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Exhibit 10.1.3
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
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THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED FINANCING AND
SECURITY AGREEMENT (this "Agreement") is made as of the 12th day of June, 2000,
by and among
AAi.FOSTERGRANT, INC. (formerly known as Accessories Associates, Inc.),
a corporation organized and existing under the laws of the State of Rhode Island
(the "Borrower");
FOSTER GRANT GROUP, L.P., a limited partnership organized under the
laws of the State of Delaware ("Foster Grant") and FANTASMA, LLC, a limited
liability company organized under the laws of the State of Delaware
("Fantasma");
F.G.G. INVESTMENTS, INC., a corporation organized and existing under
the laws of the State of Delaware, THE BONNEAU COMPANY, a corporation organized
and existing under the laws of the State of Texas, BONNEAU HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Delaware,
BONNEAU GENERAL, INC., a corporation organized and existing under the laws of
the State of Delaware, FOSTER GRANT HOLDINGS, INC., a corporation organized and
existing under the laws of the State of Delaware, and O-RAY HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporate Guarantors"; the Corporate Guarantors together with Foster Grant and
Fantasma, the "Guarantors"; and the Guarantors together with the Borrower, the
"Obligors");
BANK OF AMERICA, N.A., a national banking association ("Bank of
America"), formerly NationsBank, N.A., and each other financial institution
which is party to the Financing Agreement (as that term is defined below) from
time to time (collectively, the "Lenders" and individually, a "Lender"); and
BANK OF AMERICA, N.A., a national banking association(the "Agent"),
formerly NationsBank, N.A., in its capacity as both collateral and
administrative agent for each of the Lenders.
RECITALS
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A. The Borrower, the Guarantors, the Lenders and the Agent entered into a
Second Amended and Restated Financing and Security Agreement dated July 21, 1998
(as amended by that certain First Amendment to Second Amended and Restated
Financing and Security Agreement dated as of May 7, 1999, Second Amendment to
Second Amended and Restated Financing and Security Agreement dated as of March
24, 2000, and as further amended, restated, modified, substituted, extended, and
renewed from time to time, the "Financing Agreement"). The Financing Agreement
provides for some of the agreements among the Borrower, the Guarantors, the
Lenders and the Agent with respect to the "Loan" (as defined in the Financing
Agreement), including the Revolving Credit Facility (as that term is defined in
the Financing
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Agreement) in an amount not to exceed $60,000,000 and the Letter of Credit
Facility which is part of the Revolving Credit Facility.
B. The Borrower has requested that the Agent and Lenders consent to the
redemption of a portion of the Senior Notes (as that term is defined in the
Financing Agreement) at a discount and that one or more of the Lenders provide a
credit subfacility for that purpose.
C. The Agent and Lenders are willing to agree to the Borrower's request
on the condition, among others, that this Agreement be executed.
AGREEMENTS
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NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Borrower,
the Guarantors, the Lenders and Agent agree as follows:
1. The Obligors, the Lenders and the Agent agree that the Recitals
above are a part of this Agreement. Unless otherwise expressly defined in this
Agreement, terms defined in the Financing Agreement shall have the same meaning
under this Agreement.
2. The Obligors, the Lenders and Agent agree that the aggregate
outstanding principal balance under the Revolving Credit Note (subject to change
for returned items and other adjustments made in the ordinary course of
business) as of the close of the business day of June 9, 2000 is $22,659,851.37.
3. Each of the Borrower, Foster Grant and Fantasma represents and
warrants to the Lenders and Agent as follows:
(a) The Borrower is a corporation duly organized, and validly existing
and in good standing under the laws of the state in which it was organized and
is duly qualified to do business as a foreign corporation in good standing in
every other state wherein the conduct of its business or the ownership of its
property requires such qualification.
(b) Foster Grant is a limited partnership duly organized, validly
existing and in good standing under the laws of the state in which it was
organized and is duly qualified to do business as a foreign limited partnership
in every other state wherein the conduct of its business or the ownership of its
property requires such qualification.
(c) Fantasma is a limited liability company duly organized, validly
existing and in good standing under the laws of the state in which it was
organized and is duly qualified to do business as a foreign limited partnership
in every other state wherein the conduct of its business or the ownership of its
property requires such qualification.
(d) Each of the Borrower, Foster Grant and Fantasma has the power and
authority to execute and deliver this Agreement and perform its obligations
hereunder and has taken all necessary and appropriate corporate, partnership or
limited liability company action, as applicable, to authorize the execution,
delivery and performance of this Agreement.
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(e) The Financing Agreement, as amended by this Agreement, and each of
the other Financing Documents remains in full force and effect, and each
constitutes the valid and legally binding obligation of the Borrower, Foster
Grant and Fantasma, enforceable in accordance with its terms.
(f) All of the Borrower's, Foster Grant's and Fantasma's
representations and warranties contained in the Financing Agreement and the
other Financing Documents are true and correct on and as of the date of the
Borrower's, Foster Grant's and Fantasma's execution of this Agreement.
(g) No Event of Default and no event which, with notice, lapse of time
or both would constitute an Event of Default, has occurred and is continuing
under the Financing Agreement or the other Financing Documents which has not
been waived in writing by the Lenders and Agent.
4. The Financing Agreement is hereby amended as follows:
(a) Section 1.1 of the Financing Agreement is hereby amended by
changing certain existing definitions in their entirety and adding certain new
definitions as follows:
"BASE RATE LOAN" MEANS ANY LOAN OR ANY SNR LOAN FOR WHICH
INTEREST IS TO BE COMPUTED WITH REFERENCE TO THE BASE RATE.
"COMMITMENT" MEANS WITH RESPECT TO EACH LENDER, SUCH LENDER'S
REVOLVING CREDIT COMMITMENT AND SNR COMMITMENT AS THE CASE MAY BE, AND
"COMMITMENTS" MEANS THE COLLECTIVE REFERENCE TO THE REVOLVING CREDIT
COMMITMENTS AND SNR COMMITMENTS OF ALL OF THE LENDERS.
"COMMITTED AMOUNT" MEANS WITH RESPECT TO EACH LENDER, SUCH
LENDER'S REVOLVING LOAN COMMITTED AMOUNT OR SNR COMMITTED AMOUNT, IF
ANY, AS THE CASE MAY BE, AND "COMMITTED AMOUNTS" MEANS COLLECTIVELY THE
REVOLVING LOAN COMMITTED AMOUNT AND SNR COMMITTED AMOUNT OF EACH OF THE
LENDERS.
"CREDIT FACILITY" MEANS WITH RESPECT TO EACH LENDER, SUCH
LENDER'S PRO RATA SHARE OF THE REVOLVING CREDIT FACILITY OR THE LETTER
OF CREDIT FACILITY OR SNR PRO RATA SHARE, IF ANY, OF THE SENIOR NOTE
REDEMPTION SUBFACILITY AS THE CASE MAY BE, AND "CREDIT FACILITIES"
MEANS COLLECTIVELY WITH RESPECT TO EACH LENDER, SUCH LENDER'S PRO RATA
SHARE OF THE REVOLVING CREDIT FACILITY AND THE LETTER OF CREDIT
FACILITY AND SNR PRO RATA SHARE, IF ANY, OF THE SENIOR NOTE REDEMPTION
SUBFACILITY AND ANY AND ALL OTHER CREDIT FACILITIES NOW OR HEREAFTER
EXTENDED UNDER OR SECURED BY THIS AGREEMENT.
"FEES" MEANS THE COLLECTIVE REFERENCE TO EACH FEE PAYABLE TO
THE AGENT, FOR ITS OWN ACCOUNT OR FOR THE RATABLE BENEFIT OF THE
LENDERS, UNDER THE TERMS OF THIS AGREEMENT OR UNDER THE TERMS OF ANY OF
THE OTHER FINANCING DOCUMENTS, INCLUDING, WITHOUT LIMITATION, THE
REVOLVING CREDIT UNUSED FACILITY FEES, THE
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LETTER OF CREDIT FEES, THE EARLY TERMINATION FEE, THE ORIGINATION FEE,
THE SNR ACTIVATION FEE, AND THE FIELD EXAMINATION FEES.
"LIBOR LOAN" MEANS ANY LOAN OR ANY SNR LOAN FOR WHICH
INTEREST IS TO BE COMPUTED WITH REFERENCE TO THE LIBOR RATE.
"LOANS" MEANS THE COLLECTIVE REFERENCE TO THE LOAN AND TO THE
SNR LOAN.
"MORTGAGE" MEANS THAT CERTAIN MORTGAGE, ASSIGNMENT AND
SECURITY AGREEMENT DATED AS OF THE SNR CLOSING DATE, FROM THE BORROWER
TO THE AGENT FOR ITSELF AND THE SNR LENDERS SECURING THE OBLIGATIONS
WITH RESPECT TO THE SENIOR NOTE REDEMPTION SUBFACILITY.
"NOTE" MEANS ANY REVOLVING CREDIT NOTE OR ANY SNR NOTE AS THE
CASE MAY BE, AND "NOTES" MEANS COLLECTIVELY EACH REVOLVING CREDIT NOTE,
EACH SNR NOTE AND ANY OTHER PROMISSORY NOTE WHICH MAY FROM TIME TO TIME
EVIDENCE ALL OR ANY PORTION OF THE OBLIGATIONS.
"PERMITTED SENIOR NOTE PURCHASES" MEANS THE COLLECTIVE
REFERENCE TO EACH PURCHASE BY THE BORROWER OF SENIOR NOTES USING THE
PROCEEDS OF AND IN CONFORMANCE WITH THE SENIOR NOTE REDEMPTION
SUBFACILITY.
"OBLIGATIONS" MEANS ALL PRESENT AND FUTURE INDEBTEDNESS,
DUTIES, OBLIGATIONS, AND LIABILITIES, WHETHER NOW EXISTING OR
CONTEMPLATED OR HEREAFTER ARISING, OF ANY ONE OR MORE OF THE BORROWER,
FOSTER GRANT OR FANTASMA TO THE LENDERS AND/OR THE AGENT UNDER, ARISING
PURSUANT TO, IN CONNECTION WITH AND/OR ON ACCOUNT OF THE PROVISIONS OF
THIS AGREEMENT, EACH NOTE, EACH SECURITY DOCUMENT, AND/OR ANY OF THE
OTHER FINANCING DOCUMENTS, AND/OR THE LOAN AND/OR THE SENIOR NOTE
REDEMPTION SUBFACILITY, INCLUDING, WITHOUT LIMITATION, THE PRINCIPAL
OF, AND INTEREST ON, EACH NOTE, LATE CHARGES, THE FEES, ENFORCEMENT
COSTS, AND PREPAYMENT FEES (IF ANY), LETTER OF CREDIT FEES OR FEES
CHARGED WITH RESPECT TO ANY GUARANTY OF ANY LETTER OF CREDIT, ANY
INTEREST RATE PROTECTION AGREEMENT WITH THE AGENT, ANY LENDER OR ANY
AFFILIATE OF THE AGENT OR ANY OF THE LENDERS, AND ANY FOREIGN EXCHANGE
PROTECTION AGREEMENT WITH THE AGENT, ANY LENDER OR ANY AFFILIATE OF THE
AGENT OR ANY OF THE LENDERS; ALSO MEANS ALL OTHER PRESENT AND FUTURE
INDEBTEDNESS, LIABILITIES AND OBLIGATIONS, WHETHER NOW EXISTING OR
CONTEMPLATED OR HEREAFTER ARISING, OF ANY ONE OR MORE OF THE OBLIGORS
TO THE AGENT AND/OR TO NATIONSBANK OR ITS AFFILIATES OF ANY NATURE
WHATSOEVER REGARDLESS OF WHETHER SUCH DEBTS, OBLIGATIONS AND
LIABILITIES BE DIRECT, INDIRECT, PRIMARY, SECONDARY, JOINT, SEVERAL,
JOINT AND SEVERAL, FIXED OR CONTINGENT; AND ALSO MEANS ANY AND ALL
RENEWALS, EXTENSIONS, SUBSTITUTIONS, AMENDMENTS, RESTATEMENTS AND
REARRANGEMENTS OF ANY SUCH DEBTS, OBLIGATIONS AND LIABILITIES.
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"SENIOR NOTE REDEMPTION SUBFACILITY" AND "SNR" EACH MEAN
SENIOR NOTE REDEMPTION CREDIT FACILITY PROVIDED BY THE SNR LENDERS AS
DESCRIBED IN SECTION 2.6.1 (SENIOR NOTE REDEMPTION SUBFACILITY).
"SNR ACTIVATION FEE" HAS THE MEANING DESCRIBED IN SECTION
2.6.5 (ACTIVATION FEE).
"SNR CLOSING DATE" MEANS JUNE 12, 2000.
"SNR COMMITMENT" AND "SNR COMMITMENTS" HAVE THE MEANINGS
DESCRIBED IN SECTION 2.6.1 (SENIOR NOTE REDEMPTION SUBFACILITY).
"SNR COMMITMENT PERIOD" MEANS THE PERIOD OF TIME FROM THE SNR
CLOSING DATE TO JULY 7, 2000.
"SNR COMMITTED AMOUNT" HAS THE MEANING DESCRIBED IN SECTION
2.6.1 (SENIOR NOTE REDEMPTION SUBFACILITY).
"SNR EXPIRATION DATE" MEANS THE REVOLVING CREDIT EXPIRATION
DATE.
"SNR GUARANTOR" MEANS WESTON PRESIDIO CAPITAL II, L.P., A
DELAWARE LIMITED PARTNERSHIP AND ITS SUCCESSORS.
"SNR GUARANTY" MEANS THAT CERTAIN GUARANTY OF PAYMENT
AGREEMENT DATED AS OF THE SNR CLOSING DATE FROM THE SNR GUARANTOR IN
FAVOR OF THE AGENT AND THE SNR LENDERS WITH RESPECT TO THE SENIOR NOTE
REDEMPTION SUBFACILITY.
"SNR INSTALLMENT PAYMENT SCHEDULE" HAS THE MEANING DESCRIBED
IN SECTION 2.6.4 (PAYMENTS OF SENIOR NOTE REDEMPTION FACILITY).
"SNR LENDER" MEANS EACH LENDER THAT HAS A SNR PRO RATA SHARE,
AS THE CASE MAY BE AND EACH OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS;
AND "SNR LENDERS" MEANS THE COLLECTIVE REFERENCE TO ALL LENDERS THAT
HAVE A SNR PRO RATA SHARE, AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
"SNR LOAN" HAS THE MEANING SET FORTH IN SECTION 2.6.1 (SENIOR
NOTE REDEMPTION SUBFACILITY).
"SNR LOAN OBLIGATIONS" MEANS THE OBLIGATION WITH RESPECT TO
THE SNR LOAN.
"SNR LOAN OPTIONAL PREPAYMENT" HAS THE MEANING SET FORTH IN
SECTION 2.6.6 (SNR LOAN OPTIONAL PREPAYMENT).
"SNR NOTE" AND "SNR NOTES" HAVE THE MEANING DESCRIBED IN
SECTION 2.6.3 (SNR NOTES).
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"SNR NOTICE" HAS THE MEANING DESCRIBED IN SECTION 2.6.2
(PROCEDURE FOR MAKING ADVANCES UNDER THE SNR).
"SNR PARTICIPANT" MEANS WESTON PRESIDIO CAPITAL II, L.P., A DELAWARE
LIMITED PARTNERSHIP AND ITS SUCCESSORS.
"SNR PARTICIPATION AGREEMENT" MEANS THAT CERTAIN NOTE
PARTICIPATION AGREEMENT DATED AS OF THE SNR CLOSING DATE AMONG THE SNR
LENDERS AND THE SNR PARTICIPANT, AS AMENDED, MODIFIED, RESTATED,
SUBSTITUTED, EXTENDED AND RENEWED FROM TIME TO TIME.
"SNR PRO RATA SHARE" HAS THE MEANING DESCRIBED IN SECTION
2.6.1 (SENIOR NOTE REDEMPTION SUBFACILITY).
"SNR TERMINATION DATE" MEANS THE EARLIER OF (a) THE SNR
EXPIRATION DATE, OR (B) THE REVOLVING CREDIT TERMINATION DATE.
"TOTAL SNR COMMITTED AMOUNT" HAS THE MEANING DESCRIBED IN
SECTION 2.6.1.
(b) The definition of "Permitted Uses" is hereby amended to include the
payment of any and all regularly scheduled payments of principal of, or interest
on, the SNR Loan, as and when such payments are due and payable.
(c) The table in Section 2.1.1 of the Financing Agreement is hereby
amended to read as follows:
REVOLVING CREDIT REVOLVING CREDIT
LENDER COMMITTED AMOUNT PRO RATA SHARE
BANK OF AMERICA $27,692,340 46.1539%
LASALLE $18,461,520 30.7692%
PNC $13,846,140 23.0769%
TOTAL REVOLVING CREDIT
COMMITTED AMOUNT $60,000,000 100%
(d) Clause (b) of the fifth paragraph of Section 2.1.1 of the Financing
Agreement is hereby amended in its entirety to read as follows:
(b) THE AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF
THE REVOLVING LOAN AND ALL LETTER OF CREDIT OBLIGATIONS WOULD NOT
EXCEED THE LESSER OF (i) THE TOTAL REVOLVING CREDIT COMMITTED AMOUNT
MINUS THE TOTAL
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SNR COMMITTED AMOUNT OR (ii) THE THEN MOST CURRENT BORROWING BASE.
(e) Section 2.3.1, 2.3.2, 2.3.3 and 2.3.5 of the Financing Agreement
are hereby amended in their entirety to read as follows:
2.3.1 APPLICABLE INTEREST RATES.
(a) EACH LOAN AND EACH SNR LOAN
SHALL BEAR INTEREST UNTIL MATURITY (WHETHER BY ACCELERATION,
DECLARATION, EXTENSION OR OTHERWISE) AT EITHER THE BASE RATE
OR THE LIBOR RATE, AS SELECTED AND SPECIFIED BY THE BORROWER IN AN
INTEREST RATE ELECTION NOTICE FURNISHED TO THE AGENT IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 2.3.2(E) (SELECTION OF INTEREST RATES), OR AS
OTHERWISE DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION
2.3 (INTEREST), AND AS MAY BE ADJUSTED FROM TIME TO TIME IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 2.3.3 (INABILITY TO DETERMINE LIBOR BASE
RATE).
(b) NOTWITHSTANDING THE FOREGOING,
FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT
OF DEFAULT, AT THE OPTION OF THE AGENT, THE LOAN, THE SNR LOAN AND
OTHER OBLIGATIONS SHALL BEAR INTEREST AT THE POST-DEFAULT RATE.
(c) WITH RESECT TO THE REVOLVING LOANS,
THE APPLICABLE MARGIN FOR (i) LIBOR LOANS SHALL BE TWO PERCENT
(2%) PER ANNUM, AND (ii) BASE RATE LOANS SHALL BE ONE-QUARTER
PERCENT (0.25%) PER ANNUM. WITH RESECT TO THE SNR LOANS, THE
APPLICABLE MARGIN FOR (i) LIBOR LOANS SHALL BE TWO AND ONE-HALF
PERCENT (2.5%) PER ANNUM, AND (ii) BASE RATE LOANS SHALL BE
THREE-QUARTERS PERCENT (0.75%) PER ANNUM. THE APPLICABLE MARGINS ARE
SUBJECT TO CHANGE AS PROVIDED IN SECTION 2.3.1(d).
(d) CHANGES IN THE APPLICABLE MARGIN
SHALL BE MADE NOT MORE FREQUENTLY THAN QUARTERLY BASED ON THE
BORROWER'S PRICING RATIO, DETERMINED BY THE AGENT IN THE EXERCISE
OF ITS SOLE AND ABSOLUTE DISCRETION FROM THE MONTHLY REPORTS
REQUIRED BY SECTION 6.1.1(c)) (MONTHLY STATEMENTS AND CERTIFICATES)
COMMENCING WITH THE STATEMENTS FOR THE FISCAL MONTH ENDING JUNE, 2000.
THE APPLICABLE MARGIN (EXPRESSED AS BASIS POINTS) SHALL VARY DEPENDING
UPON THE BORROWER'S PRICING RATIO, AS FOLLOWS:
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PRICING RATIO LIBOR REVOLVING BASE RATE LIBOR BASE RATE
LOAN REVOLVING LOAN SNR LOAN SNR LOAN
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GREATER THAN 1.0 TO 1.0 BUT LESS 275 100 325 150
THAN OR EQUAL TO 1.05 TO 1.0
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GREATER THAN 1.05 TO 1.0 BUT LESS 250 75 300 125
THAN OR EQUAL TO 1.10 TO 1.0
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GREATER THAN 1.10 TO 1.0 BUT LESS 225 50 275 100
THAN OR EQUAL TO 1.15 TO 1.0
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GREATER THAN 1.15 TO 1.0 BUT LESS 200 25 250 75
THAN OR EQUAL TO 1.60 TO 1.0
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GREATER THAN 1.60 TO 1.0 175 0 225 50
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2.3.2 SELECTION OF INTEREST RATES.
(a) THE BORROWER MAY SELECT THE INITIAL
APPLICABLE INTEREST RATE OR APPLICABLE INTEREST RATES TO BE CHARGED
ON THE LOANS.
(b) FROM TIME TO TIME AFTER THE DATE OF
THIS AGREEMENT AS PROVIDED IN THIS SECTION, BY A PROPER AND TIMELY
INTEREST RATE ELECTION NOTICE FURNISHED TO THE AGENT IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 2.3.2(e), THE BORROWER MAY SELECT AN INITIAL
APPLICABLE INTEREST RATE OR APPLICABLE INTEREST RATES FOR THE LOAN
AND/OR THE SNR LOAN OR MAY CONVERT THE APPLICABLE INTEREST RATE AND,
WHEN APPLICABLE, THE INTEREST PERIOD, FOR ANY EXISTING LOAN AND/OR SNR
LOAN TO ANY OTHER APPLICABLE INTEREST RATE OR, WHEN APPLICABLE, ANY
OTHER INTEREST PERIOD.
(c) THE BORROWER'S SELECTION OF AN
APPLICABLE INTEREST RATE AND/OR AN INTEREST PERIOD, THE BORROWER'S
ELECTION TO CONVERT AN APPLICABLE INTEREST RATE AND/OR AN INTEREST
PERIOD TO ANOTHER APPLICABLE INTEREST RATE OR INTEREST PERIOD, AND ANY
OTHER ADJUSTMENTS IN AN INTEREST RATE ARE SUBJECT TO THE FOLLOWING
LIMITATIONS:
(i) THE BORROWER SHALL NOT AT ANY TIME
SELECT OR CHANGE TO AN INTEREST PERIOD THAT EXTENDS BEYOND THE
REVOLVING CREDIT EXPIRATION DATE,
(ii) EXCEPT AS OTHERWISE PROVIDED IN SECTION
2.3.4 (INDEMNITY), NO CHANGE FROM THE LIBOR RATE TO THE BASE
RATE SHALL BECOME EFFECTIVE ON A DAY OTHER THAN A BUSINESS DAY
AND ON A DAY WHICH IS THE LAST DAY OF THE THEN CURRENT
INTEREST PERIOD, NO CHANGE OF AN INTEREST PERIOD SHALL BECOME
EFFECTIVE ON A DAY OTHER THAN THE LAST DAY OF THE THEN CURRENT
INTEREST PERIOD, AND NO CHANGE FROM THE BASE RATE TO THE LIBOR
RATE SHALL BECOME EFFECTIVE ON A DAY OTHER THAN A DAY WHICH IS
A EURODOLLAR BUSINESS DAY;
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(iii) ANY APPLICABLE INTEREST RATE CHANGE
FOR ANY LOAN AND/OR SNR LOAN TO BE EFFECTIVE ON A DATE ON
WHICH ANY PRINCIPAL PAYMENT ON ACCOUNT OF SUCH LOAN AND/OR SNR
LOAN IS SCHEDULED TO BE PAID SHALL BE MADE ONLY AFTER SUCH
PAYMENT SHALL HAVE BEEN MADE,
(iv) NO MORE THAN EIGHT (8) DIFFERENT
LIBOR RATES MAY BE OUTSTANDING AT ANY TIME AND FROM TIME TO
TIME,
(v) THE FIRST DAY OF EACH INTEREST
PERIOD SHALL BE A EURODOLLAR BUSINESS DAY,
(vi) UNLESS THE AGENT ELECTS OTHERWISE, AS
OF THE EFFECTIVE DATE OF A SELECTION, THERE SHALL NOT EXIST A
DEFAULT OR AN EVENT OF DEFAULT, AND
(vii) THE MINIMUM PRINCIPAL AMOUNT OF A
LIBOR LOAN SHALL BE FIVE HUNDRED THOUSAND DOLLARS ($500,000).
(d) IF A REQUEST FOR AN ADVANCE UNDER
THE LOAN OR UNDER THE SNR LOAN IS NOT ACCOMPANIED BY AN INTEREST RATE
ELECTION NOTICE OR DOES NOT OTHERWISE INCLUDE A SELECTION OF AN
APPLICABLE INTEREST RATE AND, IF APPLICABLE, AN INTEREST PERIOD, OR IF,
AFTER HAVING MADE A SELECTION OF AN APPLICABLE INTEREST RATE AND, IF
APPLICABLE, AN INTEREST PERIOD, THE BORROWER FAILS OR IS NOT OTHERWISE
ENTITLED UNDER THE PROVISIONS OF THIS AGREEMENT TO CONTINUE SUCH
APPLICABLE INTEREST RATE OR INTEREST PERIOD, THE BORROWER SHALL BE
DEEMED TO HAVE SELECTED THE BASE RATE AS THE APPLICABLE INTEREST RATE
UNTIL SUCH TIME AS THE BORROWER HAS SELECTED A DIFFERENT APPLICABLE
INTEREST RATE AND SPECIFIED AN INTEREST PERIOD IN ACCORDANCE WITH, AND
SUBJECT TO, THE PROVISIONS OF THIS SECTION.
(e) THE LENDERS WILL NOT BE OBLIGATED TO
MAKE ADVANCES OF THE LOAN AND/OR THE SNR LOAN, TO CONVERT THE
APPLICABLE INTEREST RATE ON ADVANCES OF THE LOAN AND/OR THE SNR LOAN TO
ANOTHER APPLICABLE INTEREST RATE, OR TO CHANGE INTEREST PERIODS, UNLESS
THE AGENT SHALL HAVE RECEIVED AN IRREVOCABLE WRITTEN OR TELEPHONIC
NOTICE (AN "INTEREST RATE ELECTION NOTICE") FROM THE BORROWER
SPECIFYING THE FOLLOWING INFORMATION:
(i) THE AMOUNT TO BE BORROWED OR CONVERTED,
(ii) A SELECTION OF THE BASE RATE OR THE LIBOR
RATE,
(iii) THE LENGTH OF THE INTEREST PERIOD IF THE
APPLICABLE INTEREST RATE SELECTED IS THE LIBOR RATE, AND
(IV) THE REQUESTED DATE ON WHICH SUCH ELECTION
IS TO BE EFFECTIVE.
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ANY TELEPHONIC NOTICE MUST BE CONFIRMED IN WRITING WITHIN THREE (3)
BUSINESS DAYS. EACH INTEREST RATE ELECTION NOTICE MUST BE RECEIVED BY
THE AGENT NOT LATER THAN 1:30 P.M. (BALTIMORE CITY TIME) ON THE
BUSINESS DAY OF ANY REQUESTED BORROWING OR CONVERSION IN THE CASE OF A
SELECTION OF THE BASE RATE AND NOT LATER THAN 1:30 P.M. (BALTIMORE CITY
TIME) ON THE THIRD BUSINESS DAY BEFORE THE EFFECTIVE DATE OF ANY
REQUESTED BORROWING OR CONVERSION IN THE CASE OF A SELECTION OF THE
LIBOR RATE.
2.3.3 INABILITY TO DETERMINE LIBOR BASE RATE.
IN THE EVENT THAT (a) THE AGENT SHALL HAVE DETERMINED THAT, BY
REASON OF CIRCUMSTANCES AFFECTING THE LONDON INTERBANK EURODOLLAR
MARKET, ADEQUATE AND REASONABLE MEANS DO NOT EXIST FOR ASCERTAINING THE
LIBOR BASE RATE FOR ANY REQUESTED INTEREST PERIOD WITH RESPECT TO A
LOAN OR AN SNR LOAN THE BORROWER HAS REQUESTED TO BE MADE AS OR TO BE
CONVERTED TO A LIBOR LOAN OR (b) THE AGENT SHALL DETERMINE THAT THE
LIBOR BASE RATE FOR ANY REQUESTED INTEREST PERIOD WITH RESPECT TO A
LOAN OR AN SNR LOAN THE BORROWER HAS REQUESTED TO BE MADE AS OR TO BE
CONVERTED TO A LIBOR LOAN DOES NOT ADEQUATELY AND FAIRLY REFLECT THE
COST TO THE AGENT AND/OR ANY OF THE LENDERS OF FUNDING OR CONVERTING
SUCH LOAN OR SNR LOAN, THE AGENT SHALL GIVE TELEPHONIC NOTICE, FOLLOWED
BY PROMPT WRITTEN NOTICE, OR WRITTEN NOTICE OF SUCH DETERMINATION TO
THE BORROWER AT LEAST ONE (1) BUSINESS DAY PRIOR TO THE PROPOSED DATE
FOR FUNDING OR CONVERTING SUCH LOAN OR SNR LOAN. IF SUCH NOTICE IS
GIVEN, ANY REQUEST FOR A LIBOR LOAN SHALL BE MADE AS OR CONVERTED TO A
BASE RATE LOAN. UNTIL SUCH NOTICE HAS BEEN WITHDRAWN BY THE AGENT, THE
BORROWER WILL NOT REQUEST THAT ANY LOAN BE MADE AS OR CONVERTED TO A
LIBOR LOAN.
2.3.5 PAYMENT OF INTEREST.
(a) UNPAID AND ACCRUED INTEREST ON ANY
ADVANCE OF THE REVOLVING LOAN OR THE SNR LOAN WHICH CONSISTS OF A BASE
RATE LOAN SHALL BE PAID MONTHLY, IN ARREARS, ON THE FIRST DAY OF EACH
CALENDAR MONTH, COMMENCING ON THE FIRST SUCH DATE AFTER THE DATE OF
THIS AGREEMENT, AND ON THE FIRST DAY OF EACH CALENDAR MONTH THEREAFTER,
AND AT MATURITY (WHETHER BY ACCELERATION, DECLARATION, EXTENSION OR
OTHERWISE).
(b) UNPAID AND ACCRUED INTEREST ON ANY
LIBOR LOAN SHALL BE PAID ON THE LAST BUSINESS DAY OF EACH INTEREST
PERIOD FOR SUCH LIBOR LOAN AND AT MATURITY (WHETHER BY ACCELERATION,
DECLARATION, EXTENSION OR OTHERWISE); PROVIDED, HOWEVER THAT ANY AND
ALL UNPAID AND ACCRUED INTEREST ON ANY LIBOR LOAN PREPAID PRIOR TO
EXPIRATION OF THE THEN CURRENT INTEREST PERIOD FOR SUCH LIBOR LOAN
SHALL BE PAID IMMEDIATELY UPON PREPAYMENT; AND PROVIDED FURTHER,
FURTHER THAT WITH RESPECT TO ANY LIBOR LOAN FOR WHICH THE INTEREST
PERIOD IS ONE HUNDRED AND EIGHTY (180) DAYS, UNPAID AND ACCRUED
INTEREST SHALL BE PAID QUARTERLY OF THE FIRST DAY OF EACH QUARTERLY
PERIOD DURING SUCH INTEREST PERIOD.
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5. Section 2.5 (Settlement Among Lenders) is hereby amended by adding
the following new section as Section 2.5.5:
2.5.5 SENIOR NOTE REDEMPTION SUBFACILITY.
THE AGENT SHALL PAY TO EACH SNR LENDER ON EACH
INTEREST PAYMENT DATE OR DATE PROVIDED IN THE SNR INSTALLMENT PAYMENT
SCHEDULE, AS THE CASE MAY BE, SUCH SNR LENDER'S SNR PRO RATA SHARE OF
ALL PAYMENTS RECEIVED BY THE AGENT IN IMMEDIATELY AVAILABLE FUNDS ON
ACCOUNT OF THE SNR, NET OF ANY AMOUNTS PAYABLE BY SUCH SNR LENDER TO
THE AGENT, BY WIRE TRANSFER OF SAME DAY FUNDS; THE AMOUNT PAYABLE TO
EACH SNR LENDER SHALL BE BASED ON THE PRINCIPAL AMOUNT OF THE SNR OWING
TO SUCH SNR LENDER.
6. Article II of the Financing Agreement is hereby amended by adding
the following as new Section 2.6:
SECTION 2.6 THE SENIOR NOTE REDEMPTION SUBFACILITY.
2.6.1 SENIOR NOTE REDEMPTION SUBFACILITY.
SUBJECT TO AND UPON THE PROVISIONS OF THIS AGREEMENT,
THE SNR LENDERS COLLECTIVELY, BUT SEVERALLY, ESTABLISH IN FAVOR OF THE
BORROWER A CREDIT FACILITY FOR THE REPURCHASE OF SENIOR NOTES. ADVANCES
UNDER THE SENIOR NOTE REDEMPTION SUBFACILITY ARE SOMETIMES REFERRED TO
IN THIS AGREEMENT INDIVIDUALLY AND COLLECTIVELY AS THE "SNR LOAN."
THE AMOUNT SET FORTH IN THE FOLLOWING TABLE IS HEREIN
CALLED SUCH SNR LENDER'S "SNR COMMITTED AMOUNT," THE AGGREGATE OF ALL
SNR LENDER'S SNR COMMITTED AMOUNTS EQUAL ($2,750,000) AND IS HEREIN
CALLED THE "TOTAL SNR COMMITTED AMOUNT," AND THE PROPORTIONATE SHARE
SET FORTH IN THE FOLLOWING TABLE IS HEREIN CALLED SUCH SNR LENDER'S
"SNR PRO RATA SHARE."
SNR LENDER SNR COMMITTED AMOUNT SNR PRO RATA SHARE
BANK OF AMERICA $1,269,232 46.1539%
LASALLE $ 846,153 30.7692%
PNC $ 634,615 23.0769%
TOTAL SNR COMMITTED AMOUNT $2,750,000 100%
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THE OBLIGATION OF EACH SNR LENDER TO MAKE
AN ADVANCE UNDER THE SNR LOAN IS SEVERAL AND IS LIMITED TO ITS SNR
COMMITTED AMOUNT AND BY THE PROVISIONS OF CLAUSE (c) IN THE FOLLOWING
PARAGRAPH AND SUCH OBLIGATION OF EACH SNR LENDER IS HEREIN CALLED ITS
"SNR COMMITMENT". THE SNR COMMITMENT OF EACH OF THE SNR LENDERS IS
HEREIN COLLECTIVELY REFERRED TO AS THE "SNR COMMITMENTS". THE AGENT
SHALL NOT BE RESPONSIBLE FOR THE SNR COMMITMENT OF ANY SNR LENDER; AND
SIMILARLY, NONE OF THE SNR LENDERS SHALL BE RESPONSIBLE FOR THE SNR
COMMITMENT OF ANY OF THE OTHER SNR LENDERS; THE FAILURE, HOWEVER, OF
ANY SNR LENDER TO PERFORM ITS SNR COMMITMENT SHALL NOT RELIEVE ANY OF
THE OTHER SNR LENDERS FROM THE PERFORMANCE OF THEIR RESPECTIVE SNR
COMMITMENTS.
DURING THE SNR COMMITMENT PERIOD, THE
BORROWER MAY REQUEST ADVANCES UNDER THE SENIOR NOTE REPURCHASE FACILITY
IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT; PROVIDED THAT
AFTER GIVING EFFECT TO ANY BORROWER'S REQUEST:
(a) THE OUTSTANDING PRINCIPAL BALANCE OF
EACH SNR LENDER'S SNR PRO RATA SHARE OF THE SENIOR NOTE
REDEMPTION SUBFACILITY WOULD NOT EXCEED SUCH SNR LENDER'S SNR
PRO RATA SHARE; AND
(b) THE AGGREGATE OUTSTANDING PRINCIPAL
BALANCE OF THE SNR WOULD NOT EXCEED THE TOTAL SNR COMMITTED AMOUNT; AND
(c) THE OUTSTANDING PRINCIPAL BALANCE OF THE
AGGREGATE OF THE REVOLVING LOAN, ALL LETTER OF CREDIT
OBLIGATIONS AND THE SNR LOAN WOULD NOT EXCEED AN AMOUNT EQUAL
TO THE TOTAL REVOLVING CREDIT COMMITTED AMOUNT.
AMOUNTS REPAID ON THE SNR MAY NOT BE REBORROWED.
2.6.2 PROCEDURE FOR MAKING ADVANCES UNDER THE SNR.
THE BORROWER MAY BORROW UNDER THE SENIOR
NOTE REDEMPTION SUBFACILITY ON ANY BUSINESS DAY DURING THE SNR
COMMITMENT PERIOD. THE BORROWER SHALL GIVE THE AGENT WRITTEN NOTICE (AN
"SNR NOTICE") AT LEAST ONE (1) BUSINESS DAY PRIOR TO THE DATE ON WHICH
SUCH BORROWER DESIRES AN ADVANCE UNDER THE SNR. EACH SNR NOTICE SHALL
BE ACCOMPANIED BY A WRITTEN REQUEST FROM THE BORROWER THAT ACCURATELY
AND COMPLETELY DESCRIBES A SENIOR NOTE TO BE PURCHASED, THE OUTSTANDING
PRINCIPAL BALANCE OF THE SENIOR NOTE, THE AMOUNT TO BE PAID (WHICH
AMOUNT SHALL BE NO GREATER THAN A PERCENTAGE OF SUCH OUTSTANDING
PRINCIPAL BALANCE AS MAY BE AGREED UPON BY THE BORROWER AND THE SNR
LENDERS) TO REDEEM THE SENIOR NOTE, AND THE DATE AND MANNER OF PAYMENT.
EACH SNR NOTICE SHALL ALSO BE ACCOMPANIED BY SUCH OTHER INFORMATION,
CERTIFICATES, CONFIRMATIONS, AND OTHER ITEMS AS THE AGENT MAY REQUIRE
WITH RESPECT TO THE REPURCHASE OF THE
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SENIOR NOTE AND COMPLIANCE WITH THE OTHER TERMS OF THIS AGREEMENT. THE
BORROWER SHALL USE THE PROCEEDS OF THE SNR LOAN PROMPTLY AND ONLY FOR
THE REDEMPTION OF SENIOR NOTES IN ACCORDANCE WITH AN SNR NOTICE.
NOT LATER THAN 2:00 P.M. (BALTIMORE CITY
TIME) ON EACH REQUESTED BORROWING DATE FOR THE MAKING OF ADVANCES UNDER
THE SNR, EACH SNR LENDER SHALL, IF IT HAS RECEIVED TIMELY NOTICE FROM
THE AGENT OF THE BORROWER'S REQUEST FOR SUCH ADVANCES, MAKE AVAILABLE
TO THE AGENT, IN FUNDS IMMEDIATELY AVAILABLE TO THE AGENT AT THE
AGENT'S OFFICE SET FORTH IN SECTION 9.1, SUCH SNR LENDER'S SNR PRO RATA
SHARE OF THE ADVANCES TO BE MADE ON SUCH DATE.
2.6.3 SNR NOTES.
THE OBLIGATION OF THE BORROWER TO PAY EACH
SNR LENDER'S SNR PRO RATA SHARE OF THE SENIOR NOTE REDEMPTION
SUBFACILITY, WITH INTEREST, SHALL BE EVIDENCED BY A SERIES OF
PROMISSORY NOTES (AS FROM TIME TO TIME EXTENDED, AMENDED, RESTATED,
SUPPLEMENTED OR OTHERWISE MODIFIED, COLLECTIVELY THE "SNR NOTES" AND
INDIVIDUALLY A "SNR NOTE") SUBSTANTIALLY IN THE FORM OF EXHIBIT "A-2"
ATTACHED HERETO AND MADE A PART HEREOF, WITH APPROPRIATE INSERTIONS.
EACH SNR LENDER'S SNR NOTE SHALL BE PAYABLE TO THE ORDER OF SUCH SNR
LENDER AT THE TIMES PROVIDED IN THE SNR NOTE, AND SHALL BE IN THE
PRINCIPAL AMOUNT OF SUCH SNR LENDER'S SNR PRO RATA SHARE. THE BORROWER
ACKNOWLEDGES AND AGREES THAT, IF THE OUTSTANDING PRINCIPAL BALANCE OF
THE SENIOR NOTE REDEMPTION SUBFACILITY OUTSTANDING FROM TIME TO TIME
EXCEEDS THE AGGREGATE FACE AMOUNT OF THE SNR NOTES, THE EXCESS SHALL
BEAR INTEREST AT THE RATES PROVIDED FROM TIME TO TIME FOR THE SENIOR
NOTE REDEMPTION SUBFACILITY EVIDENCED BY THE SNR NOTES AND SHALL BE
PAYABLE, WITH ACCRUED INTEREST, ON DEMAND. THE SNR NOTES SHALL NOT
OPERATE AS A NOVATION OF ANY OF THE OBLIGATIONS OR NULLIFY, DISCHARGE,
OR RELEASE ANY SUCH OBLIGATIONS OR THE CONTINUING CONTRACTUAL
RELATIONSHIP OF THE PARTIES HERETO IN ACCORDANCE WITH THE PROVISIONS OF
THIS AGREEMENT.
2.6.4 PAYMENTS OF SENIOR NOTE REDEMPTION
SUBFACILITY.
EACH ADVANCE UNDER THE SENIOR NOTE
REDEMPTION SUBFACILITY SHALL BE REPAYABLE IN INSTALLMENT PAYMENTS OF
PRINCIPAL MONTHLY (ON THE FIRST DAY OF EACH MONTH) COMMENCING APRIL 1,
2001 IN AN AMOUNT EQUAL TO 1/60TH OF THE AMOUNT OUTSTANDING ON MARCH
31, 2001. THE SNR INSTALLMENT PAYMENT SCHEDULES SHALL NOT OPERATE AS A
NOVATION OF ANY OF THE OBLIGATIONS OR NULLIFY, DISCHARGE, OR RELEASE
ANY SUCH OBLIGATIONS OR THE CONTINUING CONTRACTUAL RELATIONSHIP OF THE
PARTIES HERETO IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT OR
THE SNR NOTES.
2.6.5 ACTIVATION FEE.
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THE BORROWER SHALL PAY TO THE AGENT FOR THE
RATABLE (BASED UPON EACH SNR LENDER'S SNR PRO RATA SHARE) BENEFIT OF
THE SNR LENDERS ON OR BEFORE THE DATE OF EACH ADVANCE UNDER THE SENIOR
NOTE REDEMPTION SUBFACILITY A FEE (THE "SNR ACTIVATION FEE") IN THE
AMOUNT OF ONE AND ONE-HALF PERCENT (1-1/2%) OF THE AMOUNT ADVANCED.
2.6.6 OPTIONAL PREPAYMENTS OF SNR LOAN.
THE SNR LOAN MAY NOT BE PREPAID IN WHOLE OR
IN PART ON OR BEFORE JULY 31, 2001. SUBJECT TO THE PROVISIONS OF
SECTION 2.6.7 (SNR EARLY TERMINATION FEE) AND SECTION 2.3.4
(INDEMNITY), THE BORROWER SHALL HAVE THE OPTION AT ANY TIME THEREAFTER
AND FROM TIME TO TIME PREPAY (EACH A "SNR LOAN OPTIONAL PREPAYMENT" AND
COLLECTIVELY THE "SNR LOAN OPTIONAL PREPAYMENTS") THE SNR LOAN, IN
WHOLE OR IN PART WITHOUT PREMIUM OR PENALTY; PROVIDED, HOWEVER, THAT
THE BORROWER MAY NOT USE ANY PROCEEDS OF AN ADVANCE UNDER THE REVOLVING
CREDIT FACILITY FOR AN SNR LOAN OPTIONAL PREPAYMENT UNLESS AT THE TIME
OF THE REQUEST FOR, AT THE TIME OF THE FUNDING OF AND IMMEDIATELY AFTER
THE TIME OF THE APPLICATION OF SUCH ADVANCE, THE OUTSTANDING PRINCIPAL
AMOUNT OF THE REVOLVING LOAN PLUS THE OUTSTANDING LETTER OF CREDIT
OBLIGATIONS DOES NOT EXCEED AN AMOUNT EQUAL TO THE LESSER OF (i) THE
TOTAL REVOLVING CREDIT COMMITTED AMOUNT OR (ii) THE BORROWING BASE,
MINUS TEN MILLION DOLLARS ($10,000,000) AND MINUS AN AMOUNT EQUAL TO
ACCRUED AND AN UNPAID INTEREST ON THE SENIOR NOTES.
2.6.7 SNR EARLY TERMINATION FEE.
WITH EACH SNR LOAN OPTIONAL PREPAYMENT
PRIOR TO THE REVOLVING CREDIT EXPIRATION DATE (AS EXTENDED FROM TIME TO
TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT), THE BORROWER
SHALL PAY A FEE (THE "SNR EARLY TERMINATION FEE") EQUAL TO FOLLOWING
AMOUNT AT THE FOLLOWING TIMES:
- --------------------------------------------------------------------------------
PERIOD SNR EARLY TERMINATION FEE
- --------------------------------------------------------------------------------
AUGUST 1, 2001 THROUGH AND INCLUDING JULY 31, 0.5% OF THE AMOUNT PREPAID
2002
- --------------------------------------------------------------------------------
AUGUST 1, 2002 THROUGH AND INCLUDING JULY 31, 0.25% OF THE AMOUNT PREPAID
2003
- --------------------------------------------------------------------------------
AUGUST 1, 2003 AND THEREAFTER NONE
- --------------------------------------------------------------------------------
PAYMENT OF THE SNR LOAN IN WHOLE OR IN PART
BY OR ON BEHALF OF THE BORROWER, BY COURT ORDER OR OTHERWISE, FOLLOWING
AND AS A RESULT OF THE INSTITUTION OF ANY BANKRUPTCY PROCEEDING BY OR
AGAINST THE BORROWER,
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SHALL BE DEEMED TO BE A PREPAYMENT OF THE SNR LOAN SUBJECT TO THE SNR
EARLY TERMINATION FEE PROVIDED IN THIS SUBSECTION.
NOTWITHSTANDING THE FOREGOING, THE BORROWER
SHALL NOT BE REQUIRED TO PAY THE SNR EARLY TERMINATION FEE IN
CONNECTION WITH A TERMINATION OF THE REVOLVING CREDIT COMMITMENTS IF
THE REPAYMENT OF ALL OBLIGATIONS IS FROM (a) THE PROCEEDS OF AN
ISSUANCE OF COMMON STOCK BY THE BORROWER, (b) THE PROCEEDS OF AN
ISSUANCE OF COMMON STOCK BY THE BORROWER, (c) A REPLACEMENT CREDIT
FACILITY EXTENDED BY BANK OF AMERICA, OR ITS SUCCESSORS, TO THE
BORROWER, WHICH GENERATES SUFFICIENT PROCEEDS AND IS IN FACT USED TO
REPAY ALL OBLIGATIONS (INCLUDING ALL LETTER OF CREDIT OBLIGATIONS) IN
FULL AND, IF, IN CONNECTION WITH SUCH REPAYMENT OF ALL OBLIGATIONS, ALL
LETTERS OF CREDIT ARE TERMINATED, OR (d) A REPLACEMENT CREDIT FACILITY
EXTENDED WHICH GENERATES SUFFICIENT PROCEEDS AND IS IN FACT USED TO
REPAY ALL OBLIGATIONS BY ANOTHER LENDER TO THE BORROWER ON TERMS AND
CONDITIONS THAT THE AGENT AND THE LENDERS DID NOT OFFER TO THE BORROWER
AFTER HAVING BEEN PROVIDED A COPY OF SUCH OTHER LENDER'S COMMITMENT AND
HAVING HAD NOT LESS THAN THIRTY (30) DAYS TO REVIEW, APPROVE AND COMMIT
TO IN WRITING A COMPARABLE CREDIT FACILITY.
7. Section 7.2.5 of the Financing Agreement is hereby amended in its
entirety as follows:
7.2.5 APPLICATION OF PROCEEDS; SNR PARTICIPANT.
(a) ANY PROCEEDS OF SALE OR OTHER DISPOSITION OF THE
COLLATERAL WILL BE APPLIED BY THE AGENT TO THE PAYMENT FIRST OF ANY AND
ALL AGENT'S OBLIGATIONS, THEN TO ANY AND ALL ENFORCEMENT COSTS, AND
THEREAFTER (i) PROCEEDS FROM THE COLLATERAL (OTHER THAN THE MORTGAGE)
SHALL BE APPLIED FIRST TO THE OBLIGATIONS WITH RESPECT TO THE REVOLVING
CREDIT FACILITY, SECOND TO OBLIGATIONS OTHER THAN THE THOSE WITH
RESPECT TO THE SENIOR NOTE REDEMPTION SUBFACILITY, THEN TO ANY
OBLIGATIONS WITH RESPECT TO THE SENIOR NOTE REDEMPTION SUBFACILITY, AND
(ii) PROCEEDS FROM THE MORTGAGE SHALL BE APPLIED FIRST TO THE
OBLIGATIONS WITH RESPECT TO THE SENIOR NOTE REDEMPTION SUBFACILITY AND
THEN TO ANY OTHER OBLIGATIONS. IF THE SALE OR OTHER DISPOSITION (BY
FORECLOSURE, LIQUIDATION OR OTHERWISE) OF THE COLLATERAL FAILS TO FULLY
SATISFY THE OBLIGATIONS, THE BORROWER SHALL REMAIN LIABLE TO THE AGENT
AND THE SNR LENDERS FOR ANY DEFICIENCY.
(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, THE THIRD AMENDMENT OR OTHERWISE, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE REQUISITE LENDERS, UNTIL THE OBLIGATIONS (OTHER THAN THE
SNR LOAN OBLIGATIONS AND CONTINGENT INDEMNIFICATION OBLIGATIONS NOT
THEN DUE AND PAYABLE), HAVE BEEN INDEFEASIBLY PAID IN FULL IN CASH (i)
THE SNR LOAN SHALL NOT BE INCLUDED IN THE DETERMINATION OF PRO RATA
SHARES AND REQUISITE LENDERS, (ii) THE AGENT AND THE LENDERS MAY TAKE
ANY ACTION UNDER THIS AGREEMENT, UNDER THE FINANCING AGREEMENT, UNDER
THE FINANCING
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DOCUMENTS, UNDER APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, THOSE
ACTIONS FOR WHICH THE CONSENT OF ALL LENDERS IS REQUIRED UNDER SECTION
9.2.2 (CIRCUMSTANCES WHERE CONSENT OF ALL LENDERS IS REQUIRED) OF THE
FINANCING AGREEMENT) OR OTHERWISE WITH RESPECT TO THE OBLIGATIONS
AND/OR THE COLLATERAL (OTHER THAN THE MORTGAGE AND OTHER THAN TO MODIFY
THE TERMS OF, OR TO RELEASE THE OBLIGORS WITH RESPECT TO, THE SNR LOAN
OBLIGATIONS AS PROVIDED UNDER THE THIRD AMENDMENT) WITHOUT THE FURTHER
AGREEMENT OR CONSENT OF THE HOLDER OF THE SNR LOAN OR ANY INTEREST
THEREIN (INCLUDING, WITHOUT LIMITATION, THE SNR PARTICIPANT), (iii) ALL
LIENS (OTHER THAN THE LIEN OF THE MORTGAGE) SECURING THE SNR LOAN
OBLIGATIONS SHALL BE AND ARE HEREBY AGREED TO BE FULLY SUBORDINATE TO
THE LIENS OF THE AGENT AND THE LENDERS IN THE COLLATERAL (OTHER THAN
THE MORTGAGE), AND THE HOLDER OF THE SNR LOAN OR ANY INTEREST THEREIN
(INCLUDING, WITHOUT LIMITATION, THE SNR PARTICIPANT) SHALL HAVE NO
RIGHTS OF MARSHALLING OR OTHERWISE IN CONNECTION WITH THE DISPOSITION
OF THE COLLATERAL, (iv) NO PROCEEDS OF SALE OR OTHER DISPOSITION OF THE
COLLATERAL (OTHER THAN THE MORTGAGE) WILL BE APPLIED TO THE SNR LOAN,
AND (v) THE AGENT, IN THE EXERCISE OF ITS SOLE AND ABSOLUTE DISCRETION,
MAY AT ANY TIME RELEASE, TERMINATE, FAIL TO PERFECT OR OTHERWISE DEAL
WITH OR FAIL TO DEAL WITH THE COLLATERAL (OTHER THAN THE MORTGAGE) AS
LONG AS SUCH ACTION IS NOT TAKEN BY THE AGENT IN BAD FAITH OR BY
WILLFUL MISCONDUCT, ALL AS IF THE SNR LOAN DID NOT EXIST, THE HOLDERS
OF THE SNR LOAN AND OF ANY INTEREST THEREIN (INCLUDING, WITHOUT
LIMITATION, THE SNR PARTICIPANT) WAIVING ANY CLAIM TO THE CONTRARY.
8. Article V of the Financing Agreement is hereby amended by
adding the following as new Sections 5.3 and 5.4:
SECTION 5.3 CONDITIONS TO THE INITIAL ADVANCE UNDER THE
SENIOR NOTE REDEMPTION SUBFACILITY.
THE MAKING OF THE INITIAL ADVANCE UNDER THE SENIOR NOTE
REDEMPTION SUBFACILITY IS SUBJECT TO THE FULFILLMENT ON OR BEFORE THE
SNR CLOSING DATE OF THE FOLLOWING CONDITIONS PRECEDENT IN A MANNER
SATISFACTORY IN FORM AND SUBSTANCE TO THE AGENT AND ITS COUNSEL:
5.3.1 ORGANIZATIONAL DOCUMENTS.- OBLIGORS
THE AGENT SHALL HAVE RECEIVED FOR EACH OF OBLIGORS
CERTIFICATES OF GOOD STANDING, OFFICER'S CERTIFICATES, AND TRUE AND
COMPLETE COPIES OF THE APPLICABLE CORPORATE CHARTER, BYLAWS,
PARTNERSHIP AGREEMENTS, PARTNERSHIP CERTIFICATES, AND ALL AMENDMENTS
THERETO, ALL IN FORM AND SUBSTANCE SATISFACTORY TO THE AGENT.
5.3.2 OPINION OF OBLIGORS' COUNSEL.
THE AGENT SHALL HAVE RECEIVED THE FAVORABLE OPINION
OF COUNSEL FOR THE OBLIGORS ADDRESSED TO THE AGENT AND THE LENDERS IN
FORM AND SUBSTANCE SATISFACTORY TO THE AGENT.
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5.3.3 ORGANIZATIONAL DOCUMENTS.- SNR GUARANTOR
THE AGENT SHALL HAVE RECEIVED FOR THE SNR GUARANTOR
CERTIFICATES OF GOOD STANDING, PARTNER'S CERTIFICATES, AND TRUE AND
COMPLETE COPIES OF THE APPLICABLE PARTNERSHIP AGREEMENTS, PARTNERSHIP
CERTIFICATES, AND ALL AMENDMENTS THERETO, ALL IN FORM AND SUBSTANCE
SATISFACTORY TO THE AGENT.
5.3.4 OPINION OF SNR GUARANTOR'S COUNSEL.
THE AGENT SHALL HAVE RECEIVED THE FAVORABLE OPINION
OF COUNSEL FOR THE SNR GUARANTOR ADDRESSED TO THE AGENT AND THE LENDERS
IN FORM AND SUBSTANCE SATISFACTORY TO THE AGENT.
5.3.5 NOTES.
THE AGENT SHALL HAVE RECEIVED FOR DELIVERY TO EACH OF
THE SNR LENDERS THE SNR NOTES, EACH CONFORMING TO THE REQUIREMENTS
HEREOF AND EXECUTED BY A RESPONSIBLE OFFICER OF THE BORROWER AND
ATTESTED BY A DULY AUTHORIZED REPRESENTATIVE OF THE BORROWER.
5.3.6 MORTGAGE.
THE BORROWER SHALL HAVE EXECUTED AND DELIVERED THE
MORTGAGE CONFORMING TO THE REQUIREMENTS HEREOF AND EXECUTED BY A
RESPONSIBLE OFFICER OF THE BORROWER AND ATTESTED BY A DULY AUTHORIZED
REPRESENTATIVE OF THE BORROWER AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE AGENT.
5.3.7 SNR GUARANTY; SNR PARTICIPANT.
THE SNR GUARANTOR SHALL HAVE EXECUTED AND DELIVERED
THE SNR GUARANTY IN FORM AND SUBSTANCE SATISFACTORY TO THE AGENT.
5.3.8 SNR PARTICIPATION.
THE SNR PARTICIPANT SHALL HAVE EXECUTED AND DELIVERED
THE SNR PARTICIPATION WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY
TO THE SNR LENDERS.
5.3.8 OTHER DOCUMENTS, ETC.
THE AGENT SHALL HAVE RECEIVED SUCH OTHER
CERTIFICATES, OPINIONS, DOCUMENTS AND INSTRUMENTS CONFIRMATORY OF OR
OTHERWISE RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY AS MAY HAVE
BEEN REASONABLY REQUESTED BY THE AGENT.
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5.3.9 PAYMENT OF FEES.
THE AGENT AND THE LENDERS SHALL HAVE RECEIVED PAYMENT
OF ANY FEES DUE ON OR BEFORE THE SNR CLOSING DATE.
SECTION 5.4 CONDITIONS TO THE INITIAL ADVANCE UNDER THE
SENIOR NOTE REDEMPTION SUBFACILITY.
THE MAKING OF ALL ADVANCES UNDER THE SNR LOAN IS SUBJECT TO
THE FULFILLMENT OF THE REQUIREMENTS OF SECTION 2.6 (SENIOR NOTE
REDEMPTION SUBFACILITY) AND TO THE FULFILLMENT AT THE TIME OF EACH SUCH
ADVANCE OF THE CONDITIONS SET FORTH IN SECTION 5.2 (CONDITIONS TO ALL
EXTENSIONS OF CREDIT) (EXCEPT THAT REFERENCES TO EACH ADVANCE UNDER THE
LOAN SHALL BE DEEMED TO REFER TO EACH ADVANCE UNDER THE SNR LOAN).
9. With respect to the SNR Guaranty:
(a) After February 28, 2001 and before April 15, 2001, the SNR
Guarantor or the Borrower by notice to the Agent and the SNR Lenders may request
that the SNR Guaranty be released, which the Agent and the SNR Lenders shall do
if (a) the Borrower has delivered the annual financial statements, certificates
and opinions as and when required by Sections 6.1.1(a) and (b); (b) there shall
exist no Default or Event of Default as of the date of those financial
statements, the date of the notice and the date of the release; (c) the
outstanding principal amount of the Revolving Loan plus the Outstanding Letter
of Credit Obligations does not on the date of release exceed an amount equal to
the lesser of (i) the Total Revolving Credit Committed Amount or (ii) the
Borrowing Base, minus Ten Million Dollars ($10,000,000) and minus an amount
equal to accrued and an unpaid interest on the Senior Notes; and (d) the
conditions of the following subparagraph (c) have been met.
(b) If the SNR Guarantor or the Borrower does not make a request
meeting the requirements of subsection (a) above, for a period of thirty (30)
days after the Borrower delivers the financial statements and certificates as
and when required by Sections 6.1.1(c) for a month that is also the end of a
fiscal quarter of the Borrower, the SNR Guarantor or the Borrower by notice to
the Agent and the SNR Lenders may request that the SNR Guaranty be released,
which the Agent and the SNR Lenders shall do if (a) the Borrower has delivered
the monthly financial statements and certificates as and when required by
Sections 6.1.1(c) for the fiscal quarter most recently ended; (b) there shall
exist no Default or Event of Default as of the date of those financial
statements, the date of the notice and the date of the release; (c) the
outstanding principal amount of the Revolving Loan plus the Outstanding Letter
of Credit Obligations does not on the date of release exceed an amount equal to
the lesser of (i) the Total Revolving Credit Committed Amount or (ii) the
Borrowing Base and minus an amount equal to accrued and an unpaid interest on
the Senior Notes, minus Ten Million Dollars ($10,000,000); and (d) the
conditions of the following subparagraph (c) have been met.
(c) The SNR Lenders shall have no obligation to release the SNR
Guaranty unless the Mortgage at the time of the release shall grant a Lien
covering the real property described therein to the Agent, for the ratable
benefit of the SNR Lenders and the Agent to secure the SNR
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Obligations (including, without limitation, the Agent's Obligations with
respect thereto), and shall:
(i) be in form and substance satisfactory to
the Agent;
(ii) create a first priority Lien in such real
property in favor of the Agent, for the ratable benefit of the SNR
Lenders and the Agent to secure the SNR Obligations (including, without
limitation, the Agent's Obligations with respect thereto), subject only
to Permitted Liens, zoning ordinances, existing leases related to a
PILOT program (provided, however, that on or before July 31, 2000 such
leases shall be subordinated to the Mortgage, in form and substance
satisfactory to the Agent), and such other matters as the Agent may
reasonably approve and subject to no preference claims or other claims
under the Bankruptcy Codes or under other Laws affecting the rights of
creditors generally;
(iii) be accompanied by a current appraisal of the
fair market value of the subject real property prepared by appraisers
reasonably satisfactory to the Agent, which appraisal shall show that
the outstanding principal balance of the SNR Loan does not exceed 75%
of such fair market value;
(iv) be accompanied by a current survey reasonably
satisfactory in all respects to the Agent of the subject real property,
prepared by a registered land surveyor or engineer satisfactory to the
Agent;
(v) be accompanied by evidence (including, without
limitation, a Phase I report ordered by and for the Agent and meeting
ASTM standards and the Agent's then current standards) reasonably
satisfactory to the Agent regarding the current and past pollution
control practices at such real property in connection with the
discharge, emission, handling, disposal or existence of Hazardous
Materials, which may include, at the Agent's request, an environmental
audit of such real property prepared by a person or firm acceptable to
the Agent;
(vi) be accompanied by a mortgagee's title insurance
policy or marked-up unconditional commitment or binder for such
insurance in form and substance satisfactory to the Agent and issued by
a title insurance company reasonably satisfactory to the Agent; and
(vii) upon request of the Agent, be accompanied by a
signed opinion of counsel addressed to the Agent and each of the
Lenders, in form and substance satisfactory to the Agent, and from
counsel, satisfactory to the Agent, licensed to practice in the state
where the subject real property is located.
10. The Borrower covenants and agrees to provide on or before July 31,
2000, the items required by clauses (iv) and (vi) of Section 9(c) above.
11. By letter dated May 15, 2000, the Borrower requested that the Agent
and the Lenders consent to a reorganization of the Obligors with the effect that
all of the assets of Foster Grant Holdings, Inc. and its direct and indirect
subsidiaries will be held by the Borrower. The Agent
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and the Lenders agree that the reorganization so described shall be treated
as a transaction covered by Section 6.2.1(c) of the Financing Agreement
and that no further consent of the Agent or the Lenders shall be required if the
reorganization meets the requirements of Section 6.2.1(c), including, without
limitation, the requirement that all Collateral remain subject to the Liens in
favor of the Agent and the Lenders.
12. The Obligors, as applicable, hereby issue, ratify and confirm the
representations, warranties and covenants contained in the Financing Agreement,
as amended hereby. The Obligors agree that this Agreement is not intended to and
shall not cause a novation with respect to any or all of the Obligations.
11. The Obligors acknowledge and warrant that the Agent and Lenders
have acted in good faith and have conducted in a commercially reasonable manner
their relationships with the Obligors in connection with this Agreement and
generally in connection with the Financing Agreement and the Obligations, the
Obligors hereby waiving and releasing any claims to the contrary.
12. The Obligors shall pay at the time this Agreement is executed and
delivered all fees, commissions, costs, charges, taxes and other expenses
incurred by the Agent and Lenders and their counsel in connection with this
Agreement, including, but not limited to, reasonable fees and expenses of the
Agent's counsel and all recording fees, taxes and charges.
13. This Agreement may be executed in any number of duplicate originals
or counterparts, each of such duplicate originals or counterparts shall be
deemed to be an original and taken together shall constitute but one and the
same instrument. The parties agree that their respective signatures may be
delivered by facsimile. Any party who chooses to deliver its signature by
facsimile agrees to provide a counterpart of this Agreement with its inked
signature promptly to each other party.
IN WITNESS WHEREOF, the Borrower, the Guarantors, the Lenders and Agent
have executed this Agreement under seal as of the date and year first written
above.
WITNESS AAi.FOSTERGRANT, INC. (formerly known
as Accessories, Associates, Inc.)
/s/ Paula Zampini By: /s/ Mark Kost (SEAL)
- ---------------------------- --------------------------
Mark Kost
Chief Financial Officer
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WITNESS: FOSTER GRANT GROUP, L.P.
By: Bonneau General, Inc.
General Partner
/s/ Paula Zampini By: /s/ Mark Kost (SEAL)
- ----------------------------- --------------------------
Mark Kost
Chief Financial Officer
WITNESS: FANTASMA, LLC
/s/ Paula Zampini By: /s/ Mark Kost (SEAL)
- ----------------------------- --------------------------
Mark Kost
Chief Financial Officer
WITNESS: F.G.G. INVESTMENTS, INC.
/s/ Paula Zampini By: /s/ Mark Kost (SEAL)
- ----------------------------- --------------------------
Mark Kost
Chief Financial Officer
WITNESS: THE BONNEAU COMPANY
/s/ Paula Zampini By: /s/ Mark Kost (SEAL)
- ----------------------------- --------------------------
Mark Kost
Chief Financial Officer
WITNESS: BONNEAU GENERAL, INC.
/s/ Paula Zampini By: /s/ Mark Kost (SEAL)
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Mark Kost
Chief Financial Officer
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WITNESS: BONNEAU HOLDINGS, INC.
/s/ Paula Zampini By:/s/ Mark Kost (SEAL)
- ----------------------------- --------------------------
Mark Kost
Chief Financial Officer
WITNESS: FOSTER GRANT HOLDINGS, INC.
/s/ Paula Zampini By:/s/ Mark Kost (SEAL)
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Mark Kost
Chief Financial Officer
WITNESS: O-RAY HOLDINGS, INC.
/s/ Paula Zampini By:/s/ Mark Kost (SEAL)
- ----------------------------- --------------------------
Mark Kost
Chief Financial Officer
SIGNATURES CONTINUED ON THE NEXT PAGE
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WITNESS: BANK OF AMERICA, N.A., Agent
/s/ Mary J. Kleinsmith By: /s/ Gary W. Bartlett (SEAL)
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Gary W. Bartlett
Vice President
WITNESS: BANK OF AMERICA, N.A.
in its capacity as a Lender
/s/ Mary J. Kleinsmith By: /s/ Gary W. Bartlett (SEAL)
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Gary W. Bartlett
Vice President
WITNESS: LASALLE BUSINESS CREDIT, INC.
By: /s/ Thomas A. Buckelew (SEAL)
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Thomas A. Buckelew
Vice President
WITNESS: PNC BANK, NATIONAL ASSOCIATION
By: /s/ Rose Crump (SEAL)
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Rose Crump
Vice President
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EXHIBIT A-2
SNR NOTE
--------
$__________ Baltimore, Maryland
June __, 2000
FOR VALUE RECEIVED, AAi.FOSTERGRANT, INC. (formerly known as
Accessories Associates, Inc.), a corporation organized and existing under the
laws of the State of Rhode Island (the "Borrower"), promises to pay to the order
of ________________ (the "SNR Lender"), the principal sum of
__________________________ DOLLARS ($___________) (the "Principal Sum"), or so
much thereof as has been or may be advanced to or for the account of the
Borrower pursuant to the terms and conditions of the "Financing Agreement" (as
hereinafter defined) with respect to the SNR Lender's SNR Pro Rata Share of the
SNR Loan (as those terms are defined in the Financing Agreement), together with
interest thereon at the rate or rates provided in the Financing Agreement. All
capitalized terms used, but not specifically defined herein, shall have the
meanings given such terms in the Financing Agreement.
1. INTEREST.
Commencing as of the date hereof and continuing until repayment in full
of all sums due hereunder, the unpaid Principal Sum shall bear interest at the
Applicable Interest Rate or, if applicable, the Post Default Rate. The rate of
interest charged under this Note shall change immediately and contemporaneously
with any change in the Applicable Interest Rate. All interest payable under the
terms of this Note shall be calculated on the basis of a 360-day year and the
actual number of days elapsed.
2. PAYMENTS AND MATURITY.
The unpaid Principal Sum, together with interest thereon at the rate or
rates provided above, shall be payable as follows:
(d) Interest shall be paid at the times for the payment of interest set
forth in Section 2.3 of the Financing Agreement; and
(e) The Borrower shall make installment payments of principal at the
times and in the amounts provided in Section 2.6.4 (Payments of Senior Note
Redemption Subfacility) of the Financing Agreement; and
(f) Unless sooner paid, the unpaid Principal Sum, together with
interest accrued and unpaid thereon, shall be due and payable in full on the
Revolving Credit Expiration Date (as that term is defined in the Financing
Agreement).
The fact that the balance hereunder may remain at or may be reduced to zero from
time to time pursuant to the Financing Agreement will not affect the continuing
validity of this Note or the
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Financing Agreement, and the balance may be
increased to the Principal Sum after any such reduction to zero.
3. LATE CHARGES.
If the Borrower shall fail to make any payment under the terms of this
Note within ten (10) days after the date such payment is due, the Borrower shall
pay to the SNR Lender on demand a late charge equal to five percent (5%) of such
payment.
4. APPLICATION AND PLACE OF PAYMENTS.
All payments, made on account of this Note shall be applied first to
the payment of any late charge then due hereunder, second to the payment of
accrued and unpaid interest then due hereunder, then to any installments of
principal then due and payable hereunder, and, if the Borrower is permitted to
make a SNR Loan Optional Prepayment (as that term is defined in the Financing
Agreement), then to any applicable Early Termination Fee (as that term is
defined in the Financing Agreement), and the remainder, if any, shall be applied
to installments of principal in the inverse order of maturity. All payments on
account of this Note shall be paid in lawful money of the United States of
America in immediately available funds during regular business hours of Bank of
America, N. A. (the "Agent") at the office of Bank of America Business Credit in
Baltimore, Maryland or at such other times and places as the Agent (as that term
is defined in the Financing Agreement) may at any time and from time to time
designate in writing to the Borrower.
5. FINANCING AGREEMENT.
This Note is an "SNR Note" described in a Second Amended and Restated
Financing and Security Agreement dated July 21, 1998 (as amended by that certain
First Amendment to Second Amended and Restated Financing and Security Agreement
dated as of May 7, 1999, Second Amendment to Second Amended and Restated
Financing and Security Agreement dated as of March 24, 2000, Third Amendment to
Financing and Security Agreement dated the same date as this Note (the "Third
Amendment"), and as further amended, restated, modified, substituted, extended,
and renewed from time to time, the "Financing Agreement") by and among the
Borrower, Bank of America, N.A., a national banking association, in its capacity
as Agent (the "Agent"), the SNR Lender, and others identified from time to time
therein as "Obligors," "SNR Lenders" and "Lenders" under the Financing
Agreement. The indebtedness evidenced by this Note is included within the
meaning of the term "Obligations" under the Financing Agreement.
6. SECURITY.
This Note is secured by the Mortgage (as that term is defined in the
Financing Agreement) and as otherwise provided in the Financing Agreement.
7. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an event of default (individually, an "Event of Default" and
collectively, the "Events of Default") under the terms of this Note:
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(g) The failure of the Borrower to pay to the SNR Lender when due any
and all amounts payable by the Borrower to the SNR Lender under the terms of
this Note; or
(h) The occurrence of an "Event of Default" (as defined in the
Financing Agreement).
8. REMEDIES.
Upon the occurrence of an Event of Default, at the option of the SNR
Lender, all amounts payable by the Borrower to the SNR Lender under the terms of
this Note shall immediately become due and payable by the Borrower to the SNR
Lender without notice to the Borrower or any other person, and the SNR Lender
shall have all of the rights, powers, and remedies available under the terms of
this Note, any of the other Financing Documents and all applicable laws. The
Borrower and all endorsers, guarantors, and other parties who may now or in the
future be primarily or secondarily liable for the payment of the indebtedness
evidenced by this Note hereby waives presentment, protest and demand, notice of
protest, notice of demand and of dishonor and non-payment of this Note and
expressly agrees that this Note or any payment hereunder may be extended from
time to time without in any way affecting the liability of the Borrower,
guarantors and endorsers.
The SNR Lender agrees with the Agent and the other Lenders that the
decisions and determinations of the Required Lenders in enforcing this Note and
in guiding the Agent in this matter shall be binding upon the SNR Lender,
including, without limitation, authorizing the Agent at the pro rata expense of
the SNR Lenders (to the extent not reimbursed by the Borrower) to retain
attorneys to seek judgment on this Note. The SNR Lender similarly agrees with
the Agent and the other Lenders and covenants with the Borrower that it will not
seek to separately institute any legal action on this Note. All rights of action
under this Note may be enforced by the Agent only and any suit or proceeding
instituted by the Agent in furtherance of such enforcement may be brought in its
name as Agent without the necessity of joining as plaintiffs or defendants the
SNR Lender, and the recovery of any judgment shall be for the benefit of the
Agent and the SNR Lenders, subject to the expenses of the Agent.
9. ARBITRATION.
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING,
BUT NOT LIMITED TO THOSE ARISING OUT OF THIS NOTE, THE FINANCING AGREEMENT OR
THE OTHER FINANCING DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN
ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE
FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE ACT), THE
RULES OF PRACTICE AND PROCEDURE FOR ARBITRATION OF COMMERCIAL DISPUTES OF THE
JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF AN INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS NOTE OR ANY OTHER FINANCING DOCUMENT MAY
BRING ANY ACTION, INCLUDING A SUMMARY OR EXPEDITED
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PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH
THIS NOTE RELATES IN ANY COURTS HAVING JURISDICTION OVER SUCH ACTION.
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF
AGENT'S DOMICILE AT THE TIME OF EXECUTION OF THIS NOTE AND ADMINISTERED BY
J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90
DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING FOR AN
ADDITIONAL 60 DAYS.
(B) RESERVATION OF RIGHTS. NOTHING IN THIS NOTE OR OTHER FINANCING
DOCUMENTS SHALL BE DEEMED TO: (I) LIMIT OR EXPAND THE APPLICABILITY OF ANY
OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED
IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF
THE PROTECTION AFFORDED TO IT BY 12 U.S.C. 91 OR ANY SUBSTANTIALLY EQUIVALENT
STATE LAW; OR (III) LIMIT OR EXPAND THE RIGHT OF THE LENDER. (A) TO EXERCISE
SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SET OFF, OR (B) TO FORECLOSE
AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT
PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE
RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE OR ANOTHER LOAN DOCUMENT.
NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF
ANY ACTION FOR FORECLOSURE OR FOR PROVISIONAL OR ANCILLARY REMEDIES SHALL
CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT
TO SUCH REMEDIES.
10. NOTICES.
Any notice, request, or demand to or upon the Borrower or the SNR
Lender shall be deemed to have been properly given or made when delivered in
accordance with Section 9.1 of the Financing Agreement.
11. APPLICABLE LAW.
The Borrower acknowledges and agrees that this Note shall be governed
by the laws of the State of Maryland, even though for the convenience and at the
request of the Borrower, this Note may be executed elsewhere.
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IN WITNESS WHEREOF, each of the Borrower has caused this Note to be
executed under seal by its duly authorized officers as of the date first written
above.
WITNESS: AAI.FOSTERGRANT, INC. (formerly known as
Accessories Associates, Inc.)
/s/ Paula Zampini By: /s/ Mark Kost (Seal)
- ----------------------------- --------------------------------
Mark Kost
Chief Financial Officer
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