AMENDED AND RESTATED LOAN AGREEMENT
Dated as of December 30, 1999
among
FAIRFIELD MANUFACTURING COMPANY, INC.,
The Lenders Named Herein,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent for the Lenders
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS 1
SECTION 1.1 DEFINED TERMS 1
SECTION 1.2 USE OF DEFINED TERMS 27
SECTION 1.3 ACCOUNTING TERMS 27
SECTION 1.4 ROUNDING 27
SECTION 1.5 EXHIBITS AND SCHEDULES 28
SECTION 1.6 MISCELLANEOUS TERMS 28
ARTICLE 2 AMOUNT AND TERMS OF CREDIT 28
SECTION 2.1 ADVANCES 28
SECTION 2.2 LETTERS OF CREDIT 29
SECTION 2.3 TERM LOANS 32
SECTION 2.4 SPECIAL ADVANCES BY LENDERS 32
SECTION 2.5 AGENT'S RIGHT TO ASSUME FUNDS AVAILABLE 32
SECTION 2.6 ACCOUNTING 32
SECTION 2.7 SINGLE LOAN 33
SECTION 2.8 SUBSEQUENT COMMITMENT INCREASES 33
ARTICLE 3 PRINCIPAL PAYMENTS; INTEREST; FEES 35
SECTION 3.1 PRINCIPAL PAYMENTS 35
SECTION 3.2TERMINATION OF COMMITMENT; VOLUNTARY PREPAYMENT OF TERM LOAN 35
SECTION 3.3 MANDATORY PREPAYMENTS 36
SECTION 3.4 INTEREST 37
SECTION 3.5 FIXED RATE ELECTIONS 37
SECTION 3.6 COMMITMENT FEE 38
SECTION 3.7 LETTER OF CREDIT FEES 38
SECTION 3.8 AGENT'S FEES 38
SECTION 3.9 INCREASED COST AND REDUCED RETURN 38
SECTION 3.10 LIBOR COSTS 39
SECTION 3.11 SPECIAL LIBOR CIRCUMSTANCES 40
SECTION 3.12 FUNDING LOSSES 40
SECTION 3.13 DEFAULT RATE 41
SECTION 3.14 PAYMENT AND COMPUTATION OF INTEREST 41
SECTION 3.15 NON-BUSINESS DAYS 42
SECTION 3.16 PAYMENT FREE OF TAXES 42
SECTION 3.17 FUNDING SOURCES 45
SECTION 3.18 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER 45
SECTION 3.19 SAVINGS CLAUSE 45
SECTION 3.20 PRO RATA TREATMENT 46
SECTION 3.21 MANNER AND TREATMENT OF PAYMENTS 46
SECTION 3.22 AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE 46
SECTION 3.23 SURVIVABILITY 47
ARTICLE 4 REPRESENTATIONS AND WARRANTIES 47
SECTION 4.1EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS 47
SECTION 4.2AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS 48
SECTION 4.3REQUIREMENTS OF LAW; PERFORMANCE OF CONTRACTUAL OBLIGATIONS 48
SECTION 4.4 NO GOVERNMENTAL APPROVALS REQUIRED 48
SECTION 4.5 SUBSIDIARIES 49
SECTION 4.6 FINANCIAL STATEMENTS 49
SECTION 4.7 NO OTHER LIABILITIES; NO MATERIAL ADVERSE EFFECT 49
SECTION 4.8 TITLE TO AND LOCATION OF PROPERTY 49
SECTION 4.9 INTANGIBLE ASSETS 50
SECTION 4.10 GOVERNMENTAL REGULATION 50
SECTION 4.11 LITIGATION; JUDGMENTS 50
SECTION 4.12 BINDING OBLIGATIONS 50
SECTION 4.13 NO DEFAULT 50
SECTION 4.14 ERISA 50
SECTION 4.15 REGULATIONS G AND U 52
SECTION 4.16 DISCLOSURE 52
SECTION 4.17 TAX LIABILITY 52
SECTION 4.18 SECURITY INTERESTS 53
SECTION 4.19 EMPLOYEE MATTERS 53
SECTION 4.20 SOLVENCY 53
SECTION 4.21 SUBORDINATION OF SUBORDINATED INDEBTEDNESS 53
SECTION 4.22 REAL PROPERTY 54
SECTION 4.23 ENVIRONMENTAL MATTERS 54
SECTION 4.24 OWNERSHIP OF CAPITAL STOCK 55
SECTION 4.25 BROKERS; TRANSACTION FEES 55
ARTICLE 5 AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING
REQUIREMENTS) 56
SECTION 5.1 USE OF PROCEEDS 56
SECTION 5.2PAYMENT OF TAXES AND OTHER POTENTIAL LIENS; COMPLIANCE WITH
RELATED AGREEMENTS 56
SECTION 5.3 PRESERVATION OF EXISTENCE 56
SECTION 5.4 MAINTENANCE OF PROPERTIES AND BUSINESS 57
SECTION 5.5 MAINTENANCE OF INSURANCE 57
SECTION 5.6 COMPLIANCE WITH LAWS 57
SECTION 5.7 INSPECTION RIGHTS 58
SECTION 5.8 AUDIT RIGHTS 58
SECTION 5.9 KEEPING OF RECORDS AND BOOKS OF ACCOUNT 58
SECTION 5.10COMPLIANCE WITH AGREEMENTS; PAYMENT OF INDEBTEDNESS 58
SECTION 5.11 ENVIRONMENTAL LAWS 58
SECTION 5.12 ADDITIONAL REAL PROPERTY COLLATERAL 60
SECTION 5.13 COLLECTIONS 60
ARTICLE 6 NEGATIVE COVENANTS 61
SECTION 6.1 DISPOSITION OF PROPERTY; APPLICATION OF PROCEEDS 61
SECTION 6.2 RESTRICTIONS ON FUNDAMENTAL CHANGES 62
SECTION 6.3 RESTRICTED PAYMENTS 63
SECTION 6.4 RESTRICTIONS ON AMENDMENTS, ETC. 64
SECTION 6.5 ERISA 65
SECTION 6.6 CHANGE IN NATURE OR CONDUCT OF BUSINESS 65
SECTION 6.7 LIENS 65
SECTION 6.8 INDEBTEDNESS 66
SECTION 6.9 TRANSACTIONS WITH AFFILIATES 68
SECTION 6.10 SALES AND LEASEBACKS 69
SECTION 6.11 MARGIN REGULATIONS 69
SECTION 6.12 INVESTMENTS 69
SECTION 6.13 FISCAL YEAR 69
SECTION 6.14 CASH MANAGEMENT SYSTEM 69
SECTION 6.15 CANCELLATION OF INDEBTEDNESS 69
SECTION 6.16 COMMINGLING 70
SECTION 6.17 RELATED AGREEMENTS; TAX ELECTION 70
SECTION 6.18 CAPITAL EXPENDITURES 70
SECTION 6.19 OPERATING LEASES 70
SECTION 6.20 CURRENT RATIO 70
SECTION 6.21 CONSOLIDATED FIXED CHARGE COVERAGE RATIO 70
SECTION 6.22 INTEREST COVERAGE RATIO 71
ARTICLE 7 INFORMATION AND REPORTING REQUIREMENTS 71
SECTION 7.1 FINANCIAL INFORMATION AND REPORTS 71
SECTION 7.2BORROWING BASE CERTIFICATES AND OTHER COLLATERAL REPORTING 73
SECTION 7.3 OPERATING LEASES; CAPITAL LEASES, ETC. 74
SECTION 7.4 OTHER SPECIFIC INFORMATION AND REPORTS 74
SECTION 7.5 OTHER INFORMATION AND REPORTS (GENERALLY) 77
ARTICLE 8 CONDITIONS 77
SECTION 8.1 CONDITIONS TO EFFECTIVENESS 77
SECTION 8.2 ANY ADVANCE, ETC. 79
ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT 79
SECTION 9.1 EVENTS OF DEFAULT 79
SECTION 9.2 REMEDIES UPON EVENT OF DEFAULT 82
ARTICLE 10 THE AGENT 84
SECTION 10.1APPOINTMENT AND AUTHORIZATION; NO FIDUCIARY RESPONSIBILITY 84
SECTION 10.2 AGENT AND AFFILIATES 84
SECTION 10.3 LENDERS' CREDIT DECISIONS 85
SECTION 10.4 ACTION BY AGENT 85
SECTION 10.5 LIABILITY OF AGENT 86
SECTION 10.6 INDEMNIFICATION 87
SECTION 10.7 SUCCESSOR AGENT 87
SECTION 10.8PROPORTIONATE INTEREST OF THE LENDERS IN ANY COLLATERAL 87
ARTICLE 11 MISCELLANEOUS 88
SECTION 11.1 CUMULATIVE REMEDIES; NO WAIVER 88
SECTION 11.2 AMENDMENTS; CONSENTS 88
SECTION 11.3 COSTS, EXPENSES AND TAXES 89
SECTION 11.4 NATURE OF LENDER'S OBLIGATIONS 90
SECTION 11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES 90
SECTION 11.6 NOTICES 90
SECTION 11.7 EXECUTION IN COUNTERPARTS 91
SECTION 11.8 BINDING EFFECT; ASSIGNMENT 92
SECTION 11.9 CONFIDENTIALITY OF CONFIDENTIAL INFORMATION 94
SECTION 11.10 SHARING OF SETOFFS 94
SECTION 11.11 INDEMNITY BY BORROWER 95
SECTION 11.12 NONLIABILITY OF LENDERS 96
SECTION 11.13 NO THIRD PARTIES BENEFITED 97
SECTION 11.14 RIGHT OF SETOFF - DEPOSIT ACCOUNTS 97
SECTION 11.15 FURTHER ASSURANCES 97
SECTION 11.16 INTEGRATION 98
SECTION 11.17 GOVERNING LAW 98
SECTION 11.18 SEVERABILITY OF PROVISIONS 98
SECTION 11.19 HEADINGS 98
SECTION 11.20 CONFLICT IN LOAN DOCUMENTS 98
SECTION 11.21 CHOICE OF FORUM 98
SECTION 11.22 CONSEQUENTIAL DAMAGES; WAIVER OF TRIAL BY JURY 100
SECTION 11.23 PURPORTED ORAL AMENDMENTS 100
SECTION 11.24 REFINANCINGS 100
EXHIBITS
A - BORROWER PLEDGE AGREEMENT
B - BORROWER SECURITY AGREEMENT
C - BORROWING BASE CERTIFICATE
D - COMPLIANCE CERTIFICATE
E - LANCER PLEDGE AGREEMENT
F - LOAN ASSIGNMENT
G - MORTGAGE
H - OPINION OF DEBEVOISE & ▇▇▇▇▇▇▇▇
I - PATENT SECURITY AGREEMENT
J - REQUEST FOR ADVANCE
K - REQUEST FOR FIXED RATE ELECTION
L - REQUEST FOR LETTER OF CREDIT
M - REVOLVING CREDIT NOTE
N - SUBSIDIARY GUARANTY
O - SUBSIDIARY SECURITY AGREEMENT
P - TERM NOTE
Q - TRADEMARK SECURITY AGREEMENT
R - U.S. TAX COMPLIANCE CERTIFICATE
SCHEDULES
4.5 JOINT VENTURES
4.7 NO MATERIAL ADVERSE EFFECT
4.8 LOCATIONS OF PROPERTY
4.9 PATENTS AND TRADEMARKS
4.11 LITIGATION
4.14 PENSION PLANS
4.17 TAX MATTERS
4.19 LABOR MATTERS
4.22 REAL PROPERTY
4.23 ENVIRONMENTAL MATTERS
4.24 OWNERSHIP OF CAPITAL STOCK
5.5 MINIMUM INSURANCE REQUIREMENTS
5.11 REMEDIAL ACTIONS
6.7 EXISTING LIENS
6.8 EXISTING INDEBTEDNESS
6.14 BANK ACCOUNTS
AMENDED AND RESTATED LOAN AGREEMENT
Dated as of December 30, 1999
THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is entered into as
of the date set forth above by and among FAIRFIELD MANUFACTURING COMPANY, INC.,
an Indiana corporation having its principal place of business and chief
executive ▇▇▇▇▇▇ ▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower"),
the lenders named herein (individually, a "Lender" and collectively, the
"Lenders") and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
having an office at Suite 600, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("GE Capital"), as agent for itself and the other Lenders hereunder (GE Capital,
in such capacity, the "Agent").
RECITALS
A. Borrower, Lenders and the Agent are parties to a certain Loan
Agreement, dated as of July 7, 1993, as amended pursuant to a First
Amendment to Loan Agreement, dated as of September 30, 1994, a Second
Amendment to Loan Agreement,dated as of March 30, 1995, but effective as of
December 31, 1994, a Third Amendment to Loan Agreement, dated as of
March 31, 1995, a Fourth Amendment to Loan Agreement, dated as of
December 5, 1996, a Fifth Amendment to Loan Agreement, dated as of
February 26, 1997, a Sixth Amendment to Loan Agreement, dated as of
October 12, 1998, and a Seventh Amendment to Loan Agreement dated as of
May 19, 1999 (the "Existing Loan Agreement").
B. Borrower, Lenders and the Agent wish to enter into this Agreement in
order to amend the Existing Loan Agreement in certain respects and to
restate the Existing Loan Agreement, as so amended, in its entirety, in order
to incorporate in a single document the Existing Loan Agreement and all
amendments thereto and to eliminate references to transactions that have been
completed.
AGREEMENT
In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement, the following
terms shall have the meanings set forth respectively after each:
"Account Debtor" means any Person who is or who may become obligated to
Borrower under, with respect to, or on account of, an Account.
"Accounts" means all rights to payment for Inventory sold or for services
rendered arising in the ordinary course of Borrower's business.
"Acquisition" means any transaction or series of related transactions by
which Borrower and/or any Subsidiary:
(a) acquires any going business or all or substantially all of the assets
of any Person, or a line of business or division of a Person, whether through
the purchase of assets, merger or otherwise;
(b) directly or indirectly acquires control of at least a majority (in number
of votes) of the Capital Stock of a corporation having ordinary voting power in
the election of directors of such corporation; or
(c) directly or indirectly acquires a twenty percent (20%) or more ownership
interest in any partnership or joint venture.
"Advance" means an advance made or to be made to Borrower by the Lenders,
each according to that Lender's Pro Rata Share of the Commitment, pursuant to
Section 2.1.
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, ten percent (10%) or more of the Capital Stock
having ordinary voting power in the election of directors of such Person, (b)
each Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person and (c) each of such Person's officers,
directors, joint venturers and partners. For purposes of this definition,
"control" of a Person means the possession, directly or indirectly, of the power
to direct or cause the direction of its management or policies, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" means GE Capital, in its capacity as agent for itself and any other
Lenders hereunder, and any successor agent appointed pursuant to Section 10.7.
"Agent's Deposit Account" means the Agent's deposit account number 50-199-
839 maintained at Bankers Trust Company, New York, New York, ABA #▇▇▇▇-▇▇▇▇-▇,
or such other deposit account maintained at such bank or at such other bank as
shall be designated by the Agent from time to time.
"Agreement" means this Amended and Restated Loan Agreement, either as
originally executed or as it may from time to time be supplemented, modified,
amended, amended and restated, renewed, extended or supplanted.
"Blocked Account Agreements" means, collectively, the agreements executed
by Borrower, the Agent and each bank at which a Collection Account is
maintained, each in form and substance satisfactory to the Agent, pursuant to
which, among other things (a) Borrower has granted a Lien on each Collection
Account in favor of the Agent for the benefit of Lenders, (b) the Agent has
authorized each bank at which a Collection Account is maintained, prior to
receipt of notice from the Agent that a Triggering Event has occurred, to remit
all Collections on a daily basis to Borrower's Deposit Account and (c) Borrower
has directed each bank at which a
Collection Account is maintained, from and after receipt by such bank of notice
from the Agent that a Triggering Event has occurred, to remit all collections in
such Collection Account to the Agent's Deposit Account.
"Borrower" means Fairfield Manufacturing Company, Inc., a Delaware
corporation having its principal place of business and chief executive office at
the address set forth in the introductory paragraph to this Agreement.
"Borrower's Deposit Account" means a deposit account to be maintained by
Borrower with a bank selected by Borrower and reasonably acceptable to the
Agent. The Borrower's Deposit Account on the Closing Date is account number
0011649920 maintained with BancOne, Lafayette, Indiana. Any substitution
therefor subsequent to the Closing Date will be identified to the Agent by a
Senior Officer of Borrower in a letter in similar form.
"Borrower Pledge Agreement" means the stock pledge agreement, covering all
Capital Stock owned by Borrower, executed by Borrower on the Original Closing
Date, as amended prior to the date hereof and as the same from time to time may
be supplemented, modified, amended, renewed, extended or supplanted. Copies of
such agreement and all amendments thereto through the Closing Date are attached
hereto as Exhibit A.
"Borrower Security Agreement" means the Amended and Restated Security
Agreement, covering the Property of Borrower specified therein, executed by
Borrower on March 31, 1995, as amended prior to the date hereof and as the same
from time to time may be supplemented, modified, amended, renewed, extended or
supplanted. Copies of such agreement and all amendments thereto through the
Closing Date are attached hereto as Exhibit B.
"Borrowing Base" means, as of any date of determination, an amount
determined by the Agent to be equal to the sum of (a) up to 80% of Eligible
Accounts, plus (b) up to 60% of Eligible Inventory consisting of finished goods,
finished parts or raw materials, plus (c) up to 20% of Eligible Inventory
consisting of work in process, all determined by the Agent with reference to the
most recent Borrowing Base Certificate furnished to the Agent pursuant to
Section 7.2(a) and the additional Collateral reporting furnished to the Agent
pursuant to Section 7.2(b), adjusted on a daily basis at such time as a
Triggering Event has occurred and is continuing to reflect Collections and the
information contained in the daily Collateral reporting furnished to the Agent
pursuant to Section 7.2(c).
The Agent shall have the right to establish reserves against the Borrowing
Base as to such matters, events, conditions or contingencies as to which the
Agent, based on the Agent's customary credit considerations, determines reserves
should be established hereunder, including, without limitation, reserves with
respect to (a) taxes, charges and assessments of any Governmental Agency and
Liens, (b) sums as to which the Agent is permitted to make Advances on
Borrower's behalf under Section 2.4, (c) anticipated costs of repair,
replacement or restoration of damaged or destroyed Property in accordance with
the provisions of Section 6 of the Borrower Security Agreement and Sections 7
and 8 of the Mortgage, (d) expenses incurred by Borrower in connection with the
transactions contemplated to occur on the Closing Date which have not been paid
by Borrower on or before such date and (e) potential liabilities for responding
to Environmental Claims, potential costs of Remedial Actions and potential
decreases in the
value of Collateral, in each case occurring as a result of a Release of
Contaminants or violations of Environmental Laws at or with respect to
Borrower's Real Property.
Borrower acknowledges that the advance ratios against Eligible Accounts and
Eligible Inventory provided for in this definition of Borrowing Base have been
established based upon the Agent's determination of the loan values of
Borrower's Eligible Accounts and Eligible Inventory as of the date of this
Agreement, and that the Agent may, at any time or times hereafter, based on the
Agent's customary credit considerations, reduce such advance ratios to reflect
any material adverse change in such loan values not reflected in the criteria
for establishing Eligible Accounts and Eligible Inventory set forth in the
definitions thereof or in the reserves against the Borrowing Base and against
Eligible Accounts and Eligible Inventory which the Agent is authorized to
establish hereunder.
"Borrowing Base Certificate" means a Borrowing Base Certificate in the form
of Exhibit C, properly completed and executed by a Responsible Official of
Borrower.
"Business Day" means any day that is not a Saturday, a Sunday, a day on
which banks are required or authorized to be closed in the State of New York or
the State of Indiana or a day on which the Agent is closed for business.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures by Borrower and its Subsidiaries for the acquisition or leasing
pursuant to Capital Leases of fixed or capital assets or additions to Equipment
(including, but not limited to, replacements, capitalized repairs and
improvements during such period) which should be capitalized under GAAP on a
consolidated balance sheet of Borrower and its Subsidiaries. For the purpose of
this definition, expenditures for Equipment which is purchased simultaneously
with the trade-in, sale or similar disposition of existing Equipment owned by
Borrower or any of its Subsidiaries or with insurance proceeds shall be included
in Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such Equipment for such Equipment
being traded in at such time (or proceeds of resale or similar recoveries) or
the amount of such insurance proceeds, as the case may be.
"Capital Lease" means, at the time any determination thereof is to be made,
any lease of property, real or personal, in respect of which the present value
of the minimum rental commitment would be capitalized on a balance sheet of the
lessee in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock or partnership
interests.
"Cash" means all monetary items (including currency, coin and bank demand
deposits) that are treated as cash under GAAP.
"Cash Collateral Account" has the meaning set forth in Section 2.2(i).
"Cash Equivalents" means (a) securities issued or fully guaranteed or
insured by the United States Government or any agency thereof having maturities
of not more than one (1) year after the date of acquisition, (b) certificates of
deposit, time deposits, Eurodollar time deposits and bankers' acceptances having
maturities not more than one (1) year after the date of issuance
or creation, issued by any financial institution that is a member of the Federal
Reserve System having combined capital, surplus and undivided profits
aggregating not less than Five Hundred Million Dollars ($500,000,000) at the
time of investment, (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Corporation or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. or an
equivalent rating category of another nationally recognized rating agency and in
either case having a maturity of 365 days or less, (d) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the government of the United States of America
or issued by any agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within 365 days from the date of
acquisition; provided that the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions With Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985, and (e) investments in money market funds
with assets of Five Billion Dollars ($5,000,000,000) or greater.
"Certificate of Designations" means the Certificate of Designations
relating to the Exchangeable Preferred Stock, dated June 16, 1997, as in effect
in the Closing Date.
"Change of Control" means (a) the sale, in one or a series of related
transactions, of all or substantially all of Lancer's or Borrower's assets as an
entirety to any Person or related group of Persons, (b) except as permitted
under Section 6.2, the merger or consolidation of Lancer or Borrower with or
into another Person or the consolidation or merger of any other Person with or
into Lancer or Borrower, (c) the failure of Lancer at any time (i) to maintain
in the aggregate a direct or indirect beneficial interest in Borrower at least
equal to 50% of the entire beneficial equity interest held by all Persons in
Borrower or (ii) to own beneficially, directly or indirectly, Capital Stock
representing voting control of Borrower, or (d) a "Change of Control" as defined
in the Senior Subordinated Note Indenture or any other indenture or governing
instrument with respect to any Subordinated Indebtedness.
"Closing Date" means the Business Day on which the conditions set forth in
Article 8 are satisfied and this Agreement becomes effective.
"Code" means the Internal Revenue Code of 1986, as amended or replaced and
as in effect from time to time, and any regulations promulgated pursuant thereto
and rulings issued thereunder.
"Collateral" means, collectively, all of the present and future right,
title and interest of Borrower and each Subsidiary in and to their respective
Property subjected to the Liens, or intended to be subjected to the Liens,
created by the Collateral Documents, which Collateral shall include, but is not
limited to, Borrower's and each Subsidiary's accounts, inventory, equipment,
instruments, patents, patent licenses, trademarks, trademark licenses, other
intellectual property, contract rights, documents, general intangibles, Real
Property and other Property, and proceeds of any of the foregoing.
"Collateral Documents" means, collectively, the Security Agreements, the
Mortgage, the Trademark Security Agreement, the Patent Security Agreement, the
Borrower Pledge Agreement and any other pledge agreement, security agreement,
assignment, deed of trust, mortgage, deed
to secure debt or similar instrument executed by Borrower or any Subsidiary in
favor of the Agent for the benefit of the Lenders to secure the Obligations.
"Collection Accounts" means one or more lockbox or deposit accounts
maintained in Borrower's name at one or more banks selected by Borrower and
acceptable to the Agent, in its sole discretion, for the collection of proceeds
of Accounts and Inventory of Borrower and of other Collateral, each of which
shall be subject to a Blocked Account Agreement.
"Collections" means the collected balance from time to time of all proceeds
of Accounts and Inventory deposited to the Collection Accounts pursuant to the
terms and conditions of the Blocked Account Agreements.
"Commitment" means Twenty Million Dollars ($20,000,000), as such amount may
be increased to Forty Million Dollars ($40,000,000) pursuant to the Subsequent
Commitment Increases provided for in Section 2.8, unless and until reduced to
zero pursuant to Section 3.2(a).
"Commitment Letter" means the commitment letter dated as of May 11, 1993
between Borrower and GE Capital.
"Commitment Termination Date" means the earliest of (a) the Maturity Date,
(b) the date of termination of the Lenders' Commitment by Borrower pursuant to
Section 3.2(a), and (c) the date of termination of the Lenders' Commitment by
the Agent pursuant to Section 9.2.
"Compliance Certificate" means a compliance certificate in the form of
Exhibit D properly completed and executed by a Senior Officer of Borrower.
"Condemnation" means any condemnation proceeding, exercise of the right of
eminent domain or conveyance of Property in lieu of or in settlement of any
condemnation proceeding or exercise of the right of eminent domain.
"Consolidated Cash Flow" means, for any period, without duplication, the
sum of: (a) Consolidated EBITDA for such period, plus (b) all payments made by
Borrower and its Subsidiaries pursuant to Operating Leases during such period,
less (c) Capital Expenditures made by Borrower and its Subsidiaries during such
period, plus (d) all Tax Capital Contributions made to Borrower during such
period and all other capital contributions made to Borrower during such period
by any of its Affiliates, in each case determined on a consolidated basis in
accordance with GAAP.
"Consolidated Current Assets" means, at any date, all amounts which would,
in conformity with GAAP, be included under current assets on a consolidated
balance sheet of Borrower and its Subsidiaries as at such date; provided, that
such amounts shall not include (a) any amounts for any Indebtedness owing by an
Affiliate of Borrower, unless such Indebtedness arose in connection with the
sale of goods or other property in the ordinary course of business and would
otherwise constitute current assets in conformity with GAAP, (b) the equity
value of any shares of stock issued by an Affiliate of Borrower, (c) the cash
surrender value of any life insurance policy, (d) any intangibles, (e) Cash and
Cash Equivalents or (f) LIFO reserves established with respect to current
Inventory.
"Consolidated Current Liabilities" means, at any date, all amounts which
would, in conformity with GAAP, be included under current liabilities on a
consolidated balance sheet of Borrower and its Subsidiaries as at such date;
provided, that such amounts shall include (a) all Indebtedness of any such
Person payable on demand or, at the option of the Person to whom such
Indebtedness is owed, not more than twelve months after such date and (b) all
reserves in respect of liabilities or Indebtedness payable on demand or, at the
option of the Person to whom such Indebtedness is owed, not more than twelve
months after such date, the validity of which is contested at such date, but
shall exclude (w) the current portion of Indebtedness for borrowed money that by
its terms has a final maturity of, or which is renewable or extendable at the
option of Borrower to a date, more than twelve months after such date, (x) the
current portion of deferred taxes and of taxes payable, (y) intercompany
payables under the Tax Sharing Agreement and (z) the current portion of post-
employment retirement and medical benefits and pensions.
"Consolidated EBITDA" means, for any period, the sum of (a) Consolidated
Net Income for such period, plus (b) Consolidated Net Interest Expense
(excluding Permitted Preferred Stock Dividends) for such period, plus (c) all
taxes computed on a stand-alone basis for Borrower and its Subsidiaries accrued
for such period on or measured by income, to the extent treated as expense in
the determination of Consolidated Net Income for such period, plus (d) all
depreciation and amortization of fees or intangibles of any kind for such
period, to the extent treated as expense in the determination of Consolidated
Net Income for such period, plus (e) all non-cash accruals or cash expenses
relating to the Equity Incentive Plan, to the extent that such accruals or
expenses reduce net income, in each case, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Fixed Charges" means, for any period, without duplication,
the sum of (a) Consolidated Net Interest Expense for such period (including,
without limitation, under Capital Leases, but excluding Permitted Preferred
Stock Dividends), plus (b) all payments made by Borrower and its Subsidiaries
pursuant to Operating Leases during such period, plus (c) all taxes payable by
Borrower and its Subsidiaries during such period, including all amounts paid or
payable to Lancer under the Tax Sharing Agreement during such period (without
giving effect to any corresponding capital contribution or other reduction
therein provided for in Section 7 of the Tax Sharing Agreement), plus (d) all
cash payments made by Borrower to purchase Exchangeable Preferred Stock, during
such period, other than payments made from the proceeds of cash capital
contributions to Borrower not made under or with respect to the Tax Sharing
Agreement, plus (e) all other payments made by Borrower in cash during such
period as permitted under Section 6.3 (to the extent not added or subtracted in
calculating Consolidated Cash Flow), other than Permitted Preferred Stock
Dividends, in each case determined on a consolidated basis in accordance with
GAAP.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP (after taxes but before dividends on the
Exchangeable Preferred Stock, and accretions thereon), but without giving effect
to extraordinary losses or gains for such period or to non-operating or non-cash
items of income or expense (or expenses relating to the LIFO reserve) during
such period and excluding net income (or loss) of any Person other than Borrower
and its
Subsidiaries that is included in the determination of such net income (or loss)
except to the extent of dividends or distributions paid to Borrower or its
Subsidiaries.
"Consolidated Net Interest Expense" means, for any period, the gross
interest expense of Borrower and its Subsidiaries for such period, plus (a) the
portion of the up-front costs and expenses for Interest Rate Contracts (to the
extent not included in gross interest expense) fairly allocated to such Interest
Rate Contracts as expenses for such period, less (b) interest income (to the
extent not deducted from gross interest expense), Interest Rate Contracts
payments received and amortized debt discount and deferred financing fees (to
the extent not deducted from gross interest expense) of Borrower and its
Subsidiaries for such period plus (c) Permitted Preferred Stock Dividends paid
in cash during such period, other than Permitted Preferred Stock Dividends paid
from the proceeds of cash capital contributions to Borrower not made under or
with respect to the Tax Sharing Agreement less (d) amortization of deferred
financing costs included in gross interest expense, in each case determined on a
consolidated basis in accordance with GAAP.
"Consolidated Working Capital" means Consolidated Current Assets minus
Consolidated Current Liabilities.
"Contaminant" means those substances, materials and items, in any form,
whether solid, liquid, gaseous, semisolid or any combination thereof, whether
waste materials, raw materials, chemicals, finished products, by products or any
other material or article, which are regulated by or form the basis of liability
under federal, state or local environmental, health and safety statutes or
regulations including, without limitation, hazardous wastes, hazardous
substances, pollutants, contaminants, asbestos, polychlorinated biphenyls
("PCBs"), petroleum (including, but not limited to, crude oil, petroleum-derived
substances, waste or breakdown or decomposition products thereof or any fraction
thereof) and radioactive substances.
"Contractual Obligation" means, as to any Person, any obligation under any
outstanding Securities issued by that Person or any agreement, indenture, loan
agreement, credit agreement, instrument or undertaking to which that Person is
a party or by which it or any of its Property is bound.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America, as amended from time to time, and all other applicable dissolution,
liquidation, conservatorship, bankruptcy, moratorium, readjustment of debt,
compromise, rearrangement, receivership, insolvency, reorganization or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.
"Default" means any event that, with the giving of notice or passage of
time, or both, would be an Event of Default.
"Default Rate" means, at any time, two percent (2%) per annum over the
applicable interest rates otherwise in effect hereunder with respect to the
Loans.
"Dollars" or "$" means United States of America dollars.
"Eligible Accounts" means the gross outstanding balance, less all finance
charges, late fees and other fees which are unearned, of Accounts which the
Agent, in the exercise of its
reasonable credit judgment, shall deem eligible, provided that no Account shall
be deemed eligible if:
(a) the Account is an Account in which the Agent does not have a perfected
first priority Lien for the benefit of Lenders pursuant to the Borrower Security
Agreement, or as to which Borrower does not have clear title, free and clear of
all Liens;
(b) the Account has remained unpaid for a period exceeding sixty (60) days
after the due date of the invoice issued with respect thereto or has been
outstanding for more than one hundred five (105) days after the original date of
invoice, or has been reserved against on Borrower's books;
(c) fifty percent (50%) or more of the outstanding Accounts from the
Account Debtor which constituted Eligible Accounts at the time they arose are
not deemed Eligible Accounts hereunder;
(d) the Account Debtor is a supplier or creditor of Borrower, in which
event such Account will be deemed ineligible to the extent of any sums
owed by Borrower to the Account Debtor, or the Account is otherwise subject to
any right of set-off by the Account Debtor, in which event such Account will
be deemed ineligible to the extent of such right of set-off;
(e) the Account is an account of the United States government, the
government of any state of the United States or any political subdivision
thereof, or any agency or instrumentality of any of the foregoing;
(f) the Account Debtor is not Solvent or is the subject of a proceeding
under any Debtor Relief Law;
(g) the Account is subject to any defense, claim, dispute, set-off or
counterclaim by the Account Debtor (in which event such Account shall be deemed
ineligible to the extent of the amount of the defense, claim, dispute, set-off
or counterclaim,) other than discounts in the ordinary course of business which
are reflected in the Borrowing Base Certificate, or any material part of the
subject goods has been returned, rejected, lost or damaged;
(h) the Account is not evidenced by an invoice or other writing in form
acceptable to the Agent in its sole discretion;
(i) the Account or Accounts (or any portion thereof which is included in
total Eligible Accounts for purposes of computing the Borrowing Base),
individually or when aggregated with all other then outstanding Accounts of
the same Account Debtor, exceed thirty percent (30%) in face value of all
Accounts of Borrower then outstanding, in which event such Account or
Accounts shall be deemed ineligible to the extent of such excess;
(j) (i) the Account is denominated in other than Dollars, (ii) the
Account is payable outside the United States, or (iii) the sale represented by
such Account is to an Account Debtor located or principally doing business
in a foreign country other than (A) Account Debtors located in or
principally doing business in the Provinces of Ontario, British Columbia and
Alberta in Canada, to the extent that the Agent shall have received an
opinion of Canadian counsel
satisfactory to the Agent, in form and substance satisfactory to the Agent, to
the effect that all actions which are necessary or advisable in such Province
for the perfection or enforceability of the Accounts have been duly taken and
(B) unless the Agent shall otherwise determine from time to time in the
reasonable exercise of its credit judgment, Account Debtors located in or
principally doing business in any of Belgium, Canada (other than in the
Provinces of Ontario, British Columbia and Alberta), France, Germany, Italy,
Japan, the Netherlands, Sweden and the United Kingdom, to the extent that the
Accounts of such Account Debtors, in the aggregate, do not exceed fifteen
percent (15%) in face value of all Accounts of Borrower; provided, that an
Account which is otherwise an Eligible Account under all other clauses hereof
will not be excluded pursuant to this clause (j) if the sale to such Account
Debtor is on letter of credit or acceptance terms acceptable to the Agent and
the Agent has received an assignment of Borrower's rights under such letter of
credit or acceptance or has been irrevocably designated the payee of such letter
of credit or acceptance or is insured by the Foreign Credit Insurance
Association in form and amount satisfactory to the Agent and the proceeds of
such insurance have been assigned to the Agent pursuant to an assignment in form
and substance satisfactory to the Agent;
(k) with respect to such Account, any warranty or representation
contained in this Agreement or any of the other Loan Documents or
applicable either to Accounts in general or to any such specific Account has
been breached;
(l) the Account Debtor is an Affiliate or employee of Borrower;
(m) the sale represented by such Account is on a ▇▇▇▇ and hold,
undelivered sale, guaranteed sale, sale or return, consignment, or sale on
approval basis;
(n) the Agent believes, in the reasonable exercise of its credit judgment,
that the collection of such Account is insecure or that such Account may not be
paid;
(o) the Account is subject to any Lien whatsoever, other than Liens in
favor of the Agent;
(p) the Account is evidenced by a promissory note, chattel paper or other
instrument;
(q) the Account or Accounts exceed any credit limit established by the
Agent for the Account Debtor based on the Agent's customary credit
considerations, in which case such Account or Accounts will be deemed
ineligible to the extent of such excess;
(r) the Inventory giving rise to such Account has not been shipped and
delivered to the Account Debtor and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by Borrower and
accepted by the Account Debtor;
(s) Borrower, in order to be entitled to collect the Account, is required
to perform any additional service for, or perform or incur any
additional obligation to, the Account Debtor or collection is contingent
upon the fulfillment of any other condition precedent; or
(t) the Account Debtor is located in Indiana, New Jersey or Minnesota or
in any other state on the Closing Date or thereafter imposing the condition
on the right of a creditor to
collect accounts receivable that such creditor has either qualified to do
business in such state or filed a Business Activities Report or other
appropriate report with the taxing or other designated authorities of such state
for the then current year, unless Borrower has complied with such conditions on
or prior to the date when such compliance is required under applicable state
Laws.
The Agent shall have the right, based on the Agent's customary credit
considerations, to establish reserves with respect to specific categories of
ineligibility, in lieu of determining specific Accounts to be ineligible in
accordance with the foregoing categories, and to establish reserves against
eligibility to reflect reserves carried on Borrower's books and to reconcile
accounting entries.
"Eligible Inventory" means the lower of FIFO cost or market value of
Inventory which the Agent, in the exercise of its credit judgment, shall deem
eligible, provided that no Inventory shall be deemed eligible if:
(a) the Inventory consists of Inventory in which the Agent does not have a
perfected first priority Lien, for the benefit of Lenders, or as to which
Borrower does not have clear title, free and clear of all Liens;
(b) the Inventory is not (i) located at one of the places of business of
Borrower listed on Schedule 4.8 which is either owned or leased by Borrower and
which is located in a jurisdiction in the continental United States of America
(or in the State of Hawaii or Alaska) where all necessary UCC filings have been
made to perfect the security interest of the Agent under the Borrower Security
Agreement; (ii) located at such other place business of Borrower which is
reported to the Agent in writing in accordance with Section 5(b) of the Borrower
Security Agreement and which is located in a jurisdiction in the continental
United States of America (or in the State of Hawaii or Alaska) where all
necessary UCC filings have been made to perfect the security interest of the
Agent under the Borrower Security Agreement; or (iii) in transit from one such
place of business to another;
(c) the Inventory does not consist of finished goods Inventory, finished
parts Inventory, raw materials Inventory used in the manufacture of finished
goods or work in process Inventory;
(d) the Inventory consists of stores, processing supplies, packaging,
advertising, promotional materials or other non-product related items;
(e) the Inventory consists of uninspected returned goods;
(f) the Inventory is located at any third-party finishing or processing
location or public warehouse or is otherwise in the possession of a bailee;
(g) the Inventory is located at any leased location of Borrower as to
which the Agent has not received a landlord's lien waiver and, to the extent
that the Agent shall so require, a consent to the leasehold mortgage or
collateral assignment to the Agent of the subject lease, in each case in form
and substance satisfactory to the Agent;
(h) the Inventory is slow moving or obsolete or is otherwise not currently
saleable in the ordinary course of the business of Borrower;
(i) the Inventory is under consignment to or from any Person or under any
▇▇▇▇ and hold or like arrangement;
(j) the Inventory is not of good and merchantable quality, free from
defects which would affect the market value thereof;
(k) the Inventory does not meet all standards imposed by any Governmental
Agency having regulatory authority over such Inventory; or
(l) with respect to such Inventory, any warranty or representation
contained in this Agreement or any of the other Loan Documents applicable either
to Inventory in general or to such specific Inventory has been breached.
The Agent shall have the right, based on the Agent's customary credit
considerations, to establish reserves with respect to specific categories of
ineligibility, in lieu of determining specific items of Inventory to be
ineligible in accordance with the foregoing categories, and to establish
reserves against eligibility to reflect reserves carried on Borrower's books and
to reconcile accounting entries.
"Environmental Claim" means any notice of violation (including, without
limitation, any notice of expenditures necessary to come into compliance with or
maintain compliance with, any Environmental Law or Environmental Permit), claim
(whether based on strict liability or otherwise), demand, abatement or other
order or direction (conditional or otherwise) by any Governmental Agency or any
Person for personal injury (including sickness, disease or death), toxic tort,
tangible or intangible property damage, damage to the environment, trespass,
damage to natural resources, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restrictions, resulting
from or based upon (a) the existence, or the continuation of the existence, of a
Release or a threatened Release (including, without limitation, sudden or non-
sudden, accidental or non-accidental Releases), of, or exposure to, any
Contaminant, odor or audible noise or other release or emission in, into or onto
the environment (including, without limitation, the air, soil, subsurface
strata, drinking water supply, groundwater or any surface water or any sediments
associated with any water body), and in, by, from, or related to any of the Real
Property, (b) the environmental aspects of the transportation, storage,
treatment, disposal, generation, recycling, reclamation, use or other handling
of any Contaminants or other materials in connection with the operation of the
any of the Real Property or the conduct of Borrower's or any Subsidiary's
business or (c) the violation, or alleged violation, of any applicable statutes,
common law, ordinances, decrees, agreements, orders, rules, regulations,
Environmental Permits, licenses, registrations or approvals of or from any
Governmental Agency relating to environmental matters connected with the any of
the Real Property.
"Environmental Laws" means all applicable federal, state, local or foreign
laws relating to the environment, natural resources, safety, health or the
regulation of Contaminants, including, without limitation, the Comprehensive
Environmental Response, Compensation, and
Liability Act (42 U.S.C. 9601 et seq.) ("CERCLA"), the Hazardous Materials
Transportation Act (49 App. U.S.C. 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. 6901 et seq.) ("RCRA"), the Clean Water Act (33 U.S.C.
1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. 2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. 136 et seq.), the Emergency Planning
and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the Safe Drinking
Water Act (42 U.S.C. 201 and 300f et seq.), The Rivers and Harbors Act (33
U.S.C. 401 et seq.), The Oil Pollution Act (33 U.S.C. 2701 et seq.) and the
Occupational Safety and Health Act (29 U.S.C. 651 et seq.), as such laws have
been and may be amended or supplemented from time to time, and any analogous
future federal, state, local or foreign laws and all rules and regulations
promulgated pursuant to any of such federal, state, local or foreign laws.
"Environmental Lien" means a Lien in favor of any Governmental Agency for
(a) liability under Environmental Laws or (b) damages arising from, or costs
incurred by such Governmental Agency in response to, a Release or threatened
Release of a Contaminant.
"Environmental Material Adverse Effect" means any event, act, condition or
occurrence of whatever nature (including, without limitation, any adverse
determination in any litigation, arbitration or governmental investigation or
proceeding) that arises of or is related to any Release, any matter regulated
under any Environmental Law, or any Environmental Claim where the cost to
Borrower or any of its Subsidiaries to correct, resolve or otherwise address any
environmental cleanup obligations, compliance costs, penalties or other
liabilities could reasonably be expected to be at least $750,000.
"Environmental Permit" means any permit, approval, authorization,
registration, license, variance or permission required from a Governmental
Agency having jurisdiction under an applicable Environmental Law.
"Equipment" means all of Borrower's present and future machinery, equipment
and fixtures.
"Equity Incentive Plan" means Borrower's long-term incentive compensation
plan, as such plan may be amended, supplemented or restated by the Board of
Directors of Borrower; provided, however, that any amendment, supplement or
restatement which could reasonably be expected to have a Material Adverse Effect
shall require the consent of the Majority Lenders.
"Equity Plan Cap" means the sum of $5,000,000 in the aggregate in each
Fiscal Year and $35,000,000 in the aggregate during the term of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations, rulings or interpretations promulgated or issued thereunder.
"ERISA Affiliate" means, with respect to Borrower or any Subsidiary, any
trade or business (whether or not incorporated) which, together with any such
entity, is treated as a single employer within the meaning of Section 414 of the
Code.
"Event of Default" has the meaning set forth in Section 9.1.
"Exchange Debentures" has the meaning given to such term in the Certificate
of Designations.
"Exchangeable Preferred Stock," means Borrower's Cumulative Exchangeable
Preferred Stock, with par value $.01 per share and a liquidation value of $1,000
per share and having such other terms as are set forth in the Certificate of
Designations pertaining thereto as in effect on the date hereof.
"Excluded Taxes" has the meaning set forth in Section 3.19.
"Existing Loan Agreement" has the meaning set forth in the recitals to this
Agreement.
"Facility Usage" means, as of any date, the sum of (a) the principal amount
of the Revolving Credit Loan then outstanding, plus (b) the aggregate amount of
all Letter of Credit Obligations then outstanding.
"Financial Covenants" means the covenants contained in Sections 6.18
through 6.22 of this Agreement.
"Fiscal Quarter" means each of the four fiscal quarters of Borrower ending
on or about March 31, June 30, September 30 and December 31, respectively, of
each Fiscal Year.
"Fiscal Year" means the fiscal year of Borrower ending on or about
December 31 of each calendar year.
"Fixed Rate" means the LIBOR Rate plus the Applicable LIBOR Margin as
determined in accordance with the following grid:
If the Ratio of The
Consolidated EBITDA to Applicable
Consolidated Net Interest LIBOR
Expense for the Four Margin for
Consecutive Fiscal Quarters Fixed Rate
ending on the last day of Loans will be:
the Preceding Fiscal
Quarter is:
Revolving Term Loan
Credit Loan and Other
Obligations
Greater than or equal to 0.75% per annum 1.00% per annum
2.75
Greater than or equal to 1.00% per annum 1.25% per annum
2.50:1.00
Less than 2.50:1 1.25% per annum 1.50% per annum
On the Closing Date, the Fixed Rate shall be the LIBOR Rate plus, as to the
Revolving Credit Loan, one and one-quarter percent (1-1/4%) per annum, and, as
to the Term Loan and all other Obligations (other than Obligations under the
Revolving Credit Loan), one and one-half
percent (1-1/2%) per annum. Any change in the Applicable LIBOR Margin by virtue
of the foregoing provision with regard to any Fiscal Quarter shall be made
within five (5) days after delivery by Borrower to Lender of financial
statements for such Fiscal Quarter pursuant to Section 7.1(b) (commencing with
the financial statements for the Fiscal Quarter ending September 30, 1999);
provided, however, that any such change shall be deemed to have become effective
on that date thirty (30) days after the end of such Fiscal Quarter.
"Fixed Rate Advance" means an Advance or portion thereof bearing interest
at the Fixed Rate pursuant to Section 3.5(a).
"Fixed Rate Election" has the meaning set forth in Section 3.5(a).
"Fixed Rate Loan" means a Fixed Rate Advance or a Fixed Rate Term Loan, or
both of them, as the context may require.
"Fixed Rate Term Loan" means the Term Loans or portions thereof bearing
interest at the Fixed Rate pursuant to Section 3.5(a).
"Floating Rate Advance" means an Advance or portion thereof bearing
interest at the Floating Rate pursuant to Section 3.4.
"Floating Rate Loan" means a Floating Rate Advance or a Floating Rate Term
Loan, or both of them, as the context may require.
"Floating Rate Term Loan" means the Term Loans or portions thereof bearing
interest at the Floating Rate pursuant to Section 3.4.
"Floating Rate" means the Index Rate plus three quarters of one percent
(3/4%) per annum.
"GAAP" means, as of any date, accounting principles referenced as
"generally accepted" in then currently effective Statements of the Auditing
Standards Board of the American Institute of Certified Public Accountants, or if
such Statements are not then in effect, accounting principles that are then
approved by a significant segment of the accounting profession in the United
States of America, applied on a basis consistent in all material respects with
those accounting principles applied at prior dates or for prior periods.
"Governmental Agency" means (a) any international, foreign, federal, state,
county or municipal government, or political subdivision thereof, (b) any
governmental agency, authority, board, bureau, commission, department or
instrumentality, (c) any court or administrative tribunal, (d) any non-
governmental agency or entity that is vested by a governmental agency with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has given its general
consent.
"Guaranty" means any Contractual Obligation, contingent or otherwise, of
any Person with respect to any Indebtedness, obligation or liability of another,
if the primary purpose or intent thereof by the Person incurring the Contractual
Obligation is to provide assurance to the obligee of such Indebtedness,
obligation or liability of another Person that such Indebtedness,
obligation or liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders thereof will be
protected (in whole or in part) against loss in respect thereof including,
without limitation, direct and indirect guarantees, endorsements (except for
collection or deposit in the ordinary course of business), notes co-made or
discounted, recourse agreements, take-or-pay agreements, keep-well agreements,
agreements to purchase or repurchase such Indebtedness, obligation or liability
or any security therefor or to provide funds for the payment or discharge
thereof, agreements to maintain solvency, assets, level of income, or other
financial condition, and agreements to make payment other than for value
received.
"Indebtedness" means, as applied to any Person at any time, (a) all
indebtedness, obligations or other liabilities of such Person (i) for borrowed
money or evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, and any accrued interest, fees and charges relating
thereto, (ii) under profit payment agreements or in respect of obligations to
redeem, repurchase or exchange any Securities of such Person or to pay dividends
in respect of any Capital Stock, (iii) with respect to letters of credit issued
for such Person's account, (iv) to pay the deferred purchase price of Property
or services, except accounts payable and accrued expenses arising in the
ordinary course of business, (v) in respect of Capital Leases or (vi) which are
Guaranties; (b) all indebtedness, obligations or other liabilities of such
Person or others secured by a Lien on any Property of such Person, whether or
not such indebtedness, obligations or liabilities are assumed by such Person;
(c) all indebtedness, obligations or other liabilities of such Person in respect
of Interest Rate Protection Obligations and foreign exchange contracts, net of
liabilities owed to such Person by the counterparties thereon; (d) all Capital
Stock subject (upon the occurrence of any contingency or otherwise) to mandatory
redemption; and (e) all contingent Contractual Obligations with respect to any
of the foregoing.
"Index Rate" means the higher of (a) the highest of the prime, base or
equivalent rate of interest announced or published from time to time hereafter
by any of the five largest member banks of the New York Clearing House
Association (with the understanding that such rates may merely serve as a basis
upon which effective rates of interest are calculated for loans making reference
thereto and that such rates are not necessarily the lowest or best rates at
which such banks calculate interest or extend credit), and (b) the most recent
published annual yield on ninety-day commercial paper (or the average of such
yields if more than one is published) sold through dealers by major corporations
in multiples of $1,000, as quoted either in the Federal Reserve Rate Report
which customarily appears in The Wall Street Journal (Eastern Edition) under
"Money Rates" or, in the event such report shall not so appear, in such other
nationally recognized publication as the Agent may, from time to time, specify
to Borrower. The Index Rate shall initially be determined by the Agent as of
the Business Day preceding the Closing Date, and thereafter shall change as and
when the higher of the rates specified in clauses (a) and (b) above changes.
"Interest Rate Contracts" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance
and other agreements or arrangements designed to protect against fluctuations in
interest rates.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to
receive from time to time periodic payments calculated by applying either a
floating or a fixed rate of interest on a stated notional amount in exchange for
periodic payments made by such Person calculated by applying a fixed or a
floating rate of interest on the same notional amount and shall include Interest
Rate Contracts.
"Interest Period" means, with respect to any Fixed Rate Loan, the period
commencing on the LIBOR Business Day that Borrower elects in accordance with
Section 3.5(a) that the subject Advance or Term Loans, or portion of either or
both thereof, be made as, converted into or renewed as a Fixed Rate Loan and
ending on the date one, two, three or six months thereafter; provided, that:
(a) except as provided in clauses (b), (c), (d), (e), (f), (g) and (h)
below, each Interest Period shall end on the day in the calendar month at the
end of such Interest Period which numerically corresponds to the first day
of such Interest Period (i.e., a two month interest period commencing on
January 15 shall end on March 15);
(b) If any Interest Period would otherwise end on the last LIBOR Business
Day in any week, that Interest Period shall end on the immediately preceding
LIBOR Business Day;
(c) if any Interest Period would otherwise end on a day which is not a
LIBOR Business Day, that Interest Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding LIBOR Business Day;
(d) any Interest Period that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
LIBOR Business Day of the calendar month at the end of such Interest Period;
(e) no Interest Period for the Term Loans shall extend beyond the earlier
of the Maturity Date or any earlier date fixed for prepayment in full of the
Term Loans pursuant to Section 3.2(b);
(f) no Interest Period for any Advance shall extend beyond the earlier of
the Maturity Date or any date fixed for termination of the Commitment pursuant
to Section 3.2(a); and
(g) Borrower shall select Interest Periods with respect to Advances, or
portions thereof, so that each Advance, or portion thereof, will have an
Interest Period ending on or before the date on which Borrower intends to or is
required to repay such Advance, or portion thereof; provided, that, so long as
GE Capital is the only Lender hereunder, Borrower may at its election, in lieu
of the foregoing, maintain such Advances, or portions thereof, as Fixed Rate
Loans with a one-month Interest Period.
"Inventory" means goods held by Borrower for sale or raw materials, work in
process or materials used or consumed in Borrower's business.
"Investment" means, when used in connection with any Person, any investment
by that Person, whether by means of a purchase or other acquisition of Capital
Stock or other Securities of any other Person or by means of a loan, advance,
capital contribution, Guaranty, or other debt or equity participation or
interest in any other Person, including any partnership or joint venture
interest in any other Person. The amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases in
the market value or book value of such Investment.
"Lancer" means Lancer Industries Inc., a Delaware corporation and the owner
of one hundred percent (100%) of the issued and outstanding common stock of
Borrower.
"Lancer Pledge Agreement" means the Stock Pledge Agreement covering all of
the Capital Stock of Borrower, dated as of March 31, 1995, executed by Lancer in
favor of the Agent, for its benefit and the ratable benefit of Lenders, as
amended prior to the date hereof and as the same from time to time may be
supplemented, modified, amended, renewed, extended or supplanted. Copies of
such agreement and all amendments thereto through the Closing Date are attached
hereto as Exhibit E.
"Laws" means, when used in connection with any Person, collectively, all
international, foreign, federal, state and local statutes, treaties, rules,
regulations, standards, guidelines, ordinances, codes, orders and judgments (or
any official interpretation of any of the foregoing) issued by any Governmental
Agency applicable to that Person and, in the case of Borrower, shall include,
without limitation, Environmental Laws, labor laws, occupational safety and
health laws, ERISA and tax laws.
"Leasehold Real Property" means all leasehold interests in real property
hereafter held by Borrower or any Subsidiary, as lessee, wherever located,
together with all rights of the lessee under the related lease.
"Lender" means any of the lenders signatory to this Agreement, its
successors and, upon the effective date after recordation with the Agent
pursuant to Section 11.8 of a Loan Agreement executed by a Lender Assignee, such
Lender Assignee.
"Lender Assignee" means any institutional investor, bank, financial
institution or commercial lender that has executed and recorded with the Agent a
Loan Assignment pursuant to Section 11.8(d).
"Lenders' Commitment" means the collective commitment of the Lenders, prior
to the Commitment Termination Date, to make Advances and incur Letter of Credit
Obligations pursuant to Article 2 hereof, not to exceed as to all of the Lenders
the amount of the Commitment or as to any Lender its Pro Rata Share of the
amount of the Commitment.
"Letter of Credit" means any documentary or standby letter of credit issued
at the request and for the account of Borrower for which the Lenders have
incurred Letter of Credit Obligations pursuant to Section 2.2.
"Letter of Credit Application" means such form of application for the
issuance of a Letter of Credit by the Letter of Credit Issuer as shall be
mutually satisfactory to Borrower, the Letter of Credit Issuer and the Agent.
"Letter of Credit Guaranty" means the guaranty by GE Capital on behalf of
the Lenders of the reimbursement obligations of Borrower under any outstanding
Letter of Credit Application up to the maximum amount of $4,000,000.
"Letter of Credit Issuer" means such bank or other legally authorized
Person as shall be selected by the Agent from time to time in its sole
discretion to issue Letters of Credit.
"Letter of Credit Obligations" means all outstanding obligations incurred
by Lenders at the request of Borrower, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance or guarantee, by any
Lender or any other Person, of Letters of Credit, including, without limitation,
the obligations of GE Capital under any Letter of Credit Guaranty and the
obligations of the Lenders pursuant to Section 2.2(c). The amount of such
Letter of Credit Obligations shall equal the maximum amount which may be payable
by Lenders thereupon or pursuant thereto.
"LIBOR Base Rate" means, for any Interest Period, the rate per annum equal
to the offered rate for deposits in Dollars for the applicable Interest Period
which appears on Telerate Page 3750 as of 11:00 a.m. (London, England time) two
(2) LIBOR Business Days prior to the beginning of such Interest Period.
"LIBOR Business Day" means a Business Day on which banks may accept
deposits of Dollars in the London interbank market.
"LIBOR Rate" means, for any Interest Period, that rate per annum determined
solely by the Agent pursuant to the following formula (with each component
expressed as a decimal and rounded upward to the nearest 1/100 of 1%):
LIBOR Base Rate
1.00-LIBOR Reserve Percentage
"LIBOR Reserve Percentage" means, with respect to any Interest Period, the
maximum percentage then applicable under Regulation D or other applicable Laws
to determine reserve requirements of member banks in the Federal Reserve System
with respect to "eurocurrency liabilities," irrespective of whether any Lender
is at the time a member bank of the Federal Reserve System or otherwise subject
to such requirements. The determination by the Agent of the LIBOR Reserve
Percentage shall be conclusive in the absence of manifest error.
"Lien" means any mortgage, deed of trust, deed to secure debt, pledge,
hypothecation, assignment for security, security interest, encumbrance, lien or
charge of any kind, whether voluntarily incurred or arising by operation of Law,
by statute, by contract, or otherwise, affecting any Property, including any
agreement to grant any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature of a security interest, and/or the
filing of or agreement to give any financing statement (other than a
precautionary financing
statement with respect to a lease that is not in the nature of a security
interest) under the UCC or comparable Law of any jurisdiction with respect to
any Property.
"Loan Assignment" means a Loan Assignment executed by a Lender and an
assignee of such Lender substantially in the form of Exhibit F and recorded with
the Agent pursuant to Section 11.8.
"Loan Availability" means the amount, if any, by which (a) the lesser of
(i) the amount of the Commitment and (ii) the Borrowing Base, exceeds (b) the
Facility Usage.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Blocked Account Agreements, the Subsidiary Guaranty, the Collateral Documents,
the Lancer Pledge Agreement and any other agreements of any type or nature
heretofore or hereafter executed and delivered by Borrower or any of its
Affiliates in favor of the Agent or Lenders in any way relating to or in
furtherance of this Agreement, in each case either as originally executed or as
the same may from time to time be supplemented, modified, amended, restated,
extended or supplanted.
"Loans" means, collectively, the Revolving Credit Loan and the Term Loans.
"Majority Lenders" means, as of any date, Lenders holding Notes evidencing
at least 51% of the aggregate Indebtedness evidenced by the Notes, or, if no
such Indebtedness is outstanding, at least 51% of the Commitment.
"Material Adverse Effect" means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), a
material adverse change in, a material adverse effect attributable to, or a
material adverse effect upon, any of (a) the financial condition, operations,
business, properties, or prospects of Borrower and its Subsidiaries taken as a
whole, (b) the rights and remedies of the Agent or the Lenders under any of the
Loan Documents or the ability of any Person to perform its obligations under any
of the Loan Documents, (c) the legality, validity or enforceability of any Loan
Document, or (d) the perfection or priority of the Lien of the Agent granted
under any of the Loan Documents.
"Maturity Date" means July 1, 2005.
"Monthly Payment Date" means the fifteenth day of each calendar month after
the Closing Date, and shall also include the Commitment Termination Date.
"Mortgage" means the mortgage covering the Owned Real Property executed by
Borrower on the Original Closing Date, as amended prior to the date hereof and
concurrently herewith and as the same from time to time may be supplemented,
modified, amended, renewed, extended or supplanted. Copies of such mortgage and
all amendments thereto through the Closing Date are attached hereto as Exhibit
G.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which Borrower, any Subsidiary or any ERISA Affiliate is
making, is obligated to make, or has within the last 6 years made or been
obligated to make contributions on behalf of participants who are or were
employed by any such entity.
"Net Proceeds" means (a) in the case of the disposition by Borrower or any
Subsidiary of any Property pursuant to Section 6.1(a)(ii) or (iii) hereof, all
proceeds in Cash or Cash Equivalents, including payments in respect of deferred
payment obligations when received in the form of Cash or Cash Equivalents
(except to the extent that such obligations are financed or sold with recourse
to Borrower or any Subsidiary) net of (i) brokerage commissions and other fees
and expenses (including, without limitation, fees and expenses of legal counsel
and investment bankers) related to such asset sale, (ii) provisions for all
taxes payable (including, without limitation, payments under the Tax Sharing
Agreement) as a result of such asset sale, (iii) amounts required to be paid and
which have been paid to any Person (other than Borrower or any Subsidiary)
owning a beneficial interest in the Property subject to the asset sale (which
beneficial interest is a Permitted Encumbrance hereunder) and (iv) appropriate
amounts to be provided by Borrower or any Subsidiary, as the case may be, as a
reserve required in accordance with GAAP consistently applied against any
liabilities associated with such asset sale and retained by Borrower or any
Subsidiary, as the case may be, after such asset sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such asset sale; (b) in the case of loss or damage
to any Property of Borrower or any Subsidiary or of any Condemnation of any
Property of Borrower or any Subsidiary, all Cash proceeds of insurance paid on
account of such loss or damage and all proceeds in Cash or Cash Equivalents of
such Condemnation, as and when received by Borrower or such Subsidiary, net of
(i) all money actually applied to repair or reconstruct the damaged Property or
Property affected by the Condemnation, as provided in Section 6 of the Security
Agreement or in Section 7 or 8 of the Mortgage, as applicable, (ii) all of the
costs and expenses reasonably incurred or to be incurred in connection with the
collection of such proceeds, and (iii) any amounts retained by or paid to
parties having rights to such proceeds, superior to the rights of Borrower or
such Subsidiary, and (c) in the case of any issuance of Capital Stock by
Borrower or any Subsidiary, the aggregate proceeds in Cash or Cash Equivalents
of such issuance, as and when received by Borrower or such Subsidiary, net of
any costs, fees and expenses directly incurred by Borrower in connection with
such issuance.
"Notes" means, collectively, the Revolving Credit Notes and the Term Notes.
"Obligations" means all present and future obligations of every kind or
nature of Borrower at any time and from time to time owed to the Agent or the
Lenders or any one or more of them under any one or more of the Loan Documents,
whether due or to become due, matured or unmatured, liquidated or unliquidated,
or contingent or non-contingent, including obligations of performance as well as
obligations of payment, and including, to the extent permitted by applicable
Debtor Relief Laws, interest that accrues after the commencement of any
proceeding under any Debtor Relief Law by or against Borrower.
"Officer's Certificate" means, when used with reference to any Person, a
certificate signed by a Senior Officer of such Person.
"Original Closing Date" means July 7, 1993, the "Closing Date" under the
Existing Loan Agreement.
"Operating Leases" has the meaning assigned to it under GAAP.
"Opinion of Borrower's Counsel" means the favorable written legal opinion
of Debevoise & ▇▇▇▇▇▇▇▇, special counsel to Borrower, substantially in the form
of Exhibit H, together with copies of all factual certificates and legal
opinions upon which such counsel has relied.
"Owned Real Property" means all real property owned by Borrower or any
Subsidiary, wherever located, together with all improvements thereon and
appurtenances thereto, a listing of which as of the date of this Agreement and
the Closing Date is set forth in Schedule 4.22.
"Patent Security Agreement" means the collateral assignment or assignments
covering all patents owned by Borrower or any Subsidiary or in which Borrower or
any Subsidiary has rights as a licensee, executed on the Original Closing Date
by Borrower and each Subsidiary owning patents or having rights in patents as a
licensee, as amended prior to the date hereof and as the same from time to time
may be supplemented, modified, amended, renewed, extended or supplanted. Copies
of such agreement and all amendments thereto through the Closing Date are
attached hereto as Exhibit I.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" means an employee pension benefit plan, as defined in
Section (3)(2) of ERISA (other than a Multiemployer Plan), which is subject to
Title IV of ERISA, to which Borrower, any Subsidiary or any ERISA Affiliate is
making, is obligated to make, has within the last six years made or been
obligated to make contributions on behalf of participants who are or were
employed by any such entity.
"Permitted Encumbrances" has the meaning set forth in Section 6.7.
"Permitted Preferred Stock Dividends" has the meaning set forth in
clause(i) of Section 6.3.
"Person" means any entity, whether an individual, trustee, corporation,
general partnership, limited partnership, joint stock company, trust, estate,
unincorporated organization, business association, tribe, firm, joint venture,
Governmental Agency, or otherwise.
"Plan" means any employee benefit plan, as defined in Section 3(3) of
ERISA, to which Borrower, any Subsidiary or any ERISA Affiliate is making, is
obligated to make, or has within the last six years made or been obligated to
make contributions on behalf of participants who are or were employed by any
such entity.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
"Pro Rata Share" means, with respect to each Lender, the percentage set
forth opposite the name of that Lender on the signature pages hereof.
"Quarterly Payment Date" means the fifteenth day of each February, May,
August and November.
"Real Property" means, collectively, the Owned Real Property and the
Leasehold Real Property, in each case whether now or hereafter owned or leased
by Borrower or any Subsidiary.
"Registration Statement" means the Amendment No. 1 to Registration
Statement on Form S-4 filed by Borrower with the SEC on July 2, 1999 (No. 333-
80431), as amended or supplemented, together with all Exhibits thereto.
"Regulation D", "Regulation G" and "Regulation U" mean, respectively,
Regulations D, G and U of the Board of Governors of the Federal Reserve System
as from time to time in effect and all official rulings and interpretations
thereunder or thereof.
"Related Agreements" means the Tax Sharing Agreement and any other
agreement related to the Tax Sharing Agreement, whether existing on the date
hereof or hereafter.
"Release" means any release, spill, emission, leaking, pumping, emptying,
dumping, injection, abandonment, deposit, disposal, discharge, dispersal,
leaching or migration of Contaminants (including, but not limited to, the
abandonment or discarding of Contaminants in barrels, drums or other containers)
into the indoor or outdoor environment or into or out of any Real Property,
including the movement of Contaminants, into, under, on, through or in the air,
soil, subsurface strata, surface water, groundwater, drinking water supply, any
sediments associated with any water bodies or any other environmental medium.
"Remedial Action" means all actions required to (a) clean up, remove,
treat, dispose of or in any other way address Contaminants in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release of Contaminants so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment, (c) respond to or otherwise mitigate Releases or (d) perform pre-
remedial studies and investigations and post-remedial monitoring and care in
respect of actions contemplated in the preceding clauses (a), (b) and (c).
"Reportable Event" means any of the reportable events described in
Section 4043 of ERISA and the regulations issued from time to time thereunder
(other than a reportable event not subject to the provisions for 30-day notice
to the PBGC under such regulations).
"Request for Advance" means a request for an Advance substantially in the
form of Exhibit J signed by a Responsible Official of Borrower and properly
completed to provide all information required to be included therein.
"Request for Fixed Rate Election" means a request that (a) an Advance or
the Term Loans or portions of either or both thereof be made initially as a
Fixed Rate Loan, (b) any Advance or the Term Loans or portions of either or both
thereof be converted from a Floating Rate Loan or Loans to a Fixed Rate Loan or
Loans, or (c) any Advance or the Term Loans or portions of either or both
thereof be renewed as a Fixed Rate Loan or Loans for a subsequent Interest
Period, substantially in the form of Exhibit K, signed by a Responsible Official
of Borrower and properly completed to provide all information required to be
included therein.
"Request for Letter of Credit" means a request for a Letter of Credit
substantially in the form of Exhibit L, signed by a Responsible Official of
Borrower and properly completed to provide all information required to be
included therein.
"Requirement of Law" means, with respect to any Person, (a) the articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, (b) any Law applicable to such Person including,
without limitation, any Environmental Law, and (c) any judgment, award, decree,
writ or determination of a Governmental Agency, applicable to or binding upon
such Person or any of its Property or to which such Person or any of its
Property is subject.
"Responsible Official" means any corporate officer of Borrower or any other
responsible official of Borrower duly acting on behalf of Borrower. Any
document or certificate hereunder that is signed or executed by a Responsible
Official of Borrower shall be conclusively presumed to have been authorized by
all necessary corporate and/or other action on the part of Borrower, and the
Agent and Lenders shall be entitled to rely in good faith on the authorization
to act of any such Person reasonably believed by the Agent or any Lender to be a
Responsible Official of Borrower.
"Restricted Payment" means (a) any dividend or other distribution, direct
or indirect, on account of any shares of any class of Capital Stock of Borrower
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock or in any class of stock junior to the holders of that class,
(b) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
Capital Stock of Borrower now or hereafter outstanding, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
the Subordinated Indebtedness, (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other Securities of Borrower now or hereafter outstanding, (e) any
Investment by Borrower or any Subsidiary in the holder of five percent (5%) or
more of any Capital Stock or other Securities of Borrower or any Subsidiary if a
purpose of such Investment is to avoid characterization of the transaction as a
Restricted Payment, and (f) any payment by Borrower or any Subsidiary of
management or similar fees to any Affiliate, and any payment by Borrower or any
Subsidiary of any expenses of any Affiliate.
"Retiree Welfare Plan" means any Welfare Plan maintained by Borrower or any
Subsidiary providing for continuing coverage or benefits for any participant or
any beneficiary of a participant after such participant's termination of
employment, other than continuation coverage provided pursuant to Section 4980B
of the Code or Part 6 of Title I of ERISA.
"Revolving Credit Loan" means the outstanding principal amount of the
Advances from time to time.
"Revolving Credit Note" means any of the promissory notes, substantially in
the form of Exhibit M, issued by Borrower in favor of a Lender evidencing such
Lender's Pro Rata Share of all Advances made to Borrower, pursuant to such
Lender's Pro Rata Share of the Commitment.
"Right of Others" means, as to any Property in which a Person has an
interest, (a) any legal or equitable right, title or other interest (other than
a Lien) held by any other Person in or with respect to that Property, and
(b) any option or right held by any other Person to acquire any right, title or
other interest in or with respect to that Property, including any option or
right to acquire a Lien.
"SEC" means the Securities and Exchange Commission and any successor
Governmental Agency.
"Securities" means any Capital Stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of Indebtedness, limited
partnership interests, or any warrant, option or other right to purchase or
acquire any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Security Agreements" means, collectively, the Borrower Security Agreement
and the Subsidiary Security Agreement.
"Senior Officer" means the (a) chief executive officer, (b) chief operating
officer, (c) chief financial officer or (d) chief administrative officer, in
each case whatever the title nomenclature may be, of the Person designated.
"Senior Subordinated Note Indenture" means the Indenture, dated as of
May 19, 1999, between Borrower and First Union National Bank, as trustee,
pursuant to which the Senior Subordinated Notes were issued and governed, as
such Indenture has been amended, modified or supplemented through the Closing
Date and as such Indenture may be amended, modified or supplemented hereafter,
subject to the limitations set forth in Section 6.4.
"Senior Subordinated Notes" means, collectively, the $100,000,000 aggregate
original principal amount of Senior Subordinated Notes due 2008, issued pursuant
to the Senior Subordinated Note Indenture, as such notes have been amended or
modified through the Closing Date and as such notes may be amended, modified,
supplemented, extended or renewed hereafter, subject to the limitations set
forth in Section 6.4.
"Solvent" means, when used with respect to any Person, that at the time of
determination: (a) the fair market value of its assets is in excess of the total
amount of its liabilities (including, without limitation, contingent
liabilities), (b) the present fair saleable value of its assets is greater than
its probable liability in its existing debts as such debts become absolute and
mature, (c) it is then able and expects to be able to pay its Indebtedness
(including, without limitation, contingent Indebtedness and other commitments)
as they mature, and (d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Subordinated Indebtedness" means the Indebtedness evidenced by or in
respect of (a) the Senior Subordinated Notes, and (b) any refinancing of the
Senior Subordinated Notes
with the prior written consent of the Majority Lenders on terms and conditions
satisfactory to the Majority Lenders (but in no event less favorable to Borrower
than the terms and conditions of the Senior Subordinated Notes), which
Indebtedness shall not exceed the principal amount then outstanding under the
Senior Subordinated Notes and shall be subordinated in right of payment to the
Obligations in a manner reasonably satisfactory to the Majority Lenders.
"Subsequent Commitment Increase" and "Subsequent Commitment Increases" have
the meanings set forth in Section 2.8.
"Subsequent Commitment Increase Date" and "Subsequent Commitment Increase
Dates" have the meanings set forth in Section 2.8.
"Subsidiary" means any Person of which at least a majority of Capital Stock
having ordinary voting power for the election of directors or other governing
body of said Person is owned by Borrower directly or through one or more
Subsidiaries.
"Subsidiary Guaranty" means the guaranty of the Obligations executed by
each Subsidiary on the Original Closing Date, as amended prior to the date
hereof and as the same may from time to time be supplemented, modified, amended,
renewed, extended or supplanted. Copies of such agreement and all amendments
thereto through the Closing Date are attached hereto as Exhibit N.
"Subsidiary Security Agreement" means the security agreement executed by
each Subsidiary on the Original Closing Date, as amended prior to the date
hereof and as the same may from time to time be supplemented, modified, amended,
renewed, extended or supplanted. Copies of such agreement and all amendments
thereto through the Closing Date are attached hereto as Exhibit O.
"Tax Capital Contribution" means any capital contribution made to Borrower
by Lancer or any other Affiliate of Borrower or deemed to have been made to
Borrower by Lancer or any other Affiliate of Borrower pursuant to Section 7 of
the Tax Sharing Agreement.
"Taxes" has the meaning set forth in Section 3.16.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of July
18, 1990, between Borrower and Lancer, as same may hereafter be amended,
modified or supplemented, subject to the limitations set forth in Section 6.17.
"Term Loan" and "Term Loans" each has the meaning specified in Section
2.3(a).
"Term Note" means any of the promissory notes, substantially in the form of
Exhibit P, issued by Borrower in favor of a Lender evidencing the Term Loan made
by such Lender.
"T-H Licensing" means T-H Licensing, Inc., a Delaware corporation and
wholly-owned subsidiary of Borrower.
"Title Company" means ▇▇▇▇▇▇▇ Commonwealth Title Guaranty Company.
"Trademark Security Agreement" means the collateral assignment or
assignments covering all trademarks and trade names owned by Borrower or any
Subsidiary or in which Borrower or any Subsidiary has rights as a licensee,
executed on the Original Closing Date by Borrower and each Subsidiary owning
trademarks or tradenames or having rights in trademarks or tradenames as a
licensee, and as amended prior to the date hereof as the same from time to time
may be supplemented, modified, amended, extended or supplanted (including,
without limitation, in connection with the execution and delivery of this
Agreement). Copies of such agreement and all amendments thereto through the
Closing Date are attached hereto as Exhibit Q.
"Triggering Event" means the existence or occurrence of either or both of
the following events:
(a) an Event of Default shall occur and be continuing.
(b) Loan Availability shall be less than $1,000,000.
"UCC" means the Uniform Commercial Code of the State of New York, as in
effect from time to time or, if the Uniform Commercial Code of the State of New
York refers any matter to the laws of another jurisdiction, the Uniform
Commercial Code of that jurisdiction, as in effect from time to time.
"Welfare Plan" means any Plan maintained by Borrower or any Subsidiary that
is an employee welfare benefit plan as defined in Section 3(1) of ERISA.
Section 1.2 Use of Defined Terms. Any defined term used in the plural
shall refer to all members of the relevant class, and any defined term used
in the singular shall refer to any one or more of the members of the relevant
class.
Section 1.3 Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with, GAAP except as otherwise specifically prescribed herein. In
the event that GAAP changes during the term of this Agreement such that any of
the defined terms set forth in Section 1.1 (as used in Article 6) or the
Financial Covenants would then be calculated in a different manner or with
different components or would render the same not meaningful criteria for
evaluating Borrower's financial condition, (a) Borrower and Lenders agree to
negotiate in good faith in order to amend this Agreement in such respects as
are necessary to conform the defined terms set forth in Section 1.1 (as
used in Article 6) and the Financial Covenants so that the criteria for
evaluating the matters contemplated by Article 6 (including the Financial
Covenants) are substantially the same criteria as were effective prior to such
change in GAAP, and (b) Borrower shall be deemed to be in compliance with the
Financial Covenants during the 120 day period following any such change in
GAAP if and to the extent that Borrower would have been in compliance
therewith under GAAP as in effect immediately prior to such change.
Section 1.4 Rounding. All ratios required to be maintained by Borrower
pursuant to the Financial Covenants shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio
is expressed in the Financial Covenants and rounding the result up or down to
the nearest number (with a round-up if there is no nearest number) to the number
of places by which such ratio is expressed in the Financial Covenants.
Section 1.5 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified, or amended, are incorporated herein by reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules to
the extent that it is specifically cross-referenced in any other applicable
Schedule, but not otherwise.
Section 1.6 Miscellaneous Terms. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply to
males. The term "including" is by way of example and not limitation.
ARTICLE 2.
AMOUNT AND TERMS OF CREDIT
Section 2.1 Advances.
(a) Subject to the terms and conditions set forth in this Agreement, at
any time and from time to time from the Closing Date to (but not including) the
Commitment Termination Date, each Lender agrees, severally and for itself alone,
that it shall, pro rata according to that Lender's Pro Rata Share of the
Commitment, make Advances to Borrower in such amounts as Borrower may request in
accordance with Section 2.1(b); provided that, after giving effect to each such
Advance, the Facility Usage does not exceed the lesser of (i) the Commitment or
(ii) the Borrowing Base. Subject to the limitations set forth herein, Borrower
may borrow, repay and reborrow under this Section 2.1(a) without premium or
penalty.
(b) Subject to the next succeeding sentence, each Advance shall be made
pursuant to a Request for Advance which shall (i) specify the requested (A) date
of such Advance and (B) amount of such Advance, which shall be in an aggregate
principal amount of $3,000,000 or any larger integral multiple of $1,000,000 in
the case of Fixed Rate Advances (provided, that any such Fixed Rate Advance may
be requested in an aggregate principal amount of $1,000,000 or integral
multiples thereof at any time while GE Capital is the only Lender hereunder) and
of $100,000 and integral multiples thereof in the case of Floating Rate
Advances; and (ii) be given by Borrower to the Agent no later than 11:00 a.m.,
Atlanta time, on the Business Day preceding the proposed Advance in the case of
a Floating Rate Advance and no later than 11:00 a.m. Atlanta time, three (3)
LIBOR Business Days preceding the proposed Advance in the case of a Fixed Rate
Advance. In the event that any such Advance or portion thereof is to be a Fixed
Rate Advance, Borrower shall concurrently make a Fixed Rate Election with
respect thereto in accordance with Section 3.5(b). Unless the Agent has, in its
sole and absolute discretion, notified Borrower to the contrary, an Advance may
also be made pursuant to a request therefor by telephone by a Responsible
Official of Borrower, received by the Agent by the time required for a Request
for Advance, in which case Borrower shall confirm such request by promptly
mailing to the Agent a Request for Advance conforming to the preceding sentence
and concurrently telecopying to the Agent a copy of such Request for Advance.
(c) Promptly following receipt of a Request for Advance, the Agent shall
notify each Lender by telephone or telecopier of the date of the Advance
and such Lender's Pro Rata Share of the Advance. Not later than 11:00 a.m.,
Atlanta time, on the date specified for any Advance, each Lender shall make its
Pro Rata Share of the Advance available to the Agent by wire transfer of
immediately available funds to the Agent's Deposit Account. Upon
fulfillment of the applicable conditions set forth in Article 8, each Advance
shall be made by the Agent by wire transfer of immediately available funds
to Borrower's Deposit Account, to the extent actually received from the
Lenders. No Lender shall be responsible for the failure of any other Lender to
make the Pro Rata Share of any Advance to be made by such other Lender.
(d) Each Lender's Pro Rata Share of the Advances made to Borrower pursuant to
Section 2.1(a) shall be evidenced by that Lender's Revolving Credit Note,
subject to the provisions of Section 2.6.
(e) A Request for Advance shall be irrevocable upon the Agent's first
notification thereof.
Section 2.2 Letters of Credit.
(a) Subject to the terms and conditions hereof, at any time and from time
to time from the Closing Date to (but not including) the Commitment Termination
Date, the Agent shall arrange for the issuance by the Letter of Credit Issuer of
such Letters of Credit as Borrower may request by a Request for Letter of
Credit; provided that, after giving effect to the Letter of Credit Obligations
incurred by the Lenders as a result thereof, (i) the aggregate amount of all
Letter of Credit Obligations then outstanding does not exceed $4,000,000 and
(ii) the Facility Usage does not exceed the lesser of (A) the Commitment or
(B) the Borrowing Base. No Letter of Credit shall be arranged for by the Agent
hereunder except to the extent necessary in connection with transactions in the
ordinary course of business of Borrower. The expiration date of any Letter of
Credit shall not extend beyond the earliest of (i) one year from the date of
issuance thereof, (ii) the Maturity Date (except for any Letter of Credit which
automatically renews on an annual basis pursuant to its terms, provided that the
aggregate face amounts of all such Letters of Credit shall not exceed $1,000,000
at any time outstanding), and (iii) any date fixed for termination of the
Commitment pursuant to Section 3.2(a).
(b) Each Request for Letter of Credit shall be submitted to the Agent at least
five (5) Business Days prior to the date when required, accompanied by a Letter
of Credit Application executed by a Responsible Official. Upon issuance of a
Letter of Credit by the Letter of Credit Issuer, the Agent shall notify the
Lenders of the amount and terms thereof within a reasonable time thereafter.
(c) Upon the incurrence of any Letter of Credit Obligation by GE Capital, each
other Lender shall be deemed to have purchased from GE Capital a participation
therein and in any rights of GE Capital under the related Letter of Credit
Application, in an amount equal to that Lender's Pro Rata Share of the amount of
the Letter of Credit Obligations so incurred. Without limiting the scope and
nature of each Lender's participation in any Letter of Credit Obligations, to
the extent that GE Capital has not been reimbursed by Borrower for any payment
required to be made by GE Capital in respect of any Letter of Credit
Obligations, each Lender shall,
according to its Pro Rata Share, reimburse GE Capital promptly upon demand for
the amount of such payment. The obligation of each Lender to so reimburse GE
Capital shall be absolute and unconditional and shall not be affected by the
occurrence of a Default, an Event of Default, the Commitment Termination Date or
any other occurrence or event, nor be modified or diminished for any reason or
in any manner whatsoever, including, without limitation, by virtue of any claim,
action or defense that Borrower may have or assert against the Letter of Credit
Issuer in respect of the payment of any draft or demand under any Letter of
Credit or against GE Capital in respect of its reimbursement obligations
hereunder. Any such reimbursement shall not relieve or otherwise impair the
obligation of Borrower to reimburse GE Capital for the amount of any payment
made by GE Capital in respect of any Letter of Credit Obligations together with
interest as hereinafter provided.
(d) Borrower agrees to pay to GE Capital, within one (1) Business Day
after demand therefor, a principal amount equal to any payment made by GE
Capital in respect of any Letter of Credit Obligations, together with
interest on such amount from the date of any payment made by GE Capital
through the date of payment by Borrower at the Floating Rate or, if then in
effect, at the Default Rate. The principal amount of any such payment made by
Borrower to GE Capital shall be used to reimburse GE Capital for the payment
made by it in respect of such Letter of Credit Obligation. Each Lender that
has reimbursed GE Capital pursuant to Section 2.2(c) for its Pro-Rata Share
of any payment made by GE Capital in respect of any Letter of Credit
Obligation shall thereupon acquire a participation, to the extent of such
reimbursement, in the claim of GE Capital against Borrower under this Section
2.2(d).
(e) If Borrower fails to make any payment required by Section 2.2(d), the Agent
may, without notice to or the consent of Borrower, notify each Lender that an
Advance is to be made by Lenders under Section 2.1 in an aggregate amount equal
to the amount paid by GE Capital in respect of its Letter of Credit Obligations
in accordance with the procedures provided in Section 2.1(c) (or may deem any
reimbursement made by Lenders pursuant to Section 2.2(c) to constitute the
funding of such Advance) and, for this purpose, the conditions precedent set
forth in Sections 8.1 and 8.2 shall not apply. The proceeds of such Advance
shall be paid to GE Capital to reimburse it for the payment made by it in
respect of such Letter of Credit Obligations.
(f) The issuance of any supplement, modification, amendment, renewal or
extension to or of any Letter of Credit shall be treated in all respects the
same as the issuance of a new Letter of Credit, and each such Letter of Credit,
and all Letter of Credit Obligations in respect thereof, shall in each case
remain subject to this Section 2.2.
(g) The obligation of Borrower to pay to GE Capital the amount of any payment
made by GE Capital in respect of any Letter of Credit Obligation shall be
absolute, unconditional and irrevocable, and Borrower's unconditional
obligations to GE Capital hereunder shall not be modified or diminished for any
reason or in any manner whatsoever, including, without limitation, by virtue of
any claim, action or defense that Borrower may have or assert against the Letter
of Credit Issuer in respect of the payment of any draft or demand under any
Letter of Credit. Borrower hereby agrees that any action taken by GE Capital,
if taken in good faith, under or in connection with a Letter of Credit or in
respect of GE Capital's Letter of Credit Obligations, or the drafts or
acceptances thereunder, shall be binding on Borrower and shall not
impose any resulting liability on GE Capital, other than as a result of the
gross negligence or willful misconduct of GE Capital.
(h) As between Borrower and the Letter of Credit Issuer, each Letter of
Credit shall be issued pursuant to and shall be subject to the provisions of
the respective Letter of Credit Application. As between Borrower and GE
Capital, the provisions of this Agreement, to the extent in conflict with any
provision of any Letter of Credit Application, shall control.
Notwithstanding the foregoing, GE Capital shall be fully subrogated to all
rights of the Letter of Credit Issuer under each Letter of Credit
Application, upon discharging its Letter of Credit Obligations in respect
of the Letter of Credit issued thereunder.
(i) In the event that any Letter of Credit Obligation, whether or not then due
and payable, shall for any reason be outstanding on the Commitment Termination
Date, then:
(i) Borrower will pay to the Agent (A) Cash or Cash Equivalents in an
amount equal to the then outstanding Letter of Credit Obligations or (B) provide
a back-up letter of credit or guaranty from a financial institution satisfactory
to the Agent in such amount, in form and substance satisfactory to the Agent.
Such Cash or Cash Equivalents, in the case of clause(A) above, shall be held by
the Agent in a cash collateral account (the "Cash Collateral Account"). The
Cash Collateral Account shall be held in the name of the Agent (as a cash
collateral account), for its benefit and the ratable benefit of the Lenders, and
shall be under the sole dominion and control of the Agent and subject to the
terms of this Section 2.2(i). Borrower hereby pledges, and grants to the
Agent a security interest in, all Cash or Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the Letter of Credit Obligations,
whether or not then due.
(ii) From time to time after Cash or Cash Equivalents are deposited in the Cash
Collateral Account, the Agent may apply such Cash or Cash Equivalents then held
in the Cash Collateral Account to the payment of any amounts, in such order as
the Agent may elect, as shall be or shall become due and payable by Borrower to
the Agent, GE Capital or any other Lender in respect of such Letter of Credit
Obligations.
(iii) The Agent shall invest the Cash in the Cash Collateral Account or
deposit such Cash in an interest-bearing account, as the Agent deems appropriate
in its sole discretion. Interest and earnings on the Cash or Cash Equivalents
in the Cash Collateral Account shall become a part of the Cash Collateral
Account and shall be held and disbursed by the Agent in accordance with this
Section 2.2(i).
(iv) Neither Borrower nor any Person claiming on behalf of or through Borrower
shall have any right to withdraw any of the Cash or Cash Equivalents held in the
Cash Collateral Account, except that upon the termination of any Letter of
Credit Obligations in accordance with their terms and the payment of all amounts
payable by Borrower to the Agent, GE Capital and the other Lenders in respect
thereof, any Cash or Cash Equivalents remaining in the Cash Collateral Account
in excess of the then remaining Letter of Credit Obligations shall be returned
to Borrower.
(j) The Letter of Credit Issuer shall be entitled to the benefits
accorded by Article 10 to the Agent, mutatis mutandis.
Section 2.3 Term Loans.
(a) Pursuant to the Existing Loan Agreement, Lenders made to Borrower term
loans (individually the "Term Loan" and, collectively, the "Term Loans") in the
principal amount of $35,000,000, the outstanding principal balance of which on
the date hereof is $10,000,000. Borrower may not reborrow the Term Loans or any
portion thereof once repaid.
(b) Each Lender's Term Loan is evidenced by that Lender's Term Note, subject to
the provisions of Section 2.6.
Section 2.4 Special Advances by Lenders. If Borrower fails to make any
payment of interest, fees, expenses, costs or other sums required to be paid to
the Agent or any Lender or Lenders under the terms of this Agreement or any
other Loan Document, the Agent may, without the consent of Borrower, notify each
Lender that an Advance is to be made by the Lenders under Section 2.1 in an
amount equal to the sum due from Borrower to the Agent or such Lender or Lenders
and, for this purpose, the conditions precedent set forth in Sections 8.1 and
8.2 shall not apply. The proceeds of such Advance shall be paid to the Agent or
such Lender or Lenders for application to the payment of the sum due from
Borrower to the Agent, such Lender or Lenders.
Section 2.5 Agent's Right to Assume Funds Available. Unless the Agent
shall have been notified by any Lender at least one Business Day prior to the
date on which any Advance is to be made to Borrower that such Lender does not
intend to make available to the Agent such Lender's Pro Rata Share of such
Advance, the Agent may assume that such Lender has made such amount available
to the Agent on the date of the Advance and the Agent may, in reliance upon
such assumption, make available to Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such
Lender, the Agent shall be entitled to recover such corresponding amount on
demand from such Lender. If such Lender does not pay such corresponding
amount forthwith upon the Agent's demand therefor, the Agent shall notify
Borrower and Borrower shall pay such corresponding amount to the Agent. The
Agent shall also be entitled to recover from such Lender interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to
the rate per annum then in effect with respect to the Revolving Credit Loan.
Nothing herein shall be deemed to relieve any Lender from its obligation
to fulfill its Pro Rata Share of the Lenders' Commitment hereunder or to
prejudice any rights which the Agent or Borrower may have against any
Lender as a result of any default by such Lender hereunder.
Section 2.6 Accounting. The Agent will provide to Borrower a monthly
accounting of transactions under Articles 2 and 3 of this Agreement. Each and
every such accounting shall (absent manifest error) be deemed final, binding and
conclusive upon Borrower in all respects as to all matters reflected therein,
unless Borrower, within thirty (30) days after the date any such accounting is
received by Borrower, shall notify the Agent in writing of any objection which
Borrower may have to any such accounting, describing the basis for such
objection with specificity. In that event, only those items expressly objected
to in such notice shall be deemed
to be disputed by Borrower. The Agent's good faith determination, based upon
the facts available, of any item objected to by Borrower in such notice shall
(absent manifest error) be final, binding and conclusive on Borrower, unless
Borrower shall commence a judicial proceeding to resolve such objection within
thirty(30) days following the Agent's notifying Borrower of such determination.
Section 2.7 Single Loan. The Term Loans, the Advances, the Letter of
Credit Obligations and all other Obligations of Borrower arising under this
Agreement shall constitute one general obligation of Borrower secured by a
first priority security interest in the Collateral (subject only to Permitted
Encumbrances).
Section 2.8 Subsequent Commitment Increases.
(a) Subsequent Commitment Increases. Subject to the satisfaction of each
of the conditions set forth in Section 2.8(b), at Borrower's written
request, delivered by Borrower to the Agent at least fifteen (15) days
prior to the requested increase date and specifying the requested
increase date (each individually a "Subsequent Commitment Increase Date"
and collectively the "Subsequent Commitment Increase Dates"), the Commitment
shall be increased (each individually a "Subsequent Commitment Increase" and
collectively the "Subsequent Commitment Increases") on no more than four
Subsequent Commitment Increase Dates by an amount not in excess of Twenty
Million Dollars ($20,000,000) in the aggregate as to all Subsequent Commitment
Increases.
(b) Conditions Precedent to Subsequent Commitment Increases. The obligations
of the Lenders to make the Subsequent Commitment Increases available to Borrower
are subject to the following conditions precedent each of which shall be
satisfied prior to or on the applicable Subsequent Commitment Increase Date:
(i) There shall be no more than four (4) Subsequent Commitment Increases.
(ii) Each Subsequent Commitment Increase shall be in a minimum amount of Five
Million Dollars ($5,000,000).
(iii) The Agent shall have received all of the following, each dated as of
the applicable Subsequent Commitment Increase Date and all in form and substance
satisfactory to the Agent and legal counsel for the Agent:
(1) amendments to the then existing Revolving Credit Note executed
by Borrower in favor of each Lender pursuant to which the principal amount of
the Revolving Credit Note held by each Lender shall be increased by an amount
equal to such Lender's Pro Rata Share of the Subsequent Commitment Increase;
(2) an Officer's Certificate affirming that the conditions set forth in clauses
(iv), (v), (vi), (vii) and (viii) below have been satisfied;
(3) to the extent deemed necessary by the Agent, an amendment to the Mortgage
giving effect to the Subsequent Commitment Increase, executed by Borrower, and
in form acceptable for recordation with the appropriate Governmental Agency;
(4) to the extent deemed necessary by the Agent, assurance from the
Title Company that it is committed to cause such amendment to the Mortgage to
be recorded, and, upon recordation of such amendment to issue an endorsement to
the title insurance policy issued by the Title Company with regard to the
Mortgage, in a form acceptable to the Agent, insuring the continued validity and
priority of the Mortgage as a lien upon the Owned Real Property, subject to
only those title exceptions which are set forth in such title insurance policy
and such other title exceptions as may be approved by the Agent in its sole
discretion; and
(5) such other assurances, certificates, documents, consents or opinions (in
addition to those described hereinbelow) as the Agent may reasonably require.
(iv) The representations and warranties contained in Article 4 shall
be true and correct in all material respects on and as of the Subsequent
Commitment Increase Date as though made on and as of that date (except to the
extent that such representations and warranties relate solely to an earlier date
and except as affected by transactions expressly contemplated by this
Agreement).
(v) There shall not then be pending or, to the best knowledge of Borrower,
threatened, any litigation, arbitration, injunction, proceeding, governmental
investigation or inquiry against or affecting Borrower or any Property of
Borrower before any Governmental Agency that could reasonably be expected to
have a Material Adverse Effect.
(vi) Each of Lancer, Borrower and each of Borrower's Subsidiaries shall be in
compliance with all the terms and provisions of the Loan Documents to which it
is party, and no Default or Event of Default shall have occurred and be
continuing.
(vii) Since the Closing Date, there shall not have occurred: (A) any event
or circumstance that could reasonably be expected to have a Material Adverse
Effect, or (B) any dividends or other distributions made to the stockholders of
Borrower, except as permitted by Section 6.3 of this Agreement or Section 7(b)
of the Lancer Pledge Agreement.
(viii) Lenders shall be satisfied that Borrower and its Subsidiaries are in
compliance with all applicable Laws, including, without limitation, all
Environmental Laws and all Laws pertaining to labor, occupational safety and
health and ERISA matters except to the extent that noncompliance could not
reasonably be expected to have a Material Adverse Effect. Lenders shall be
satisfied that the consummation of the Subsequent Commitment Increase will not
cause Borrower or any Subsidiary to violate any Contractual Obligation to which
it is party or by which it is bound or any Laws applicable to it.
(ix) Lenders shall be satisfied that Borrower's incurrence of Indebtedness
pursuant to the Subsequent Commitment Increase is permissible pursuant to
Section 4.06 of the Senior Subordinated Note Indenture, and that after giving
effect thereto, each of the representations and warranties set forth in
Section 4.21 shall continue to be true and
correct in all respects and shall have received such assurances in regard
thereto as Lenders shall request, including, without limitation,
certifications of Senior Officers of Borrower and an opinion of Borrower's
counsel with regard to such matters, each to be in form and substance
satisfactory to Lenders.
(x) Borrower shall pay to Lenders a fee for each Subsequent
Commitment Increase in an amount of one-fourth percent (.25%) of the amount of
such increase which fee shall be fully-earned and non-refundable on the date of
such increase.
ARTICLE 3.
PRINCIPAL PAYMENTS; INTEREST; FEES
Section 3.1 Principal Payments.
(a) All Collections which in accordance with the provisions of the Blocked
Account Agreements are remitted to the Agent's Deposit Account from the
Collection Accounts at a time when a Triggering Event has occurred and is
continuing shall be applied on a daily basis to the prepayment of the Revolving
Credit Loan and, from and after the Commitment Termination Date, to the
repayment of any and all other Obligations of Borrower. The entire unpaid
balance of the Revolving Credit Loan shall be due and payable in full in Cash on
the Commitment Termination Date.
(b) The aggregate principal amount of the Term Loans shall, if not sooner paid,
be payable in full on the Maturity Date.
Section 3.2 Termination of Commitment; Voluntary Prepayment of Term
Loan.
(a) Borrower may voluntarily terminate the Lenders' Commitment at any time
by giving at least 90 days'prior written notice to the Agent of its intent to
terminate the Lenders' Commitment and the effective date of such termination.
On such effective date, upon compliance by Borrower with the provisions of
Section 2.2(i), the Commitment shall reduce to zero, and in accordance with
Section 3.3(a), Borrower shall immediately pay any outstanding principal amount
of the Revolving Credit Loan, together with any accrued and unpaid interest, any
accrued and unpaid commitment fees pursuant to Section 3.6, and any accrued and
unpaid letter of credit fees pursuant to Section 3.7, and, if the Revolving
Credit Loan, or any portion thereof, is then being maintained as a Fixed Rate
Loan and is paid prior to the last day of its Interest Period, any amounts
payable pursuant to Section 3.12, in Cash.
(b) The Term Loans may, at any time and from time to time, voluntarily be
prepaid at the election of Borrower, in whole or in part, without penalty, but
with accrued and unpaid interest thereon on the amount so prepaid, provided that
(i) the Agent must have received written notice (or telephonic notice confirmed
promptly in writing) of any prepayment at least 90 days before the date of
prepayment, in the case of a full prepayment, and at least 5 days before the
date of prepayment, in the case of a partial prepayment, and (ii) any
prepayment of all or any portion of the Term Loans while being maintained as
Fixed Rate Loans prior to the last day of the Interest Period shall be subject
to Section 3.12.
Section 3.3 Mandatory Prepayments.
(a) The outstanding principal amount of the Revolving Credit Loan shall be
immediately payable in Cash in an amount equal to any amount by which the
Facility Usage at any time exceeds the lesser of (i) the Commitment or (ii) the
Borrowing Base. Any payment made hereunder shall be applied to the Advances in
the order in which such Advances are made.
(b) The Term Loans shall be prepaid in amounts equal to one hundred percent
(100%) of the Net Proceeds of any disposition of Property by Borrower or any of
its Subsidiaries permitted pursuant to Section 6.1(a)(iii) or consented to by
the Majority Lenders in writing and of any insurance proceeds or payments of
compensation in respect of any loss, damage or Condemnation to or of any
Property of Borrower and its Subsidiaries which the Agent retains as provided in
Section 6 of each of the Security Agreements or in Section 7 or 8 of the
Mortgage, as applicable. Borrower shall promptly notify the Agent of such
proposed disposition or of any receipt of Net Proceeds of insurance or of any
Condemnation (including the amount of the estimated Net Proceeds to be received
by Borrower in respect thereof) and promptly upon receipt of such Net Proceeds
shall make the prepayment required hereby. In addition, the Term Loans shall be
prepaid in amounts equal to one hundred percent (100%) of the Net Proceeds, or
any portion thereof, of any disposition of Property by Borrower or any of its
Subsidiaries permitted pursuant to Section 6.1(a)(ii) to the extent that such
Net Proceeds, or any portion thereof, are not applied to the purchase price of
replacement Equipment within one hundred eighty (180) days after the date of
disposition, and in any event, to the extent that such Net Proceeds exceed the
sum of Three Million Dollars ($3,000,000) in the aggregate in any Fiscal Year.
(c) The Term Loans shall be prepaid in amounts equal to one hundred percent
(100%) of any cash reversions to Borrower or any Subsidiary from the termination
of any Pension Plan or other employee benefit plan. Borrower shall make such
prepayment promptly upon receipt by Borrower or any Subsidiary of any such
amount.
(d) The Commitment shall terminate and the Revolving Credit Loan and the Term
Loans shall be prepaid in full, together with accrued and unpaid interest
thereon, any accrued and unpaid commitment fees pursuant to Section 3.6, any
accrued and unpaid letter of credit fees pursuant to Section 3.7, and any
amounts payable as provided in Section 3.12, immediately upon the occurrence of
a Change of Control.
Section 3.4 Interest.
(a) Interest shall be payable on the outstanding daily unpaid principal
amount of (i) each Advance from the date thereof until payment in full of such
Advance, and (ii) each Term Loan from the date thereof until payment in full of
the Term Loan and, in each case shall accrue and be payable at the applicable
rates set forth herein with respect to Advances and the Term Loans, before and
after default, before and after maturity, before and after judgment, and before
and after the commencement of any proceeding under any Debtor Relief Law, with
interest on overdue interest to bear interest at the Default Rate to the extent
permitted by applicable laws.
(b) Except as otherwise provided in Sections 3.5, 3.13 and 3.19, the Revolving
Credit Loan and the Term Loans shall bear interest at the Floating Rate.
Section 3.5 Fixed Rate Elections.
(a) Provided that no Default or Event of Default has occurred and is
continuing, Borrower may elect that the Term Loans or a portion thereof bear
interest at the Fixed Rate, and provided that no Triggering Event has occurred
and is continuing as to which the Agent has elected to exercise its rights
pursuant to Section 5.13, Section 7.2(c), or both, Borrower may elect that any
Advance or a portion thereof bear interest at the Fixed Rate, in each case for
such Interest Period as Borrower shall select; provided that (i) Borrower may
not have more than three Interest Periods in effect at any time with respect to
the Term Loans or more than three interest periods in effect at any time with
respect to the Revolving Credit Loan, and (ii) Borrower may not make such an
election unless the principal amount of the Advance or Term Loans or portion
thereof as to which such election is made shall be in an aggregate amount not
less than $3,000,000 or any integral multiple of $1,000,000 in excess thereof
(provided, that the principal amount as to which such election is made may be in
an aggregate principal amount of $1,000,000 or integral multiples thereof at any
time while GE Capital is the only Lender hereunder); and (iii) the aggregate
amount of Fixed Rate Loans to which any Interest Period relates shall not be
reduced, by payment, prepayment or otherwise to be less than $3,000,000
(provided, that, subject to the requirements of Section 3.12, such amount may be
reduced to zero at any time while GE Capital is the only Lender hereunder). Any
election made pursuant to this clause (a) is called herein a "Fixed Rate
Election".
(b) Subject to the requirements of clause (a) above, Borrower may make a Fixed
Rate Election in accordance with the following procedures: (i) no later than
11:00 A.M., Atlanta time, three LIBOR Business Days prior to the proposed Fixed
Rate Election, Borrower shall provide to the Agent by telephone (confirmed by
telecopier) a notice that it proposes to make a Fixed Rate Election, specifying
the amount of the Advances or Term Loans or both as to which Borrower proposes
to make the Fixed Rate Election, and (ii) no later than 11:00 A.M., Atlanta
time, two LIBOR Business Days prior to the proposed Fixed Rate Election (after
Borrower has received from the Agent quotations of the Fixed Rates then
available for the various Interest Periods), Borrower shall make a Fixed Rate
Election pursuant to a Request for Fixed Rate Election which shall (A) be
forwarded to the Agent by telecopier and by reputable overnight courier, (B)
request (x) that an Advance requested by Borrower or the Term Loans, or portions
of either or both thereof, be made initially as a Fixed Rate Loan, (y) that the
subject Advance or the Term Loans or portions of either or both thereof be
converted from a Floating Rate Loan to a Fixed Rate Loan, or (z) that the
subject Advance or the Term Loans or portions of either or both thereof selected
by Borrower be renewed as a Fixed Rate Loan for an additional Interest Period
following the expiration of the then current Interest Period, and (C) specify
(x) the requested date of such Fixed Rate Election, (y) the Advance or Term
Loans or portions of either or both thereof as to which such Fixed Rate Election
is made, and (z) the Interest Period selected by Borrower.
(c) Except as otherwise provided in Sections 3.11, 3.13 and 3.19, at all times
during an Interest Period selected by Borrower in a Request for Fixed Rate
Election, the Revolving Credit Loan and the Term Loans or the portion of either
or both thereof selected by Borrower shall bear interest at the Fixed Rate, as
elected by Borrower.
Section 3.6 Commitment Fee. Borrower shall pay to the Agent, for the
account of each Lender, a commitment fee with respect to the Commitment in an
amount equal to the
quotient of (a) an amount equal to (i) the average daily amount by which the
Commitment exceeds the Facility Usage during the preceding month multiplied by
(ii) one-quarter of one percent (1/4 of 1%) divided by (b) 360. The commitment
fee payable hereunder shall accrue daily and be payable monthly in arrears on
each Monthly Payment Date and on the Commitment Termination Date.
Section 3.7 Letter of Credit Fees. In the event that Lenders shall incur
any Letter of Credit Obligations, Borrower shall pay to the Agent (a) for the
account of the Agent, the fees and charges paid by the Agent to the Letter of
Credit Issuer in connection with the Letters of Credit in respect of which such
Letter of Credit Obligations were incurred, and (b) for the account of each
Lender according to that Lender's Pro Rata Share of the Commitment, a letter of
credit fee in an amount equal to the quotient of (i) an amount equal to (A) the
sum of the daily outstanding amount of such Letter of Credit Obligations on each
day during the month then ending, multiplied by (B) two and one-half percent (2-
1/2%), divided by (ii) 360. Letter of Credit fees shall accrue daily during
each month during which Letter of Credit Obligations are outstanding hereunder
and be payable monthly in arrears on the Monthly Payment Date and on the
Commitment Termination Date.
Section 3.8 Agent's Fees. Borrower shall pay to the Agent, for its
account, an agency fee in the amount provided in the separate fee letter between
Borrower and the Agent, at such times as are provided therein.
Section 3.9 Increased Cost and Reduced Return.
(a) If (i) the introduction of or any change in Law or in the
interpretation or administration thereof occurring after the date hereof, or
(ii) the compliance with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) does or
shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of any
Lender, and the result of any of the foregoing is to reduce the amount of any
sum received or receivable by such Lender (or its lending office) under this
Agreement by an amount deemed by such Lender to be material, then, within
fifteen (15) days after demand by such Lender (with a copy to the Agent),
Borrower shall pay to such Lender for such additional amount or amounts as will
compensate such Lender for such reduction. If Lender becomes entitled to claim
any additional amounts pursuant to this Section 3.9(a), it shall promptly
notify the Borrower of the event by reason of which it became so entitled.
(b) If any Lender reasonably determines that either (i) the introduction of or
any change in any Law or in the interpretation or administration of any Law by
any Governmental Agency charged with the interpretation or administration
thereof after the date of this Agreement relating to the regulation of banks or
commercial lenders or (ii) compliance with any guideline or request issued or
made after the date hereof from any such Governmental Agency relating to the
regulation of banks or commercial lenders (whether or not having the force of
law) has or would have the effect of reducing the rate of return on the capital
of that Lender or any corporation controlling that Lender as a consequence of or
with reference to that Lender's funding, incurring or maintaining its allocable
portion of any Commitment, Advance, Letter of Credit Obligation,
Term Loans or other extension of credit or transaction hereunder below the rate
which that Lender or such other corporation could have achieved but for such
introduction, change or compliance (taking into account the policies of that
Lender or corporation with regard to capital), then Borrower shall from time to
time, upon demand by that Lender, pay to that Lender additional amounts
sufficient to compensate that Lender or other corporation for such reduction.
Each Lender agrees promptly to notify Borrower of any event or condition that
would cause Borrower to pay any additional amount pursuant to this
Section 3.09(b), within six (6) months after the occurrence of such event or
condition. Any notice by any Lender hereunder shall be accompanied by a
certificate from that Lender setting forth in reasonable detail the nature and
calculation of the relevant amounts.
Section 3.10 LIBOR Costs. Upon notice from any Lender, Borrower shall
promptly reimburse that Lender for any increase after the date of this Agreement
in its costs, including taxes (other than any tax, or changes in the rate of
any tax, based upon the income, profits, receipts or business of that Lender,
or upon any personal property or franchise of that Lender, or any similar tax
which may be levied upon that Lender, or any change in the rate of any such
similar tax by the United States, or any other government having jurisdiction,
or any political subdivision or taxing authority of any thereof, and other than
withholding tax covered by Section 3.16), fees, charges, and/or reserve
requirements directly or indirectly resulting from or relating to funding,
incurring or maintaining such Lender's Term Loan and/or Pro Rata Share of the
Revolving Credit Loan or portions of either or both thereof, as applicable, as a
Fixed Rate Loan due to any changee after the date of this Agreement in any Law,
guideline or interpretation or application thereof by any Governmental Agency.
As used in the preceding sentence, "reserve requirements" shall be calculated
after taking into account any compensation received by that Lender through the
computation of the LIBOR Reserve Percentage. Amounts payable to any
Lender under this Section 3.10 shall be determined solely by that Lender on
the assumption that such Lender funded and maintained 100% of its Term Loan
and/or its Pro Rata Share of the Revolving Credit Loan, or portions of
either or both thereof, as applicable, in the London interbank market for a
corresponding amount of Dollars and term, regardless of whether that Lender did
so in fact. In attributing any Lender's general costs relating to any
transaction under this Agreement, or averaging any cost over a period of time,
that Lender may use any reasonable attribution and/or averaging method it deems
appropriate and practical. Any notice under this Section 3.10 shall be
given to Borrower as promptly as practicable after it obtains knowledge of such
change, with a copy to the Agent, and shall be accompanied by a certificate from
that Lender setting forth in reasonable detail the nature and calculation of
the relevant amounts.
Section 3.11 Special LIBOR Circumstances.
(a) If any change in any Law by any Governmental Agency or any other
circumstance relating to the London interbank market shall at any time in the
reasonable opinion of any Lender make it unlawful or impractical for that Lender
to fund or maintain its Term Loan or its Pro Rata Share of the Revolving Credit
Loan or portion of either or both thereof, as a Fixed Rate Loan in the London
interbank market for a corresponding amount of Dollars or term, or to continue
that funding or maintaining, or to determine or charge interest rates based upon
the LIBOR Rate, that Lender shall promptly notify the Agent, who shall notify
Borrower and the other Lenders. Upon the giving of such notice, the obligation
of that Lender to fund or maintain its Term Loan or Pro Rata Share of the
Revolving Credit Loan or portion of either or both
thereof, as a Fixed Rate Loan shall terminate, and such Lender's Term Loan or
its Pro Rata Share of the Revolving Credit Loan or portion of either or both
thereof, as applicable, then being maintained as a Fixed Rate Loan, shall bear
interest at the Floating Rate commencing on the day following the last day of
the applicable Interest Period or on such earlier date as shall be required by
Law.
(b) In the event that, prior to the first day of any Interest Period in
respect of any Fixed Rate Loan, by reason of circumstances affecting the London
interbank market, either (i) the Agent shall have determined in good faith
(which determination shall be conclusive and binding upon all parties hereto),
that (A) Dollar deposits of the relevant amount and for the relevant Interest
Period for such Fixed Rate Loan are not available to those Lenders authorized to
accept such deposits in the London interbank market, or (B) the LIBOR Base Rate
applicable to such Interest Period cannot be ascertained, or (ii) the Majority
Lenders shall have determined in good faith and so notified the Agent that the
LIBOR Rate will not adequately reflect the cost to such Majority Lenders of
funding or maintaining the Revolving Credit Loan or the Term Loans as
applicable, as a Fixed Rate Loan or Loans, the Agent shall promptly give to
Borrower and the Lenders notice of such determination, whereupon Borrower's
right to make a Fixed Rate Election by submitting a Request for Fixed Rate
Election pursuant to Section 3.5(a) shall be suspended for so long as such
circumstances shall exist. At all times during the period of such suspension,
the entire outstanding principal amount of the Revolving Credit Loan and the
Term Loans and shall be Floating Rate Loans.
Section 3.12 Funding Losses. In order to induce each Lender to fund and
maintain its Pro Rata Share of the Revolving Credit Loan and its Term Loan or
portion of either or both thereof, as applicable, as a Fixed Rate Loan, on the
terms provided herein and in consideration of the entering into by Lenders of
funding arrangements from time to time in contemplation thereof, whether or not
funded in the London interbank market, if any Fixed Rate Loan is repaid in whole
or in part (except so long as GE Capital is the only Lender hereunder any Fixed
Rate Loan having an Interest Period of one month) on any day other than the last
day of the Interest Period therefor (whether any such repayment is made pursuant
to any provision of this Agreement or any other Loan Document or is the result
of acceleration, by operation of law or otherwise), Borrower shall indemnify and
hold harmless each Lender from and against and in respect of any and all losses,
costs and expenses resulting from, or arising out of or imposed upon or incurred
by such Lender by reason of the liquidation or reemployment of funds acquired or
committed to be acquired by such Lender to fund or maintain its Pro Rata Share
of the Revolving Credit Loan or its Term Loan, or portion of either or both
thereof, as applicable, as a Fixed Rate Loan or Loans, pursuant to such Lender's
customary funding arrangements. The amount of any losses, costs or expenses
resulting in an obligation of Borrower to make a payment pursuant to the
foregoing sentence shall not include any losses attributable to any Lender's
lost profit, but shall represent the excess, if any, of (a) such Lender's cost
or deemed cost of obtaining funding for the amount necessary to fund or maintain
its Pro Rata Share of the Revolving Credit Loan or its Term Loan, or portion of
either or both thereof, as applicable, as a Fixed Rate Loan or Loans pursuant to
such Lender's customary funding arrangements, whether or not funded in the
London interbank market, as reasonably determined by each Lender (which may be
computed by any Lender on the basis of such funds having been borrowed at a rate
equal to one percent (1%) over the interest rate on United States Treasury bills
or notes with a maturity that most closely approximated the end of the relevant
Interest Period as quoted by Telerate News Service (page 5)
at the close of business on the date when the Term Loans or the Revolving Credit
Loan or portion of either or both thereof were made as, converted to or renewed
as a Fixed Rate Loan), over (b) the return such Lender would receive on its
reemployment of such funds, as reasonably determined by each Lender (which, if
such Lender's cost of obtaining funding is computed pursuant to the
parenthetical to clause (a) above, may be computed by any Lender on the basis of
its reinvestment of such funds in United States Treasury bills or notes with a
maturity that most closely approximates the end of the relevant Interest Period
as quoted by Telerate News Service (page 5) at the close of business on the date
of repayment of such Fixed Rate Loan); provided, that if any Lender terminates
any funding arrangements in respect of its Pro Rata Share of the Revolving
Credit Loan or its Term Loan, or portion of either or both thereof, as
applicable, when maintained as a Fixed Rate Loan or Loans, the amount of such
losses, costs and expenses shall also include the cost to such Lender of such
termination. The determination of such amount by any Lender, when evidenced by
a certificate from that Lender giving a reasonably detailed calculation of the
amount of said cost, expense, claim, penalty, liability, loss, fee, damage or
other charge, shall be presumed correct in the absence of manifest error.
Section 3.13 Default Rate. So long as an Event of Default shall have
occurred and be continuing, the Obligations (including accrued and unpaid
interest to the extent permitted by applicable Laws), shall, at the option of
the Agent evidenced by its written notice to Borrower making specific
reference to this Section 3.13, bear interest at the applicable Default Rates.
The provisions of this Section 3.13 are intended to compensate Lenders for
additional credit risk and not as a penalty.
Section 3.14 Payment and Computation of Interest. Interest shall be
payable on the Loans at the rate or rates herein specified on each Quarterly
Payment Date and on the Commitment Termination Date, in the case of the
Revolving Credit Loan; on each Quarterly Payment Date and on the Maturity Date,
in the case of the Term Loans; and on each Monthly Payment Date from and after
the occurrence of an Event of Default, in the case of any of the Loans. In
addition to (and not in lieu of) the payments described in the preceding
sentence, interest on each Fixed Rate Loan at the applicable Fixed Rate shall be
payable on the last day of the Interest Period with respect to such Fixed Rate
Loan. All computations of interest hereunder shall be calculated on the basis
of a year of 360 days and the actual number of days elapsed. Any Advance or
Term Loan or portion thereof that is repaid on the same day on which it is
made shall bear interest for one day. Interest shall in all events be
calculated and paid through the due date therefor, including, without
limitation, any due date which is not a Business Day.
Section 3.15 Non-Business Days. If any payment to be made by Borrower
shall come due on a day other than a Business Day, payment shall be made on the
next preceding Business Day, and shall be computed through the last day of any
period for which such payment is to accrue.
Section 3.16 Payment Free of Taxes. All payments of principal,
interest and fees and all other amounts to be made by Borrower pursuant to
this Agreement shall be paid without deduction for, and free from, any tax,
imposts, levies, duties, deductions, or withholdings of any nature now or at any
time hereafter imposed by any governmental authority or by any taxing
authority thereof or therein excluding in the case of the Agent and each Lender,
taxes imposed on or measured by its net income, branch profits tax or franchise
taxes imposed on it by the
jurisdiction under the laws of which the Agent or such Lender is organized or
any political subdivision thereof and, in the case of each Lender, taxes imposed
on its income, branch profits and franchise taxes imposed on it, by the
jurisdiction of such Lender's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Non-Excluded Taxes"). In the
event that Borrower is required by applicable law to make any such withholding
or deduction of Non-Excluded Taxes with respect to any amount payable hereunder,
Borrower shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish the Agent or any Lender in respect of which
such deduction or withholding is made all receipts and other documents
evidencing such payment and shall pay to the Agent or such Lender, as
applicable, additional amounts as may be necessary in order that the amount
received by the Agent or such Lender, as applicable, after the required
withholding or other payment shall equal the amount the Agent or such Lender
would have received had no such withholding or other payment been made;
provided, that Borrower shall not be required to pay any such additional amounts
to any Lender that is not organized under the laws of the United States or any
state thereof if such Lender fails to comply with the requirements of the
following paragraph. If no withholding or deduction of Non-Excluded Taxes are
payable in respect to any amount payable hereunder, Borrower shall furnish any
Lender, at such Lender's request, a certificate from each applicable taxing
authority or an opinion of counsel acceptable to such Lender, in either case
stating that such payments are exempt from or not subject to withholding or
deduction of Non-Excluded Taxes. If Borrower fail to provide such original or
certified copy of a receipt evidencing payment of Non-Excluded Taxes or
certificate(s) or opinion of counsel of exemption, Borrower hereby agrees to
compensate such Lender for, and indemnify it with respect to, the tax
consequences of Borrower's failure to provide evidence of tax payments or tax
exemption. Before making any claim pursuant to this Section, such Lender shall
designate a different lending office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. Each Lender will promptly notify Borrower of a
change in such Lender's tax status that would require Borrower to withhold
and/or pay any amounts under this Section 3.16.
Each Lender that is not a United States person (as defined in
Section 7701(a)(30) of the Code):
(i) (A) before the first payment date after it becomes a party to this
agreement deliver to Borrower and the Agent two duly completed copies of
Internal Revenue Service Form W-8BEN, in the case of a Lender claiming
treaty benefits with respect to payments under this Agreement and any
Notes, or Internal Revenue Service Form W-8ECI, in the case of a Lender
claiming payments under this Agreement and any Notes are effectively
connected with the conduct of a trade or business within the United States,
or successor applicable form, as the case may be, covering all amounts
receivable by it under this Agreement and any Notes, together with such
other forms, documentation or certifications as may be necessary to
establish an available exemption from deduction or withholding of U.S.
federal income taxes with respect to payments under this Agreement and any
Notes, (B) deliver to the Borrower and the Agent two further copies of any
such form, documentation or certification on or before the date that any
such form, documentation or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the most recent
form previously delivered by it to the
Borrower; and (C) obtain such extensions of time for filing and completion
of such forms, documentation or certifications as may be reasonably
requested by the Borrower or the Agent; or
(ii) in the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and that cannot comply with the
requirements of clause (i) above, (A) represent to Borrower (for the
benefit of Borrower and the Agent) that it is not a bank within the meaning
of Section 881(c)(3)(A) of the Code, (B) furnish to Borrower on or before
the date of any payment by Borrower, wit a copy to the Agent, (x) a
certificate substantially in the form of Exhibit R (any such certificate,
a "U.S. Tax Compliance Certificate") and (y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8BEN, or
successor applicable form certifying to such Lender's legal entitlement at
the date of such certificate to an exemption from U.S. withholding tax
under the provisions of Section 871(h) or 881(c) of the Code with respect
to payments to be made under this Agreement and any Notes (and deliver to
Borrower and the Agent two further copies of such form on or before the
date it expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form and, if necessary,
obtain any extensions of time reasonably requested by Borrower or the
Agent for completing such forms) and (c) upon reasonable request by
Borrower, to provide to Borrower (for the benefit of Borrower and the
Agent) such other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an exemption from
withholding with respect to payments under this Agreement and any Notes;
unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so advises Borrower
and the Agent. Such Lender shall certify (i) in the case of a Lender claiming
treaty benefits with respect to payments under this Agreement and any Notes, or
in the case of a Lender claiming amounts receivable by it under this Agreement
and any Notes are effectively connected with the conduct of a trade or business
within the United States, that it is entitled to receive payments under this
Agreement and any Notes without deduction or withholding of any United States
federal income taxes and (ii) that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender Assignee
or a participant pursuant to subsection 11.8(c) or 11.8(f) shall, upon the
effectiveness of the related transfer, be required to provide all of the forms,
documentation or certifications required pursuant to this subsection, provided
that in the case of a participant such participant shall furnish all such
required forms, documentation or certifications to the Lender from which the
related participation shall have been purchased, and such Lender shall in turn
furnish all such required forms (including without limitation Internal Revenue
Service Form W-81MY), documentation and certifications to Borrower and the
Agent, together with such other forms, documentation or certifications as may be
necessary to establish an available exemption from deduction or withholding of
U.S. federal income taxes on payments under this Agreement and any Notes.
If notwithstanding compliance by any Lender with the provisions of the
preceding paragraph, Borrower is unable to establish that such Lender is
entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes and withholding taxes, or to file the forms provided by such
Lender, and, in any event during such period of time as such request for
exemption is pending, Borrower shall nonetheless remain obligated under the
terms of the first paragraph of this Section 3.16.
If any Lender or the Agent shall become aware in its sole and good faith
judgment that it is entitled to receive a refund in respect of Non-Excluded
Taxes as to which it has received additional amounts from Borrower pursuant to
this Section 3.16, it shall promptly notify Borrower of the availability of such
refund and within 30 days after receipt of a request by Borrower, apply for such
refund at Borrower's expense. If any Lender or the Agent receives a refund in
respect of Non-Excluded Taxes as to which it has received additional amounts
from Borrower pursuant to this Section 3.16, it shall promptly repay such refund
to such Borrower, provided, however, that if any Lender or the Agent receives a
refund which it must subsequently return to the applicable taxing authority
after Borrower has already been repaid, Borrower agrees to promptly return the
amount of such repayment to the Lender or Agent.
Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower and the Lenders contained
in this Section 3.16 shall be applicable with respect to any Lender Assignee
pursuant to Section 11.8(b) and participant pursuant to Section 11.8(f), and any
calculations required by such provisions (i) shall be made based upon the
circumstances of such Lender Assignee or participant, and (ii) constitute a
continuing agreement and shall survive the termination of this Agreement and the
payment in full or cancellation of the Notes.
For the purposes of this Section 3.16 and Section 3.9, a change in treaty,
law, rule or regulation shall not include the new United States withholding
regulations (Treasury Decision 8734 and Treasury Decision 8804) which become
effective on January 1, 2000.
Section 3.17 Funding Sources. Nothing in this Agreement shall be deemed
to obligate any Lender to obtain the funds for its share of any Loan in the
London interbank market or in any other particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for its Loans in the London interbank market or in any other
particular place or manner, but any Lender shall, for purposes hereof, be
entitled to compute the amounts due to it under Sections 3.10, 3.11 and 3.12 as
if such funds had been obtained in the London interbank market, without any
requirement of tracing or matching such funds.
Section 3.18 Failure to Charge Not Subsequent Waiver. Any failure by the
Agent or any Lender to require payment of any interest (including interest at
the Default Rate), fee, cost or other amount payable under any Loan Document, or
to calculate any amount payable by a particular method, on any occasion shall in
no way limit or be deemed a waiver of the Agent's or any Lender's right to
require full payment of any such interest, fee, cost or other amount payable
under any Loan Document, or to calculate any amount payable by another method,
on any other or subsequent occasion.
Section 3.19 Savings Clause. Notwithstanding anything to the contrary
set forth in this Article 3, if at any time until payment in full of all of
the Obligations, any of the Floating Rate, the Fixed Rate or the Default Rate,
by itself or when aggregated with any of the fees or other
amounts payable by Borrower under any of the Loan Documents that are deemed or
construed to be interest under applicable Law, as the case may be, exceeds the
highest rate of interest permissible under any Laws which a court of competent
jurisdiction shall, in a final determination, deem applicable to any Lender with
respect to its Pro Rata Share of the Revolving Credit Loan or its Term Loan, as
the case may be (each a "Maximum Lawful Rate"), then in such event and so long
as the Maximum Lawful Rate would be so exceeded, such rate of interest shall be
reduced to the Maximum Lawful Rate; provided that if at any time thereafter the
Floating Rate, the Fixed Rate or either of the Default Rates, as applicable, is
less than the Maximum Lawful Rate, Borrower shall continue to pay interest to
such Lender hereunder at the Maximum Lawful Rate until such time as the total
interest received by such Lender from the making of its Pro Rata Share of the
Revolving Credit Loan and its Term Loan is equal to the total interest which
such Lender would have received had the Floating Rate, the Fixed Rate or the
Default Rates, as applicable, been (but for the operation of this Section 3.19)
the interest rates payable to such Lender since such Lender became a Lender
hereunder. Thereafter, the interest rates payable to such Lender with respect
to its Pro Rata Share of the Revolving Credit Loan and its Term Loans, shall be
the applicable Floating Rate, Fixed Rate or the applicable Default Rate, as
applicable, unless and until the Floating Rate, the Fixed Rate or the applicable
Default Rate, as applicable, again exceeds the Maximum Lawful Rate, in which
event this Section 3.19 shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount which such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. In the event
that the Maximum Lawful Rate is calculated pursuant to this Section 3.19, (a) if
required by applicable Laws, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made, and (b) if permitted by applicable Laws,
Borrower and Lender shall (i) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, pro rate, allocate and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Obligations so that interest for the entire term
does not exceed the Maximum Lawful Rate. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 3.19, shall make a
final determination that any Lender has received interest hereunder or under any
of the Loan Documents in excess of the Maximum Lawful Rate with respect to its
Pro Rata Share of the Revolving Credit Loan or its Term Loan, such Lender shall,
to the extent permitted by applicable Law, promptly apply such excess, first to
any interest due and not yet paid under its Notes, second to any due and payable
principal of its Notes, third to the remaining principal amount of its Notes and
fourth to other unpaid Obligations, and thereafter shall refund any excess to
Borrower or as a court of competent jurisdiction may otherwise order.
Section 3.20 Pro Rata Treatment. Each payment and prepayment of
principal on, and each payment of interest on, the Revolving Credit Loan shall
be applied pro rata, as among Lenders, according to the respective Pro Rata
Share of each Lender. Each payment and prepayment of principal on, and each
payment of interest on, the Term Loans shall be applied pro rata, as
among Lenders, according to the ratio of each Lender's Term Loan to all Term
Loans.
Section 3.21 Manner and Treatment of Payments. Each payment hereunder or
on the Notes or under any other Loan Document shall be made to the Agent,
without setoff,
deduction or counterclaim, by wire transfer of immediately available funds to
the Agent's Deposit Account, for the attention of Control Desk Supervisor,
Southeast Region Office re: Fairfield Manufacturing Company, Inc., for the
account of each of the Lenders or the Agent, as the case may be, not later than
12:00 noon, Atlanta time, on the day of payment (which must be a Business Day).
All payments received after 12:00 noon, Atlanta time, on any particular Business
Day, shall be deemed received on the next succeeding Business Day. All payments
shall be made in lawful money of the United States of America. The amount of
all payments received by the Agent for the account of a Lender shall be promptly
paid by the Agent to that Lender in immediately available funds. All payments
made by Borrower pursuant to this Section 3.21 shall be credited by each Lender
for purposes of computing interest hereunder on the day payment has been
received or deemed received by the Agent in accordance with this Section 3.21.
Notwithstanding anything herein to the contrary, Borrower shall give the Agent
(i) with regard to prepayments of the Revolving Credit Loan in amounts in excess
of $2,000,000 but less than $10,000,000, one (1) Business Day's advance written
notice of such prepayment so long as GE Capital is the only Lender hereunder and
two (2) Business Days' advance written notice of such prepayment if there are
Lenders in addition to GE Capital hereunder and (ii) with regard to prepayments
of the Revolving Credit Loan in amounts in excess of $10,000,000 two (2)
Business Days' advance written notice of such prepayment so long as GE Capital
is the only Lender hereunder and three (3) Business Days' advance written notice
of such prepayment if there are Lenders in addition to GE Capital hereunder;
provided that the foregoing shall not apply with regard to prepayments pursuant
to Section 3.1(a) hereof.
Section 3.22 Agent's Right to Assume Payments Will be Made. Unless the
Agent shall have been notified by Borrower at least one Business Day prior to
the date on which any payment to be made by Borrower hereunder is due that
Borrower does not intend to remit such payment, the Agent may, in its
discretion, assume that Borrower has remitted such payment when so due and
the Agent may,in its discretion and in reliance upon such assumption, make
available to each Lender on such payment date an amount equal to such
Lender's share of such assumed payment. If Borrower has not in fact remitted
such payment to the Agent, each Lender shall forthwith on demand repay to the
Agent the amount of such assumed payment made available to such Lender, together
with interest thereon in respect of each day from and including the date such
amount was made available by the Agent to such Lender to the date such amount
is repaid to the Agent at a rate per annum equal to the rate or rates per
annum then in effect with respect to the Loans in respect of which such payment
is due.
Section 3.23 Survivability. All of Borrowers' obligations under Sections
3.9, 3.10, 3.12 and 3.16 shall survive the payment in full of all
Obligations hereunder, provided that any Lender making a claim under Section
3.12 shall notify Borrower of such claim not later than 90 days following date
of payment in full of the Obligations.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Agent and Lenders that:
Section 4.1 Existence and Qualification; Power; Compliance With Laws.
Each of Lancer, Borrower and Borrower's Subsidiaries is a corporation duly
organized and validly
existing and in good standing under the Laws of the state of its incorporation.
Each of Lancer, Borrower and Borrower's Subsidiaries is duly qualified as a
foreign corporation, and is in good standing, in each jurisdiction in which the
conduct of its business or the ownership or leasing of its Property makes such
qualification necessary, except where the failure so to qualify and to be in
good standing could not reasonably be expected to have a Material Adverse
Effect. The chief executive office and principal place of business of Borrower
and (except as otherwise indicated in the Subsidiary Security Agreement) each
Subsidiary is located at ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. Each of
Lancer, Borrower and Borrower's Subsidiaries has the requisite corporate power
and authority to conduct its business as now being conducted and to own its
Property, and, in the case of Lancer, Borrower and Borrower's Subsidiaries, to
execute and deliver each Loan Document to which it is party and to perform its
obligations thereunder. Each of Lancer, Borrower and Borrower's Subsidiaries is
in compliance in all respects with all Laws applicable to it or to its business,
except where failure to comply could not reasonably be expected to have a
Material Adverse Effect, has obtained all authorizations, consents, approvals,
orders, licenses and permits (including, without limitation, Environmental
Permits) from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Governmental Agency that are necessary for the transaction of its business
except where the failure to obtain such authorizations, consents, approvals,
orders, licenses and permits or to accomplish such filings, registrations and
qualifications could not reasonably be expected to have a Material Adverse
Effect.
Section 4.2 Authority; Compliance With Other Agreements and Instruments.
The execution, delivery and performance by each of Lancer, Borrower and
Borrower's Subsidiaries of the Loan Documents to which it is party have
been duly authorized by all necessary corporate actions, and do not and will
not:
(a) Require any consent or approval of any partner, stockholder, security
holder or creditor of such Person (including, without limitation, the holders of
the Senior Subordinated Notes) not heretofore obtained;
(b) Violate or conflict with any provision of any such Person's articles or
certificate of incorporation or bylaws;
(c) Result in or require the creation or imposition of any Lien or Right of
Others upon or with respect to any Property now owned or leased by any such
Person, other than in favor of the Lenders;
(d) Violate any Requirement of Law applicable to any such Person; or
(e) Conflict with, result in a breach of or default under, or with the giving
of notice or the lapse of time or both, constitute a breach of or default under,
or cause or permit the acceleration of any obligation owed under or require the
termination of (i) the Senior Subordinated Note Indenture or the Senior
Subordinated Notes or (ii) any other Contractual Obligation of any such Person.
Section 4.3 Requirements of Law; Performance of Contractual Obligations.
(a) Neither Lancer, Borrower nor any Subsidiary of Borrower is in violation of,
or default under, any Requirement of Law applicable to such Person, its Property
or business, including, without limitation any Environmental Law or any other
Law, in any respect that could reasonably be expected to have a Material Adverse
Effect.
(b) Neither Lancer, Borrower nor any Subsidiary of Borrower has received any
notice nor has actual knowledge that (i) it is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to it or (ii) any condition
exists which, with the giving of notice or lapse of time or both, would
constitute a default with respect to such Contractual Obligation, except where
such default or defaults, singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(c) Neither Borrower nor any of its Subsidiaries is a party to or bound by any
Contractual Obligation or subject to any charter or corporate restriction or any
Requirement of Law which could reasonably be expected to have a Material Adverse
Effect.
Section 4.4 No Governmental Approvals Required. No authorization,
consent, approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is required to authorize or permit
under applicable Laws the execution, delivery and performance by Lancer,
Borrower or any Subsidiary of Borrower of the Loan Documents to which such
Person is party or the consummation by such Persons of the transactions
contemplated hereby and thereby, except for filings necessary to perfect Liens
in the Collateral, as provided for in Section 8.1. No contract between Borrower
or any of its Subsidiaries and any Governmental Agency prohibits assignment.
Section 4.5 Subsidiaries. Borrower has no Subsidiaries other than T-H
Licensing and except as listed on Schedule 4.5, no interests in any joint
venture or partnership with any other Person.
Section 4.6 Financial Statements. Borrower has furnished to the Lenders
(a) Borrower's consolidated balance sheets for its Fiscal Year ending on or
about December 31, 1998 and Borrower's related consolidated statements of
operations, stockholders' equity and cash flows for its Fiscal Year ending on or
about December 31, 1998, accompanied by the audit opinion of
PricewaterhouseCoopers LLP, (b) Borrower's unaudited consolidated balance sheet
for its Fiscal Quarter ending on or about September 30, 1999 and Borrower's
related consolidated statements of operations, stockholders' equity and cash
flows for such Fiscal Quarter, and (c) Borrower's operating and financial plan
for the three Fiscal Years ending after the Closing Date. The financial
statements described in clauses (a) and (b) above fairly present the financial
position and results of operations of Borrower, on a consolidated basis, as at
the dates and for the periods indicated in accordance with GAAP consistently
applied.
Section 4.7 No Other Liabilities; No Material Adverse Effect. Neither
Borrower nor any Subsidiary has any liability or contingent liability that is
material to Borrower or such Subsidiary that is not reflected in, reserved for
or against or otherwise disclosed in the financial statements described in
Section 4.6, and, since September 30, 1999, except as described in
Schedule 4.7 hereto, no event or circumstance has occurred that could reasonably
be expected to have a Material Adverse Effect.
Section 4.8 Title to and Location of Property. Borrower and its
Subsidiaries have good and marketable title to the owned Property reflected
in the financial statements described in Section 4.6 and valid leasehold title
to the leased Property (if any) reflected in such financial statements, in each
case, other than Property subsequently sold or disposed of in the ordinary
course of business, free and clear of all Liens, other than Permitted
Encumbrances. Neither Borrower nor any Subsidiary owns any Property in any
jurisdiction other than the jurisdictions set forth in Schedule 4.8. All of the
Property owned by, leased to or used by Borrower or any Subsidiary is in good
operating condition and repair (except as described on Schedule 4.7 attached
hereto), ordinary wear and tear excepted, is free and clear of any known defects
except such defects as do not substantially interfere with the continued use
thereof in the conduct of normal operations, and is able to serve the function
for which it is currently being used. Borrower and its Subsidiaries have the
right to peaceful and undisturbed possession under all leases of Property
necessary for the operation of their respective businesses and assets, none of
which contains any unusual or burdensome provisions which could reasonably be
expected to have a Material Adverse Effect, and all such leases are valid and
subsisting and in full force and effect except to the extent that failure to
be in full force and effect could not reasonably be expected to have a Material
Adverse Effect.
Section 4.9 Intangible Assets. Borrower and its Subsidiaries own or
possess the right to use all trademarks, trade names, copyrights, patents,
patent rights, computer software, licenses and other intangible assets that are
used or are necessary in the conduct of their respective businesses as now
operated. To the best of Borrower's knowledge, no such intangible asset (a)
conflicts with the valid trademark, trade name, copyright, patent, patent right
or intangible asset of any other Person or (b) has been infringed upon, to the
extent that such conflict or infringement could reasonably be expected to have
a Material Adverse Effect. Schedule 4.9 sets forth all patents, patent
applications, trademarks and trade names used by Borrower and its Subsidiaries
as of the date of this Agreement and the Closing Date.
Section 4.10 Governmental Regulation. Neither Borrower nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940 or any other Law limiting or regulating its ability to
incur Indebtedness for money borrowed.
Section 4.11 Litigation; Judgments. Except for matters set forth in
Schedule 4.11, there are no actions, suits, proceedings or investigations
pending or, to Borrower's knowledge, threatened against or affecting Lancer,
Borrower or any Subsidiary or any Property of any of them before any
Governmental Agency relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or which, if determined adversely to such
Person could reasonably be expected to have a Material Adverse Effect. There
is, to the best knowledge of Borrower, no reasonable basis for any action, suit,
proceeding or investigation against Lancer, Borrower, or any Subsidiary of
Borrower or any Property of any of them before any Governmental Agency which,
if determined adversely to such Person, could reasonably be expected to
have a Material Adverse Effect. Neither Lancer, Borrower nor any Subsidiary
of Borrower is subject to, or in default with respect to, any final judgment,
writ, injunction,
restraining order or other order of any nature, decree, rule or regulation of
any Governmental Agency which could reasonably be expected to have a Material
Adverse Effect.
Section 4.12 Binding Obligations. Each of the Loan Documents will, when
executed and delivered by Lancer, Borrower or any Subsidiary of Borrower, to the
extent that each is a party thereto, constitute the legal, valid and binding
obligation of such Person pursuant thereto, enforceable against such Person in
accordance with its terms.
Section 4.13 No Default. No event has occurred and is continuing that
constitutes a Default or an Event of Default.
Section 4.14 ERISA.
Except as disclosed on Schedule 4.14:
(a) Except for premiums payable in the ordinary course of business that
are not past due, neither Borrower, nor any Subsidiary is subject to any
liability nor is Borrower aware of any facts which could reasonably be expected
to result in liability to any such Person resulting directly or indirectly or
in any way connected with any failure on the part of Borrower, any Subsidiary or
any ERISA Affiliate to comply with the applicable provisions of ERISA, the Code,
and other applicable Laws with respect to a Plan of any such entity, including,
but not limited to, the continuation of health coverage requirements under
Part 6 of Title I of ERISA and Code Section 4980B with respect to any Welfare
Plan of Borrower, any Subsidiary or any ERISA Affiliate, which liabilities
either singly or in the aggregate could reasonably be expected to have a
Material Adverse Effect;
(b) Neither Borrower nor any Subsidiary maintains or has liability with respect
to, or obligation to pay benefits from or under, any Retiree Welfare Plan;
(c) Neither Borrower nor any Subsidiary maintains or has liability with respect
to, or obligation to pay benefits from or under, any unfunded Plan which
provides benefits to a select group of management or highly compensated
employees upon the termination of employment;
(d) With respect to any Plan of Borrower, any Subsidiary or any ERISA
Affiliate, there are no delinquencies, omissions or misrepresentations with
respect to any returns, reports or premiums required to be filed with or paid to
any Governmental Agency, including, but not limited to, the Internal Revenue
Service, the Department of Labor and the PBGC, which could reasonably be
expected to have a Material Adverse Effect;
(e) With respect to any Pension Plan (or a money purchase plan of Borrower, any
Subsidiary or an ERISA Affiliate), (i) all contributions required by Section 412
of the Code, Section 302 of ERISA, the terms of any collective bargaining
agreement and the terms of any such plan, have been timely made, and (ii) as of
the most recent valuation date for each such plan, the present value of the
total accrued benefits (both vested and nonvested) does not exceed the fair
market value of the assets of such plan by more than $2,000,000;
(f) With respect to each Plan of Borrower or any Subsidiary other than a
Pension Plan, no contributions due from Borrower or any Subsidiary are
delinquent or, if there are any
delinquencies, the adverse consequences of such delinquencies, such as financial
penalties or, in the case of insurance premiums, potential losses of coverage,
could not singly or in the aggregate reasonably be expected to have a Material
Adverse Effect;
(g) With respect to each Pension Plan, there have been no Reportable
Events and Borrower is not aware of any facts which would reasonably be expected
to result in any Reportable Events under circumstances that could reasonably be
expected to have a Material Adverse Effect;
(h) With respect to each Multiemployer Plan, no events have occurred which,
with the giving of notice under Section 4219 of ERISA, either singly or in the
aggregate, would result in withdrawal liability that could reasonably be
expected to have a Material Adverse Effect;
(i) Within the last six years, no Pension Plan has been terminated and there
has been no complete or partial withdrawal within the meaning of Section 4201 of
ERISA from any Multiemployer Plan under circumstances that resulted in
liability to the PBGC, a trustee appointed under Section 4042(b) of ERISA, a
Pension Plan, a Multiemployer Plan or any other Person which liability remains
unsatisfied; and
(j) Neither Borrower, any Subsidiary nor any ERISA Affiliate within the last
five years has engaged in any transaction which resulted in a Pension Plan
being transferred outside of the "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) of such Person.
Section 4.15 Regulations G and U. No part of the proceeds of any Term
Loan or Advance hereunder will be used to purchase or carry, or to extend
credit to others for the purpose of purchasing or carrying, any "margin stock"
(as such term is defined in Regulations G and U) in violation of Regulations G
or U. Neither Borrower nor any Subsidiary is engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any such "margin stock".
Section 4.16 Disclosure. Neither this Agreement, any other Loan
Document, the Registration Statement or any written statement made by or on
behalf of Borrower to the Agent or the Lenders in connection with this
Agreement, any other Loan Document or the transactions contemplated by the
Registration Statement or in connection with the making of any Advance, the
issuance of any Letter of Credit, the incurrence of any Letter of Credit
Obligation or the making of any Term Loan contains any untrue statement of a
material fact or omits a material fact necessary in order to make the statement
made not misleading in light of all the circumstances existing at the date the
statement was made. There is no fact known to Borrower which would constitute a
Material Adverse Effect that has not been disclosed in writing to Lenders.
Borrower acknowledges that Lenders are relying on the truth and accuracy of all
disclosures made by or on behalf of Borrower (including, without limitation, in
the Registration Statement), in making the extensions of credit contemplated
by this Agreement, and specifically authorizes such reliance.
Section 4.17 Tax Liability. Borrower and its Subsidiaries have filed all
tax returns which are required to be filed, and all federal income tax returns
of Borrower and its Subsidiaries for each period beginning on or after August
21, 1989, have been filed on a consolidated basis
with Lancer in accordance with the terms of the Tax Sharing Agreement. Borrower
and its Subsidiaries have paid, or made provision for the payment of, all taxes
with respect to the periods, Property or transactions covered by said returns,
or pursuant to any assessment received by Borrower or any Subsidiary, except
such taxes, if any, as are being contested in good faith by appropriate
proceedings and as to which adequate reserves have been established and
maintained, and taxes or assessments not yet past due. Borrower timely filed,
or caused to be timely filed, with the appropriate office of the Internal
Revenue Service a full and complete protective carryover basis election under
Section 338 of the Code and the Treasury Regulations promulgated thereunder,
with respect to its acquisition by Central Alabama Grain Company to avoid
properly the potential application of such Section of the Code. Borrower has no
knowledge of any proposed tax assessment against Borrower or any Subsidiary that
could reasonably be expected to have a Material Adverse Effect, which has not
been reserved against and is not being actively contested in good faith by or
on behalf of Borrower. As of the date of this Agreement, except as described in
Schedule 4.17, neither Borrower nor any Subsidiary, nor any Person on their
behalf, has executed or filed with any Governmental Agency any agreement or
other document extending, or having the effect of extending, the period for the
assessment or collection of any tax. All deficiencies which have been asserted
against Borrower or any Subsidiary as a result of any federal, state, local or
foreign tax examination for each taxable year in respect of which an examination
has been conducted by the Internal Revenue Service have been fully paid or
finally settled or are being contested in good faith, and no issue has been
raised in any such examination which, by application of similar principles,
reasonably can be expected to result in assertion of a material deficiency for
any other year not so examined which has not been reserved for in Borrower's
financial statements to the extent, if any, required by GAAP.
Section 4.18 Security Interests. The Collateral Documents have created
valid and enforceable Liens in the Collateral described therein in favor of the
Agent, for the benefit of the Lenders, as security for the Obligations which
have been perfected by the filing of financing statements in the offices in the
jurisdictions listed in the schedules to the Security Agreements and, the filing
or recording of the Mortgage, the Patent Security Agreement and the Trademark
Security Agreement, with the appropriate Governmental Agencies. The Liens
created pursuant to such Collateral Documents constitute fully perfected first
Liens on, and security interests in, all right, title and interest of Borrower
or its Subsidiary in the Collateral described therein except as set forth in
such Collateral Documents and except for Permitted Encumbrances.
Section 4.19 Employee Matters. Neither Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect. There is (a) no unfair labor
practice complaint pending against Borrower, or any of its Subsidiaries or, to
the best knowledge of Borrower, threatened against any of them, before the
National Labor Relations Board, and no grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against Borrower or any of its Subsidiaries or, to the best knowledge of
Borrower, threatened against any of them, (b) no strike, labor dispute, slowdown
or stoppage pending against Borrower or any of its Subsidiaries or, to the best
knowledge of Borrower, threatened against Borrower or any of its Subsidiaries
and (c) to the best knowledge of Borrower, except as set forth in Schedule 4.19,
no union representation question exists with respect to the employees of
Borrower, or any of its Subsidiaries and, to the best knowledge of Borrower, no
union organizing activities are taking
place, except, with respect to any matter specified in clause (a), (b) or (c)
above, either individually or in the aggregate, such as could not reasonably be
expected to have a Material Adverse Effect.
Section 4.20 Solvency. After giving effect to the entering into by
Borrower of this Agreement and the other Loan Documents, the making of any
Advance, the incurrence of any Letter of Credit Obligation and the funding of
the Term Loans, Lancer, Borrower and each Subsidiary is Solvent.
Section 4.21 Subordination of Subordinated Indebtedness.
This Agreement and the other Loan Documents to which Borrower or any
Subsidiary is party, and, to the extent permissible under Section 4.06 of the
Senior Subordinated Note Indenture, all further amendments, amendments and
restatements, renewals, extensions, restructurings, supplements, modifications,
refinancings, refundings, or replacements hereof and thereof constitute the
"Credit Agreement" within the meaning of the Senior Subordinated Note Indenture,
and the Term Loans, the Revolving Credit Loan, the Letter of Credit Obligations,
and all other Obligations of Borrower to the Agent and the Lenders under this
Agreement, the Notes and any of the other Loan Documents, and, to the extent
permissible pursuant to Section 4.06 of the Senior Subordinated Note Indenture,
all further amendments, amendments and restatements, renewals, extensions,
restructurings, supplements, modifications, refinancings, refundings and
replacements of any of the foregoing, constitute "Senior Indebtedness" of
Borrower within the meaning of the Senior Subordinated Note Indenture, and the
holders thereof from time to time shall be entitled to all of the rights of a
holder of "Senior Indebtedness" pursuant to Article 11 of the Senior
Subordinated Note Indenture.
Section 4.22 Real Property. Schedule 4.22 correctly sets forth a summary
description of all Owned Real Property and all Leasehold Real Property.
Section 4.23 Environmental Matters. Except as described in Schedule 4.23
(to the extent applicable), (a) the operations, facilities and properties of
Borrower and each Subsidiary comply in all material respects with all applicable
Environmental Laws; (b) Borrower and each Subsidiary have obtained all
Environmental Permits necessary for the operation of their respective
businesses, except where the failure to obtain such Permits would not have
either a Material Adverse Effect or an Environmental Material Adverse Effect,
and all such Environmental Permits are valid and in good standing except where
the failure to be valid and in good standing would not have either a Material
Adverse Effect or an Environmental Material Adverse Effect and, to the best of
Borrower's knowledge, are not the subject of any modification or revocation
proceeding, and Borrower and each Subsidiary are in compliance in all material
respects with all terms and conditions of such Environmental Permits;
(c) neither Borrower nor any Subsidiary is the subject of any outstanding
written order or agreement with any Governmental Agency or private party
respecting (i) any Environmental Laws, (ii) any Remedial Actions, or (iii) any
Environmental Claims arising from the Release or threat of Release of a
Contaminant; (d) neither Borrower nor any Subsidiary is a party defendant or
respondent in any judicial or administrative proceeding alleging a violation of
any Environmental Law, asserting any Environmental Claim arising from the
Release or threat of Release of a Contaminant or relating to any Remedial
Action; (e) to the best of Borrower's knowledge, none of the operations,
properties or facilities of Borrower or any Subsidiary or any of the past
operations, properties or facilities of Borrower or any Subsidiary is (i) the
subject of any federal or state investigation (other than periodic and ordinary
inspections) evaluating any matter regulated by any Environmental Law,
including, without limitation, a determination of whether any Remedial Action is
needed to respond to a Release of any Contaminant into the environment under any
Environmental Law or (ii) listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS") or any similar
published state list of sites requiring investigation or clean-up; (f) neither
Borrower nor any Subsidiary (as to any of the present or past facilities or
operations of Borrower or any Subsidiary) or, to the best knowledge of Borrower,
any predecessor of Borrower or any Subsidiary, has filed any written notice
under any Environmental Law indicating past or present treatment, storage, or
disposal of a hazardous waste or solid waste or reporting a spill or Release of
a Contaminant into the environment under any Environmental Law and except for
Releases of Contaminants which occurred after the date that Borrower or any of
its Subsidiaries sold, transferred, assigned or otherwise disposed of its
interests in any previously operated, owned or leased Property, there have been
no unreported Releases of Contaminants at, on or under Property now or
previously operated, owned or leased by Borrower or any of its Subsidiaries; (g)
to the best of Borrower's knowledge, neither Borrower nor any Subsidiary has any
contingent liability in connection with any Release or threat of Release of any
Contaminant into the environment; (h) neither Borrower nor any Subsidiary has
received any written notice or claim to the effect that it is or may be liable
to any Person as a result of the Release or threat of Release of a Contaminant
into the Environment if such liability would have either a Material Adverse
Effect or an Environmental Material Adverse Effect; (i) as of the Closing Date,
none of Borrower's or any Subsidiary's operations involve the generation,
storage, transportation, treatment, recycling, reclamation, handling or disposal
of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent; (j) neither Borrower nor any Subsidiary has disposed of any
Contaminant by placing it in, on or under the ground, subsurface strata, surface
waters or groundwaters of any Real Property owned, leased or used by Borrower or
any Subsidiary and, to the best of Borrower's knowledge, neither has any lessee,
other prior owner or other Person; (k) neither Borrower nor any of its
Subsidiaries has directly transported or directly arranged for the
transportation of Contaminants to any location which is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on
any similar published state list or which is the subject of federal, state or
local enforcement actions or other investigations which may lead to claims
against Borrower or such Subsidiary for any remedial work, damage to natural
resources or personal injury, including claims under CERCLA, except for such
claims which could not reasonably be expected to have either a Material Adverse
Effect or an Environmental Material Adverse Effect; (l) to the best of
Borrower's knowledge, none of Borrower's or any Subsidiary's Real Property
contains or ever contained, any underground storage tanks, surface impoundments,
asbestos-containing materials or polychlorinated biphenyls; and (m) no
Environmental Lien in favor of any Governmental Agency has been filed or
attached to any of Borrower's or any Subsidiary's Real Property and, to the best
of Borrower's knowledge, there are no conditions or facts in existence that with
the passage of time could give rise to the filing or attachment of such an
Environmental Lien.
Section 4.24 Ownership of Capital Stock. Schedule 4.24 sets forth, as of
the date of this Agreement and the Closing Date, the number of issued and
authorized shares of each class of Capital Stock of Borrower and T-H Licensing,
and the ownership of such shares. Except as
set forth in Schedule 4.24, no Capital Stock (or any securities, instruments,
warrants, option or purchase rights, conversion or exchange rights, calls,
commitments or claims of a character convertible into or exercisable for Capital
Stock) of Borrower or T-H Licensing is subject to issuance under any security,
instrument, warrant, option or purchase rights, conversion or exchange rights,
call, commitment or claim of any character.
Section 4.25 Brokers; Transaction Fees. Neither Borrower nor any of its
Subsidiaries has any obligation to any Person in respect of any finder's,
broker's or investment banker's fee in connection herewith or with any of the
transactions contemplated hereby.
ARTICLE 5.
AFFIRMATIVE COVENANTS
(OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)
So long as any Term Loan or Advance remains unpaid, any Letter of Credit
Obligation remains outstanding, any other Obligation remains unpaid or any
portion of the Commitment remains outstanding, unless the Majority Lenders
otherwise consent in writing:
Section 5.1 Use of Proceeds. Borrower shall use the proceeds of
Advances made hereunder only for working capital and for other general corporate
purposes of Borrower permitted hereunder; and use Letters of Credit arranged
for hereunder only to support certain insurance obligations of Borrower and
for other general corporate purposes of Borrower; in each case to the extent
that such purpose is not otherwise prohibited by this Agreement.
Section 5.2 Payment of Taxes and Other Potential Liens; Compliance with
Related Agreements.
(a) Borrower shall, and shall cause each Subsidiary to, pay (i) all taxes,
assessments and other governmental charges imposed upon it or on any of its
Property or in respect of any of its franchises, businesses, income or Property
before any penalty or interest accrues thereon, and (ii) all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which by Law have or may become a Lien
upon any of Borrower's or any Subsidiary's Properties; provided that no such
taxes, assessments, and governmental charges referred to in clause (i) above or
claims referred to in clause (ii) above need to be paid if being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted and if adequate reserves shall have been set aside therefor in
accordance with GAAP;
(b) Borrower shall file consolidated tax returns with Lancer in accordance
with the terms of the Tax Sharing Agreement and otherwise shall comply with and
perform, and cause each Subsidiary to comply with and perform, all of the
covenants and agreements applicable to Borrower and its Subsidiaries under the
Related Agreements.
Section 5.3 Preservation of Existence. Borrower shall, and shall cause
each Subsidiary to, (a) preserve and maintain its corporate existence under the
laws of the state of its incorporation and all authorizations, rights,
franchises, privileges, consents, approvals, orders, licenses, permits or
registrations from any Governmental Agency that are necessary for the
transaction of its business; and notify the Agent in writing, promptly after
learning thereof, of the suspension, cancellation, revocation or discontinuance
of or of any pending or threatened action or proceeding seeking to suspend,
cancel, revoke or discontinue any such authorization, right, franchise,
privilege, consent, approval, order, license or permit, and (b) qualify and
remain qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary in view of its business or the ownership of its
Properties except if failure to qualify or remain qualified could not reasonably
be expected to have a Material Adverse Effect. Nothing contained herein shall
prohibit a merger or consolidation of T-H Licensing with and into Borrower or a
transfer of the assets of T-H Licensing to Borrower otherwise permitted by
Section 6.2(a).
Section 5.4 Maintenance of Properties and Business.
(a) Borrower shall, and shall cause each Subsidiary to, maintain, preserve
and protect (i) all of their respective tangible Properties that are used or
useful in the conduct of their respective businesses in good order and
condition, subject to wear and tear in the ordinary course of business, and not
permit any waste of any material item of their respective Properties, and (ii)
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect, all trademarks, trade names, copyrights, patents,
patent rights, computer software, licenses and other intangible assets that are
used or useful in the conduct of their respective businesses.
(b) Except as permitted pursuant to the last sentence of Section 5.3, Borrower
shall, and shall cause each of its Subsidiaries to, use its reasonable efforts,
in the ordinary course and consistent with past practice, to preserve its
business organization and preserve the goodwill and business of the customers,
suppliers, and others having business relations with it.
Section 5.5 Maintenance of Insurance. Borrower shall, and shall cause
each Subsidiary to, maintain liability, casualty and other insurance (subject
to customary deductibles and retentions) with responsible insurance companies
in such amounts and against such risks as is carried by responsible companies
engaged in similar businesses and owning similar assets in the general areas in
which Borrower and its Subsidiaries operate and, in any event, the minimum
insurance coverages and risks assured against described in Schedule 5.5; and
provide to the Agent a certified copy of each policy providing for such
insurance, together with an endorsement thereto providing that the insurance
companies issuing such policies will give the Agent at least thirty (30) days
prior written notice of cancellation, non-renewal or any other material change;
maintain the Agent for the benefit of the Lenders as loss payee, as its interest
appears, with respect to insurance covering the Collateral and maintain each
Lender as an additional insured on its liability insurance policies.
Section 5.6 Compliance With Laws. Borrower shall, and shall cause each
Subsidiary to, comply with all Requirements of Law, including, without
limitation, all Environmental Laws, except (a) noncompliances with such
Requirements of Law as are being contested in good faith or as to which a bona
fide dispute may exist and as which could not reasonably be expected to have a
Material Adverse Effect or (b) inadvertent noncompliances with Requirements of
Law which could not reasonably be expected to have a Material Adverse Effect.
Section 5.7 Inspection Rights. Borrower shall, upon reasonable notice, at
any time during customary business hours and as often as reasonably requested,
or if an Event of Default has occurred and is continuing, at any time without
advance notice, permit the Agent or any Lender, or any authorized employee,
agent or representative thereof, to examine, audit and make copies and abstracts
from the records and books of account of, and to visit and inspect the Property
of, Borrower and each Subsidiary, under the guidance of a Responsible Official
of Borrower or such Subsidiary, and to discuss the affairs, finances and
accounts of Borrower and each Subsidiary with any of its officers, key employees
or accountants. Borrower hereby authorizes the Agent and its representatives to
communicate directly with Borrower's accountants, after notifying Borrower of
its intent to do so, and authorizes Borrower's accountants to disclose to the
Agent and its representatives any and all financial statements and other
information of any kind, including copies of any management letter or the
substance of any oral information, that such accountants may have with respect
to the Collateral or Borrower's and its Subsidiaries' condition (financial or
otherwise), operations, properties, performance and prospects. Borrower, on or
before the Closing Date, shall deliver a letter addressed to such accountants
instructing them to disclose such information.
Section 5.8 Audit Rights. Borrower shall permit the Agent, or any
authorized employee, agent or representative thereof, at Borrower's expense,
to audit the Collateral from time to time as often as the Agent may reasonably
request.
Section 5.9 Keeping of Records and Books of Account. Borrower shall,
and shall cause each Subsidiary to, make and keep books, records and accounts
which reflect in reasonable detail all transactions as necessary to permit
preparation of financial statements in conformity with GAAP. If an Event of
Default has occurred and is continuing, Borrower, upon the Agent's request,
shall turn over copies of any such records to the Agent or its representative.
Section 5.10 Compliance With Agreements; Payment of Indebtedness.
Borrower shall, and shall cause each Subsidiary to, promptly and fully comply
with all Contractual Obligations under all agreements, indentures, leases
and/or instruments to which Borrower or any Subsidiary is a party, whether such
agreements, indentures, leases or instruments are with the Lenders or another
Person, where the failure so to comply could reasonably be expected to have a
Material Adverse Effect. Without limitation of the foregoing, Borrower shall
pay, and shall cause each Subsidiary to pay, all Indebtedness in respect of such
Contractual Obligations, subject to the subordination provisions contained in
the Senior Subordinated Note Indenture or any other instruments or agreements
evidencing Indebtedness of Borrower or any Subsidiary.
Section 5.11 Environmental Laws.
(a) Borrower shall and shall cause each Subsidiary to (i) comply in all
material respects with the Environmental Laws and Environmental Permits
applicable to it; (ii) notify the Agent in writing promptly after knowledge, and
in any event within five days after knowledge, in the event of any: (A) Release
or threat of Release which is or must be reported to any Governmental Agency,
(B) Environmental Claims in connection with any of Borrower's or any
Subsidiary's Real Property, (C) government investigation (other than periodic
and ordinary inspections) of matters regulated pursuant to any Environmental
Law, (D) actual or threatened Environmental Lien, (E) proposed real estate,
stock or other commercial transaction that could
reasonably be expected to give rise to any Environmental Claim or potential
liability under any Environmental Law, or (F) any other matter related to
Borrower's or any Subsidiary's Real Property that is related to Environmental
Laws and could reasonably be expected to have a Material Adverse Effect or an
Environmental Material Adverse Effect, including, without limitation, any change
to any applicable Environmental Law and any change or proposed change to any
applicable Environmental Permit; (iii) promptly, and in any event within five
days after submission, forward to the Agent a copy of any notice or report
submitted by Borrower or any Subsidiary to any Governmental Agency in connection
with (A) any Release, (B) any threat of Release, (C) any Environmental Claim,
(D) any written allegation which may give rise to an Environmental Claim or (E)
any other matter relating to the Environmental Laws which would have a Material
Adverse Effect or an Environmental Material Adverse Effect; (iv) forward to the
Agent promptly, and in any event within five days after receipt, a copy of any
order, notice, Environmental Permit or other written communication received by
Borrower or any Subsidiary from any Governmental Agency or other Person in
connection with (A) any Release, (B) any threat of Release, (C) any
Environmental Claim, (D) any written allegation which may give rise to an
Environmental Claim, or (E) any other matter relating to the Environmental Laws
which could reasonably be expected to have a Material Adverse Effect or an
Environmental Material Adverse Effect; and (v) promptly, and in any event within
five days after submission, notify the Agent of any application for an
Environmental Permit submitted by Borrower or any Subsidiary to any Governmental
Agency.
(b) Borrower shall conduct, and cause to be conducted, the ongoing
operations of Borrower and its Subsidiaries in a manner that will not give rise
to the imposition of liability, or require expenditures, under or in connection
with any Environmental Laws, except for any liabilities or expenditures which,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(c) Borrower shall refrain from disposing of any "hazardous waste" (as that
term is defined under RCRA) or "hazardous substance" (as that term is defined
under CERCLA) at, on, in or under any of the Real Property.
(d) In any Fiscal Year, at the request of the Agent, Borrower shall retain an
environmental contractor of recognized standing to perform an environmental
compliance audit ("Environmental Audit") of the facilities, properties and
operations of Borrower and its Subsidiaries in order to demonstrate that
Borrower is in compliance with paragraphs (a), (b) and (c) of this Section 5.11.
The work performed by the contractor in conducting the Environmental Audit shall
be of sufficient scope and quality, and the results presented in such a format,
as to permit Lenders readily to ascertain such compliance on the part of
Borrower. In performing the Environmental Audit, the retained environmental
contractor shall, at a minimum, determine all rules, regulations, requirements,
standards, and limitations of the Environmental Laws, and the provisions of all
Environmental Permits, applicable to all Contaminants used, produced, generated,
discharged or emitted by the operations or activities of Borrower and its
Subsidiaries and all Contaminants known to be present at or on the properties or
facilities of Borrower and its Subsidiaries, and shall determine the compliance
of Borrower and its Subsidiaries with such applicable rules, regulations,
requirements, standards and limitations. If the Agent requests any
Environmental Audit in accordance with the provisions of this Section 5.11(d),
Borrower shall deliver to the Agent not later than sixty (60) days after the
date of such request, a written report
setting forth the results of such Environmental Audit. In the event that the
Environmental Audit discloses any non-compliance with any Environmental Laws or
any condition that could give rise to an Environmental Claim (whether or not
such non-compliance or condition would constitute a breach of paragraph (a) of
this Section 5.11), Borrower shall promptly take such action as Borrower shall
deem necessary or appropriate, in consultation with the environmental contractor
retained by it and with external legal counsel, to remedy such noncompliance.
The reports setting forth the results of Environmental Audits shall be
furnished to the Agent solely for the purpose of evidencing Borrower's and its
Subsidiaries' compliance with the provisions of paragraphs (a), (b) and (c) of
this Section 5.11 and shall not create, nor be intended to imply, any right,
duty or obligation on behalf of the Agent or any of Lenders in any respect
whatsoever, including, without limitation, any right, duty or obligation on the
part of the Agent or any of Lenders in any manner to participate in the
management or operations of Borrower or its Subsidiaries, nor be construed to
imply that the Agent or any of Lenders has any power whatsoever to affect the
decisions and activities of Borrower or its Subsidiaries with respect to
compliance with applicable Environmental Laws.
Section 5.12 Additional Real Property Collateral. Borrower shall notify
the Agent in writing promptly upon its or any Subsidiary's acquisition or
leasing of any Real Property, and, at the Agent's request, shall promptly
thereafter execute and deliver to the Agent, for the benefit of Lenders, or
cause its Subsidiary to execute and deliver to the Agent, for the benefit of
Lenders, a mortgage, deed of trust, deed to secure debt, assignment or other
appropriate instrument evidencing a Lien upon any such Real Property, together
with such title insurance policies (mortgagee's form), certified surveys,
appraisals and local counsel opinions with respect thereto and such other
agreements, documents and instruments which the Agent deems necessary or
desirable, the same to be in form and substance substantially the same as
the Mortgage (with appropriate state law variations) and to be subject only to
(a) Permitted Encumbrances and (b) such other Liens as the Agent may approve in
its sole discretion, it being understood that the granting of such additional
security for the Obligations is a material inducement to the execution and
delivery of this Agreement by each Lender.
Section 5.13 Collections. Borrower shall deposit into the Collection
Accounts on a daily basis any monies, checks, notes, drafts or other items of
payment received by Borrower relating to or which constitute proceeds of
Accounts, Inventory or other Collateral, and to the extent that one or more of
the Collection Accounts consists of a lockbox, will direct all of its Account
Debtors to remit all payments on Accounts directly to the appropriate lockbox or
lockboxes. Prior to Borrower's deposit of proceeds of Accounts or Inventory
into the Collection Accounts, Borrower shall hold all such amounts in trust for
the benefit of Lenders. Borrower shall take all actions necessary at all times
hereafter to maintain the Collection Accounts, including the payment of all fees
charged by the banks at which such accounts are maintained. Borrower
acknowledges and agrees that, from and after the occurrence of, and during the
continuance of, a Triggering Event, only the Agent shall have any power of
withdrawal with respect to the Collection Accounts and Borrower shall not have
any right, title or interest in such accounts or the sums deposited therein. In
accordance with the provisions of the Blocked Account Agreements Borrower will
instruct each bank at which a Collection Account is maintained that, from and
after the occurrence of, and during the continuance of, a Triggering Event, if
the Agent so directs, such bank is to remit the collected balance in such
account on a
daily basis, in immediately available funds, to the Agent's Deposit Account or
as the Agent shall otherwise direct for application to the Obligations as
provided in Section 3.1(a).
ARTICLE 6.
NEGATIVE COVENANTS
So long as any Term Loan or Advance remains unpaid, or any Letter of Credit
Obligation remains outstanding or any other Obligation remains unpaid or any
portion of the Commitment remains outstanding (unless the Majority Lenders
otherwise consent in writing):
Section 6.1 Disposition of Property; Application of Proceeds.
(a) Borrower shall not, and shall not permit any Subsidiary to, sell,
assign, transfer, lease, convey or otherwise dispose of any of its Property
(including, without limitation, Accounts), whether now owned or hereafter
acquired, or any income or profits therefrom, or enter into any agreement to do
so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) dispositions in the ordinary course of business of used, worn-out or
surplus Equipment and sales of Equipment to the extent that such sales are
credited against the purchase price of replacement Equipment or the proceeds of
such sale are applied within one hundred eighty (180) days after the date of
such sale to the purchase price of such replacement Equipment; provided that
neither the aggregate book value of Equipment disposed of or sold as permitted
under this clause (ii), nor the aggregate amount of sales proceeds received in
respect thereof, exceeds Three Million Dollars ($3,000,000) in any one Fiscal
Year; and
(iii) dispositions not otherwise permitted hereunder which are made for fair
market value and the Net Proceeds of which are applied as provided in
Section 3.3, provided that (A) at the time of any disposition, no Default or
Event of Default shall have occurred and be continuing or shall result from such
disposition, (B) the aggregate sales price from such disposition shall be paid
in Cash and (C) neither the aggregate book value of such assets nor the
aggregate amount of sales proceeds received in respect thereof exceeds Five
Hundred Thousand Dollars ($500,000) in any one Fiscal Year.
(b) Net Proceeds of dispositions of Property made as permitted under
subclauses (a)(ii) and (a)(iii) of this Section 6.1 shall be paid by Borrower to
the Agent for application in prepayment of the Term Loans to the extent
required by Sections 3.3(b). Proceeds of dispositions of Property made pursuant
to the other provisions of clause (a) shall be deposited in the Collection
Accounts as required by Section 5.13.
Section 6.2 Restrictions on Fundamental Changes. Borrower shall not,
and shall not permit any Subsidiary to, (a) enter into any merger or
consolidation, (b) liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), (c) convey, lease, sell, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or substantially all of Borrower's
or any Subsidiaries' business or Property, whether now owned or hereafter
acquired, (d)
consummate any Acquisition, (e) create any Subsidiary, (f) transfer any of its
assets to any Subsidiary created hereafter (including, without limitation, any
Subsidiary created with the Majority Lenders' prior written consent), or (g)
change its corporate, capital, legal or divisional structure, except that:
(i) any Subsidiary of Borrower may merge or consolidate with or into,
or transfer assets to, Borrower (provided that Borrower shall be the
continuing or surviving corporation) or with, into or to any one or more
Subsidiaries of Borrower (provided that if any transaction shall be between
a Subsidiary and a wholly-owned Subsidiary, the wholly-owned Subsidiary
shall be the continuing or surviving corporation or transferee) if
immediately after giving effect thereto no Default or Event of Default
would exist;
(ii) any Subsidiary may convey, lease, sell, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to Borrower
or another wholly-owned Subsidiary of Borrower if immediately after giving
effect thereto no Default or Event of Default would exist;
(iii) Borrower or any Subsidiary may enter into distributorship agreements,
marketing, licensing and other arrangements relating to or complementary with
Borrower's business as presently conducted which will not require a capital
investment or contribution by Borrower, and with respect to which neither
Borrower nor any of its Subsidiaries will incur any Indebtedness (except as
otherwise expressly permitted under this Agreement);
(iv) Borrower or any Subsidiary may enter into joint ventures or partnerships
related to or complementary with Borrower's business as presently conducted if
(A) such joint ventures or partnerships will, in the good faith judgment of
Borrower, be advantageous to Borrower, (B) Borrower does not make capital
investments in excess of, or contribute assets having a fair value in excess of,
$3,000,000 for any one such joint venture or partnership or $5,000,000 for all
such joint ventures or partnerships, subject, in each case, to the additional
limitations on Capital Expenditures set forth in Section 6.18 (and provided that
expenditures permitted under this clause (iv) to the extent not Capital
Expenditures will be deducted from Borrower's gross income in determining
Consolidated Net Income for purposes of this Agreement), (C) neither Borrower
nor any of its Subsidiaries incurs any Indebtedness with respect to any such
joint venture or partnership and (D) immediately after giving effect thereto no
Default or Event of Default would exist; and
(v) Borrower may contribute to T-H Licensing patents, trademarks, trade names,
service marks, copyrights and rights with respect to the foregoing, provided
that T-H Licensing licenses back to Borrower the exclusive right to use the
same.
Section 6.3 Restricted Payments. Borrower shall not, and shall not
permit any Subsidiary to, make any Restricted Payment except (a) regularly
scheduled payments of interest in respect of the Senior Subordinated Notes
(but only to the extent permitted to be made pursuant to Section 11.03 of the
Senior Subordinated Note Indenture), (b) purchases, redemptions or other
acquisitions of shares of its common stock or warrants or options to acquire
any such shares with
proceeds received from the substantially concurrent issue of new shares of its
common stock, (c) payments to Lancer or any Affiliate of Lancer of Borrower's
allocated portion of the Lancer consolidated group's corporate expenses
(including (x) expenses for fees actually paid or payable at market rates to
attorneys, accountants, consultants and other professionals, and
(y) reimbursement of salary and compensation expenses of Lancer employees who
provide substantially all of their employment services to Borrower) actually
incurred in connection with Lancer's or any Affiliates of Lancer's performance
of management, consulting, monitoring and financial advisory services with
respect to Borrower or any Subsidiary; provided, however, that such payments
(excluding reimbursement of the expenses referred to in the preceding
parenthetical) shall be in an amount not in excess of $1,600,000 in the
aggregate in any Fiscal Year (inclusive of an amount not in excess of $100,000
in any Fiscal Year permitted to be retained and paid by T-H Licensing as
provided in clause(A)(2) of the second paragraph of Section 6.9(c) hereof), (d)
payments in respect of the Equity Incentive Plan to the extent permitted under
Section 6.9, (e) payments in discharge of mortgage obligations of its employees
to the extent that Borrower is permitted to assume such obligations under clause
(m) of Section 6.8, (f) payments by Borrower under the Tax Sharing Agreement to
the extent permitted under Section 6.9, (g) reasonable directors' fees to
directors of Borrower who are not employees of Borrower in an aggregate amount
not to exceed $300,000 in any Fiscal Year, (h) loans and advances by Borrower to
its employees permitted under Section 6.12; (i) cash dividends declared and paid
by Borrower on the Exchangeable Preferred Stock; provided that (A) such
dividends are declared and paid in accordance with the terms of the Certificate
of Designations as in effect on the Closing Date; (B) no Default or Event of
Default has occurred and is continuing hereunder or would result from the
declaration and payment of such dividend; (C) such dividends are permitted to be
paid under Section 4.08 of the Senior Subordinated Note Indenture as in effect
on the Closing Date (without requiring the obtaining of any waiver or consent
from the holders of the Senior Subordinated Notes); and (D) the Agent shall have
received all of the following prior to the declaration and payment of each such
dividend, all in form and substance satisfactory to the Agent and legal counsel
for the Agent: (1) an Officer's Certificate affirming that the conditions set
forth in clauses (A), (B) and (C) above have been satisfied with respect to such
dividend (and attaching all calculations necessary to demonstrate satisfaction
of the condition set forth at clause (C) above); (2) such documentation as the
Agent may request to confirm that such dividend has been duly authorized,
including certificates of corporate resolutions, certificates of Responsible
Officials and the like; (3) upon the written request of the Agent, the legal
opinion of Debevoise & ▇▇▇▇▇▇▇▇, special counsel to Borrower, with respect to
such dividend, in form and substance reasonably satisfactory to the Agent,
together with copies of all factual certificates and legal opinions upon which
such counsel has relied; and (4) upon the written request of the Agent, the
favorable written opinion of Chartered Capital Advisors, Inc., valuation
consultants to Borrower or other valuation consultants selected by Borrower and
acceptable to Lender, as to the solvency of Borrower after giving effect to the
declaration and payment of such dividend (any such dividend meeting the
requirements of clauses (A)-(D) above, a "Permitted Preferred Stock Dividend");
(j) payments to Lancer or any Affiliate of Lancer for consulting, investment
banking, advisory or other services performed by Lancer or any Affiliates of
Lancer in connection with material and extraordinary transactions, including
material acquisitions and dispositions, of Borrower or any of its Subsidiaries
(including reimbursement of expenses of Lancer or Affiliates of Lancer for fees
actually paid or payable at market rates to attorneys, accountants, consultants
and other professionals in connection with such services); provided,
however, that (i) such payments (excluding reimbursement of the expenses
referred to in the preceding parenthetical) do not exceed in any Fiscal Year the
greater of (x) $1,500,000 or (y) fifty percent (50%) of Borrowers' Consolidated
Net Income before payment of Permitted Preferred Stock Dividends for the
preceding Fiscal Year, but not to exceed $5,000,000, (ii) no Default or Event of
Default has occurred and is continuing or will result from the payment of any
such amount and (iii) this provision shall not be deemed to be a consent by
Lenders to the consummation of any transaction prohibited by the Loan Agreement;
(k) payments to Lancer or the Lancer Employee Stock Ownership Plan, the proceeds
of which are used to redeem shares of common stock of Lancer held by
participants in the Lancer Employee Stock Ownership Plan so long as (i) such
payments do not exceed $500,000 in the aggregate in any Fiscal Year or
$2,000,000 in the aggregate in the Fiscal Year (if any) in which Borrower's
employees' participation in the Lancer Employee Stock Ownership Plan is
terminated; (ii) such payments do not exceed $5,500,000 in the aggregate during
the term of this Agreement and (iii) at the time of the making of any such
payment no Default or Event of Default shall have occurred and be continuing or
will result from the making of such payment; and (l) purchases by Borrower or
any Subsidiary of Borrower of the Exchangeable Preferred Stock or Senior
Subordinated Notes so long as (i) the face amount of such purchases does not
exceed $15,000,000 in the aggregate in any Fiscal Year and (ii) at the time of
the making of any such purchase, no Default or Event of Default shall have
occurred and be continuing or will result from the making of such purchase.
Section 6.4 Restrictions on Amendments, Etc. Borrower shall not (a)
amend, modify or change, or consent or agree to any amendment, modification or
change to, the Senior Subordinated Note Indenture, any Senior Subordinated Note
or any of the terms relating to Subordinated Indebtedness (other than (i) any
such amendment, modification or change which would extend the maturity or reduce
the amount of any payment of principal thereof or which would reduce the
rate or extend the date of payment of interest thereon or other amounts with
respect thereto and (ii) amendments of the type described in Sections 8.01(2),
(3), (4) and (8) of the Senior Subordinated Note Indenture, provided, however,
that any amendment, modification or change with respect to the definitions of
"Credit Agreement", "Designated Senior Indebtedness", "Senior Indebtedness",
"Guarantor Senior Indebtedness" or "Senior Credit Facility" (as defined in the
Senior Subordinated Note Indenture) or with respect to Article Eleven of the
Senior Subordinated Note Indenture shall require the consent of the Majority
Lenders); (b) designate any "Senior Indebtedness" other than the Obligations
as "Designated Senior Indebtedness" (as such terms are defined in the
Senior Subordinated Note Indenture) or (c) amend, modify or change, or consent
or agree to any amendment, modification or change to, the Certificate of
Designations or any of the terms relating to the Exchangeable Preferred Stock
(other than any such amendment, modification or change which would extend the
maturity date or reduce the amount of any liquidation preference or redemption
amount or which would reduce the dividend rate or extend the date of payment
of dividends thereon or other amounts with respect thereto).
Section 6.5 ERISA. Borrower shall not, and shall not permit any
Subsidiary to:
(a) Terminate any Pension Plan when such termination reasonably could be
expected to result in liability to Borrower or any Subsidiary in excess of Three
Million Dollars ($3,000,000);
(b) With respect to any Pension Plan (or money purchase plan of Borrower,
any Subsidiary or any ERISA Affiliate), fail timely to make any contributions
as required by the terms of such plan and Code Section 412 and ERISA Section
302, if the consequence of such failure could reasonably be expected to have a
Material Adverse Effect;
(c) With respect to any Multiemployer Plan, make a complete or partial
withdrawal (within the meaning of Section 4201 of ERISA) from any such plan that
in the aggregate could reasonably be expected to have a Material Adverse Effect;
(d) Take or fail to take any action with respect to a Plan, including, but not
limited to, amending a Plan or establishing a Plan where such actions or
failures to act singly or in the aggregate could reasonably be expected to have
a Material Adverse Effect; or
(e) Modify, establish or become obligated to contribute to a Plan (other than a
Pension Plan or Multiemployer Plan) if as a result of such action the estimated
present value of the liability to pay benefits under such Plan will exceed the
fair market value of any assets set aside to fund such benefits in an amount
that could reasonably be expected to have a Material Adverse Effect.
Section 6.6 Change in Nature or Conduct of Business. Borrower shall
not, and shall not permit any Subsidiary to, make any material change in its
business other than a reasonable extension of such business to add complementary
product lines or markets.
Section 6.7 Liens. Borrower shall not, and shall not permit any
Subsidiary to, directly or indirectly, create, incur, assume or permit to exist
any Lien on or with respect to any of its Property, except the following
(collectively, "Permitted Encumbrances"):
(a) Liens created by the Loan Documents;
(b) Liens existing on the date of this Agreement and described on Schedule 6.7;
(c) those Liens which are "Permitted Encumbrances" under the Mortgage;
(d) Liens (other than Environmental Liens and Liens in favor of the PBGC) with
respect to taxes, assessments or governmental charges or claims, the nonpayment
of which is permitted under Section 5.2;
(e) Statutory Liens of landlords and Liens of suppliers, mechanics, carriers,
materialmen, warehousemen or workmen and other Liens imposed by law and created
in the ordinary course of business, arising in respect of claims, the nonpayment
of which is permitted under Section 5.2;
(f) Liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other types of
social security benefits or to secure other similar obligations;
(g) Liens (including the interest of a lessor under a Capital Lease) to which
any Property is subjected at the time of Borrower's acquisition thereof (or
within thirty (30) days
after the acquisition thereof), securing Indebtedness permitted under Section
6.8(d) arising in respect of the purchase or lease of such Property; provided
that in each case, (i) such Lien does not extend to or cover or include any
other Property of Borrower or a Subsidiary, (ii) the fair market value of the
Property subject to such Lien is no less than the principal amount of the
Indebtedness to be secured by such Lien, (iii) such Lien secures only such
permitted Indebtedness and no other Indebtedness of Borrower or a Subsidiary,
and (iv) such Lien is promptly released upon the payment in full of such
Indebtedness;
(h) Liens arising under Section 302(f) of ERISA or Section 412(n) of the
Code where the delinquent contribution which gave rise to the Lien is paid
within thirty (30) days of its original due date;
(i) any interest or title of a lessor, or secured by a lessor's interest, under
any lease permitted by this Agreement;
(j) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business, which do not in the aggregate materially detract
from the value of the encumbered asset or materially impair the use thereof in
the operation of the business of Borrower or any Subsidiary thereof; and
(k) zoning restrictions, easements, encroachments, rights of way, licenses or
other restrictions on the use of the Real Property or other minor irregularities
in title thereto, as long as the same do not materially impair the use, value of
marketability of the Real Property.
Section 6.8 Indebtedness. Borrower shall not, and shall not permit any
Subsidiary to, enter into any Guaranty or create, incur, assume or permit to
exist any other Indebtedness, whether recourse or nonrecourse, and whether
superior or junior, resulting from borrowings, loans, advances or the granting
of credit, whether secured or unsecured, except the following:
(a) the Obligations;
(b) the Subordinated Indebtedness;
(c) Indebtedness existing on the Closing Date described on Schedule 6.8;
(d) purchase money Indebtedness incurred by Borrower to finance Capital
Expenditures and the acquisition of Property under Capital Leases subsequent to
the date of this Agreement to the extent that (i) the aggregate amount of such
Indebtedness incurred during the term of this Agreement does not exceed
$1,000,000 and (ii) at the time that any such liability in respect of purchase
money Indebtedness or Capital Leases is to be incurred, no Default or Event of
Default shall have occurred and be continuing or will result therefrom;
(e) Indebtedness incurred in connection with Operating Leases permitted under
Section 6.19;
(f) the Subsidiary Guaranty;
(g) Indebtedness of Borrower to T-H Licensing, arising as a result of the
making by T-H Licensing of loans to Borrower as described in Section 6.9
(subject to the limitations set forth therein).
(h) Indebtedness of Borrower to Lancer under the Tax Sharing Agreement;
(i) Subject to the limitations on Capital Expenditures set forth in Section
6.18, Indebtedness of Borrower in respect of Capital Leases so long as the
aggregate amount of such Indebtedness does not exceed the greater of
(i) $5,000,000 or (ii) four and one-half percent (4.5%) of the amount of the
gross property, plant and equipment of Borrower and its subsidiaries determined
on a consolidated basis, as shown on the balance sheet of Borrower as of the end
of the most recently ended Fiscal Quarter of Borrower, in accordance with GAAP
consistently applied;
(j) Indebtedness of the Borrower or its Subsidiaries in an amount not in excess
of $10,000 at any time outstanding arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, that such Indebtedness is
extinguished within 5 business days of incurrence;
(k) Interest Rate Protection Obligations of Borrower covering Indebtedness of
Borrower; provided, however, that (i) any Indebtedness to which any such
Interest Rate Protection Obligations relate bears interest at fluctuating
interest rates and is otherwise permitted to be incurred under this Section 6.8
and (ii) the notional amount of any such Interest Rate Protection Obligations
does not exceed the principal amount of the Indebtedness to which such Interest
Rate Protection Obligation relates;
(l) Unsecured Indebtedness of the Borrower in an aggregate amount not in excess
of $3,000,000 at any time outstanding; and
(m) Indebtedness of Borrower in an aggregate amount not in excess of Five
Hundred Thousand Dollars ($500,000) at any time outstanding resulting from the
guaranty by Borrower of, or assumption by Borrower of, residential mortgage
indebtedness of its employees in connection with the relocation of such
employees.
Section 6.9 Transactions with Affiliates. Borrower shall not, and shall
not permit any Subsidiary to, directly or indirectly, enter into or permit to
exist any transaction with any Affiliate of Borrower on terms that are less
favorable to Borrower or such Subsidiary than those that might be obtained in
an arm's-length transaction at the time from Persons who are not an Affiliate,
except as permitted under Sections 6.3 and 6.8 and as follows:
(a) Borrower may make payments (i) to the Persons provided under the Equity
Incentive Plan in amounts not in excess of the Equity Plan Cap and (ii) to
Lancer as required by the Tax Sharing Agreement, provided, that as to each of
clauses (i) and (ii), no Event of Default shall have occurred and be continuing
(other than an Event of Default of which Borrower has given the Agent at least
thirty (30) days notice prior to the making of such payment and as to which
Borrower has not received a notice from the Agent, given at the request of the
Majority Lenders requiring that such payment not be made); and
(b) Borrower may, notwithstanding that an Event of Default may have occurred
and be continuing, make any payment prior to any acceleration of the Obligations
pursuant to Section 9.2 which is due to Lancer under the Tax Sharing Agreement
to the extent that such payment does not exceed the amount of a then-current or
past due obligation of the "Lancer Group" to pay tax to a Governmental Agency
which is attributable to the "Separate Return Tax Liability" of the "Fairfield
Group" (as such terms are defined in the Tax Sharing Agreement).
(c) Borrower may pay royalties to T-H Licensing on a quarterly or annual basis
in the amounts provided in that certain letter agreement dated as of December
29, 1989 between Borrower and T-H Licensing as in effect on the Closing Date;
provided that (i) except as provided below, any such payment is returned by T-H
Licensing to Borrower as a loan within forty-five (45) days after receipt by T-H
Licensing, (ii) no principal, interest or other payment is payable or paid on
any such loans until the Obligations have been paid in full and the Loan
Agreement has been terminated, except that Borrower may pay interest to T-H
Licensing on such loans at a rate not in excess of the rate then in effect with
respect to the New Term Loans so long as, except as provided below, any such
interest payment is returned by T-H Licensing to Borrower as a loan within sixty
(60) days after receipt by T-H Licensing and (iii) each such loan is evidenced
by a promissory note which is delivered by T-H Licensing to the Agent as
additional collateral under the Subsidiary Security Agreement.
Notwithstanding the foregoing, (A) T-H Licensing may retain from the
amounts otherwise required to be loaned to Borrower as provided in clause (i)
above, (1) amounts not in excess of $100,000 per quarter and $500,000 in the
aggregate during the term of this Agreement so long as all such amounts are
deposited in T-H Licensing's Account No. 28096 at Wilmington Trust Company and
are not withdrawn by T-H Licensing for any purpose and (2) an amount not in
excess of $100,000 per year which may be used by T-H Licensing for the purpose
of making the payments to Lancer and its Affiliates specified in clause (c) of
Section 6.3 hereof (subject to the aggregate limitation of $1,600,000 on all
such payments by Borrower and its Subsidiaries specified therein) and (B) T-H
Licensing may retain from the amounts otherwise required to be loaned to
Borrower as provided in clause (ii) above, amounts required to pay its patent
registration fees and reasonable legal expenses incurred in the ordinary course
of business.
Section 6.10 Sales and Leasebacks. Borrower shall not become, and shall
not permit any Subsidiary to become, liable, by assumption or by Guaranty, with
respect to any lease, whether an Operating Lease or a Capital Lease, of any
Property (whether real, personal or mixed) which it sold or transferred or is to
sell or transfer to any other Person or which it intends to use for
substantially the same purposes as any other Property which has been or is to be
sold or transferred by it to any other Person in connection with such lease.
Section 6.11 Margin Regulations. Borrower shall not use all or any
portion of the proceeds of any Advance or Term Loan made under this Agreement
to purchase or carry "margin stock" (as such term is defined in Regulations
G and U).
Section 6.12 Investments. Except as permitted under Section 6.2,
Borrower shall not, and shall not permit any Subsidiary to, make or suffer to
exist any Investment except (a) Investments consisting of Cash Equivalents or
investments in money market funds organized under the laws of the United States
of America or any state thereof that invest substantially all of
their assets in Cash Equivalents (which, in each case, have been duly pledged to
the Agent) at any time when a Triggering Event is not in existence,
(b) Investments consisting of advances to employees of Borrower for travel
expenses, relocation and similar purposes in the ordinary course of business in
amounts not to exceed $250,000 to all employees in the aggregate at any time
outstanding (exclusive of mortgage guarantees and assumptions permitted under
Section 6.8(m)), (c) Investments consisting of Accounts, (d) in the case of T-H
Licensing, the loans described in Section 6.9(c) and (e) Investments
representing Capital Stock Obligations issued to Borrower in settlement of
claims against any other Person by reason of a composition or readjustment of
debt or a reorganization under Chapter 11 of the Bankruptcy Code of the United
States of America of any Account Debtor.
Section 6.13 Fiscal Year. Borrower shall not change its Fiscal Year for
accounting or tax purposes from the fiscal year ending on or about December 31
of each calendar year and shall not, and shall not permit any Subsidiary to,
make any significant change in accounting treatment or reporting practices,
except as required by GAAP.
Section 6.14 Cash Management System. Borrower shall not maintain any
bank account other than those accounts set forth in Schedule 6.14 and the
Collection Accounts, or authorize or direct any Person to take any action with
respect to amounts deposited in the Collection Accounts in contravention of the
provisions of this Agreement, the Security Agreement, the Blocked Account
Agreements, or any other Loan Document. Borrower shall not direct any Account
Debtor to remit payments to any bank account or lockbox other than a Collection
Account.
Section 6.15 Cancellation of Indebtedness. Borrower shall not, and shall
not permit any Subsidiary to, cancel any material claim or debt owing to it,
except for reasonable consideration in the ordinary course of business.
Section 6.16 Commingling. Borrower shall not maintain corporate deposit
accounts jointly with any Affiliate or other Person or commingle any funds with
funds of any Affiliate or other Person.
Section 6.17 Related Agreements; Tax Election. Borrower shall not (a)
take or fail to take any action under the Related Agreements which could
reasonably be expected to have a Material Adverse Effect or (b) amend,
supplement, waive or otherwise relinquish any material right under, or otherwise
modify any provision of, any Related Agreement which could reasonably be
expected to have a Material Adverse Effect. Borrower shall not make, and shall
not permit any Subsidiary of Borrower to make, any payment to Lancer or its
Affiliates with respect to federal tax obligations except at the times and in
the amounts required by the Tax Sharing Agreement.
Section 6.18 Capital Expenditures. Borrower shall not, and shall not
permit any Subsidiary to, make or commit to make Capital Expenditures in any
Fiscal Year which exceed in the aggregate for Borrower and its Subsidiaries the
sum of $15,000,000; provided that, in the event that, for any Fiscal Year, the
maximum aggregate amount set forth above exceeds the amount of Capital
Expenditures actually made in such Fiscal Year, the unused portion of such
permitted amount for such Fiscal Year may be carried forward and used solely
in the next
succeeding Fiscal Year for Capital Expenditures, but only after the entire
amount actually scheduled for use in such succeeding Fiscal Year shall have been
used.
Section 6.19 Operating Leases. Borrower shall not, and shall not permit
any Subsidiary to, become liable in any way, whether directly or by assignment
or Guaranty, for the obligations of the lessee under any Operating Lease, except
Operating Leases of Borrower and its Subsidiaries in existence on the Closing
Date and any renewal, extension or refinancing thereof, and after the Closing
Date, any Operating Leases entered in to by Borrower or any of its Subsidiaries
in the ordinary course of business in a manner and to the extent consistent with
past practice, provided, that the aggregate annual rental payments for all such
Operating Leases shall not exceed $3,000,000 in any Fiscal Year.
Section 6.20 Current Ratio. Borrower will not permit (as of the end of
any Fiscal Quarter) the ratio of Consolidated Current Assets to Consolidated
Current Liabilities to be less than 1.25:1.00.
Section 6.21 Consolidated Fixed Charge Coverage Ratio. Borrower will not
permit the ratio of (a) Consolidated Cash Flow for any Fiscal Quarter to (b)
Consolidated Fixed Charges for such Fiscal Quarter to be less than the ratio set
forth below next to the Fiscal Year in which such Fiscal Quarter occurs:
FISCAL YEAR ENDING RATIO
December 31, 1999 .90:1.00
December 31, 2000 and 1.00:1.00
each Fiscal Year thereafter
For purposes of this Section 6.21, Consolidated Cash Flow and Consolidated
Fixed Charges shall be calculated based upon the period of four Fiscal Quarters
ending on the date of calculation.
Section 6.22 Interest Coverage Ratio. Borrower shall not permit the
ratio of (a) Consolidated EBITDA for any Fiscal Quarter to (b) Consolidated Net
Interest Expense for such Fiscal Quarter to be less than the ratio set forth
below next to the applicable Fiscal Quarter set forth below:
FISCAL QUARTER RATIO
All Fiscal Quarters 1.50:1.00
through the Fiscal
Quarter ending
December 31, 2001
Fiscal Quarters 1.60:1.00
Ending March 31,
2002 and June 30, 2002
All Fiscal Quarters 1.75:1.00
thereafter
For purposes of this Section 6.22, Consolidated EBITDA and Consolidated Net
Interest Expense shall be calculated based upon the period of four Fiscal
Quarters ending on the date of calculation.
ARTICLE 7.
INFORMATION AND REPORTING REQUIREMENTS
So long as any Term Loan or Advance remains unpaid, any Letter of Credit
Obligation remains outstanding, any other Obligation remains unpaid or any
portion of the Commitment remains outstanding, unless the Agent (with the
approval of the Majority Lenders) otherwise consents in writing:
Section 7.1 Financial Information and Reports. Borrower shall deliver
to the Agent and each of the Lenders at Borrower's sole expense:
(a) Monthly Financial Statements. As soon as practicable, and in any event
within thirty (30) days after the end of each month, (i) the consolidated
balance sheet of Borrower as at the end of such month and (ii) consolidated
statements of operations, stockholders' equity and cash flows, in each case for
such month and for the portion of the Fiscal Year ended with such month, all in
sufficient detail to calculate compliance with the Financial Covenants, and
presented in a manner comparing such financial statements to the corresponding
period of the prior Fiscal Year.
(b) Quarterly Financial Statements. As soon as practicable, and in any event
within forty-five (45) days after the end of each Fiscal Quarter (other than
the fourth Fiscal Quarter in any Fiscal Year), (i) the consolidated balance
sheet of Borrower as at the end of such Fiscal Quarter and (ii) consolidated
statements of operations, stockholders' equity and cash flows, in each case for
such Fiscal Quarter and for the portion of the Fiscal Year ended with such
Fiscal Quarter, all in detail sufficient to calculate compliance with the
Financial Covenants, and presented in a manner comparing such financial
statements to the corresponding period of the prior Fiscal Year.
(c) Annual Financial Statements. As soon as practicable, and in any event
within ninety (90) days after the end of each Fiscal Year, (i) the consolidated
balance sheet of Borrower as at the end of such Fiscal Year, and (ii) the
related consolidated statements of income, stockholders' equity and cash flows.
Such financial statements shall be prepared in accordance with GAAP,
consistently applied (except for those changes with which the independent public
accountants of Borrower have concurred and shall have disclosed in the notes to
such financial statements) and shall be accompanied by a report and opinion of
Pricewaterhouse Coopers, LLP or other independent public accountants of
recognized national standing selected by Borrower and approved by the Majority
Lenders which report and opinion shall be prepared in accordance with generally
accepted auditing standards as at such date, shall not be subject to any
qualifications or exceptions (except for exceptions addressing changes in
accounting principles), and shall be accompanied by a computation by Borrower of
its Consolidated Excess Cash Flow for such Fiscal Year and by a certificate of
such accountants stating that (A) Borrower's computation of Consolidated Excess
Cash Flow for such Fiscal Year is in accordance with the provisions of this
Agreement and GAAP, and (B) in performing the audit necessary for the
certification of such financial statements and such report, such accountants
have obtained no actual knowledge that Borrower is not in compliance with the
Financial Covenants or of any other Default or Event of Default (or, if such
accountants have obtained actual knowledge of noncompliance with any Financial
Covenant or of any other Default or Event of Default, stating the nature and
status of such Default).
(d) Comparison of Annual Statements and Prior Years Statements; Consolidating
Financial Statement. Concurrently with the audited financial statements
described in clause (c) above,
(i) unaudited consolidated statements setting forth the consolidated balance
sheet, statement of operations, statement of stockholders' equity and statement
of cash flows of Borrower for the Fiscal Year to which the audited financial
statements relate presented in a manner comparing such financial statements
to the prior Fiscal Year.
(ii) unaudited consolidating balance sheets of Borrower as at the end of such
Fiscal Year and the related consolidating statements of operations and
stockholders' equity and consolidated statement of cash flows for such Fiscal
Year, all in reasonable detail certified by a Senior Officer of Borrower as
having been used in connection with the preparation of the financial statements
delivered pursuant to the preceding clause (c).
(e) Management's Discussion and Analysis. Concurrently with the financial
statements described in clauses(a), (b) and (c) above, a report detailing the
operations of Borrower which report shall include a management discussion and
analysis of Borrower's performance during such month, Fiscal Quarter or Fiscal
Year and an explanation of any material variance from Borrower's business plan
or budget for such period that is reflected in such financial statements and
such other matters which the Agent or the Majority Lenders shall request.
(f) Compliance Certificate. Concurrently with each of the financial statements
to be delivered pursuant to clauses (a), (b) and (c), Borrower shall deliver a
Compliance Certificate dated as of the last day of the fiscal period covered by
such financial statements to include (i)
calculations demonstrating Borrower's compliance with the Financial Covenants
and whether a Triggering Event has occurred, and a reconciliation of such
calculations to the monthly, quarterly or annual financial statements being
delivered with such Compliance Certificate and (ii) calculations demonstrating,
or certifications as to, Borrower's compliance with Sections 6.1, 6.3, 6.8, 6.9
and 6.12, including with respect to Section 6.1 hereof, a statement of the book
value of, and proceeds received in respect of, Equipment disposed of during the
then current Fiscal Year to the date of such Compliance Certificate.
(g) Budgets; Business Plans; Financial Projections. As soon as practicable and
in any event within forty-five (45) days after the commencement of each Fiscal
Year of Borrower, an operating plan for such Fiscal Year, including budget,
personnel, facilities and Capital Expenditure projections, and monthly operating
profit and cash flow projections incorporating all of the foregoing, together
with a description of the material assumptions upon which such projections and
budgets are based.
Section 7.2 Borrowing Base Certificates and Other Collateral Reporting.
Borrower shall deliver to the Agent and each of the Lenders at Borrower's sole
expense:
(a) not later than fifteen (15) days after the end of each calendar month, a
Borrowing Base Certificate reflecting the Borrowing Base as at the end of such
calendar month, and showing compliance with the terms thereof signed by a
Responsible Official of Borrower; and
(b) concurrently with the delivery of each Borrowing Base Certificate, (i) a
detailed aged trial balance of all existing Accounts, specifying each Account
Debtor by name and the aged balance (from invoice date and due date) of all
Accounts due from such Account Debtor and including a summary of concentrations
for Borrower's twenty (20) largest Account Debtors, (ii) a listing of all
Accounts (A) denominated other than in Dollars, (B) payable outside of the
United States or (C) as to which the Account Debtor is located or principally
doing business outside the United States, specifying the names of the Account
Debtors under such Accounts, the amounts owing by such Account Debtors and the
countries in which such Account Debtors are located and indicating whether a
letter of credit or bankers acceptance has been obtained with respect to such
Account or whether such Account is insured by the Foreign Credit Insurance
Association, (iii) a listing of all Accounts as to which any Governmental Agency
is the Account Debtor, specifying the names of such Account Debtors and the
total amount of Accounts of such Account Debtors, (iv) a listing of all Accounts
as to which any Affiliate or employee of Borrower is the Account Debtor,
specifying the names of such Account Debtors and the total amounts of Accounts
of such Accounts Debtors, (v) a copy of Borrower's Accounts roll-forward for the
month to which such Borrowing Base Certificate relates, (vi) a summary schedule
of Borrower's Inventory based on its most recent perpetual Inventory, (vii) an
aging of accounts payable, specifying the names of the payees of such accounts
payable and the amounts payable thereunder, and (viii) such other supporting
documents satisfactory in form and substance to the Agent as the Agent shall
request confirming that the calculations in the Borrowing Base Certificate are
mathematically correct, all of which shall be certified as true and correct by a
Responsible Official of Borrower; and
(c) upon the occurrence of a Triggering Event and during the continuance
thereof, in addition to the items provided for in clauses (a) and (b), if the
Agent shall request, on a daily
basis, (i) a summary of daily sales, (ii) a summary of daily Collections,
(iii) a summary roll-forward of Accounts activity, and (iv) any other
information as the Agent shall request to permit the Agent to maintain an
accurate daily balance of Accounts, all of which shall be certified as true and
correct by a Responsible Official of Borrower.
Section 7.3 Operating Leases; Capital Leases, Etc. On a quarterly
basis, within fifteen (15) days after the end of each Fiscal Quarter, Borrower
shall deliver to the Agent and each of the Lenders at Borrower's sole expense:
(a) A list showing each of the then existing Capital Leases and Operating
Leases and the amount of all monthly payments due in respect thereof and
indicating whether Borrower is current as to payments under all such leases; and
(b) A schedule setting forth the aggregate amount of all Capital Expenditures
for the Fiscal Year to date.
Section 7.4 Other Specific Information and Reports. Borrower shall
deliver to the Agent and each of the Lenders at Borrower's sole expense:
(a) Taxes, Assessments, etc. Promptly after Borrower determines to
contest any material tax, assessment or other material governmental charge or
any material claim as permitted pursuant to Section 5.2, written notice of such
contest which notice shall include a brief description of the nature of the tax,
assessment, charge or claim being contested and the action Borrower is taking
with respect thereto and shall specify (i) the amount of such tax assessment,
charge or claim being contested, and (ii) the amount of the reserve Borrower
has set aside therefor.
(b) Audit Reports. Promptly after receipt thereof, copies of any detailed
audit reports or recommendations submitted to Borrower by independent
accountants in connection with the accounts or books of Borrower, or any audit
of any of them.
(c) Management Reports. Promptly after receipt thereof, copies of any
management reports delivered to Borrower by Borrower's accountants in connection
with the financial statements delivered pursuant to Section 7.1.
(d) Reports to Shareholders; SEC Filings. Promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the shareholders of Borrower or to the trustee
under any indenture and copies of all annual, regular, periodic and special
reports and registration statements which Borrower may file or be required to
file with the SEC under the Securities Act or the Securities Exchange Act.
(e) Press Releases. Promptly after the same are made available to the public,
copies of all press releases made available generally by Borrower to the public
concerning material developments in Borrower's business.
(f) ERISA Matters.
(i) Promptly upon Borrower's becoming aware, and in any event within ten
(10) Business Days after becoming aware, (A) of any Reportable Event and
any additional act or condition arising in connection with any Pension Plan
if such Reportable Event or act or condition could constitute grounds
for the termination of any such plan by the PBGC or for the appointment
by the appropriate United States district court of a trustee to administer
such plan; (B) notice of any action, suit or proceeding before any court
or other governmental agency or authority with respect to any Plan which
could subject Borrower or any Subsidiary to any tax, penalty, or liability
under Title I or Title IV of ERISA or Chapter 43 of the Code, except those
which, singly or in the aggregate, if adversely determined, could not
reasonably be expected to result in a Material Adverse Effect; and (C)
notice of any events with respect to a Pension Plan or Multiemployer Plan
which could, singly or in the aggregate, reasonably be expected to result
in liability to Borrower, or any Subsidiary or the imposition of a Lien
under ERISA or the Code in an amount which could reasonably be expected to
have a Material Adverse Effect;
(ii) at the same time and in the same manner as such notice must be provided to
either the PBGC, any participant, any beneficiary or any alternate payee, a copy
of any notice required under Sections 101(d), 302(f)(4), 303, 307(e),
4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or under Section 412 of the Code with
respect to a Pension Plan; and
(iii) upon request by any Lender, a true and complete copy of any annual
report required to be filed pursuant to ERISA and any other information
reasonably requested by any Lender with respect to a Plan.
(g) Change of Control. Not less than thirty (30) days prior to the
occurrence of any event or transaction which could reasonably be expected to
result in a Change of Control, written notice specifying the nature of such
event or transaction.
(h) Events of Default. Promptly upon, but in no event more than five (5) days
after, Borrower obtains knowledge (i) of any condition or event which
constitutes an Event or Default or Default or that any Lender or the Agent has
given any notice with respect to a claimed Default or Event of Default under
this Agreement, (ii) that any Person has given any notice to Borrower or taken
any other action with respect to a claimed default or event or condition of the
type referred to in Section 9.1(d) or (iii) of any event or condition that
constitutes or will constitute a Material Adverse Effect or affect the value of,
or the Agent's interest in, the Collateral in any material respect, an Officer's
Certificate specifying (A) the nature and period of existence of any such
claimed Default, Event of Default, default, condition or event, (B) the notice
given or action taken by any Person in connection therewith and (C) what action
Borrower has taken, is taking and proposes to take with respect thereto.
(i) Lawsuits. (i) Promptly upon Borrower obtaining knowledge of the
institution of, or written threat of, (A) any action, suit, proceeding or
arbitration against or affecting Borrower or any asset of Borrower involving
money or property valued in excess of Seven Hundred Fifty Thousand Dollars
($750,000) or any actions, suits, proceedings or arbitration which in the
aggregate involve money or property value in excess of Seven Hundred Fifty
Thousand Dollars ($750,000) or (B) any investigation or proceeding before or by
any Governmental Agency, which is reasonably likely to have a Material Adverse
Effect Borrower shall provide the Agent with written notice thereof and such
other information as may be reasonably available to enable each Lender and its
counsel to evaluate such matters, (ii) as soon as practicable and in any event
within forty-five (45) days after the end of each Fiscal Quarter of Borrower, a
litigation status report covering the institution of, or written threat of, any
action, suit, proceeding, governmental investigation or arbitration reported
pursuant to clause (h)(A) and (B) above and such other information at such time
as may be reasonably available to enable each Lender and its counsel to evaluate
such matters, and (iii) in addition to the requirements set forth in clauses (i)
and (ii) of this clause (i), upon request of the Agent or the Majority Lenders,
written notice of the status of any action, suit, proceeding, governmental
investigation or arbitration covered by a report delivered pursuant to clause
(i) or (ii) above and such other information as may be reasonably available to
it to enable each Lender and its counsel to evaluate such matters.
(j) Insurance. As soon as practicable and in any event by October 1 of each
year, (i) a report in form and substance reasonably satisfactory to Lenders
outlining all insurance policies and programs currently in effect with respect
to the Property and business of Borrower, insurance coverage maintained as of
the date of such report by Borrower and the loss payment provisions of such
coverage and (ii) evidence that all premiums with respect to such coverage have
been paid when due.
(k) Labor Matters. Promptly, but in any event within five (5) Business Days
after learning thereof, written notice of (i) any material labor dispute to
which Borrower may reasonably be expected to become a party, any strikes,
lockouts or other disputes relating to Borrower's plants and other facilities
and (ii) any liability incurred with respect to the closing of any plant
facility of Borrower.
(l) Permitted Subordinated Indebtedness. Upon its receipt thereof, copies of
(i) any notice or other communication delivered by or on behalf of Borrower to
any Person in connection with any agreement or other document relating to
Subordinated Indebtedness or the Exchangeable Preferred Stock at the same time
and by the same means as such notice or other communication is delivered to such
Person and (ii) any material notice or other material communication received by
Borrower from any Person in connection with any agreement or other document
relating to Subordinated Indebtedness or the Exchangeable Preferred Stock
promptly after such notice or other communication is received by Borrower.
Section 7.5 Other Information and Reports (Generally). Borrower shall
provide to the Agent and each Lender such other information, reports, contracts,
schedules, lists, documents, agreements and instruments with respect to (a) the
Collateral and (b) Borrower's business condition (financial or otherwise),
operations, performance, properties or prospects as the Agent or the Majority
Lenders may from time to time reasonably request.
ARTICLE 8.
CONDITIONS
Section 8.1 Conditions to Effectiveness. This Agreement shall not
become effective (and the Existing Loan Agreement shall continue in full
force and effect) unless and until each of the following conditions precedents
have been satisfied:
(a) Document Deliveries. The Agent shall have received all of the
following, each dated as of the Closing Date and all in form and substance
reasonably satisfactory to the Agent and legal counsel for the Agent:
(i) a reaffirmation of the Subsidiary Guaranty and the Subsidiary
Security Agreement executed by each Subsidiary;
(ii) certificates representing any pledged shares referred to in the Lancer
Pledge Agreement which have not previously been delivered to the Agent and
undated stock powers for such certificates executed in blank;
(iii) such amendments to the Trademark Security Agreement and the Patent
Security Agreement, executed by Borrower and, as applicable, each Subsidiary, as
the Agent shall request in order to cover any patents or trademarks, not
previously covered thereby each in form acceptable for recordation with the
appropriate Governmental Agency;
(iv) such documentation as the Agent may reasonably require to establish the due
organization, valid existence and good standing of Borrower and each of its
Subsidiaries, the qualification of Borrower and each of its Subsidiaries to
engage in business in each jurisdiction in which it is engaged in business or
required to be so qualified, its authority to execute, deliver and perform any
Loan Documents to which it is a party, and the identity, authority and capacity
of each Responsible Official thereof authorized to act on its behalf, including
certified copies of articles or Certificates of incorporation and amendments
thereto, bylaws and amendments thereto, certificates of good standing and/or
qualification to engage in business, certificates of corporate resolutions,
incumbency certificates, certificates of Responsible Officials and the like;
(v) the Opinion of Borrower's Counsel;
(vi) an Officer's Certificate affirming that the conditions set forth in
Sections 8.1(d), 8.1(e), 8.1(f) and 8.1(g) have been satisfied;
(vii) such other assurances, certificates, documents, consents or opinions
as the Agent may reasonably require.
(b) Litigation, Etc. The Agent shall be satisfied that no litigation,
arbitration, injunction, proceeding, government investigation or inquiry which
(i) is related to this Agreement or the Revolving Credit Loan, the Term Loans or
any of the other transactions contemplated hereby, or (ii) could, if adversely
determined, constitute a Material Adverse Effect has been commenced nor has been
threatened, and nor will the Agent have been apprised of the
existence of any basis for such litigation, arbitration, injunction, proceeding,
governmental investigation or proceeding nor shall Borrower be aware of any
basis therefor.
(c) Legal Fees and Expenses. The reasonable fees and expenses of counsel
retained by the Agent relating to the Loan Documents shall have been paid by
Borrower.
(d) Representations and Warranties. The Agent shall be satisfied that the
representations and warranties of Borrower contained in Article 4 shall be true
and correct.
(e) Compliance with Loan Documents; No Default. Lancer, Borrower and
Borrower's Subsidiaries shall be in compliance with all the terms and provisions
of the Loan Documents to which it is party, and no Default or Event of Default
shall have occurred and be continuing.
(f) No Material Adverse Effect. Since September 30, 1999, there shall not have
occurred: (i) any event or circumstance that could reasonably be expected to
have a Material Adverse Effect, or (ii) any dividends or other distributions
made to the stockholders of Borrower other than as permitted pursuant to Section
6.3 or Section 7(b) of the Lancer Pledge Agreement.
(g) Compliance with Laws; Agreements. Lenders shall be satisfied that Borrower
and its Subsidiaries are in compliance with all applicable Laws, including,
without limitation, all Environmental Laws and all Laws pertaining to labor,
occupational safety and health and ERISA matters except to the extent that non-
compliance could not reasonably be expected to have a Material Adverse Effect.
Lenders shall be satisfied that the consummation of the transactions
contemplated by this Agreement will not cause Borrower or any Subsidiary to
violate any Contractual Obligation to which it is party or by which it is bound
or any Law applicable to it.
(h) Material Agreements. Borrower shall have provided to the Agent copies of
all management, employment, labor and other material agreements to which
Borrower or any Subsidiary is party, and all of such agreements shall be
satisfactory to Lenders in all respects.
Section 8.2 Any Advance, Etc. The obligations of the Lenders to make
any Advance and to incur any Letter of Credit Obligation subsequent to the
Closing Date are subject to the following additional conditions precedent:
(a) Requests. The Agent shall have timely received a Request for Advance
in compliance with Section 2.1(b) or the Agent shall have timely received a
Request for Letter of Credit in compliance with Section 2.2(b), as the case may
be.
(b) Representations and Warranties. The representations and warranties
contained in Article 4 shall be true and correct in all material respects on and
as of the date of the Advance or Letter of Credit Obligation as though made on
and as of that date (except to the extent that such representations and
warranties relate solely to an earlier date and except as affected by
transactions expressly contemplated by this Agreement).
(c) Litigation, Etc. There shall not be then pending or, to the best knowledge
of Borrower, threatened, any litigation, arbitration, injunction, proceeding,
governmental
investigation or inquiry against or affecting Borrower or any Property of
Borrower before any Governmental Agency that could reasonably be expected to
have a Material Adverse Effect.
(d) Borrowing Base Certificate, Etc. The Agent shall have received the most
recent Borrowing Base Certificate required to be delivered in accordance with
Section 7.2(b), together with any and all other reports required to be delivered
in accordance with Sections 7.2(b) and 7.2(c).
(e) Other Information, Etc. The Agent shall have received such other
information relating to any matters which are the subject of this Section 8.2 or
the compliance by Borrower with this Agreement as may reasonably be requested by
the Agent.
ARTICLE 9.
EVENTS OF DEFAULT AND REMEDIES
UPON EVENTS OF DEFAULT
Section 9.1 Events of Default. The existence or occurrence of any one
or more of the following events, whatever the reason therefor and under any
circumstance whatsoever, shall constitute an Event of Default:
(a) Failure to Make Payments When Due. Borrower fails to pay any
principal, premium, fee or other Obligation (other than interest) on or before
the date when due hereunder or under any other Loan Document or fails to pay any
interest payable hereunder or under any other Loan Document on or before
the second Business Day after the date when due; or
(b) Breach of Representation or Warranty. Any representation or warranty of
Lancer, Borrower or any Subsidiary made in any Loan Document or in any
certificate delivered pursuant to any Loan Document proves to have been
incorrect in any material respect when made or deemed to have been made; or
(c) Specific Defaults. Lancer, Borrower or any Subsidiary fails duly and
punctually to perform or observe any agreement, covenant or obligation binding
on Lancer, Borrower or such Subsidiary, as applicable, pursuant to Section 5.13
or Article 6 of this Agreement (other than Section 6.5) or pursuant to Section
5(a), 5(h) or 5(l) of the Borrower Security Agreement, Section 5(a), 5(h) or
5(l) of the Subsidiary Security Agreement, Section 5, 7(a) 7(b) or 7(c) of the
Lancer Pledge Agreement or Section 4, 6(a), 6(b), or 6(c) of the Borrower Pledge
Agreement; or
(d) Other Defaults. Lancer, Borrower or any Subsidiary fails to perform or
observe any other agreement, covenant or obligation binding upon it under this
Agreement or any other Loan Document to which it is a party and such default
shall continue unremedied for a period of fourteen (14) days, in the case of the
provisions of Article 7, and thirty (30) days, in the case of all other
provisions of this Agreement and the other Loan Documents (except as set forth
in Section 9.1(a), (b) or and (c)), after the earlier of (i) the date upon which
Lancer, Borrower or such Subsidiary became aware of such failure or (ii) the
date upon which written notice thereof has been given to Borrower by the Agent
or any Lender; or
(e) Default as to Other Indebtedness. Borrower or any Subsidiary fails to make
any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) with respect to any Subordinated Indebtedness
or any other Indebtedness (other than an Obligation) if the aggregate amount of
such other Indebtedness is Five Million Dollars ($5,000,000) or more; or any
breach, default or event of default occurs, or any other condition exists under
any instrument, agreement or indenture pertaining to any such Indebtedness
(including, without limitation, a "Change of Control", as defined in the Senior
Subordinated Note Indenture), if the effect thereof (with or without the giving
of notice or lapse of time or both) is to cause an acceleration, mandatory
redemption or other required repurchase of such Indebtedness or permit the
holder or holders of such Indebtedness to accelerate the maturity of any such
Indebtedness or require a redemption or other repurchase of such Indebtedness;
or any such Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or otherwise
repurchased by Borrower or any Subsidiary (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or the holder or
holders of any Lien, in any amount, commences foreclosure of such Lien upon
Property of Borrower having a value of Five Million Dollars ($5,000,000) or
more; or
(f) Judgments and Attachments. (i) Any money judgment, writ or warrant of
attachment or similar process against Borrower or any Subsidiary or any of their
respective assets involving an amount in excess of Two Million Dollars
($2,000,000) is entered and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days; (ii) any nonmonetary judgment,
injunction or order against Borrower or any Subsidiary or any of their
respective assets which could reasonably be expected to have a Material Adverse
Effect are entered and either (A) enforcement proceedings are commenced by any
Person upon such judgment or order or (B) there shall be any period of ten (10)
consecutive days during which a stay of enforcement of such judgment, injunction
or order, by reason of a pending appeal or otherwise, shall not be in effect or
(iii) any judgment or award of any court or administrative agency awarding
material damages is entered against Borrower in any action under the Securities
Act or the Securities Exchange Act, or any other securities laws, seeking
rescission of the purchase or sale of, any Subordinated Indebtedness, and such
judgment or order becomes final after exhaustion of all available appellate
remedies; or
(g) Related Agreements. There occurs any material breach by Borrower or Lancer
under any Related Agreement.
(h) Dissolution. Any order, judgment or decree is entered against Lancer,
Borrower or any Subsidiary decreeing its involuntary dissolution or split up and
such order shall remain undischarged or unstayed for a period in excess of
thirty (30) days; or Lancer, Borrower, or any Subsidiary (except as permitted by
Section 6.2) otherwise dissolves or ceases to exist; or
(i) Loan Documents; Failure of Security. At any time, for any reason (i) any
Loan Document ceases to be in full force and effect or Lancer, Borrower or any
Subsidiary seeks to repudiate its obligations thereunder or the Liens intended
to be created thereby are, or Lancer, Borrower or any Subsidiary seeks to
render such Liens, invalid and unperfected, or (ii) Liens in favor of the Agent
and/or Lenders contemplated by the Loan Documents or the subordination
provisions of any documents evidencing the Subordinated Indebtedness are, at any
time, for any reason, invalidated or otherwise cease to be in full force and
effect, or such Liens are
subordinated or otherwise not have the priority contemplated by this Agreement,
or the other Loan Documents; or
(j) Subordinated Indebtedness. Any determination is made by a court of
competent jurisdiction that payment of principal or interest or both is due to
any holder of any Subordinated Indebtedness which would not be permitted by
Section 6.3 or that the Senior Subordinated Notes are not subordinated to the
Obligations in accordance with the terms of the Senior Subordinated Note
Indenture; or
(k) Proceedings Under Debtor Relief Laws, Etc. Lancer, Borrower or any
Subsidiary institutes or consents to any proceeding under a Debtor Relief Law
relating to it or to all or any part of its Property, or is unable or admits in
writing its inability to pay its debts as they mature, or makes an assignment
for the benefit of creditors; or applies for or consents to the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator, or
similar officer for it or for all or any part of its Property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator, or similar officer
is appointed without the application or consent of Lancer, Borrower or any
Subsidiary and the appointment continues undischarged or unstayed for thirty
(30) calendar days; or any proceeding under any Debtor Relief Law relating to
Lancer, Borrower or any Subsidiary or to all or any part of the Property of any
of them is instituted without the consent of Lancer, Borrower or any Subsidiary
and continues undismissed or unstayed for thirty (30) calendar days; or any
judgment, writ, warrant of attachment or execution, or similar process is issued
or levied against all or any material part of the Property of Lancer, Borrower
or any Subsidiary and is not released, vacated, or fully bonded within thirty
(30) calendar days after its issue or levy; or
(l) ERISA. The occurrence of any of the following events:
(i) With respect to any Plan, a prohibited transaction within the meaning
of Section 4975 of the Code or Section 406 of ERISA;
(ii) With respect to any Pension Plan, Borrower, any Subsidiary or any ERISA
Affiliate files a notice to voluntarily terminate any such plan in a distress
termination pursuant to Section 4041(c) of ERISA;
(iii) With respect to any Multiemployer Plan, Borrower, any Subsidiary or
any ERISA Affiliate incurs any withdrawal liability under Section 4201 of ERISA;
(iv) With respect to any Pension Plan (or money purchase plan), Borrower, any
Subsidiary or any ERISA Affiliate incurs an accumulated funding deficiency
within the meaning of ERISA Section 302 and Code Section 412, or requests a
funding waiver under ERISA Section 303 or Code Section 412;
(v) With respect to any Pension Plan, the occurrence of any event which
constitutes grounds for termination of any such plan by the PBGC under
subsections (a)(1), (2) or (3) of Section 4041 of ERISA or the appointment by
the appropriate United States district court of a trustee to administer any such
plan; or
(vi) The termination of a Pension Plan or the appointment by the appropriate
United States district court of a trustee to administer such plan;
provided, that the liability or deficiency of Borrower, Lancer or any
Subsidiary, whether or not assessed, exceeds $1,000,000 for any such event or
exceeds $1,000,000 in the aggregate for all such events.
(m) Change of Control. The occurrence of any Change of Control; or
(n) Insolvency. Borrower or any Subsidiary ceases to be Solvent; or
(o) Ownership Changes; Tax Consolidation. Any ownership change of Lancer or
Borrower within the meaning of Section 382 of the Code occurs, or for any reason
Lancer fails to file or is ineligible to file a consolidated United States
Federal income tax return with Borrower (showing Borrower and Lancer as part of
an affiliated group of which Lancer is the parent) in accordance with the Tax
Sharing Agreement; or
(p) Material Adverse Effect. The occurrence of any condition or event since
the Closing Date which the Majority Lenders determine constitutes a Material
Adverse Effect; or
(q) Board of Directors. The holders of the Exchangeable Preferred Stock become
entitled to, and exercise their right to, elect any member of Borrower's board
of directors.
Section 9.2 Remedies Upon Event of Default. Without limiting any other
rights or remedies of the Agent or the Lenders provided for elsewhere in this
Agreement or the Loan Documents, or by applicable Law, or in equity, or
otherwise:
(a) Upon the occurrence of any Event of Default (other than an Event of
Default described in Section 9.1(l)):
(i) the Lenders' Commitment and the obligations of Lenders to make Advances or
to incur Letter of Credit Obligations shall be suspended without notice to or
demand upon Borrower, which is expressly waived by Borrower to the fullest
extent permitted by applicable Laws (except to the extent that the Majority
Lenders may waive the Event of Default or, without waiving, determine, upon
terms and conditions satisfactory to the Majority Lenders, to reinstate the
Lenders' Commitment);
(ii) The Majority Lenders may request the Agent to, and the Agent thereupon
shall, terminate the Lenders' Commitment, declare all or any part of the unpaid
principal of the Notes, all interest accrued and unpaid thereon and all other
Obligations payable under the Loan Documents to be forthwith due and payable,
and direct the Letter of Credit Issuer to declare all amounts due under the
Letter of Credit Applications to be forthwith due and payable, whereupon the
same shall become and be forthwith due and payable, without protest, presentment
for payment, notice of dishonor, demand or further notice of any kind, all of
which are expressly waived by Borrower to the fullest extent permitted by
applicable Laws; and
(iii) the Majority Lenders may request the Agent to, and the Agent thereupon
shall, make immediate demand upon Borrower to fund the Cash Collateral Account
contemplated by Section 2.2(i).
(b) Upon the occurrence of any Event of Default described in Section 9.1(k):
(i) the Lenders' Commitment and all other obligations of the Agent and the
Lenders and all rights of Borrower under the Loan Documents shall automatically
terminate without notice to or demand upon Borrower, which is expressly waived
by Borrower to the fullest extent permitted by applicable Laws;
(ii) the unpaid principal of the Notes, all interest accrued and unpaid thereon
and all other Obligations payable under the Loan Documents, together with all
amounts due under the Letter of Credit Applications, shall be forthwith due and
payable, without protest, presentment for payment, notice of dishonor, demand or
further notice of any kind, all of which are expressly waived by Borrower to
the fullest extent permitted by applicable Laws; and
(iii) Borrower shall fund the Cash Collateral Account contemplated by
Section 2.2(i).
(c) Upon the occurrence of any Event of Default, the Agent, without notice to
(other than as expressly provided for in any Loan Document) or demand upon
Borrower, which is expressly waived by Borrower to the fullest extent permitted
by applicable Laws, may proceed to protect, exercise, and enforce the rights and
remedies of the Agent and the Lenders under the Loan Documents, in accordance
with the terms of the Loan Documents and such other rights and remedies as are
provided by applicable Laws or in equity.
(d) The order and manner in which the rights and remedies of the Lenders under
the Loan Documents and otherwise are to be exercised shall be determined by the
Majority Lenders. All payments received by the Agent and the Lenders, or any of
them, shall be applied first, to the costs and expenses (including reasonable
attorneys' fees and disbursements) of the Agent and of the Lenders, second, to
the payment to the Lenders, in proportion to each Lender's Pro Rata Share, of
the unpaid principal amount owing on all the Obligations, plus accrued and
unpaid interest thereon, third, to the payment to the Agent and the Lenders of
any other Obligations hereunder, in proportion to the amount of such Obligations
owing to the Agent and to the Lenders, and thereafter to Borrower or whomsoever
may be lawfully entitled thereto. Regardless of how each Lender may treat the
payments for its own accounting purposes, for the purpose of computing
Borrower's Obligations hereunder and under the Notes, payments shall be applied
first, to the costs and expenses of the Agent and the Lenders as set forth
above, second, to the payment of accrued and unpaid interest due under any Loan
Documents to and including the date of such application (ratably, and without
duplication, according to the accrued and unpaid interest due under each of the
Loan Documents), and third, to the payment of all other amounts (including
principal and fees) then owing to the Lenders under the Loan Documents. No
application of the payments will cure any Event of Default or prevent
acceleration, or continued acceleration, of amounts payable under the Loan
Documents or prevent the exercise, or
continued exercise, of rights or remedies of the Lenders hereunder or thereunder
or as are provided by applicable Laws or in equity.
ARTICLE 10.
THE AGENT
Section 10.1 Appointment and Authorization; No Fiduciary Responsibility.
Each Lender hereby irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms thereof or are reasonably
incidental thereto, as determined by the Agent. This appointment and
authorization does not constitute appointment of the Agent as a trustee or
fiduciary for any Lender and, except as specifically set forth herein to the
contrary, the Agent shall take such action and exercise such powers only
in an administrative and ministerial capacity. Each of the Lenders agrees that
the Agent has no fiduciary relationship with any Lender and that no implied
covenants, functions, responsibilities, duties, obligations or liabilities of
any kind shall be implied in the course of conduct of the Agent's
responsibilities specifically set forth herein or otherwise exist on the part of
the Agent for the benefit of the Lenders.
Section 10.2 Agent and Affiliates. GE Capital (and each successor Agent)
has the same rights and powers under the Loan Documents as any other Lender and
may exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" includes GE Capital in its individual capacity. GE Capital (and each
successor Agent) and its respective Affiliates may lend money to and generally
engage in any kind of business with Borrower and any Affiliate of Borrower, as
if it were not the Agent and without any duty to account therefor to the
Lenders. GE Capital (and each successor Agent) need not account to any other
Lender for any monies received by it for reimbursement of its costs and expenses
as Agent hereunder, for any fee received by it in its capacity as Agent
hereunder, or for any monies received by it in its capacity as a Lender
hereunder, except as otherwise provided herein.
Section 10.3 Lenders' Credit Decisions. Each Lender agrees that it has,
independently and without reliance upon the Agent, any other Lender, or the
directors, officers, agents, or employees of the Agent or of any other Lender,
and instead in reliance upon information supplied to it by or on behalf of
Borrower and upon such other information as it has deemed appropriate, made its
own independent credit analysis and decision to enter into this Agreement. Each
Lender confirms that it has such knowledge and experience in business and
financial matters that it is capable of making such credit analysis and
evaluating the merits and risks of entering into this Agreement. It is
expressly understood that each Lender is able to bear the risk of loss, and
assumes all risk of loss in connection with the entering into of this Agreement.
Each Lender also agrees that it shall, independently and without reliance upon
the Agent, any other Lender, or the directors, officers, agents, or employees of
the Agent or of any other Lender, continue to make its own independent credit
analyses and decisions in acting or not acting under the Loan Documents.
Section 10.4 Action by Agent.
(a) The Agent may assume that no Default or Event of Default has occurred
and is continuing, unless the Agent has actual knowledge of the Default or
Event of Default, has
received notice from Borrower stating the nature of the Default or Event of
Default, or has received notice from a Lender stating the nature of the Default
or Event of Default and that Lender considers the Default or Event of Default to
have occurred and to be continuing.
(b) The Agent has only those obligations under the Loan Documents that are
expressly set forth therein. Without limitation on the foregoing, the Agent
shall have no duty to inspect any Property of Borrower, although the Agent may
in its discretion periodically inspect any Property from time to time.
(c) Except for any obligation expressly set forth in the Loan Documents and as
long as the Agent may assume that no Default or Event of Default has occurred
and is continuing, the Agent may, but shall not be required to, exercise its
discretion to act or not act, except that the Agent shall be required to act or
not act upon the instructions of the Majority Lenders (or of all the Lenders, to
the extent required by Section 11.2) and those instructions shall be binding
upon the Agent and all the Lenders; provided, that the Agent shall not be
required to act or not act if to do so would expose the Agent to personal
liability or would be contrary to any Loan Document or to applicable Laws.
(d) If the Agent has received a notice specified in clause (a), the Agent shall
give notice thereof to the Lenders and shall act or not act upon the
instructions of the Majority Lenders (or of all the Lenders, to the extent
required by Section 11.2); provided that the Agent shall not be required to act
or not act if to do so would be contrary to any Loan Document or to applicable
Law or would result, in the reasonable judgment of the Agent, in risk of
liability to the Agent, and except that if the Majority Lenders (or all the
Lenders, if required under Section 11.2) fail, for three Business Days after the
receipt of notice from the Agent, to instruct the Agent, then the Agent, in its
sole discretion, may act or not act as it deems advisable for the protection of
the interests of the Lenders.
(e) The Agent shall have no liability to any Lender for acting, or not acting,
as instructed by the Majority Lenders (or all the Lenders, if required under
Section 11.2), notwithstanding any other provision hereof.
(f) Each Lender hereby irrevocably authorizes the Agent to execute releases of
Liens relating to any Collateral that is the subject of any disposition of
Property permitted by this Agreement.
Section 10.5 Liability of Agent. Neither the Agent nor any of its
respective directors, officers, agents or employees shall be liable for any
action taken or not taken by them under or in connection with the Loan
Documents, except for their own gross negligence or willful misconduct. Without
limitation of the foregoing, the Agent and its respective directors, officers,
agents and employees:
(a) may treat the payee of any Note as the holder thereof until the Agent
receives notice of the assignment or transfer thereof pursuant to a Loan
Assignment, signed by the payee and may treat each Lender as the owner of that
Lender's interest in the Obligations due to Lenders for all purposes of this
Agreement until the Agent receives notice of the assignment or transfer thereof
pursuant to a Loan Assignment;
(b) may consult with legal counsel, in-house legal counsel, independent
public accountants, in-house accountants and other professionals, or other
experts selected by it, or with legal counsel, independent public accountants,
or other experts for Borrower, and shall not be liable for any action taken or
not taken by it or them in good faith in accordance with the advice of such
legal counsel, independent public accountants, or experts;
(c) will not be responsible to any Lender for any statement, warranty, or
representation made in any of the Loan Documents or in any notice, certificate,
report, request, or other statement (written or oral) in connection with any of
the Loan Documents;
(d) except to the extent expressly set forth in the Loan Documents, will have
no duty to ascertain or inquire as to the performance or observance by Borrower
or any other Person of any of the terms, conditions, or covenants of any of the
Loan Documents or to inspect the property, books, or records of Borrower or any
of its Affiliates or other Person;
(e) will not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, effectiveness, sufficiency, or value of
any Loan Document, any other instrument or writing furnished pursuant thereto or
in connection therewith;
(f) will not incur any liability by acting or not acting in reliance upon any
Loan Document, notice, consent, certificate, statement, or other instrument or
writing believed by it or them to be genuine and signed or sent by the proper
party or parties; and
(g) will not incur any liability for any arithmetical error in computing any
amount payable to or receivable from any Lender hereunder, including payment of
principal and interest on the Notes and payment of fees and other amounts;
provided, that promptly upon discovery of such an error in computation, the
Agent, the Lenders and (to the extent applicable) Borrower shall make such
adjustments as are necessary to correct such error and to restore the parties to
the position that they would have occupied had the error not occurred.
Section 10.6 Indemnification. Each Lender shall, ratably in accordance
with its Pro Rata Share of the Commitment, indemnify and hold the Agent and its
directors, officers, agents, and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements of any kind or nature whatsoever
(including, without limitation, attorney's fees and disbursements) that may be
imposed on, incurred by, or asserted against it or them in any way relating to
or arising out of the Loan Documents (other than losses incurred by reason of
the failure by Borrower to pay the Obligations due to Lenders hereunder or under
the Notes) or any action taken or not taken by it as Agent thereunder, except
for the Agent's gross negligence or willful misconduct. Without limitation on
the foregoing, each Lender shall reimburse the Agent upon demand for that
Lender's ratable share of any cost or expense incurred by the Agent in
connection with the negotiation, preparation, execution, delivery,
administration, amendment, waiver, refinancing, restructuring, reorganization
(including a bankruptcy reorganization), or enforcement of the Loan Documents,
to the extent that Borrower is required by Section 11.3 to pay that cost or
expense but fails to do so upon demand. Any such reimbursement shall not
relieve Borrower of its obligations under Section 11.3, and upon any subsequent
recovery of such cost or expense by the
Agent from Borrower the Agent shall promptly return to each Lender such Lender's
Pro Rata Share of the amounts so paid.
Section 10.7 Successor Agent. The Agent may resign as such at any time
by written notice to Borrower and Lenders, and the Majority Lenders may, at
any time when the sum of GE Capital's Pro Rata Share of the Commitment plus the
outstanding principal balance of GE Capital's Term Loan equal less than fifty
percent(50%) of the sum of the Commitment and the aggregate outstanding
principal balance of all Term Loans remove the Agent by written notice to that
effect, with the written consent of Borrower (which consent shall not
unreasonably be withheld). Any resignation or removal shall become effective
upon a successor's acceptance of appointment as Agent. In either event, the
Majority Lenders shall appoint a successor Agent or Agents, who must be from
among the Lenders; provided that the Agent shall be entitled to appoint a
successor Agent from among the Lenders, subject to acceptance of appointment by
that successor Agent, if the Majority Lenders have not appointed a successor
Agent within 30 days after the date the Agent gave notice of resignation or was
removed. Upon a successor's acceptance of appointment as Agent, the successor
will thereupon succeed to and become vested with all the rights, powers,
privileges, and duties of the Agent under the Loan Documents, the resigning or
removed Agent will thereupon be discharged from its duties and obligations
thereafter arising under the Loan Documents, and the provisions of this Article
10 shall continue to inure to the benefit of the retiring or removed Agent as to
any actions taken or omitted to be taken by it while it was serving as Agent
under this Agreement and the other Loan Documents.
Section 10.8 Proportionate Interest of the Lenders in any Collateral.
The Agent, on behalf of all the Lenders, shall hold in accordance with the Loan
Documents all items of any Collateral or interests therein received or held by
the Agent. Subject to the Agent's and the Lenders' rights to reimbursement for
their costs and expenses under this Agreement (including attorneys' fees and
disbursements and other professional services) and subject to the application of
payments in accordance with Section 9.2(d), each Lender shall have an interest
in any Collateral or interests therein in the same proportions that the
aggregate Obligations owed such Lender under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all the Lenders, without
priority or preference among the Lenders.
ARTICLE 11.
MISCELLANEOUS
Section 11.1 Cumulative Remedies; No Waiver. The rights, powers,
privileges and remedies of the Agent or any Lender provided herein or in any
Note or other Loan Document are cumulative and not exclusive of any right,
power, privilege or remedy provided by Law or equity. No failure or delay on
the part of the Agent or any Lender in exercising any right, power, privilege
or remedy may be, or may be deemed to be, a waiver thereof; nor may any single
or partial exercise of any right, power, or remedy preclude any other or
further exercise of any other right, power, privilege or remedy. The terms and
conditions of Article 8 hereof are inserted for the sole benefit of the Lenders,
and the Agent may (with the approval of the Majority Lenders) waive them in
whole or in part with or without terms or conditions in respect of any Advance
or Letter of Credit Obligation, without prejudicing the Lenders' rights to
assert them in whole or in part in respect of any other Advance or Letter of
Credit.
Section 11.2 Amendments; Consents. No amendment, modification,
supplement, termination or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure therefrom by Lancer,
Borrower or any Subsidiary, may in any event be effective unless in writing
signed by the Agent with the written approval of the Majority Lenders, and, in
the case of an amendment or modification, Lancer, Borrower or Borrower's
Subsidiary, as applicable, and then only in the specific instance and for the
specific purpose given; and without the approval in writing of all the Lenders,
no amendment, modification, supplement, termination, waiver or consent may be
effective:
(a) to amend or modify the principal of, or the rate of interest payable
on, any Obligation or decrease the amount of any fee payable to any Lender; or
(b) without limitation of the preceding clause (a), to amend or modify the
provisions of Section 3.1, 3.3, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 or 3.17 in any
manner which would postpone any date fixed for any payment or prepayment of
principal of, or any interest on, any Obligation or any fee; or
(c) to extend the Maturity Date; or
(d) to amend or modify the provisions of the definition of "Majority Lenders,"
of Section 9.2(a) with respect to the rights of the Majority Lenders or of
Section 11.2, 11.10 or 11.11; or
(e) to amend or modify any provision of this Agreement or the Loan Documents
that expressly requires the consent or approval of all the Lenders; or
(f) to release all or a material portion of the Collateral, other than as set
forth in Section 10.4(f) or as contemplated by the Loan Documents.
Any amendment, modification, supplement, termination, waiver, or consent
pursuant to this Section 11.2 shall apply equally to, and shall be binding upon,
all the Lenders and the Agent.
Section 11.3 Costs, Expenses and Taxes. Borrower shall pay on demand the
reasonable costs and expenses of GE Capital, individually and in its capacity as
Agent, and its Affiliates and agents, in connection with (a) the negotiation,
preparation, execution and delivery of the Loan Documents; (b) the ongoing
administration (including, without limitation, (i) consultation with attorneys
in connection with such ongoing administration and with respect to the Agent's
rights and responsibilities under this Agreement and the other Loan Documents
and (ii) the Agent's periodic audits of Borrower), amendment, waiver,
refinancing, restructuring, and enforcement or attempted enforcement of any Loan
Documents; (c) any assignment or sale of a participation by GE Capital permitted
by Section 11.8 and (d) any matter related to any of the foregoing, including
filing fees, recording fees, search fees, reasonable travel expenses, and other
out-of-pocket expenses and the reasonable fees and out-of-pocket expenses of any
legal counsel and of any other professionals retained by GE Capital in any
capacity (including, without limitation, King & Spalding, special counsel to the
Agent and GE Capital, any other counsel retained by GE
Capital in any capacity, auditors, accountants, appraisers, valuation
consultants, insurance and environmental advisors, records research firms,
management consultants, and other consultants and agents), including any costs,
expenses or fees incurred or suffered by GE Capital in any capacity, in
connection with or during the course of any bankruptcy or insolvency proceedings
of Borrower. Borrower shall also pay on demand the costs and expenses of each
of the Lenders in connection with the restructuring and enforcement or attempted
enforcement of any Loan Documents and any matter related thereto, including
travel expenses and other reasonable out-of-pocket expenses and the fees and
other reasonable out-of-pocket expenses of any legal counsel retained by any of
the Lenders, including any costs, expenses or fees incurred or suffered by any
of the Lenders in connection with or during the course of any bankruptcy or
insolvency proceedings of Borrower. Borrower shall pay any and all documentary
tax, stamp tax, intangibles tax, intangible recording tax, ad valorem tax, value
added tax, excise tax and any other similar taxes or levies and all costs,
expenses, fees and charges payable or determined to be payable in connection
with the filing or recording of any Loan Document or any other instrument or
writing to be delivered hereunder or thereunder, or in connection with any
transaction pursuant hereto or thereto, and shall reimburse, hold harmless and
indemnify the Agent and each Lender from and against any and all loss, liability
or legal or other expense with respect to or resulting from any delay in paying
or failure to pay any tax, cost, expense, fee or charge that any of them may
suffer or incur by reason of the failure of Borrower to perform any of its
Obligations.
Section 11.4 Nature of Lender's Obligations. Each Lender's obligation to
make any Advance or its Term Loan pursuant hereto is several and not joint or
joint and several and is conditioned upon the performance by each other Lender
of its obligation to make Advances and Term Loans, as the case may be. A
default by any Lender will not increase the Pro Rata Share of the Commitment
attributable to any other Lender or create any new obligation or otherwise
increase any existing obligation of any other Lender. Any Lender not in default
may, if it desires, assume in such proportion as the non-defaulting Lenders
agree of the obligations of any Lender in default, but is not obligated to do
so.
Section 11.5 Survival of Representations and Warranties. All
representations and warranties contained herein or in any other Loan Document
or in any certificate or other writing delivered by or on behalf of Borrower,
will survive the making of all Advances and Term Loans hereunder and the
execution and delivery of the Notes, and have been or will be relied upon by the
Agent and each Lender, notwithstanding any investigation made by the Agent or
any Lender or on their behalf.
Section 11.6 Notices.
(a) Except as otherwise expressly provided in any Loan Document, all
notices, requests, demands, directions, and other communications provided for
hereunder and under any other Loan Document must be in writing and must be
mailed, telegraphed, telecopied, delivered, or sent by telex or cable to the
appropriate party at the following address for such party:
(i) If to the Agent or GE Capital at
General Electric Capital Corporation
Suite 600
3379 Peachtree Road, N.E.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President and
Region Operations Manager
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Poland
Counsel, Corporate Finance Group
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Borrower, at
Fairfield Manufacturing Company
U.S. ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to any Lender at its address indicated on the signature
pages hereof or in a Loan Assignment.
or at such other address as may be substituted by notice given as herein
provided.
Any notice, request, demand, direction, or other communication given by
telegram, telecopier, telex, or cable must be confirmed within 48 hours by
letter mailed or delivered to the appropriate party at its respective address.
(b) Except as otherwise expressly provided in any Loan Document if any
notice, request, demand, direction, or other communication required or permitted
by any Loan Document is given by mail it will be effective on the earlier of
receipt or the third calendar day after deposit in the United States mail with
first class or airmail postage prepaid; if given by telex or telecopier, when
received; or if given by personal delivery, when delivered.
Section 11.7 Execution in Counterparts. Unless the Agent otherwise
specifies with respect to any Loan Document, this Agreement and any other Loan
Document may be executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which when executed and delivered
will be deemed to be an original and all of which counterparts of this Agreement
or any other Loan Document, as the case may be, taken together will be deemed
to be but one and the same instrument. Neither this Agreement nor any other
Loan Document will be deemed to have been executed and delivered by any party
hereto or thereto until counterparts hereof or thereof, as the case may be,
have been executed by all the parties hereto or thereto and delivered to the
Agent (which delivery may be made by facsimile transmission of the respective
signature pages to this Agreement, followed promptly thereafter by delivery of
executed original signature pages).
Section 11.8 Binding Effect; Assignment.
(a) This Agreement and the other Loan Documents shall be binding upon and
inure to the benefit of Borrower, the Agent, each of the Lenders, and its
successors and assigns, except that Borrower may not assign its rights hereunder
or thereunder or any interest herein or therein without the prior written
consent of all the Lenders. Each Lender shall have the right to sell or
transfer any participation interest in this Agreement, and the Notes in
accordance with the provisions of this Section 11.8. Each Lender represents
that it is not acquiring its Note with a view to the distribution thereof
within the meaning of the Securities Act (subject to any requirement that
disposition of such Note must be within the control of such Lender).
(b) From time to time each Lender may, with the prior written consent of
Borrower (which will not unreasonably be withheld), assign to one or more Lender
Assignees all or a portion of its Pro Rata Share of the Commitment or its Term
Loan; provided that (i) such Eligible Assignee, if not then a Lender or an
Affiliate of Lender, shall be reasonably acceptable to the Agent, (ii) such
assignment shall be evidenced by a Loan Assignment, a copy of which shall be
furnished to the Agent for recordation as hereinbelow provided, and (iii) the
effective date of any such assignment shall be as specified in the Loan
Assignment. Upon the effective date of such Loan Assignment, the Lender
Assignee named therein shall be a Lender for all purposes of this Agreement,
with the Pro Rata Share of the Commitment or the portion of the Term Loans
therein set forth and, to the extent of such Pro Rata Share (in the case of an
assignment of the Commitment or portion thereof), the assigning Lender shall be
released from its obligations under this Agreement. Borrower agrees that it
shall execute and deliver (against delivery by the assigning Lender to Borrower
of its Note) to such Lender Assignee, a Note evidencing that Lender Assignee's
Pro Rata Share of the Commitment or Term Loan, as applicable, and to the
assigning Lender, a Note evidencing the Pro Rata Share of the Commitment or
remaining Term Loan, as applicable, retained by the assigning Lender. Borrower
also agrees that it shall provide, and cause Lancer and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
to provide, any information to any Lender Assignee reasonably deemed necessary
by an assigning Lender in order to effect such assignment, including without
limitation all information delivered pursuant to Article 7 hereof, and shall
cause its Senior Officers and the senior officers of Lancer and partners and
employees of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Levy, to participate in meetings with any
Lender Assignee when requested by an assigning Lender.
(c) By executing and delivering a Loan Assignment, the Lender Assignee
thereunder acknowledges and agrees that (i) other than the representation and
warranty that it is the legal and beneficial owner of the Pro Rata Share of the
Commitment or the Term Loan or portion thereof being assigned thereby free and
clear of any adverse claim, the assigning Lender has made no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness or sufficiency of
this Agreement or any other Loan Document, (ii) the assigning Lender has made
no representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or the performance by Borrower of the
Obligations, (iii) it has received a copy of this Agreement, together with
copies of the most recent financial statements delivered pursuant to this
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Loan Assignment,
(iv) it will, independently and without reliance upon the Agent or any Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement, (v) it appoints and authorizes the Agent to take such
action and to exercise such powers under this Agreement as are delegated to the
Agent by Article 10, and (vi) it will perform in accordance with their terms all
of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) The Agent shall maintain at the Agent's office a copy of each Loan
Assignment delivered to it and a ledger for recordation of the names and
addresses of the Lenders and their respective Pro Rata Shares of the Commitment
and the respective amounts of their Term Loans. The entries in such ledger
shall be conclusive, in the absence of manifest error, and Borrower,
the Agent and the Lenders may treat each Person whose name is recorded in the
ledger as a Lender hereunder for all purposes of this Agreement. Promptly
following any entry in the ledger, the Agent shall provide notice thereof to
Borrower and the Lenders.
(e) Notwithstanding any provision of this Section 11.8 to the contrary, (i) any
Lender that is a member of the Federal Reserve system may assign, as collateral
or otherwise, any of its rights under this Agreement and the other Loan
Documents (including, without limitation, rights to payment of principal and/or
interest) to any Federal Reserve Bank of the Federal Reserve System without
notice to or consent of Borrower and (ii) any Lender (including GE Capital) may
assign its entire interest in this Agreement, the Notes, the other Loan
Documents, the Commitment, the Letter of Credit Obligations and all other
Obligations as part of the sale or other disposition by such Lender of a
portfolio including one or more other transactions.
(f) From time to time each Lender may, without notice to the Agent or Borrower,
sell participations in all or any portion of its Term Loan and Notes or its Pro
Rata Share of the Commitment, or both of them, to any institutional investor,
bank, financial institution or other commercial lender; provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the other parties to this Agreement shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, (iv) any participant shall
not be entitled to require such Lender to take or omit to take any action
hereunder except action with respect to (A) in the case of a participant in the
Term Loan (x) a reduction in the rates of interest payable with respect to such
Term Loan or in any fees in which such participant shares, (y) an extension of
the maturity of such Term Loan or the postponement of any date fixed for the
payment of any interest on, any such Term Loan, or (z) the release of all or any
material portion of the Collateral for such Term Loan, other than in connection
with dispositions of such Collateral permitted by this Agreement, and (B) in the
case of a participant in the Commitment (x) a reduction in the rates of interest
payable with respect to the Revolving Credit Loan or any fees payable with
respect to the Revolving Credit Loan in which such participant shares, (y) an
extension of the Maturity Date or the postponement of any date fixed for the
payment of any interest on the Revolving Credit Loan or (z) the release of all
or any material portion of the Collateral for the Revolving Credit Loan, other
than in connection with dispositions of such Collateral permitted by this
Agreement, and (v) the participant shall be entitled to the cost protection
provisions contained in Sections 3.9, 3.10, 3.12 and 3.16 (provided that the
participant shall comply with all requirements imposed under Section 3.16 as
would apply if the participant were a Lender hereunder).
Section 11.9 Confidentiality of Confidential Information. The Agent and
each Lender acknowledges that certain information concerning Borrower which is
obtained by or furnished to the Agent and such Lenders pursuant to this
Agreement may be non-public, proprietary or confidential in nature
("Confidential Information"). The Agent and each Lender confirm to Borrower,
for itself, that it is the policy and practice of the Agent and each such Lender
to maintain in confidence all Confidential Information which is received by it
in connection with the closing and administration of transactions of the kind
contemplated by this Agreement and which is identified to the Agent or such
Lender as such, and that the Agent and each Lender will protect the
confidentiality of all Confidential Information submitted to it by or with
respect to Borrower, commensurate with its efforts to maintain the
confidentiality of its own
Confidential Information, subject to (a) its need in connection with the closing
and administration of the transactions contemplated by this Agreement to
disclose any Confidential Information to any legal counsel, auditors,
appraisers, consultants or other Persons retained by it for the purpose of
advising the Agent or such Lender in connection therewith; (b) its need to
disclose any Confidential Information under color of legal authority, including,
without limitation, to any regulatory authority having jurisdiction over its or
its operations or to or under the authority of any court deemed by it to be of
competent jurisdiction; (c) its right to disclose the Confidential Information
to any prospective Lender, assignee or participant which has agreed to maintain
the confidentiality thereof on a basis substantially similar to that set forth
herein; and (d) the inapplicability of the terms of this Section 11.9 to any
information furnished to the Agent or any Lender which was (i) in the Agent's or
such Lender's possession prior to its delivery to the Agent or such Lender by
Borrower, or otherwise has been obtained by the Agent or such Lender on a non-
confidential basis; or (ii) was or becomes available to the public or otherwise
part of the public domain (other than as a result of the Agent's or such
Lender's failure to abide hereby); or (iii) was not non-public, proprietary or
confidential when Borrower delivered it to the Agent or such Lender.
Section 11.10 Sharing of Setoffs. Each Lender severally agrees that if
it, through the exercise of the right of setoff, banker's lien, or counterclaim
against Borrower or otherwise, receives payment of the Obligations due it
hereunder and under the Notes that is ratably more than any other Lender,
through any means, receives in payment of the Obligations held by that Lender,
then (a) the Lender exercising the right of setoff, banker's lien, or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from the other Lender a participation
in the Obligations held by the other Lender and shall pay to the other Lender a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker's lien, or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien, or counterclaim or receipt of
payment, and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender's share of the Obligations immediately prior to, and without
taking into account, the payment; provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by Borrower or any Person claiming through or succeeding
to the rights of Borrower, the purchase of a participation shall be rescinded
and the purchase price thereof shall be restored to the extent of the recovery,
but without interest. Each Lender that purchases a participation in the
Obligations pursuant to this Section 11.10 shall from and after the purchase
have the right to give all notices, requests, demands, directions and other
communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased. Borrower expressly consents to
the foregoing arrangements and agrees that any Lender holding a participation in
an Obligation so purchased may exercise any and all rights of setoff, banker's
lien or counterclaim with respect to the participation as fully as if the Lender
were the original owner of the Obligation purchased.
Section 11.11 Indemnity by Borrower.
(a) Borrower agrees to indemnify and hold the Agent and each Lender, its
successors and assigns, its Affiliates, its directors, officers, attorneys,
employees, and agents and the directors, officers, attorneys, employees and
agents of its successors and assigns and Affiliates, and all Persons controlling
any of them or their Affiliates within the meaning of the Securities Act or
Securities Exchange Act (collectively, "Indemnified Persons") harmless from and
against any and all claims, losses, damages, liabilities and expenses of any
kind or nature whatsoever which may be incurred by or asserted against or
involve any Indemnified Person in any and all actions, suits, proceedings
(including any investigations or inquiries) or claims with respect to (i) this
Agreement, the other Loan Documents, the Senior Subordinated Note Indenture or
the Existing Loan Agreement, (ii) any of the transactions contemplated hereunder
or thereunder (whether or not consummated), and (iii) the preparation,
execution, delivery, administration and enforcement of the Loan Documents by the
Agent or any Lender, and, upon demand by the Agent or any Lender, will pay or
reimburse any such Indemnified Person for any legal or other expenses incurred
in connection with investigating, defending or preparing to defend or
participate in any such action, suit, proceeding (including any inquiry or
investigation) or claim, whether commenced or threatened (including such
expenses incurred on any appeal), it being understood that each Indemnified
Person shall have the right to select its own counsel in connection with such
matters (subject, in the case of Indemnified Persons other than GE Capital, to
the provisions of clause (b) below); provided that Borrower shall not be
responsible for such indemnification to such Indemnified Persons to the extent
that any such claims, losses, damages, liabilities or expenses result from such
Indemnified Person's gross negligence or willful misconduct. The provisions of
this Section 11.11 shall apply whether or not any such Indemnified Person is a
party to any such action, suit, proceeding or claim, and are expressly intended
to include, but not be limited to, reimbursement of legal and other expenses,
including expenses incurred in depositions or discovery proceedings (subject to
the provisions of clause (b) below). The indemnity obligations of Borrower
hereunder shall be in addition to, and not in limitation of, any other liability
or obligation that Borrower may have to any Indemnified Person, at common law or
otherwise, including, but not limited to, any obligation of contribution.
(b) Any Indemnified Person other than GE Capital shall have the right to employ
counsel in any such proceeding separate from that employed by GE Capital and to
participate in the defense thereof, but the fees and expenses of such separate
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnified Person is merely appearing as a witness or is otherwise the object
of depositions or other discovery proceedings, (ii) the employment of such
separate counsel has been specifically authorized by Borrower or (iii) the
named parties to any such action (including any impleaded parties) include such
Indemnified Person and GE Capital or one of its Affiliates and such Indemnified
Person shall have been advised by its counsel that there may be one or more
legal defenses available to such Indemnified Person which are different from or
additional to those available to GE Capital or one of its Affiliates (in which
case, Borrower shall be responsible for the payment of all legal and other fees
incurred by such Indemnified Person in connection therewith).
(c) The Agent and each Lender agree that in the event that it becomes aware of
any claim for indemnification under this Section 11.11, the Agent or such Lender
shall promptly notify Borrower in writing, but any failure to so notify Borrower
shall not relieve Borrower of any of its obligations hereunder.
(d) Notwithstanding any provision of this Agreement to the contrary, the
provisions of this Section 11.11 shall survive the termination of this Agreement
and the repayment of the Term Loans and the Revolving Credit Loan and the
payment and performance of all other Obligations owed to the Agent and the
Lenders for the applicable statute of limitations period.
Section 11.12 Nonliability of Lenders. Borrower acknowledges and agrees
that:
(a) Any inspections of any Property of Borrower made by or through the
Agent or the Lenders are for purposes of administration of the Loan Documents
only, and Borrower is not entitled to rely upon the same;
(b) By accepting or approving anything required to be observed, performed,
fulfilled or given to the Lenders or the Agent pursuant to the Loan Documents,
neither the Lenders nor the Agent shall be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of the same
or of any term, provision or condition thereof, and such acceptance or approval
thereof shall not constitute a warranty or representation to anyone with respect
thereto by the Lenders or the Agent;
(c) The relationship between Borrower and the Lenders arising out of or related
to this Agreement is, and shall at all times remain, solely that of a borrower
and lender; neither the Agent nor any of the Lenders shall under any
circumstance be construed to be a partner or a joint venturer of Borrower or any
of its Affiliates; neither the Agent nor any of the Lenders shall under any
circumstance be deemed to be in a fiduciary relationship with Borrower or its
Affiliates in connection with this Agreement, or to owe any fiduciary duty to
Borrower or its Affiliates in connection with this Agreement; neither the Agent
nor any of the Lenders undertakes or assumes any responsibility or duty to
Borrower or its Affiliates to select, review, inspect, supervise, pass judgment
upon or inform Borrower or its Affiliates of any matter in connection with their
Property or the operations of Borrower or its Affiliates; Borrower and its
Affiliates shall rely entirely upon their own judgment with respect to such
matters; and any review, inspection, supervision, exercise of judgment or supply
of information undertaken or assumed by the Lenders or the Agent in connection
with such matters is solely for the protection of the Agent and the Lenders and
neither Borrower, nor any other Person is entitled to rely thereon; and
(d) Neither the Agent nor any of the Lenders shall be responsible or liable to
any Person for any loss, damage, liability or claim of any kind relating to
injury or death to Persons or damage to Property or other loss, damage,
liability or claim caused by the actions, inaction or negligence of Borrower
and/or its Affiliates.
Section 11.13 No Third Parties Benefited. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Borrower, the Agent and the Lenders with respect to the Revolving Credit Loan,
Term Loans, Letter of Credit Obligations and the other Obligations and is made
for the sole benefit of Borrower, the Agent and the Lenders, and the Agent's and
the Lenders' successors and assigns. Except as provided in Sections 11.8 and
11.11, no other Person shall have any rights of any nature hereunder or by
reason hereof, including, without limitation, any right to rely on any
representation made by Borrower herein
(except that counsel to the parties hereto may rely on such representations in
connection with the issuance of opinions with respect to the Loan Documents).
Section 11.14 Right of Setoff - Deposit Accounts. Upon the occurrence of
an Event of Default, Borrower hereby specifically authorizes each Lender, if
any, which is a bank in which Borrower maintains deposit accounts (whether a
general or special deposit account, other than trust accounts) or a certificate
of deposit, to set off any Obligations owed to the Lenders against such deposit
account or certificate of deposit without prior notice to Borrower or such
Subsidiary (which notice is hereby waived) whether or not such deposit account
or certificate of deposit has then matured. Nothing in this Section 11.14 shall
limit or restrict the exercise by a Lender of any right to setoff or banker's
lien under applicable Law.
Section 11.15 Further Assurances. Borrower shall, at its expense and
without expense to the Lenders or the Agent, do, execute and deliver such
further acts and documents as any Lender or the Agent from time to time
reasonably requires for the assuring and confirming unto the Lenders or the
Agent the rights hereby created or intended now or hereafter so to be, or for
carrying out the intention or facilitating the performance of the terms of any
Loan Document.
Section 11.16 Integration. This Agreement constitutes an amendment and
restatement of the Existing Loan Agreement. The execution and delivery of this
Agreement shall not constitute a novation, waiver, release or modification of
any rights, claims, or remedies of the Agent and Lenders under the Existing Loan
Agreement or otherwise, or any indebtedness or other obligations owing to the
Agent and Lenders under the Existing Loan Agreement or otherwise. Except as
provided in the preceding two sentences, this Agreement, together with the other
Loan Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and shall supersede all prior agreements, written
or oral, on the subject matter hereof including, without limitation, the
Commitment Letter. Each Loan Document was drafted with the joint participation
of the respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.
Section 11.17 GOVERNING LAW. ALL ADVANCES AND THE TERM LOANS MADE
HEREUNDER HAVE BEEN OR SHALL BE FUNDED FROM AND WILL BE REPAID IN NEW YORK,
NEW YORK, AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OTHERWISE BEAR A
SUBSTANTIAL RELATIONSHIP TO THE STATE OF NEW YORK. ACCORDINGLY, THE PARTIES TO
THIS AGREEMENT HAVE CHOSEN THAT, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY
PROVIDED THEREIN, EACH LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
Section 11.18 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid as to any
party or in any jurisdiction shall, as to that party or that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the remaining
provisions or the operation, enforceability, or validity of that provision as
to any party or in any other jurisdiction, and to this end the provisions of all
Loan Documents are declared to be severable.
Section 11.19 Headings. Article and Section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.
Section 11.20 Conflict in Loan Documents. To the extent there is any
actual irreconcilable conflict between the provisions of this Agreement and
any other Loan Document, the provisions of this Agreement shall prevail.
Section 11.21 CHOICE OF FORUM.
(a) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND EACH HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE OR FEDERAL COURT. BORROWER AGREES THAT SUCH JURISDICTION
SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING BROUGHT BY IT
AGAINST THE AGENT OR ANY LENDER. NOTWITHSTANDING THE FOREGOING, THE PARTIES
AGREE THAT, WITH RESPECT TO ANY COLLATERAL IN WHICH A SECURITY INTEREST IS
GRANTED BY BORROWER TO THE LENDERS AND THE AGENT LOCATED IN OTHER
JURISDICTIONS, THE AGENT SHALL BE ENTITLED TO COMMENCE ACTIONS IN SUCH
JURISDICTIONS AGAINST BORROWER OR OTHER PERSONS FOR THE PURPOSE OF SEEKING
PROVISIONAL REMEDIES, INCLUDING ACTIONS FOR CLAIM AND DELIVERY OF PROPERTY, OR
FOR INJUNCTIVE RELIEF OR APPOINTMENT OF A RECEIVER, OR ACTIONS TO FORECLOSE
UPON LIENS GRANTED TO THE LENDERS AND THE AGENT. EACH PARTY TO ANY LOAN
DOCUMENT, TO THE EXTENT PERMITTED BY APPLICABLE LAWS, HEREBY EXPRESSLY WAIVES
ANY DEFENSE OR OBJECTION TO JURISDICTION OR VENUE BASED ON THE DOCTRINE OF FORUM
NON CONVENIENS, AND STIPULATES THAT ANY NEW YORK STATE OR FEDERAL COURT SITTING
IN THE COUNTY OF NEW YORK SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER
SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY DISPUTE OR CONTROVERSY ARISING OUT
OF OR RELATED TO THE LOAN DOCUMENTS. IN THE EVENT BORROWER SHOULD COMMENCE OR
MAINTAIN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THE LOAN
DOCUMENTS IN A FORUM OTHER THAN ONE OF THE FOREGOING COURTS, THE LENDERS AND THE
AGENT SHALL BE ENTITLED TO REQUEST THE DISMISSAL OR STAY OF SUCH ACTION OR
PROCEEDING, AND BORROWER STIPULATES FOR ITSELF THAT SUCH ACTION OR PROCEEDING
SHALL BE DISMISSED OR STAYED.
(b) Borrower hereby irrevocably designates, appoints and empowers Prentice Hall
Corporation System, Inc., whose present address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, as its authorized agent to receive, for and on its
behalf and on behalf of its Property, service of process in the State of New
York when and as such legal actions or proceedings may be brought in the New
York Courts, and such service of process shall be deemed complete upon the date
of delivery thereof to such agent whether or not such agent gives notice thereof
to
Borrower, or upon the earliest of any other date permitted by applicable Law.
It is understood that a copy of said process served on such agent will as soon
as practicable be forwarded to Borrower at such address specified in accordance
with Section 11.6, at such address, but its failure to receive such copy shall
not affect in any way the service of said process on said agent as the agent of
Borrower. Borrower irrevocably consents to the service of process of any of the
New York Courts in any such action or proceeding by the mailing of the copies
thereof by certified mail, return receipt requested, postage prepaid, to it at
its address specified in accordance with Section 11.6, such service to become
effective upon the earlier of (i) the date 10 calendar days after such mailing
or (ii) any earlier date permitted by applicable Law. Borrower agrees that it
will at all times continuously maintain an agent to receive service of process
in the State of New York on behalf of itself and its Property and in the event
that, for any reason, the agent named above or its successor shall no longer
serve as its agent to receive service of process in the State of New York on its
behalf, it shall promptly appoint a successor so to serve and shall advise the
Agent and the Lenders thereof (and shall furnish to the Agent the consent of any
successor agent so to act).
(c) Nothing in this Section 11.21 shall affect the right of the Agent or any
Lender to bring proceedings against Borrower in the courts of any other
jurisdiction or to serve process in any other manner permitted by applicable
Law.
Section 11.22 CONSEQUENTIAL DAMAGES; WAIVER OF TRIAL BY JURY. NEITHER THE
AGENT NOR ANY LENDER SHALL BE RESPONSIBLE OR LIABLE TO BORROWER OR ANY OTHER
PERSON OR ENTITY FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY
BE ALLEGED AS A RESULT OF THIS AMENDED AND RESTATED LOAN AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY. BORROWER AND THE AGENT AND EACH OF THE LENDERS
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF SUCH PERSONS OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND EACH SUCH PERSON HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY TRIAL COURT WITHOUT
A JURY, AND THAT ANY OTHER PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 11.23 PURPORTED ORAL AMENDMENTS. BORROWER EXPRESSLY ACKNOWLEDGES
THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR
MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. BORROWER AGREES THAT IT
WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR
WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF AGENT OR ANY LENDER THAT DOES
NOT COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR
SUPPLEMENT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
Section 11.24 Refinancings. Borrower agrees that Agent and GE Capital
shall have the right of first refusal to serve as agent and to participate as a
lender, respectively, in any debt refinancing of the Obligations hereunder
consummated at any time prior to September 15, 2000, on substantially the same
terms and conditions as offered by any other prospective agent and lender;
provided, however, that (i) such right of first refusal shall not be applicable
to any proposed refinancing of the Obligations (or portion thereof) using solely
the proceeds of Subordinated Indebtedness or other subordinated indebtedness of
the Borrower which is junior in rank to the Obligations and (ii) in the event
that any other Indebtedness of Borrower is refinanced contemporaneously with, or
as part of, any refinancing of the Obligations, such right of first refusal
shall only apply to the refinancing of the Obligations and not such other
Indebtedness.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed as of the date first above written.
FAIRFIELD MANUFACTURING COMPANY, INC.
By:
Name:
Title:
ATTEST:
Name:
Title:
[CORPORATE SEAL]
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender and as Agent
By:________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
and Region Operations Manager
Dollar Amount of Term Loan: $10,000,000
Pro Rata Share of Commitment: 100%
