYEWEAR, INC. (F/K/A SOLAR-MATES, INC.)]
Address for Notices: SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION,
Individually and as Agent
200 South Orange Avenue
6th Floor, SOAB
Post Office Box 3833 By:___________________________________
Orlando, Florida 32897 Vipul H. Patel,
Vice President
Attention: Vipul H. Patel,
Vice President
Telephone No.: (407) 237-5352
Telecopy No.: (407) 237-4076
Lending Office: For the purposes of delivering all
Notices of Borrowing and Notices of
Conversion/Continuation if applicable,
the Lending Office shall be:
200 South Orange Avenue 25 Park Place
6th Floor, SOAB Suite 1300
Post Office Box 3833 Atlanta, Georgia 30303
Orlando, Florida 32897
Attention: Todd Jarvis
Attention: Vipul H. Patel,
Vice President Telephone No.: (404) 724-3743
Telecopy No.: (404) 827-6514
Telephone No.: (407) 237-5352
Telecopy No.: (407) 237-4076
__________________________________________________
Revolving Loan Commitment: $4,285,714
Pro Rata Share of Revolving Loan Commitment: 57.1428%
Term Loan Commitment: $5,714,286
Pro Rata Share of Term Loan Commitment: 57.1428%
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[SIGNATURE PAGE TO
REVOLVING CREDIT AND LINE OF CREDIT AGREEMENT
BETWEEN SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, AS AGENT,
AND SERENGETI EYEWEAR, INC. (F/K/A SOLAR-MATES, INC.)]
Address for Notices: CREDITANSTALT-BANKVEREIN
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
By:___________________________________
Attention: Francine J. Wanalista
Title:___________________________
Telephone No.: (770) 390-1850
Telecopy No.: (770) 390-1851 By:___________________________________
Title:___________________________
Lending Office:
Creditanstalt-Bankversin
Two Greenwich Plaza
Greenwich, Connecticut 06830-6353
__________________________________________________
Revolving Loan Commitment: $3,214,286
Pro Rata Share of Revolving Loan Commitment: 42.8572%
Term Loan Commitment: $4,285,714
Pro Rata Share of Term Loan Commitment: 42.8572%
70
Exhibit 16
February 14, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Solar-Mates, Inc.
Dear Sir/Madam:
Pursuant to the request of the above referenced Company, we affirm that:
(1) We have read the Company's response to Item 4 of Form 8-K dated
February 11, 1997, and
(2) We agree with the response.
Sincerely,
WINTER, SCHEIFLEY & ASSOCIATES, P.C.
