TEMPORARY DEFERRAL AGREEMENT

THIS TEMPORARY DEFERRAL AGREEMENT (this "Temporary Deferral Agreement"), dated
as of August 28, 2003, is by and among BMC Industries, Inc., a Minnesota
corporation ("Borrower"), the several banks and other financial institutions set
forth on the signature pages hereto in their capacities as lenders under the
Credit Agreement (as defined below), DEUTSCHE BANK TRUST COMPANY AMERICAS
(formerly named Bankers Trust Company), as Agent for the Lenders (in such
capacity, the "Agent") and as a Lender, and Bank One, NA, as Documentation Agent
and a Lender.

W I T N E S S E T H :

    WHEREAS, Borrower, Lenders and Agent are parties to that certain Third
Amended and Restated Credit Agreement dated as of September 27, 2002 (as
amended, restated, supplemented or otherwise modified and in effect from time to
time, the "Credit Agreement"), pursuant to which Lenders have provided to
Borrower credit facilities and other financial accommodations;

    WHEREAS, Borrower, Lenders and Agent executed an Agreement and Temporary
Waiver dated as of June 30, 2003 (the "Waiver");

    WHEREAS, Borrower, Lenders and Agent executed a First Amended Agreement and
Temporary Waiver dated as of July 15, 2003 (the "First Amended Waiver");

    WHEREAS, the Borrower, Lenders and Agent executed a Temporary Deferral
Agreement dated as of July 30, 2003 (the "Original Temporary Deferral
Agreement") whereby the Agent and Lenders agreed to defer certain interest
coming due under the Credit Agreement; and

    WHEREAS, Borrower has requested that Agent and Lenders continue to defer
certain payments of interest coming due under the Credit Agreement as set forth
herein and Lenders and Agent are agreeable to the same, subject to the terms and
conditions hereof.

    NOW, THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, and other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:

    1.               Defined Terms.  Terms capitalized herein and not otherwise
defined herein are used with the meanings ascribed to such terms in the Credit
Agreement. 

    2.               Temporary Deferral.  (a)  Subject to the conditions set
forth in Section 6 hereof, Agent and Lenders hereby temporarily defer during the
Deferral Period (as defined below) the interest payments due and owing by the
Borrower on each of the dates set forth on Annex A to this Deferral Agreement
(the "Temporary Interest Deferral") provided that all such interest payments
shall be immediately due and owing in full upon the last day of the Deferral
Period.

                     For purposes of this Temporary Deferral Agreement,
"Deferral Period" means the period commencing on the Effective Date and
terminating on the earliest of (a) September 15, 2003; and (b) the occurrence of
an Additional Default (as defined below) under the Loan Documents. 

                        (b)       Nothing herein shall limit or restrict in any
way the rights and remedies of Agent or any Lender with respect to any Unmatured
Event of Default or Event of Default other than the Events of Default which
would exist absent this Temporary Deferral Agreement (including any breach by
the Borrower of any covenant contained in Section 4 of this Agreement)
(collectively, the "Additional Defaults" and, individually, each an "Additional
Default").

                        (c)            Notwithstanding the agreement under this
Temporary Deferral Agreement or anything in the Credit Agreement to the
contrary, the Borrower hereby acknowledges and agrees that during the Deferral
Period no Revolving Lender shall be obligated to make Revolving Loans pursuant
to the terms and conditions of the Credit Agreement.

                        (d)            BORROWER EXPRESSLY ACKNOWLEDGES AND
AGREES THAT THE AGREEMENTS SET FORTH IN THIS SECTION 2 ARE EFFECTIVE ONLY DURING
THE DEFERRAL PERIOD AND THAT, AFTER THE TERMINATION OF THE DEFERRAL PERIOD, THE
CREDIT AGREEMENT WILL BE IN MATERIAL DEFAULT AND AGENT AND LENDERS WILL BE FULLY
ENTITLED IMMEDIATELY TO EXERCISE THEIR RIGHTS AND REMEDIES UNDER THE CREDIT
AGREEMENT, THE LOAN DOCUMENTS OR APPLICABLE LAW WITHOUT REGARD TO ANY MATTERS
TRANSPIRING DURING THE DEFERRAL PERIOD OR THE FINANCIAL CONDITION OR PROSPECTS
OF  BORROWER AND ITS SUBSIDIARIES.  BORROWER UNDERSTANDS THAT AGENT AND LENDERS
ARE EXPRESSLY RELYING ON THE TERMS OF THIS SECTION 2(d) AND WOULD NOT HAVE
ENTERED INTO THIS TEMPORARY DEFERRAL AGREEMENT BUT FOR BORROWER'S ACKNOWLEDGMENT
AND AGREEMENT IN THIS SECTION 2(d).

    3.               Other Agreements of the Parties.  Each of the Agent, the
Lenders and the Borrower hereby agree that until such time as the Required
Lenders otherwise consent in writing, the Borrower shall only be entitled to
elect Interest Periods of up to one month for any Notice of Borrowing or Notice
of Conversion or Continuation with respect to Eurodollar Loans.

     4.               Covenants of the Borrower.  The Borrower hereby further
covenants and agrees that it will (and that its failure to do so will be deemed
an immediate Event of Default under the Credit Agreement and an Additional
Default hereunder) pay promptly upon invoice thereof the fees and expenses of
counsel, advisors, consultants and other Persons retained by the Agent (or such
Persons) in connection with the proposed restructuring of the Borrower,
including, without limitation, the fees and expenses of Winston & Strawn,
counsel to the Agent, and Alvarez and Marsal, Inc.    

    5.               Representations and Warranties.  In order to induce Agent
and Lenders to enter into this Temporary Deferral Agreement, Borrower hereby
represents and warrants to Agent and Lenders, in each case after giving effect
to this Temporary Deferral Agreement, as follows:

                 (a)             Borrower has the right, power and capacity and
has been duly authorized and empowered by all requisite corporate and
shareholder action to enter into, execute, deliver and perform this Temporary
Deferral Agreement and all agreements, documents and instruments executed and
delivered pursuant to this Temporary Deferral Agreement.

                 (b)            This Temporary Deferral Agreement constitutes
Borrower's legal, valid and binding obligation, enforceable against it, except
as enforcement thereof may be subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at law or
otherwise).                

                 (c)             The representations and warranties contained in
the Credit Agreement and the other Loan Documents are true and correct in all
material respects at and as of the Effective Date as though made on and as of
the Effective Date (except to the extent specifically made with regard to a
particular date, in which case such representation and warranty is true and
correct in all material respects as of such earlier date).                

                (d)            Borrower's execution, delivery and performance of
this Temporary Deferral Agreement do not and will not violate its Articles or
Certificate of Incorporation or By-laws, any law, rule, regulation, order, writ,
judgment, decree or award applicable to it or any contractual provision (except
as otherwise expressly waived hereby) to which it is a party or to which it or
any of its property is subject.                

                (e)             No authorization or approval or other action by,
and no notice to or filing or registration with, any governmental authority or
regulatory body (other than those which have been obtained and are in force and
effect) is required in connection with the execution, delivery and performance
by Borrower or any other Credit Party of this Temporary Deferral Agreement and
all agreements, documents and instruments executed and delivered pursuant to
this Temporary Deferral Agreement.                

                (f)              No Event of Default or Unmatured Event of
Default exists under the Credit Agreement (except as is the subject of a prior
waiver under the First Amended Waiver or deferral under the Original Temporary
Deferral Agreement).  

    6.               Conditions to Effectiveness of Temporary Deferral
Agreement. This Temporary Deferral Agreement shall become effective on the date
(the "Effective Date") each of the following conditions precedent is satisfied:

                (a)             Execution and Delivery of Temporary Deferral
Agreement. Borrower, Agent and each Lender shall have executed and delivered
this Temporary Deferral Agreement to the Agent.                

                (b)            Execution and Delivery of Loan Documents.  Agent
shall have received each of the following documents, all of which shall be
satisfactory in form and substance to Agent and its counsel:

                        (1)            A certificate of a Responsible Officer of
Borrower in the form of Exhibit A attached hereto;

                        (2)            A Reaffirmation of Guaranty executed by a
Responsible Officer of each Subsidiary Guarantor in the form of Exhibit B
attached hereto.                 

                (c)             Representations and Warranties.  The
representations and warranties of the Borrower and the other Credit Parties
contained in this Temporary Deferral Agreement, the Credit Agreement and the
other Loan Documents shall be true and correct in all material respects as of
the Effective Date, with the same effect as though made on such date, except to
the extent that any such representation or warranty relates to an earlier date,
in which case such representation or warranty shall be true and correct in all
material respects as of such earlier date.                

                (d)            No Defaults. Other than the Unmatured Events of
Default and Events of Default which were the subject of prior waiver pursuant to
the First Amended Waiver or prior deferral under the Original Temporary Deferral
Agreement, no Unmatured Event of Default or Event of Default under the Credit
Agreement shall have occurred and be continuing.

    7.               Miscellaneous. The parties hereto hereby further agree as
follows:                

                (a)             Costs, Expenses and Taxes.  Borrower hereby
agrees to pay all reasonable fees, costs and expenses of Agent incurred in
connection with the negotiation, preparation and execution of this Temporary
Deferral Agreement and the transactions contemplated hereby, including, without
limitation, the reasonable fees and expenses of Winston & Strawn, counsel to
Agent.                

                (b)            Counterparts.  This Temporary Deferral Agreement
may be executed in one or more counterparts any of which may be a facsimile,
each of which, when executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same document with the same force and effect as if the signatures of all of the
parties were on a single counterpart, and it shall not be necessary in making
proof of this Temporary Deferral Agreement to produce more than one (1) such
counterpart.                

                (c)             Headings.  Headings used in this Temporary
Deferral Agreement are for convenience of reference only and shall not affect
the construction of this Temporary Deferral Agreement.                

                (d)            Integration.  This Temporary Deferral Agreement
and the Credit Agreement (as modified hereby) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof.
               

                (e)             Governing Law.  THIS TEMPORARY DEFERRAL
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO
CONFLICT OF LAWS PRINCIPLES).                

                (f)              Binding Effect.  This Temporary Deferral
Agreement shall be binding upon and inure to the benefit of and be enforceable
by Borrower, Agent and Lenders and their  respective successors and assigns. 
Except as expressly set forth to the contrary herein, this Temporary Deferral
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than Borrower, Agent and the Lenders and their respective
successors and permitted assigns.

                 (g)             Temporary Deferral Agreement.  The parties
hereto agree and acknowledge that nothing contained in this Temporary Deferral
Agreement in any manner or respect limits or terminates any of the provisions of
the Credit Agreement or any of the other Loan Documents other than as expressly
set forth herein and further agree and acknowledge that the Credit Agreement and
each of the other Loan Documents remain and continue in full force and effect
and are hereby ratified and confirmed.  Except to the extent expressly set forth
herein, the execution, delivery and effectiveness of this Temporary Deferral
Agreement shall not operate as a waiver of any rights, power or remedy of
Lenders or Agent under the Credit Agreement or any other Loan Document, nor
constitute a waiver of any provision of the Credit Agreement or any other Loan
Document.  No delay on the part of any Lender or Agent in exercising any of
their respective rights, remedies, powers and privileges under the Credit
Agreement or any of the Loan Documents or partial or single exercise thereof,
shall constitute a waiver thereof.  Borrower acknowledges and agrees that this
Temporary Deferral Agreement constitutes a "Loan Document" for purposes of the
Credit Agreement, including, without limitation, Sections 9.1 and 11.1 of the
Credit Agreement.  None of the terms and conditions of this Temporary Deferral
Agreement may be changed, waived, modified or varied in any manner, whatsoever,
except in accordance with Section 11.1 of the Credit Agreement.

            (h)            Release of Claims.  Borrower hereby represents and
warrants that there are no liabilities, claims, suits, debts, losses, causes of
action, demands, rights, damages or costs, or expenses of any kind, character or
nature whatsoever, known or unknown, fixed or contingent (collectively, the
"Claims"), which Borrower may have or claim to have against Agent or any Lender,
or any of their respective affiliates, agents, employees, officers, directors,
representatives, attorneys, successors, or assigns (collectively, the "Lender
Released Parties"), which might arise out of or be connected with any act of
commission or omission of the Lender Released Parties existing or occurring on
or prior to the date of this Agreement, including without limitation any Claims
arising with respect to the Credit Agreement or any Loan Documents.  Borrower
hereby releases, acquits, and forever discharges the Lender Released Parties
from any and all Claims that Borrower may have or claim to have, relating to or
arising out of or in connection with the Credit Agreement or any Loan Documents
or any other agreement or transaction contemplated thereby or any action taken
in connection therewith from the beginning of time up to and including the date
of the execution and delivery of this Agreement.  Borrower further agrees
forever to refrain from commencing, instituting, or prosecuting any lawsuit,
action, or other proceeding against any Lender Released Parties with respect to
any and all Claims.

[Signature Page Follows]

 

IN WITNESS WHEREOF, the parties hereto have caused this Temporary Deferral
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first written above.

BMC INDUSTRIES, INC.

By:  /s/C. E. Petersen           

Name:    C. E. Petersen

Title:  SVP and CFO

 

DEUTSCHE BANK TRUST COMPANY AMERICAS, in its individual capacity and as Agent

 

 

By:  /s/Clark G. Peterson

Name:  Clark G. Petersen 

Title: Vice President

 

BANK ONE, NA (Main Office Chicago)

 

individually as a Lender and as documentation agent

 

By:  /s/Henry W. Howe

Name:  Henry W.  Howe

Title:  AVP

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (f/k/a Norwest Bank Minnesota,
National Association)

By:  /s/Scott J. Manookin

Name:  Scott J. Manookin

Title:  Vice President

HARRIS TRUST AND SAVINGS BANK

By:  /s/Lawrence A. Mizera

Name:  Lawrence A. Mizera

Title:  Vice President

CREDIT AGRICOLE INDOSUEZ

By:  /s/Leo von Reissig

Name:  Leo Von Reissig

Title:  Vice President

 

By:  /s/Kathleen Sweeney

Name:  Kathleen Sweeney

Title:  Vice President

WACHOVIA BANK, N.A.

By:  /s/Jason Consoli

Name:  Jason Consoli

Title:  Vice President

UNION BANK OF CALIFORNIA, N.A.

By:  /s/Jeffrey Mumm

Name:  Jeffrey Mumm

Title:  Vice President

U.S. BANK NATIONAL ASSOCIATION

By:  /s/David Kopolow

Name:  David Kopolow

Title:  SVP

 

 

--------------------------------------------------------------------------------

EXHIBIT A

CERTIFICATE OF OFFICER

        I, the undersigned, Chief Financial Officer and Secretary of BMC
Industries, Inc., a Minnesota corporation (the "Borrower"), in accordance with
Section 6(b) of that certain Temporary Deferral Agreement dated as of August 28,
2003 (the "Agreement") among  the Borrower, Deutsche Bank Trust Company
Americas, as Agent and the financial institutions party to the Credit Agreement
(as defined in the Agreement), do hereby certify on behalf of Borrower, the
following:

1.         The representations and warranties set forth in Section 5 of the
Agreement are true and correct in all material respects as of the date hereof
except to the extent such representations and warranties are expressly made as
of a specified date in which event such representations and warranties were true
and correct in all material respects as of such specified date;

2.         Other than the Unmatured Events of Default and Events of Default
which were the subject of prior waiver pursuant to the First Amended Waiver or
deferral pursuant to the Original Temporary Deferral Agreement, no Unmatured
Event of Default or Event of Default under the Credit Agreement has occurred and
is continuing; and

3.         The conditions of Section 6 of the Agreement have been fully
satisfied.

Unless otherwise defined herein, capitalized terms used herein shall have the
meanings set forth in the Agreement.

[signature page follows]

IN WITNESS WHEREOF, the undersigned has duly executed and delivered on behalf of
Borrower this Certificate of Officer on this 28th day of August, 2003.

 

BMC INDUSTRIES, INC.

 

 

By:    /s/C. E. Petersen                                 

Name:  C. E. Petersen

Title:  SVP and CFO

 

 

--------------------------------------------------------------------------------

EXHIBIT B

REAFFIRMATION OF GUARANTY

Each of the undersigned acknowledges receipt of a copy of the Temporary Deferral
Agreement dated as of August 28, 2003 among the Borrower, Deutsche Bank Trust
Company Americas, as Agent and the financial institutions party to the Credit
Agreement (as defined in the Agreement) (the "Agreement").  Capitalized terms
used herein shall, unless otherwise defined herein, have the meanings provided
in the Credit Agreement, as such term is defined in the Agreement.  Each of the
undersigned hereby consents to such Agreement and each of the transactions
referenced in the Agreement and hereby reaffirms its obligations under the
Subsidiary Guarantee Agreement.

Dated as of August 28, 2003.

 

VISION-EASE LENS, INC.,

                                                                       

as Guarantor

 

 

 

                       

By:  /s/C. E. Petersen         

                       

Name:  C. E. Petersen

                       

Title:  CFO

 

 

 

 

VISION-EASE LENS AZUSA, LLC,

                                                                       

as Guarantor

 

 

 

                       

By:  /s/C. E. Petersen

                       

Name:  C. E. Petersen 

                       

Title:  CFO

 

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ANNEX A

INTEREST PAYMENTS

 

BMC Industries

 

 

 

Interest Payment Date

Facility

Interest Due

 

July 30, 2003                

Term B

$602,043.70

 

July 31, 2003

Term A

$   9,883.76

 

July 31, 2003

Term B       

$   7,462.59

 

July 31, 2003

Revolver

$ 21,189.24

 

August 7, 2003

Revolver

$ 46,769.10

 

August 29, 2003

Revolver

$  19,887.15

 

August 29, 2003

Term Loan A

$823,211.84

 

August 29, 2003

Term Loan A

$    9,276.40

 

August 29, 2003

Term Loan B

$    6,996.30

 

August 29, 2003

Term Loan B

$202,649.07

      September 8, 2003 Revolver $  48,277.78