EXHIBIT 10.1
------------
AGREEMENT
DATED APRIL 21, 2003
US$4,150,000
CREDIT FACILITY
FOR
SIGNATURE EYEWEAR, INC.
PROVIDED BY
BLUEBIRD FINANCE LIMITED
CONTENTS
CLAUSE PAGE
1. Interpretation......................................................1
1.1 Definitions............................................1
1.2 Construction...........................................5
2. Facility............................................................6
3. Purpose.............................................................7
3.1 Loans..................................................7
3.2 Letter of Credit.......................................7
3.3 No obligation to monitor...............................7
3.4 Security...............................................7
4. Conditions Precedent................................................7
4.1 Conditions precedent documents.........................7
4.2 Further conditions precedent...........................7
5. Utilization - Loans.................................................7
5.1 Giving of Requests.....................................7
5.2 Completion of Requests.................................8
5.3 Advance of Loan........................................8
5.4 Consolidation..........................................8
6. Utilization - Letters of Credit.....................................8
6.1 Giving of Requests.....................................8
6.2 Completion of Requests.................................8
6.3 Issue of Letter of Credit..............................9
7. Letters of Credit...................................................9
7.1 General................................................9
7.2 Fees in respect of the Letter of Credit...............10
7.3 Claims under a Letter of Credit.......................10
7.4 Indemnities...........................................10
8. Repayment..........................................................10
9. Prepayment and Cancellation........................................10
9.1 Mandatory prepayment - illegality.....................10
9.2 Mandatory prepayment - change of control..............11
9.3 Voluntary prepayment..................................11
9.4 Automatic cancellation................................11
9.5 Voluntary cancellation................................12
9.6 Involuntary prepayment and cancellation...............12
9.7 Re-borrowing of Loans.................................12
9.8 Miscellaneous provisions..............................12
10. Interest...........................................................12
10.1 Calculation of interest...............................12
10.2 Payment of interest...................................13
10.3 Interest on overdue amounts...........................13
11. Terms..............................................................13
12. Taxes..............................................................13
12.1 Tax gross-up..........................................13
12.2 Tax indemnity.........................................14
12.3 Stamp taxes...........................................14
12.4 Value added taxes.....................................14
13. Increased Costs....................................................14
13.1 Increased Costs.......................................14
13.2 Exceptions............................................15
13.3 Claims................................................15
14. Payments...........................................................15
14.1 Place.................................................15
14.2 Funds.................................................15
14.3 Currency..............................................15
14.4 No set-off or counterclaim............................15
14.5 Business Days.........................................16
14.6 Timing of payments....................................16
15. Representations....................................................16
15.1 Representations.......................................16
15.2 Status................................................16
15.3 Powers and authority..................................16
15.4 Legal validity........................................16
15.5 Non-conflict..........................................16
15.6 No default............................................17
15.7 Authorizations........................................17
15.8 Financial statements..................................17
15.9 No material adverse change............................18
15.10 Litigation............................................18
15.11 Information...........................................18
15.12 Pari passu ranking....................................19
15.13 Taxes on payments.....................................19
15.14 Stamp duties..........................................19
15.15 Immunity..............................................19
15.16 Pre-existing relationship; Capacity
to protect own interest.............................19
15.17 Regulatory laws.......................................20
15.18 Times for making representations......................20
16. Information Covenants..............................................21
16.1 Financial statements..................................21
16.2 Form of financial statements..........................21
16.3 Asset reports.........................................21
16.4 Information - miscellaneous...........................22
16.5 Notification of Default...............................22
16.6 Year end..............................................22
17. General Covenants..................................................22
17.1 General...............................................22
17.2 Authorizations........................................23
17.3 Compliance with laws..................................23
17.4 Pari passu ranking....................................23
17.5 Negative pledge.......................................23
17.6 Disposals.............................................24
17.7 Financial Indebtedness................................24
17.8 Change of business....................................25
17.9 Mergers...............................................25
17.10 Acquisitions..........................................25
17.11 Environmental matters.................................25
17.12 Insurance.............................................26
17.13 ERISA.................................................26
17.14 Securities Laws.......................................27
17.15 No new Subsidiaries...................................27
18. Default............................................................27
18.1 Events of Default.....................................27
18.2 Non-payment...........................................28
18.3 Breach of other obligations...........................28
18.4 Misrepresentation.....................................28
18.5 Cross-default.........................................28
18.6 Insolvency............................................29
18.7 Insolvency proceedings................................29
18.8 Creditors' process....................................30
18.9 Cessation of business.................................30
18.10 Effectiveness of Finance Documents....................30
18.11 Material adverse change...............................30
18.12 Acceleration..........................................30
19. Evidence and Calculations..........................................31
19.1 Accounts..............................................31
19.2 Certificates and determinations.......................31
19.3 Calculations..........................................31
20. Indemnities........................................................31
20.1 Currency indemnity....................................31
20.2 Other indemnities.....................................32
21. Expenses...........................................................32
21.1 Initial costs.........................................32
21.2 Subsequent costs......................................32
21.3 Enforcement costs.....................................33
22. Waivers............................................................33
23. Changes to the Parties.............................................33
23.1 Assignments and transfers by the Company..............33
23.2 Assignments and transfers by the Lender...............33
24. Disclosure of Information..........................................33
25. Set-Off............................................................34
26. Severability.......................................................34
27. Counterparts.......................................................34
28. Notices............................................................35
28.1 In writing............................................35
28.2 Contact details.......................................35
28.3 Effectiveness.........................................35
29. Language...........................................................36
30. Governing Law......................................................36
31. Enforcement........................................................36
31.1 Waiver of immunity....................................36
31.2 Waiver of trial by jury...............................36
32. Integration........................................................37
Signatories.................................................................38
SCHEDULES
1. Conditions Precedent Documents.....................................39
2. Form of Request....................................................41
3. Security Interests.................................................42
4. Form of Security Agreement.........................................43
5. Defaults...........................................................44
6. Material Adverse Change............................................45
7. Litigation.........................................................46
8. Form of Legal Opinion of the Company's Counsel.....................47
9. Letter of Credit...................................................55
THIS AGREEMENT is dated April 21, 2003
BETWEEN:
(1) SIGNATURE EYEWEAR, INC., a corporation organized under the laws of the
State of California (the Company); and
(2) BLUEBIRD FINANCE LIMITED as lender, a company organized under the laws of
the British Virgin Islands (the LENDER).
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
AFFILIATE means a Subsidiary or a Holding Company of a person or any other
Subsidiary of that Holding Company.
AVAILABILITY PERIOD means the period from and including the date of this
Agreement to and including: (a) with respect to Loans, the date falling
three months before the Final Maturity Date; and (b) with respect to the
Letter of Credit, close of business on the date of this Agreement.
BUSINESS DAY means a day (other than a Saturday or a Sunday) on which banks
are open for general business in California, USA.
COMMITMENT means the Letter of Credit Commitment and the Loan Commitment.
CREDIT means a Loan or the procurement of the Letter of Credit.
DECEMBER FINANCIAL STATEMENTS means the draft unaudited consolidated
financial statements of the Company for the period ended December 31, 2002.
DEFAULT means:
(a) an Event of Default; or
(b) an event which would be (with the expiry of a grace period, the giving
of notice or the making of any determination under the Finance
Documents or any combination of them) an Event of Default.
EVENT OF DEFAULT means an event specified as such in Clause 18 (Default).
FACILITY means the credit facility made available under this Agreement.
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FINAL MATURITY DATE means the tenth anniversary of the date of this
Agreement.
FINANCE DOCUMENT means:
(a) this Agreement;
(b) a Security Document;
(c) the Subordination Agreement; or
(d) any other document designated as such by the Lender and the Company.
FINANCIAL INDEBTEDNESS means any indebtedness for or in respect of:
(a) moneys borrowed;
(b) any acceptance credit;
(c) any bond, note, debenture, loan stock or other similar instrument;
(d) any redeemable preference share;
(e) any agreement treated as a finance or capital lease in accordance with
generally accepted accounting principles in the jurisdiction of
incorporation of the Company;
(f) receivables sold or discounted (otherwise than on a non-recourse
basis);
(g) the acquisition cost of any asset to the extent payable after its
acquisition or possession by the party liable where the deferred
payment is arranged primarily as a method of raising finance or
financing the acquisition of that asset;
(h) any derivative transaction protecting against or benefiting from
fluctuations in any rate or price (and, except for non-payment of an
amount, the then xxxx to market value of the derivative transaction
will be used to calculate its amount);
(i) any other transaction (including any forward sale or purchase
agreement) which has the commercial effect of a borrowing;
(j) any counter-indemnity obligation in respect of any guarantee,
indemnity, bond, letter of credit or any other instrument issued by a
bank or financial institution; or
(k) any guarantee, indemnity or similar assurance against financial loss
of any person in respect of any item referred to in the above
paragraphs.
GROUP means the Company and its Subsidiaries.
HOLDING COMPANY of any other person, means a company in respect of which
that other person is a Subsidiary.
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INCREASED COST means:
(a) an additional or increased cost;
(b) a reduction in the rate of return from the Facility; or
(c) a reduction of an amount due and payable under any Finance Document,
which is incurred or suffered by the Lender or any of its Affiliates but
only to the extent:
(i) attributable to the Lender having entered into any Finance Document or
funding or performing its obligations under any Finance Document; and
(ii) such costs, reduction or amounts exceeds US$25,000 in aggregate.
LC ISSUER means Bank of America (Asia) Limited.
LETTER OF CREDIT means the US$1,250,000 letter of credit issued by the LC
Issuer in favor of the Senior Lender at the request of the Lender as
collateral for the obligations of the Company under the Senior Credit
Agreement in the form of Schedule 9 (Letter of Credit).
LETTER OF CREDIT COMMITMENT means US$1,250,000, as such amount shall be
automatically reduced to zero on the earlier of:
(a) the Utilization Date of the Letter of Credit; and
(b) close of business in California on the date of this Agreement.
LOAN means, unless otherwise stated in this Agreement, the principal amount
of each borrowing under this Agreement or the principal amount outstanding
of that borrowing.
LOAN COMMITMENT means US$2,900,000, as such amount shall be automatically
reduced by an amount equal to US $72,500 on:
(a) the date falling 27 months after the date of this Agreement; and (b)
every 3 months after such date,
to the extent not cancelled, transferred or otherwise reduced under this
Agreement.
MATERIAL ADVERSE EFFECT means a material adverse effect on:
(a) the business, financial condition or results of operations of any
member of the Group or the Group as a whole;
(b) the ability of the Company to perform its obligations under any
Finance Document;
(c) the validity or enforceability of any Finance Document; or
(d) any right or remedy of the Lender in respect of a Finance Document.
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OCTOBER FINANCIAL STATEMENTS means the draft consolidated financial
statements of the Company for the year ended October 31, 2002.
PARTY means a party to this Agreement.
REPEATING REPRESENTATIONS means the representations which are deemed to be
repeated under Clause 15.18 (Times for making representations).
REQUEST means a request for a Credit, substantially in the form of Schedule
2 (Form of Request).
SECURITY AGREEMENT means a security agreement in the form of Schedule 4
(Form of Security Agreement) with such amendments as the Lender may approve
or reasonably require.
SECURITY DOCUMENT means:
(a) each Security Agreement; and
(b) any other document evidencing or creating security over any asset of
the Company to secure any obligation of the Company to the Lender
under the Finance Documents.
SECURITY INTEREST means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or arrangement
having a similar effect.
SENIOR CREDIT AGREEMENT means the US$3,500,000 loan and security agreement
dated on or about the date hereof between the Senior Lender and the Company
and the two promissory notes issued by the Company pursuant thereto.
SENIOR LENDER means Home Loan and Investment Company, a Colorado
corporation.
SUBORDINATION AGREEMENT means the subordination agreement dated on or about
the date of this Agreement between the Senior Lender, the Company and the
Lender.
SUBSIDIARY means an entity of which a person has direct or indirect control
or owns directly or indirectly more than 50% of the voting capital or
similar right of ownership and CONTROL for this purpose means the power to
direct the management and the policies of the entity whether through the
ownership of voting capital, by contract or otherwise.
TAX means any tax, levy, impost, duty or other charge or withholding of a
similar nature (including any related penalty or interest).
TAX DEDUCTION means a deduction or withholding for or on account of Tax
from a payment under a Finance Document.
TAX PAYMENT means a payment made by the Company to the Lender in any way
related to a Tax Deduction or under any indemnity given by the Company in
respect of Tax under any Finance Document.
TERM means:
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(a) three months or each period determined under this Agreement by
reference to which interest on an overdue amount is calculated; or
(b) the period for which the Lender or any Affiliate of the Lender may be
under any liability with respect to the Letter of Credit.
UTILIZATION DATE means each date on which the Facility is utilized.
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) an AMENDMENT includes a supplement, novation, restatement or
re-enactment and AMENDED will be construed accordingly;
(II) ASSETS includes present and future properties, revenues and rights of
every description; (iii) an AUTHORIZATION includes an authorization,
consent, approval, resolution, license, exemption, filing,
registration or notarization;
(IV) DISPOSAL means a sale, transfer, grant, lease or other disposal,
whether voluntary or involuntary, and DISPOSE will be construed
accordingly;
(V) INDEBTEDNESS includes any obligation (whether incurred as principal or
as surety) for the payment or repayment of money;
(vi) a PERSON includes any individual, company, corporation, limited
liability partnership, limited liability company, unincorporated
association or body (including a partnership, trust, joint venture or
consortium), government, state, agency, organization or other entity
whether or not having separate legal personality;
(vii) a REGULATION includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law but, if
not having the force of law, being of a type with which any person to
which it applies is accustomed to comply) of any governmental,
inter-governmental or supranational body, agency, department or
regulatory, self-regulatory or other authority or organization;
(viii) a currency is a reference to the lawful currency for the time being
of the relevant country; (ix) a Default being OUTSTANDING means that
it has not been remedied or waived; (x) a provision of law is a
reference to that provision as extended, applied, amended or
re-enacted and includes any subordinate legislation;
(xi) a Clause, a Subclause or a Schedule is a reference to a clause or
subclause of, or a schedule to, this Agreement;
(xii) a Party or any other person includes its successors in title,
permitted assigns and permitted transferees;
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(xiii) a Finance Document or another document is a reference to that
Finance Document or other document as amended; and
(xiv) a time of day is a reference to California time.
(b) Unless the contrary intention appears, a reference to a MONTH or MONTHS is
a reference to a period starting on one day in a calendar month and ending
on the numerically corresponding day in the next calendar month or the
calendar month in which it is to end, except that:
(i) if the numerically corresponding day is not a Business Day, the period
will end on the next Business Day in that month (if there is one) or
the preceding Business Day (if there is not);
(ii) if there is no numerically corresponding day in that month, that
period will end on the last Business Day in that month; and
(iii) notwithstanding sub-paragraph (b)(i) above, a period which commences
on the last Business Day of a month will end on the last Business Day
in the next month or the calendar month in which it is to end, as
appropriate.
(c) Unless expressly provided to the contrary in a Finance Document, a person
who is not a party to a Finance Document may not enforce any of its terms
and, notwithstanding any term of any Finance Document, no consent of any
third party is required for any variation (including any release or
compromise of any liability) or termination of that Finance Document.
(d) Unless the contrary intention appears:
(i) a reference to a Party will not include that Party if it has ceased to
be a Party under this Agreement;
(ii) an amount in US Dollars is only payable in US Dollars;
(iii) a word or expression used in any other Finance Document or in any
notice given in connection with any Finance Document has the same
meaning in that Finance Document or notice as in this Agreement; and
(iv) any obligation of the Company under the Finance Documents which is not
a payment obligation remains in force for so long as any payment
obligation of the Company is or may be outstanding under the Finance
Documents.
(e) The headings in this Agreement do not affect its interpretation. 2.
FACILITY
Subject to the terms of this Agreement, the Lender makes available to the
Company:
(a) a revolving credit facility in an aggregate amount equal to the Loan
Commitment; and
(b) a credit facility in an aggregate amount equal to the Letter of Credit
Commitment.
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3. PURPOSE
3.1 LOANS
Each Loan may only be used for:
(a) payments to creditors of the Company designated by the Lender; and
(b) the general working capital needs of the Company.
3.2 LETTER OF CREDIT
The Letter of Credit may only be issued as collateral for the obligations
of the Company under the Senior Credit Agreement.
3.3 NO OBLIGATION TO MONITOR
The Lender is not bound to monitor or verify the utilization of the
Facility.
3.4 SECURITY
The obligations of the Company under the Finance Documents are secured by
the Security Documents.
4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT DOCUMENTS
A Request may not be given until the Lender has notified the Company that
it has received all of the documents and evidence set out in Schedule 1
(Conditions precedent documents) in form and substance satisfactory to the
Lender. The Lender must give this notification to the Company promptly upon
being so satisfied.
4.2 FURTHER CONDITIONS PRECEDENT
The obligations of the Lender to make any Credit available are subject to
the further conditions precedent that on both the date of the Request and
the Utilization Date for that Credit:
(a) the Repeating Representations are correct in all material respects;
and (b) no Default is outstanding or would result from the Credit.
5. UTILIZATION - LOANS
5.1 GIVING OF REQUESTS
(a) The Company may borrow a Loan by giving to the Lender a duly completed
Request.
(b) Unless the Lender otherwise agrees, the latest time for receipt by the
Lender of a duly completed Request is 11:00 a.m. two Business Days
before the Utilization Date for the proposed Loan.
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5.2 COMPLETION OF REQUESTS
A Request for a Loan will not be regarded as having been duly completed
unless:
(a) the Utilization Date is a Business Day falling within the applicable
Availability Period; and
(b) the amount of the Loan requested is:
(i) a minimum of US$25,000 and an integral multiple of US$25,000; or
(ii) the maximum undrawn amount available under this Agreement for
Loans under the Facility on the proposed Utilization Date.
Only one Loan may be requested in a Request.
5.3 ADVANCE OF LOAN
(a) The Lender is not obliged to make a Loan if, as a result, the Loans
would exceed the Loan Commitment.
(b) If the conditions set out in this Agreement have been met, the Lender
must make the Loan available to the Company on the Utilization Date
set out in the Request for the Loan.
5.4 CONSOLIDATION
Immediately upon being made available to the Company a Loan shall be
consolidated with any other Loan and treated as one Loan.
6. UTILIZATION - LETTERS OF CREDIT 6.1 GIVING OF REQUESTS
(a) The Company may request the Lender to procure that the Letter of
Credit be issued by giving to the Lender a duly completed Request.
(b) Unless the Lender otherwise agrees, the latest time for receipt by the
Lender of a duly completed Request is 11.00 a.m. two Business Days
before the proposed Utilization Date for the Letter of Credit.
6.2 COMPLETION OF REQUESTS
A Request for the procurement of the Letter of Credit will not be regarded
as being duly completed unless:
(a) it specifies that it is for the Letter of Credit;
(b) the Utilization Date is a Business Day falling within the applicable
Availability Period; and
(c) the delivery instructions for the Letter of Credit are specified.
8
Only the Letter of Credit may be requested in a Request.
6.3 ISSUE OF LETTER OF CREDIT
(a) The Lender is not obliged to procure the issue of the Letter of Credit if
as a result the Credit attributable to the Letter of Credit would exceed
the Letter of Credit Commitment.
(b) If the conditions set out in this Agreement have been met, the Lender must
procure the issue of the Letter of Credit on the Utilization Date set out
in the Request for the procurement of the Letter of Credit.
7. LETTERS OF CREDIT
7.1 GENERAL
(a) The Letter of Credit is REPAID or PREPAID if:
(i) the Company provides cash cover to the Lender for the Letter of
Credit;
(ii) the maximum amount payable under the Letter of Credit is reduced in
accordance with its terms; or
(iii) the Lender is satisfied that neither it nor any of its Affiliates has
any further liability with respect to the Letter of Credit.
The amount by which the Letter of Credit is repaid or prepaid under
sub-paragraphs (i) and (ii) above is the amount of the relevant cash cover
or reduction.
(b) If the Letter of Credit or any amount outstanding under the Letter of
Credit is expressed to be immediately payable, the Company must repay or
prepay that amount immediately.
(C) CASH COVER is provided for the Letter of Credit if the Company pays an
amount in the currency of the Letter of Credit to an interest-bearing
account with the Lender in the name of the Company and the following
conditions are met:
(i) until no amount is or may be outstanding under the Letter of Credit,
withdrawals from the account may only be made to pay the Lender
amounts due and payable by it or any of its Affiliates with respect to
the Letter of Credit or under this Clause; and
(ii) the Company has executed a security document over that account, in
form and substance satisfactory to the Lender, creating a first
ranking security interest over that account in favor of the Lender.
(d) The OUTSTANDING or PRINCIPAL amount of the Letter of Credit at any time is
the maximum amount that is or may be payable by the Company or any of its
Affiliates to the LC Issuer or any other person in respect of the Letter of
Credit at that time.
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7.2 FEES IN RESPECT OF THE LETTER OF CREDIT
(a) The Company must pay to the Lender immediately on demand an amount equal to
the letter of credit fee payable to the LC Issuer on the outstanding amount
of the Letter of Credit for the period from the issue of the Letter of
Credit until its maturity date.
(b) The letter of credit fee is payable annually in advance.
7.3 CLAIMS UNDER A LETTER OF CREDIT
(a) The Company irrevocably and unconditionally authorizes the Lender to pay to
the LC Issuer an amount equal to any claim made or purported to be made
under the Letter of Credit which appears on its face to be in order (a
CLAIM).
(b) The Company must immediately on demand pay to the Lender an amount equal to
the amount of any claim.
(c) The Company acknowledges that the Lender and the LC Issuer:
(i) are not obliged to carry out any investigation or seek any
confirmation from any other person before paying a claim; and
(ii) deal in documents only and will not be concerned with the legality of
a claim or any underlying transaction or any available set-off,
counterclaim or other defence of any person.
(d) The obligations of the Company under this Clause will not be affected by:
(i) the sufficiency, accuracy or genuiness of any claim or any other
document; or
(ii) any incapacity of, or limitation on the powers of, any person signing
a claim or other document.
7.4 INDEMNITIES
The Company must immediately on demand indemnify the Lender against any
loss or liability which the Lender incurs under or in connection with the
Letter of Credit.
8. REPAYMENT
(a) The Company must repay the Loan so that the Loan never exceeds the Loan
Commitment.
(b) The Company must repay the Letter of Credit in full on its maturity date.
9. PREPAYMENT AND CANCELLATION
9.1 MANDATORY PREPAYMENT - ILLEGALITY
(a) The Lender must notify the Company promptly if it becomes aware that it is
unlawful in any jurisdiction for the Lender to perform any of its
obligations under a Finance Document or to fund or maintain any Credit.
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(b) After notification under paragraph (a) above:
(i) the Company must repay or prepay the Lender each Credit on the date
specified in paragraph (c) below; and
(ii) the Commitment will be immediately cancelled.
(c) The date for repayment or prepayment of a Credit will be:
(i) the last day of the current Term of that Credit; or
(ii) if earlier, the date specified by the Lender in the notification under
paragraph (a) above and which must not be earlier than the last day of
any applicable grace period allowed by law.
9.2 MANDATORY PREPAYMENT - CHANGE OF CONTROL
(a) For the purposes of this Clause:
a CHANGE OF CONTROL occurs if any person or group of persons acting in
concert cease(s) to be the beneficial owner directly or indirectly through
wholly owned Subsidiaries of more than 50% of the issued share capital of
the Company; and
ACTING IN CONCERT means acting together pursuant to an agreement or
understanding (whether formal or informal)
(b) The Company must promptly notify the Lender if it becomes aware of any
change of control.
(c) After a change of control, the Lender may, by notice to the Company:
(i) cancel the Commitment; and
(ii) declare all outstanding Credits, together with accrued interest and
all other amounts accrued under the Finance Documents, to be
immediately due and payable.
Any such notice will take effect in accordance with its terms.
9.3 VOLUNTARY PREPAYMENT
(a) The Company may, by giving not less than five Business Days' prior notice
to the Lender, prepay any Credit at any time in whole or in part.
(b) A prepayment of part of a Credit must be in a minimum amount of US$25,000
and an integral multiple of US$25,000.
9.4 AUTOMATIC CANCELLATION
(a) The Loan Commitment will be automatically cancelled at the close of
business on the Final Maturity Date.
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(b) The Letter of Credit Commitment will be automatically cancelled at the
close of business on the date of this Agreement.
9.5 VOLUNTARY CANCELLATION
(a) The Company may, by giving not less than five Business Days' prior notice
to the Lender, cancel the unutilized amount of the Loan Commitment in whole
or in part.
(b) Partial cancellation of the Loan Commitment must be in a minimum amount of
US$25,000 and an integral multiple of US$25,000. If the Loan Commitment is
cancelled in part, it may not be reduced below US$300,000.
9.6 INVOLUNTARY PREPAYMENT AND CANCELLATION
(a) If the Company is, or will be, required to pay to the Lender a Tax Payment
or an Increased Cost, the Company may, while the requirement continues,
give notice to the Lender requesting prepayment and cancellation.
(b) After notification under paragraph (a) above:
(i) the Company must repay or prepay each Credit on the date specified in
paragraph (c) below; and
(ii) the Commitment will be immediately cancelled.
(c) The date for repayment or prepayment of a Credit will be the last day of
the current Term for that Credit or, if earlier, the date specified by the
Company in its notification.
9.7 RE-BORROWING OF LOANS
Any voluntary prepayment of all or any part of the Loan may be re-borrowed
on the terms of this Agreement. Any mandatory or involuntary prepayment of
all or part of the Loan may not be re-borrowed.
9.8 MISCELLANEOUS PROVISIONS
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable and must specify the relevant date(s) and the affected Credits.
(b) All prepayments under this Agreement must be made with accrued interest on
the amount prepaid.
(c) No prepayment or cancellation is allowed except in accordance with the
express terms of this Agreement.
10. INTEREST
10.1 CALCULATION OF INTEREST
The rate of interest on the Loan is 5 (five) percent per annum.
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10.2 PAYMENT OF INTEREST
(a) Up to and including the second anniversary of the date of this Agreement,
the Company must pay accrued interest on the Loan on the first and on the
second anniversary of the date of this Agreement.
(b) After the second anniversary of the date of this Agreement the Company must
pay accrued interest on the Loan on the last day of each Term.
10.3 INTEREST ON OVERDUE AMOUNTS
(a) If the Company fails to pay any amount payable by it under the Finance
Documents, it must immediately on demand by the Lender pay interest on the
overdue amount from its due date up to the date of actual payment, both
before, on and after judgment.
(b) Interest is payable for successive Terms selected by the Lender:
(i) on an overdue amount with respect to the Loan, at a rate two percent
per annum above the rate of interest referred to in Clause 10.1
(Calculation of interest) above; and
(ii) on an overdue amount with respect to the Letter of Credit, at the rate
notified by, and payable to, the LC Issuer (as notified by the Lender
to the Company) from time to time.
(c) Interest (if unpaid) on an overdue amount will be compounded with that
overdue amount at the end of each of its Terms but will remain immediately
due and payable.
11. TERMS
The Loan has successive Terms of three months starting on the date of this
Agreement or on the expiry of the preceding Term.
12. TAXES
12.1 TAX GROSS-UP
(a) The Company must make all payments to be made by it under the Finance
Documents without any Tax Deduction, unless a Tax Deduction is required by
law.
(b) If the Company or the Lender is aware that the Company must make a Tax
Deduction (or that there is a change in the rate or the basis of a Tax
Deduction), it must notify the other Party promptly.
(c) If a Tax Deduction is required by law to be made by the Company, the amount
of the payment due from the Company will be increased to an amount which
(after making the Tax Deduction) leaves an amount equal to the payment
which would have been due if no Tax Deduction had been required.
(d) If the Company is required to make a Tax Deduction, it must make the
minimum Tax Deduction allowed by law and must make any payment required in
connection with that Tax Deduction within the time allowed by law.
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(e) Within 30 days of making either a Tax Deduction or a payment required in
connection with a Tax Deduction, the Company must deliver to the Lender
evidence satisfactory to the Lender (acting reasonably) that the Tax
Deduction has been made or (as applicable) the appropriate payment has been
paid to the relevant taxing authority.
12.2 TAX INDEMNITY
(a) Except as provided below, the Company must indemnify the Lender against any
loss or liability which the Lender (in its absolute discretion) determines
will be or has been suffered (directly or indirectly) by it for or on
account of Tax in relation to a payment received or receivable (or any
payment deemed to be received or receivable) under a Finance Document.
(b) Paragraph (a) above does not apply to any Tax assessed on the Lender under
the laws of the jurisdiction in which the Lender is incorporated or, if
different, the jurisdiction (or jurisdictions) in which the Lender is
treated as resident for tax purposes if that Tax is imposed on or
calculated by reference to the net income received or receivable by the
Lender. However, any payment deemed to be received or receivable, including
any amount treated as income but not actually received by the Lender, such
as a Tax Deduction, will not be treated as net income received or
receivable for this purpose.
(c) If the Lender makes, or intends to make, a claim under paragraph (a) above,
it must promptly notify the Company of the event which will give, or has
given, rise to the claim.
12.3 STAMP TAXES
The Company must pay and indemnify the Lender against any stamp duty,
documentary, property, registration or other similar Tax payable in the
jurisdictions of its incorporation, operations or where any of its assets
are located in connection with the entry into, performance or enforcement
of any Finance Document.
12.4 VALUE ADDED TAXES
Any amount (including costs and expenses) payable under a Finance Document
by the Company is exclusive of any value added tax or any other Tax of a
similar nature which might be chargeable in connection with that amount. If
any such Tax is chargeable, the Company must pay to the Lender (in addition
to and at the same time as paying that amount) an amount equal to the
amount of that Tax.
13. INCREASED COSTS
13.1 INCREASED COSTS
Except as provided below in this Clause, the Company must pay to the Lender
the amount of any Increased Cost incurred by the Lender or any of its
Affiliates as a result of:
(a) the introduction of, or any change in, or any change in the interpretation,
administration or application of, any law or regulation; or
(b) compliance with any law or regulation,
14
made after the date of this Agreement.
13.2 EXCEPTIONS
The Company need not make any payment for an Increased Cost to the extent
that the Increased Cost is:
(a) compensated for under another Clause or would have been but for an
exception to that Clause;
(b) a tax on the overall net income of the Lender or any of its Affiliates; or
(c) attributable to the Lender or its Affiliate willfully failing to comply
with any law or regulation.
13.3 CLAIMS
The Lender must notify the Company promptly of the circumstances giving
rise to, and the amount of, the claim.
14. PAYMENTS
14.1 PLACE
Unless a Finance Document specifies that payments under it are to be made
in another manner, all payments under a Finance Document must be made to
the relevant Party to its account at such office or bank as it may notify
to the other Party for this purpose by not less than five Business Days'
prior notice.
14.2 FUNDS
Payments under the Finance Documents to the Lender must be made for value
on the due date at such times and in such funds as the Lender may specify
to the Company as being customary at the time for the settlement of
transactions in that currency in the place for payment.
14.3 CURRENCY
(a) Unless a Finance Document specifies that payments under it are to be made
in a different manner, the currency of each amount payable under the
Finance Documents is determined under this Clause.
(b) Amounts payable in respect of costs and expenses are payable in the
currency in which they are incurred. (c) Each other amount payable under
the Finance Documents is payable in US Dollars.
14.4 NO SET-OFF OR COUNTERCLAIM
All payments made by the Company under the Finance Documents must be made
without set-off or counterclaim.
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14.5 BUSINESS DAYS
(a) If a payment under the Finance Documents is due on a day which is not a
Business Day, the due date for that payment will instead be the next
Business Day in the same calendar month (if there is one) or the preceding
Business Day (if there is not) or whatever day the Lender determines is
market practice.
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on that principal at the rate payable on
the original due date.
14.6 TIMING OF PAYMENTS
If a Finance Document does not provide for when a particular payment is
due, that payment will be due within three Business Days of demand by the
Lender.
15. REPRESENTATIONS
15.1 REPRESENTATIONS
The representations set out in this Clause are made by the Company to the
Lender.
15.2 STATUS
(a) It is a corporation, duly incorporated and validly existing under the laws
of the State of California.
(b) It and each of its Subsidiaries has the power to own its assets and carry
on its business as it is being conducted.
15.3 POWERS AND AUTHORITY
It has the power to enter into and perform, and has taken all necessary
action to authorize the entry into and performance of, the Finance
Documents to which it is or will be a party and the transactions
contemplated by those Finance Documents.
15.4 LEGAL VALIDITY
Each Finance Document to which it is a party is its legally binding, valid
and enforceable obligation.
15.5 NON-CONFLICT
The entry into and performance by it of, and the transactions contemplated
by, the Finance Documents do not conflict with:
(a) any law or regulation applicable to it;
(b) its or any of its Subsidiaries' constitutional documents; or
(c) any document which is binding upon it or any of its Subsidiaries or any of
its or its Subsidiaries' assets other than documents with respect to which
the Company's maximum potential liability does not exceed US$75,000 in
aggregate and the payment of such liability would not have a Material
Adverse Effect.
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15.6 NO DEFAULT
(a) No Default is outstanding or will result from the execution of, or the
performance of any transaction contemplated by, any Finance Document other
than as described in Schedule 5 (Defaults).
(b) No other event is outstanding which constitutes a default under any
document which is binding on it or any of its Subsidiaries or any of its or
its Subsidiaries' assets other than:
(i) as described in Schedule 5 (Defaults);
(ii) any document with respect to the counterparty of which the Company's
maximum aggregate potential liability is greater than US$100,000 and
which liability will be repaid in full within 30 days of the date of
this Agreement; or
(iii) any document with respect to the counterparty of which the Company's
maximum aggregate potential liability does not exceed US$100,000 and
the payment of such liability would not have a Material Adverse
Effect.
15.7 AUTHORIZATIONS
All authorizations required by it in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents have been obtained or effected (as
appropriate) and are in full force and effect.
15.8 FINANCIAL STATEMENTS
(a) The October Financial Statements have been prepared in good faith with due
care and diligence and fairly represent its financial condition and results
of operations as at the date to which they were drawn up, subject to:
(i) normal year end adjustments and completion of the footnotes; and
(ii) adjustments required by the Company's auditors to be made as follows:
(A) increase in inventory reserves as a result of obsolescence or
slow movement of inventory;
(B) increase in the reserves for returns of goods, inventory and
merchandise; and
(C) increase in the bad debt reserve,
all such adjustments to be notified to the Lender promptly upon agreement
thereof by the Company and its auditors.
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(b) The December Financial Statements have been prepared in good faith with due
care and diligence and fairly represent its financial condition and results
of operations as at the date to which they were drawn up, subject to:
(i) normal year end adjustments; and
(ii) adjustments directly resulting from any adjustments made to the
October Financial Statements in accordance with paragraph (a)(ii)
above.
The December Financial Statements contain no footnotes.
(c) Its audited consolidated financial statements most recently delivered to
the Lender:
(i) have been prepared in accordance with accounting principles and
practices generally accepted in its jurisdiction of incorporation,
consistently applied; and
(ii) fairly represent its consolidated financial condition and results of
operations as at the date to which they were drawn up,
except, in each case, as disclosed to the contrary in those financial
statements.
15.9 NO MATERIAL ADVERSE CHANGE
There has been no material adverse change in the consolidated financial
condition or results of operations of the Company since December 31, 2002
other than:
(a) as set out in Schedule 6 (Material Adverse Change); or
(b) as otherwise known to the Lender.
15.10 LITIGATION
No litigation, arbitration or administrative proceedings are current or, to
its knowledge, pending or threatened, which, if adversely determined, are
reasonably likely to have a Material Adverse Effect other than:
(a) as set out in Schedule 7 (Litigation); or
(b) threatened claims for an amount not exceeding US$100,000 in aggregate.
15.11 INFORMATION
(a) All written information (including, for the avoidance of doubt, information
supplied by, or attached to, e-mail) supplied by it to the Lender in
connection with the Finance Documents is true and accurate in all respects
as at its date or (if appropriate) as at the date (if any) at which it is
stated to be given other than inaccuracies which are not material in the
context of:
(i) the overall business, financial condition or results of operations of
the Company; or
(ii) the ability of the Company to perform its obligations under any
Finance Document.
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(b) It has not omitted to supply any information which, if disclosed, might
make the information supplied by it to the Lender in connection with the
Finance Documents untrue or misleading in any material respect other than:
(i) omissions which are not material in the context of:
(A) the overall business, financial condition or results of
operations of the Company; or
(B) the ability of the Company to perform its obligations under any
Finance Document;
(ii) information that is known to the Lender; or
(iii) information that is available to the general public in the city where
the management of the Lender is located through:
(A) major media sources; or
(B) relevant optical industry press.
15.12 PARI PASSU RANKING
Its payment obligations under the Finance Documents rank at least pari
passu with all its other present and future unsecured payment obligations,
except for obligations mandatorily preferred by law applying to companies
generally.
15.13 TAXES ON PAYMENTS
All amounts payable by it under the Finance Documents may be made without
any Tax Deduction.
15.14 STAMP DUTIES
No stamp duty, documentary, property, registration or similar Tax or charge
is payable in its jurisdiction of incorporation in respect of any Finance
Document.
15.15 IMMUNITY
(a) The execution by it of each Finance Document constitutes, and the exercise
by it of its rights and performance of its obligations under each Finance
Document will constitute, private and commercial acts performed for private
and commercial purposes.
(b) It will not be entitled to claim immunity from suit, execution, attachment
or other legal process in any proceedings taken in its jurisdiction of
incorporation in relation to any Finance Document.
15.16 PRE-EXISTING RELATIONSHIP; CAPACITY TO PROTECT OWN INTEREST
(a) The Lender and the Company, or any of their respective officers, directors
or controlling persons, have a pre-existing business or personal
relationship.
19
(b) The Company has the capacity to protect its interests in connection with
its obligations under the Finance Documents by reason of its business and
financial experience or that of its professional advisors.
15.17 REGULATORY LAWS
(a) In this Subclause:
HOLDING COMPANY, AFFILIATE AND SUBSIDIARY COMPANY
have the meanings given to them in the United States Public Utility Holding
Company Act of 1935.
INVESTMENT COMPANY
has the meaning given to it in the United States Investment Company Act of
1940.
PUBLIC UTILITY
has the meaning given to it in the United States Federal Power Act of 1920.
(b) No member of the Group is:
(i) a holding company, an affiliate of a holding company or a subsidiary
company of a holding company, or subject to regulation, under the
United States Public Utility Holding Company Act of 1935;
(ii) required to register as an investment company;
(iii) a public utility, or subject to regulation, under the United States
Federal Power Act of 1920; or
(iv) subject to regulation under any United States Federal or State law or
regulation that limits its ability to incur or guarantee indebtedness.
15.18 TIMES FOR MAKING REPRESENTATIONS
(a) The representations set out in this Clause are made by the Company on the
date of this Agreement.
(b) Unless a representation is expressed to be given at a specific date, each
representation is deemed to be repeated by the Company on the date of each
Request and the first day of each Term.
(c) When a representation is repeated, it is applied to the circumstances
existing at the time of repetition.
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16. INFORMATION COVENANTS
16.1 FINANCIAL STATEMENTS
(a) The Company must supply to the Lender:
(i) its audited consolidated financial statements for each of its
financial years; and
(ii) its interim financial statements for the first three quarters of each
of its financial years.
(b) All financial statements must be supplied as soon as they are available
and:
(i) in the case of the Company's audited consolidated financial
statements, within 180 days; and
(ii) in the case of the Company's interim financial statements, within 120
days, of the end of the relevant financial period.
16.2 FORM OF FINANCIAL STATEMENTS
(a) The Company must ensure that each set of financial statements supplied
under this Agreement fairly presents its financial condition and results of
operations (consolidated or otherwise) as at the date to which those
financial statements were drawn up.
(b) The Company must notify the Lender of any change to the manner in which its
audited consolidated financial statements are prepared.
(c) If requested by the Lender, the Company must supply to the Lender:
(i) a full description of any change notified under paragraph (b) above;
and
(ii) sufficient information to enable it to make a proper comparison
between the financial position shown by the set of financial
statements prepared on the changed basis and its most recent audited
consolidated financial statements delivered to the Lender under this
Agreement.
16.3 ASSET REPORTS
(a) The Company must supply to the Lender an asset report in form and substance
satisfactory to the Lender, together with such additional information,
reports and/or statements as the Lender may require, setting out:
(i) a listing and aging (by invoice date) of all accounts receivable and
accounts payable together with applicable sales and payment terms,
details of outstanding balances due from all account debtors (as that
term is defined in the Uniform Commercial Code as in effect in the
State of California) and the Company's worksheet for applicable
reserves;
(ii) a reconciliation of the aging referred to in paragraph (i) above with
the previous aging delivered to the Lender;
21
(iii) a listing of all the Company's inventory (as that term is defined in
the Uniform Commercial Code as in effect in the State of California)
setting out types, locations and values (calculated in accordance with
generally accepted accounting principles); and
(iv) details of reserves for obsolete inventory and the Company's
applicable worksheet.
(b) The asset report referred to in paragraph (a) above must be supplied within
15 days after the end of each calendar month.
16.4 INFORMATION - MISCELLANEOUS
The Company must supply to the Lender:
(a) copies of all documents dispatched by the Company to its shareholders
(or any class of them) or its creditors generally or any class of them
at the same time as they are dispatched;
(b) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending and which might, if adversely determined, have a
Material Adverse Effect;
(c) promptly on request, a list of the then current Subsidiaries; and
(d) promptly on request, such further information regarding the financial
condition and operations of the Group as the Lender may reasonably
request.
16.5 NOTIFICATION OF DEFAULT
(a) The Company must notify the Lender of any Default (and the steps, if any,
being taken to remedy it) promptly upon becoming aware of its occurrence.
(b) Promptly on request by the Lender, the Company must supply to the Lender a
certificate, signed by two of its authorized signatories on its behalf,
certifying that no Default is outstanding or, if a Default is outstanding,
specifying the Default and the steps, if any, being taken to remedy it.
16.6 YEAR END
The Company must not change its financial year end.
17. GENERAL COVENANTS
17.1 GENERAL
The Company agrees to be bound by the covenants set out in this Clause
relating to it and, where the covenant is expressed to apply to a member or
members of the Group, the Company must ensure that any member of the Group
that is its Subsidiary performs that covenant.
22
17.2 AUTHORIZATIONS
The Company must promptly obtain, maintain and comply with the terms of any
authorization required under any law or regulation to enable it to perform
its obligations under, or for the validity or enforceability of, any
Finance Document.
17.3 COMPLIANCE WITH LAWS
Each member of the Group must comply in all respects with all laws to which
it is subject where failure to do so is reasonably likely to have a
Material Adverse Effect.
17.4 PARI PASSU RANKING
The Company must ensure that its payment obligations under the Finance
Documents rank at least pari passu with all its other present and future
unsecured payment obligations, except for obligations mandatorily preferred
by law applying to companies generally.
17.5 NEGATIVE PLEDGE
(a) Except as provided below, no member of the Group may create or allow to
exist any Security Interest on any of its assets.
(b) Paragraph (a) above does not apply to:
(i) any Security Interest constituted by the Security Documents;
(ii) any Security Interest granted to the Senior Lender in connection with
the Senior Credit Agreement, but only to the extent such Security
Interest is in respect of the personal property subject to the
Security Documents;
(iii) any Security Interest listed in Schedule 3 (Security Interests)
except to the extent the principal amount secured by that Security
Interest exceeds the amount stated in that Schedule;
(iv) any Security Interest comprising a netting or set-off arrangement
entered into by a member of the Group in the ordinary course of its
banking arrangements for the purpose of netting debit and credit
balances;
(v) any lien arising by operation of law and in the ordinary course of
business; and
(vi) any Security Interest on an asset, or an asset of any person, acquired
by a member of the Group after the date of this Agreement but only for
the period of 6 months from the date of acquisition and to the extent
that the principal amount secured by that Security Interest has not
been incurred or increased in contemplation of, or since, the
acquisition.
(c) No member of the Group may:
(i) sell, transfer or otherwise dispose of any of its assets on terms
where it is or may be leased to or re-acquired or acquired by a member
of the Group or any of its related entities; or
23
(ii) sell, transfer or otherwise dispose of any of its receivables on
recourse terms,
in circumstances where the transaction is entered into primarily as a
method of raising Financial Indebtedness or of financing the acquisition of
an asset.
17.6 DISPOSALS
(a) Except as provided below, no member of the Group may, either in a single
transaction or in a series of transactions and whether related or not,
dispose of all or any part of its assets.
(b) Paragraph (a) above does not apply to any disposal:
(i) made in the ordinary course of trading of the disposing entity;
(ii) of assets in exchange for other assets comparable or superior as to
type, value and quality; or
(iii) where the higher of the market value or consideration receivable
(when aggregated with the higher of the market value or consideration
for any other disposal not allowed under the preceding sub-paragraphs)
does not exceed US$150,000 or its equivalent in any financial year of
the Company.
17.7 FINANCIAL INDEBTEDNESS
(a) Except as provided below, no member of the Group (other than the Company)
may incur any Financial Indebtedness.
(b) Paragraph (a) above does not apply to:
(i) any Financial Indebtedness incurred under the Finance Documents;
(ii) any Financial Indebtedness incurred under the Stock Purchase Agreement
dated the date of this Agreement between the Company and the Lender
relating to the purchase and sale of Series A 5% convertible preferred
stock;
(iii) any Financial Indebtedness incurred under the Senior Credit
Agreement;
(iv) any Financial Indebtedness incurred under the Promissory Note dated
February 4, 2003 issued by the Company in favor of Axwood Investments
Limited;
(v) any Financial Indebtedness incurred under the Promissory Note dated on
or about March 26, 2003 issued by the Company in favor of Xxxxx Fargo
Equipment Finance, Inc. and US Bancorp Xxxxxx-Xxxxx Technology
Leasing;
(vi) any Financial Indebtedness owed by a member of the Group to another
member of the Group;
(vii) any Financial Indebtedness of any person acquired by a member of the
Group which is incurred under arrangements in existence at the date of
acquisition, but only for a period of 6 months from the date of
acquisition;
24
(viii) any derivative transaction protecting against or benefiting from
fluctuations in any rate or price entered into in the ordinary course
of business; or
(ix) Financial Indebtedness which in aggregate does not exceed US$150,000
or its equivalent at any time.
17.8 CHANGE OF BUSINESS
The Company must ensure that no change is made to the general nature of the
business of the Company or the Group from that carried on at the date of
this Agreement.
17.9 MERGERS
The Company may not enter into any amalgamation, demerger, merger or
reconstruction without the prior consent of the Lender.
17.10 ACQUISITIONS
(a) Except as provided below, no member of the Group may make any acquisition
or investment.
(b) Paragraph (a) above does not apply to:
(i) acquisitions or investments made in the ordinary course of trade; or
(ii) acquisitions where the consideration (when aggregated with the
consideration of any other acquisition not allowed under the preceding
sub-paragraphs) does not exceed US$150,000 or its equivalent in any
financial year of the Company.
17.11 ENVIRONMENTAL MATTERS
(a) In this Subclause:
ENVIRONMENTAL APPROVAL means any authorization required by an Environmental
Law.
ENVIRONMENTAL CLAIM means any claim by any person in connection with:
(i) a breach, or alleged breach, of an Environmental Law;
(ii) any accident, fire, explosion or other event of any type involving an
emission or substance which is capable of causing harm to any living
organism or the environment; or
(iii) any other environmental contamination.
ENVIRONMENTAL LAW means any law or regulation concerning:
(i) the protection of health and safety;
(ii) the environment; or
(iii) any emission or substance which is capable of causing harm to any
living organism or the environment.
25
(b) Each member of the Group must ensure that it is, and has been, in
compliance with all Environmental Law and Environmental Approvals
applicable to it, where failure to do so is reasonably likely to have a
Material Adverse Effect or results in any liability for the Lender.
(c) The Company must promptly upon becoming aware notify the Lender of:
(i) any Environmental Claim current, or to its knowledge, pending or
threatened; or
(ii) any circumstances reasonably likely to result in an Environmental
Claim,
which, if substantiated, is reasonably likely to either have a Material
Adverse Effect or result in any liability for the Lender.
17.12 INSURANCE
Each member of the Group must insure its business and assets with insurance
companies to such an extent and against such risks as companies engaged in
a similar business normally insure.
17.13 ERISA
(a) In this Subclause:
CODE
means the United States Internal Revenue Code of 1986.
ERISA
means the United States Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE
means any person treated as a single employer with any member of the Group
for the purpose of section 414 of the Code.
PLAN
means an employee benefit plan as defined in section 3(3) of ERISA:
(i) maintained by any member of the Group or any ERISA Affiliate; or
(ii) to which any member of the Group or any ERISA Affiliate is required to
make any payment or contribution.
REPORTABLE EVENT
means:
(i) an event specified as such in section 4043 of ERISA or any related
regulation, other than an event in relation to which the requirement
to give notice of that event is waived by any regulation; or
26
(ii) a failure to meet the minimum funding standard under section 412 of
the Code or section 302 of ERISA, whether or not there has been any
waiver of notice or waiver of the minimum funding standard under
section 412 of the Code.
(b) Each member of the Group must promptly upon becoming aware of it notify the
Lender of:
(i) any Reportable Event;
(ii) the termination of or withdrawal from, or any circumstances reasonably
likely to result in the termination of or withdrawal from, any Plan
subject to Title IV of ERISA; and
(iii) a claim or other communication alleging material non-compliance with
any law or regulation relating to any Plan.
(c) Each member of the Group and its ERISA Affiliates must be, and remain, in
compliance in all respects with all laws and regulations relating to each
of its Plans.
(d) Each member of the Group and its ERISA Affiliates must ensure that no event
or condition exists at any time in relation to a Plan which is reasonably
likely to result in the imposition of a Security Interest on any of its
assets or which is reasonably likely to have a Material Adverse Effect.
17.14 SECURITIES LAWS
(a) In this Subclause:
MARGIN STOCK
has the meaning given to it in Regulations U and X issued by the Board of
Governors of the United States Federal Reserve System.
(b) No member of the Group may:
(i) extend credit for the purpose, directly or indirectly, of buying or
carrying Margin Stock; or
(ii) use any Loan, directly or indirectly, to buy or carry Margin Stock or
to extend credit to others for the purpose of buying or carrying
Margin Stock.
(c) No member of the Group may use any part of any Loan to acquire any security
in a transaction that is subject to sections 13 or 14 of the United States
Securities Exchange Act of 1934.
17.15 NO NEW SUBSIDIARIES
No member of the Group may create, acquire or invest in a Subsidiary.
18. DEFAULT
18.1 EVENTS OF DEFAULT
Each of the events set out in this Clause is an Event of Default.
27
18.2 NON-PAYMENT
The Company does not pay on the due date any amount payable by it under the
Finance Documents in the manner required under the Finance Documents,
unless the non-payment:
(a) is caused by technical or administrative error; and (b) is remedied within
three Business Days of the due date.
18.3 BREACH OF OTHER OBLIGATIONS
(a) The Company does not comply with any term of Clause 17 (General Covenants)
above.
(b) The Company does not comply with any other term of the Finance Documents
not already referred to in this Clause, unless the non-compliance:
(i) is capable of remedy; and
(ii) is remedied within fourteen days of the earlier of the Lender giving
notice and the Company becoming aware of the non-compliance.
18.4 MISREPRESENTATION
A representation made or repeated by the Company in any Finance Document or
in any document delivered by or on behalf of the Company under any Finance
Document is incorrect in any material respect when made or deemed to be
repeated, unless the circumstances giving rise to the misrepresentation:
(a) are capable of remedy; and
(b) are remedied within fourteen days of the earlier of the Lender giving
notice and the Company becoming aware of the misrepresentation.
18.5 CROSS-DEFAULT
(a) Any of the following occurs in respect of a member of the Group:
(i) any of its Financial Indebtedness is not paid when due (after the
expiry of any originally applicable grace period);
(ii) any of its Financial Indebtedness:
(A) becomes prematurely due and payable;
(B) is placed on demand; or
(C) is capable of being declared by a creditor to be prematurely due
and payable or being placed on demand,
in each case, as a result of an event of default (howsoever
described); or
28
(iii) any commitment for its Financial Indebtedness is cancelled or
suspended as a result of an event of default (howsoever described),
unless the aggregate amount of Financial Indebtedness falling within all or
any of paragraphs (i) and (ii) above is less than US$150,000 or its
equivalent.
(b) Any Event of Default (under and as defined in the Senior Credit Agreement)
occurs.
18.6 INSOLVENCY
Any of the following occurs in respect of a member of the Group:
(a) it is, or is deemed for the purposes of any law to be, unable to pay
its debts as they fall due or insolvent;
(b) it admits its inability to pay its debts as they fall due;
(c) it suspends making payments on any of its debts which in aggregate
exceed US$150,000 or announces an intention to do so;
(d) by reason of actual or anticipated financial difficulties, it begins
negotiations with any creditor for the rescheduling of any of its
indebtedness which in aggregate exceed US$150,000; or
(e) a moratorium is declared in respect of any of its indebtedness which
in aggregate exceeds US$150,000.
If a moratorium occurs in respect of any member of the Group, the ending of
the moratorium will not remedy any Event of Default caused by the
moratorium.
18.7 INSOLVENCY PROCEEDINGS
(a) Except as provided below, any of the following occurs in respect of a
member of the Group:
(i) other than as provided in Clause 18.6 (Insolvency) above, any step is
taken with a view to a moratorium or a composition, assignment or
similar arrangement with any of its creditors;
(ii) a resolution of its shareholders or directors is passed or adopted to
petition for or to file documents with a court or any registrar for,
its bankruptcy, winding-up, administration or dissolution;
(iii) any person presents a petition, or files documents with a court or
any registrar, for its bankruptcy, winding-up, administration or
dissolution;
(iv) an order for its bankruptcy, winding-up, administration or dissolution
is made;
(v) any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or similar
officer is appointed in respect of it or any of its assets;
29
(vi) its shareholders, directors or other officers request the appointment
of, or give notice of their intention to appoint, a liquidator,
trustee in bankruptcy, judicial custodian, compulsory manager,
receiver, administrative receiver, administrator or similar officer;
or
(vii) any other analogous step or procedure is taken in any jurisdiction.
(b) Paragraph (a) above does not apply to a petition for bankruptcy,
dissolution or winding-up presented by a creditor which is being contested
in good faith and with due diligence and is dismissed, discharged or struck
out within 45 days.
18.8 CREDITORS' PROCESS
Any attachment, sequestration, distress, execution or analogous event
affects any asset(s) of a member of the Group, having an aggregate value of
at least US$150,000, and is not discharged within 30 days.
18.9 CESSATION OF BUSINESS
A member of the Group ceases, or threatens to cease, to carry on business
except as a result of any disposal allowed under this Agreement.
18.10 EFFECTIVENESS OF FINANCE DOCUMENTS
(a) It is or becomes unlawful for the Company to perform any of its obligations
under the Finance Documents.
(b) Any Finance Document is not effective or is alleged by the Company to be
ineffective for any reason.
(c) The Company repudiates a Finance Document or evidences an intention to
repudiate a Finance Document.
18.11 MATERIAL ADVERSE CHANGE
Any event or series of events occurs which has or will have a Material
Adverse Effect.
18.12 ACCELERATION
(a) If an Event of Default is outstanding, the Lender may, by notice to the
Company:
(i) cancel the Loan Commitment; and/or
(ii) declare that all or part of any amounts outstanding under the Finance
Documents are:
(A) immediately due and payable; and/or
(B) payable on demand by the Lender; and/or
(iii) declare that full cash cover in respect of the Letter of Credit is
immediately due and payable.
30
Any notice given under this Subclause will take effect in accordance with
its terms.
(b) If any of the following in respect of any member of the Group occurs, the
Loan Commitment will, if not already cancelled under this Agreement, be
immediately and automatically cancelled and the Loan, together with accrued
interest, and all other amounts outstanding under the Finance Documents
will be immediately due and payable:
(i) it makes a general assignment for the benefit of creditors;
(ii) it commences a voluntary case or proceeding under the United States
Bankruptcy Code of 1978 or any other United States Federal or State
bankruptcy, insolvency or similar law (U.S. Bankruptcy Law); or
(iii) an involuntary case under any U.S. Bankruptcy Law is commenced
against it and is not controverted within 20 days or is not dismissed
or stayed within 60 days after commencement of the case.
19. EVIDENCE AND CALCULATIONS 19.1 ACCOUNTS
Accounts maintained by the Lender in connection with this Agreement are
prima facie evidence of the matters to which they relate for the purpose of
any litigation or arbitration proceedings.
19.2 CERTIFICATES AND DETERMINATIONS
Any certification or determination by the Lender of a rate or amount under
the Finance Documents will be, in the absence of manifest error, conclusive
evidence of the matters to which it relates.
19.3 CALCULATIONS
Any interest accruing under this Agreement accrues from day to day and is
calculated on the basis of the actual number of days elapsed and a year of
360 days.
20. INDEMNITIES 20.1 CURRENCY INDEMNITY
(a) The Company must, as an independent obligation, indemnify the Lender
against any loss or liability which the Lender incurs as a consequence of:
(i) the Lender receiving an amount in respect of the Company's liability
under the Finance Documents; or
(ii) that liability being converted into a claim, proof, judgment or order,
in a currency other than the currency in which the amount is expressed to
be payable under the relevant Finance Document.
31
(b) Unless otherwise required by law, the Company waives any right it may have
in any jurisdiction to pay any amount under the Finance Documents in a
currency other than that in which it is expressed to be payable.
20.2 OTHER INDEMNITIES
(a) The Company must indemnify the Lender against any loss or liability which
the Lender incurs as a consequence of:
(i) the occurrence of any Event of Default;
(ii) any failure by the Company to pay any amount due under a Finance
Document on its due date;
(iii) (other than by reason of negligence or default by the Lender) a
Credit not being made after the Request has been delivered for that
Credit;
(iv) a Credit (or part of a Credit) not being prepaid in accordance with a
notice of prepayment;
(v) reasonable investigation of any event which the Lender reasonably
believes to be a Default; or
(vi) acting or relying on any notice relating to the Finance Documents (or
the transactions contemplated thereby) which the Lender reasonably
believes to be genuine, correct and appropriately authorized.
(b) The Company's liability in each case includes any loss or expense on
account of funds borrowed, contracted for or utilized to fund any amount
payable under any Finance Document, any amount repaid or prepaid or any
Credit.
21. EXPENSES
21.1 INITIAL COSTS
(a) Each Party shall be responsible for the amount of all costs and expenses
(including legal fees) incurred by it in connection with the negotiation,
preparation, printing and execution of the Finance Documents.
(b) The Company will promptly on demand pay to the Lender the amount of all
costs and expenses (including legal fees) reasonably incurred by it in
connection with the negotiation, preparation, printing, execution and
maintenance (including any issuance, utilization, non-utilization, per
annum or arrangement fee) of the Letter of Credit.
21.2 SUBSEQUENT COSTS
The Company must pay to the Lender the amount of all costs and expenses
(including legal fees) reasonably incurred by it in connection with:
32
(a) the negotiation, preparation, printing and execution of any Finance
Document executed after the date of this Agreement; and
(b) any amendment, waiver or consent requested by or on behalf of the
Company or specifically allowed by this Agreement.
21.3 ENFORCEMENT COSTS
The Company must pay to the Lender the amount of all costs and expenses
(including legal fees) incurred by it in connection with the enforcement
of, or the preservation of any rights under, any Finance Document.
22. WAIVERS
The rights of the Lender under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general law;
and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any right is not a waiver of that
right.
23. CHANGES TO THE PARTIES
23.1 ASSIGNMENTS AND TRANSFERS BY THE COMPANY
The Company may not assign or transfer any of its rights and obligations
under the Finance Documents without the prior consent of the Lender.
23.2 ASSIGNMENTS AND TRANSFERS BY THE LENDER
(a) The Lender may, subject to the following provisions of this Subclause, at
any time assign or transfer (including by way of novation) any of its
rights and obligations under this Agreement to any other person (the New
Lender).
(b) A transfer of obligations will be effective only if the New Lender confirms
to the Company that it is bound by the terms of this Agreement as the
Lender. On the transfer becoming effective in this manner the Lender will
be released from its obligations under this Agreement to the extent that
they are transferred to the New Lender.
24. DISCLOSURE OF INFORMATION
(a) The Lender must keep confidential any information supplied to it by or on
behalf of the Company in connection with the Finance Documents. However,
the Lender is entitled to disclose information:
(i) which is publicly available, other than as a result of a breach by the
Lender of this Clause;
33
(ii) in connection with any legal or arbitration proceedings;
(iii) if required to do so under any law or regulation;
(iv) to a governmental, banking, taxation or other regulatory authority;
(v) to its professional advisers;
(vi) to the extent allowed under paragraph (b) below; or
(vii) with the agreement of the Company.
(b) The Lender may disclose to an Affiliate or any person with whom it may
enter, or has entered into, any kind of transfer, participation or other
agreement in relation to this Agreement (a participant):
(i) a copy of any Finance Document; and
(ii) any information which the Lender has acquired under or in connection
with any Finance Document.
However, before a participant may receive any confidential information, it
must agree with the Lender to keep that information confidential on the
terms of paragraph (a) above.
This Clause supersedes any previous confidentiality undertaking given by
the Lender in connection with this Agreement.
25. SET-OFF
The Lender may set off any matured obligation owed to it by the Company
under the Finance Documents (to the extent beneficially owned by the
Lender) against any obligation (whether or not matured) owed by the Lender
to the Company, regardless of the place of payment, booking branch or
currency of either obligation. If the obligations are in different
currencies, the Lender may convert either obligation at a market rate of
exchange in its usual course of business for the purpose of the set-off.
26. SEVERABILITY
If a term of a Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction of any
other term of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions of
that or any other term of the Finance Documents.
27. COUNTERPARTS
Each Finance Document may be executed in any number of counterparts. This
has the same effect as if the signatures on the counterparts were on a
single copy of the Finance Document.
34
28. NOTICES
28.1 IN WRITING
(a) Any communication in connection with a Finance Document must be in writing
and, unless otherwise stated, may be given in person, by courier service,
post, fax, e-mail or any other electronic communication approved by the
Lender.
(b) For the purpose of the Finance Documents, an electronic communication will
be treated as being in writing.
(c) Unless it is agreed to the contrary, any consent or agreement required
under a Finance Document must be given in writing.
28.2 CONTACT DETAILS
(a) The contact details of the Company for this purpose are:
Address: 000 Xxxxx Xxx Xxxxxx
Xxxxxxxxx, XX 00000
XXX
Fax number: x0 000 000 0000
Attention: Chief Executive Officer
(b) The contact details of the Lender for this purpose are:
Address: PO Box 957
Road Town, Tortola
British Virgin Islands
Attention: The Directors
(c) The Company or the Lender may change their contact details by giving five
Business Days' notice to the other Party.
(d) Where a Party nominates a particular department or officer to receive a
communication, a communication will not be effective if it fails to specify
that department or officer.
28.3 EFFECTIVENESS
(a) Except as provided below, any communication in connection with a Finance
Document will be deemed to be given as follows:
(i) if delivered in person or by courier service, at the time of delivery;
(ii) if posted, five days after being deposited in the post, postage
prepaid, in a correctly addressed envelope;
(iii) if by fax, when received in legible form; and
35
(iv) if by e-mail or any other electronic communication, when received in
legible form.
(b) A communication given under paragraph (a) above but received on a
non-working day or after business hours in the place of receipt will only
be deemed to be given on the next working day in that place.
(c) A communication to the Lender will only be effective on actual receipt by
it.
29. LANGUAGE
(a) Any notice given in connection with a Finance Document must be in English.
(b) Any other document provided in connection with a Finance Document must be:
(i) in English; or
(ii) (unless the Lender otherwise agrees) accompanied by a certified
English translation. In this case, the English translation prevails
unless the document is a statutory or other official document.
30. GOVERNING LAW
This Agreement is governed by the law of the State of California.
31. ENFORCEMENT
31.1 WAIVER OF IMMUNITY
The Company irrevocably and unconditionally:
(a) agrees not to claim any immunity from proceedings brought by the
Lender against the Company in relation to a Finance Document and to
ensure that no such claim is made on its behalf;
(b) consents generally to the giving of any relief or the issue of any
process in connection with those proceedings; and
(c) waives all rights of immunity in respect of it or its assets.
31.2 WAIVER OF TRIAL BY JURY
EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED ON, ARISING FROM OR IN CONNECTION WITH ANY FINANCE
DOCUMENT OR ANY TRANSACTION CONTEMPLATED BY ANY FINANCE DOCUMENT. THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY COURT.
36
32. INTEGRATION
The Finance Documents contain the complete agreement between the Parties on
the matters to which they relate and supersede all prior commitments,
agreements and understandings, whether written or oral, on those matters.
This Agreement has been entered into on the date stated at the beginning of
this Agreement.
37
SIGNATORIES
COMPANY
Signature Eyewear, Inc.
By: _______________________________
Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer
LENDER
Bluebird Finance Limited
By: __________________________________
Name: ________________________________________
Title: _______________________________________
38
SCHEDULE 1
CONDITIONS PRECEDENT DOCUMENTS
COMPANY
1. A copy of the constitutional documents of the Company.
2. A copy of a resolution of the board of directors of the Company
approving the terms of, and the transactions contemplated by, this
Agreement.
3. A specimen of the signature of each person authorized on behalf of the
Company to execute or witness the execution of any Finance Document or
to sign or send any document or notice in connection with any Finance
Document.
4. A copy of the October Financial Statements and the December Financial
Statements.
5. A certificate of an authorized signatory of the Company certifying that
each copy document specified in this Schedule is correct (other than as
provided in Clause 15.8(a) (Financial statements) above with respect to
the October Financial Statements), complete and in full force and
effect as at a date no earlier than the date of this Agreement.
SECURITY
6. The Security Agreement dated on or about the date of this Agreement
between the Company and the Lender duly executed by the parties to it.
7. UCC-1 forms required to be filed under the Security Document.
8. Evidence of insurance cover in compliance with this Agreement.
9. Evidence that all Security Interests granted in favor of City National
Bank, N.A. have been released.
LEGAL OPINIONS
1. A legal opinion of Jeffer, Mangels, Xxxxxx & Marmaro LLP, legal
advisers in California to the Company, addressed to the Lender,
substantially in the form of Schedule 8 (Form of Legal Opinion of the
Company's Counsel).
OTHER DOCUMENTS AND EVIDENCE
1. Evidence that all fees and expenses then due and payable from
the Company under this Agreement have been or will be paid by
the first Utilization Date.
2. Evidence that the all amounts owing to City National Bank,
N.A. on the date of this Agreement will be repaid or prepaid,
and cancelled, in full on or by the first Utilization Date.
39
3. Written confirmation from the Senior Lender that all
conditions precedent to utilization of the credit facilities
provided pursuant to the Senior Credit Agreement have been
satisfied and that US$3,500,000 will be advanced to, or to the
order of, the Company on the first Utilization Date.
4. A copy of any other authorization or other document, opinion
or assurance which the Lender has notified the Company is
necessary or desirable in connection with the entry into and
performance of, and the transactions contemplated by, any
Finance Document or for the validity and enforceability of any
Finance Document.
5. Executed copies of the following documents:
(a) Stock Purchase Agreement dated the date of this
Agreement between the Company and the Lender relating
to the purchase and sale of Series A 2% Convertible
Preferred Stock of the Company (the STOCK PURCHASE
AGREEMENT);
(b) Certificate of Determination dated the date of this
Agreement issued by the Company pursuant to authority
granted by article IV of its Restated Articles of
Incorporation;
(c) Registration Rights Agreement dated the date of this
Agreement entered into pursuant to the Stock Purchase
Agreement;
(d) Settlement Agreements with various creditors, the
details of which have been disclosed to the Lender;
(e) Agreement Re Assignment of Claims and Mutual General
Release dated March 31, 2003 between Moulin Optical
Manufactory Limited, Allied Industrial Limited,
Dartmouth Commerce of Manhattan, Inc., a California
corporation (DARTMOUTH) and the Company;
(f) Agreement for the Purchase and Sale of Debt dated April
1, 2003 between Dartmouth and the Company;
(g) Senior Credit Agreement; and
(h) Subordination Agreement.
40
SCHEDULE 2
FORM OF REQUEST
To: Bluebird Finance Limited
From: Signature Eyewear, Inc.
Date: [ ]
SIGNATURE EYEWEAR, INC. - US$4,150,000 CREDIT AGREEMENT DATED [ ], 2003
(the AGREEMENT)
1. We refer to the Agreement. This is a Request.
2. We wish to [borrow a Loan/request the procurement of the Letter of
Credit]o on the following terms:
(a) Utilization Date: [ ];
(b) Amount: [ ].
3. Our [payment/delivery]o instructions are: [ ].
4. We confirm that each condition precedent under the Agreement which must
be satisfied on the date of this Request is so satisfied.
5. This Request is irrevocable.
By:
________________________________
SIGNATURE EYEWEAR, INC.
41
SCHEDULE 3
SECURITY INTERESTS
1. The Security Interest granted by the Company to City National Bank,
N.A. with respect to certain of the Company's assets, which Security
Interest will be released on the date of this Agreement.
2. The Security Interest granted by the Company to Xxxxx Fargo Equipment
Finance, Inc. and US Bancorp Xxxxxx-Xxxxx Technology Leasing with
respect to certain equipment pursuant to a security agreement dated
March 26, 2003 to secure the Company's obligations under the Financial
Indebtedness referred to in Clause 17.7(b)(v) (Financial Indebtedness).
3. The Security Interest granted by the Company to Axwood Investments
Limited with respect to certain inventory pursuant to a security
agreement dated February 4, 2003 to secure the Company's obligations
under the Financial Indebtedness referred to in Clause 17.7(b)(iv)
(Financial Indebtedness).
4. The Security Interests granted by the Company to the lessors of certain
office equipment (including, a telephone system, postage meter,
photocopier, certain computer equipment and a warehouse storage racking
system referred to as the "Carousel") utilized by the Company in its
business.
42
SCHEDULE 4
FORM OF SECURITY AGREEMENT
[Insert form of Security Agreement]
43
SCHEDULE 5
DEFAULTS
1. As a result of the Company's current financial condition and cash flow
situation, it is in actual or technical default with most of the
companies and entities with which it has, or currently does, transact
its business, other than as previously disclosed to the Lender.
2. The Company is in contravention of certain financial covenants
contained in certain license agreements and is accordingly in technical
or actual default under such licenses. The Company has not received any
written notices of default from any of the licensors under such license
agreements.
44
SCHEDULE 6
MATERIAL ADVERSE CHANGE
The Company has continued to suffer operating losses in the ordinary course of
its business since December 31, 2002. In addition, given the Company's current
financial condition and cash flow, the Company is in actual or technical default
with most of the companies and entities with which the Company has, or currently
does, transact its business.
45
SCHEDULE 7
LITIGATION
1. The Chapter 7 trustee in bankruptcy of an optical company which holds a
disputed claim against the Company of approximately US$58,000 contacted
the Company with respect to such claim approximately nine months ago.
When advised of the dispute, the trustee advised that it would enquire
into the matter. The Company has had no further contact from either the
trustee or any other party with respect to this disputed claim.
2. Xxxxxx v. Signature Eyewear - case pending in Washington State Court
arising out of an employment dispute. The amount claimed does not
exceed US$25,000.
3. Xxxx Xxxxxxx v. Signature Eyewear - Xx. Xxxxxxx, a former employee of
the Company, has made a written demand in the amount of approximately
US$138,000 to the Company for certain vacation pay and commissions he
claims he is owed. The Company disputes the claims made by Xx. Xxxxxxx.
4. Amplicon Financial has threatened in writing to bring a claim against
the Company in an amount of approximately US$30,000.
5. The Company intends to use the proceeds from the transactions
contemplated by the Finance Documents and the Senior Credit Agreement,
in part, to settle certain outstanding claims against the Company and
thereby curing certain outstanding defaults. The Company has previously
delivered to the Lender a schedule of the pending or threatened claims
that the Company intends to settle using the proceeds from these
transactions. The Company intends to settle these matters within thirty
days of the date of this Agreement or such later date as has been
agreed with certain claimants.
6. As a result of the Company's current financial condition and cash flow,
the Company is in actual or technical default with most of the
companies and entities with which the Company has, or currently does,
transact its business. Some of these parties have asserted, or may
assert, claims against the Company and some of these claims will be in
excess of US$100,000 in the aggregate.
46
SCHEDULE 8
FORM OF LEGAL OPINION OF THE COMPANY'S COUNSEL
APRIL ___, 2003
Bluebird Finance Limited
X.X. Xxx 000
Xxxx Xxxx, Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxxx
Re: Bluebird Finance Limited - $4,650,000 Loan to Signature Eyewear, Inc.
---------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for Signature Eyewear, Inc., a California
corporation (the "Company"), in connection with the loan (the "Loan")
contemplated by that certain Credit Facility Agreement (the "Loan Agreement"),
of even date, between the Company and Bluebird Finance Limited, a British Virgin
Islands company (the "Lender"). We do not represent the Company in all of its
legal matters, and the Company has retained other legal counsel to represent it
in connection with certain other legal matters. We do not assume any
responsibility for any transaction or matter where the Company has been
represented by other counsel. Capitalized terms, which are used herein but not
defined herein, shall have the meanings ascribed to them in the Loan Agreement.
In connection with this opinion, we have examined and relied upon (i) the
representations and warranties as to factual matters contained in and made
pursuant to the Purchase Agreement by various parties, and (ii) originals or
copies, certified or otherwise identified to our satisfaction as being true
copies, of the following documents (collectively, the "Documents"):
(1) the Loan Agreement;
(2) The Security Agreement between the Company and Lender;
(3) [the Financing Statement];
(4) Officers' Closing Certificate of the Company;
(5) Articles of Incorporation of the Company, as amended, as certified by
the office of the Secretary of State of the State of California as of
March 26, 2003 (the "Articles");
(6) Amended and Restated Bylaws of the Company, dated June 6, 1997 (the
"Bylaws");
(7) Certificate of Status Domestic Corporation for the Company issued by
the California Secretary of State and dated March 26, 2003 (the
"Domestic Status Certificate"); and
47
(8) the Representation Letter from Xxxxxxx Xxxxx and Xxxxxxx Xxxxxx (the
"Representation Letter").
Except as set forth above, the documents listed in clauses (1), (2) and (3)
are each dated as of April ___, 2003 and are referred to herein collectively as
the "Transaction Documents."
We have rendered these opinions based solely upon our review of the
Documents, and upon our examination of such statutes, decisions and matters of
law as we deem necessary to express the opinions set forth below. In particular,
our opinion that the Company is "in good standing under the laws of the State of
California" set forth in opinion number 1, below, is based solely on the
Domestic Status Certificate. We have made no examination of public records
(including, without limitation, the plaintiff or defendant indices of state and
federal courts), nor have we undertaken any independent investigation to
determine the existence or nonexistence of facts contained or asserted in the
Documents or the assumptions set forth herein and you acknowledge we have no
duty to perform any such independent investigation.
In addition, in rendering this opinion, we have not taken into
consideration the effect, if any, that certain other transactions that will be
occurring on or about the time of the Closing, may have upon the Company or the
opinions set forth herein, including, without limitation, transactions between
(i) the Company and Home Loan Investment Company (the "Senior Loan Documents"),
(ii) the Company, Moulin Optical Manufactory Limited, Allied Industrial Limited
and Dartmouth Commerce of Manhattan, Inc. ("Dartmouth"), (iii) the Company and
Dartmouth, and (iv) the Xxxxx Family Trust and Dartmouth.
In rendering this opinion, we have assumed (i) the genuineness and
authenticity of all signatures on original documents, (ii) the authenticity of
all documents submitted to us as originals and the conformity to originals of
documents submitted to us as certified or photostatic copies, (iii) the
accuracy, completeness and authenticity of certificates of public officials,
(iv) each person signing a document is a competent adult person not operating
under any legal disability, duress or having been defrauded in the execution of
documents, and (v) the due authorization, execution and delivery of all
documents (except the due authorization, execution and delivery by the Company
of the Transaction Documents), and (vi) that the parties to the Transaction
Documents will act in good faith in connection with their obligations under the
Transaction Documents.
For purposes of this opinion, we have made the following additional
assumptions:
(a)......Other than the Documents, there are no documents, understandings
or agreements between or among the parties which would expand or otherwise
modify the obligations of the respective parties to the Documents regarding the
transactions contemplated thereby and which would have an effect on this
opinion;
(b)......To the extent that the obligations of the Company may be dependent
upon such matters, we have assumed for purposes of this opinion, that: (i) each
party to the Transaction Documents other than the Company ("Other Party") is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of formation and qualified to do business in other jurisdictions,
to the extent necessary; (ii) each Other Party has the requisite organizational
or other power and authority to execute and deliver, and to perform its
obligations under, the Transaction Documents to which it is a party; (iii) the
Transaction Documents to which each Other Party is a party have been duly
authorized, executed and delivered by it, and each of such Transaction Documents
constitutes the legally valid and binding obligation of such Other Party,
enforceable against such party in accordance with its terms; and (iv) that each
such Other Party is, at all relevant times in connection with the origination
and enforcement of the Loan, duly qualified and authorized to conduct intrastate
business and to make the Loan within the State of California and holds any and
all licenses to conduct such activity as may be required by applicable
California law.
48
(c)......The Lender will exercise any rights or remedies it may have under
the Transaction Documents in good faith, in circumstances in which it is
commercially reasonable to do so, in a commercially reasonable manner to the
extent required by applicable law, and otherwise pursuant to the Uniform
Commercial Code as adopted in the State of California (the "UCC");
(d)......The representations and warranties of the Company and the Lender
in the Transaction Documents are true and correct; and (e) The choice of
California law in the Transaction Documents will be enforced.
In addition, we have assumed that the documents necessary to perfect the
security interests of the Lender under the Transaction Documents have been or
will be correctly filed in the Office of the Secretary of State of California,
and with all appropriate officials or in all applicable offices of agencies and
departments of the government of the United States of America and any other
governmental authorities having jurisdiction over the subject matter therein
described and over the filing thereof. We have also assumed without undertaking
any investigation that the Company has good and enforceable title to the
Collateral.
Whenever used in this opinion, the phrase "to the best of our actual
knowledge" or words of similar import mean to the actual conscious knowledge of
those attorneys in this Firm who have given substantive attention to the
transaction contemplated by the Transaction Documents.
We are licensed to practice law only in the State of California. The
opinions set forth below apply only insofar as the substantive laws of the State
of California (without application of the principle of conflicts of laws) and
the United States' federal laws may be concerned, and we express no opinion with
respect to the laws of any other state or jurisdiction. Based on the foregoing
and subject to the assumptions, qualifications and limitations set forth herein,
it is our opinion that:
1........The Company has been duly incorporated, is validly existing is in
good standing under the laws of the State of California, with the requisite
corporate power and corporate authority to own its properties and assets, to
conduct its business as presently conducted, to enter into and deliver the
Transaction Documents, and to perform its obligations under the Transaction
Documents.
2........The execution, delivery and performance of the Transaction
Documents have been duly authorized by all necessary corporate action on the
part of the Company, and the Transaction Documents have been duly executed and
delivered by the Company.
3........Each of the Transaction Documents constitutes the legally valid
and binding obligation of the Company, and except as otherwise provided in the
Senior Loan Documents, enforceable against the Company in accordance with its
terms.
4........The Company's execution, delivery and performance of the
Transaction Documents do not violate the Restated Articles of Incorporation or
Bylaws of the Company.
5........The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party, to the best of our actual
knowledge, will not violate any law or
49
regulation, including, without limitation, any usury or similar law regulating
the rate of interest that may be charged to a borrower.
6........Except as set forth on the schedules to the Loan Agreement, to the
best of our actual knowledge, no consent of, authorization from or registration
or filing with any governmental authority, agency or body is required in
connection with the execution, delivery and performance by the Company of the
Transaction Documents.
7........Except for (i) any actions, suits or proceedings before any court,
arbitrator or governmental agency which may result in damages against the
Company in excess of $100,000 ("Legal Proceedings"), which are described on the
schedules to the Loan Agreement, and (ii) those Legal Proceeding that have been
represented to us will settle within thirty (30) days of the Closing as is set
forth on Exhibit B to the Representation Letter, we are not and have not
represented the Company in any currently pending Legal Proceedings.
8........The Security Agreement creates a valid security interest in the
Collateral, and such security interest will be duly perfected upon the filing of
the Financing Statement with the Secretary of State of California to the extent
that a security interest in the Collateral may be perfected by the filing of a
financing statement.
We express no opinion with respect to:
(i) The applicability of Sections 547 and 548 of the Bankruptcy Code, 11
U.S.C. Sections 547 and 548, Sections 500 et seq. of the California
Corporations Code, or any other federal or state laws regarding
fraudulent conveyances or preferences;
(ii) Compliance by any party with state or federal securities laws
including, without limitation, anti-fraud, disclosure or similar laws,
rules or regulations relating to securities or the issuance and sale
thereof;
(iii) Compliance by any party with (A) antitrust laws including, but not
limited to, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
or (B) the Employee Retirement Income Security Act of 1974, as
amended;
(iv) Compliance by any party, or any of the Transaction Documents, with any
federal, state or local land use, subdivision, zoning, planning, tax,
labor or communications law, ordinance or regulation;
(v) The fairness of any consideration given or received in connection with
any of the Transaction Documents or any transaction contemplated
thereby;
(vi) The impact of local, state, federal or foreign tax laws on the
transactions contemplated by any of the Transaction Documents,
including, without limitation, the effect of any failure of the
Company to pay any employment, withholding, sales or other taxes when
due;
(vii) Any provisions of the Transaction Documents which permit the
enforcement of the remaining provisions of the Transaction Documents
where some provision has been declared unenforceable, unless the
unenforceable portion is not an essential part of the agreement
therein contained;
50
(viii) Any covenant not to compete, non-solicitation, confidentiality or
similar provisions contained in any of the Transaction Documents;
(ix) the validity of the Company's title to the Collateral or the priority
of any liens or security interests therein;
(x) Any Legal Proceeding in which we are not counsel of record.
This opinion is subject to, and limited by the following qualifications,
exceptions and reservations:
(a)......The enforceability of the Transaction Documents may be limited or
affected by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally (including, without limitation,
fraudulent conveyance laws), (ii) general principles of equity including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity or at law,
and (iii) judicial discretion and the valid exercise of sovereign power of the
State of California and the constitutional powers of the United States of
America;
(b)......Limitations imposed by equitable principles of California or
federal law upon the specific enforceability of any of the remedies, covenants,
or other provisions of the Transaction Documents and upon the availability of
injunctive relief or other equitable remedies;
(c)......The unenforceability under certain circumstances, under any state
or federal law or court decision, of (i) provisions expressly or by implication
waiving broadly or vaguely stated rights, unknown future rights, defenses to
obligations or rights created by law, (ii) provisions indemnifying a party
against liability for its own negligent or wrongful acts, where such waivers or
indemnifications are against public policy or prohibited by law, and (iii)
provisions which impose late charges, default rates of interest or other similar
penalty terms, or restrict or condition prepayment;
(d)......The effect of California court decisions invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where (i) the breach of such covenants or
provisions imposes restrictions or burdens upon an obligor, including the
acceleration of indebtedness due under such instruments, and it cannot be
demonstrated that the enforcement of such restrictions or burdens is reasonably
necessary for the protection of the creditor, or (ii) the creditor's enforcement
of such covenants or provisions under the circumstances would violate the
creditor's implied covenant of good faith and fair dealing.
(e)......The effect of Section 1670.5 of the California Civil Code, which
provides, in substance, that if a court as a matter of law finds a contract or
any clause of a contract to have been "unconscionable" at the time it was made,
the court may refuse to enforce the contract, or the court may enforce the
remainder of the contract without the "unconscionable" clause or so as to avoid
an "unconscionable" result. That Section also permits parties to present
evidence as to the commercial setting, purpose and effect of any contract or
clause thereof claimed to be "unconscionable," to aid the court in making its
determination;
(f)......The unenforceability under certain circumstances of provisions to
the effect that rights or remedies are not exclusive, that every right or remedy
is cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy;
51
(g)......The unenforceability under certain circumstances of contractual
provisions which allow the exercise of self-help or summary remedies without
requiring notice or opportunity for hearing or correction;
(h)......The effect of California law providing that, where a contract
permits one party to the contract to recover attorneys' fees, the prevailing
party in any action to enforce any provision of the contract shall be entitled
to recover its reasonable attorneys' fees;
(i)......The effect of California Civil Code section 2924.5, and California
common law, on the ability to assess a late, default, or delinquency charge on
any delinquent payment of a loan installment without providing the borrower
written notice of the delinquency or default and the amount or method of
computing the amount of the charge to be imposed in the event of delinquency or
default and the date by which the delinquent payment must be made in order to
avoid such charge; and the effect of the unenforceability of any provision of
the Transaction Documents which constitutes or which is held by a court or
arbitrator to constitute an unlawful forfeiture or penalty, or an unenforceable
liquidation of damages, including, without limitation, provisions of the
Transaction Documents providing for any increase in the rate of interest or the
payment of a prepayment fee or any other amount upon or as a result or
consequence of any breach or default by Borrowers under the Transaction
Documents (refer to case citations set forth in paragraph (n) below);
(j)......We note that the collectibility of interest under any of the
Transaction Documents, to the extent that interest computed at the rate set
forth in such Transaction Documents based upon a 360-day year exceeds interest
that would accrue at the same rate but computed upon a 365-day year, is subject
to certain judicial precedents in California, including but not limited to
Fletcher v. Security Pacific National Bank, 23 Cal.3d 442 (1979), and Chern v.
Bank of America, 15 Cal.3d 866 (1976), which indicate that a California court
may enjoin collection of such interest and award restitution thereof to a
borrower, if on the basis of the facts and circumstances then before the court,
the court determined that such relief was necessary to prevent the use or
employment of an unfair trade practice;
(k)......The effect of Section 9-610 of the California Uniform Commercial
Code which places limitations on the circumstances under which a secured party
may purchase collateral at a private sale;
(l)......The effect of the unenforceability of the Transaction Documents
due to a failure to file the Financing Statement, any defect or omission in the
title to the real or personal property therein described, any failure of
consideration, or any failure by Lender Parties to perfect the security interest
in the Collateral in the manner required by applicable law;
(m)......The effect of the unenforceability of the Transaction Documents,
or any of them, based upon or resulting from the unenforceability to any extent
of any other instrument, agreement, document, or instruction executed or entered
into in connection with the Transaction Documents;
(n)......The effect of California Civil Code section 1671, and California
common law, on the ability to assess a late, default, or delinquency charge on
any delinquent payment of a loan installment without providing the borrower
written notice of the delinquency or default and the amount or method of
computing the amount of the charge to be imposed in the event of delinquency or
default and the date by which the delinquent payment must be made in order to
avoid such charge; and the effect of the unenforceability of any provision of
the Transaction Documents which constitutes or which is held by a court or
arbitrator to constitute an unlawful forfeiture or penalty, or an unenforceable
liquidation of damages, including, without limitation, provisions of the
Transaction Documents providing for any increase in the rate of interest or the
payment of a prepayment fee or any other amount upon or as a result or
52
consequence of any breach or default by Borrowers under the Transaction
Documents (see Xxxxxxx x. Coast & Southern Federal Savings and Loan Association
(1973) 9 Cal.3d 731; Xxxxxxx x. Xxxx Thrift and Loan Association (1998) 98 Daily
Journal D.A.R. 3991);
(o)......The effect of Article XV, Section 1 of the California
Constitution, which limits the rate of interest upon any loan or forbearance of
money, to the extent applicable to the transactions contemplated by the Loan
Documents; and
(p)......We express no opinion as to the provisions of the Transaction
Documents which (1) purport to waive, limit, or restrict various rights of the
Company except to the extent permitted by law, (2) permit a party to act as the
agent and attorney-in-fact of the Company after a default, (3) select the forum
for the resolution of any disputes or consent to the jurisdiction of any
jurisdiction (both as to personal jurisdiction and subject matter jurisdiction),
(4) attempt to change or waive rules of evidence or fix the method or quantum of
proof to be applied in litigation or similar proceedings, (5) provide for the
confession of judgment, (6) provide that time is of the essence, (7) permit the
enforcement of the remaining provisions of a Transaction Document, where some
provision has been declared unenforceable, unless the unenforceable portion is
not an essential part of the agreement therein contained, (8) provide for the
appointment of a receiver except in accordance with applicable laws, or (9)
provide the Lender with the right to establish reserves or limit advances based
upon its sole and unfettered discretion.
This opinion is rendered only with respect to the laws, and the rules,
regulations and orders under those laws, that are in effect as of the date
hereof, and we disclaim any obligation to update this opinion for events
occurring after the date hereof. We assume no responsibility to advise you or
any other person or entity of changes which may hereafter be brought to our
attention.
This opinion is rendered only to the Lender and is solely for its benefit
in connection with the above transaction. Except as provided above, this opinion
may not be quoted or used in whole or in part for any purpose, nor may copies be
provided to any person, without our prior written consent.
Very truly yours,
53
EXHIBIT A
[Representation Letter]
54
SCHEDULE 9
LETTER OF CREDIT
FROM: BANK OF AMERICA (ASIA) LIMITED
ADVISING BANK: BANK OF AMERICA N.A. USA
TO: HOME LOAN INVESTMENT COMPANY
000 X. 0xx XXXXXX,
X.X. XXX 000
XXXXX XXXXXXXX, XX 00000
X.X.X.
STANDBY L/C
THE ADVISING BANK IS REQUESTED TO ADD CONFIRMATION ON THIS STANDBY LETTER OF
CREDIT WITH CONFIRMATION CHARGES FOR ACCOUNT OF [ ].
AT THE REQUEST OF [ ], WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF
CREDIT NO. [ ] UP TO AN AGGREGATE AMOUNT OF UNITED STATES DOLLARS ONE
MILLION AND TWO HUNDRED FIFTY THOUSAND ONLY (US$1,250,000) AVAILABLE WITH US BY
PAYMENT AGAINST YOUR WRITTEN STATEMENT THROUGH YOUR BANKER SPECIFYING THE AMOUNT
CLAIMED REPRESENTS PART OR ALL OF THE UNPAID BALANCE OF INDEBTEDNESS DUE TO YOU
IN CONNECTION WITH YOUR GRANTING CREDIT FACILITY TO SIGNATURE EYEWEAR, INC., 000
X. XXX XX., XXXXXXXXX, XX00000, XXXXXX XXXXXX OF AMERICA IN RESPECT OF WHICH
SAID BORROWER IS IN DEFAULT.
THE STANDBY LETER OF CREDIT AMOUNT COVERS THE PRINCIPAL, INTEREST AND YOUR
CHARGES.
YOUR WRITTEN STATEMENT MUST REACH THE OFFICE OF THE CONFIRMING BANK ON OR BEFORE
[ ].
PARTIAL DRAWING ALLOWED, MULTIPLE PRESENTATION NOT ALLOWED.
ALL BANKING CHARGES ARE FOR ACCOUNT OF APPLICANT.
THIS STANDBY LETTER OF CREDIT WILL EXPIRE ONE YEAR AFTER DATE OF ISSUANCE AT THE
COUNTER OF THE CONFIRMING BANK.
THE CONFIRMING BANK IS ALLOWED TO DEBIT THE ACCOUNT OF ISSUING BANK IN
SETTLEMENT UPON RECEIPT OF A XXXXXXXX CLAIM. THE CONFIRMING BANK IS REQUIRED TO
SWIFT INFORM ISSUING BANK UPON RECEIPT OF A CLAIM.
55
THIS STANDBY LETTER OF CREDIT IS SUBJECT TO INTERNATIONAL CHAMBER OF COMMERCE
INTERNATIONAL STANDBY PRACTICE ISP98.
THIS IS THE OPERATIVE INSTRUMENT.
56
================================================================================
SECURITY AGREEMENT
DATED APRIL 21, 2003
BETWEEN
SIGNATURE EYEWEAR, INC.
AS DEBTOR
AND
BLUEBIRD FINANCE LIMITED
AS SECURED PARTY
XXXXX & XXXXX
NEW YORK
================================================================================
CONTENTS
CLAUSE PAGE
1. INTERPRETATION........................................................... 1
1.1 UCC and Credit Agreement Defined Terms...................... 1
1.2 Other Definitions........................................... 1
1.3 Construction................................................ 3
2. CREATION AND PERFECTION OF SECURITY INTEREST............................. 3
2.1 Grant....................................................... 3
2.2 Continuing security interest................................ 3
2.3 Filing of financing statements.............................. 4
2.4 No liability................................................ 4
3. REPRESENTATIONS AND WARRANTIES........................................... 4
3.1 Representations and warranties.............................. 4
3.2 The Debtor.................................................. 4
3.3 The Collateral.............................................. 5
3.4 Security interest........................................... 5
3.5 Intellectual Property Rights................................ 6
3.6 Times for making representations and warranties............. 7
3.7 Survival.................................................... 7
4. UNDERTAKINGS............................................................. 7
4.1 Undertakings................................................ 7
4.2 The Debtor.................................................. 7
4.3 The Collateral.............................................. 8
4.4 Security interest........................................... 8
4.5 Notices..................................................... 9
5. RIGHTS AND REMEDIES...................................................... 9
5.1 Events of Default........................................... 9
5.2 Collections after an Event of Default....................... 9
5.3 Secured Party's rights upon default......................... 10
5.4 No marshaling............................................... 11
6. MISCELLANEOUS............................................................ 11
6.1 Further assurances.......................................... 11
6.2 Costs and indemnity......................................... 12
6.3 Successors.................................................. 12
6.4 Amendments and waivers...................................... 13
6.5 Rights cumulative........................................... 13
6.6 Severability................................................ 13
6.7 Counterparts................................................ 13
6.8 Notices..................................................... 13
6.9 Complete Agreement.......................................... 14
6.10 Waiver of Jury Trial........................................ 14
6.11 Governing Law............................................... 14
Signatories.................................................................. 15
SCHEDULES
1. Commercial Tort Claims................................................... 16
2. Intellectual Property.................................................... 17
3. Countries and States in which Collateral consisting of goods is located.. 18
THIS AGREEMENT is dated April 21, 2003
BETWEEN:
(1) SIGNATURE EYEWEAR, INC., a corporation organized under the laws of the
State of California (the DEBTOR); and
(2) BLUEBIRD FINANCE LIMITED, as Lender under the Credit Agreement described
below, a company organized under the laws of the British Virgin Islands (in
that capacity the SECURED PARTY).
BACKGROUND:
(A) The Debtor and the Secured Party are concurrently entering into the
US$4,150,000 credit agreement dated the date of this Agreement (the CREDIT
AGREEMENT).
(B) It is a condition precedent to the obligations of the Secured Party under
the Credit Agreement that the Debtor enter into this Agreement and grant
the security described in this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 UCC AND CREDIT AGREEMENT DEFINED TERMS
Any term defined in the Uniform Commercial Code as in effect from time to
time in the State of California (the UCC) and not defined in this Agreement
has the meaning given to the term in the UCC. Any term defined in the
Credit Agreement and not defined in this Agreement or the UCC has the
meaning given to the term in the Credit Agreement.
1.2 OTHER DEFINITIONS
In this Agreement:
COLLATERAL means all personal property, wherever located, in which the
Debtor now has or later acquires any right title or interest, including
all:
(a) accounts,
chattel paper (including tangible chattel paper and
electronic chattel paper),
goods (including equipment, inventory and fixtures),
health-care-insurance receivables,
instruments (including promissory notes),
investment property,
documents,
deposit accounts,
letter-of-credit rights,
general intangibles (including payment intangibles),
software,
supporting obligations,
1
other assets (including any and all proprietary and intellectual
property rights of any kind or nature whatsoever, anywhere in the
world, including any and all inventions, discoveries, trade secrets,
intellectual property rights, patents, trademarks, trade names,
service marks and copyrights, all registrations of and applications
relating to any of the foregoing, and all associated goodwill); and
(b) Intellectual Property Rights and any associated Contracts,
and to the extent not listed above as original Collateral, proceeds and
products of, and accessions to, the foregoing.
The term COLLATERAL also includes all existing commercial tort claims of
the Debtor as described in Schedule 1 (Commercial Tort Claims).
Notwithstanding the foregoing, COLLATERAL shall not include:
(a) any property, right or interest in which a security interest may not
be granted under applicable law or under enforceable contractual
restrictions binding on the Debtor; or
(b) Eyewear Licenses but not any inventory derived from such Eyewear
Licenses.
CONTRACTS means any contract, indenture, mortgage, deed of trust, note,
instrument, lease, license, arrangement or other agreement, whether oral or
written, including without limitation, all acquisition, development,
production, distribution, exploitation and/or licensing agreements.
EVENT OF DEFAULT has the meaning given to that term in Clause 5.1 (Events
of Default).
EYEWEAR LICENSES means the licenses held today or hereafter acquired by the
Debtor pursuant to which a person licenses to the Debtor the right to
manufacture, market, sell and/or distribute eyeglass frames and related
eyewear accessories using trademarks, tradenames and other intellectual
property owned by such person.
INTELLECTUAL PROPERTY RIGHTS means any inventions, discoveries, patent and
patent applications, trademarks, trade names, service marks and
registrations and applications in respect thereto, and copyrights,
copyright registrations and copyright applications including those
described in Schedule 2 (Intellectual Property) and those created or
acquired after the date of this Agreement.
LIEN means any security interest, lien, mortgage, pledge, encumbrance,
charge, assignment, hypothecation, agreement or arrangement having the
effect of conferring security, adverse claim, claim, or restriction on
assignment, transfer or pledge.
RELEVANT STATES means the State of the Debtor's incorporation, the State
where the Debtor has its chief executive office and the States in which
Collateral consisting of goods is located.
SECURED OBLIGATIONS means:
(a) the Credits and all other amounts payable or owing to the Secured
Party under the Finance Documents;
(b) all other obligations of the Debtor under the Finance Documents;
2
(c) all obligations of the Debtor under this Agreement;
(d) all amounts owed under any modifications, renewals or extensions of
any of the foregoing obligations; and
(e) any of the foregoing that arises after the filing of a petition by or
against the Debtor under the U.S. Bankruptcy Code, even if the
obligations do not accrue because of the automatic stay under U.S.
Bankruptcy Code ss. 362 or otherwise.
1.3 CONSTRUCTION
(a) No reference to PROCEEDS in this Agreement authorizes any sale,
transfer, or other disposition of Collateral by the Debtor.
(b) INCLUDES and INCLUDING are not limiting.
(c) OR is not exclusive.
(d) ALL includes ANY and ANY includes ALL.
(e) The term LAW includes any law, statute, regulation, regulatory
requirement, rule, ordinance, ruling, decision, treaty, directive,
order, guideline, regulation, policy, writ, judgment, injunction or
request of any court or other governmental, inter-governmental or
supranational body, fiscal or monetary authority, or other ministry or
public entity (and their interpretation, administration and
application), whether or not having the force of law.
(f) A reference to a law is a reference to that law as amended or
re-enacted.
(g) A reference to an agreement is a reference to that agreement as
amended, supplemented, restated or novated.
(h) Clause headings used in this Agreement are for convenience only. They
are not a part of this Agreement and shall not be used in construing
it.
2. CREATION AND PERFECTION OF SECURITY INTEREST
2.1 GRANT
As security for the prompt and complete payment and performance of the
Secured Obligations when due (whether due because of stated maturity,
acceleration, mandatory prepayment, or otherwise) and to induce the Secured
Party to make the Credits, the Debtor grants to the Secured Party a
continuing security interest in the Collateral.
2.2 CONTINUING SECURITY INTEREST
(a) This Agreement creates a continuing security interest in the
Collateral and will remain in full force and effect until the
irrevocable and indefeasible payment in full of the ultimate balance
of the Secured Obligations, regardless of any intermediate payment or
discharge in whole or in part.
3
(b) If, at any time for any reason (including the bankruptcy, insolvency,
receivership, reorganization, dissolution or liquidation of the Debtor
or the appointment of any receiver, intervenor or conservator of, or
agent or similar official for, the Debtor or any of its properties),
any payment received by the Secured Party in respect of the Secured
Obligations is rescinded or avoided or must otherwise be restored or
returned by the Secured Party, that payment shall not be considered to
have been made for purposes of this Agreement, and this Agreement will
continue to be effective or will be reinstated, if necessary, as if
that payment had not been made.
2.3 FILING OF FINANCING STATEMENTS
(a) The Debtor authorizes the Secured Party to prepare and file, at the
Debtor's expense, financing statements describing the Collateral, as
well as continuation statements and amendments in respect of those
financing statements. The Debtor expressly authorizes the Secured
Party, if it so elects, to file financing statements with the
collateral description "all assets of the Debtor", "all personal
property of the Debtor" or other words to that effect.
(b) Promptly after the filing of an initial financing statement in respect
of the Collateral, the Debtor shall provide the Secured Party with an
official report from the Secretary of State of each Relevant State
indicating that the Secured Party's security interest is prior to all
other security interests or other interests reflected in the report
other than any security interests referred to in clause 17.5(b)
(Negative pledge) of the Credit Agreement.
2.4 NO LIABILITY
The Debtor represents, warrants and agrees that:
(a) its liabilities and obligations under contractual obligations that
constitute part of the Collateral shall not be affected by this
Agreement or the exercise by the Secured Party of its rights under
this Agreement;
(b) unless it expressly agrees in writing, the Secured Party shall not
have any liabilities or obligations under any contractual obligation
that constitutes part of the Collateral as a result of this Agreement,
the exercise by the Secured Party of its rights under this Agreement
or otherwise; and
(c) the Secured Party does not and shall not have any obligation to
collect upon or enforce any contractual obligation or claim that
constitutes part of the Collateral, or to take any other action with
respect to the Collateral.
3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES
The Debtor makes the representations and warranties set out in this Clause
3 to the Secured Party.
3.2 THE DEBTOR
(a) The Debtor is incorporated in the State of California.
4
(b) The Debtor's exact legal name, as it appears in the public records of
its jurisdiction of incorporation, is Signature Eyewear, Inc. The
Debtor has not changed its name, whether by amendment of its charter,
reorganization, merger or otherwise, since its date of incorporation.
(c) The Debtor's organizational identification number, as issued by its
jurisdiction of incorporation, is 01209237.
(d) The Debtor's chief executive office is located at 000 Xxxxx Xxx
Xxxxxx, Xxxxxxxxx, XX 00000, XXX. The Debtor has not changed its chief
executive office within the past four months.
(e) The Debtor keeps its corporate records and all records, documents and
instruments relating to or evidencing Collateral at its address
indicated in Clause 6.8 (Notices) below.
3.3 THE COLLATERAL
(a) The Debtor has exclusive possession and control of all Collateral.
(b) Except as permitted under the Credit Agreement:
(i) the Debtor has good and marketable title to, and is the sole
legal and beneficial owner of, and has the power to transfer and
grant a security interest in, the Collateral;
(ii) none of the Collateral is subject to any Lien other than the
Secured Party's security interest;
(iii) Debtor has not agreed or committed to sell, assign, pledge,
transfer, license, lease or encumber any of the Collateral, or
granted any option, warrant or right with respect to any of the
Collateral; and
(iv) no effective mortgage, deed of trust, financing statement,
security agreement or other instrument similar in effect is on
file or of record with respect to any Collateral, except for
those that create, perfect or evidence the Secured Party's
security interest.
(c) All Collateral consisting of goods is located solely in the countries
and States of the United States listed in Schedule 3 (Countries and
States in which Collateral consisting of goods is located).
3.4 SECURITY INTEREST
(a) This Agreement confers the security interest it purports to confer
over the Collateral in favor of the Secured Party, and, subject to the
provisions of section 552 of the U.S. Bankruptcy Code, that security
interest is not liable to avoidance on liquidation or bankruptcy,
composition or any other similar insolvency proceedings.
(b) The description of the Collateral contained in this Agreement is true,
correct, and complete and is sufficient to describe the Collateral for
the purpose of creating, attaching, and perfecting the security
interest in favor of the Secured Party intended to be created by this
Agreement.
(c) As of the first Utilization Date, all necessary and appropriate
deliveries, notices, recordings, filings, and registrations have been
effected to perfect a first-priority (except as described in the
Credit Agreement) security interest in the Collateral in favor of the
Secured Party in all relevant jurisdictions, and the Secured Party has
as of the first Utilization Date, and will continue to have until the
Secured Obligations have been repaid in full and the Secured Party's
security interest has been released, a duly and validly created,
attached, perfected and enforceable (except as described in the Credit
Agreement) security interest in the Collateral in all relevant
jurisdictions.
5
3.5 INTELLECTUAL PROPERTY RIGHTS
(a) All the Debtor's Intellectual Property Rights as at the date of this
Agreement are listed in Schedule 2 (Intellectual Property).
Comprehensive details of all Intellectual Property Rights acquired by
the Debtor after the date of this Agreement have been notified to the
Secured Party.
(b) All Intellectual Property Rights forming part of the Collateral are,
and at all times have been, valid, subsisting, enforceable, and in
full force and effect.
(c) All Intellectual Property Rights forming part of the Collateral are
solely and exclusively held by the Debtor and the Debtor is the sole
and exclusive owner of all such Intellectual Property Rights.
(d) No Intellectual Property Rights forming part of the Collateral have
lapsed or fallen into the public domain or been abandoned.
(e) To the Debtor's best knowledge, no third party is violating,
infringing or misappropriating any of the Intellectual Property Rights
forming part of the Collateral.
(f) All items of Collateral which are subject to copyright protection
constitute original works of authorship and, to the extent created by
parties other than the Debtor or the Debtor's
predecessor(s)-in-interest, were created pursuant to valid
work-for-hire arrangements or agreements which were not and/or have
not been breached by any party thereto.
(g) Any item of Collateral which is subject to copyright protection, and
which was published prior to March 1, 1989, was published with a
copyright notice in full compliance with the U.S. Copyright Act.
(h) The chain-of-title with respect to each item of Collateral is clear
and complete, and there are no gaps with respect thereto.
(i) All material items of Collateral which are subject to copyright
protection have been registered in the U.S. Copyright Office.
(j) All material items of Collateral which constitute trademarks or
service marks have been registered in the United States Patent and
Trademark Office.
(k) No Intellectual Property Rights forming part of the Collateral have
been declared invalid, null or void, or been cancelled, rejected or
refused, or have been the subject of any challenge, dispute,
opposition or cancellation, in any judicial or administrative
proceeding.
(l) Exploitation of the Collateral does not and will not violate, infringe
or misappropriate the patent, inventorship, trademark, service xxxx,
trade name, copyright, droit morale, privacy, publicity, trade secret,
or other proprietary or intellectual property rights, of any kind or
nature whatsoever, of any third person or entity.
6
(m) Exploitation of the Collateral does not and will not violate any laws,
rules, statutes or regulations, including those related to obscenity,
morals, health, welfare or safety, or those related to the broadcast,
transmission, distribution or exhibition of audiovisual works.
(n) Except as described in the Credit Agreement, all Contracts are valid,
subsisting, enforceable, and in full force and effect, and no party to
any such Contract is in breach or violation thereof.
(o) The Debtor has secured all consents, permissions, releases,
authorizations and waivers necessary for the full and continued
exploitation of the Collateral, and has fully performed all
obligations with respect thereto.
(p) The Debtor is in compliance with all union, guild, collective
bargaining, performance rights society and similar agreements and
obligations arising out of or related or applicable to any
exploitation of the Collateral.
3.6 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES
The representations and warranties set out in this Clause 3:
(a) are made on the date of this Agreement; and
(b) are deemed to be repeated by the Debtor on the date of each Request
and the first day of each Term with reference to the facts and
circumstances then existing.
3.7 SURVIVAL
The representations and warranties of the Debtor contained in this
Agreement or made by the Debtor in any certificate, notice or report
delivered under the Finance Documents will survive each Utilization Date,
the making and repayment of the Credits, and any novation, transfer or
assignment of the Credits.
4. UNDERTAKINGS
4.1 UNDERTAKINGS
The Debtor covenants and agrees that, so long as the Secured Party has any
commitment under the Credit Agreement and until payment in full of the
Secured Obligations, it will perform and observe each of the undertakings
in this Clause 4.
4.2 THE DEBTOR
(a) The Debtor will preserve its corporate existence and will not, in one
transaction or a series of related transactions, merge into or
consolidate with any other entity, or sell all or substantially all of
its assets.
(b) The Debtor will not change the jurisdiction of its incorporation.
(c) The Debtor will not change its name without providing the Secured
Party with 30 days' prior written notice.
7
(d) The Debtor will keep its corporate records and all records, documents
and instruments relating to or evidencing Collateral at its address
indicated in Clause 6.8 (Notices) below.
(e) The Debtor agrees to permit the Secured Party and its agents and
representatives (at the Debtor's expense), during normal business
hours, to inspect the Collateral, to examine and make copies of and
abstracts from the records referred to in paragraph (d) above, and to
discuss matters relating to the Collateral directly with the Debtor's
officers and employees and relevant third parties (including account
debtors).
(f) Upon request, the Debtor shall provide the Secured Party with such
information concerning the Collateral as the Secured Party shall
reasonably request, including the current list of names and addresses
of all account debtors.
4.3 THE COLLATERAL
(a) Except as permitted by the Credit Agreement:
(i) the Debtor will maintain good and marketable title to, and sole
legal and beneficial ownership of, the Collateral;
(ii) the Debtor will not permit any Collateral to be subject to any
Lien other than the Secured Party's security interest and will at
all times and at its own cost warrant and defend the Secured
Party's security interest in the Collateral against all other
Liens; and
(iii) the Debtor will not, and is not authorized to, sell, assign,
transfer, pledge, license, lease or encumber, or grant any
option, warrant, or right with respect to, any of the Collateral,
or agree or contract to do any of the foregoing.
(b) The Collateral shall remain personal property at all times. The Debtor
shall not affix any of the Collateral to any real property in any manner
which would change its nature from that of personal property to real
property or to a fixture.
(c) The Debtor shall xxxx conspicuously all Collateral consisting of chattel
paper with a legend, in form and substance satisfactory to the Secured
Party, indicating that the Secured Party has a security interest in the
chattel paper.
(d) The Debtor shall pay when due (and in any case before any penalties are
assessed or any Lien is imposed on any Collateral) all taxes, assessments
and charges imposed on or in respect of Collateral and all claims against
the Collateral, including claims for labor, materials and supplies.
(e) In any suit, legal action, arbitration or other proceeding involving the
Collateral or the Secured Party's security interest, the Debtor will take
at its own cost all lawful action necessary or desirable to avoid
impairment of the Secured Party's security interest or the Secured Party's
rights under this Agreement or the imposition of a Lien on any Collateral.
4.4 SECURITY INTEREST
The Debtor shall take all actions necessary or desirable to ensure that the
Secured Party has and continues to have in all relevant jurisdictions a
duly and validly created, attached, perfected and enforceable
8
first-priority (except as described in the Credit Agreement) security
interest in the Collateral (including after-acquired Collateral).
4.5 NOTICES
The Debtor will give the Secured Party prompt notice of the occurrence of
any of the following events:
(a) any pending or threatened claim, suit, legal action, arbitration or
other proceeding involving or affecting the Debtor or any Collateral
which could reasonably be expected to impair the Secured Party's
security interest or the Secured Party's rights under this Agreement
or result in the imposition of a Lien on any Collateral;
(b) any loss or damage to any material portion of the Collateral; or
(c) any representation or warranty contained in this Agreement is or
becomes untrue, incorrect or incomplete in any material respect.
In each notice delivered under this Clause, the Debtor will include
reasonable details concerning the occurrence that is the subject of the
notice as well as the Debtor's proposed course of action, if any. Delivery
of a notice under this Clause will not affect the Debtor's obligations to
comply with any other provision of this Agreement.
5. RIGHTS AND REMEDIES
5.1 EVENTS OF DEFAULT
EVENT OF DEFAULT for the purposes of this Agreement means:
(a) failure to comply with Clause 4.3(a) (The Collateral) above;
(b) failure to comply with any other provision of this Agreement if the
failure continues for 14 days after the earlier of:
(i) notice from the Secured Party; and
(ii) the Debtor becoming aware of the non-compliance;
(c) failure, in any material respect, of any representation or warranty
contained in this Agreement to be true and correct on the date made or
deemed to be repeated;
(d) any attachment, execution or levy on any of the Collateral; or
(e) an "Event of Default", as that term is defined in the Credit
Agreement.
5.2 COLLECTIONS AFTER AN EVENT OF DEFAULT
Subject to the Subordination Agreement, after the occurrence and during the
continuation of an Event of Default, the Debtor will hold all funds and
other property received or collected in respect of the Collateral in trust
for the Secured Party, and will keep those funds and that other property
separate and apart from all other funds and property so as to be capable of
9
identification. The Debtor will deliver those funds and that other property
to the Secured Party in the identical form received, properly endorsed or
assigned when required to enable the Secured Party to complete collection.
After the occurrence and during the continuation of an Event of Default,
the Debtor shall not settle, compromise, adjust, discount or release any
claim in respect of Collateral and shall not accept any returns of
merchandise.
5.3 SECURED PARTY'S RIGHTS UPON DEFAULT
(a) Upon the occurrence and during the continuation of an Event of
Default, the Secured Party may, in its sole discretion, take any of
the following actions, in each case at the Debtor's expense, and
without prior notice to the Debtor except as required under applicable
law:
(i) transfer or assign to, or register in the name of, the Secured
Party or its nominees any of the Collateral;
(ii) exercise all consent and other rights relating to any Collateral;
(iii) perform or comply with any contractual obligation that
constitutes part of the Collateral;
(iv) receive, endorse, negotiate, execute and deliver or collect upon
any check, draft, note, acceptance, chattel paper, account,
instrument, document, letter of credit, contract, agreement, xxxx
of lading, invoice, assignment, xxxx of sale, deed, security,
share certificate, stock power, proxy, or instrument of
conveyance or transfer constituting or relating to any
Collateral;
(v) assert, institute, file, defend, settle, compromise, adjust,
discount or release any suit, action, claim, counterclaim or
right of set-off relating to any Collateral;
(vi) execute and deliver acquittances, receipts and releases in
respect of Collateral; and
(vii) exercise any other right or remedy available to the Secured
Party under applicable law, the other Finance Documents, or any
other agreement between the parties.
(b) The Debtor agrees that the Secured Party will have, with respect to
the Collateral, in addition to the rights and remedies described in
this Agreement, all of the rights and remedies available to a secured
party under applicable law and under the UCC (whether or not the UCC
applies to the affected Collateral and regardless of whether or not
the UCC is the law of the jurisdiction where the rights or remedies
are asserted) as if those rights and remedies were fully set forth in
this Agreement.
(c) The Secured Party may exercise the rights and remedies described in
this Agreement and those available under applicable law in such order,
at such times and in such manner as the Secured Party may, in its sole
discretion, determine from time to time. The Secured Party may at any
time and from time to time release or relinquish any right, remedy, or
security interest it has with respect to a particular item of
Collateral without releasing, relinquishing, or in any way affecting
its rights, remedies, or security interests with respect to any other
item of Collateral.
(d) The Debtor irrevocably constitutes and appoints the Secured Party,
with full power of substitution, as the Debtor's true and lawful
attorney-in-fact, in the Debtor's name or in the Secured Party's name
or otherwise, and at the Debtor's expense, to take any of the actions
10
authorized by this Agreement or permitted under applicable law upon
the occurrence and during the continuation of an Event of Default,
without notice to, or the consent of, the Debtor. This power of
attorney is a power coupled with an interest and cannot be revoked.
The Debtor ratifies and confirms all actions taken by the Secured
Party or its agents under this power of attorney.
(e) The Secured Party may comply with any applicable state or federal law
requirements in connection with a disposition of Collateral and
compliance will not be considered adversely to affect the commercial
reasonableness of any sale of Collateral.
(f) The grant to the Secured Party under this Agreement of any right or
power does not impose upon the Secured Party any duty to exercise that
right or power. The Secured Party will have no obligation to take any
steps to preserve any claim or other right against any person or with
respect to any Collateral.
(g) All risk of loss, damage, diminution in value, or destruction of the
Collateral will be borne by the Debtor.
(h) The Debtor agrees that the sale, transfer or other disposition under
this Agreement of any right, title, or interest of the Debtor in any
item of Collateral will operate to permanently divest the Debtor and
all persons claiming under or through the Debtor of that right, title,
or interest, and will be a perpetual bar, both at law and in equity,
to any claims by the Debtor or any person claiming under or through
the Debtor with respect to that item of Collateral.
5.4 NO MARSHALING
The Secured Party has no obligation to attempt to satisfy the Secured
Obligations by collecting them from any other person liable for them and
the Secured Party may release, modify or waive any collateral provided by
any other person to secure any of the Secured Obligations, all without
affecting the Secured Party's rights against the Debtor. The Debtor waives
any right it may have to require Secured Party to pursue any third person
for any of the Secured Obligations. Except to the extent required by
applicable law, the Secured Party will not be required to marshal any
Collateral or any guaranties of the Secured Obligations, or to resort to
any item of Collateral or any guaranty in any particular order, and the
Secured Party's rights with respect to the Collateral and any guaranties
will be cumulative and in addition to all other rights, however existing or
arising. To the extent permitted by applicable law, the Debtor irrevocably
waives, and agrees that it will not invoke or assert, any law requiring or
relating to the marshaling of Collateral or any other law which might cause
a delay in or impede the enforcement of the Secured Party's rights under
this Agreement or any other agreement.
6. MISCELLANEOUS
6.1 FURTHER ASSURANCES
At any time and from time to time upon the request of the Secured Party,
the Debtor will execute and deliver such further documents and instruments
and do such other acts as the Secured Party may reasonably request in order
to effect fully the purposes of this Agreement, to create, perfect,
maintain, and preserve a first-priority (except as described in the Credit
Agreement) security interest in the Collateral in favor of the Secured
Party for the benefit of the Secured Party, to facilitate any sale,
transfer or other disposition of Collateral and to make any sale, transfer
or other disposition of Collateral valid, binding, and in compliance with
applicable law.
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6.2 COSTS AND INDEMNITY
(a) The Debtor will pay to the Secured Party all costs incurred by the
Secured Party for the purpose of enforcing its rights under this
Agreement, including:
(i) costs of foreclosure and of disposition and sale of the
Collateral;
(ii) costs of maintaining or preserving the Collateral or assembling
it or preparing it for sale;
(iii) costs of obtaining money damages; and
(iv) fees and expenses of attorneys employed by the Secured Party for
any purpose related to this Agreement or the Secured Obligations,
including consultation, drafting documents, sending notices or
instituting, prosecuting or defending litigation or arbitration.
(b) The Debtor agrees to indemnify the Secured Party and its respective
affiliates, directors, officers, representatives and agents (each an
INDEMNIFIED PARTY) from and against all claims, liabilities,
obligations, losses, damages, penalties, judgments, costs and expenses
of any kind (including attorney's fees and expenses) which may be
imposed on, incurred by or asserted against any of them by any person
in any way relating to or arising out of:
(i) this Agreement;
(ii) the Collateral;
(iii) the Secured Party's security interest in the Collateral;
(iv) any Event of Default;
(v) any action taken or omitted by the Secured Party under this
Agreement or any exercise or enforcement of rights or remedies
under this Agreement; or
(vi) any sale or other disposition of, or any realization on,
Collateral,
but the Debtor will not be liable to an indemnified party to the
extent any liability results from that indemnified party's gross
negligence or willful misconduct. Payment by an indemnified party will
not be a condition precedent to the obligations of the Debtor under
this indemnity.
(c) This Clause 6.2 (Costs and indemnity) will survive the initial
Utilization Date, the making and repayment of the Credits and any
novation, transfer or assignment of the Credits.
6.3 SUCCESSORS
This Agreement shall be binding upon and inure to the benefit of the Debtor
and the Secured Party and their respective successors and assigns, except
that the Debtor may not assign or transfer all or any part of its rights or
obligations under this Agreement without the prior written consent of the
Secured Party, and any assignment by the Debtor in violation of this
provision shall be void and of no effect. The Debtor waives and will not
assert against any assignee of the Secured Party any claims, defenses or
set-offs which the Debtor could assert against the Secured Party except for
defenses which cannot be waived under applicable law.
12
6.4 AMENDMENTS AND WAIVERS
Any term of this Agreement may be amended or waived only by the written
agreement of the Debtor and the Secured Party.
6.5 RIGHTS CUMULATIVE
The rights and remedies of the Secured Party under this Agreement:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under applicable law;
and
(c) may be waived only in writing and specifically.
The Secured Party's delay in exercising, or failure to exercise, any right
or remedy under this Agreement is not a waiver of that right or remedy.
6.6 SEVERABILITY
If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(b) the legality, validity or enforceability in any other jurisdiction of
that or any other provision of this Agreement.
6.7 COUNTERPARTS
This Agreement may be executed in counterpart, and this has the same effect
as if the signatures on the counterparts were on a single copy of this
Agreement.
6.8 NOTICES
(a) All notices or other communications under or in connection with this
Agreement shall be given in writing. Any such notice will be deemed to
be given:
(i) if by mail or courier, when delivered; and
(ii) if by facsimile, when sent with confirmation of transmission,
except that a notice given on a non-working day or after business
hours in the place of receipt will only be deemed to be given on the
next working day in that place.
(b) The address and facsimile number of the Debtor are:
Address: 000 Xxxxx Xxx Xxxxxx
Xxxxxxxxx, XX 00000
XXX
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Fax number: x0 000 000 0000
Attention: Chief Executive Officer
(c) The address and facsimile number of the Secured Party are:
Address: PO Box 957
Road Town, Tortola
British Virgin Islands
Attention: The Directors
(d) Either party may change its address or facsimile number for notices by
a notice to the other party given in accordance with this Clause 6.8.
6.9 COMPLETE AGREEMENT
This Agreement contains the complete agreement between the parties on the
matters to which it relates and supersedes all prior commitments,
agreements and understandings, whether written or oral, on those matters.
6.10 WAIVER OF JURY TRIAL
THE DEBTOR AND THE SECURED PARTY WAIVE ANY RIGHTS THEY MAY HAVE TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. In the event
of litigation, this Agreement may be filed as a written consent to a trial
by the court.
6.11 GOVERNING LAW
This Agreement is governed by the laws of the State of California, except
to the extent that the validity, perfection or enforcement of any security
interest granted under this Agreement or any remedy in respect of any
particular Collateral is mandatorily governed by the law of another
jurisdiction.
The undersigned, intending to be legally bound, have executed and delivered this
Agreement on the date stated at the beginning of this Agreement.
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SIGNATORIES
DEBTOR
SIGNATURE EYEWEAR, INC.
By:
---------------------------------
Name: Xxxxxxx Xxxxxx
-------------------------------
Title: Chief Financial Officer
-------------------------------
SECURED PARTY
BLUEBIRD FINANCE LIMITED
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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SCHEDULE 1
COMMERCIAL TORT CLAIMS
None.
16
SCHEDULE 2
INTELLECTUAL PROPERTY
TRADEMARKS
1. Intuition
2. Bravado
3. Latitudes
4. Lifescape
5. Search
6. Small Print
7. Kensington & Xxxxx Riding Club and Design
17
SCHEDULE 3
COUNTRIES AND STATES IN WHICH COLLATERAL CONSISTING OF GOODS IS LOCATED
1. Belgium
2. California
3. Texas
18
