Exhibit 10.27
LOAN AND SECURITY AGREEMENT
By and Among
U.S. VISION, INC.,
STYL-RITE OPTICAL MFG. CO., INC.,
USV OPTICAL, INC.,
U.S. VISION HOLDINGS, INC.,
9072-8411 QUEBEC, INC.,
d/b/a, Optik Pro Baie 2000, and
HEALTH EYE CARE STATISTICS, INC.
as Obligors
and
COMMERCE BANK, N.A., Lender
as of October 30, 2002
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of October
30, 2002, by and among COMMERCE BANK, N.A. (the "Lender") and U.S. VISION, INC.,
a Delaware corporation ("U.S. Vision"), STYL-RITE OPTICAL MFG. CO., INC., a
Florida corporation ("Styl"), USV OPTICAL, INC., a Texas corporation ("USV"),
and U.S. VISION HOLDINGS, INC., a Delaware corporation ("Holdings"; U.S. Vision,
Styl, USV, and Holdings, individually, a "Borrower" and, collectively, the
"Borrowers"), and 9072-8411 QUEBEC, INC. "Optik Pro Baie 2000" ("Optik Pro"),
and HEALTH EYE CARE STATISTICS, INC. ("Health"; and together with Optik Pro,
individually, a "Guarantor" and, collectively, the "Guarantors"; each Borrower
and Guarantor, individually, an "Obligor" and, collectively, the "Obligors").
BACKGROUND
Simultaneously with the execution hereof, U.S. Vision and Kayak Acquisition
Corp., a Delaware corporation ("Kayak"), will consummate the transactions
contemplated by the Agreement and Plan of Merger by and between Kayak and U.S.
Vision dated May 14, 2002 (the "Agreement and Plan of Merger") pursuant to
which, inter alia, Kayak will merge with and into U.S. Vision and the separate
corporate existence of Kayak will cease and U.S. Vision will be the surviving
company (the "Merger").
In connection with the Merger, the Lender has agreed to make available to
Borrowers, subject to the terms and provisions hereof, certain Loans, as more
fully hereinafter described.
NOW, THEREFORE, in consideration of the mutual covenants and premises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby mutually acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. DEFINITIONS, CERTAIN RULES OF CONSTRUCTION
1.1 Defined Terms. Each initially capitalized term used herein shall
have the meaning set forth in the recitals hereto, in EXHIBIT A attached hereto
and made a part hereof, or as otherwise set forth in the Agreement, for the
purposes hereof and for each of the Loan Documents. All initially capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Uniform Commercial Code as enacted in the State of New Jersey.
1.2 Accounting Reports and Principles. The character or amount of any
asset, liability, account or reserve and of any item of income or expense to be
determined, and any consolidation or other accounting computation to be made,
and the construction of any definition containing a financial term, including,
but not limited to, capitalized terms not otherwise defined herein, pursuant to
this Agreement or any other Loan Document, shall be construed, determined or
made, as the case may be, in accordance with GAAP, consistently applied, unless
such principles are inconsistent with any express provision of this Agreement.
1.3 Business Day. Whenever any payment or other Obligation hereunder,
under the Notes or any other Loan Document, is due on a day other than a
Business Day, such shall be paid or performed on the Business Day next following
the prescribed due date, except as otherwise specifically provided for herein to
the contrary, and such extension of time shall be included in the computation of
interest and charges. Any reference made herein or in any other Loan Document to
an hour of day shall refer to the then-prevailing time in Cherry Hill, New
Jersey unless specifically provided herein to the contrary.
1.4 Obligors' Authorization to Charge Accounts. Whenever Obligors are
obligated hereunder, under the Notes or any other Loan Document, to make
payments of any nature to Lender, including payments of principal, interest and
Lender's Costs, Lender, on Lender's behalf, shall be entitled, and Obligors
hereby authorize Lender, on Lender's behalf, to debit from any Deposit Account
of any Obligor maintained with Lender or any Affiliate of Lender, the amount of
such payment due; provided, however, that in the event there are insufficient
funds in such accounts to pay all currently due payments to Lender, Obligors
shall pay to Lender the difference when such payment is due.
1.5 Lender's Costs. Borrowers shall, within 15 days of Lender's
request, pay Lender all Lender's Costs incurred by Lender through the date of
such request. Until paid, all past due and owing interest payments, fees and
Lender's Costs shall be deemed to be part of the principal balance of the Line
of Credit, bear interest at either the Term Interest Rate or the Line Interest
Rate, whichever is higher, and be secured by the Borrowers' Collateral and
guaranteed by the Guarantors pursuant to the Guarantors' respective Guaranty and
Surety Agreements which shall be secured by the Movable Hypothec and the General
Security Agreement. The Obligations of Borrowers under this Section shall
survive the termination of this Agreement and the payment of the Notes.
2. THE LOAN
2.1 Line of Credit.
2.1.1 Line Established. Provided that no Event of Default or
Potential Default has occurred and is continuing, and subject to the terms and
conditions set forth herein, commencing on the Closing Date and expiring on the
day next preceding the Line Termination Date, unless Borrowers shall have
terminated this Agreement, upon Borrowers' request from time-to-time, Lender
hereby commits to extend one or more Advances to Borrowers, the aggregate of
which outstanding at any one time shall not exceed Seventeen Million Five
Hundred Thousand Dollars ($17,500,000) to be used exclusively for general
working capital purposes of Borrowers. Prior to the Line Termination Date and,
subject to the provisions of this Agreement, Borrowers may borrow, repay and
reborrow under the Line.
2.1.2 Line of Credit Note. On the date hereof and to evidence the
Indebtedness under the Line, Borrowers shall execute and deliver to Lender the
Line of Credit Note.
2.1.3 Advances. Provided that no Event of Default or Potential
Default has occurred and is continuing, and subject to the terms and conditions
set forth herein,
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Borrowers may request Advances under the Line in accordance with the following
provisions. Borrowers shall give the Lender notice in the form of EXHIBIT B
hereto (a "Notice of Borrowing") not later than (i) 2:00 p.m. on the Closing
Date with respect to the initial Advance, and (ii) not later than 12:00 noon on
the same Business Day, of each Prime Rate Advance and each LIBOR Rate Advance
after the Closing Date, of Borrowers' intention to borrow, specifying (a) the
date of such Advance, which shall be a Business Day, (b) the amount of such
Advance, which shall be in a principal amount of not less than One Hundred
Thousand Dollars ($100,000), and (c) whether the Advance is to be a LIBOR Rate
Advance or Prime Rate Advance or a combination thereof. Notices of Borrowing
received after 12:00 noon, other than Notices of Borrowing received prior to
2:00 p.m. on the Closing Date, shall be deemed received on the next Business
Day.
2.1.4 Interest Rate Options. Subject to the provisions of this
Paragraph, at the election of the Borrowers, the principal balance of each
Advance shall bear interest at Prime plus One Hundred Fifty (150) basis points
(the "Prime Rate") or at LIBOR, as determined in accordance with Paragraph 2.1.5
below, plus Three Hundred Seventy Five (375) basis points (the "LIBOR Rate");
provided, however, that in no event shall the applicable interest rate be less
than Five and One Half Percent (5.5%) per annum. The Borrowers shall select
whether an Advance will accrue interest at the Prime Rate (a "Prime Rate
Advance") or at the LIBOR Rate (a "LIBOR Rate Advance") at the time a Notice of
Borrowing is given pursuant to Paragraph 2.1.3. Any Advance or any portion
thereof as to which the Borrowers shall not have duly specified an interest rate
as provided herein shall conclusively be deemed to be a Prime Rate Advance. All
interest on the Line shall be calculated on the basis of a 360 day year for the
actual number of days elapsed in each period.
2.1.5 LIBOR Rate Interest Period. Other than with respect to
Advances extended at Closing, in connection with each LIBOR Rate Advance, no
later than 12:00 p.m. (New Jersey time) two Business Days prior to the end of
each calendar month, the Borrowers shall select monthly the interest rate
applicable to the current 30-day LIBOR period which shall then constitute LIBOR
for the succeeding calendar month to be applicable to the LIBOR Rate and all
LIBOR Rate Advances outstanding and which may become outstanding during the
succeeding calendar month. The Borrowers shall give the Lender notice of
Borrowers' selection under this Paragraph in the Form of the Notice of
Borrowing. If Borrowers fail to make an election hereunder for any month, the
previous election made under this Paragraph shall apply for that month.
2.1.6 Facility Fee. As long as there is any outstanding
Obligation under the Line of Credit, commencing on November 30, 2002, for the
period between the Closing Date and November 30, 2002, and on each December 31,
March 31, June 30 and September 30 thereafter, Borrowers shall jointly and
severally pay to Lender, within three (3) days after the close of each such
period, a fee in an amount equal to one quarter of one percent (0.25%) per annum
calculated on the basis of a 360 day year for the actual number of days elapsed
in each period of the average daily unused portion of the Line of Credit. Any
permanent reductions of the Maximum Available Credit will be taken into account
in the calculation of the Facility Fee.
2.1.7 Line Closing Fee. Simultaneously with the execution of this
Agreement, Borrowers shall pay to Lender a Line Closing Fee in the amount of One
Hundred
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Seventy Five Thousand Dollars ($175,000). Borrowers acknowledge and agree that
such Line Closing Fee is deemed fully earned upon the payment thereof and is
non-refundable in all events.
2.1.8 Principal and Interest Payments. Until the Indebtedness
associated with the Line of Credit is paid in full, interest alone shall be paid
monthly in arrears at the applicable Line Interest Rate on the first day of the
month following the month in which the first Advance is made and thereafter on
the first day of each consecutive month. Anything to the contrary herein
notwithstanding all unpaid principal of the Line and all interest accrued
thereon shall be paid in full by the Borrowers not later than the Line
Termination Date.
2.1.9 Maximum Available Credit. The outstanding principal balance
of the Line of Credit shall not exceed, at any time, Seventeen Million Five
Hundred Thousand Dollars ($17,500,000) (the "Maximum Available Credit").
Borrowers jointly and severally covenant and agree to immediately repay, without
notice or demand, any principal balance of the Line of Credit in excess of the
Maximum Available Credit. Borrowers may from time to time, at their option,
permanently reduce the Maximum Available Credit on 5 Business Days' prior
written notice to Lender. All such reductions shall be in minimum amounts of
$1,000,000 and integral multiples thereof and such reductions may not reduce the
Maximum Available Credit below the amount of the Advances then outstanding.
2.1.10 Extension of Line Termination Date. No earlier than 90
days prior to each annual anniversary date of the date hereof Borrowers may
request in writing that the Lender extend the Line Termination Date for a period
of one year beyond the then current Line Termination Date; whereupon, in its
sole and absolute discretion, Lender may decide to extend the Line Termination
Date for such period. Lender shall provide notice to Borrowers of Lender's
decision with respect to Borrowers' request to extend the Line Termination Date
no later than forty-five (45) days after receipt of Borrowers' written request
therefore; provided, however, that if Lender fails to respond to Borrowers'
extension request within such forty-five (45) day period, Borrowers' request
shall be deemed conclusively denied and the then current Line Termination Date
shall not be extended.
2.2 Term Loan.
2.2.1 Term Loan Established. On the date hereof, the Lender shall
advance to Borrowers the sum of Fifteen Million Dollars ($15,000,000) as the
Term Loan. The proceeds of the Term Loan shall be used by Borrowers exclusively
to finance the Cash-Out.
2.2.2 Term Note. On the date hereof and to evidence the
Indebtedness under the Term Loan, Borrowers shall execute and deliver to Lender
the Term Note.
2.2.3 Term Interest Rate. The aggregate outstanding principal
balance of the Term Loan shall bear interest at a fixed rate of interest of Nine
Percent (9%) per annum. All interest on the Term Loan shall be calculated on the
basis of a 360 day year for the actual number of days elapsed in each period.
2.2.4 Term Loan Closing Fee. Simultaneously with the execution of
this Agreement, Borrowers shall pay to Lender with regard to the Term Loan, a
Term Loan Closing Fee in the amount of One Hundred Fifty Thousand Dollars
($150,000). Borrowers acknowledge
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and agree that such Term Loan Closing Fee is deemed fully earned upon the
payment thereof and is non-refundable in all events.
2.2.5 Principal and Interest Payments. Interest at the Term
Interest Rate on the outstanding principal balance of the Term Loan shall be
payable on the first day of each month from and after the Closing Date until
such principal balance is paid in full. Principal under the Term Loan shall be
paid in the following installments:
Principal payments in the amount of Four Hundred Thousand Dollars
($400,000) shall be due and payable on each of January 31, 2003, April
30, 2003, July 31, 2003 and October 31, 2003;
Principal payments in the amount of Six Hundred Seventy-Five Thousand
Dollars ($675,000) shall be due and payable on each of January 31,
2004, April 30, 2004, July 31, 2004 and October 31, 2004;
Principal payments in the amount of Eight Hundred Twenty-Five Thousand
Dollars ($825,000) shall be due and payable on each of January 31,
2005, April 30, 2005, July 31, 2005 and October 31, 2005;
Principal payments in the amount of Nine Hundred Twenty-Five Thousand
Dollars ($925,000) shall be due and payable on each of January 31,
2006, April 30, 2006, July 31, 2006, October 31, 2006, January 31,
2007, April 30, 2007, July 31, 2007, and October 31, 2007.
2.2.6 Prepayment under the Term Loan. The Term Loan may be
prepaid in whole or in part and from time to time without premium or penalty,
provided, however, that any prepayment of the Term Loan must be accompanied by
the payment of interest on the amount prepaid accrued through the date of
prepayment. Any prepayment will reduce the aggregate principal amount of the
Term Loan and will have no effect on the next scheduled payment due in
accordance with the terms of this Agreement and the Term Note; provided,
however, that if the next scheduled payment due is greater than the unpaid
aggregate principal amount of the Term Loan (the "Unpaid Balance"), such payment
shall be equal to the Unpaid Balance.
2.2.7 Payments Under the Xxxx Documents. Upon the exercise of the
Option (each as defined therein) under the Xxxx Note or the ROFR (each as
defined therein) under the Xxxx Agreement, and subject to the limited right of
setoff as respectively provided therein, all net proceeds otherwise respectively
payable to the Borrowers thereunder (the "Net Xxxx Proceeds") shall be payable
by Xxxx National directly to the Lender and shall be credited by the Lender with
the following order of priority: (i) against any Lender's Costs then
outstanding; (ii) against accrued but unpaid interest under the Term Loan; and
(iii) against unpaid principal under the Term Loan; provided, however, that if
at the time of the payment of the Net Xxxx Proceeds an Event of Default or a
Potential Event of Default has occurred and is continuing, then and in such
event, Lender may apply the Net Xxxx Proceeds to such of the Obligations and in
such order as Lender may elect. Subject to the foregoing, and provided, no Event
of Default or a Potential Event of Default has occurred and is continuing, in
the event that the Lender applies the
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Net Xxxx Proceeds to the outstanding principal balance due under the Term Loan,
notwithstanding the amortization thereof as set forth in Paragraph 2.2.5 hereof,
the remaining principal balance shall be amortized in equal quarterly
installments over the number of full calendar quarters between (a) the date of
the application of the Net Xxxx Proceeds to the outstanding principal balance
due under the Term Loan and (b) the Term Loan Termination Date. Interest at the
Term Loan Interest Rate shall continue to be paid on the outstanding principal
balance of the Term Loan on the first day of each month. Borrowers covenant and
agree to execute and deliver to Lender an Amended and Restated Term Loan Note
consistent with the forgoing and to pay to Lender all Lender's costs associated
with all of the foregoing.
2.3 General Provisions Applicable to the Loans.
2.3.1 Payments. All payments hereunder shall be made by Obligors
in Dollars to Lender without defense, setoff or counterclaim in immediately
available funds and delivered to Lender not later than 2:00 p.m. on the date
due, at Lender's address set forth in Section 9.1 hereof, or such other place as
shall be designated in writing by Lender. Funds received by Lender after that
time shall be deemed to have been paid by Obligors on the next succeeding
Business Day.
2.3.2 Late Charge; Default Rate of Interest. Obligors shall pay
to Lender a late charge of five (5%) percent of any payment of principal,
interest, fees, charges or Lender's Costs which is more than fifteen (15) days
past due. In addition, any principal payment on the Loans not paid when due, and
to the extent permitted by applicable law, any interest payment on the Loans not
paid when due, and any other amount due to Lender under this Agreement or any
other Loan Document not paid when due (including Lender's Costs), in any case
whether at stated maturity, acceleration or otherwise, shall thereafter bear
interest payable upon demand at a rate per annum which is three (3%) percent
plus the highest applicable Interest Rate, if any. Such default rate of interest
shall continue only for so long as the monetary default applicable thereto
continues.
2.3.3 Maximum Rate of Interest. Notwithstanding anything to the
contrary herein or in any other Loan Document, no effective rate of interest
hereunder shall exceed the maximum effective rate of interest permitted by
applicable law or Rule. Obligors hereby agree to give Lender written notice in
the event that any Obligor has actual knowledge that any interest payment made
to Lender hereunder or under any other Loan Document will cause the total
interest payments collected in any one year to be usurious under applicable law
or Rule, and Lender hereby agrees not to knowingly collect any interest from
Obligors in the form of fees or otherwise which would render either of the Loans
usurious. In the event that interest hereunder or under any other Loan Document
would be usurious in the opinion of Lender, Lender reserves the right to reduce
the interest payable by Obligors. This Paragraph shall survive the repayment of
the Loans.
2.3.4 Obligations Absolute. The Obligations of Borrowers and
Obligors, as the case may be, under this Agreement and each of the other Loan
Documents shall be joint, several, absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms hereof, as amended
according to clause (ii) of this Paragraph, under all circumstances whatsoever,
including without limitation the following circumstances: (i) any lack
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of validity or enforceability of the Loan Documents or any other agreement or
document relating thereto; (ii) any amendment or waiver of or any consent to or
departure from the Loan Documents or any document relating thereto if Borrowers
or Obligors, as the case may be, have consented to any such amendment; and (iii)
the existence of any claim other than claims arising solely from Lender's gross
negligence or willful misconduct, defense or other right which Obligors may have
at any time against Lender or any other person or entity, whether in connection
with this Agreement, the transactions described herein or any unrelated
transaction. Obligors understand and agree that no payment by Obligors under any
other agreement (whether voluntary or otherwise) shall constitute a defense to
their Obligations hereunder.
2.3.5 Assessment. If Lender shall reasonably determine that (i)
any current law or Rule, the adoption or imposition of any law or Rule, any
change in any law or Rule, or the adoption, imposition or change in the
interpretation or administration thereof by a governmental authority, central
bank or comparable agency charged with the interpretation and administration
thereof, or (ii) compliance with any guideline or directive generally applicable
to national banks whether or not having the force of law, including without
limitation with respect to special deposits, capital adequacy, risk based
capital, capital or reserve maintenance, capital ratio, or similar requirements,
or any deposits or other liabilities taken or entered into by Lender (including
the capital adequacy guidelines promulgated by the Board of Governors of the
Federal Reserve System) may result in (A) an increase to Lender of the cost of
making or maintaining the Loans, or to impose upon Lender or increase any
capital requirement applicable as a result of the making or maintenance of the
Loans, or (B) a reduction of the rate of return or amounts receivable hereunder
as a consequence of its obligations pursuant to this Agreement to a level below
that which Lender could have achieved but for such adoption, imposition, change
or compliance, taking into consideration Lender's policies with respect to
capital adequacy (which adoption, imposition, change, or increase in capital
requirements or reduction in amounts receivable may be determined by Lender's
reasonable allocation of the aggregate of such cost increase, capital increase
or imposition of reductions in amounts receivable resulting from such events),
or (C) subjecting the Lender to any tax, duty, charge or withholding on or from
payments due from Obligors (excluding federal taxation of the overall net income
of Lender), or changes in the basis of taxation of payments to Lender in respect
of the Loans or other amounts due to Lender hereunder, then, from time to time,
Obligors shall pay to Lender, within ten (10) Business Days of demand by Lender,
such additional amounts as will be necessary to restore the rate of return to
Lender from the date of such change, together with interest on such amount from
the 10th Business Day after demand until payment thereof in full at the Interest
Rate. Lender shall be entitled to compensation pursuant to this Paragraph by
submitting a certificate claiming compensation and setting forth (accompanied by
calculations in reasonable detail) the increased cost, reduction in amounts
receivable or additional amount or amounts necessary to compensate Lender
hereunder for any reduction in return on capital, which certificate shall be
conclusive absent manifest error. Failure on the part of Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of Lender's right to demand compensation with respect to
such period or any other period. The protection of this Paragraph shall be
available to Lender regardless of any possible contention of the invalidity or
inapplicability of any law or Rule or other change or condition which shall have
occurred or been imposed.
2.3.6 Conditional Payment. All funds received by Lender from
Obligors
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will be subject to Lender's standard clearing procedures and clearing periods
for uncollected funds as such procedures and clearing periods may change from
time-to-time. Obligors waive any rights they may have to direct the application
of any and all payments at any time or times hereafter received by Lender on
account of the Indebtedness. Obligors agree that Lender shall have the
continuing exclusive right to apply and reapply such payments in any manner, as
Lender may deem advisable, notwithstanding any entry by Lender upon its books;
provided, however, that so long as no Lenders' Costs, interest, principal or any
other amount owing under this Agreement and the other Loan Documents is due and
no Potential Default or Event of Default has occurred and is continuing,
Obligors may direct the prepayment of the Term Loan in accord with Paragraph
2.2.6 hereof.
2.3.7 Action by Obligors. Obligors agree and hereby confirm that
(i) other than U.S. Vision, all of the Obligors are wholly owned either directly
or indirectly by U.S. Vision, and all Obligors have shared management and
financial support; and (ii) any request made or other function made or performed
by U.S. Vision in connection with this Agreement or the other Loan Documents
shall be deemed made or performed by and on behalf of all Obligors.
2.3.8 Participations. Obligors agree that Lender may sell
participations in the Obligations to financial institutions and other Persons
who lend money in the ordinary course of their business, and therefore: (i)
Lender may from time to time provide financial and other information concerning
the Obligors to any participant or prospective participant; and (ii) should any
participant default under its obligations to fund any portion of its interest in
the Term Loan, Lender will have no obligation to fund the Term Loan to the
extent of such participant's share thereof.
2.3.9 Canadian Interest Act Conversion. Notwithstanding any other
provision of this Agreement, for the purposes of the Canadian Interest Act and
disclosure thereunder, wherever interest to be paid by any under this Agreement
is to be calculated on the basis of a year of a 360 day year or any other period
of time that is less than a calendar year, the yearly rate of interest to which
the rate determined pursuant to such calculation is equivalent is the rate so
determined multiplied by the actual number of days elapsed in the calendar year
in which the same is to be ascertained and divided by either 360 or such other
period of time, as the case may be.
2.3.10 Termination of Facility. The Borrowers may terminate this
Agreement at any time prior to the Line Termination Date or the Term Loan
Termination Date upon at least 10 Business Days' notice to the Lender without
premium or penalty after (i) the payment in full of all outstanding Advances
under the Line of Credit, together with accrued interest thereon, (ii) the
payment of the Term Loan, together with accrued interest thereon, and (iii) the
satisfaction of all other Obligations, including, without limitation, the
payment in full in cash or cash equivalent of all Indebtedness, Lender's Costs
and all other costs under this Agreement or the Loan Documents.
3. SECURITY
3.1 Collateral Generally.
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3.1.1 Security Interest in All Assets. As security for the prompt
payment and discharge of all of the Indebtedness and the performance of all of
the Obligations, Borrowers hereby grant to Lender a security interest in, and
first Lien on, All Assets of Borrowers, now owned or hereafter acquired, whether
or not earned by performance, all books and records pertaining thereto
(including without limitation all manual and computer records, runs, printouts,
disks, software and other computer-prepared information of every kind) and all
insurance proceeds in connection therewith, together with all cash and non-cash
proceeds and products thereof, wherever located, whether now owned or hereafter
acquired or arising (the "Borrowers' Collateral").
3.1.2 Security Interest in All Assets of Guarantors. As security
for the performance of all of the Guarantors' Obligations and pursuant to the
General Security Agreement of the Health and the Movable Hypothec, Guarantors
have granted to Lender a security interest in, and first Lien on, All Assets of
Guarantors, now owned or hereafter acquired, whether or not earned by
performance, all books and records pertaining thereto (including, without
limitation, all manual and computer records, runs, printouts, disks, software
and other computer-prepared information of every kind) and all insurance
proceeds in connection therewith, together with all cash and non-cash proceeds
and products thereof, wherever located, whether now owned or hereafter acquired
or arising (the "Guarantors' Collateral").
3.1.3 Priority of Liens. Except for Permitted Liens set forth on
Schedule 3.1.3, all Liens in favor of Lender in the Collateral shall be first
perfected priority Liens. Obligors shall pay and discharge when due all taxes,
levies, and other charges upon said Collateral and upon the goods evidenced by
any documents constituting Collateral and shall indemnify and defend Lender
against, and save Lender harmless from, all claims of any Person with respect to
the Collateral. This indemnity shall include reasonable attorneys' fees and
expenses as well as costs of investigation.
3.1.4 Financing Statements and Other Documents. Obligors hereby
authorize Lender or its agent to file any and all Financing Statements. Further,
Obligors agree to execute and deliver any other documents, instruments, or
agreements reasonably requested by Lender, to create, perfect or keep perfected
any security interest under the Uniform Commercial Code as adopted in any state
or province having jurisdiction over the Collateral, including, without
limitation, any Financing Statements, continuation statements or termination
statements and any other security instruments or agreements as Lender may
reasonably require in connection with this Agreement and the other Loan
Documents, including, without limitation, the Movable Hypothec. Borrowers hereby
appoint Lender as Borrowers' attorneys-in-fact to execute and file in Borrowers'
name all documents and instruments which Lender may deem necessary or
appropriate to perfect and continue perfected the security interest in the
Collateral created by this Agreement or any of the other Loan Documents.
3.2 Lockboxes. Each of the Obligors shall establish and maintain
lockboxes (each a Lockbox and collectively, the "Lockboxes") and non-interest
bearing depository accounts (each a "Cash Collateral Account" and collectively
the "Cash Collateral Accounts") with Lender subject to the provisions of this
subparagraph and the respective Lockbox Agreement. Unless otherwise prohibited
by applicable law, all collections of Accounts shall be paid directly by Account
Debtors into the respective Lockboxes and then deposited into Lender's
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respective Cash Collateral Accounts for such Obligor. Provided no Potential
Default or Event of Default has occurred and is continuing, on a daily basis and
at the election of the Obligors, cleared funds in the Cash Collateral Accounts
shall be transferred to Obligors' concentration operating account at Lender or
applied to reduce the outstanding Indebtedness under the Notes. Upon the
occurrence and continuance of an Event of Default or Potential Default, Lender
may retain all funds in the Cash Collateral Accounts and shall have the right to
use such funds in accordance with Section 8.3 hereof. In the event that
collections of Accounts and proceeds of other Collateral are received at any
time by any of the Obligors, such collections shall be held in trust for the
benefit of Lender and shall be remitted, in the form received, to Lender for
deposit into such Obligor's Cash Collateral Account immediately upon receipt by
Obligors.
3.3 Maintenance of Collateral. Obligors shall maintain, preserve,
protect and keep in good order and condition, ordinary wear and tear excepted,
all Collateral, and from time to time, make all necessary or appropriate
repairs, replacements and improvements thereto. If Obligors shall hereafter
acquire Collateral which, under applicable law, is required to be registered or
certified, Obligors shall cause such Collateral to be registered or certified
properly in the name of Obligors, as the case may be, and cause all motor
vehicles or other equipment the ownership of which, under applicable law, is
evidenced by a certificate of title to be properly titled in Obligors' name, and
to have Lender's Lien on such motor vehicles and other equipment properly noted
on the certificate of title with respect thereto and deliver such certificates
of title to Lender. On behalf of Obligors, Lender may, but shall not be
obligated to pay and discharge taxes and/or Liens pertaining to the Collateral
and pay for the repair of any such Collateral, the maintenance and preservation
thereof and for insurance thereon if Obligors shall fail to do so, unless an
Event of Default shall have occurred in which case Lender need not request
Obligors to do so. Obligors agree to reimburse Lender, within three (3) Business
Days after notice thereof from Lender to Obligors, for any payment so made.
3.4 Searches. Lender will have received prior to or at Closing, and
thereafter from time to time, UCC, judgment, federal and state tax and real
estate, pending litigation and bankruptcy Lien searches, or their Canadian
equivalent, against each Obligor, the cost of which shall constitute Lenders'
Costs, showing that Lender's security interests in and Liens on the Collateral,
as granted in this Agreement, the Movable Hypothec and the General Security
Agreement, shall be, upon perfection, security interests in and Liens thereon
with the priority rights agreed to in this Agreement, the Movable Hypothec and
the General Security Agreement, and the Collateral is not subject to any Liens,
claims and encumbrances except for Permitted Liens.
3.5 Inspection, Appraisal and Audit of Collateral. So long as any
portion of the Indebtedness remains outstanding and unpaid or any of the
Obligations remain unperformed, Lender shall have the right at any time and from
time-to-time, as Lender deems necessary in its sole discretion to inspect,
conduct audits, valuations and other tests and to obtain appraisals of the
Collateral. Such inspections, audits, valuations and appraisals shall occur no
more than twice annually, unless an Event of Default or Potential Default shall
have occurred, after which any such inspection, audit, valuation or appraisal
may be performed as frequently as reasonably determined by Lender. In each case,
such inspection, audits, valuations and appraisals shall be performed by persons
selected by Lender at reasonable cost, shall constitute a portion of Lender's
Costs, and shall be made at any reasonable time, during normal business hours,
10
twentyfour (24) hours subsequent to the provision of notice to Obligors.
4. CONDITIONS PRECEDENT
The performance by Lender of any of its obligations hereunder is subject to
the following conditions precedent:
4.1 Closing Deliveries. At or prior to Closing, Obligors shall deliver
or cause to be delivered to Lender, executed where applicable and in form and
substance satisfactory to Lender and its counsel, in addition to this Agreement,
the following documents, instruments and agreements and the following conditions
shall have been satisfied:
4.1.1 The Line of Credit Note;
4.1.2 The Term Note;
4.1.3 The Post-Closing Agreement;
4.1.4 Insurance certificates meeting the criteria set forth in
Paragraph 6.1.3 hereof;
4.1.5 Financing Statements identifying Obligors as debtors, and
Lender as secured party to be filed in all jurisdictions required to perfect
Lender's security interest in the Collateral in which perfection can be achieved
by the filing of a financing statement;
4.1.6 UCC, judgment, federal and state tax, real estate, pending
litigation and bankruptcy lien searches against each Obligor performed by a
company designated by Lender, the cost of which shall constitute Lenders' Costs;
4.1.7 Copies of the Penney's Agreement, the Sears Agreement and
the Vision One Agreement, certified by a Specified Officer to be true and
correct copies of the originals thereof (other than with respect to the Sears
Agreement as specified therein) and to be in full force and effect on the date
hereof;
4.1.8 Each of the Transactional Documents with any amendments
thereto, certified by a Specified Officer to be true and correct copies of the
originals thereof, and to be in full force and effect on the date hereof, and
evidence in form and substance satisfactory to Lender that the respective
transactions contemplated thereby have been consummated and fully funded, other
than to the extent funding is required hereunder;
4.1.9 A certificate of the Secretary of each Obligor, certifying
to and attaching true, correct and complete copies of (i) resolutions of such
Obligor's Board of Directors authorizing the borrowing hereunder, granting the
security interests herein, and the execution and delivery of the Loan Documents,
(ii) authorizing resolutions as to the Merger, (iii) Certificate of
Incorporation for such Obligor, (iv) such Obligor's Bylaws, (v) incumbency and
signatures of the officers of such Obligor authorized to execute and deliver the
Loan Documents, (vi) a currently issued good standing, subsistence or existence
certificate from each state in which such Obligor is organized and where such
Obligor conducts business where the failure to
11
be so qualified could constitute a Material Adverse Effect;
4.1.10 An opinion of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP and
an opinion of Xxxxxx, Lidji & Werbner addressed to Lender, each with respect to
the Line of Credit, Term Loan and the Transactional Documents, in form and
substance satisfactory to Lender in its sole and absolute discretion;
4.1.11 Payment of the Line Closing Fee and the Term Loan Closing
Fee;
4.1.12 Payment of all Lender's Costs incurred in connection with
the extension of the credit facilities and the transactions contemplated hereby;
4.1.13 All documents, agreements and arrangements required by
Lender with respect to the Collateral;
4.1.14 Copy of the Agreement and Plan of Merger with any
amendments thereto, certified by a Specified Officer to be true and correct
copies of the originals thereof and to be in full force and effect on the date
hereof;
4.1.15 Evidence satisfactory to the Lender that all of the
conditions to the effectiveness of the Merger set forth in Article VI of the
Agreement and Plan of Merger have been met;
4.1.16 The Lockbox Agreement;
4.1.17 Each of the Canadian Collateral Documents; and
4.1.18 Such additional documents or instruments as the Lender may
require.
4.2 Advances After the Date Hereof. Lender shall not be required to
make any requested Advance unless on each Funding Date (i) Obligors deliver or
cause to be delivered to Lender, executed where applicable, and in form and
substance satisfactory to Lender and its counsel, the following documents and
instruments, and (ii) the following conditions shall have been satisfied:
4.2.1 The representations and warranties set forth in Article 5
of this Agreement shall be true and correct in all material respects on and as
of such date with the same effect as though made on and as of such date, and
each Notice of Borrowing shall be deemed a reaffirmation thereof;
4.2.2 No Event of Default or Potential Default shall have
occurred and be continuing hereunder or under any other Loan Document;
4.2.3 No Material Adverse Change shall have occurred and then be
in existence;
4.2.4 All Lender's Costs then due shall have been paid by
Obligors.
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Obligors authorize Lender to deduct such Lender's Costs from the Advance and
agree to indemnify and hold Lender harmless from and against any and all claims,
other than claims arising from Lender's willful misconduct or gross negligence,
for any such Lender's Costs; and
4.2.5 Obligors will have delivered to Lender such additional
documents or instruments as Lender may reasonably require.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Obligors represent and warrant to Lender as follows:
5.1.1 Incorporation, Good Standing, Due Qualification. Each
Obligor is a corporation duly organized, validly existing, subsisting or in good
standing under the laws of each respective Obligor's state or province of
incorporation as shown on Schedule 5.1.1 hereto; has all power and authority
necessary to own and operate its properties and to carry on its business as it
is now engaged and where and as contemplated; and is duly qualified as a foreign
corporation to do business in, and is in good standing in, every jurisdiction
where the nature of Obligors' business requires such qualification;
5.1.2 Power and Authority. The making, execution, issuance and
performance by each Obligor of this Agreement, the Notes and each of the other
Loan Documents to which such Obligor is a party is within the corporate powers
of such Obligor, and have been duly authorized by all necessary corporate action
by such Obligor;
5.1.3 Legally Enforceable Agreement. This Agreement and each of
the other Loan Documents to which Obligors are, individually or in the
aggregate, a party, constitute the legal, valid and binding Obligations of
Obligors, enforceable against Obligors in accordance with their respective
terms;
5.1.4 Priority of Liens; Condition of Collateral. With the
exception of Permitted Liens, Obligors own the Collateral free and clear of all
Liens and upon perfection of Lender's security interest in such Collateral,
Lender will have a security interest and Movable Hypothec in, and first priority
Lien on, all of the Collateral subject only to Permitted Liens, if any. With
respect to each Obligor (i) its chief executive office (or in the Province of
Quebec, its head office) is located in the state or province identified in
Schedule 5.1.4(i) hereto, (ii) its exact legal name as set forth in such
Obligor's organizational documents as filed in the state or province of such
Obligor's formation is as set forth in the first Paragraph of this Agreement and
any names, other than such name, trade styles or designation under which each
Obligor does business as such or has done business within the five (5) years
immediately preceding the date hereof, is also as identified in as such in
Schedule 5.1.4(ii) hereto, and (iii) its tax identification number (or Canadian
equivalent) is as identified on Schedule 5.1.4(iii) hereto. Obligors have
registered all fictitious names listed on Schedule 5.1.4(ii);
5.1.5 Leases. Schedule 5.1.5 hereto accurately sets forth all
locations occupied or utilized by each Obligor as lessee, together with the name
and address of the lessor and, if other than the lessor, the record owner
thereof, and the date of the applicable lease; all such leases are in full force
and effect and each Obligor is in material compliance with the terms
13
of each lease;
5.1.6 Store Count and Sales Volume. Schedule 5.1.6 hereto
accurately sets forth by Obligor all of such Obligor's store locations and the
volume of sales for each location;
5.1.7 Real Property. Schedule 5.1.7 hereto accurately sets forth
all Real Property;
5.1.8 No Violation. The execution, delivery and performance by
Obligors of the Loan Documents does not, and will not by the passage of time,
the giving of notice or otherwise, to Obligors' knowledge (i) violate any
provision of any law or regulation, (ii) violate the Certificate or Articles of
Incorporation or Bylaws of any Obligor, (iii) violate any judgment, order,
decree, agreement, trust or other indenture or instrument to which any Obligor
is a party or by which any of its property is bound, or (iv) result in or
require the creation or imposition of any Lien with respect to any property now
owned or hereafter acquired, other than Liens arising under the Loan Documents.
Obligors are not in default with respect to any judgment, writ, injunction,
decree, rule or regulation of any governmental authority;
5.1.9 Penney's Agreement; Sears Agreement; Vision One Agreement.
True, correct and complete copies of each of the Penney's Agreement, the Sears
Agreement, and the Vision One Agreement have been delivered to Lender pursuant
to Article 4 hereof, are each in full force and effect in the respective forms
thereof as certified and delivered to the Lender on the date hereof and have not
been terminated or amended nor to the knowledge of any of the Obligors are any
such actions pending or threatened;
5.1.10 Financial Condition. The financial statements of Obligors
heretofore furnished to Lender are true, complete and correct in all material
respects, have been prepared in accordance with GAAP, consistently applied, and
present fairly the financial condition of Obligors as of the dates thereof, and
the results of Obligors' operations for the periods therein ended. Since the
date of the most recent financial statements provided by Obligors to Lender,
there has been no Material Adverse Change, individually or in the aggregate, in
the financial condition of Obligors;
5.1.11 No Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of any Obligor, threatened against or affecting
any Obligor or any of its assets, and no Obligor is in default in the
performance of any agreement to which any Obligor is a party or by which any
Obligor is bound specifically including, but not limited to, the Penney's
Agreement, the Sears Agreement and the Vision One Agreement, and there is no
order, writ, injunction, or any decree of any court, or any federal, state,
municipal or other government agency or instrumentality, domestic or foreign,
which if adversely determined with respect to any of the foregoing suits,
proceedings, defaults, orders, writings, injunctions or decrees would have a
Material Adverse Effect on Obligors, individually or in the aggregate;
5.1.12 Compliance. Obligors have all authorizations, consents,
approvals, licenses, and exceptions from, and have made all registrations and
filings with, and all reports to, all Governmental Agencies (collectively, the
"Governmental Approvals") necessary for the
14
conduct of their respective businesses, and the conduct of their respective
business is not and has not been in violation of any such Governmental Approvals
or any applicable federal or state law, Rule or regulation, including ERISA, the
failure of which to obtain or to comply with would, in any such case, have a
Material Adverse Effect on Obligors, individually or in the aggregate. Obligors
do not require any Governmental Approvals to enter into, or perform under, this
Agreement, the Notes, or any other Loan Document to which such Obligor is a
party. There are no actions or investigations pending or, to the knowledge of
the Obligors, threatened against or affecting any Obligor before any
Governmental Agency, which could result in a Material Adverse Change in such
Obligor's business, prospects or the ability of Obligors to conduct their
respective businesses in a manner consistent with past operations and financial
results;
5.1.13 Compliance with Regulations O, T, U and X. No Obligor is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meanings of Regulations O, T, U and X of the Board of Governors of the
Federal Reserve System);
5.1.14 Taxes. Each Obligor has paid, when due, all taxes,
governmental charges and assessments levied against any Obligor or any of its
assets, except for taxes, charges or assessments which are not overdue or which
are being contested in good faith and by appropriate proceedings with adequate
reserves therefor being available or having been set aside;
5.1.15 Environmental Matters.
5.1.15.1 To the best of Obligors' knowledge and after
reasonable investigation, the Real Property owned, leased or operated by the
Obligors now, or in the past, does not contain, and has not previously
contained, any Hazardous Materials in amounts or concentrations which (i)
constitute or constituted a violation of applicable Environmental Laws, or (ii)
could give rise to liability under applicable Environmental Laws;
5.1.15.2 The Obligors and Real Property and all operations
conducted in connection therewith are in compliance, and have been in
compliance, with all applicable Environmental Laws, and, to the best of
Obligors' knowledge and after reasonable investigation, there is no
contamination at, under or about such properties or such operations which could
interfere with the continued operation of such properties or materially impair
the fair saleable value thereof;
5.1.15.3 The Obligors have not received any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters, Hazardous Materials, or compliance with
Environmental Laws, nor do the Obligors have knowledge or reason to believe that
any such notice will be received or is being threatened;
5.1.15.4 To the best of Obligors' knowledge and after
reasonable investigation, Hazardous Materials have not been transported or
disposed of to or from the Real Property, leased or operated by the Obligors in
violation of, or in a manner or to a location which could give rise to liability
under, Environmental Laws, nor have any Hazardous Materials been generated,
treated, stored or disposed of at, on or under any of such properties in
15
violation of, or in a manner that could give rise to liability under, any
applicable Environmental Laws;
5.1.15.5 No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of the Obligors
threatened, under any Environmental Law to which any Obligor is or will be named
as a party, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to any
Obligor, its operation or the Real Property; and
5.1.15.6 There has been no release, or to the best of the
Obligor's knowledge, threat of release, of Hazardous Materials at or from
properties owned, leased or operated by the Obligors, now or in the past, in
violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws.
5.1.16 Debt and Guaranties. Except as set forth on Schedule
5.1.16 hereto, Obligors have no Debt, nor has any Obligor guaranteed the payment
or performance of any debts or obligations of any other Person except for the
guarantee of checks or other negotiable instruments for collection in the
ordinary course of such Obligor's business;
5.1.17 Stock Ownership. The outstanding capital stock of Obligors
is owned beneficially and of record as set forth in Schedule 5.1.17. All of the
outstanding shares of capital stock of Obligors have been duly authorized and
are validly issued, fully paid and non-assessable and are not subject to any
right or claim of rescission, and have been offered, sold and issued by each
respective Obligor in compliance with all applicable federal and state
securities laws;
5.1.18 Transactional Documents.
5.1.18.1 True, correct and complete copies of each of the
Transactional Documents have been delivered to Lender pursuant to Article 4
hereof, are each in full force and effect in the respective forms thereof as
certified and delivered to the Lender on the date hereof and have not been
terminated or amended nor to the knowledge of any of the Obligors are any such
actions pending or threatened;
5.1.18.2 Obligors have the full corporate power and
authority to execute and deliver each of the Transactional Documents and to
consummate all of the Transactions. The execution and delivery by Obligors of
the Transactional Documents and performance by Obligors of the Transactions have
been duly authorized by the Board of Directors of each of the Obligors and no
other corporate action on the part of any Obligor is necessary to authorize such
execution, delivery and performance. Each Transactional Document is a legal,
valid and binding obligation of the Obligors which are parties thereto,
enforceable against each such Obligor in accordance with its respective terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditor's rights generally and by the effect of general
principles of equity (regardless of whether enforcement is considered in
proceeding at law or in equity; and
16
5.1.18.3 No Obligor has any knowledge of any existing facts
or circumstances that may cause Obligors to be unable to consummate the
Transactions;
5.1.19 Solvency.
5.1.19.1 The present fair saleable value of the assets of
each Obligor after giving effect to the funding of the Loans hereunder exceeds
the amount that will be required to be paid on or in respect of the Debts and
other liabilities (including contingent liabilities) of Obligors as they mature,
5.1.19.2 The assets of Obligors do not constitute
unreasonably small capital for Obligors to conduct their business as now
conducted and as proposed to be conducted, including the capital needs of
Obligors,
5.1.19.3 Obligors do not intend to, nor do Obligors believe
that they will, incur Debts beyond their ability to pay such Debts as they
mature (taking into account the timing and amounts of cash to be received by
Obligors and of amounts to be payable on or in respect of Debt of Obligors). The
cash available to Obligors, after taking into account all other anticipated uses
of the cash of Obligors, is anticipated to be sufficient to pay all amounts on
or in respect of the Indebtedness when the Indebtedness or any part thereof is
required to be paid, and
5.1.19.4 The aggregate fair value of Obligors' assets
exceeds the aggregate of all their liabilities;
5.1.20 Labor Matters. Except to the extent set forth on Schedule
5.1.20 hereto, (i) Obligors individually or in the aggregate are not a party to
any collective bargaining agreements, (ii) Obligors have not experienced any
strike, labor dispute, slowdown or work stoppage as a result of labor
disagreements which would have a Material Adverse Effect on the value of the
Collateral, or on the enforceability of such Borrower's Obligations or
Guarantors' Obligations or the Indebtedness (including realizing on such
Collateral and Obligations), (iii) to the best knowledge of each Obligor, after
due inquiry, there is no such strike, dispute, slowdown or work stoppage pending
or threatened against any Obligor which would have a Material Adverse Effect on
any Obligor or the value of the Collateral or the enforceability of the
Indebtedness (including realizing on such Collateral), (iv) no labor petitions
have been filed or union organizing activity conducted during the past six
months pertaining to any Obligor; and (v) each Obligor's relations with such
Obligor's respective employees are satisfactory.
5.1.21 Investment Company Act. No Obligor is an Investment
Company within the meaning of the Investment Company Act of 1940;
5.1.22 Public Utility Holding Company Act. No Obligor is a Public
Utility Holding Company within the meaning of the Public Utility Holding Company
Act;
5.1.23 RICO. No Obligor has engaged in any conduct or taken or
omitted to take any action which violates RICO;
5.1.24 Acts of God. The business and properties of each Obligor
have not
17
been effected by any fire, explosion, accident, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance) that may have a Material Adverse Effect;
5.1.25 Other Agreements. No Obligor is in default in any respect
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any material contract, agreement or
instrument to which it is a party or by which it is bound which may have a
Material Adverse Effect;
5.1.26 Subsidiaries. U.S. Vision owns, directly or indirectly
through the ownership of another Obligor, all of the issued and outstanding
shares of the capital stock of all other Obligors. All Subsidiaries of Obligors
are parties under this Agreement and Obligors have no Affiliates other than as
set forth on Schedule 5.1.26;
5.1.27 ERISA. Each Obligor is in compliance in all material
respects with all applicable provisions of ERISA. Neither a Reportable Event nor
a Prohibited Transaction has occurred and is continuing with respect to any
Plan; no notice of intent to terminate a Plan has been filed, nor has any Plan
been terminated; no circumstances exist that constitute grounds under Section
4042 of ERISA entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administrate, a Plan, nor has the PBGC instituted any such
proceedings; no Obligor nor any ERISA Affiliate has completely or partially
withdrawn under Section 4201 or 4204 of ERISA from a Multi-Employer Plan;
Obligors and each ERISA Affiliate have met their minimum funding requirements
under ERISA with respect to all of their Plans and the present fair market value
of all Plan assets exceeds the present value of all vested benefits under each
Plan, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA and the regulations thereunder for
calculating the potential liability of each Obligor or any ERISA Affiliate to
the PBGC or the Plan under Title IV of ERISA; and no Obligor or any ERISA
Affiliate has incurred any liability to the PBGC under ERISA;
5.1.28 Operation of Business. Each of the Obligors possesses all
material licenses, permits, franchises, intellectual property, and trade names,
or rights thereto, to conduct its business substantially as now conducted and as
presently proposed to be conducted, and none of the Obligors is in violation of
any rights of others with respect to any of the foregoing. Nothing has come to
the attention of any Obligor to the effect that (i) any product, process,
method, substance, part or other material presently contemplated to be sold by
or employed by it in connection with such business may infringe any patent,
trademark, service xxxx, trade name, copyright, license or other right owned by
any other Person or (ii) there is pending or, to such Obligor's knowledge,
threatened any claim or litigation against or affecting it contesting its right
to sell or use any such product, process, method, substance, part or other
material, which infringement, claim or litigation may, in any one case, or would
in the aggregate, have a Material Adverse Effect on the business, properties,
assets, operations or conditions, financial or otherwise, of such Obligor;
5.1.29 Fiscal Year. The Fiscal Year of Obligors for financial
accounting purposes ends on January 31 of each year;
18
5.1.30 Accounts. Each Account of each Obligor arises out of a
completed, bona fide sale and delivery of goods or rendition of services by such
Obligor in the ordinary course of business;
5.1.31 Legal Compliance.
5.1.31.1 Each Obligor has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof, including, without limitation, the SEC,
the National Stock Market ("Nasdaq") and all applicable state securities
regulatory agencies (each a "Blue Sky Agency"), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, audit, or notice has
been filed or commenced against any Obligor alleging any failure so to comply.
No disciplinary proceeding with respect to any Obligor or any Obligor's
respective officers is pending before the SEC, the Nasdaq or any Blue Sky
Agency;
5.1.31.2 A definitive proxy statement (the "Proxy
Statement") in connection with the merger has been filed by U.S. Vision and
Holdings, with the SEC and a Schedule 13E-3 ("Schedule 13E-3") has been filed by
U.S. Vision, Kayak, Xxxxxx X. Xxxxxxxx III, Xxxxxxx X. Xxxxxxxx, Xx., Xxxxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxxxx, Xx., Indiana Pacific Capital Trust, Xxxxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxxx, and Xxxxx X. Xxxxxxx with the SEC and no order
preventing or suspending the use of the Proxy Statement and Schedule 13E-3 has
been issued by the SEC, and the Proxy Statement and Schedule 13E-3, at the time
of filing thereof, conformed in all material respects to the requirements of the
Securities Exchange Act of 1934 (the "1934 Act") and the rules and regulations
of the SEC thereunder, and does not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. There is no action, suit, proceeding, inquiry or
investigation before any court, public board, government agency, self-regulatory
organization or body including, without limitation, the SEC, the Nasdaq, and any
Blue Sky Agency, pending or, to the knowledge of any of the Obligors, threatened
against or affecting any of the Obligors, or any of their respective directors
or officers in their capacities as such. There are no facts which, if known by a
potential claimant or Governmental Authority, could give rise to a claim or
proceeding which, if asserted or conducted, the results would be unfavorable to
any of the Obligors; and
5.1.32 Accuracy of Representations; No Default. The information
set forth herein and on each of the Schedules hereto, and in each of the other
Loan Documents is complete and accurate in all material respects and contains
full and complete disclosure of all pertinent information in connection with
Obligors. None of such information contains any untrue statement of a material
fact or omits to state a material fact necessary to make the information
contained herein or therein not misleading or not incomplete. No Event of
Default or Potential Default hereunder, or under any other Loan Document, has
occurred.
6. AFFIRMATIVE COVENANTS
6.1 Obligors' Covenants. So long as any portion of the Indebtedness
remains outstanding and unpaid and any Obligation remains unperformed, or Lender
has any obligation
19
to extend Advances hereunder, Obligors jointly and severally covenant and agree
to do each and all of the following:
6.1.1 Financial Statements. To furnish, cause to be furnished, or
make available for inspection and review by Lender and in form and substance
satisfactory to Lender:
6.1.1.1 Not later than One Hundred Twenty (120) Days
following the close of each Fiscal Year, a statement of income and expense, a
statement of cash flows, and a balance sheet and notes of Obligors as at the end
of such Fiscal Year (and setting forth comparative figures for the previous
Fiscal Year, if any), each prepared in accordance with GAAP and accompanied by
an audit report, without qualification, of an independent certified public
accountant, satisfactory to Lender, in its sole and absolute discretion.
Obligors shall cause to be delivered by its then regularly-engaged independent
certified public accounting firm, together with the year end financial
statements of Obligors, a statement from such accountant to the effect that in
performing its audit of Obligors' financial statements, such accounting firm has
not become aware of any Event of Default or Potential Default;
6.1.1.2 not later than Forty-Five (45) Days after the end of
each Fiscal Quarter, management prepared statements of income and expense, a
statement of cash flows, and a balance sheet as at the end of such Fiscal
Quarter (and cumulatively for the Fiscal Year with comparative figures for the
periods in the prior Fiscal Year, if any) each prepared in accordance with GAAP,
subject to normal year-end accruals, except that notes to such financial
statements need not be prepared;
6.1.1.3 not later than Thirty (30) Days after the end of
each month, management prepared statements of income and expense and a balance
sheet as at the end of each such month (and cumulatively for the Fiscal Year,
with comparative figures for the periods in the prior Fiscal Year, if any) each
prepared in accordance with past practices;
6.1.1.4 not later than Thirty (30) Days after the end of
each Fiscal Year of Obligors, Projections of Obligors for the forthcoming four
Fiscal Years, year-by-year, and for the forthcoming Fiscal Year, month-by-month;
6.1.1.5 promptly upon it becoming available, one copy of
each financial statement, report, notice or statement sent by U.S. Vision to the
SEC or its stockholders generally; and
6.1.1.6 such data, reports, statements and information,
financial or otherwise, as Lender may request, including without limitation,
monthly consolidated accounts analysis.
All financial information provided by Obligors, pursuant to
this Paragraph shall be accompanied by a written statement signed by the
President or Chief Financial Officer of each Obligor, stating that all
information is true, correct and complete in all material respects and that (as
to a statement by Obligors) Obligors have not committed nor does there exist an
Event of Default or Potential Default under this Agreement or any other Loan
Document;
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6.1.2 Additional Financial Data. With reasonable promptness
furnish such additional information and data concerning the business and
financial condition of Obligors, as may be reasonably requested by Lender; upon
reasonable prior notice afford Lender or its agents reasonable access to the
financial books and records, computer records and properties of Obligors at all
reasonable times and permit Lender or its agents to make copies and abstracts of
same and to remove such copies and abstracts from Obligors' premises and permit
Lender or its agents the right to converse directly with the independent
accounting firm then engaged by Obligors to prepare their financial statements.
Obligors shall maintain their financial books and other records in accordance
with GAAP;
6.1.3 Insurance. Maintain, or cause to be maintained at all
times, in full force and effect: (i) worker's compensation insurance, in amounts
required under applicable law; (ii) general liability insurance; (iii)
automobile liability insurance; (iv) business interruption insurance; (v)
employee relations insurance; (vi) broad form fire, theft and extended coverage
covering all of Obligors' real and personal property on a replacement basis in
amounts not less than the amounts sufficient to prevent the imputation of any
co-insurance provisions; and (vii) such other insurance as Lender may from time
to time reasonably require. Each policy of insurance hereunder shall be in
amounts satisfactory to Lender in the exercise of its reasonable credit judgment
and shall be issued by a company or companies reasonably satisfactory to Lender
in the exercise of its reasonable credit judgment, and Obligors shall furnish
Lender with copies of each such policy. Evidence of all such policies shall be
on an Xxxxx 25 and Xxxxx 27 certificates in form satisfactory to Lender in the
exercise of its reasonable credit judgment, shall name Lender as a loss payee
and additional insured, as applicable, shall have premiums prepaid for twelve
(12) months, and shall contain a provision that such policies shall not be
cancelled or materially amended without at least thirty (30) days' prior written
notice to Lender for any and all cancellations and/or amendments, whether
monetary or non-monetary. If the insurance, or any part thereof, shall expire,
or be withdrawn, or become void by reason of Obligors' breach of any condition
thereof, or become void by reason of the value or impairment of the capital of
any company by which the insurance may then be carried, or if for any reason
whatever the insurance shall be unsatisfactory to Lender in the exercise of its
reasonable credit judgment, Obligors shall, at their own expense, place new or
additional insurance satisfactory to Lender in the exercise of its reasonable
credit judgment;
6.1.4 Taxes. Cause the prompt payment and discharge of all taxes,
governmental charges and assessments levied and assessed or imposed upon any
Obligor, or any of its assets, except as may be contested in good faith with
adequate reserves satisfactory to Lender having been set aside therefor;
6.1.5 Litigation. Promptly defend all actions, proceedings or
claims which could result in a Material Adverse Effect on Obligors' business,
and promptly notify Lender of the institution of, or any change in, any such
action, proceeding or claim if the same is in excess of One Hundred Fifty
Thousand Dollars ($150,000) for any single action, proceeding or claim and One
Hundred Fifty Thousand Dollars ($150,000) in the aggregate (other than claims
fully covered by insurance). In the event any order, judgment or Lien in an
amount exceeding One Hundred Fifty Thousand Dollars ($150,000) is entered or
filed, while any portion of the Indebtedness remains outstanding and unpaid,
that has not been vacated or the execution of which has not been stayed within
thirty (30) days (or immediately if a writ of execution is
21
filed) following the entry thereof, or that is not fully covered by insurance
satisfactory to Lender, Obligors shall furnish to Lender (i) a bond,
satisfactory to Lender, from an independent, financially responsible corporate
surety company, naming Obligors and Lender as co-payees, or (ii) establish an
escrow account with Lender, in either event in an amount equal to or greater
than the amount of such order, judgment or Lien, plus costs;
6.1.6 Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, affecting all of its financial transactions;
6.1.7 Maintenance of Properties. Maintain, keep and preserve all
of their properties necessary or useful in the proper conduct of their business
in good working order and condition, ordinary wear and tear and casualty
excepted;
6.1.8 Notice of Events. Promptly after Obligors become aware,
give written notice to Lender of the occurrence or imminent occurrence of any
event or occurrence which causes or would imminently cause: (i) any
representation or warranty made in Article 5 hereof to be untrue, incomplete or
misleading in any material respect; (ii) an the occurrence of an Event of
Default or Potential Default hereunder or under any other Loan Document; (iii)
any Material Adverse Change, (iv) any casualty to any material property of
Obligors; (v) the institution of, or the issuance of any order, judgment, decree
or other process in, any litigation, investigation, prosecution, proceeding or
other action by any Governmental Agency or other Person against any Obligor,
that does, or could, cause a Material Adverse Change; (vi) any change in
shareholders, directors or officers of Obligors, except as permitted by
Paragraph 7.1.6; and (vii) the termination or amendment of the Penney's
Agreement, the Sears Agreement or the Vision One Agreement;
6.1.9 Fiscal Year; Principal Executive Office; Existence.
Promptly notify Lender in writing of a change in the Fiscal Year of any Obligor;
notify Lender at least sixty (60) days prior to a change in the location of any
material portion of the Collateral or the principal executive office of any
Obligor; notify Lender at least thirty (30) days prior to any corporate or
entity name change of any Obligor; and maintain in good standing the corporate
existence of each Obligor and all necessary foreign qualifications, where the
failure to do so could constitute a Material Adverse Effect;
6.1.10 Compliance with Covenants under Transactional Documents.
Comply in all material respects with all covenants and agreements set forth in
each of the Transactional Documents.
6.1.11 Business. (i) Maintain all licenses in full force and
effect where the failure to do so could constitute a Material Adverse Effect,
(ii) maintain the general character of Obligors' business in the areas in which
it is currently engaged, and not engage in any business unrelated to the
business in which Obligors are currently engaged, (iii) continually operate that
business, and (iv) maintain and comply in all material respects with all
contracts and agreement with third parties, whether written or oral, promptly
notifying Lender in writing of any breach, termination, rescission or
modification thereof by any party thereto;
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6.1.12 Maintain Accounts with Lender. Maintain Lender as
Obligors' primary depository for all deposit, checking or similar accounts;
6.1.13 Additional Security Documents. Provide Lender, at any time
and from time to time on request, with such assignments, certificates of title,
or Financing Statements, and such additional instruments or documents as Lender
may, in Lender's sole and absolute discretion, deem necessary in order to
perfect, protect and maintain the security interest in the Collateral granted to
Lender pursuant to the terms hereof;
6.1.14 Operation of Business; Collection of Accounts. Diligently
operate the Obligors' business and take all reasonable commercial action to
collect all Accounts in connection therewith;
6.1.15 Performance of Obligation. Perform, as and when due, and
pay and discharge, at or before maturity, all obligations and liabilities,
except where the same may be contested in good faith by appropriate proceedings,
and appropriate reserves for the accrual of any of the same shall have been
established to the satisfaction of Lender;
6.1.16 Collateral Audits; Inspection. Permit Lender from time to
time to conduct valuations, inspections, audits and appraisals of the Collateral
and, as provided in Section 3.5 hereof, pay all Lender's Costs in connection
therewith.
6.1.17 Collateral. (i) Preserve the Collateral in good condition
and order and not permit it to be abused or misused; (ii) not allow any of the
Collateral to be affixed to real estate unless such real estate is subject to a
Lien in favor of the Lender; (iii) upon the request of Lender, deliver all
proceeds of the Collateral to Lender immediately upon receipt in identical form
received without commingling with other property; (iv) take all necessary steps
to preserve the liability of Account Debtors, obligors and secondary parties
whose liabilities are part of the Collateral; and (v) defend the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein and, in the event that Lender's security interest in
Obligors' Collateral or any part thereof would be impaired by an adverse
decision, allow Lender to contest or defend any such claim or demand in
Obligors' name;
6.1.18 Payments. Pay when due (or within applicable grace
periods) all Indebtedness, rental payments and other liabilities and obligations
to third Persons, except when the amount thereof is being contested in good
faith, by appropriate proceedings and with adequate reserves therefore being set
aside on its books. If any Obligor defaults in the payment of any principal or
rental (or installment thereof) of, or interest on, any Debt for money borrowed
in excess of One Hundred Fifty Thousand Dollars ($150,000) in the aggregate or
rental or other obligations in excess of One Hundred Fifty Thousand Dollars
($150,000) in the aggregate, Lender shall have the right, in its sole
discretion, to pay such interest, principal, rental or obligation for the
account of Obligors and shall be reimbursed therefore on demand by Obligors,
with interest at the Default Rate until paid;
6.1.19 Notice of Events with Respect to the Transactional
Documents. Notify Lender promptly upon becoming aware of (i) the occurrence of
an event of default or an event which would become a default but for the giving
of notice or the passage of time or both,
23
under any of the Transactional Documents, (ii) any fact, condition or event
that, with the giving of notice or passage of time, or both, could become an
event of default or potential default under any of the Transactional Documents
as those terms are defined therein, (iii) the failure of any Obligor to observe
any of its undertakings under any of the Transactional Documents and (iv) any
representation or warranty made in any of the Transactional Documents to be
untrue, incomplete or misleading in any material respect. Obligors agree that
immediately upon becoming aware of any development or other information outside
the ordinary course of business and excluding matters of a general economic,
financial or political nature which may materially and adversely affect their
respective ability to perform under any of the Transactional Documents, they
shall give to Lender notice specifying the nature of such development or
information and such anticipated effect;
6.1.20 Assignment of Accounts. Upon the occurrence and
continuance of an Event of Default, execute and deliver to Lender formal written
assignments of all of their Accounts weekly, which shall include all Accounts
that have been created since the date of the last assignment, together with
copies of invoices, invoice registers or other evidence of the sale related
thereto. Obligors shall keep accurate and complete records of their Accounts and
all payments and collections thereon and shall submit to Lender on a monthly
basis a sales and collections report from the preceding month, in form
satisfactory to Lender. On or before the last day of each month from and after
the date hereof, Obligors shall deliver to Lender, in form acceptable to Lender,
a detailed aged trial balance of all Accounts existing as of the last day of the
preceding month, specifying the names, addresses, face value, dates of invoices
and due dates for each Account Debtor obligated on an Account so listed
("Schedule of Accounts"), and, upon Lender's request therefore, make available
to Lender copies of proof of delivery and the original copy of all documents,
including, without limitation, repayment histories and present status reports
relating to the Accounts so scheduled and such other matters and information
relating to the status of then existing Accounts as Lender shall request;
6.1.21 Discounts, Allowances and Credits. Upon the granting of
any discounts, allowances or credits by Obligors, or any of them, that are not
shown on the face of the invoice for the Account involved, promptly report such
discounts, allowances or credits, as the case may be, to Lender and in no event
later than the time of its submission to Lender of the next Schedule of Accounts
as provided in Paragraph 6.1.2. Upon the occurrence and during the continuance
of an Event of Default, Lender shall have the right, but not the obligation, to
settle or adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including attorneys' fees, to
Obligors. If an Account includes a charge for any tax payable to any
Governmental Agency, Lender is authorized, in its sole discretion, to pay the
amount thereof to the proper Governmental Agency for the account of Obligors and
to charge Obligors hereunder therefor. Obligors shall notify Lender if any
Account includes any tax due to any Governmental Agency and, in the absence of
such notice, Lender shall have the right to retain the full proceeds of the
Account and shall not be liable for any taxes to any Governmental Agency that
may be due by Obligors, or any of them, by reason of the sale and delivery
creating the Account. Whether or not a Potential Default or an Event of Default
has occurred, any of Lender's officers, employees or agents shall have the
right, at any time or times hereafter, in the name of Lender, any designee of
Lender or Obligors, to verify the validity, amount or any other matter relating
to any Accounts
24
by mail, telephone, telegraph or otherwise. Obligors shall cooperate fully with
Lender in an effort to facilitate and promptly conclude any such verification
process;
6.1.22 Collection of Accounts. In order to expedite collection,
Obligors shall (subject to the provisions below) endeavor in the first instance
to make collection of its Accounts for Lender. All remittances received by any
Obligor on account of Accounts (and proceeds of all other Collateral) shall be
held as Lender's property by such Obligor as trustee of an express trust for
Lender's benefit (and in the Province of Quebec, as agent for the Lender) and
such Obligor shall immediately deposit same, in kind, in the Lockbox or the Cash
Collateral Account. Lender retains the right following the occurrence of an
Event of Default, to notify Account Debtors that Accounts have been assigned to
Lender and to collect Accounts directly in its own name and to charge the
collection costs and expenses, including attorneys' fees to Obligors. Lender has
no duty to protect, insure, collect or realize upon the Accounts or preserve
rights in the Accounts;
6.1.23 Amount in Dispute. Other than accounts receivable due from
Penney's, Sears and Vision One, in the event any amounts due and owing in excess
of Twenty Five Thousand Dollars ($25,000) are in dispute between an Obligor and
any Account Debtor, and with respect to accounts due and payable from Penney's,
Sears or Vision One any amounts due and owing in excess of One Hundred Thousand
Dollars ($100,000), provide Lender with written notice thereof at the time of
submission of the next Schedule of Accounts, explaining in detail the reason for
the dispute, all claims related thereto and the amount in controversy;
6.1.24 Inventory Reports. Furnish Lender with Inventory reports
for all Inventory at such times as Lender may request, but at least once each
Fiscal Quarter no later than thirty (30) days following the close of such Fiscal
Quarter. Such reports shall be in form and detail satisfactory to Lender;
6.1.25 Financial Covenants. Comply with the following Financial
Covenants:
6.1.25.1 Minimum Tangible Net Worth. Maintain a minimum
Tangible Net Worth, measured as of the last day of each month, of not less than
(i) Seventeen Million Five Hundred Thousand Dollars ($17,500,000) for the period
beginning on the Closing Date and ending on January 30, 2004; (ii) Twenty
Million Five Hundred Thousand Dollars ($20,500,000) for the period beginning on
January 31, 2004 and ending on January 30, 2005; (iii) Twenty-Three Million Five
Hundred Thousand Dollars ($23,500,000) for the period beginning on January 31,
2005 and ending on January 30, 2006; (iv) Twenty-Six Million Five Hundred
Thousand Dollars ($26,500,000) for the period beginning on January 31, 2006 and
ending on January 30, 2007; and (v) Twenty-Nine Million Five Hundred Thousand
Dollars ($33,000,000) for the period beginning on January 31, 2007 and
thereafter;
6.1.25.2 Minimum Current Ratio. Maintain a minimum Current
Ratio, measured as of the last day of each month, of not less than (i) 1.50 to
1.00 for the period beginning on January 31, 2003 and ending on January 30,
2004; and (ii) 1.75 to 1.00 for the period beginning on January 31, 2004 and
thereafter;
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6.1.25.3 Minimum Debt Coverage Ratio. Maintain a minimum
Debt Coverage Ratio, measured on a rolling twelve-month basis as of the last day
of each month, of not less than 1.25 to 1.00 for the period beginning on January
31, 2004 and thereafter;
6.1.25.4 Minimum Fixed Charge Coverage Ratio. Maintain a
minimum Fixed Charge Coverage Ratio, measured on a rolling twelve-month basis as
of the last day of each month, of not less than 1.00 to 1.00 for the period
beginning on January 31, 2004 and thereafter;
6.1.25.5 Maximum Leverage Ratio. Maintain a Maximum Leverage
Ratio, measured as of the last day of each month, of not greater than (i) 2.40
to 1.00 for the period beginning on the Closing Date and ending on January 30,
2004; (ii) 2.20 to 1.00 for the period beginning on January 31, 2004 and ending
on January 30, 2005; (iii) 2.00 to 1.00 for the period beginning on January 31,
2005 and ending on January 30, 2006; (iv) 1.80 to 1.00 for the period beginning
on January 31, 2006 and ending on January 31, 2007; and (v) 1.60 to 1.00 for the
period beginning on January 31, 2007 and thereafter;
If, however, there shall occur any changes in any
applicable laws, rules, regulations or GAAP that would affect how the Obligors
calculate any of the foregoing financial covenants, the Lender shall, in its
reasonable discretion, agree to adjust the financial covenants accordingly to
take into account any such change in any applicable laws, rules, regulations or
GAAP that would affect how the Obligors calculate any of the foregoing financial
covenants.
6.1.26 Legal Compliance. Each Obligor shall comply with all
applicable laws, statutes, rules regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges of federal, state, local, and
foreign governments (and all agencies thereof, including, without limitation,
the SEC, Nasdaq, ERISA and CERCLA / RCRA) and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, audit, or notice has
been filed or commenced against any of them alleging any failure so to comply.
No disciplinary proceeding with respect to any Obligor or any Obligor's
respective officers is pending before the SEC, the Nasdaq or any Blue Sky
Agency.
6.2 Indemnification.
6.2.1 In General. Obligors hereby agree to indemnify and to
protect, defend, and hold harmless Lender and its Affiliates and participants
and its or their directors, officers, employees, agents, attorneys and
shareholders, from and against any and all losses, damages, expenses or
liabilities of any kind or nature and from any suits, claims, or demands,
including all reasonable counsel fees incurred in investigating, evaluating or
defending such claim but not including any claim, loss, damage, expense or
liability arising solely from Lender's gross negligence or willful misconduct,
suffered by any Obligor and caused by, relating to, arising out of, resulting
from, or in any way connected with this Agreement, the Notes, or the other Loan
Documents and any transaction contemplated herein or therein or arising out of
Obligors' businesses, including, but not limited to, claims based upon any act
or failure to act by Lender in connection with this Agreement, or the other Loan
Documents and any transaction
26
contemplated herein or therein, except to the extent arising solely out of the
gross negligence or willful misconduct of Lender. If Obligors shall have
knowledge of any claim or liability hereby indemnified against, they shall
promptly give written notice thereof to Lender. THIS COVENANT SHALL SURVIVE
PAYMENT OF THE INDEBTEDNESS AND THE TERMINATION OR SATISFACTION OF THIS
AGREEMENT.
6.2.2 Defense of Claim. Lender shall promptly give Obligors
written notice of all suits or actions instituted against Lender with respect to
which Obligors have indemnified Lender, and Obligors shall timely proceed to
defend any such suit or action. Lender shall also have the right, at the
reasonable expense of Obligors, to participate in or, at Lender's election and
at Obligors' expense, assume the defense or prosecution of such suit, action, or
proceeding, and in the latter event, Obligors may employ counsel and participate
therein. Lender shall have the right to adjust, settle, or compromise any claim,
suit, or judgment after notice to Obligors, unless Obligors desire to litigate
such claim, defend such suit, or appeal such judgment and simultaneously
therewith deposit with Lender additional collateral security sufficient to pay
any judgment rendered, with interest, costs, legal fees and expenses; and the
right of Lender to indemnification under this Agreement shall extend to any
money paid by Lender in settlement or compromise of any such claims, suits, and
judgments in good faith, after notice to Obligors.
6.2.3 Several Actions. If any suit, action, or other proceeding
is brought by Lender against Obligors for breach of Obligors' covenant of
indemnity herein contained, separate suits may be brought as causes of action
accrue, without prejudice or bar to the bringing of subsequent suits on any
other cause or causes of action, whether theretofore or thereafter accruing.
6.3 Post-Closing Compliance. Obligors agree to execute, re-execute,
and to use reasonable efforts to cause any applicable third party to execute and
re-execute, and to deliver to Lender any document or instrument signed in
connection herewith or with any other Loan Document which was incorrectly
drafted and/or signed, as well as any document or instrument which should have
been signed at or prior to Closing but which was not so signed. Obligors agree
to comply with any written request of Lender to cause the foregoing to be done
not later than ten days after Obligors' receipt thereof, and failure by Obligors
to so comply shall, at the option of Lender, constitute an Event of Default
hereunder.
7. NEGATIVE COVENANTS
7.1 Negative Covenants. As long as any portion of the Indebtedness
shall remain outstanding and unpaid and any of the Obligations remains
unperformed, or Lender has any obligation to make Advances to Borrowers
hereunder, Obligors jointly and severally covenant and agree that, in the
absence of prior written consent of Lender, they will not do, or permit to be
done, any of the following:
7.1.1 Debt, Liens and Encumbrances. Incur any Debt or Capital
Lease Obligations except for Permitted Debt or create, incur, assume or permit
to exist, any mortgage, Lien, pledge, charge, security interest or other
encumbrance upon the Collateral, or any of their properties or assets,
including, but not limited to, any real property, whether now owned or hereafter
acquired, except for Permitted Liens;
27
7.1.2 Transfer of Collateral. Other than the creation of
Permitted Liens, any transfer of the Sears Agreement or the interest thereon
pursuant to the Xxxx Documents, and sales of assets in the ordinary course of
business, or as a consequence of deterioration or obsolescence, sell, enter into
an agreement of sale for, convey, lease, assign, transfer, pledge, grant a
security interest, mortgage or Lien in, or otherwise dispose of any Collateral;
7.1.3 Combination; Merger. Other than as anticipated by the
transaction Documents, enter into proceedings in total or partial liquidation;
merge, combine or consolidate with or into any unaffiliated entity, or acquire
all or substantially all of the assets or securities of any other Person or
otherwise take any action or omit to take any action which would have a Material
Adverse Effect, individually or in the aggregate, on Obligors or their business;
7.1.4 Subsidiaries. Create or acquire any Subsidiary (except for
a newly formed Subsidiary not for the purpose of acquiring an existing business
and provided that the Subsidiary executes all instruments and documents in form
and substance satisfactory to Lender joining in this Agreement, the Notes, and
all other Loan Documents designated by Lender, after which such Subsidiary will
be a "Borrower" hereunder);
7.1.5 Nature of Operations. Substantially change the nature or
operations of their business as conducted on the date hereof;
7.1.6 Ownership/Management. Make any material change in the
executive management of Obligors or materially change Obligors' corporate
structure, or beneficial or legal ownership of the Obligors, including, but not
limited to, any change in the shareholders, or their respective interests,
except any transfers by any shareholder of any Obligor as of the date hereof to
(a) any Person that has an equity or other ownership interest in any shareholder
of any Obligor as of the date hereof; (b) any dependent of any shareholder of
any Obligor as of the date hereof or a trust formed for the benefit of any such
dependent of any shareholder of any Obligor as of the date hereof of, in any of
the Obligors;
7.1.7 Penney's Agreement; Sears Agreement; Vision One Agreement.
Amend or terminate the Penney's Agreement, the Sears Agreement (except in
accordance with the provisions of the Xxxx Documents) or the Vision One
Agreement without the consent of Lender, which consent will not be unreasonably
withheld; provided, however, that the Penney's Agreement, the Sears Agreement or
the Vision One Agreement may be terminated if the Obligors replace the customer
party to such agreement with another customer satisfactory to Lender, in
Lender's sole and absolute discretion, on terms satisfactory to Lender, in
Lender's sole and absolute discretion;
7.1.8 Transactional Documents. Amend in any material respect or
terminate any of the Transactional Documents;
7.1.9 Margin Stock. Use any part of the proceeds of the Loan to
purchase or carry, or to reduce, retire or refinance any credit incurred to
purchase or carry, any margin stock (within the meaning of Regulations O, T, U
and X of the Board of Governors of the Federal Reserve System) or to extend
credit to others for the purpose of purchasing or carrying any margin stock. If
requested by Lender, Obligors will furnish Lender statements in conformity
28
with the requirements of Federal Reserve Form U-1 referred to in said
regulation;
7.1.10 Transactions with Affiliates. Enter into any transaction
or transactions with any Affiliate for less than full value or on terms or
conditions less favorable than could be obtained in an arm's length transaction
with a third party or make any loan or advance to, or guaranty any obligation of
Debt of, any Affiliate; provided, however, that, notwithstanding the foregoing:
(i) Borrowers may not make loans to (a) Optik Pro in an aggregate amount at any
time outstanding in excess of One Million Five Hundred Thousand Dollars
($1,500,000); or (b) Health in an aggregate amount at any time outstanding in
excess of Three Hundred Thousand Dollars ($300,000); (ii) any loan by Borrowers
to either Optik Pro or Health shall be evidenced by a Guarantor's Note payable
to Borrowers; and (iii) each such Guarantor's Note shall be endorsed to Lender
and delivered to Lender.
7.1.11 Environmental Matters. Use, generate, treat, transport,
store, dispose of, or otherwise introduce any Hazardous Material into or on any
real property owned, leased or occupied by any Obligor, or cause, suffer, allow,
or permit anyone else to do so, in violation of any applicable statute, law,
ordinance rule or regulation;
7.1.12 Dividends; Distribution. Declare, or make payment of, any
dividend or any distribution to any shareholder of any Obligor in respect of any
capital stock of any Obligor; provided, however, that notwithstanding the
foregoing, Obligors may make interest distributions, if any, payable in
connection with the Obligor's preferred stock so long as (i) no Event of Default
has occurred hereunder, and (ii) the payment thereof would not cause a violation
of any of the Financial Covenants;
7.1.13 Change in Location of Collateral. Change any location of
any Collateral, other than in the ordinary course of business, without giving
the Lender prior written notice;
7.1.14 Conduct of Business. Conduct any business under any other
name or entity, other than those listed on Schedule 5.1.4(ii) hereto;
7.1.15 Leases. Other than leases for Obligors' retail store
facilities, create, incur, assume or suffer to exist any obligation as lessee
for the rental or hire of any real or personal property where the annual
monetary obligations per such lease would exceed the lesser of Two Hundred Fifty
Thousand Dollars ($250,000);
7.1.16 Sale and Lease Back. Sell, transfer or otherwise dispose
of any material real or personal property to any Person and thereafter directly
or indirectly lease back the same or similar property;
7.1.17 Investments. Make any loan or advance to any Person or
purchase or otherwise acquire any capital stock, obligations or other securities
of, make any capital contribution to, or otherwise invest in or acquire any
interest in any Person in an aggregate amount in excess of One Hundred Thousand
Dollars ($100,000) annually;
7.1.18 Guaranties. Other than the Guaranty and Surety Agreements
of Guarantors, assume, guarantee, endorse or otherwise be or become directly or
contingently liable
29
for obligations of any Person, other than Guaranties for the benefit of
operating Affiliates of Obligors, provided that (i) the extension of such
Guaranties would not cause Obligors to violate any of the Financial Covenants;
(ii) such Guaranties are unsecured and the obligations thereunder are
subordinated to the Obligations of the Borrower to Lender hereunder and under
the other Loan Documents; and (iii) such Guaranties do not exceed an aggregate
amount greater than Twenty-Five Thousand Dollars ($25,000) annually;
7.1.19 Fiscal Year. Change their Fiscal Year;
7.1.20 Accounting Methods. Unless required by applicable law or
GAAP and upon prior written notice thereof to Lender, make or consent to a
material change in the manner in which the business of Obligors is conducted or
in Obligors' method of accounting, as applicable;
7.1.21 Capital Expenditures. Incur any capital expenditures in
any Fiscal Year in excess of the lesser of Seven Million Dollars ($7,000,000) in
the aggregate; and
7.1.22 Stock. Sell, encumber or otherwise dispose of any shares
of capital stock of any Subsidiary.
8. DEFAULT
8.1 Events of Default. The occurrence of any one or more of the
following events, conditions or states of affairs, shall constitute an "Event of
Default" hereunder, under the Notes and under each of the other Loan Documents:
8.1.1 Failure by Obligors to pay any of the Indebtedness, or any
portion thereof when the same becomes due;
8.1.2 Failure by any Obligor to pay any Lender's Costs when the
same shall be due, and such failure continues within ten days following written
demand therefor;
8.1.3 Failure by Obligors to be in compliance with any Financial
Covenant.
8.1.4 Other than as contemplated by Paragraphs 8.1.1, 8.1.2 and
8.1.3 above, the failure by any Obligor to observe or perform any other
agreement, condition, undertaking or covenant in (i) this Agreement, the Notes,
or any other Loan Document, or in any other agreement by and between any Obligor
and Lender, provided the Obligors have not cured the same within twenty (20)
days following written notice thereof from Lender, or (ii) any other material
agreement, lease, mortgage, note or other obligation to which Obligors are a
party or by which Obligors are bound, the failure of which, taken as a whole,
causes a default thereunder and could have a Material Adverse Effect on
Obligors;
8.1.5 Any material representation or warranty of Obligors made in
this Agreement or any other Loan Document or any statement or information in any
report, certificate, financial statement or other instrument made by Obligors in
connection with making this Agreement, the establishment of the Loans or in
compliance with the provisions hereof or
30
any other Loan Document shall have been false or misleading in any material
respect when so made, deemed made or furnished;
8.1.6 The occurrence of any Material Adverse Effect;
8.1.7 Any Obligor discontinues its business operations or
materially changes the nature of its business;
8.1.8 (i) Any Reportable Event which Lender determines to
constitute grounds for the termination of any Plan by the PBGC or for the
appointment by any United States District Court of a trustee to administer or
liquidate any Plan; (ii) the termination of any Plan described in either Section
414(j) or Section 414(k) of the Internal Revenue Code, the present value of
whose benefits that may be guarantied under Title IV of ERISA exceeds by more
than One Hundred Thousand Dollars ($100,000) the amount of Plan assets allocable
to such benefits; (iii) the appointment by any United States District Court of a
trustee to administer any Plan; (iv) the institution by the PBGC of proceedings
to terminate any Plan; (v) the failure by any Obligor or any member of any
Controlled Group to meet the minimum funding standards established in Section
302 of ERISA; or (vi) the assertion of any claim of, or demand for, withdrawal
liability in excess of One Hundred Thousand Dollars ($100,000) under ERISA by
any multi-employer pension plan to which any Obligor or any member of its
Controlled Group heretofore contributed or currently contributes;
8.1.9 The Penney's Agreement, the Sears Agreement or the Vision
One Agreement shall terminate for any reason or, material adverse change in the
relationship between Obligors and Penney's, Obligors and Sears, or Obligors and
Vision One shall have occurred, other than pursuant to the exercise by Xxxx
National or Xxxx Vision of any rights under the Xxxx Documents;
8.1.10 The occurrence of any event of default under any of the
Transactional Documents.
8.1.11 Any Obligor shall become insolvent or unable to pay its
debts as they mature, or file a voluntary petition or proceeding seeking
liquidation, reorganization or other relief with respect to itself under any
provision of the Bankruptcy Code or any state bankruptcy or insolvency statute,
or make an assignment or any other transfer of assets for the benefit of its
creditors, or apply for or consent to the appointment of a receiver for its
assets, or suffer the filing against its property of any attachment or
garnishment or take any action to authorize any of the foregoing, or an
involuntary case or other proceeding shall be commenced against any Obligor
seeking liquidation, reorganization or other relief with respect to its debts
under the Bankruptcy Code or any other bankruptcy, insolvency or similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of its or any substantial part
of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of sixty (60) days (it being understood
that no delay period applies with respect to any default arising under this
Section by reason of the filing of a voluntary petition by any Obligor under the
Bankruptcy Code or any state bankruptcy or insolvency statute or the making of
an assignment or other transfer of assets for the benefit of Obligors' creditors
or by reason of any Obligor applying for or consenting to
31
the appointment of a receiver for any Obligor's assets); or an order for relief
shall be entered against any Obligor under any provision of the Bankruptcy Code
or any state bankruptcy or insolvency statute as now or hereafter in effect;
8.1.12 Entry of a final judgment or judgments against any Obligor
by a court of law not fully covered by insurance in an amount exceeding One
Hundred Fifty Thousand Dollars ($150,000) in any single instance or an aggregate
of Three Hundred Thousand Dollars ($300,000) outstanding at any one time,
enforcement of which judgment or judgments has not been stayed, bonded or
dismissed within forty-five days after entry (so long as no execution with
respect to such judgment has been commenced);
8.1.13 Except for Permitted Liens, imposition of any Lien or
series of Liens against any Obligor or any of the Collateral whether by
operation of law or by consent;
8.1.14 Other than Permitted Liens, Lender's Lien in any of the
Collateral shall cease to constitute a first Lien on the Collateral or otherwise
cause to be in full force and effect, or the validity or enforceability thereof
shall be contested by any Obligor, or any Obligor shall deny that it has any
further Liability or Obligation under any of the Loan Documents, and the
foregoing has or would have a Material Adverse Effect on any Obligor; and
8.1.15 Lender believes, in good faith, subject only to its own
business judgment, that the prospect of any payment or performance of any
obligation hereunder is, or shall be impaired.
8.2 Remedies upon an Event of Default. Upon the occurrence and
continuation of an Event of Default, the Lender may by notice to the Obligors:
8.2.1 Forthwith suspend all future Advances and declare all
Indebtedness to be immediately due and payable, without protest, demand or other
notice (which are hereby expressly waived by Obligors) and, in addition to the
rights specifically granted hereunder or now or hereafter existing in equity, at
law, by virtue of statute or otherwise (each of which rights may be exercised at
any time and from time to time), Lender may exercise the rights and remedies
available to Lender at law or in equity or under this Agreement, the Notes, and
any of the other Loan Documents or any other agreement by and between any
Obligor and Lender in accordance with the respective provisions thereof;
8.2.2 Have all the rights of a secured creditor under the Uniform
Commercial Code as enacted in the State of New Jersey in any other jurisdiction
in which any Collateral is located and in any other jurisdiction in which any
Obligor was organized;
8.2.3 Receive payment from Obligors, as part of the Indebtedness
and Obligations hereby secured, all of the Lender's Costs, with per annum
interest on all of the same at highest Line Interest Rate plus three percent
(3%), from and after demand for the payment thereof until paid;
8.2.4 (i) receive, open and dispose of all mail addressed to such
Obligor, to notify the post office authorities to change the address for
delivery of mail addressed to such Obligor to such address as Lender may
designate; (ii) endorse the name of Obligors on any
32
notes, acceptances, checks, drafts, money orders or other evidences of payment
or proceeds of the Collateral that may come into Lender's possession; (iii) sign
the name of Obligors on any invoices, documents, drafts against and notices to
Account Debtors of Obligors, assignments and request for verification of
accounts; (iv) execute proofs of claim and loss; (v) execute any endorsements,
assignments or other instruments of conveyance or transfer; (vi) adjust and
compromise any claims under insurance policies; (vii) execute releases; (viii)
collect the Accounts; (ix) notify Account Debtors to make payments directly to
Lender; and (x) do all other acts and things necessary and advisable in the sole
discretion of Lender to carry out and enforce this Agreement. All acts of said
attorney or designee are hereby ratified and approved and said attorney or
designee shall not be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law. Each of these powers of attorney
being coupled with an interest is irrevocable while any of the Indebtedness
shall remain unpaid or Lender has any obligations to make Advances hereunder;
and
8.2.5 (i) require Obligors at Obligors' expense, to assemble the
Collateral and make it available to Lender at the place or places to be
designated by Lender; (ii) have the right to sell such Collateral at one or more
public or private sales (the requirement of reasonable notice of the time and
place of disposition of such Collateral by Lender shall be conclusively met if
such notice is personally delivered, delivered by overnight courier, facsimiled
or mailed to Obligors' address as specified in this Agreement at least ten days
before the time of the sale or disposition); (iii) bid upon and purchase any or
all of such Collateral at any public sale thereof; and (iv)dispose of all or any
part of such Collateral from time to time, and upon such terms and conditions,
including a credit sale, as it determines in its sole discretion.
8.3 Application of Proceeds. Any cash proceeds of sale, lease or other
disposition of the Collateral upon an Event of Default shall be applied in the
following order:
8.3.1 At Lender's sole discretion, to pay part, any or all of any
Obligations including, but not limited to, Lender's Costs, interest, and/or
principal; and
8.3.2 Any surplus then remaining to Obligors or whomever may be
lawfully entitled thereto.
8.4 Set-Off Rights Upon Default. In addition to all Liens and rights
of set-off against Obligors' money, securities or other property given to Lender
by law, Obligors acknowledge and agree that Lender, in addition to any remedies
set forth above, shall have the right at any time and from time to time upon the
occurrence and during the continuation of an Event of Default, without notice to
Obligors, to the extent permitted by law (any such notice being expressly waived
by Obligors) and to the fullest extent permitted by applicable Rules, to set
off, to exercise any banker's lien or any right of attachment or garnishment and
apply any and all balances, credits, deposits (general or special, time or
demand, provisional or final), accounts or monies at any time held by Lender and
other indebtedness at any time owing by Lender to or for the account of Obligors
against any and all Indebtedness or other Obligations of Obligors, now or
hereafter existing under this Agreement, the Notes or any other Loan Document,
regardless of whether Lender shall have made any demand hereunder or thereunder.
Every such right of set-off shall be deemed to have been exercised immediately
upon the occurrence of an Event of Default without any action by Lender,
although Lender may enter such set-off on its
33
books and records at a later time.
8.5 Singular or Multiple Exercise; Non-Waiver. The remedies provided
herein and in the other Loan Documents or otherwise available to Lender at law
or in equity and any powers of attorney therein contained shall be cumulative
and concurrent, and may be pursued singly, successively or together at the sole
discretion of Lender, and may be exercised as often as occasion therefor shall
occur; and the failure to exercise any such right or remedy shall in no event be
construed as a waiver or release of the same.
8.6 Discontinuance of Remedies. In the event that Lender shall have
proceeded to enforce any right under this Agreement and such proceedings shall
have been discontinued or abandoned for any reason, then and in every such case,
the rights, remedies and obligations of the parties hereto shall remain in full
force and effect.
8.7 Cumulative Remedies. No delay or omission of Lender to exercise
any right or power arising under this Agreement, the Notes, any Loan Documents
or from any Event of Default or Potential Default shall exhaust or impair any
such right or power or prevent its exercise during the continuance of any other
Event of Default or Potential Default. No waiver by Lender of any Event of
Default, whether such waiver be full or partial, shall extend to or be taken to
effect any subsequent Event of Default, or to impair the rights resulting
therefrom except as may otherwise be provided herein. The remedies provided in
the Loan Documents are cumulative and are not exclusive of any remedies provided
by law.
8.8 Judgments. Obligors agree that, with respect to any judgments
which may be entered against any Obligor by or on behalf of Lender: (i) if for
the purpose of obtaining judgment in any court it is necessary to convert all or
any part of a sum due hereunder in Dollars into Canadian Dollars, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which, in accordance with normal banking
procedures, the Lender could purchase Dollars with Canadian Dollars on the
Business Day immediately preceding the day on which any such judgment, or any
relevant part thereof, is paid or otherwise satisfied; and (ii) the obligation
of the Obligors in respect to any sum due hereunder in Dollars shall,
notwithstanding any judgment in Canadian Dollars, be discharged only to the
extent that on the Business Day following receipt by Lender of any sum adjudged
to be so due in Canadian Dollars, the Lender may, in accordance with normal
banking procedures, purchase Dollars with Canadian Dollars. If the amount of
Dollars so purchased is less than the sum originally due to the Lender in
Dollars, the Obligors shall, as a separate obligation and notwithstanding any
such judgment, indemnify the Lender against such loss, and if the amount of
Dollars so purchased exceeds the sum originally due to the Lender, the Lender
shall remit such excess to the Obligors so long as no other Indebtedness or
Lenders' Costs are outstanding hereunder.
9. MISCELLANEOUS
9.1 Notices. Any notice or other communication hereunder or under any
of the Loan Documents by one party to another shall be in writing and shall be
deemed to have been validly given upon receipt if by hand delivery, overnight
delivery or facsimile with evidence of transmission receipt, to the addresses as
follows:
34
If to any Obligor: With a copy to:
U.S. Vision, Inc. Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
Attn: Xxxxxxx Xxxxxxxx, Attn: Xxxxxx X. Xxxxxxxx, Esquire
Chief Executive Officer 0000 Xxxxxx Xxxxxx
1 Xxxxxx Drive Philadelphia, PA 19103
Xxxx Oaks Industrial Park E-mail: xxxxxxxx@xxxxxxxxxxxx.xxx
Xxxxxxxx, XX 00000 Phone: (000) 000-0000
E-mail: xx@xxxxxxxx.xxx Fax: (000) 000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000 and
Xxxxxx, Lidji & Werbner
Attn: Xxxxx X. Xxxxx, Esquire
4400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, XX 00000
E-mail: xxxxxx@xxx.xxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Bank: With a copy to:
Commerce Bank, X.X. Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP
Attn: Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Esquire
Vice President 0000 Xxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxx 00 Xxxx Xxxxxxxxxxxx, XX 00000
Xxxxxx Xxxx, XX 00000 E-mail: xxxxxx@xxxxxxxx.xxx
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
9.2 Integration. This Agreement and the other Loan Documents shall be
construed as one agreement; in the event of any inconsistency, this Agreement
shall control over any other Loan Document.
9.3 Amendment; Modification. Modifications or amendments of or to the
provisions of this Agreement or any other Loan Document shall be effective only
if set forth in a written instrument signed by Lender and any other party sought
to be bound thereby.
9.4 Survival. The terms of this Agreement and all agreements,
representations, warranties and covenants made by Obligors in any other Loan
Document shall survive the issuance and payment of the Notes and all sums due
hereunder and shall continue so long as any portion of the Indebtedness shall
remain outstanding and unpaid; provided, however, that the covenants set forth
in Sections 6.2 (with respect to indemnification), 9.7, 9.10 and 9.11 (with
respect to damages, jurisdiction, venue and jury trial) hereof shall survive the
payment of the Indebtedness and the termination of this Agreement. Obligors
hereby acknowledge that
35
Lender has relied upon the foregoing in making available the Loan.
9.5 Closing. Closing hereunder shall occur on October 30, 2002 at the
offices of Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP, 0000 Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 or at such other time and place as the parties
hereto may determine.
9.6 Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and the respective
successors and assigns of the parties hereto; provided, however that Obligors
may not assign this Agreement, or any rights or duties arising hereunder,
without the express prior written consent of Lender, which may be withheld by
Lender in its sole and absolute discretion, and Lender may assign all or any
part of its rights or duties hereunder without the consent of Obligors.
9.7 Joint and Several Obligations. Each Borrower is jointly and
severally obligated under this Agreement, the Notes and each of the other Loan
Documents.
9.8 CERTAIN WAIVERS. NEITHER LENDER NOR ANY ATTORNEY OF LENDER SHALL
BE LIABLE TO OBLIGORS OR ANY AFFILIATE FOR CONSEQUENTIAL DAMAGES ARISING FROM
ANY BREACH OF CONTRACT, TORT OR OTHER WRONG RELATING TO THE ESTABLISHMENT,
ADMINISTRATION OR COLLECTION OF THE OBLIGATIONS RELATING IN ANY WAY TO THIS
AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS OR THE ACTION OR
INACTION OF ANY SUCH PERSONS UNDER ANY ONE OR MORE PROVISIONS HEREOF OR THEREOF.
IN THE EVENT LENDER SEEKS TO TAKE POSSESSION OF ANY OR ALL OF THE COLLATERAL BY
COURT PROCESS OR OTHER METHOD AVAILABLE UNDER THE LAW, OBLIGORS IRREVOCABLY
WAIVE ANY BOND OR ANY SURETY OR SECURITY RELATING THERETO REQUIRED BY ANY
STATUTE, COURT RULE OR OTHERWISE AS AN INCIDENT TO SUCH POSSESSION AND WAIVES
ANY DEMAND FOR POSSESSION PRIOR TO THE COMMENCEMENT OF ANY SUIT OR ACTION TO
RECOVER WITH RESPECT THERETO. OBLIGORS FURTHER WAIVE THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTIONS LAWS.
9.9 Releases. Each Obligor acknowledge that it has been represented by
competent counsel in connection with the transactions contemplated hereby and
has been fully advised by such counsel of the full range of rights and
Obligations possessed by Obligors and undertaken and received pursuant to the
terms of this Agreement and the other Loan Documents and, specifically, the
provisions of this Agreement and the other Loan Documents. Obligors hereby
knowingly and, after consultation with counsel, freely acknowledge and agree
that they do not now have nor do they know of any basis for any claim in tort,
contract or otherwise against Lender for breach of any of the terms of any of
the Loan Documents. Obligors acknowledge and agree that this Agreement and the
other Loan Documents were negotiated, executed and delivered freely and with
full and informed knowledge of the consequences of this Agreement and the other
Loan Documents and that they have executed this Agreement and the other Loan
Documents without duress, and that Lender has proceeded in a commercially
reasonable manner in light of all of the facts and circumstances surrounding the
transactions that are the subject of this Agreement and the other Loan
Documents.
36
9.10 Governing Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of New Jersey with respect to
contracts to be entered into and performed within the State of New Jersey.
9.11 CONSENT TO JURISDICTION AND VENUE. IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE RELATIONSHIP EVIDENCED HEREBY, EACH OF THE OBLIGORS HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE COURT LOCATED
IN THE STATE OF NEW JERSEY, IN ANY COUNTY IN WHICH LENDER HAS AN OFFICE OR
BRANCH, AND ANY UNITED STATES COURT, AND AGREES NOT TO RAISE ANY OBJECTION TO
SUCH JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH
PROCEEDING. EACH OF THE OBLIGORS AGREES THAT SERVICE OF PROCESS IN ANY SUCH
PROCEEDING MAY BE DULY EFFECTED UPON SUCH OBLIGOR BY MAILING A COPY THEREOF, BY
REGISTERED MAIL, POSTAGE PREPAID OR BY HAND DELIVERY OR A NATIONALLY RECOGNIZED
OVERNIGHT DELIVERY SERVICE, TO EACH PARTY THERETO.
9.12 WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS AND LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
RELATIONSHIP EVIDENCED HEREBY OR THEREBY. EACH OF THE OBLIGORS ACKNOWLEDGES THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO, ACCEPT AND
RELY UPON THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
9.13 Gender. All references to any gender, including the neuter
gender, shall be deemed to incorporate all other genders.
9.14 Public Announcement. Lender may announce and publicize the
existence of this Agreement and the extension of credit by Lender to Obligors,
in such media as Lender may, in its sole discretion, from time to time
determine.
9.15 Relationship of Parties. The relationship of Lender and Obligors
will at all times be that of creditor and obligor. Nothing herein shall be
deemed or construed to confer upon the parties any other relationship including,
but not limited to, any relationship of a partnership or joint venture.
9.16 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) and the other Loan Documents constitute the entire agreement
and understanding between the parties hereto relating to the subject matter
hereof and supersede all prior oral or written understandings.
9.17 Severability. The invalidity, illegality or unenforceability in
any jurisdiction of any provision in or obligation under this Agreement, the
Notes or the other Loan
37
Documents shall not affect or impair the validity, legality or enforceability of
the remaining provisions or obligations thereunder in any other jurisdiction.
9.18 Excess Payments. If Obligors shall pay any interest under the
terms of the Notes at a rate higher than the maximum rate allowed by applicable
law, then such excess payment shall be credited as a payment of principal first
to Lender's Costs, then to the Line of Credit, unless Obligors notify Lender in
writing to return the excess payment to Obligors.
9.19 Partial Invalidity. If any provision of this Agreement shall for
any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
9.20 Compliance with Rules. Lender shall not be required by operation
or effect of any provision of this Agreement to violate any statute or
regulation under state or federal law, including all Rules.
9.21 Headings. The heading of any Article, Section, Paragraph or
Clause contained in this Agreement is for convenience of reference only and
shall not be deemed to amplify, limit, modify or give full notice of the
provisions thereof.
9.22 Counterparts. This Agreement may be signed in counterparts each
of which shall be deemed to be an original and all of which together shall
constitute one and the same agreement.
9.23 Retention of Documents. Unless otherwise provided herein, any
documents, schedules, invoices or other papers delivered to Lender may be
destroyed or otherwise disposed of by Lender six months after they are delivered
to or received by Lender, unless Obligors request the return of such documents,
schedules, invoices or other papers and makes arrangements, at Obligors'
expense, for their return.
9.24 Limitations of Obligations of the Obligors. Notwithstanding the
definition of "Obligations" herein, to the extent required to make the
Obligations of a Borrower fully enforceable, the liability of such Borrower
shall be limited to an amount equal to: (i) the lowest amount that would not
render all or a portion of such Borrower's joint and several liabilities, if
any, with respect to such Obligations void, voidable or unenforceable against
such Borrower's creditors or creditor's representatives under any applicable
fraudulent conveyance, fraudulent transfer or similar act or under Section 544
or 548 of the Bankruptcy Code of 1978, as amended, minus (ii) One ($1.00)
Dollar.
9.25 Xxxx Documents. Lender acknowledges receipt of a copy of each of
the Xxxx Documents, and understands that Xxxx National, Xxxx Vision, or one or
more Affiliates of either of the foregoing may exercise certain rights to
purchase certain leases or assets constituting the Sears Agreement. The Lender
hereby covenants and agrees that, provided Lender has been given reasonable
assurances that all proceeds payable in connection with the exercise of the
option thereunder (other than amounts permitted to be set-off under the Xxxx
Note) will be paid directly to Lender as contemplated by Paragraph 2.2.7 hereof,
upon receipt of written notification from Xxxx National that it or one or more
Affiliates of Xxxx National is
38
exercising all or any rights under the Xxxx Documents with respect to the Sears
Assets or Sears Leases (as defined in the Xxxx Documents), the Lender will
release its security interest in the Sears Assets or Sears Leases and will
execute and deliver to Xxxx National a proper instrument or instruments and will
duly assign, transfer and deliver to Xxxx National such part of the Collateral
as may be in the possession of the Lender.
9.26 Agreement in English. Optik Pro hereby declares having expressly
required that this Agreement, the Movable Hypothec, the Guaranty and Surety
Agreement of Optik Pro and all other documents, agreements and notices related
thereto be drafted in the English language. Optik Pro declare et reconnait avoir
expressement requis que ce contrat de pret et tous les autres documents,
conventions ou avis qui sont afferent soient rediges en langue anglaise.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
39
IN WITNESS WHEREOF, intending to be legally bound hereby, Obligors and
Lender have executed this Agreement under seal, intending to be legally bound
hereby, the day and year first above written.
BORROWERS / OBLIGORS: GUARANTORS / OBLIGORS:
U.S. VISION, INC. 9072-8411 QUEBEC, INC.
d/b/a "Optik Pro Baie 2000"
By: /s/ Xxxxxx X. Xxxx III By: /s/ Xxxxxx X. Xxxx III
--------------------------------- ------------------------------------
Xxxxxx X. Xxxx III, Xxxxxx X. Xxxx III,
Senior Vice President and Senior Vice President and
Chief Financial Officer Chief Financial Officer
STYL-RITE OPTICAL MFG. CO., INC. HEALTH EYE CARE STATISTICS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx. By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------- ------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx., Xxxxxxx X. Xxxxxxxx, Xx.,
President President
USV OPTICAL, INC. COMMERCE BANK, N.A.
By: /s/ Xxxxxx X. Xxxx III By: /s/ Xxxxxx X. Xxxxx
--------------------------------- ------------------------------------
Xxxxxx X. Xxxx III, Xxxxxx X. Xxxxx,
Senior Vice President and Vice President
Chief Financial Officer
U.S. VISION HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxx III
---------------------------------
Xxxxxx X. Xxxx III,
Chief Financial Officer
40
EXHIBIT A
DEFINITIONS
"Accounts" means all rights of a Person to receive payment for the
sale, lease, or provision of goods and services, Health-Care-Insurance
Receivables and all other rights to receive the payment of money, whether or not
earned by performance, shown on the financial reports of such Person as gross
accounts receivable, or otherwise, all as determined in accordance with such
Person's financial policies consistently applied and in conformity with GAAP.
"Account Debtor" means the Person or Persons obligated under or on
account of an Account.
"Acquisition Documents" means the Agreement and Plan of Merger, the
Proxy Statement and the Schedule 13E-3.
"Advance" means any advance of funds under the Line by Lender to
Borrowers.
"Affiliate" means and refers to, as applied to any Person, any other
Person directly or indirectly controlling, or through one or more Persons
controlled by, or in common control with, that Person. "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/or policies of that Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this Loan and Security Agreement, as it may be
amended, restated or otherwise modified and in effect from time to time.
"Agreement and Plan of Merger" has the same meaning ascribed thereto
in the preamble to this Agreement.
"All Assets" means, for any Person, all Accounts; all of such Person's
deposit accounts with Lender; all contents of the Lockboxes (as defined below);
Cash Collateral Accounts; As-Extracted Collateral; Chattel Paper; Commercial
Tort Claims; Consignments; Contracts; Documents; Encumbrance(s); Equipment;
Inventory (including, but not limited to, all returned or rejected merchandise);
Fixtures; Instruments; Leases, Investment Property, General Intangibles,
including, without limitation, all intellectual property of every kind and
nature; Letter-of-Credit Rights; and all Supporting Obligations. Any capitalized
term used in this paragraph without definition herein shall have the meaning
ascribed thereto in Article 9 of the UCC.
"Applicable Law" means all applicable provisions of constitutions,
laws, statutes, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Agencies and all
orders and decrees of all courts and arbitrators.
"Bankruptcy Code" means Title 11 of the United States Code as now or
hereafter
in effect, or any successor statute.
"Borrowers' Collateral" shall have the meaning ascribed thereto in
Paragraph 3.1.1.
"Business Day" means any day other than a Saturday, Sunday or day on
which banking institutions in New Jersey are required by law or regulation to
close.
"Canadian Collateral Documents" means the following: (i) the Guaranty
and Surety Agreements of the respective Guarantors; (ii) the General Security
Agreement; (iii) the Movable Hypothec; and (iv) the Guarantor's Note.
"Canadian Dollars" means the lawful money of Canada.
"Capital Expenditures" means expenditures made, or liabilities
incurred, for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year and otherwise confirm with the provisions of GAAP, including the direct or
indirect acquisition of such assets by way of increased product or service
charges, offset items or otherwise, and all Capital Lease Obligations.
"Capital Lease" means any lease of property (real, personal or mixed)
which, in conformity with GAAP, is or should be accounted for as a capital lease
on the balance sheet of a Person.
"Capital Lease Obligations" means the aggregate amount of a Person's
obligations under all of such Person's Capital Leases.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Collateral Account" has the meaning ascribed thereto in Section
3.2.
"Cash-Out" means the consideration that each current shareholder and
option holder of U.S. Vision stock will be entitled to receive pursuant to
Section 2.2 of the Agreement and Plan of Merger.
"CERCLA / RCRA" means the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and the Resource
Conservation Recovery Act of 1976, as amended.
"Closing" and "Closing Date" mean the date hereof.
""Xxxx Agreement" means that certain agreement as of even date
herewith among Xxxx National, Xxxx Vision and U.S. Vision.
"Xxxx Documents" means each of: (i) the Xxxx Note; (ii) the Xxxx
Agreement; (iii) the Vision One Agreement; and (iv) the Xxxx Subordination
Agreement.
"Xxxx National" means Xxxx National Corporation, a Delaware
corporation.
"Xxxx Note" means that certain Promissory Note of even date herewith
of
Borrowers in favor of Xxxx National in the original principal amount of Four
Million Dollars ($4,000,000).
"Xxxx Subordination Agreement" means that certain Subordination
Agreement of even date herewith by and between Lender and Xxxx.
"Xxxx Vision" means Xxxx Vision Corporation, a Delaware corporation.
"Collateral" means Borrowers' Collateral and Guarantors' Collateral.
"Collections" shall mean, with respect to any Account, all cash
collections and other cash proceeds of such Account including, without
limitation, all payments by the Account Debtor in respect of such Account and
all cash proceeds of any related security with respect to such Account.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Controlled Group" has the meaning given to such term in ERISA.
"Current Assets" has the meaning ascribed thereto by GAAP.
"Current Liabilities" has the meaning ascribed thereto by GAAP.
"Current Ratio" means, as of any date, the ratio of: (i) the aggregate
Current Assets of Obligors to (ii) the aggregate Current Liabilities of
Obligors, all as determined in accordance with GAAP.
"Debt" has the meaning ascribed thereto by GAAP.
"Debt Coverage Ratio" means, as of any date, the ratio of: (i)
Obligors' consolidated EBITDA for the Twelve Month Period ending on such date to
(ii) the sum of consolidated Debt Service and Tax Expense of the Obligors for
such Twelve Month Period.
"Debt Service" means for any Twelve Month Period the sum of (i)
principal payments maturing during such Twelve Month Period on Debt, and (ii)
interest expense on Debt (gross, not net of interest income) paid, payable or
otherwise accrued during such Twelve Month Period.
"Deposit Account" means a demand, time, savings, passbook or like
account with a federally insured bank or savings and loan association, other
than an account evidenced by a negotiable certificate of deposit.
"Designated Officer" means Xxxxxx X. Xxxxx, Vice President, or any
other person designated in writing by Lender as its representative for the
purpose of receiving notice under this Agreement.
"Dollars" and the symbol "$" mean the lawful money of the United
States of
America.
"EBITDA" means the sum of gross revenues and other proper income
credits, less all proper charges against income other than (i) interest expense
on Debt, (ii) taxes on income, and (iii) depreciation and amortization expense,
all determined in accordance with GAAP; provided that there shall not be
included in such revenues or charges (i) any gains resulting from the write-up
of assets; (ii) any proceeds of any life insurance policy, (iii) any gain or
loss which is classified as "extraordinary" in accordance with GAAP, (iv) any
non-cash expenses and charges, (v) non-cash provisions for reserves for
discontinued operations, and (vi) any gain or loss associated with the sale or
write-down of assets. EBITDA can be less than zero for all purposes of this
Agreement.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Agencies, relating to the
protection of human health or the environment, including, but not limited to,
requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means each trade or business (whether or not
incorporated and whether or not foreign) which is or may hereafter become a
member of a group of which an Obligor is a member and which is treated as a
single employer under ERISA Section 4001(b)(1), or Internal Revenue Code Section
414.
"Event of Default" means any event as set forth in Section 8.1 hereof.
"Facility Fee" has the meaning ascribed thereto in Paragraph 2.1.6 of
this Agreement.
"Financial Covenant" individually and "Financial Covenants"
collectively mean the financial covenants set forth in Clauses 6.1.25.1,
6.1.25.2, 6.1.25.3, 6.1.25.4 and 6.1.25.5 hereof.
"Financing Statements" means any and all financing statements and
amendments required or appropriate to perfect and keep perfected any security
interest created under any of the Loan Documents pursuant to (i) the Uniform
Commercial Code as adopted in any state in which any of the Obligors were
organized or in any other jurisdiction having jurisdiction over the Collateral,
and (ii) the laws of Canada.
"Fiscal Quarter" shall mean the fiscal quarter of Obligors ending on
April 30, July 31, and October 31 of each year and January 31 of the following
year.
"Fiscal Year" shall mean the fiscal year of Obligors ending on January
31 of each year. For purposes of this Agreement (including, but not limited to,
the Financial Covenants set forth herein), each Fiscal Year will be identified
by the calendar year in which eleven of the twelve calendar months occur during
such Fiscal Year fall (e.g., the 2001 Fiscal Year will be the
fiscal year ending on January 31, 2002).
"Fixed Charges" means the sum of (i) principal payments on Debt
maturing during the applicable Twelve Month Period, other than Debt incurred
under the Line of Credit; (ii) interest expense (gross, not net of interest
income) during such Twelve Month Period; (iii) Tax Expense (but not below zero)
for such Twelve Month Period; and (iv) Unfunded Capital Expenditures during such
Twelve Month Period.
"Fixed Charge Coverage Ratio" means, as of any date, the ratio of (i)
Obligors' consolidated EBITDA for the Twelve Month Period ending on such date to
(ii) the Fixed Charges of Obligors for such Twelve Month Period.
"Funding Date" means a Business Day on which an Advance is funded.
"GAAP" means generally accepted accounting principles as set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board as each may from time
to time be in effect, or as set forth in such other statements by such other
Person as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination and
which are applied on a consistent basis.
"General Security Agreement" means that certain General Security
Agreement of even date herewith substantially in the form attached hereto as
EXHIBIT C required by Lender as collateral security for the repayment and
performance of Health's obligations under this Agreement, the Guaranty and
Surety Agreement of Health, and all other Loan Documents.
"Governmental Agency" means any national government, any state or
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory, supervisory or administrative functions of or pertaining
to government.
"Guarantor" means individually and "Guarantors" means together
9072-8411 Quebec, Inc. "Optik Pro Baie 0000", x Xxxxxx, Xxxxxx corporation, and
Health Eye Care Statistics, Inc., an Ontario, Canada corporation.
"Guarantors' Collateral" shall have the meaning ascribed thereto in
Paragraph 3.1.2.
"Guarantors' Obligations" means the obligations of Guarantors under
their respective Guaranty and Surety Agreements, the General Security Agreement,
the Movable Hypothec and the other Loan Documents.
"Guarantor's Note" means a note in the form of EXHIBIT D, attached
hereto and made a part hereof, evidencing the indebtedness of a Guarantor in
favor of a Borrower pursuant to Paragraph 7.1.10.
"Guaranty" means any guarantee of the payment or performance of any
indebtedness or other obligation and any other arrangement whereby credit is
extended to one obligor on the basis of any promise of another Person, whether
that promise is expressed in terms
of an obligation to pay the indebtedness of such obligor, or the purchase of an
obligation owed by such obligor, or to purchase goods and services from such
obligor pursuant to a take-or-pay contract, or to maintain the capital, working
capital, solvency or general financial condition of such obligor, whether or not
any such arrangement is listed on the balance sheet of such other Person, or
referred to in a footnote thereto, but shall not include endorsements of items
for collection in the ordinary course of business.
"Guaranty and Surety Agreements" means the Guaranty and Surety
Agreements of even date herewith of each Guarantor, substantially in the form
attached hereto as EXHIBIT E, secured by All Assets of each Guarantor.
"Guaranty Obligations" means as to any Person (the "guaranteeing
person") any obligation of the guaranteeing person in respect of any obligation
of another Person (including, without limitation, any bank under any letter of
credit), the creation of which was induced by a reimbursement agreement, counter
indemnity or similar obligation issued by the guaranteeing person, in either
case guaranteeing or in effect guaranteeing any debt, leases, dividends or other
obligations (the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation of any property
constituting direct or indirect security therefor, (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 of the primary obligor, (C) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iii) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term "Guaranty Obligation" shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation of any guaranteeing person shall
be deemed to be the lower of (i) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty Obligation is
made and (ii) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such Guaranty
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guaranty Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by
Obligors in good faith.
"Hazardous Materials" means any substances or materials: (i) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances or materials
under any Applicable Law; (ii) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Agency; (iii) the presence of which require investigation or remediation under
any Applicable Law; (iv) the discharge or emission or release of which requires
a permit or license under any Applicable Law or other governmental approval; (v)
which are deemed to constitute a nuisance, a trespass or pose a health or safety
hazard to persons or neighboring properties; (vi) which consist of underground
or aboveground storage tanks, whether empty, filled or partially filled with any
substance; or (vii) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.
"Indebtedness" means all amounts due from Obligors to the Lender,
including Lender's Costs, pursuant to this Agreement or otherwise arising out of
or in connection with any other Loan Document.
"Interest Rate" or "Interest Rates" means collectively, the Line
Interest Rate and the Term Interest Rate.
"Kayak" has the same meaning ascribed thereto in the preamble to this
Agreement.
"Lender's Costs" means all costs and expenses of any kind paid or
incurred by Lender in connection with the preparation, execution, delivery,
amendment, modification, restatement, administration or termination of this
Agreement, the Notes or any other Loan Document, any amendments hereto or
thereto, any transaction contemplated herein or in any existing or future
related agreements and the preservation, enforcement, defense and protection of
Lender's rights, remedies, obligations and liabilities in any manner concerning
this Agreement, the Notes or any other Loan Document, any transaction
contemplated herein or any existing or future related agreements, including but
not limited to: (i) expenditures of every nature and kind of Obligors, paid or
incurred by Lender pursuant to the provisions of this Agreement, the Notes and
the other Loan Documents; (ii) filing, recording, publication, appraisal,
monitoring, collateral field examinations and search costs specifically
permitted hereunder related to the Collateral, including, but not limited to,
costs paid to perfect, maintain perfected and preserve the existence and
priority of Liens on the Collateral; (iii) after the occurrence of an Event of
Default, all Lender's internal and external administrative costs and costs
incurred in collecting and gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale and advertising to
sell the Collateral, including but not limited to taxes, levies and insurance;
(iv) reasonable attorneys' fees and other reasonable fees and expenses paid or
incurred by Lender (A) in preparing, reviewing and consummating this Agreement
and the other Loan Documents and the transactions contemplated hereby and
thereby, (B) after the date hereof in amending, restating, restructuring,
extending, terminating, preserving, enforcing or determining Lender's rights and
remedies under this Agreement or any other Loan Document, and (C) after the
occurrence of an Event of Default, in enforcing, defending or protecting
Lender's rights, remedies, obligations or liabilities in any manner concerning
this Agreement or any of the other Loan Documents, any transaction contemplated
herein or any existing or future related agreements; (v) any reasonable
attorneys' fees and other reasonable fees and expenses incurred by Lender in
connection with any bankruptcy or insolvency proceeding filed by or against any
Obligor whether such attorneys' fees, other fees or expenses, incurred in the
sole discretion of Lender, are related to the review, determination, protection,
monitoring (including attendance at meetings or hearings) or enforcement by
Lender of the Obligations, including, but not limited to, the preparation and
filing of any proof of claim and without regard to whether Lender files,
responds, or is a party to any application, motion, or other proceeding; and,
(vi) wire transfer charges in such amounts as Lender may from time to time
establish for such service.
"Liabilities" means all indebtedness that, in accordance with GAAP,
consistently
applied, should be classified as liabilities on a balance sheet of Obligors.
"LIBOR" means the rate of interest (rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point) for U.S. dollar deposits
of 30, 60 or 90 day maturity as reported on Telerate page 3750 or the equivalent
reporting service as of 11:00 a.m., London time, on the second London Business
Day prior to the date hereof and on each Business Day thereafter (or if not so
reported on any Business Day, then as determined by the Lender from another
recognized source or interbank quotation, or if none is available, as determined
by the Lender).
"LIBOR Rate" has the same meaning ascribed thereto in Paragraph 2.1.4
of this Agreement. For purposes of this Agreement, LIBOR Rate is used as a
reference rate, determined on a monthly basis, in connection with LIBOR Rate
Advances.
"LIBOR Rate Advance" means any Advance bearing interest at a rate
based upon the LIBOR Rate as provided in Paragraph 2.1.4 hereof.
"Lien" means any charge against or interest in property securing
payment of a debt or performance of an obligation owed to any Person, whether
created by agreement, statute, common law or judicial or governmental authority,
legal action or equitable process, or proceeding, including, but not limited to,
any security interest, hypothec, lien, encumbrance, mortgage, assignment,
pledge, conditional sale, lease, consignment or bailment.
"Line Closing Fee" means the Line closing fee provided for in
Paragraph 2.1.7 hereof.
"Line Interest Rate" means the per annum rate of interest described
and set forth in Paragraph 2.1.4 hereof.
"Line" or "Line of Credit" means the credit facility extended by
Lender to Borrowers, pursuant to Article 2 of this Agreement, as the same may
hereafter be modified or amended.
"Line of Credit Note" means that certain revolving line of credit note
in the form of EXHIBIT F hereto executed by Borrowers in favor of Lender
evidencing Borrowers' obligation to repay Advances on the Line, and any
amendments or restatements thereof or allonges thereto.
"Line Termination Date" means (i) October 31, 2004, or as extended
pursuant to Paragraph 2.1.10 above, or (ii) such earlier date as Borrowers shall
determine by notice to Lender, or (iii) such other date as Lender and Borrowers
may, from time to time, mutually determine.
"Loans" means the collective reference to the Line of Credit and Term
Loan extended by Lender in favor of Borrowers.
"Loan Documents" means this Agreement, the Notes, the Lockbox
Agreement, the Subordination Agreements, the Guaranty and Surety Agreements, the
General Security Agreement, the Movable Hypothec, all Financing Statements, and
any other instrument or document delivered by the Obligors in connection
herewith or therewith, each as amended,
restated or otherwise modified and in effect from time to time.
"Lockbox Agreement" means the agreement between Obligors and Lender in
the form of EXHIBIT G hereto regarding the creation and maintenance of lockboxes
for the collection of Obligors' Accounts.
"Lockboxes" means those certain Lockboxes described in Section 3.2
hereof.
"Material Adverse Change or Effect" means, with respect to each
Obligor, a material adverse change or effect upon Obligor's business, assets,
liabilities, financial condition, results of operations or prospects or
Obligor's ability to perform Obligor's obligations under the Loan Documents in
accordance with their respective terms, as determined by Lender in the exercise
of its reasonable credit judgment.
"Maximum Available Credit" shall have the meaning ascribed to such
term in Paragraph 2.1.9 hereof.
"Maximum Leverage Ratio" means, as of any date, the ratio of (i) all
liabilities (other than Subordinated Debt) of the Obligors as of such date to
(ii) the Tangible Net Worth of the Obligors on such date.
"Movable Hypothec" means the movable hypothec over All Assets located
or deemed by law to be located in the Province of Quebec and an application for
the registration thereof at the Quebec Register of Personal and Movable Real
Rights, substantially in the form of EXHIBIT H attached hereto.
"Multi-Employer Plan" means a plan as defined in Section 4001(a)(3) of
ERISA to which Obligors or any Affiliate is making or accruing an obligation to
make contributions or has within any of the preceding five years made or accrued
an obligation to make contributions.
"Nasdaq" has the meaning ascribed thereto in Clause 5.1.31.1 of this
Agreement.
"Net Xxxx Proceeds" has the meaning ascribed thereto in Paragraph
2.2.7.
"NOROB Investor Documents" means the NOROB Investor Notes and the
NOROB Investor Subordination Agreements.
"NOROB Investor", individually, and "NOROB Investors", collectively,
mean those Persons identified on Schedule 1, attached hereto.
"NOROB Investor Notes" means the promissory notes of even date
herewith by the NOROB Investors in favor of Borrowers, more fully described on
Schedule 1.
"NOROB Investor Subordination Agreements" means those certain
Subordination Agreements of even date herewith between each NOROB Investor and
Lender.
"Notes" means the Line of Credit Note together with the Term Note.
"Obligation" individually and "Obligations" collectively mean the
Indebtedness
and all covenants and agreements of Obligors contained in, or arising out of or
in connection with, this Agreement or the other Loan Documents.
"Obligor" and "Obligors" shall have the meanings set forth hereto in
the first paragraph of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Penney's" means X.X. Xxxxxx Company, Inc.
"Penney's Agreement" means the License Agreement dated February 1,
1995 as amended from time-to-time by and between Penney's and U.S. Vision.
"Permitted Debt" means: (i) the Indebtedness; (ii) trade payables
incurred in the ordinary course of Obligors' business; (iii) purchase money Debt
(including Capital Leases) hereafter incurred by Obligors to finance the
purchase of fixed assets, provided that: (A) the total of all such Debt for all
Obligors taken together shall not exceed an aggregate principal amount of Twelve
Million Dollars ($12,000,000), (B) such Debt when incurred shall not exceed the
purchase price of the asset(s) financed, and (C) no such Debt shall be
refinanced for a principal amount in excess of the principal balance outstanding
thereon at the time of such refinancing; (iv) existing Indebtedness described on
Schedule 5.1.16 attached hereto and any refinancings of such Debt; (v) notes
issued to U.S. Vision shareholders in connection with the Cash-Out; and (vi)
Debt subordinated to Lender pursuant to the Subordination Agreements.
Notwithstanding any other provision of this definition, "Permitted Debt" shall
not include any Debt which, when incurred, would cause the violation of any
Financial Covenant.
"Permitted Liens" means: (i) Liens for taxes, assessments or
governmental charges or claims which are not overdue or which are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, if a reserve or other appropriate provision, if any, as
shall be reasonably required by Lender, shall have been made therefor; (ii)
Liens of brokers, carriers, warehousemen, mechanics, materialmen, repairmen,
suppliers and other like Liens incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, if a reserve or other
appropriate provision, if any, as shall be reasonably required by Lender, shall
have been made therefor; (iii) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business in connection with
workers' compensation or unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made 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 incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) the rights of tenants under
leases or subleases not interfering with the ordinary conduct of the business of
a Person; (vi) easements, rights-of-way, encroachments, zoning provisions,
covenants, conditions, restrictions and other similar charges, encumbrances and
governmental restrictions not interfering with the ordinary conduct of the
business of a Person; (vii) Liens in favor of Lender pursuant to this Agreement,
the Notes or any Loan Document; (viii) Liens of the Delaware River Port
Authority on the Real Property existing on the date hereof; (ix) liens securing
purchase money Debt for fixed assets and Capital Leases;
and (x) those existing Liens set forth on Schedule 3.1.3 attached hereto.
"Person" means an individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any political
subdivision thereof.
"Plan" means any plan described in ERISA Section 3(2) maintained for
employees of an Obligor or any ERISA Affiliate, other than a Multi-employer
Plan.
"Potential Default" means an event, occurrence or condition which,
with the giving of notice, the lapse of time, or both, constitutes an Event of
Default.
"Prime" means, as to any day on which a Loan is outstanding, the
fluctuating rate of interest per annum published in the "Money Rates" Section of
the Wall Street Journal on the applicable date or the highest Prime rate if more
than one is published, as such rate may change from day-to-day, such changes to
be effective on the dates of announcement thereof. If the Wall Street Journal
ceases to be published for any reason on any day, or if it ceases to publish a
Prime rate, then the Lender may use any similar published prime or base rate to
determine the interest rate, in its sole discretion. Prime may not necessarily
be the lowest or best rate of interest charged by the Lender.
"Prime Rate" has the same meaning ascribed thereto in Paragraph 2.1.4
of this Agreement.
"Prime Rate Advance" means any Advance bearing interest at a rate
based upon the Prime Rate as provided in Paragraph 2.1.4 hereof.
"Prohibited Transaction" means any transaction described in Section
406 of ERISA which is not exempt by reason of Section 408 of ERISA, and any
transaction described in Section 4975(c) of the Internal Revenue Code which is
not exempt by reason of Section 4975(c)(2) of the Internal Revenue Code.
"Projections" means Obligors' forecasted (i) balance sheets, (ii)
profit and loss statements, (iii) cash flow statements, (iv) Purchase Money
Debt, and (v) Capital Expenditures, all prepared on a consistent basis with
Obligors' historical financial statements, together with appropriate supporting
details and a statement underlying assumptions.
"Property" means any interest of any Obligor in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible.
"Purchase Money Debt" means purchase money Debt (including Capitalized
Lease Obligations) incurred solely for the purchase of fixed assets.
"Real Property" means all of the real property owned by Obligors,
including, without limitation, all real estate, buildings, improvements, rents,
profits, insurance and condemnation proceeds, and any other property rights and
claims related thereto, as described on Schedule 5.1.7.
"Reportable Event" means a reportable event described in Section 4043
of ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a
cessation of operations described in Section 4068(f) of ERISA.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and bylaws, the partnership agreement or other organizational or
governing documents of such Person and any law, treaty, rule or regulation or
determination of any arbitration 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.
"RICO" means the Racketeer Influenced and Corrupt Organizations Act,
as amended by the Comprehensive Crime Control Act of 1984, 18 U.S.C Sections
1961-68.
"Rule" means and includes any law, rule or regulation binding upon, or
applicable to, Lender as well as any guideline or similar directive issued by a
Governmental Agency having regulatory jurisdiction over Lender which Lender
observes or with which the Lender complies, whether or not such guideline or
directive technically has the force of law.
"Xxxxxxxx" means Xxxxxxx X. Xxxxxxxx, Xx.
"Xxxxxxxx Documents" means the Xxxxxxxx Employment Agreement, the
Xxxxxxxx Incentive Stock Option Agreement, and the Xxxxxxxx Subordination
Agreement.
"Xxxxxxxx Employment Agreement" means that certain Employment
Agreement dated April 2, 1998 between U.S. Vision and Xxxxxxxx, as amended by
that certain First Amendment to Employment Agreement dated September 23, 2002.
"Xxxxxxxx Incentive Stock Option Agreement" means that certain
Incentive Stock Option Agreement dated June 1, 2000 between U.S. Vision and
Xxxxxxxx, as amended by that certain First Amendment to Incentive Stock Option
Agreement dated September 23, 2002.
"Xxxxxxxx Subordination Agreement" means that certain Subordination
Agreement of even date herewith by and between Lender and Xxxxxxxx.
"Sears" means Sears, Xxxxxxx and Co.
"Sears Agreement" means each of the license agreements, substantially
in the form attached hereto as EXHIBIT I, by and between Sears and U.S. Vision
with respect to separate Sears stores.
"SEC" means the Securities and Exchange Commission.
"SOLA" means SOLA International, Inc., a Delaware corporation.
"SOLA Documents" means the SOLA Subordination Agreement and the SOLA
Supply Agreement.
"SOLA Subordination Agreement" means that certain Subordination
Agreement of even date herewith by and between Lender and SOLA.
"SOLA Supply Agreement" means that certain Marketing Agreement dated
October 2, 2002 by and between SOLA and U.S. Vision, as amended by that certain
First Amendment to Marketing Agreement of even date herewith, pursuant to which
SOLA will credit Three Million Dollars ($3,000,000) of new money to the account
of U.S. Vision which shall be added to the amount of U.S. Vision's entire
account payable due to SOLA.
"Solvent" means, as to any Person, that such Person (i) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage; (ii) is able to pay its debts as
they mature; or (iii) owns property whose fair saleable value is greater than
the amount required to pay its debts.
"Specified Officer" means such officer of U.S. Vision as U.S. Vision
may specify to Lender in writing. Each Obligor agrees that any request made or
other function specified herein to be made or performed by a Specified Officer
shall be deemed made or performed by and on behalf of all Obligors.
"Subordinated Debt" means any Debt of the Obligors subordinated in
right and time of payment and performance of the Obligations on terms
satisfactory to the Lender including, without limitation, the Debt evidenced by
the Xxxx Note, the Xxxxxxxx Employment Agreement, the Xxxxxxxx Incentive Stock
Option Agreement, the NOROB Investor Notes and the SOLA Supply Agreement.
"Subordination Agreements" means, collectively, the Xxxx Subordination
Agreement, the NOROB Investor Subordination Agreements, the Xxxxxxxx
Subordination Agreement and the SOLA Subordination Agreement.
"Subsidiaries" means any Person of which each Obligor directly or
indirectly through one or more intermediaries (i) owns ownership interests or
stock having ordinary voting power to elect a majority of the Board of Directors
or equivalent managing body of such Person or (ii) owns more than Fifty Percent
(50%) of any other equity or ownership interest in such Person.
"Tax Expense" means Liabilities of Obligors for local, state, and
federal income taxes.
"Tangible Net Worth" means the excess of assets over Liabilities plus
Subordinated Debt as would be shown on a combined balance sheet of Obligors,
prepared in accordance with GAAP, consistently applied, provided, however, such
amounts are to be net of amounts carried on the books of Obligors for any of the
following: (A) unamortized debt discount and expense, (B) goodwill (including
any excess cost over net assets of business acquired), experimental or
organization expenses and other like reserves and intangible assets.
"Term Loan Closing Fee" means the Term Loan Closing Fee provided for
in Paragraph 2.2.4 hereof.
"Term Interest Rate" means Nine Percent (9%) per annum.
"Term Loan" means the loan extended by Lender to Borrowers pursuant to
Paragraph 2.2.1 of this Agreement, as the same may hereafter be modified or
amended.
"Term Loan Termination Date" means October 31, 2007 or such other date
as Lender and Borrowers may, from time to time, mutually determine.
"Term Note" means that certain promissory note in the form of EXHIBIT
J hereto executed by Borrowers in favor of Lender evidencing Borrowers'
obligation to repay the Term Loan, and any amendments or restatements thereof or
allonges thereto.
"Transactions" means all of the transactions contemplated by the
Transactional Documents.
"Transactional Document" individually and "Transactional Documents"
mean collectively, the Xxxx Documents, the NOROB Investor Documents, the
Xxxxxxxx Documents, the SOLA Documents and the Acquisition Documents, together
with all documents, instruments and agreements executed or delivered in
connection therewith and related thereto.
"Twelve Month Period" means, as of any date, the twelve-month period
ending on such date.
"UCC" means the Uniform Commercial Code as enacted in the State of New
Jersey and in effect from time to time.
"Unfunded Capital Expenditures" mean Capital Expenditures which are
not fully funded through Obligors' incurring additional Debt.
"Vision One" means Vision One, a national vision care program owned by
Xxxx Vision Corporation.
"Vision One Agreement" means that certain Participating Provider
Agreement dated as of June 1, 1997 between U.S. Vision and Xxxx Vision
Corporation, a Delaware corporation, as amended by that certain amendment of
even date herewith.
