UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly report pursuant to section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission file number 0-13875
LANCER CORPORATION
(Exact name of registrant as specified in its charter)
Texas 74-1591073
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
235 West Turbo, San Antonio, Texas 78216
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (210) 344-3071
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 14(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
-------- --------
Indicate the number of shares outstanding of each of the issuers of classes of
common stock, as of the latest practicable date.
Shares outstanding as of
Title August 2, 1996
Common stock, par value $.01 per share 5,813,849
-1 -
<PAGE>
Part I - Financial Information
<TABLE>
<CAPTION>
Item 1 - Financial Statements
LANCER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1996 1995
------------------- -------------------
(Unaudited)
Current assets:
<S> <C> <C>
Cash $ 1,626,030 $ 754,352
------------------- -------------------
Receivables:
Trade accounts and notes 20,018,035 14,431,531
Other 276,747 272,214
------------------- -------------------
20,294,782 14,703,745
Less allowance for doubtful accounts (85,000) (85,000)
------------------- -------------------
Net receivables 20,209,782 14,618,745
------------------- -------------------
Inventories (note 2) 23,303,112 20,031,758
Prepaid expenses 377,818 146,776
Deferred income taxes 63,912
-
------------------- -------------------
Total current assets 45,580,654 35,551,631
------------------- -------------------
Property, plant and equipment, at cost:
Land 1,327,663 977,888
Buildings 9,658,221 7,950,514
Machinery and equipment 13,977,234 13,255,089
Tools and dies 8,498,450 7,927,246
Leaseholds, office equipment and vehicles 6,462,646 4,969,712
Construction in progress 100,000 1,361,906
------------------- -------------------
40,024,214 36,442,355
Less accumulated depreciation and amortization (18,468,110) (17,242,089)
------------------- -------------------
Net property, plant and equipment 21,556,104 19,200,266
------------------- -------------------
Long-term receivables 489,836 512,388
Intangibles and other assets,
at cost, less accumulated amortization 2,680,541 2,679,578
------------------- -------------------
$ 70,307,135 $ 57,943,863
=================== ===================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
LANCER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS EQUITY
June 30, December 31,
1996 1995
------------------- -------------------
(Unaudited)
Current liabilities:
<S> <C> <C>
Accounts payable $ 9,268,019 $ 5,645,063
Current installments of long-term debt 1,506,016 1,448,093
Line of credit with bank (note 3) 12,000,000 7,000,000
Deferred revenue 281,448 815,901
Accrued expenses and other liabilities 2,833,369 2,882,886
Income taxes payable 838,326 487,395
------------------- -------------------
Total current liabilities 26,727,178 18,279,338
Deferred income taxes 925,897 996,409
Other long-term liabilities 760,000 700,000
Long-term debt, excluding current installments (note 3) 4,663,518 5,397,574
Deferred revenue 3,062,152 1,505,600
------------------- -------------------
Total liabilities 36,138,745 26,878,921
------------------- -------------------
Shareholders' equity (note 4):
Preferred stock, without par value:
5,000,000 shares authorized, none issued - -
Common stock, $.01 par value:
10,000,000 shares authorized; 5,813,876 and 5,808,331
issued and outstanding in 1996 and 1995, respectively 58,139 38,722
Additional paid-in capital 9,856,500 9,852,713
Cumulative translation adjustment 213,997
-
Retained earnings 24,039,754 21,173,507
------------------- -------------------
Total shareholders' equity 34,168,390 31,064,942
------------------- -------------------
$ 70,307,135 $ 57,943,863
=================== ===================
</TABLE>
See accompanying notes to consolidated financial statements.
- 3 -
<PAGE>
LANCER CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $ 25,333,813 $ 21,312,939 $ 48,786,078 $ 41,654,156
Cost of sales 19,309,635 17,050,352 37,152,031 33,523,325
------------------- ------------------ ------------------ ------------------
Gross profit 6,024,178 4,262,587 11,634,047 8,130,831
Selling, general and
administrative expenses 3,380,245 2,355,053 6,584,892 4,989,199
------------------- ------------------ ------------------ ------------------
Operating income 2,643,933 1,907,534 5,049,155 3,141,632
------------------- ------------------ ------------------ ------------------
Other income (expense):
Interest expense (378,456) (297,609) (807,365) (518,923)
Interest and other income, net 169,933 451,579 368,296 994,969
------------------- ------------------ ------------------ ------------------
(208,523) 153,970 (439,069) 476,046
------------------- ------------------ ------------------ ------------------
Earnings before income taxes 2,435,410 2,061,504 4,610,086 3,617,678
------------------- ------------------ ------------------ ------------------
Income taxes expense (benefit):
Current 949,757 727,023 1,814,351 1,440,396
Deferred (40,219) 20,078 (70,512) (106,297)
------------------- ------------------ ------------------ ------------------
909,538 747,101 1,743,839 1,334,099
------------------- ------------------ ------------------ ------------------
Net earnings $ 1,525,872 $ 1,314,403 $ 2,866,247 $ 2,283,579
=================== ================== ================== ==================
Weighted average common and
common equivalent shares 6,073,863 5,976,273 6,046,832 5,972,897
=================== ================== ================== ==================
Net earnings per share $ $ $ $
0.25 0.22 0.47 0.38
=================== ================== ================== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
LANCER CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30, June 30,
1996 1995
---------------------- ----------------------
Cash flow from operating activities:
<S> <C> <C>
Net earnings $ 2,866,247 $ 2,283,579
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 1,232,021 1,085,095
Loss on sale and disposal of assets 1,382 12,173
Cumulative effect of the translation adjustment 213,997 -
Changes in assets and liabilities:
Receivables (5,568,485) (5,865,856)
Refundable income taxes - 342,981
Prepaid expenses (231,042) (169,310)
Deferred income taxes (63,912) -
Inventories (3,271,354) 3,870,441
Other assets (6,963) 424,266
Accounts payable 3,622,956 69,468
Accrued expenses (49,517) 78,147
Income taxes payable 350,931 440,919
Deferred revenue 1,022,099 -
Deferred Federal income taxes (70,512) (106,297)
Other long-term liabilities 60,000 120,000
---------------------- ---------------------
Net cash provided by operating activities 107,848 2,585,606
---------------------- ---------------------
Cash flow from investing activities:
Proceeds from sale of assets
200 14,601
Acquisition of property, plant and equipment (3,583,441) (3,749,091)
---------------------- ---------------------
Net cash used in investing activities (3,583,241) (3,734,490)
---------------------- ---------------------
Cash flow from financing activities:
Net (repayment) borrowings under line of credit agreements 5,000,000 200,000
Proceeds from issuance of long-term debt - 1,524,000
Retirement of long-term debt (676,133) (929,612)
Proceeds from exercise of stock options 23,204 2,112
---------------------- ---------------------
Net cash provided by financing activities 4,347,071 796,500
---------------------- ---------------------
Net (decrease) increase in cash 871,678 (352,384)
Cash at beginning of year 754,352 2,102,390
---------------------- ---------------------
Cash at end of period $ 1,626,030 $ 1,750,006
====================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
- 5 -
<PAGE>
LANCER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
All adjustments (consisting of normal recurring adjustments) have been made
which are necessary for a fair presentation of financial position and results of
operations. All intercompany balances and transactions have been eliminated in
consolidation. It is suggested that the consolidated financial statements be
read in conjunction with the consolidated financial statements and notes thereto
included in the December 31, 1995 Annual Report on Form 10-K.
Earnings per share are based on the weighted average number of common and
common equivalent (dilutive stock options) shares outstanding each period. Fully
diluted earnings per share would not be different than earnings per common and
common equivalent share. On July 9, 1996, the Company effected a three-for-two
stock split accounted for as a dividend. Prior year weighted average shares
outstanding and prior year per share amounts have been restated accordingly. 2.
Inventory Components
The Company uses the gross profit method to determine cost of sales and
inventory for interim periods. Inventory components are estimated based on
historical relationships as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------------------- -------------------
<S> <C> <C>
Finished Goods $ 3,632,318 $ 4,558,742
Work in process 13,848,213 11,982,620
Raw material and supplies 5,822,581 3,490,396
-------------------- -------------------
$ 23,303,112 $ 20,031,758
==================== ===================
</TABLE>
3. Long-term Debt and Line of Credit
On July 15, 1996, the Company entered into an agreement with two banks to
replace the existing credit agreements with $42.5 million in new credit
facilities (the Credit Facilities). The terms of the Credit Facilities require
the Company to maintain certain financial ratios and other covenants. Advances
bear interest based upon either the London Interbank Offered Rates (LIBOR) or
upon, and fluctuating with, the lender's prime rate.
4. Stock Dividends
On May 23, 1996, the Companys Board of Directors authorized a three-for-two
stock split effected in the form of a dividend to be distributed on July 9, 1996
to shareholders of record as of June 25, 1996. Shareholders equity has been
restated to give retroactive recognition to the stock split in the current
period by reclassifying from additional paid-in capital to common stock the par
value of the additional shares arising from the stock dividend. In addition, all
references in the financial statements to number of shares, per share amounts,
stock option data and market prices of the Companys common stock have been
restated.
- 6 -
<PAGE>
Item 2 - Managements Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Comparison of the Three-Month Periods Ended June 30, 1996 and 1995
- ------------------------------------------------------------------
Net sales for the quarter ended June 30, 1996, increased by $4.0 million,
or 18.9%, to $25.3 million from $21.3 million for the same period last year.
This increase reflects a general increase in demand for most of the Companys
core product lines with particular emphasis on ice-cooled dispensers and
dispensing towers and combined operations from Glenn Pleass Holdings, Pty. Ltd.
(GPH). International sales totaled $9.4 million, or 37.1% of net sales, for the
quarter ended June 30, 1996, an increase of $1.8 million, or 23.7%, from $7.6
million, or 35.6% of net sales, for the same period last year.
Due to the increase in sales, the gross profit recognized for the second
quarter of 1996 increased by $1.7 million, or 41.3%, to $6.0 million from $4.3
million for the same quarter last year, while gross margin for the period
(represented as a percentage of net sales) increased to 23.8% from 20.0% in the
same period of 1995. These increased margins are primarily due to reductions in
manufacturing and overhead costs. Selling, general and administrative costs
during the quarter ended June 30, 1996, increased by $1.0 million, or 43.5%, to
$3.4 million from $2.4 million for the same quarter last year. This increase
reflects higher selling and engineering research and development expenses, and
the combined costs of the Company and GPH, its wholly-owned Australian
subsidiary acquired in December 1995.
Interest expense for the three months ended June 30, 1996 increased $80
thousand, or 27.2%, to $378 thousand from $298 thousand for the same period last
year, reflecting higher average bank debt in 1996.
Other income for the three months ended June 30, 1996 decreased by $282
thousand, or (62.4%), from $452 thousand for the same period in 1995, due
primarily from a decrease in commissions earned under a sales representative
agreement for the sale of beverage coolers.
Income tax expense for the three months ended June 30, 1996, increased by
21.7%, to $910 thousand from $747 thousand for the same period in 1995. This
increase is directly related to the increase in earnings.
Net earnings for the three months ended June 30, 1996, increased by $211
thousand, or 16.1%, to $1.5 million ($0.25 per share) from $1.3 million ($0.22
per share) for the same period in 1995. This increase was primarily due to
improved gross margins.
Comparison of the Six-Month Periods Ended June 30, 1996 and 1995
- ----------------------------------------------------------------
Net sales for the six-month period ended June 30, 1996, increased by $7.1
million, or 17.1%, to $48.8 million from $41.7 million for the same period in
1995. This increase reflects a general increase in demand for most product
lines, strong sales of new product lines and combined sales of the Company and
GPH. International sales totaled $20.1 million, or 41.3% of net sales, for the
six months ended June 30, 1996, an increase of $6.9 million, or 52.3%, from
$13.2 million, or 31.6% of net sales, for the same period last year.
Gross profit for the six months ended June 30, 1996 increased by $3.5
million, or 43.1%, to $11.6 million from $8.1 million for the same period in
1995, while gross margin for the period (represented as a percentage of net
sales) increased to 23.8% from 19.5% in the same period in 1995 reflecting the
impact of increased sales and reductions in manufacturing and overhead costs.
Selling,general and administrative expenses for the six-month period ended
June 30, 1996, increased by $1.6 million, or 32.0%, to $6.6 million from $5.0
million for the same period in 1995. This increase was due primarily to higher
-7 -
<PAGE>
selling and engineering research and development expenses.
Interest expense for the first six months of 1996 increased by $288
thousand, or 55.6%, to $807 thousand from $519 thousand for the same period last
year. This increase reflects higher average bank debt resulting from the
expansion of the Companys facilities in Mexico.
Interest and other income for the six months ended June 30, 1996, decreased
by $627 thousand, or 63.0%, to $368 thousand from $995 thousand for the same
period in 1995. This decrease was due primarily to lower commissions earned
under a sales representative agreement and significant foreign currency exchange
gains recognized in the prior year.
Income tax expense for the six months ended June 30, 1996, increased by
30.7%, to $1.7 million from $1.3 million for the same period in 1995. This
increase was primarily due to increased earnings.
Net earnings for the six months ended June 30, 1996, increased by $583
thousand, or 25.5%, to $2.9 million ($0.47 per share) from $2.3 million ($0.38
per share) for the same period in 1995. The increase was primarily due to
increased sales and improvements in gross margin.
Liquidity and Capital Resources
- -------------------------------
The net increase in cash for the six months ended June 30, 1996 was
approximately $872 thousand compared to a decrease of approximately $352
thousand for the same period in the prior year. On July 15, 1996, the Company
entered into an agreement with two banks to replace the existing credit
agreements with $42.5 million in new credit facilities. The loans are due in
five years, and provide financing for working capital requirements, potential
acquisitions, and for capital spending, including the expansion of the Companys
facilities in San Antonio, Texas and Piedras Negras, Mexico. The Company
believes the new credit arrangements, together with cash on hand and cash from
operations, will be sufficient to fund the Companys activities for the
foreseeable future at more favorable rates than the previous credit facilities.
Part II - Other Information
Item 1 - Legal Proceedings
The Company is a party to various lawsuits and claims generally incidental to
its business. In the opinion of management and independent legal counsel, the
ultimate disposition of these matters is not expected to have a significant
adverse effect on the Companys financial position or results of operations.
Item 4 - Submission of Matters to a Vote of Security Holders
During The Lancer Corporation Annual Meeting of Shareholders held on May 23,
1996, the Shareholders approved the Companys 1996 Stock Incentive Plan (the
1996 Plan) which reserves 150,000 shares of Common Stock for issuance upon
exercise of options to be granted under the Plan. Of the then outstanding
shares, 3,232,509 voted for the 1996 Plan and 123,293 voted against.
Item 5 - Other Information
None
- 8 -
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
10.27 Credit Agreement, dated July 15,1996, between Lancer Corporation and The
Frost National Bank and The Boatmens National Bank of St. Louis
10.28 Term A Note, dated July 15,1996, between Lancer Corporation and The Frost
National Bank and The Boatmens National Bank of St. Louis
10.29 Term B Note, dated July 15,1996, between Lancer Corporation and The Frost
National Bank and The Boatmens National Bank of St. Louis
10.30 Revolving Note, dated July 15,1996, between Lancer Corporation and The
Frost National Bank and The Boatmens National Bank of St. Louis
10.31 Acquisition Note, dated July 15,1996, between Lancer Corporation and
The Frost National Bank and The Boatmens National Bank of St. Louis
10.32 Stock Pledge, dated July 15,1996, between Lancer Corporation and The Frost
National Bank
10.33 Parent and Affiliate Guaranties, dated July 15,1996, between Lancer
Corporation or its subsidiaries and The Frost National Bank
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the fiscal quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LANCER CORPORATION
(Registrant)
August 13, 1996 By: /s/ George F. Schroeder
George F. Schroeder
President and CEO
August 13, 1996 By: /s/ John P. Herbots
John P. Herbots
Chief Financial Officer
- 9 -
0219432.10
CREDIT AGREEMENT
among
LANCER PARTNERSHIP, LTD.
as a Borrower
and
NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V.
as a Borrower
and
THE FROST NATIONAL BANK
Individually and as the Agent
and
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
Individually
$17,500,000 Revolving Credit Facility
$12,200,000 Term A Loan Facility
$2,800,000 Term B Loan Facility
$10,000,000 Acquisition Facility
July 15, 1996
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONAL PROVISIONS 1
SECTION 1.1 Certain Definitions of Terms 1
SECTION 1.2 General Definitional Provisions 1
ARTICLE 2
THE CREDITS 2
SECTION 2.1 Commitments to Lend 2
SECTION 2.2 Method of Borrowing 3
SECTION 2.3 Notes 5
SECTION 2.4 Interest Rates and Payment 5
SECTION 2.5 Continuations/Conversions, Etc. 6
SECTION 2.6 Commitment and Other Fees 8
SECTION 2.7Reduction and Termination of Commitment 8
SECTION 2.8 Mandatory Prepayments 9
SECTION 2.9 Principal Payments on Loans. 10
SECTION 2.10 Optional Prepayments. 11
SECTION 2.11 General Provisions as to Payments 11
SECTION 2.12 Funding Losses 12
SECTION 2.13 Sharing of Payments, etc. 12
SECTION 2.14 Taxes 13
SECTION 2.15 Pro Rata Treatment 14
SECTION 2.16 Proceeds of Loans 14
ARTICLE 3
CONDITIONS 14
SECTION 3.1 Initial Loans on the Closing Date 14
SECTION 3.2 All Loans, Conversions/Continuations 14
SECTION 3.3 Loans For Acquisitions 15
ARTICLE 4
REPRESENTATIONS AND WARRANTIES 16
SECTION 4.1 Entity Status; Power and Authority 16
SECTION 4.2 Authorization; Consents 16
SECTION 4.3 No Conflicts 16
SECTION 4.4 Enforceable Obligations 17
SECTION 4.5 Title to Properties 17
SECTION 4.6 Financial Condition 17
SECTION 4.7 Full Disclosure 18
SECTION 4.8 No Default or Adverse Condition 18
SECTION 4.9 Material Agreements; Insurance 18
SECTION 4.10 No Litigation 18
SECTION 4.11 Use of Proceeds; Margin Stock 19
SECTION 4.12No Financing of Regulated Corporate Takeovers 19
SECTION 4.13 Taxes 19
SECTION 4.14 Principal Office; Names; Primary Business 19
SECTION 4.15 Subsidiaries 19
SECTION 4.16 ERISA 20
SECTION 4.17 Compliance with Law 20
SECTION 4.18 Government Regulation 20
SECTION 4.19 Insider 20
SECTION 4.20 Certain Environmental Matters 21
SECTION 4.21 Insurance; Certifications 21
ARTICLE 5
AFFIRMATIVE COVENANTS 21
SECTION 5.1 Financial Statements, Reports and Documents 21
SECTION 5.2 Payment of Taxes and Other Liabilities 24
SECTION 5.3 Maintenance of Existence and Rights;
Conduct of Business 24
SECTION 5.4 Notice of Default 24
SECTION 5.5 Other Notices 24
SECTION 5.6 Compliance with Loan Documents 25
SECTION 5.7 Compliance with Agreements 25
SECTION 5.8 Access; Books and Records 25
SECTION 5.9 Compliance with Law 25
SECTION 5.10 Insurance 25
SECTION 5.11 ERISA Compliance 26
SECTION 5.12 Further Assurances 26
SECTION 5.13 Maintenance of Corporate Identity 26
SECTION 5.14 Primary Business 27
SECTION 5.15 Subordination of Affiliate Obligations 27
ARTICLE 6
NEGATIVE COVENANTS 27
SECTION 6.1 Certain Financial Matters 27
SECTION 6.2 Limitation on Indebtedness 29
SECTION 6.3 Limitation on Property 29
SECTION 6.4 Restricted Payments 30
SECTION 6.5 Limitation on Investments 30
SECTION 6.6 Affiliate Transactions 30
SECTION 6.7 Limitation on Sale of Property 30
SECTION 6.8 Accounting Method 31
SECTION 6.9 Internal Governance Documents; Name and
Principal Place of Business 31
SECTION 6.10 Certain Environmental Matters 31
SECTION 6.11 Mergers, Acquisitions and Dissolutions 31
SECTION 6.12 Subsidiaries 32
SECTION 6.13 Sale of Receivables 32
ARTICLE 7
EVENTS OF DEFAULT 33
SECTION 7.1 Events of Default 33
SECTION 7.2 Remedies Upon Event of Default 34
ARTICLE 8
THE AGENT AND BANKS 35
SECTION 8.1 Appointment of the Agent 35
SECTION 8.2 Exculpation; Agent's Reliance 35
SECTION 8.3 Defaults 36
SECTION 8.4 Rights as a Bank 36
SECTION 8.5 Indemnification 36
SECTION 8.6 Bank's Credit Decision and Non-Reliance 37
SECTION 8.7 Deferral of Distributions; Investments 37
SECTION 8.8 Nature of Article 8 38
SECTION 8.9 Resignation and Removal by Agent 38
ARTICLE 9
CHANGED CIRCUMSTANCES 39
SECTION 9.1 Basis for Determining Interest Rate Inadequate
or Unfair 39
SECTION 9.2 Illegality 39
SECTION 9.3 Increased Cost and Reduced Return 39
SECTION 9.4 Substitute Rate for Affected LIBOR Loans 40
SECTION 9.5 Alternate Lending Office Designation 41
ARTICLE 10
MISCELLANEOUS 41
SECTION 10.1 Notices 41
SECTION 10.2 No Waivers 42
SECTION 10.3 Payment of Costs and Expenses; Professionals
and Consultants 42
SECTION 10.4 Indemnification 43
SECTION 10.5 Sharing of Set-Offs 43
SECTION 10.6 Amendments and Waivers 44
SECTION 10.7 Successors and Assigns; Participations;
Assignments 44
SECTION 10.8 Maximum Interest Rate 46
SECTION 10.9 Governing Law; Submission to Jurisdiction 47
SECTION 10.10 Counterparts; Effectiveness 48
SECTION 10.11 Independence of Covenants 48
SECTION 10.12 Survival 48
SECTION 10.13 Severability 48
SECTION 10.14 Governmental Regulation 48
SECTION 10.15 No Control 48
SECTION 10.16 Renewals, Extensions, Rearrangements,
Termination, Etc. 49
SECTION 10.17 Conflicts 49
SECTION 10.18 Confidentiality. 49
SECTION 10.19 Payments Set Aside 49
SECTION 10.20Limitation of Liability; Commencement of Actions50
SECTION 10.21 Review 50
SECTION 10.22 This Agreement 50
CREDIT AGREEMENT
This Credit Agreement is made and entered into as of the 15th day of July, 1996,
among LANCER PARTNERSHIP, LTD., a Texas limited partnership ("Operating
Subsidiary"), and NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexican
corporation ("Mexico Subsidiary") (Operating Subsidiary and Mexico Subsidiary
are hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers"); LANCER CORPORATION, a Texas corporation ("Parent Company"); and
THE FROST NATIONAL BANK, a national banking association, individually and as
agent for the Banks acting in the manner and to the extent provided in Article 8
(in such capacity, the "Agent"), THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, a
national banking association, individually, and each of the lenders which
becomes a party hereto as provided in Section 10.7 (individually, a "Bank" and
collectively, the "Banks").
W I T N E S E T H:
WHEREAS, Operating Subsidiary has requested the Banks to provide it a
revolving credit facility, a term loan facility and an acquisition facility for
the purposes hereinafter provided; and
WHEREAS, Mexico Subsidiary has requested the Banks to provide it a term
loan facility for the purposes hereinafter provided; and
WHEREAS, the Banks, severally, are willing to commit and to advance to the
extent of their respective commitments, revolving credit, term loans and
acquisition loans to Borrowers upon the terms and subject to the conditions
herein provided;
0 NOW THEREFORE, for and in consideration of the premises and the promises
herein, and for other good and valuable considerations, the receipt, adequacy
and reasonable equivalency of which are hereby acknowledged by each party
hereto, Operating Subsidiary, Mexico Subsidiary, Parent Company, each Bank and
the Agent agree as follows: DEFINITIONAL PROVISIONS
.0 1.1 Certain Definitions of Terms. For purposes of this Agreement, unless
otherwise defined herein or the context otherwise requires, capitalized terms
used in this Agreement shall have the respective meanings assigned to them in
Annex B hereto.
.1 General Definitional Provisions.
( ) All terms defined in this Agreement shall have their defined meanings
when used in each Loan Document and in each certificate, exhibit, schedule,
annex or other instrument related thereto, unless in any case the context states
or implies otherwise; and when required by the context, each term shall include
the plural as well as the singular, and vice versa. Furthermore, in each Loan
Document: (i) the word "or" is not exclusive, and the word "including" (in its
various forms) means "including without limitation"; and (ii) provisions in the
masculine, feminine or neither genders should be construed to include any
gender.
(a) Definitions of each Person specifically defined herein or in each other
Loan Document shall mean and include herein and therein, unless otherwise
expressly provided to the contrary, the successors, assigns, heirs and legal
representatives of each such Person.
(b) Unless the context otherwise requires or unless otherwise expressly
provided, references to this Agreement and each other Loan Document shall
include all amendments, modifications, supplements, restatements, ratifications,
renewals, increases, extensions, replacements, substitutions and rearrangements
thereof or thereto, as applicable, and as in effect from time to time; provided,
however, nothing contained in this sentence shall be construed to authorize any
Person to execute or enter into any such amendments, modifications, supplements,
restatements, ratifications, renewals, increases, extensions or rearrangements
to a Loan Document to which it is a party, unless entered into and executed
pursuant to the applicable provisions of the respective Loan Documents.
(c) All accounting terms not specifically defined in a Loan Document shall
be construed, and all accounting procedures, calculations and reporting required
or provided for in any Loan Document shall be performed or prepared, as
applicable, in accordance with GAAP consistently applied.
(d) The term "Section" refers to Sections of this Agreement, and the terms
"Annex", "Exhibit" and "Schedule" refer to Annexes, Exhibits and Schedules
attached hereto, reference to which is hereby made for incorporation herein for
all intents and purposes, unless in any case the context states or implies
otherwise. The table of contents and headings in each Loan Document are inserted
for convenience of reference only and shall be ignored when construing any such
Loan Document.
(e) Loans hereunder are distinguished by "Class" and by "Type". The "Class"
of a Loan (or of a Commitment to make such a Loan or of a Borrowing comprised of
such Loans) refers to the determination whether such Loan is a Term A Loan, a
Term B Loan, a Revolving Loan or an Acquisition Loan, each of which constitutes
a Class. The "Type" of a Loan refers to the determination whether such Loan is a
Base Rate Loan or a LIBOR Loan. Loans may be identified by both Class and Type
(e.g., a "Term A Base Rate Loan" is a Loan which is both a Term A Loan and a
Base Rate Loan).
THE CREDITS
.2 Commitments to Lend.
( ) (1) Term A Loans. Each Bank severally agrees, on and subject to the
terms and conditions set forth in this Agreement, to make term loans (each a
"Term A Loan") to Operating Subsidiary (i) on the Closing Date, a Term A Loan in
the principal amount of up to $5,000,000 and (ii) during the Term Availability
Period, additional Term A Loans, up to an aggregate principal amount of Term A
Loans (including the Term A Loan made on the Closing Date) not exceeding such
Bank's Term A Loan Commitment. Any Term A Loan that is repaid or prepaid may not
be reborrowed.
(0) Term B Loans. Each Bank severally agrees, on and subject to the terms
and conditions set forth in this Agreement, to make term loans (each a "Term B
Loan") to Mexico Subsidiary (i) on the Closing Date, a Term B Loan in the
principal amount of up to $1,800,000 and (ii) during the Term Availability
Period, additional Term B Loans, up to an aggregate principal amount of Term B
Loans (including the Term B Loan made on the Closing Date) not exceeding such
Bank's Term B Loan Commitment. Any Term B Loan that is repaid or prepaid may not
be reborrowed.
(a) Revolving Loans. From time to time during the Revolving Availability
Period, each Bank severally agrees to make revolving loans (each a "Revolving
Loan") to Operating Subsidiary, on and subject to the terms and conditions set
forth in this Agreement, in an aggregate principal amount at any one time
outstanding up to but not exceeding such Bank's Revolving Commitment; provided,
however, at no time shall the aggregate principal amount of all Revolving Loans
outstanding exceed the lesser of (i) the Consolidated Borrowing Base then in
effect and (ii) the Revolving Commitments of all Banks. Subject to the terms and
conditions of this Agreement, Revolving Loans may be borrowed, repaid and
reborrowed at any time during the Revolving Availability Period without premium
or penalty.
(b) Acquisition Loans. From time to time during the Acquisition
Availability Period, each Bank severally agrees to make acquisition loans (each
an "Acquisition Loan") to Operating Subsidiary, on and subject to the terms and
conditions set forth in this Agreement, up to an aggregate principal amount of
Acquisition Loans not exceeding such Bank's Acquisition Commitment. Any
Acquisition Loan that is repaid or prepaid may not be reborrowed.
(c) Amount of Borrowings; Borrowings Ratable. Each Borrowing requested by
(i) Operating Subsidiary as a Term A Base Rate Loan or an Acquisition Base Rate
Loan or (ii) Mexico Subsidiary as a Term B Base Rate Loan, shall be in a minimum
principal amount of $100,000, or if a lesser amount, the amount of the remaining
unadvanced aggregate Term A Commitments, Acquisition Commitments or Term B
Commitments, as applicable, of all Banks. Each Borrowing requested by (a)
Operating Subsidiary as a Term A LIBOR Loan or an Acquisition LIBOR Loan or (b)
Mexico Subsidiary as a Term B LIBOR Loan, shall be in a minimum principal amount
of $500,000. Each Borrowing requested by Operating Subsidiary as a Revolving
Base Rate Loan shall be in a minimum principal amount of $100,000, or a multiple
thereof, or if a lesser amount, the amount of the remaining unadvanced aggregate
Revolving Commitments of all Banks. Each Borrowing requested by Operating
Subsidiary as a Revolving LIBOR Loan shall be in a minimum principal amount of
$500,000, or a multiple of $250,000 in excess thereof. All Borrowings hereunder
shall be made from the Banks ratably in proportion to their respective
Commitments of the relevant Class and Type.
(d) Types. All Loans shall, at the option of each Borrower, be either Base
Rate Loans or LIBOR Loans and may be continued or converted pursuant to Section
2.5, provided that all Loans made pursuant to the same Borrowing shall be of the
same Type; provided, however, no more than 12 LIBOR Loan Borrowings shall be
outstanding at any time.
.3 Method of Borrowing.
( ) Operating Subsidiary shall give the Agent notice in the form attached
hereto as Exhibit and Mexico Subsidiary shall give the Agent notice in the form
attached hereto as Exhibit B (each, a "Notice of Borrowing"), not later than
11:00 A.M. (San Antonio time) on (i) with respect to Base Rate Loans, the
Business Day of each Borrowing consisting of a Base Rate Loan and (ii) with
respect to LIBOR Loans, the second LIBOR Business Day before each Borrowing
consisting of a LIBOR Loan, specifying:
(0) the date of such Borrowing, which shall be a Business Day in the case
of a Borrowing consisting of a Base Rate Loan or a LIBOR Business Day in the
case of a Borrowing consisting of a LIBOR Loan;
(1) the Class and Type of the Loans comprising such Borrowing, provided
that with respect to the initial Credit Event hereunder, all Loans shall be Base
Rate Loans;
(2) the aggregate amount of such Borrowing and of each Loan comprising such
Borrowing; and
(3) (i) the deposit account of the Agent's Domestic Lending Office into
which such Borrowing is requested to be deposited or (ii) complete wiring
instructions for any other account of such Borrower to which such Borrowing is
requested to be wired; and
(4) in the case of a LIBOR Rate Borrowing, the duration of the Interest
Period applicable thereto.
Notwithstanding the foregoing, each Borrower's right to designate any Loan
as a LIBOR Loan shall be subject to the restrictions referred to in Section
2.5(e).
(a) By 12:00 noon (San Antonio time) on the date of receipt of the
applicable Notice of Borrowing from a Borrower, the Agent shall notify each Bank
of the contents thereof and of such Bank's ratable share of such Borrowing. Such
Notice of Borrowing shall not be revocable by such Borrower.
(b) Not later than 1:00 P.M. (San Antonio time) on the date of each
Borrowing, each Bank shall make available its ratable share of such Borrowing,
in immediately available funds, to the Agent at the account number of the Agent
set forth in Annex A. Unless the Agent determines that any applicable condition
precedent has not been satisfied, the Agent will make the funds so received from
each Bank available to the applicable Borrower in its deposit account designated
in the applicable Notice of Borrowing, unless otherwise directed in writing by
such Borrower and accepted by the Agent.
(c) Unless the Agent has received notice from a Bank, prior to any proposed
Borrowing, that such Bank does not intend to fund its Loan requested to be made
on such date, the Agent may assume that such Bank has funded its Loan and is
depositing the proceeds thereof with the Agent on such date, and the Agent in
its sole discretion may, but shall not be obligated to, disburse a corresponding
amount to the applicable Borrower on such date. If Loan proceeds corresponding
to that amount are not in fact deposited with the Agent by such Bank on or prior
to the funding date of such Loan, such Bank agrees to pay, and in the event such
Bank fails to immediately pay, such Borrower agrees to repay, to the Agent
forthwith on demand such corresponding amount, together with interest on the
balance thereof from time to time outstanding for each day from the date such
amount is disbursed to such Borrower until the date such amount is paid or
repaid to the Agent, (i) in the case of such Borrower, at the interest rate
applicable to such Borrowing, and (ii) in the case of such Bank, at the Federal
Funds Rate. If such Bank shall pay to the Agent such corresponding amount, the
amount so paid shall constitute such Bank's Loan as part of such Borrowing for
the purposes of this Agreement. If both such Bank and such Borrower shall repay
such corresponding amount, the Agent shall promptly refund to such Borrower such
corresponding amount (together with any interest paid thereon by such Borrower).
This Section 2.2(d) does not relieve any Bank of its obligation to make its
Loans on any funding date therefor. The obligations of each Bank hereunder are
several, and neither any bank nor the agent shall be responsible for the
obligation of any other person hereunder (or such other person's default in the
performance thereof), nor will the failure by the Agent or any Bank to perform
any of respective obligations hereunder relieve the Agent or any other Bank from
the performance of its respective obligations hereunder.
(d) Unless otherwise directed in writing by the applicable Borrower and
accepted by the Agent, all Borrowings made hereunder shall be disbursed by
credit to the deposit account maintained by such Borrower at the Agent's
Domestic Lending Office that is designated in the applicable Notice of
Borrowing.
.4 Notes
( ) The Term A Loans of each Bank shall be evidenced by a Term A Note, the
Term B Loans of each Bank shall be evidenced by a Term B Note, the Revolving
Loans of each Bank shall be evidenced by a Revolving Note and the Acquisition
Loans of each Bank shall be evidenced by an Acquisition Note.
(a) Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of the Notes referred to in the
preceding clause (a), as the context may require.
(b) Upon receipt of each Bank's Notes pursuant to this Section 2.3, the
Agent shall promptly mail or deliver such Notes to such Bank. Each Bank shall
record on its books, and prior to any transfer of its Notes shall endorse on the
schedule forming a part thereof appropriate notations to evidence the date,
amount and maturity of each Loan made by it and the date and amount of each
payment of principal made by the applicable Borrower with respect thereto;
provided that the failure of any Bank to make any such recordation or
endorsement shall not affect the obligations of any Borrower or any Bank
hereunder or under any other Loan Document. Each Bank is hereby irrevocably
authorized by each Borrower so to endorse its Notes and to attach to and make a
part of its Notes a continuation of any such schedule as and when required.
.5 Interest Rates and Payment.
( ) Each Base Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it becomes
due and payable, at a rate per annum equal to the lesser of (i) the sum of the
Base Rate as in effect for each such day plus the Applicable Margin and (ii) the
Maximum Rate. Accrued, unpaid interest on the outstanding principal of the Base
Rate Loans shall be due and payable on each Quarterly Date. Any principal of
and, to the extent permitted by Law, accrued and unpaid interest on any Base
Rate Loan which has become due and payable shall bear interest on the unpaid
portion thereof, payable on demand, for each day from such due date and until
paid, at the Default Rate.
(a) Each LIBOR Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the lesser of (i) the sum of the Applicable Margin plus the applicable
Adjusted London Interbank Offered Rate and (ii) the Maximum Rate. Accrued,
unpaid interest on the outstanding principal of each LIBOR Loan shall be due and
payable for each Interest Period (i) on the last day thereof for each LIBOR Loan
having an Interest Period equal to one month or three months and (ii) on each
Quarterly Date during the Interest Period and on the last day thereof for each
LIBOR Loan having an Interest Period equal to six months. Any principal of and,
to the extent permitted by Law, interest on any LIBOR Loan which has become due
and payable shall bear interest on the unpaid portion thereof, payable on
demand, for each day from such due date and until paid, at the Default Rate.
(b) The Agent shall determine each interest rate applicable to the Loans
hereunder and each fee hereunder. Interest for all Base Rate Loans and all fees
shall be computed on the basis of a year of 360 days, in each case for the
actual number of days elapsed (including the first day but excluding the last
day), except that, if use of a 360-day year would result in a rate in excess of
the Maximum Rate, such computation will be made on the basis of a year
consisting of 365 or 366 days, as appropriate. Each determination by the Agent
of an interest rate or fee hereunder shall be conclusive and binding in the
absence of manifest error.
(c) Notwithstanding the foregoing, if at any time the applicable
contractual rate of interest provided for herein (without reference to the
Maximum Rate limitation) exceeds the Maximum Rate, then the rate of interest on
any Loan or other Obligation shall be limited to the Maximum Rate during such
time, and at all times thereafter (including periods during which any or all of
such applicable contractual rates of interest have fallen below the Maximum
Rate), the interest rate on any Loan or other Obligation shall be the Maximum
Rate, or if there is no Maximum Rate in effect, the Agreed Maximum Rate, until
the total amount of interest accrued on such Loan or other Obligation equals the
amount of interest which would have accrued thereon if the applicable
contractual rate of interest (without reference to the Maximum Rate limitation)
had at all times been in effect; but in no event shall the aggregate interest
payable or paid during the period beginning on the date the initial Loan is made
until the Obligations are paid in full exceed an amount equal to interest at the
Maximum Rate, so long as the Maximum Rate shall be applicable to this Agreement
and the transactions contemplated hereby. If at maturity or final payment of any
Note or other Obligations, as applicable, the total amount of interest paid or
accrued on such Note or other Obligations under the foregoing provisions is less
than the total amount of interest which would have been paid or accrued if the
applicable contractual rate of interest provided for herein had at all times
been in effect, then each Borrower agrees, to the fullest extent permitted by
Law, to pay an amount equal to the difference between (i) the lesser of (A) the
amount of interest which would have been paid or accrued on such Note or other
Obligations, as applicable, if the Maximum Rate had at all times been in effect
and (B) the amount of interest which would have been paid or accrued on such
Note or other Obligations, as applicable, if a rate per annum equal to the
applicable contractual rate of interest provided for herein had at all times
been in effect, and (ii) the amount of interest paid or accrued in accordance
with the other provisions of such Note or other Obligations, as applicable.
(d) The payment of interest (or any amount deemed to be interest) on any
Note and on any other Obligation shall, in all respects regarding each Loan
Document, be subject to the provisions of Section 10.8.
.6 Continuations/Conversions, Etc.
( ) Continuation/Conversion.
( ) Each Borrower may elect from time to time to convert all or any portion
of the outstanding Base Rate Loan to a LIBOR Loan by giving the Agent a
completed and duly executed irrevocable notice of such election, in the form and
substance of, (A) as to Operating Subsidiary, Exhibit K hereto and (B) as to
Mexico Subsidiary, Exhibit L hereto (each, a "Continuation/Conversion Notice")
not later than 11:00 A.M. (San Antonio time) on the second LIBOR Business Day
before the proposed date of conversion, specifying the proposed date of
conversion, the portion of the Base Rate Loan to be converted, and the duration
of the Interest Period applicable thereto.
(i) Each Borrower may elect to continue (as of the last day of the
applicable Interest Period) all or any part of any LIBOR Loan as the same Type
of Loan by giving the Agent an irrevocable Continuation/Conversion Notice in the
form applicable to such Borrower not later than 11:00 A.M. (San Antonio time) on
the second LIBOR Business Day before the proposed date of continuation. Each
Continuation/Conversion Notice shall specify the proposed date of continuation,
the portion of LIBOR Loan to be continued, and the duration of the Interest
Period applicable thereto.
(ii) Each Borrower may elect from time to time to convert all or any
portion of a LIBOR Loan into a Base Rate Loan by giving the Agent an irrevocable
Continuation/Conversion Notice in the form applicable to such Borrower not later
than 11:00 A.M. (San Antonio time) one Business Day before the date of
conversion. Each Continuation/Conversion Notice shall specify the portion of the
LIBOR Loan to be converted and the date of conversion.
(iii) Upon receipt of a Continuation/Conversion Notice, the Agent shall
promptly notify each Bank thereof. Any continuation pursuant to the preceding
clause (ii) or conversion pursuant to the preceding clause (iii), may only occur
on the last day of the applicable Interest Period. Each Borrowing continued as,
or converted to, a LIBOR Loan shall be in a minimum principal amount of
$500,000, or a multiple of $250,000 in excess thereof, and each Borrowing
continued as, or converted to, a Base Rate Loan shall be in a minimum principal
amount of $100,000 or a multiple thereof.
(a) No Notice. If the applicable Continuation/Conversion Notice is not
given with respect to any LIBOR Loan prior to the time specified in Section
2.5(a)(i) or Section 2.5(a)(ii), or if the applicable Continuation/Conversion
Notice is timely or otherwise given, but it is incomplete and is not completed
before the respective time required by this Agreement, such Borrower shall be
deemed to have converted such Loan into a Base Rate Loan on the last day of the
applicable Interest Period.
(b) Restrictions on Use of Options. Notwithstanding anything to the
contrary contained in this Section 2.5, no LIBOR Loan may be made or continued
as such, and no Loan shall be made or converted to a LIBOR Loan, (i) when any
Default or Event of Default has occurred and is continuing, (ii) when any
provision of any Loan Document prohibits or would preclude any such
continuation, election or conversion, or (iii) if after giving effect to any
such proposed continuation, election or conversion, it would be necessary to
prepay, in whole or part, a LIBOR Loan prior to the expiration of its then
applicable Interest period in order for the applicable Borrower to pay, in full
and in accordance with this Agreement, a mandatory, scheduled or voluntary
payment or prepayment of principal hereunder, including the final maturity
payment hereunder. During the period that a LIBOR Loan is prohibited or
precluded hereunder from continuation, election or conversion, and unless
otherwise expressly provided herein, each such LIBOR Loan shall be automatically
converted to a Base Rate Loan on the last day of the applicable Interest Period,
and each other Loan shall be continued as a Base Rate Loan.
.7 Commitment and Other Fees. Subject to Section
10.8:
( ) Operating Subsidiary shall pay to the Agent, for the ratable account of
the Banks, the following fees: (i) 1/5 of 1% per annum on the total unused
portion of the Term A Commitments of all Banks during the Term Availability
Period, (ii) 1/5 of 1% per annum on the total unused portion of the Revolving
Commitments of all Banks during the Revolving Availability Period, (iii) 1/10 of
1% per annum on each Unavailable Commitment during the Acquisition Availability
Period, and (iv) 1/5 of 1% per annum on the total unused portion of the
Acquisition Commitments of all Banks (other than the then applicable, if any,
Unavailable Commitment) during the Acquisition Availability Period. As such fees
are attributable to the Term A Commitments, such fees shall be payable quarterly
in arrears on each Quarterly Date during the Term Availability Period and on the
Term Commitment Termination Date. As such fees are attributable to the Revolving
Commitments, such fees shall be payable quarterly in arrears on each Quarterly
Date during the Revolving Availability Period and on the Revolving Commitment
Termination Date. As such fees are attributable to the Acquisition Commitments,
such fees shall be payable quarterly in arrears on each Quarterly Date during
the Acquisition Availability Period and on the Acquisition Commitment
Termination Date.
(a) Mexico Subsidiary shall pay to the Agent, for the ratable account of
the Banks, a fee equal to 1/5 of 1% per annum on the total unused portion of the
Term B Commitments of all Banks during the Term Availability Period. Such fees
shall be payable quarterly in arrears on each Quarterly Date during the Term
Availability Period and on the Term Commitment Termination Date. (b) On the
Closing Date, Operating Subsidiary shall pay the Agent, for the ratable account
of the Banks, a facility fee in the amount of $53,125, less the amount of
$10,000 previously paid.
.8 Reduction and Termination of Commitments.
( ) After the Closing Date, Operating Subsidiary may from time to time,
upon at least 30 days' prior notice to the Agent prior to the beginning of a
calendar quarter, receipt of which notice Agent shall promptly notify the Banks,
temporarily reduce, for such calendar quarter, the unused portion of the
Acquisition Commitments of all Banks by an aggregate amount of up to
$10,000,000, in minimum integral multiples of $500,000 (such reduced Commitment,
the "Unavailable Commitment"). Operating Subsidiary may, upon notice to the
Agent, restore the Unavailable Commitment to the unused portion of the
Acquisition Commitments of all Banks, in minimum integral multiples of $500,000,
and, thereupon, the unused portion of the Acquisition Commitments shall be
increased in an amount equal to the amount so restored, provided that the fee
payable under Section 2.6(a) for the calendar quarter during which Operating
Subsidiary elects to restore all or any part of the Unavailable Commitment shall
be calculated as though such restored portion of the Unavailable Commitment were
a portion of the unused portion of the Acquisition Commitments during such
entire calendar quarter. Each Unavailable Commitment shall automatically be
restored at the end of the applicable calendar quarter, subject to Operating
Subsidiary's continuing rights to temporarily reduce, terminate or permanently
reduce the unused portion of the Acquisition Commitment in accordance with the
applicable provisions of this Section 2.7.
(a) During the Term Availability Period, Operating Subsidiary may, upon at
least 5 Business Days' prior notice to the Agent, receipt of which notice Agent
shall promptly notify the Banks, terminate at any time, or permanently reduce
from time to time by an aggregate amount of $500,000 or any integral multiple
thereof, the unused portion of the Term A Commitments of all Banks.
(b) During the Term Availability Period, Mexico Subsidiary may, upon at
least 5 Business Days' prior notice to the Agent, receipt of which notice Agent
shall promptly notify the Banks, terminate at any time, or permanently reduce
from time to time by an aggregate amount of $500,000 or any integral multiple
thereof, the unused portion of the Term B Commitments of all Banks.
(c) During the Acquisition Availability Period, Operating Subsidiary may,
upon at least 5 Business Days' prior notice to the Agent, receipt of which
notice Agent shall promptly notify the Banks, terminate at any time, or
permanently reduce from time to time by an aggregate amount of $500,000 or any
integral multiple thereof, the unused portion of the Acquisition Commitments of
all Banks.
(d) Each termination or reduction of any Commitment pursuant to the
provisions hereof shall apply proportionately to the respective Commitment of
each Bank, and each such termination or permanent reduction, once terminated or
so reduced, may not be reinstated. If any Commitment is terminated in its
entirety, all accrued commitment fees with respect thereto shall be due and
payable on the effective day of such termination.
(e) To the extent not theretofore terminated or permanently reduced, as
applicable, pursuant to other provisions of this Agreement, the Term Commitments
of all Banks shall terminate on July 15, 1998, the Revolving Commitments of all
Banks shall terminate on July 15, 2001, and the Acquisition Commitments of all
Banks shall terminate on July 15, 1998.
.9 Mandatory Prepayments.
( ) If at any time (whether as a result of a temporary or permanent
reduction in Commitments pursuant to Section 2.7, a change in the Consolidated
Borrowing Base or otherwise), (i) the aggregate principal amount of all
Revolving Loans outstanding exceeds the lesser of (x) the Consolidated Borrowing
Base then in effect and (y) the aggregate amount of the Revolving Commitments of
all Banks, Operating Subsidiary shall immediately prepay the Revolving Loans in
an amount at least equal to such excess, or (ii) the aggregate principal amount
of all Term A Loans outstanding exceeds the aggregate amount of the Term A
Commitments of all Banks, Operating Subsidiary shall immediately prepay the Term
A Loans in an amount at least equal to such excess, or (iii) the aggregate
principal amount of all Term B Loans outstanding exceeds the aggregate amount of
the Term B Commitments of all Banks, Mexico Subsidiary shall immediately prepay
the Term B Loans in an amount at least equal to such excess, or (iv) the
aggregate principal amount of all Acquisition Loans outstanding exceeds the
aggregate amount of the Acquisition Commitments of all Banks, Operating
Subsidiary shall immediately prepay the Acquisition Loans in an amount at least
equal to such excess. All such mandatory prepayments shall be accompanied by,
and such Borrower shall pay, interest thereon which has accrued until the date
of payment thereof.
(a) By 11:00 A.M. (San Antonio time) on the date that a mandatory
prepayment is required under Section 2.8(a), such Borrower shall select which
outstanding Loans (indicating the Class and Type) are to be prepaid and shall
notify the Agent thereof. Such notice shall not be revocable by such Borrower.
By 12:00 noon (San Antonio time) on the date of receipt of such notice, the
Agent shall notify each Bank of the contents thereof and of such Bank's ratable
share of such prepayment. Each such prepayment shall be applied to prepay
ratably the respective Loans so selected.
(b) As provided in Section 2.2(d), such Borrower shall immediately prepay
the principal of, and accrued interest on, portions of Borrowings funded by the
Agent as to which and to the extent a Bank has not funded its pro rata portion.
(c) If at any time, Parent Company issues or sells any Indebtedness
permitted under Section 6.2(v), Operating Subsidiary shall immediately prepay
the Term A Loans and the Acquisition Loans in amounts equal to, in the
aggregate, the net cash proceeds received for such issuance or sale. Such
prepayment shall be applied (i) first to the payment of principal of the Term A
Notes and (ii) then to the payment of principal of the Acquisition Notes. Each
such prepayment with respect of the Term A Loans and the Acquisition Loans shall
be applied ratably, to the unpaid scheduled principal installments of such Loans
in the inverse order of maturity thereof.
.10 Principal Payments on Loans.
( ) On each Quarterly Date commencing September 30, 1996 and continuing
consecutively until the payment of the Term A Loans in full, there shall be due
and payable by Operating Subsidiary a principal installment in respect of
outstanding Term A Loans in an aggregate principal amount of (i) $200,000 on
each Quarterly Date from September 30, 1996 through June 30, 1997, inclusive,
(ii) $175,000 on each Quarterly Date from September 30, 1997 through June 30,
1998, inclusive, and (iii) $350,000 on each Quarterly Date from September 30,
1998 through June 30, 2001, inclusive; provided, however, the aggregate unpaid
principal balance of the Term A Loans, together with accrued, unpaid interest
thereon shall (unless the maturity thereof is sooner accelerated or otherwise
becomes due and payable in accordance with the terms hereof or any other Loan
Document) be due and payable in full by Operating Subsidiary on July 15, 2001.
(a) On each Quarterly Date commencing September 30, 1997 and continuing
consecutively until the payment of the Term B Loans in full, there shall be due
and payable by Mexico Subsidiary a principal installment in respect of
outstanding Term B Loans in an aggregate principal amount of $75,000; provided,
however, the aggregate unpaid principal balance of the Term B Loans, together
with accrued, unpaid interest thereon shall (unless the maturity thereof is
sooner accelerated or otherwise becomes due and payable in accordance with the
terms hereof or any other Loan Document) be due and payable in full by Mexico
Subsidiary on July 15, 2001.
(b) On each Quarterly Date, commencing with the Quarterly Date immediately
following each Acquisition Loan Borrowing and continuing consecutively until the
payment of such Acquisition Loan in full, there shall be due and payable by
Operating Subsidiary a principal installment in respect of such Acquisition Loan
in an aggregate principal amount equal to 3.75% of the principal amount of such
Acquisition Loan (irrespective of any repayments thereof); provided, however,
the aggregate unpaid principal balance of all Acquisition Loans, together with
accrued, unpaid interest thereon shall (unless the maturity thereof is sooner
accelerated or otherwise becomes due and payable by Operating Subsidiary in
accordance with the terms hereof or any other Loan Document) be due and payable
in full by Operating Subsidiary on July 15, 2001.
(c) By 11:00 A.M. (San Antonio time) on the date that a payment is required
in respect of Loans under this Section 2.9, Operating Subsidiary or Mexico
Subsidiary, as the case may be, shall select which outstanding Loans that are
either (i) Base Rate Loans or (ii) LIBOR Loans whose last day of its Interest
Period corresponds to the applicable Quarterly Date (and so indicating the Type)
are to be paid and shall notify the Agent thereof. Such notice shall not be
revocable by the applicable Borrower. By 12:00 noon (San Antonio time) on the
date of receipt of such notice, the Agent shall notify each Bank of the contents
thereof and of such Bank's ratable share of such payment. Each such payment
shall be applied to pay ratably the Loans so selected, or if the applicable
Borrower has not timely notified and identified the Agent (as herein provided)
the Acquisition Loans for application, such payment shall be applied, ratably,
by the Agent as it determines in its sole discretion.
(d) The aggregate unpaid principal balance of the Revolving Loans, together
with accrued, unpaid interest thereon shall (unless the maturity thereof is
sooner accelerated or otherwise becomes due and payable by Operating Subsidiary
in accordance with the terms hereof or any other Loan Document) mature and be
due and payable by Operating Subsidiary on the Revolving Commitment Termination
Date.
.11 Optional Prepayments.
( ) Each Borrower may, upon notice to the Agent given not later than 12:00
noon (San Antonio time) on (i) the Business Day of prepayment of any Base Rate
Loan and (ii) the LIBOR Business Day prior to the date of prepayment of any
LIBOR Loan, prepay (without premium or penalty, other than any funding losses as
provided in Section 2.12) any Loan in whole at any time, or from time to time in
part, in minimum principal amounts of $100,000 or any integral multiple thereof;
provided however, LIBOR Loans may be prepaid only on the last day of the
Interest Period for such Loan. Such notice shall specify the date and amount of
prepayment and the Loan or Loans (indicating the corresponding Class or Type)
applicable to such prepayment and shall not be revocable by such Borrower. The
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest thereon and other fees and
expenses due and owing by such Borrower to the date of prepayment. Any such
prepayment of Term Loans shall be applied ratably, to the unpaid scheduled
principal installments of such Loans in the inverse order of maturity thereof.
(a) Upon receipt of a notice of prepayment pursuant to this Section 2.10,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share, if any, of such prepayment.
.12 General Provisions as to Payments. (i) Operating Subsidiary shall make
each payment of principal of and interest on the Term A Loans, the Acquisition
Loans and the Revolving Loans, (ii) Mexico Subsidiary shall make each payment of
principal of and interest on the Term B Loans and (iii) each Borrower shall make
each payment of fees or any other Obligations of such Borrower, in U.S. dollars,
not later than 12:00 noon (San Antonio time) on the date when due (it being
understood that interest shall accrue and be payable for such date on any
amounts which are paid after 12:00 noon (San Antonio time)), in immediately
available funds, without deduction, setoff or counterclaim to the Agent or any
Bank at the account of the Agent set forth in Annex A. By 1:00 P.M. (San Antonio
time) on the date of receipt, the Agent will distribute to each Bank (as
applicable), in accordance with the terms of this Agreement, its ratable share
of each such payment. Whenever any payment of principal of or interest on the
LIBOR Loans shall be due on a day which is not a LIBOR Business Day, the date
for payment thereof shall be extended to the next succeeding LIBOR Business Day
unless such LIBOR Business Day falls in another calendar month, in which case
the date for payment thereof shall be the immediately preceding LIBOR Business
Day. Whenever any payment of any other Obligations shall be due on a day which
is not a Business Day, the date for payment thereof shall be extended to the
next succeeding Business Day. If the date for any payment of principal is
extended as provided above or by operation of law or otherwise, interest thereon
shall be payable for such extended time. Unless the Agent has received notice
from any Borrower prior to the date on which any payment is due to each Bank or
the Agent hereunder that such Borrower will not make such payment in full, the
Agent may assume that such Borrower has made such payment in full to the Agent
on such date, and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent such Borrower has not made such payment in full
to the Agent, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank, together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at a rate per annum equal to the Federal Funds Rate.
In the event any payment received by the Agent and so paid to Banks is rescinded
or must otherwise be returned by the Agent, each Bank shall, upon the request of
the Agent, repay to the Agent the amount of such payment paid to such Bank,
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at a rate per annum equal to the Federal Funds Rate.
.13 Funding Losses. If any Borrower (i) makes any payment or prepayment of
principal with respect to any LIBOR Loan, pursuant to Article 2 or otherwise, on
any day other than the last day of the Interest Period applicable thereto, (ii)
fails to borrow, pay or prepay any LIBOR Loans after notice has been given to
any Bank in accordance with Section 2.2(b) or 2.10(b), (iii) defaults in making
a Borrowing of, conversion into, or continuation of, LIBOR Loans after it has
given a notice regarding same in accordance with the provisions of this
Agreement, or (iv) converts or continues a LIBOR Loan, or converts a Base Rate
Loan into a LIBOR Loan, in any event in this clause (iv) pursuant to Section 2.5
at any time other than at the end of (or in the case of a conversion to a Base
Rate Loan, at the beginning of) the relevant Interest Period, then such Borrower
shall, subject to Section 10.8, indemnify and reimburse Agent and/or each Bank,
as applicable, on demand for any loss or expense incurred or sustained by it as
a consequence of any thereof, including any loss incurred or sustained in
obtaining, liquidating, employing or redeploying deposits from third parties,
and including loss of Applicable Margin, for the period after any such payment,
conversion, continuation or failure to borrow, through the end of such Interest
Period; provided that the Agent and/or such Bank shall have delivered to such
Borrower a certificate as to the amount of such loss or expense which
certificate shall be conclusive and binding against such Borrower, absent
calculational error.
.14 Sharing of Payments, etc. Each of the Agent and the Banks agrees that
if it shall, whether through the exercise of rights under any Loan Document or
rights of banker's lien, set-off, counterclaim or otherwise against any Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it by such Borrower which, taking into account all distributions made by the
Agent under this Agreement causes the Agent or such Bank to have received more
than it would have received had such payment been received by the Agent and
distributed pursuant to this Agreement, then (i) it shall notify the Agent and
each of the other Banks, (ii) it shall be deemed to have simultaneously
purchased and shall be obligated to purchase interests in the Obligations as
necessary to cause the Agent and all Banks to share all payments as provided for
herein, and (iii) such other adjustments shall be made from time to time as
shall be equitable to ensure that the Agent and all Banks share all payments of
Obligations as provided for herein; provided, however, nothing contained herein
shall in any way affect the right of the Agent or any Bank to obtain payment
(whether by exercise of rights of banker's lien, set-off, counterclaim or
otherwise) of indebtedness other than the Obligations. Each Borrower expressly
consents to the foregoing arrangements and agrees that any holder of any such
interest or other participation in the Obligations, whether or not acquired
pursuant to the foregoing arrangements, may to the fullest extent permitted by
law exercise any and all rights of banker's lien, set-off or counterclaim as
fully as if such holder were a holder of the Obligations in the amount of such
interest or other participation. If all or any part of any funds transferred
pursuant to this Section 2.13 is thereafter recovered from the seller under this
Section 2.13 which received the same, the purchase provided for in this Section
2.13 shall be deemed to have been rescinded and the purchase price restored to
the extent of such recovery, together with interest, if any, if interest is
required pursuant to court order to be paid on account of the possession of such
funds prior to such recovery.
.15 Taxes.
(a) No Deduction for Certain Taxes. Any and all payments by each Borrower
shall be made, in accordance with Sections 2.4 and 2.6, free and clear of and
without deduction for any and all present or future Taxes. If any Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable to
any Bank or the Agent, (i) the sum payable shall be increased as may be
necessary so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14), such Bank or the
Agent, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made; (ii) the Borrower shall make such
deductions; and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) Other Taxes. In addition, the Borrowers agree to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Notes, or the other Credit Documents (hereinafter referred to as "Other Taxes").
(c) Indemnification. each borrower indemnifies each bank and the agent for
the full amount of taxes or other taxes (including, without limitation, any
taxes or other taxes imposed by any jurisdiction on amounts payable under this
section 2.14) paid by such bank or the agent, as the case may be, and any
liability (including interest and expenses) arising therefrom or with respect
thereto, whether or not such taxes or other taxes were correctly or legally
asserted. each payment required to be made by any borrower in respect of this
indemnification shall be made to the agent for the benefit of any party claiming
such indemnification within 30 days from the days the borrower receives written
demand detailing the calculation of such amounts therefor from the agent on
behalf of itself as agent or any such bank. if any bank or the agent receives a
refund in respect of any taxes paid by any borrower, under this Section 2.14
(c), such bank or the agent, as the case may be, shall promptly pay to such
borrower its share of such refund.
(d) Evidence of Tax Payments. Each Borrower will pay prior to delinquency
all Taxes payable in respect of any payment due hereunder. Within 30 days after
the date of any payment of such Taxes, each Borrower will furnish to the Agent,
at its address referred to in Annex A , the original or a certified copy of a
receipt evidencing payment of such Taxes.
.16 Pro Rata Treatment. Except as required under Section 2.6(c), Section
2.6(d), Section 2.12, and Article 9, each Borrowing, each payment or prepayment
of principal of any Borrowing, each payment of interest on the Loans, each
payment of the fees, each termination or reduction of the Commitments, and each
refinancing of any Borrowing with, conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type, shall be allocated
ratably and pro rata among the Banks in accordance with their respective
Commitments. Each Bank agrees that in computing such Bank's portion of any
Borrowing to be made hereunder, the Agent may, in its discretion, round each
Bank's portion of such Borrowing to the next higher or lower whole dollar
amount.
.17 Proceeds of Loans. The proceeds of the Term A Loans shall be used by
Operating Subsidiary solely to (i) finance the expansion of Operating
Subsidiary's manufacturing facility in San Antonio, Texas and (ii) refinance the
unpaid principal balance of existing loans which financed the purchase of
equipment of Operating Subsidiary. The proceeds of the Term B Loans shall be
used by Mexico Subsidiary solely to (i) finance the expansion of Mexico
Subsidiary's maquiladora plant in Mexico and (ii) to refinance the unpaid
principal balance of existing loans which financed the purchase of such
maquiladora plant. The proceeds of the Revolving Loans shall be used by
Operating Subsidiary (a) to provide working capital for Operating Subsidiary,
its Affiliates that are Loan Parties and Australian Subsidiary, (b) to finance
capital expenditures and (c) for general corporate purposes for Operating
Subsidiary, its Affiliates that are Loan Parties and Australian Subsidiary. The
proceeds of the Acquisition Loans shall be used by Operating Subsidiary to
finance Acquisitions, whether directly by Operating Subsidiary or indirectly
through another Subsidiary of Parent Company in accordance with this Agreement.
1 CONDITIONS
.0 Initial Loans on the Closing Date. The obligations of the Banks to make
any Loan on the Closing Date are subject to the conditions precedent that on or
before the Closing Date, the Agent shall have received, there shall have been
performed and there shall exist, the documents, actions and other matters set
forth in Annex C hereto, each in form, scope and substance, and (as applicable)
dated as of a date, satisfactory to the Agent and its counsel.
.1 All Loans, Conversions/Continuations. The obligations of the Banks to
make each Loan or to continue any Loan as, or to convert any Loan into, a LIBOR
Loan or a Base Rate Loan are subject to, in addition to the conditions referred
to in Section 3.1, the satisfaction of the Agent as to the following conditions
precedent:
( ) Representations True and No Defaults. (i) The representations and
warranties contained and referred to in Article 4 (other than those
representations and warranties limited by their terms to a specific date) shall
be true, complete and accurate in all material respects on and as of the date of
the Credit Event as though made on and as of such date; (ii) no event shall have
occurred since the date of the most recent financial statements delivered
pursuant to Section 5.1 (or in the case of a Credit Event prior to the delivery
of such statements, March 31, 1996), that has caused a Material Adverse Effect;
and (iii) no Event of Default or Default shall have occurred and be continuing.
(a) No Material Adverse Change. As of the date of the Credit Event, no
change or event that might cause a Material Adverse Effect shall have occurred.
(b) Borrowing Documents. Other than a continuation or conversion pursuant
to Section 2.5, the Agent shall have received (i) a certificate signed by an
Authorized Officer of the requesting Borrower dated as of such date to the
effects set forth in Section 3.2(a), (ii) a Notice of Borrowing delivered in
accordance with Section 2.2(a) and (iii) such other documents and certificates
relating to the transactions herein contemplated as the Banks (through the
Agent), may reasonably require.
(c) Continuation/Conversion Documents. On the date of any continuation or
conversion pursuant to Section 2.5, the Agent shall have received (i) a
certificate executed by an Authorized Officer of the requesting Borrower dated
as of such date to the effects set forth in Section 3.2(a), (ii) a
Continuation/Conversion Notice in the form applicable to such Borrower delivered
in accordance with Section 2.5(b), and (iii) such other documents and
certificates relating to the transactions herein contemplated as the Banks
(through the Agent) may reasonably require.
.2 Loans For Acquisitions. The obligation of the Banks to make Acquisition
Loans requested by Operating Subsidiary to finance, in whole or in part, an
Acquisition permitted under this Agreement, is subject to, in addition to the
conditions set forth in Section 3.2, the following conditions precedent:
( ) Operating Subsidiary shall deliver or cause to be delivered to the
Agent (with a copy thereof for each Bank): (i) copies of all Acquisition
Documents relating to such Acquisition certified by the secretary or an
assistant secretary of General Partner, as being true and correct copies of such
documents as of the date of Borrowing, and as having been duly executed or
filed, as the case may be; (ii) consents, certificates or other evidence that
such Acquisition and the Acquisition Documents relating thereto have been duly
authorized by all requisite corporate action by the parties thereto; (iii) a
certificate of the president or chief financial officer of General Partner
certifying that such Acquisition has been consummated substantially in
accordance with the Acquisition Documents; and (iv) evidence that all waiting
periods under the HSR Act applicable to the transactions contemplated by such
Acquisition shall have expired, by passage of time or by valid early termination
by the FTC or the DOJ.
(a) The Acquisition Documents relating to such Acquisition and all
operative instruments executed in connection therewith shall be valid, binding
and enforceable against the parties thereto in accordance with their terms,
subject to the effect of Debtor Laws, and all conditions stated therein shall
have been satisfied without waiver, unless approved by the Agent.
(b) The terms and provisions of such Acquisition and the Acquisition
Documents relating to such Acquisition shall be acceptable to the Agent and the
Banks.
(c) With respect to an Acquisition of all or substantially all of the
assets of an Acquisition Target by a wholly owned Subsidiary of Parent Company,
the following shall occur: (i) record and beneficial ownership of all Property
to be acquired from the Acquisition Target shall be transferred, in accordance
with applicable Law and free and clear of all Liens (other than Permitted
Liens), to such Subsidiary; (ii) if such Subsidiary is not a Loan Party, such
Subsidiary shall (A) execute and deliver to the Agent a guaranty agreement, in
form, scope and substance acceptable to the Agent to guarantee the Obligations,
and (B) execute all such other documents, in form scope and substance acceptable
to the Agent, and take such other action as the Agent may reasonable request;
and (iii) all conditions set forth in Section 3.2 shall be satisfied before and
after giving effect to the completion of such Acquisition.
(d) With respect to an Acquisition of all of the outstanding capital stock,
partnership interests or other ownership interests of an Acquisition Target by a
wholly owned Subsidiary of Parent Company, the following shall occur: (i) such
Subsidiary shall be the record and beneficial owner of all of the issued and
outstanding capital stock, partnership interests or other ownership interests of
the Acquisition Target free and clear of all Liens (other than Permitted Liens);
(ii) the Acquisition Target shall (A) execute and deliver to the Agent a
guaranty agreement, in form, scope and substance acceptable to the Agent, to
guarantee the Obligations and (B) execute all such other documents, in form,
scope and substance acceptable to the Agent, and take such other action as the
Agent may reasonably request; and (iii) all conditions set forth in Section 3.2
shall be satisfied before and after giving effect to the completion of such
Acquisition.
REPRESENTATIONS AND WARRANTIES
To induce each of the Agent and the Banks to enter into and perform its
agreements pursuant to this Agreement, including, without limitation, the making
of the Revolving Loans and Term Loans, each Borrower and Parent Company (i) make
and reaffirm to each of the Agent and the Banks each of the representations and
warranties contained in each Loan Document, and (ii) without duplication,
represent and warrant to each of the Agent and the Banks that, at the time of
execution hereof and the transactions contemplated hereby and as of each of the
dates of each of the financial statements required to be delivered, from time to
time, pursuant to Section 5.1:
.0 Entity Status; Power and Authority. Each Company is a corporation or
limited partnership duly organized and validly existing in good standing under
the laws of the State of incorporation or organization and is duly qualified as
a foreign corporation and in good standing in all jurisdictions in which the
failure to be so qualified could have a Material Adverse Effect, all of which
jurisdictions are set forth in Schedule 4.1 hereto. Each Company has the
corporate power and authority and all Legal Rights which are necessary (i) to
own, lease, use and operate its respective Property and to transact its business
as now being and as proposed to be conducted and (ii) to execute and deliver
each Loan Document, perform and comply with all obligations and agreements
thereunder and consummate the transactions contemplated thereby.
.1 Authorization; Consents. The execution, delivery and performance by each
Company of each Loan Document to which it is a party, and the consummation of
the transactions contemplated thereby, have been duly authorized by all
necessary corporate and other action by, on behalf of, and with respect to, each
Company, and no consent, approval, authorization, declaration, filing, order or
other action by, on behalf of, or with respect to, any Company is required of,
or from, any Governmental Authority or other Person in connection with any of
such execution, delivery or performance, or the validity or enforceability of
any Loan Document against each Company which is a party thereto or any Property
covered thereby which has not been obtained and is final and in full force and
effect.
.2 No Conflicts. Neither the execution or delivery of any Loan Document,
nor the consummation of any transaction contemplated therein, nor the
performance of, or compliance with, any of the terms and provisions thereof,
does or will (i) conflict with, or result in or constitute a breach, violation
or default of, or require a consent under, (A) any provision of Law to which any
Company or any of its Property is subject or bound, (B) any judgment or Legal
Right applicable to any Company or any of its Property, (C) any lease,
indenture, loan agreement, note, purchase or acquisition agreement, mortgage,
deed of trust or other agreement or instrument to which any Company is a party
or by which it or any of its Property may be bound or subject, or (D) any
provision of the charter or bylaws any Company, or (ii) result in the creation
or imposition of any Lien or Negative Pledge upon any Company or any of its
Property, except for the benefit of the Agent and the Banks.
.3 Enforceable Obligations. Each Loan Document has been duly executed and
delivered by each Company which is a party thereto and constitutes the legal,
valid and binding obligations of each Company, enforceable against each Company
in accordance with its respective terms.
.4 Title to Properties. Each Company has good and indefeasible title to, or
valid leasehold interests in, as applicable, all of its Property, free and clear
of all Liens (except Permitted Liens), Negative Pledges and any other adverse
claims of any nature, except any of the foregoing which are for the benefit of
the Agent and the Banks. Except as set forth in Schedule 4.5, there are no
financing statements, lien instruments, abstracts of judgment, levies,
executions or other filings of record in any jurisdiction naming any Company as
"debtor", "mortgagor", "obligor" or the like, or covering any Property of any
Company, except those evidencing Permitted Liens.
.5 Financial Condition.
( ) Financial Statements. Each Borrower has delivered to the Agent copies
of the audited consolidated and consolidating balance sheet of the Companies as
of December 31, 1995, and the related statements of income, stockholders' equity
and cash flows for the year ended on such date, with reports thereon by KPMG
Peat Marwick LLP, its independent public accountants, and unaudited copies of
such financial statements of the Companies for the quarterly period ended March
31, 1996. Such financial statements (together with related schedules and notes,
the "Financial Statements") are true, complete and accurate, fairly present the
financial condition of the Companies as of the respective dates thereof and have
been prepared in accordance with GAAP applied throughout the periods covered
thereby on a basis consistent with that of prior periods, subject to normal
year-end audit adjustments. As of the date hereof, no Company has any (i)
obligations, liabilities or other Indebtedness (including Guarantees) or (ii)
Investments in any Person which are (separately or in the aggregate) not
reflected in such Financial Statements; and there has been no material adverse
change in the financial condition, management, control, operations, business or
prospects of the Companies or their respective Property (as applicable) since
the date of the Financial Statements.
(a) Solvency. Upon giving effect to the issuance of each Note (and the
incurrence of the Indebtedness thereunder), the execution, delivery and
performance of each Loan Document by each Company which is a party thereto, and
the consummation of the transactions contemplated thereby, the following are and
will be true, complete and accurate in all material respects as to each Company:
( ) the fair saleable value of the assets of each Company exceeds the
amount that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of such Company, as
they mature;
(i) the assets of each Company do not constitute unreasonably small capital
for such Company to carry out its business as now conducted and as proposed by
it to be conducted;
(ii) no Company intends to incur debts beyond its ability to pay such debts
as they mature (taking into account the timing and amounts of cash to be
received by such Company, and of amounts to be payable on or in respect of debt
of such Company); and
(iii) no Company intends, nor believes, that final judgments against it in
actions for money damages will be rendered at a time when, or in an amount such
that, it will be unable to satisfy any such judgments promptly in accordance
with their terms (taking into account the maximum reasonable amount of such
judgments in any such actions and the earliest reasonable time at which such
judgments might be rendered).
.6 Full Disclosure. There is no fact that any Company has not disclosed to
the Banks which might reasonably be expected to have a Material Adverse Effect.
Neither the financial information referenced in Section 4.6(a) nor any
certificate, report, exhibit, schedule, statement, disclosure letter or other
information furnished to the Agent or any Bank by, or on behalf of, any Company,
whether heretofore or herewith, in connection with the negotiation, preparation,
execution, delivery or consummation of this Agreement and the other Loan
Documents, or included therein or delivered pursuant thereto, contains any
untrue statement of a material fact or omits or omitted to state any material
fact necessary to make and keep the statements contained herein or therein from
being misleading. All information furnished after the date hereof by or on
behalf of any Company shall be true, complete and accurate in all material
respects.
.7 No Default or Adverse Condition. No event has occurred and is continuing
which constitutes a Default or an Event of Default, and there exists no event,
circumstance, condition or casualty (whether or not covered by insurance) which
could have a Material Adverse Effect.
.8 Material Agreements; Insurance. No Company is in default under, or in
violation or breach of (nor has any event or circumstance occurred which, but
for the passage of time or the giving of notice, or both, would constitute a
default under, or a violation or breach of), (i) its charter, bylaws or other
internal governance document, (ii) any Judgment affecting it or any of its
Property, or (iii) any partnership agreement or any material indenture
promissory note, contract, lease, purchase or acquisition agreement, loan
agreement, mortgage, deed of trust, security agreement, license, permit,
franchise or other material agreement or obligation to which it is a party or by
which it or any of its Property is bound. Attached hereto as Schedule 4.9 is a
complete and correct list of all of each Company's material patents, trademarks,
trade names, copyrights and service marks and all applications, registrations
and licenses relating thereto. Each Company maintains insurance in compliance
with Section 5.10.
.9 No Litigation. Except as set forth on Schedule 4.10 (and therein
designating which of the following clauses (i) through (iv) is applicable
thereto), as of the date hereof, there is no Litigation or Judgment pending, or
to the knowledge of any Company threatened, against, affecting or challenging
(as applicable) (i) any Property of any Company, including, without limitation,
each Company's sole legal and beneficial title therein and all Legal Rights with
respect thereto, (ii) the validity or enforceability of any Loan Document, (iii)
the ability of each Company to enter into, execute, deliver and perform its
obligations under each Loan Document to which it is a party as provided therein,
and otherwise to consummate the actions and transactions contemplated thereby,
(iii) any Company which, if adversely determined, could reasonably be expected
to result in a Judgment, individually or when aggregated with all other
Judgments, (A) for the payment of money in excess of $1,000,000 (regardless of
insurance coverage) or (B) for the forfeiture of any Legal Rights of any Company
(other than of a trivial or non-consequential nature), or (iv) any Company, or
any of its respective Property or Legal Rights, which might otherwise have a
Material Adverse Effect.
.10 Use of Proceeds; Margin Stock. The proceeds of the Loans will be used
solely as provided in Section 2.16, and none of such proceeds will be used (i)
for the purpose of purchasing or carrying any "margin stock" as defined in
Regulations G, T, U or X, (ii) for the purpose of maintaining, reducing or
retiring any Indebtedness which was originally incurred to purchase or carry a
"margin stock", or (iii) for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of Regulations G, T, U or X.
No Company nor any Person acting on behalf of any Company is engaged in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying "margin stock". No Company nor any Person acting
on behalf of any Company has taken or will take any action which might cause any
of the Loan Documents to violate Regulations G, T, U or X, or any other
regulations of the Board of Governors of the Federal Reserve System or to
violate the Exchange or any rule or regulation thereunder, in each case as now
in effect or as the same may hereafter be in effect.
.11 No Financing of Regulated Corporate Takeovers. No proceeds of the Loans
will be used to acquire any security in any transaction which is subject to
Sections 13 or 14 of the Exchange Act, including particularly Sections 13(d) and
14(d) thereof.
.12 Taxes. All Tax returns, reports, statements and filings required to be
filed by each Company in any jurisdiction have been timely and correctly filed,
and all Taxes upon each Company or any of its Property have been paid prior to
the time that such Taxes could give rise to a Lien thereon, except for Contested
Claims. No tax or similar Lien has been filed on, or is being enforced against,
any Company or any of its Property, and no United States Federal income tax
returns of any Company have ever been and are not now being, examined or
audited, and (ii) there is no proposed Tax assessment against any Company any of
its Property, and there is no basis for any such assessment.
.13 Principal Office; Names; Primary Business. The actual and anticipated
principal place of business of each Company, or if it has more than one such
place, its chief executive office, is shown in Schedule 4.14, and each Company
intends to maintain its principal records and books at such office. Schedule
4.14 also lists the address of each location at which each Company operates or
conducts its business or maintains or stores any of its equipment, inventory or
other Property. No Company (i) is not now conducting, nor does it currently plan
hereafter to conduct, any business or operations, or owned or is owning or
operated or is operating, or currently plans hereafter to own or operate, any
Property, in any name, other than set forth on Schedule 4.14 and (ii) has not
heretofore merged into, consolidated with, or acquired, and has no current plans
to merge into, consolidate with or acquire, any Person other than as set forth
on Schedule 4.14. The primary business of each Company is the designing,
engineering, manufacturing and marketing of fountain soft drink dispensing
systems and citrus beverage dispensing systems.
.14 Subsidiaries. No Company has any Subsidiaries and is not a general or
limited partner in any Person, except as set forth in Schedule 4.15, which lists
as to each Subsidiary or general or limited partnership interest: (i) name of
entity; (ii) jurisdiction of incorporation or organization; (iii) foreign
qualification; (iv) share/percentage/nature ownership; and (v) primary business.
Except as set forth in Schedule 4.15, there are no outstanding warrants,
options, rights, contracts or commitments of (A) any Company, other than Parent
Company, of any kind entitling any Person to purchase or otherwise acquire (a)
any shares of capital stock of such Company or (b) any securities convertible
into or exchangeable for any shares of capital stock of such Company or (B)
Parent Company of any kind entitling any Person to purchase or otherwise acquire
(x) more than 5% of the outstanding shares of capital stock of Parent Company
(assuming the full conversion or exercise of any securities convertible into or
exchangeable for shares of capital stock of Parent Company) or (y) any
securities convertible into or exchangeable for 5% of the shares of capital
stock of Parent Company (assuming the full conversion or exercise of any
securities convertible into or exchangeable for shares of capital stock of
Parent Company).
.15 ERISA. No Reportable Event (as defined in Section 4043(b) of ERISA) to
which the notice requirement has not been waived has occurred with respect to
any Plan. Each Plan complies with all applicable provisions of ERISA, and each
Company has filed all reports required by ERISA and the Code to be filed with
respect to each Plan. No Company has any knowledge of any event which could
result in a liability of such Company to the PBGC. Each Company has met all
requirements with respect to funding the Plans imposed by ERISA or the Code.
Since January 1, 1986, there have not been any, nor are there now existing any
events or conditions that would permit, termination of any Plan under
circumstances which would cause the Lien provided under Section 4068 of ERISA to
attach to any Property of any Company. The value of the Plans' liabilities as
defined in Section 4001(a)(16) of ERISA on the date hereof does not exceed the
value of such Plans' assets allocable to such benefits as of the date of this
Agreement and shall not be permitted to do so hereafter. No Plan is or has been
a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
.16 Compliance with Law. Each Company has complied in all material respects
with, and is in compliance in all material respects with, all Laws applicable to
it and its Property, including Environmental Laws and the provisions of the Fair
Labor Standards Act of 1938, 29 U.S.C. 200, et seq., as amended, including
specifically, but without limitation, 29 U.S.C. 215(a).
.17 Government Regulation. No Company is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as any of the
preceding acts have been amended), or any other Law which regulates either the
incurring by such Company of Indebtedness or the determination or setting of, or
changes to, the rates or amounts charged by Borrower for the goods or products
it sells or the services it performs, including Laws relating to common contract
carriers or the sale of electricity, gas, steam, water or other public utility
services. No Company is (i) an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, and no Company
is "controlled" by such a company, or (ii) a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, and is not a "subsidiary company" or an "affiliate" of any such
company.
.18 Insider. No Company is, and no Person having "control" (as that term is
defined in 12 U.S.C. 375(b)(5) or in regulations promulgated pursuant thereto)
of any Company is, an "executive officer", "director" or "principal shareholder"
(as those terms are defined in 12 U.S.C. 375(b) or in regulations promulgated
pursuant thereto) of any Bank, of a bank holding company of which any Bank is a
Subsidiary, or of any Subsidiary of a bank holding company of which any Bank is
a Subsidiary.
.19 Certain Environmental Matters. Except as disclosed in Schedule 4.20,
(i) no Company (A) is aware of, and has not received notice or otherwise learned
of, any Environmental Complaint or Environmental Liability which could
individually or in the aggregate have a Material Adverse Effect, (B) has no
threatened or actual liability (contingent, direct or otherwise) in connection
with the release or threatened release, generation, handling, treatment,
storage, disposal or transportation of any Hazardous Material, or other
substance which could individually or in the aggregate have a Material Adverse
Effect, (C) is not aware of, and has not received notice or otherwise learned
of, any federal or state investigation evaluating whether any remedial action is
needed to respond to a release or threatened release, and/or the generation,
handling, treatment, storage, disposal or transportation of any Hazardous
Material for which such Company is or may be liable, (D) is not in violation of
any Judgment or Litigation based upon Environmental Laws, or subject to any such
Judgment or Litigation, (E) has, in full force and effect, all permits,
licenses, approvals and other authorizations necessary for the use and operation
of its Property, including, the generation, handling, treatment, storage,
disposal, transportation or release of any Hazardous Material, and (F) is in
compliance with all Environmental Laws, except to the extent the failure to so
comply could not reasonably be expected to have a Material Adverse Effect or to
result in any Environmental Liability that could reasonably be expected to have
a Material Adverse Effect; and (ii) all Properties of each Company are free from
any Hazardous Material and Environmental Liens. There have been no environmental
investigations, studies, audits, tests, reviews or other analyses conducted by
or on behalf of, or which are in the possession or knowledge of, any Company, or
any of such Company's predecessors, in relation to any Property now or
previously owned or leased by such Company, or any of such Company's
predecessors, which have not been (y) made available to any Bank or its agents,
employees or contractors and (z) listed in Schedule 4.20. No Company has
received a notice of any Environmental Liability, Environmental Lien or
Environmental Complaint other than those which have been provided to the Agent
and listed in Schedule 4.20.
.20 Insurance; Certifications. The insurance certificates delivered
pursuant to Section 3.1 are true, correct and complete, and the insurance
coverage set forth therein complies in all regards with the requirements set
forth in Section 5.10. In furtherance of the foregoing, but not in limitation
thereof, and in furtherance of all other matters as to which certifications are
required pursuant to Section 3.1, all matters certified to by each and every
Person which were evidenced by certificates and certifications referred to in
Section 3.1 were true, correct and complete, as so certified and received by the
Agent and each Bank, as of the Closing Date and were certified by officers of
each Company, each of whom was authorized to execute and deliver such
certificate for and on behalf of such Company.
3 AFFIRMATIVE COVENANTS
Until payment in full of the Notes, the payment and performance of all
other Obligations, and so long as the Banks have any obligation hereunder to
make any Loans, each Borrower and Parent Company will, and Parent Company will
cause each Company to, punctually and completely perform and observe each of the
following covenants:
.0 Financial Statements, Reports and Documents. Each Borrower shall deliver
the following to the Agent, in form, substance and scope satisfactory to Agent
and otherwise as provided herein:
( ) Quarterly Statements. As soon as available, and in any event within 45
days after the end of each Fiscal Quarter, copies of the consolidated and
consolidating statements of income, stockholders' equity and cash flow of the
Companies for such quarter and for the portion of the Fiscal Year ending with
such quarter, and the related consolidated and consolidating balance sheets as
at the end of such period, in each case setting forth in comparative form the
corresponding figures for the corresponding periods of the preceding Fiscal
Year, all in reasonable detail and certified by the president, chief financial
officer or controller of Parent Company as being true, complete and accurate in
all material respects, as fairly presenting the consolidated and consolidating
financial condition and results of operations of the Companies for the periods
therein covered, and as having been prepared in accordance with GAAP, subject to
normal year-end audit adjustments; provided, however, in the event the
consolidating information of any Company which is not a US Company (each a
"Non-US Company"), has not been prepared in accordance with GAAP, such
consolidating information shall be certified by the president, chief financial
officer or controller of Parent Company as being true, complete and accurate in
all material respects, as fairly representing the consolidating financial
condition and results of operations of such Non-US Company for the periods
therein covered, and as having been prepared in accordance with the generally
accepted accounting principles of the jurisdiction of incorporation or
organization of such Non-US Company;
(a) Annual Statements. As soon as available, and in any event within 95
days after the end of each Fiscal Year, copies of the audited consolidated and
unaudited consolidating statements of income, stockholders' equity and cash flow
of the Companies for such Fiscal Year, and the related consolidated and
consolidating balance sheets of the Companies as at the end of such Fiscal Year,
in each case setting forth in comparative form the corresponding figures for the
preceding Fiscal Year, all in reasonable detail and accompanied by (i) an
unqualified opinion of KPMG Peat Marwick LLP or other independent public
accountants of recognized national standing selected by Borrowers and
satisfactory to the Banks, to the effect that such financial statements have
been prepared in accordance with GAAP, consistently applied, and fairly present
the consolidated financial condition and results of operations of the Companies,
as at the end of, and for, such Fiscal Year, and (ii) a certificate executed by
the president, chief financial officer or controller of Parent Company to the
same effect as such opinion; provided, however, in the event the consolidating
information of any Non-US Company has not been prepared in accordance with GAAP,
such consolidating information shall be certified by the president, chief
financial officer or controller of Parent Company as being true, complete and
accurate in all material respects, as fairly representing the consolidating
financial condition and results of operations of such Non-US Company for the
periods therein covered, and as having been prepared in accordance with the
generally accepted accounting principles of the jurisdiction of incorporation or
organization of such Non-US Company;
(b) Audit, Management and Other Reports. Immediately upon the request of
the Agent, a copy of each written report submitted to any Company by independent
accountants in any annual, quarterly or special audit, review or examination;
(c) SEC and Other Reports. Promptly upon its becoming available, one copy
of each financial statement, report, notice or proxy statement sent by any
Company to its stockholders or debtholders generally and of each regular or
periodic report, registration statement or prospectus filed by any Company with
any securities exchange or the Securities and Exchange Commission or any
successor agency or any similar Governmental Authority of a foreign country, and
of any order issued by any Governmental Authority in any proceeding to which any
Company is a party;
(d) Compliance Certificate. Concurrently with the delivery of the financial
statements delivered pursuant to Sections 5.1(a) and (b), respectively, a
certificate in the form of Exhibit M, executed by the president, chief financial
officer or controller of Parent Company, (i) stating that a diligent review of
the activities of the Companies during such period has been made under such
officer's supervision and that to the knowledge of such officer, each Company
has observed, performed and fulfilled each and every obligation and covenant
contained in each Loan Document to which it is a party and is not in Default
under any Loan Document to which it is a party, or, if any such Default has
occurred, specifying the nature and status thereof, and (ii) setting forth in
reasonable detail the computation and information necessary to determine whether
the Companies are in compliance with Section 6.1 as of the end of the respective
Fiscal Quarter or Year, as applicable; provided, however, with respect to any
Permitted Acquisition, each Borrower shall (A) deliver such certificate, with
preliminary pro forma financial information required under Article 6, on the
closing date of such Permitted Acquisition and (B) deliver such a certificate
with final pro forma financial information required under Article 6, within 75
days after the closing date of such Permitted Acquisition.
(e) Monthly Reports. Within 30 days after the end of each Fiscal Month, (i)
a Consolidated Borrowing Base Certificate in the form of Exhibit N, executed by
the president or chief financial officer of Parent Company, with information
required therein completed to reflect the Consolidated Borrowing Base as of the
end of the Fiscal Month and (ii) an aging schedule of accounts receivable in
summary form, certified by the president or chief financial officer of Parent
Company, which reflects aging of current accounts receivable of the Companies
which are current or 30, 60 or 90 days past due as of the end of such preceding
Fiscal Month;
(f) Insurance Report. Within 15 days after any significant change in
insurance coverage by Borrower, a report describing such change; and, within 90
days after the end of each Fiscal Year, a report describing the insurance
coverage of Borrower;
(g) Litigation Reports. Within (i) 90 days after the end of each Fiscal
Year, complete reports by counsel to each Company describing all Litigation
affecting such Company or any of its Property which could reasonably be expected
to (A) result in a Judgment in excess of $500,000 (without regard to insurance
coverage) or (B) otherwise have a Material Adverse Effect and (ii) 45 days after
the end of each Fiscal Quarter (except the last) in which a significant change
in Litigation has occurred or additional Litigation has been threatened or
commenced, reports by counsel to such Company describing such changes in or
additions to Litigation since the date of the annual Litigation Report most
recently received by the Agent;
(h) Environmental Notices. Notice to the Agent, in writing, promptly upon
any Company's receipt of notice or otherwise learning (whichever first occurs)
from any Person of any (i) Environmental Complaint or Environmental Lien or (ii)
any other claim, demand, action, event, condition, report or investigation
indicating any potential or actual liability (A) upon which any Environmental
Liability or Environmental Lien could result against any Company, any Bank or
any Property of any Company or (B) arising in connection with (1) the
non-compliance with, or violation of, the requirements of any Environmental Law,
(2) the release or threatened release, generation, treatment, handling, storage,
disposal or transportation of any Hazardous Material into the environment or
which act, occurrence or event any Company would have a duty to report to a
Governmental Authority under an Environmental Law, or (3) the existence of any
Environmental Lien on any Property of any Company; and such Company shall
immediately deliver a copy of each such notice to the Agent;
(i) Supplemented Schedules. As soon as possible, and in any event within 15
days after any Borrower or Parent Company obtains knowledge thereof, such
Borrower or Parent Company, as applicable, shall provide the Agent with a
supplement to any existing Schedule which would make such Schedule (and any
subsequent supplement thereto), and the corresponding representation and
warranty to which it applies, true, complete and accurate; provided, however,
any such supplement shall not be deemed to have amended any Schedule to this
Agreement unless and until the Banks have approved such amendment; and
(j) Other Information. Within such period reasonably prescribed by the
Agent, such other information concerning the business, operations, Property or
financial condition of any Company as any Bank (through the Agent) shall
reasonably request.
.1 Payment of Taxes and Other Liabilities. Each Borrower and Parent Company
will, and Parent Company will cause each Company to, pay and discharge when due,
but in no event, later than 45 days following the date when due, (i) 90% of the
aggregate amount of all trade payables, (ii) royalties, (iii) license fees, (iv)
franchise fees, (v) operating costs and expenses, and (vi) similar expenses and
obligations related to its operations, except for Contested Claims; and, except
for Contested Claims, each Borrower and Parent Company will, and Parent Company
will cause each Company to, timely pay and discharge when due (a) all Taxes, (b)
all other lawful claims against it or any of its Property, and (c) all of its
other Indebtedness, obligations and liabilities. In no regard shall the
foregoing serve as a basis of excusing or delaying the payment by any Borrower
of any Indebtedness or other amounts from time to time owed by it.
.2 Maintenance of Existence and Rights; Conduct of Business. Each Borrower
and Parent Company will, and Parent Company will cause each Company to, preserve
and maintain its existence and all of its Legal Rights necessary or desirable in
the ordinary course of its business and conduct and the ownership, maintenance
and operation of its Property, and conduct its business in an orderly and
efficient manner consistent with good business practices and industry standards
and in accordance with all Laws, except where the failure to so preserve,
maintain or conduct would only result in a trivial and inconsequential effect.
In addition, each Borrower and Parent Company will, and Parent Company will
cause each Company to, act prudently and in accordance with customary industry
standards and with its contractual obligations in managing and operating its
Property, business and investments and will keep in good working order and
condition, ordinary wear and tear excepted, all of its Property and Legal Rights
which are necessary or desirable to the conduct of its business and the
ownership and maintenance of its Property.
.3 Notice of Default. Parent Company shall furnish to the Agent,
immediately upon any Company becoming aware of the existence of any condition or
event which constitutes or would become a Default or an Event of Default,
written notice thereof that specifies the nature and period of existence thereof
and the action which such Company is taking or proposes to take with respect
thereto.
.4 Other Notices. As soon as possible, but in any event within 3 days of
any Company becoming aware thereof, Parent Company will promptly notify the
Agent of (i) any material adverse change in the financial condition, operations,
Property or business of any Company, (ii) any default under, or any threatened
or actual acceleration of the maturity of, any Indebtedness owing or secured by
any Company (or any of its Property), which individually or in the aggregate
represents a monetary obligation of $250,000 or more, or one with respect to
which a default thereunder might have a Material Adverse Effect, (iii) any
default or event of default under any lease pertaining to a location at which
any Company operates or conducts any of its business or stores any of its
Property, (iv) any significant adverse claim against or affecting any Company or
any of the Property of any Company, and (v) the commencement of, and/or any
material determination in, any Litigation which could reasonably be expected to
result in a Judgment in excess of $250,000 (without regard to insurance
coverage). In respect to each of the foregoing notices, each Borrower will
promptly provide to the Agent all reasonably related information requested by
the Agent, in reasonable detail satisfactory to the Agent.
.5 Compliance with Loan Documents. Each Borrower and Parent Company will,
and Parent Company will cause each Company to, promptly and completely comply
with and observe and perform all covenants and provisions of each Loan Document
to which it respectively is a party. In furtherance of the foregoing, but in no
way limiting the generality thereof, the proceeds of each Loan will be used
strictly in compliance with Section 2.16.
.6 Compliance with Agreements. Each Borrower and Parent Company will, and
Parent Company will cause each Company to, promptly comply in all material
respects with all material contracts, leases, agreements, indentures, mortgages
or documents binding on it or affecting it or its Property, business or
operations.
.7 Access; Books and Records. Upon reasonable notice, during all business
hours, each Borrower and Parent Company authorizes and will permit, and Parent
Company will cause each Company to authorize and permit, any representatives of
the Agent or any Bank (i) to have access to, and grant permission for such
representatives to examine, copy or make excerpts from, any and all books,
records and documents that relate to the business, operations or Property of any
Company, (ii) to inspect any and all Property of any Company, and (iii) to
discuss the business, operations and financial condition of any Company with its
officers, partners and employees. Each Borrower and Parent Company will, and
Parent Company will cause each US Company to, maintain complete and accurate
books and records of its respective transactions in accordance with GAAP. Each
Borrower and Parent Company will, and Parent Company will cause each Non- US
Company to, maintain complete and accurate books and records of its respective
transactions in accordance with the generally accepted accounting principles of
the jurisdiction of incorporation or organization of such Non-US Company.
.8 Compliance with Law. Each Borrower and Parent Company will, and Parent
Company will cause each Company to, comply in all material respects with all
Laws applicable to it or any of its Property, business operations or
transactions.
.9 Insurance. Each Borrower and Parent Company will, and Parent Company
will cause each Company to, maintain insurance with reputable insurers of sound
financial strength and creditworthiness with respect to its Property and as to
its operations and business, all as required by each Loan Document to which it
is a party and otherwise in such types, amounts, scope and coverage, and against
such risks, casualties, contingencies and liabilities, as required or
necessitated by Law, and additionally, as is customarily maintained by other
Persons engaged in similar businesses and operations, the foregoing insurance
coverage specifically including the following: (i) worker's compensation or
similar insurance as may be required by applicable Law, (ii) public liability
insurance against claims for personal injury, death or property damage suffered
upon, in or about, any Property occupied by any Company or occurring as a result
of the ownership, maintenance or operation by any Company of any equipment,
vehicle or other Property or as the result of the use of products or equipment
manufactured, constructed, sold or operated by any Company or services rendered
by it, and (iii) insurance against the loss or damage to the Property and
businesses of any Company now owned or hereafter acquired. In addition, (A) each
Borrower and Parent Company will, and Parent Company will cause each Company to,
(x) name the Agent as an additional insured on all such general and
comprehensive liability insurance and as loss payee on all such Property
insurance and (y) cause each policy of insurance to provide that such policy
will not be canceled or modified (as to term, coverage, scope, property or risks
covered, or otherwise) without 30 days prior written notice to the Agent and (B)
Parent Company will deliver copies of the policies and endorsements for such
insurance to the Agent promptly after issuance or renewal of each.
.10 ERISA Compliance.
Each Borrower and Parent Company will, and Parent Company will cause each
Company to, at all times:
( ) make contributions to each Plan in a timely manner and in an amount
sufficient to comply with the minimum funding standards requirements of ERISA
and the Code;
(a) immediately upon acquiring knowledge of any "reportable event" to which
the notice requirement has not been waived or of any "prohibited transaction"
(as such terms are defined in the Code or ERISA, as applicable) in connection
with a Plan, furnish the Agent with a statement executed by an Authorized
Officer of such Company, setting forth the details thereof and the action which
such Company proposes to take with respect thereto and, when known, any action
taken by the Internal Revenue Service with respect thereto;
(b) notify the Agent immediately upon receipt by any Company of any notice
of an interest by the PBGC to terminate or appoint a trustee or of the
institution of any proceeding or other action which may result in the
termination of any Plan and furnish to the Agent copies of such notice;
(c) furnish the Agent with copies of each annual report (together with all
related schedules and attachments) for each Plan filed with the Internal Revenue
Service not later than 30 days after such report has been filed; and
(d) furnish the Agent with copies of any request for waiver of the funding
standards or extension of the amortization periods required by Sections 303 and
304 of ERISA or Section 412 of the Code promptly after the request is submitted
to the Secretary of the Treasury, the Department of Labor or the Internal
Revenue Service, as the case may be.
.11 Further Assurances. Each Borrower and Parent Company will, and Parent
Company will cause each Company to, cure and cause to be cured promptly any
defects or deficiencies in the execution, delivery, creation or issuance of the
Loan Documents, or any of them, and any of the transactions contemplated
thereby. In addition, each Borrower and Parent Company will, and Parent Company
will cause each Company to, promptly make, execute or endorse, and acknowledge
and deliver or file, or cause each of the same to be done, all such vouchers,
invoices, notices, certifications and additional agreements, documents,
instruments, undertakings or other assurances, and take any and all such other
action, as the Agent may, from time to time, reasonably request or deem
reasonably necessary or proper under any of the Loan Documents to which such
Company is a party and the obligations of such Company thereunder.
.12 Maintenance of Corporate Identity. Each Borrower and Parent Company
will, and Parent Company will cause each Company to, maintain separate corporate
records, books and accounts. Each Borrower and Parent Company will, and Parent
Company will cause each Company to, observe the formal legal, financial and
accounting requirements necessary for the maintenance of each Company as a
separate legal entity, including the keeping of corporate records indicating
that, to the extent required by Law or its charter documents, transactions are
reviewed and authorized by its Board of Directors and stockholders. All monies
and funds advanced and to be advanced to or on behalf of any Company by its
Affiliates (other than capital contributions and other equity infusions, in each
case, that are of a "common stock" nature, by shareholders or Affiliates of such
Company into such Company), pursuant to a loan or otherwise, will be evidenced
by valid, binding and enforceable written obligations to repay such monies and
funds, the repayment of which shall be subordinated to the full and final
payment of the Obligations, on terms and conditions satisfactory to the Banks.
.13 Primary Business. Each Borrower and Parent Company will, and Parent
Company cause each Company, other than Leasing Subsidiary, to, continue to
design, engineer, manufacture and/or market beverage dispensing systems as its
primary business. Each Borrower and Parent Company will cause Leasing Subsidiary
to continue to enter into lease transactions involving inventory manufactured by
other Companies as its primary business.
.14 Subordination of Affiliate Obligations. Each Borrower and Parent
Company will, and Parent Company will cause each Company to, cause all loans or
advances of any Company to any Affiliate of any Company, other than loans or
advances of any Loan Party to any other Loan Party, at any time arising or
existing to be evidenced by promissory notes. All such promissory notes are set
forth on Schedule 5.15. Each Borrower and Parent Company will obtain and deliver
to the Agent, and Parent Company will cause each Company to obtain and deliver
to the Agent, the written agreement, in form, substance and scope satisfactory
to the Agent, of the holder of each such promissory note evidencing the
subordination of such holder's right to payment under each such note to the
payment of the Obligations, which agreement shall not prohibit the payment of
principal payments under such promissory note to the holder thereof so long as
no Default or Event of Default has occurred and is continuing. Each Borrower and
Parent Company will, and Parent Company will cause each Company to, cause the
face of each promissory note to be marked with a reference to such subordination
agreement, and will take and cause to be taken all such further and additional
actions as the Agent may reasonably request to effect and evidence such
subordination.
NEGATIVE COVENANTS
Until payment in full of the Notes, the payment and performance of all
other Obligations, and so long as the Banks have any obligation hereunder to
make any Loans, each Borrower and Parent Company will, and Parent Company will
cause each Company to, punctually and completely perform and observe each of the
following covenants:
.0 Certain Financial Matters. Neither any Borrower nor Parent Company will
permit:
( ) the ratio of (i) the current assets of the Companies determined on a
consolidated basis, to (ii) the sum of (A) the current liabilities of the
Companies determined on a consolidated basis, plus (B) to the extent not
otherwise included under GAAP, the principal amount of outstanding Revolving
Loans, to be less than 1.25 to 1.00 at the end of any Fiscal Quarter; or
(a) the ratio of (i) EBIT of the Companies determined on a consolidated
basis to (ii) the interest expense of the Companies determined on a consolidated
basis, to be less than 3.50 to 1.00 for the four-quarter period ending as of the
end of any Fiscal Quarter; provided, however, for each Fiscal Quarter in which
an Acquisition is consummated, and each Fiscal Quarter ending prior thereto, the
financial information necessary to determine the foregoing ratio shall be
adjusted to reflect, on a pro forma basis, such Acquisition as if it had
occurred as of the beginning of the first of such Fiscal Quarters included in
the relevant four-quarter measurement period; or
(b) the ratio of (i) EBIT of the US Companies determined on a consolidated
basis (consolidated only as to the US Companies) to (ii) the interest expense of
the US Companies determined on a consolidated basis (consolidated only as to the
US Companies), to be less than 2.25 to 1.00 for the four-quarter period ending
as of the end of any Fiscal Quarter; provided, however, for each Fiscal Quarter
in which an Acquisition involving a US Company is consummated, and each Fiscal
Quarter ending prior thereto, the financial information necessary to determine
the foregoing ratio shall be adjusted to reflect, on a pro forma basis, such
Acquisition as if it had occurred as of the beginning of the first of such
Fiscal Quarters included in the relevant four- quarter measurement period; or
(c) the net worth of the Companies determined on a consolidated basis as of
the end of any Fiscal Quarter to be less than the sum of (i) $30,000,000 plus
(ii) 75% of the cumulative amount of net income of the Companies determined on a
consolidated basis from June 30, 1996 through the end of such Fiscal Quarter
(without regard to, or reduction for, any net loss reported for any Fiscal
Quarter) plus (iii) 100% of the amount of Indebtedness of any Company converted
into shares of capital stock or other equity interests of such Company, if any,
plus (iv) 100% of the value of all consideration received for the issuance or
sale of capital stock or other equity interests of any Company; or
(d) the net worth of any Company, other than (i) the Mexico Companies and
(ii) any New Company, as of the end of any Fiscal Quarter to be less than
$400,000; or
_ (f) the net worth of any New Company as of end of any Fiscal Quarter to
be negative; or
( ) the ratio of (i) Total Funded Debt as of the end of any Fiscal Quarter
to (ii) Consolidated EBITDA for the four-quarter period ending as of the end of
such Fiscal Quarter, to be more than set out below opposite the period in which
such Fiscal Quarter ends; provided, however, for each Fiscal Quarter in which an
Acquisition is consummated, and each Fiscal Quarter ending prior thereto, the
financial information necessary to determine Consolidated EBITDA shall be
adjusted to reflect, on a pro forma basis, such Acquisition as if it had
occurred as of the beginning of the first of such Fiscal Quarters included in
the relevant four-quarter measurement period:
Fiscal Quarters Ended On or About Ratio
Closing Date through 6/30/98 3.00 to 1.00
7/1/98 through 6/30/99 2.75 to 1.00
7/1/99 through 6/30/00 2.50 to 1.00
7/1/00 through 7/15/01 2.25 to 1.00
(e) the capital expenditures of the Companies determined on a consolidated
basis to exceed the amount set out below opposite the applicable period;
provided that there shall be excluded from the calculation of such capital
expenditures (i) any capital expenditure of any Company to the extent that such
Company is reimbursed for such capital expenditure by The Coca-Cola Company,
(ii) up to $500,000 in Capital Lease Obligations of the Companies determined on
a consolidated basis for any Fiscal Year, and (iii) up to an aggregate amount of
$11,000,000 in costs incurred by the Companies determined on a consolidated
basis for the Fiscal Years ending December 31, 1996 and December 31, 1997 for
(A) the construction of the plant and office at and the purchase of special
equipment for Operating Subsidiary's plant located on Foster Road in Bexar
County, Texas and (B) the expansion of Mexico Subsidiary's maquiladora plant in
Piedras Negras, Mexico:
Fiscal Years (Beginning/Ending) Amount
1/1/96 through 12/31/96 $ 4,000,000 1/1/96 through 12/31/97 $ 8,000,000
1/1/96 through 12/31/98 $12,000,000 1/1/96 through 12/31/99 $16,000,000 1/1/96
through 12/31/00 $20,000,000 1/1/96 through 12/31/01 $24,000,000 Limitation on
Indebtedness. Neither any Borrower nor Parent Company will, and Parent Company
will not permit any Company to, incur, create, contract, assume, have
outstanding, permit or suffer to exist, Guarantee or otherwise be or become,
directly or indirectly, liable in respect of any Indebtedness, except the
following (collectively, "Permitted Indebtedness"):
( ) the Obligations;
(i) current liabilities for Taxes incurred in the ordinary course of
business which are not yet due and payable;
(ii) trade payables arising in the ordinary course of business;
(iii) Indebtedness listed in Schedule 6.2; and
(iv) the issuance or sale of convertible senior notes by the Parent
Company, provided that (A) such notes are issued or sold for cash only, (B) the
net cash proceeds of such issuance or sale are applied to repay certain Loans in
accordance with the Section 2.8 (d), (C) the net cash proceeds of such issuance
or sale do not exceed an amount equal to the sum of (x) the aggregate principal
amount of all Term A Loans then outstanding and (y) the aggregate principal
amount of all Acquisition Loans then outstanding, (D) such notes do not mature
prior to July 15, 2001, (E) such notes are unsecured, and (F) the provisions of
such notes, including, but not limited to, the payment of principal thereunder
and the representations and warranties contained therein, are approved in
writing by all the Banks.
.2 Limitation on Property. Neither any Borrower nor Parent Company will,
and Parent Company will not permit any Company to, (i) grant, create, enter
into, incur, permit or suffer to exist, upon or with regard to any of its
respective Property now owned or hereafter acquired, (A) any Lien, except for
Permitted Liens, or (B) any Negative Pledge, except for the benefit of the Agent
and Banks, or (ii) enter into any sale-and-lease-back transaction other than
sale-and-lease-back transactions involving inventory manufactured by any
Company, provided that the aggregate book value of all such inventory shall not
exceed the sum of $1,500,000. Anything in the foregoing or elsewhere in the Loan
Documents to the contrary notwithstanding, it is understood that no Liens, other
than Permitted Liens, or Negative Pledges, except for the benefit of the Banks,
are permitted on or with respect to any of the Property of Borrower.
.3 Restricted Payments. Neither any Borrower nor Parent Company will, and
Parent Company will not permit any Company to, directly or indirectly (i)
declare or make, or incur any liability to pay or make, any Dividends or (ii)
redeem, repurchase, retire or otherwise acquire for value any of its capital
stock, warrants, stock equivalents or other evidence of equity of any class or
nature, or (iii) set apart any money or other Property for a defeasance, sinking
or analogous fund for any Dividend or distribution thereon, or for any
redemption, retirement or other acquisition thereof; provided however, so long
as no Default or Event of Default has occurred and is continuing and no Default
or Event of Default will occur as a result of such distribution, the foregoing
shall not prohibit (A) any Company from paying a Dividend (x) to any other
Company that is a Loan Party to consummate an Acquisition permitted under this
Agreement or (y) to any Company that is a Loan Party to pay the federal income
taxes of such Company or to provide working capital for such Company, (B)
Operating Subsidiary from paying Dividends to Investment Subsidiary, as its
limited partner, for immediate re-distribution to any other Company that is a
Loan Party or (C) Parent Company from paying Dividends to its shareholders.
.4 Limitation on Investments. Neither any Borrower nor Parent Company will,
and Parent Company will not permit any Company to, make or have outstanding any
Investments in any Person, except for:
( ) Temporary Cash Investments;
(i) Investments listed in Schedule 6.5); and
(ii) Investments expressly permitted by other provisions of this Agreement.
.5 Affiliate Transactions. Neither any Borrower nor Parent Company will,
and Parent Company will not permit any Company to, enter into any transaction
with, or pay any management or other fees or compensation to, any Affiliate of
any Company other than transactions in the ordinary course of business which are
on fair and reasonable terms no less favorable to Borrower, Parent Company or
such other Company, as applicable, than would be obtained in a comparable
arm's-length transaction with a Person who is not an Affiliate of Borrower,
Parent Company or any such other Company, as applicable. In addition, neither
Borrower nor Parent Company will, and Parent Company will not permit any Company
to, enter into any transaction with, or pay any management or other fees or
compensation to, any Person (a "Non-Affiliated Person") who is not an Affiliate
of any Company wherein such Affiliate is directly or indirectly involved in,
related to, or associated with, such transaction other than transactions in the
ordinary course of business which are on fair and reasonable terms no less
favorable to Borrower, Parent Company or such other Company, as applicable, than
would be obtained in a comparable arm's-length transaction with a Non-Affiliated
Person wherein an Affiliate of such Borrower, Parent Company or such other
Company is not directly or indirectly involved, related or associated.
.6 Limitation on Sale of Property. Neither any Borrower nor Parent Company
will, and Parent Company will not permit any Company to, sell, assign, lease,
sublease or discount or otherwise exchange or dispose of any of its Property
other than (i) sales or leasing of inventory in the ordinary course of its
business, (ii) sales or other dispositions of obsolete equipment that is no
longer needed for its ordinary business or which is being replaced by equipment
of at least comparable value and utility to the equipment replaced when such
equipment was efficiently operational and functional and (iii) sale of the real
property at 339 North Oakley in Chicago, Illinois which is currently under a
contract for sale.
.7 Accounting Method. Neither any Borrower nor Parent Company will, and
Parent Company will not permit any Company to, change its Fiscal Year or method
of accounting, without the prior approval of the Banks.
.8 Internal Governance Documents; Name and Principal Place of Business.
Neither any Borrower nor Parent Company will, and Parent Company will not permit
any Company to, amend their respective Governing Documents in any respect which
could have a Material Adverse Effect. Without notifying the Agent in writing at
least 30 Business Days prior to the effective date of each of the following
changes, no Borrower nor Parent Company will, and Parent Company will not permit
any Company to, (i) change its name, or operate any of its business, operations
or Property or own or lease any Property under any name, different than as set
forth in Schedule 4.14, (ii) operate or conduct any of its business or store or
maintain any of its inventory, equipment or other Property, at a location other
than as set forth in Schedule 4.14, (iii) change its identity or corporate
structure, or (iv) change its principal place of business or chief executive
office, as applicable, from such address and location set forth in Schedule
4.14.
.9 Certain Environmental Matters. Except in compliance in all respects with
Environmental Laws, and otherwise in no way posing an imminent and significant
endangerment to public health or welfare or the environment, neither any
Borrower nor Parent Company will, and Parent Company will not permit any Company
to, (i) cause or permit any Hazardous Material to be placed, held, transported,
located, released or disposed of on, under, from, to, or at, any Property now or
hereafter owned, leased or otherwise controlled directly or indirectly by any
Company (for purposes of this Section 6.10, the "Subject Property"), or (ii)
permit the Subject Property ever to be used (whether by any Company or any other
Person) as a dump site or storage site (whether permanent or temporary) for any
Hazardous Material. Without limitation of the Agent's and the Banks' Rights
under the Loan Documents, the Agent and its representatives shall have the
right, but not the obligation, to enter upon the Subject Property or take such
other actions as the Agent or any Bank deems necessary or advisable to cleanup,
remove, resolve or minimize the impact of, or otherwise deal with, any Hazardous
Discharge or Environmental Complaint upon the Agent's or any Bank's receipt of
any notice from any Governmental Authority or other Person, asserting the
existence of any Hazardous Discharge or Environmental Complaint on or pertaining
to the Subject Property which, if true, could result in Environmental Liability
against Borrower, the Agent, any Bank or otherwise which, in the sole opinion of
any of them, could jeopardize any of their present or future Liens against or
rights to the Subject Property. All costs and expenses incurred by the Agent,
the Banks and their representatives in the exercise of any such Rights shall
become part of the Obligations and be payable upon demand, together with
interest on the unpaid portion thereof at the Default Rate.
.10 Mergers, Acquisitions and Dissolutions. Except in connection with a
Permitted Acquisition, neither any Borrower nor Parent Company will, and Parent
Company will not permit any Company to, become a party to a merger, acquisition
or consolidation, or purchase or otherwise acquire by merger, lease or purchase
all or a substantial part of the assets or Property of any Person or any shares
or other evidence of legal or beneficial ownership of any Person, or dissolve or
liquidate. A "Permitted Acquisition" means (i) the FCB Acquisition, provided
that the total purchase price consideration (including Indebtedness assumed)
does not exceed the sum of $2,000,000, (ii) any single Acquisition by Parent
Company or a wholly owned Subsidiary of Parent Company (with a series of related
Acquisitions being treated as a single Acquisition), provided that the total
purchase price consideration (including Indebtedness assumed) does not exceed
the sum of $1,500,000 and (iii) any other Acquisition by Parent Company or a
wholly owned Subsidiary of Parent Company approved by all the Banks; provided
however, as to each such transaction:
( ) no Default or Event of Default has occurred and is continuing and no
Default or Event of Default will occur as a result of the Permitted Acquisition;
(a) the primary business activity of the Acquisition Target is
substantially related to the business activities of the Operating Subsidiary;
(b) Parent Company provides to the Banks pro forma financial statements of
the Companies giving effect to the Permitted Acquisition which shall not be
materially less favorable, in the reasonable judgment of the Banks, than the
projections previously provided to the Banks;
(c) the financial ratios under Section 6.1 are complied with before and
after giving effect to the Permitted Acquisition, such compliance being
determined on a pro forma basis as of the date of such Acquisition;
(d) each of the Banks receives such information as such Bank may reasonably
request to confirm the assumptions made in such pro forma financial statements;
and
(e) each of the Banks receives (i) (x) audited balance sheets of the
Acquisition Target for the Acquisition Target's three prior fiscal years and the
related statements of income, stockholders' equity and cash flows for such
years, with reports thereon by its independent public accountants, prepared in
accordance with GAAP applied throughout the periods covered thereby on a basis
consistent with that of prior periods, subject to normal year-end audit
adjustments or (y) if the financial information in clause (x) above does not
exist, unaudited balance sheets of the Acquisition Target for the Acquisition
Target's three prior fiscal years and the related statements of income,
stockholders' equity and cash flows for such years, prepared in accordance with
GAAP applied throughout the periods covered thereby on a basis consistent with
that of prior periods, subject to normal year-end adjustments, and any other
financial information regarding the Acquisition Target available to any Company
and (ii) any unaudited year-to-date financial statements or reports for the
period ending after the end of the most recent fiscal year of the Acquisition
Target for which the Banks have received the financial reports referred to in
clause (i) above.
.11 Subsidiaries. Neither any Borrower nor Parent Company will, and Parent
Company will not permit any Company to, create or permit to exist any Subsidiary
of such Person, except for (i) the Subsidiaries listed in Schedule 4.15 and (ii)
Subsidiaries formed or acquired pursuant a Permitted Acquisition that becomes a
Loan Party. Neither any Borrower nor Parent Company will, and Parent Company
will not permit any Company to become a general partner, venturer or similar
capacity in any partnership, venture or similar Person.
.12 Sale of Receivables. Unless in favor of the Agent and the Banks or
reasonably necessary in connection with collection efforts on delinquent
receivables, no Borrower nor Parent Company will, and Parent Company will not
permit any Company to, sell or discount any of its accounts or notes receivable.
.13 Sale of Certain Interests. Neither any Borrower nor Parent Company
will, and Parent Company will not permit any Company to, transfer or sell any
outstanding capital stock, partnership interests or other ownership interests of
any Subsidiary of Parent Company.
5 EVENTS OF DEFAULT
.0 Events of Default. An "Event of Default" shall exist if any one or more
of the following events shall occur and be continuing:
( ) either Borrower fails or refuses to pay, within 5 Business Days of the
date when due, any principal of, or interest on, any Note, or any fee, expense
or other Obligations payable by such Borrower; or
(a) any representation, warranty or certification made or deemed made by,
or on behalf of, any Company under, or in connection with, any of the Loan
Documents, or in any certificate, notice, request, statement or other
communication furnished or made to the Agent or any Bank pursuant hereto or in
connection herewith is untrue, misleading or inaccurate in any material respect
as of the date on which such representation, warranty or certification was made
(or deemed made) or furnished; or
(b) either (i) (A) the occurrence of an event or circumstance designated as
a "default" or an "event of default" under any other Loan Document or (B) except
as provided in Section 7.1(a) or Section 7.1(c)(ii), any Company fails to
perform, observe or comply with any covenant or agreement contained in this
Agreement or any other Loan Document, which failure continues for a period of 30
days after the occurrence thereof; or (ii) any Company fails to perform, observe
or comply with any covenant or agreement contained in Section 6.1, which failure
continues for a period of 45 days after the due date of the Compliance
Certificate evidencing such failure or noncompliance; or
(c) either (i) any Company defaults in the payment of any Indebtedness in
excess of $100,000 of such Company or defaults in respect of any note,
agreement, indenture, loan agreement, credit agreement, bond or other document
evidencing or relating to any such Indebtedness, and such default continues for
more than the period of grace, if any, specified therein or (ii) any
Indebtedness of any Company in excess of $100,000 becomes due or prepayable
before its stated maturity by acceleration of the maturity thereof or otherwise;
or
(d) any Company (i) applies for or consents to the appointment of, or the
taking of possession by, a receiver, trustee, custodian, intervenor or
liquidator of such Company or of all or a substantial part of its Property, (ii)
commences or files a voluntary petition, proceeding or case in bankruptcy, or
admit in writing that it is unable to pay its debts as they become due or
generally not pay its debts as they become due, (iii) makes a general assignment
for the benefit of creditors, (iv) files a petition or answer seeking
reorganization or an arrangement with creditors or take advantage of any Debtor
Laws, (v) files an answer admitting the material allegations of or consenting
to, or defaults in answering, a petition, proceeding or case filed against it in
any bankruptcy, reorganization or insolvency proceeding or (vi) takes corporate
action for the purpose of effecting any of the foregoing; or
(e) an involuntary petition, proceeding, case or complaint is filed against
any Company seeking bankruptcy, liquidation, dissolution, winding-up or
reorganization of such Company or the composition or readjustments of its debts,
or the appointment of a receiver, custodian, trustee, intervenor or liquidator
of it or all or substantially all of its Property, and such petition,
proceeding, case or complaint is not dismissed within 30 days of the filing
thereof; or an order, order for relief, judgment or decree shall be entered by
any court of competent jurisdiction or other competent authority approving a
petition, proceeding, case or complaint seeking liquidation, reorganization,
dissolution, winding-up or bankruptcy of any Company or appointing a receiver,
custodian, trustee, intervenor or liquidator of any Company, or of all or
substantially all of its Property, and such order, order for relief, judgment or
decree continues unstayed for a period of 30 days; or
(f) one or more final and non-appealable Judgments that, individually or in
the aggregate, require the payment of money in excess of the sum of $250,000 or
any other Judgments that, individually or in the aggregate, require the payment
of money in excess of the sum of $10,000,000 are rendered against any Company or
with respect to its Property, and such Judgment or Judgments shall not be
satisfied or discharged within 30 days of the date it is rendered; or
(g) both (i) and (ii) following shall occur: (i) either (A) proceedings are
instituted to terminate, or a notice of termination is filed with respect to,
any Plan by any Company, any member of the "controlled group" (as defined in the
Code) of any Company, PBGC or any representative of any thereof, or any such
Plan shall be terminated, in each case under Section 4041 or 4042 of ERISA, or
(B) a "reportable event" (as defined in Title 4 of ERISA) occurs with respect to
any Plan and continues for a period of 60 days, and (ii) the sum of the
estimated liability to PBGC under Section 4062 of ERISA and the currently
payable obligations of the Companies to fund liabilities (in excess of amounts
required to be paid to satisfy the minimum funding standard of Section 412 of
the Internal Revenue Code) under the Plan or Plans subject to such event exceeds
10% of the Companies' consolidated net worth at such time; or
(h) a Change in Control shall occur; or
(i) except pursuant to the express terms of any Loan Document, any Loan
Document shall, at any time after its execution and delivery and for any reason,
cease to be in full force and effect or be declared to be null and void, or
Borrower or any other Person (other than the Agent or the Banks) shall deny that
it has any or any further liability or obligations under any Loan Document to
which it is a party.
.1 Remedies Upon Event of Default. In the event an Event of Default occurs
and is continuing, the Agent may, and upon written request of the Required
Banks, shall, exercise any one or more of the following Rights, and any other
Rights available at law or in equity or provided in any of the Loan Documents:
(i) terminate all or any portion of the Commitments, and such Commitments shall
thereupon terminate, and (ii) declare the principal of, and all earned and
accrued interest on, the Notes then outstanding and all other accrued and unpaid
Obligations to be immediately due and payable, whereupon the same shall be and
become due and payable, each and all of the foregoing without presentment,
demand, protest, notice of default, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by each
Borrower, provided however, upon the occurrence of any Event of Default
specified in Section 7.1(e) or Section 7.1(f), all of the Commitments shall
thereupon automatically and immediately terminate and the principal of, and all
earned and accrued interest on the Notes then outstanding and all other accrued
and unpaid Obligations shall thereupon be and become automatically and
immediately due and payable, each and all of the foregoing without presentment,
demand, protest, notice of default, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by each
Borrower. If any amount payable under any of the Loan Documents is not paid when
due the outstanding and unpaid portion of such amount shall bear interest at the
Default Rate.
6 THE AGENT AND BANKS
.0 Appointment of the Agent. Each of the Banks hereby appoints the Agent to
act as herein specified, and acting in the manner and to the extent provided in
this Article 8, the Agent accepts such appointment. Each of the Banks hereby
irrevocably authorizes the Agent to receive payments of principal, interest and
other amounts due hereunder as specified herein and otherwise to take such
action on its behalf, to exercise such powers and to perform such duties under
the Loan Documents as are specifically delegated to, or required of, the Agent
by the terms of the Loan Documents, together with all other powers reasonably
incidental thereto, which authorization permits the Agent to perform any of its
duties under the Loan Documents by or through its agents, attorneys or
employees. The Agent shall have no duties or responsibilities except those
expressly set forth with respect to it in the Loan Documents. The relationship
of the Agent to the Banks is only that of one company acting solely as an
administrative agent for others, and nothing in the Loan Documents, express or
implied, is intended to, or shall be construed to, constitute the Agent a
trustee or other fiduciary for any holder of any of the Notes, or of any
participation therein, nor to impose on the Agent duties and obligations other
than those expressly provided for in the Loan Documents. As to any matters not
expressly provided for in the Loan Documents and any matters to which the Loan
Documents place within the discretion of the Agent, the Agent shall not be
required to exercise any discretion or take any action (and it may request
instructions from the Banks with respect to any such matter), in which case it
shall be required to act or refrain from acting (and shall be fully protected
and free from liability to all Banks in so acting or refraining from acting)
upon the instructions of the Required Banks (including itself), and such
instructions shall be binding upon all Banks and all holders of, and
participants in, the Notes; provided however, (i) the Agent shall in all cases
be fully justified in failing or refusing to act under any Loan Document unless
it shall be indemnified to its satisfaction by the Banks against any and all
liability and expense (other than any such liability or expense proximately
caused by the Agent's gross negligence or willful misconduct, as determined by a
final judgment) which may be incurred by it by reason of taking or continuing to
take any such action, and (ii) the Agent shall not in any event be required to
take any action which (A) is contrary to any Loan Document or Law or (B) exposes
it to a risk of personal liability that it considers unreasonable.
.1 Exculpation; Agent's Reliance. as among the banks, neither the agent nor
any of its affiliates, nor any of its or their directors, officers, agents,
attorneys, insurers or employees, nor any of its or their successors, heirs,
legal representatives or assigns (collectively, the "agent indemnitees"), shall
ever be liable for any action taken or omitted to be taken by any of them under
or in connection with any loan document, including their negligence of any kind,
except that each shall respectively be liable for its own gross negligence or
willful misconduct, as determined by a final judgment. Without limiting the
generality of the foregoing or any other provision of any Loan Document, the
Agent: (i) may treat the payee of any Note as the holder thereof until the Agent
receives and accepts an assignment and acceptance entered into by the Persons as
provided in Section 10.7 and all other provisions of Section 10.7 are complied
with to the reasonable satisfaction of the Agent; (ii) may consult with legal
counsel (including counsel for any Company), independent public accountants and
other experts and advisors selected by it and shall be fully protected and free
from liability to all Banks for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants, experts
or advisors; (iii) makes no warranty or representation to any Bank and shall not
be responsible to any Bank for any statements, recitals, information, warranties
or representations made in or in connection with any Loan Document, or in any
communication or writing made or delivered in connection therewith; (iv) shall
not have any duty to ascertain, to inquire or to keep itself informed as to the
financial condition of the Companies or any of them or the performance or
observance of any of the terms, covenants or conditions of any Loan Document on
the part of any Person or to inspect the Property (including the books and
records) of any Company or such Company's Subsidiaries or any other Person; (v)
shall not be responsible to any Bank for the financial condition of the
Companies or any of them or the due execution, legality, validity,
enforceability, collectibility, genuineness, sufficiency or value of any Loan
Document or instrument or document furnished in connection therewith, or the
creation, perfection, continued creation or perfection, or priority, of any Lien
purported to be created by any Loan Document, or any other instrument or
document furnished pursuant hereto or thereto; and (vi) may rely, and shall be
fully protected and free from liability to all Banks in relying, (A) upon the
representations and warranties of any Company, the Banks in exercising its
powers hereunder, and (B) upon any notice, consent, certificate, statement,
resolution, instrument or other writing (which may be by telegram, cable,
telecopy, facsimile, telex, mail or telephone) believed by it to be genuine and
signed, sent, communicated or otherwise made by the proper Person or Persons.
.2 Defaults. The Agent shall not be deemed to have knowledge of the
occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on Loans or of commitment fees) unless the Agent has
received written notice from any Bank or any Borrower specifying the occurrence
of such Default or Event of Default and stating that such notice is a "Notice of
Default". In the event that the Agent receives a Notice of Default, it shall
give prompt notice thereof to the Banks (and shall give each Bank prompt notice
of each such non-payment). Subject to Section 8.1, the Agent shall take such
action with respect to such Default or Event of Default as shall be directed by
the Required Banks; provided that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall in its sole and absolute discretion deem advisable
in the best interest of the Banks.
.3 Rights as a Bank. The Frost National Bank (and any successor acting as
the Agent), in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any Bank and may exercise the same as though it were not the
Agent, and the term "Bank", "Banks", "Required Banks", "holders of Notes" or
similar terms shall, unless otherwise expressly indicated, include the Frost
National Bank (and any successor acting as Agent) in its individual capacity.
The Frost National Bank (and any successor acting as the Agent) and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures or as transfer agent in respect of capital stock of, and generally
engage in any kind of banking, trust, investment, financial advisory or other
business with, the any Borrower or its respective Affiliates, and may accept
fees and other consideration from any Borrower or its respective Affiliates for
services in connection with any of the foregoing, any of the Loan Documents or
otherwise, all as if it were not Agent hereunder and without having to account
for the same to the Banks. All fees and other amounts received by Agent for its
capacity as Agent hereunder shall solely be for its benefit and no other party
hereto.
.4 Indemnification. each bank agrees to indemnify, reimburse and hold
harmless each agent indemnitee (to the extent not indemnified and reimbursed, on
demand, by any borrower), ratably according to its percentage share, from and
against any and all losses, liabilities, obligations, claims, losses, damages,
penalties, actions, suits, judgments, demands, settlements, costs, disbursements
or expenses (including fees and expenses of attorneys, accountants, experts and
advisors) of any kind or nature whatsoever (in this section 8.5, the foregoing
is collectively referred to as the "liabilities and costs"), which to any extent
(in whole or part) may be imposed on, incurred by, or asserted against, such
agent indemnitee in any way relating to, or arising out of, the loan documents
and the transaction and events (including the enforcement thereof) at any time
associated therewith or contemplated therein (including any violation or
noncompliance with any environmental laws by any person or any liabilities or
duties of any person with respect to hazardous materials found in or released
into the environment) or as a result of any action taken or omitted to be taken
by such agent indemnitee, including its negligence of any kind, other, than as
provided in the following proviso, the gross negligence of an agent indemnitee;
provided that no bank shall be liable for any portion, if any, of any
liabilities and costs which is proximately caused by the agent's own individual
gross negligence or willful misconduct, as determined in a final judgment.
without limiting the generality of the foregoing, each bank agrees, in
proportion with its percentage share, to reimburse the agent promptly upon its
demand for any costs and expenses (including attorneys' fees and expenses and
other charges) incurred by the agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings, or otherwise) of, or legal
advice in respect of their rights or responsibilities under, the loan documents,
or any of them, or any other documents contemplated by the loan documents, to
the extent that the agent is not reimbursed, on demand, for such amounts by any
borrower. Each Bank's obligations under this paragraph shall survive the
termination of this Agreement and the discharge of any Borrower's obligations
hereunder.
.5 Bank's Credit Decision and Non-Reliance. Each Bank hereby acknowledges
that it has, independently and without reliance upon the Agent or any other
Person, and based upon such documents and information as it has deemed
appropriate, made (i) its own independent investigation and analysis (including
legal and credit investigation and analysis) of the Companies and their
Affiliates, and their respective financial conditions, operations and affairs,
and Properties, and the transactions provided for in, and contemplated by, each
of the Loan Documents and (ii) its own independent decision to enter into and
perform each Loan Document. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Person, and based
on such investigation, analysis, documents and information as it shall deem
appropriate at the time, continue to make its own independent legal, credit and
other decisions in taking or omitting to take action under or in connection with
the Loan Documents. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition, or business of the Companies or any of their respective Affiliates
which may come into the possession of the Agent or any of its Affiliates.
.6 Deferral of Distributions; Investments. Whenever the Agent in good faith
determines that it is uncertain about how to distribute to the Banks any funds
which it has received, or whenever the Agent in good faith determines that there
is any dispute among the Banks about how such funds should be distributed, the
Agent may choose to defer distribution of the funds which are the subject of
such uncertainty or dispute. If the Agent in good faith believes that the
uncertainty or dispute will not be promptly resolved, it may, or if the Agent is
otherwise required to invest funds pending distribution to the Banks, it shall,
invest such funds pending distribution in any manner it deems appropriate,
absent timely instructions from the Required Banks; all interest on any such
investment (net of investment and related costs, if any, incurred in connection
therewith) shall be distributed upon the distribution of such investment and in
the same proportion and to the same Persons as such investment. All moneys
received by the Agent for distribution to the Banks (other than to the Person
who is the Agent in its separate capacity as a Bank) shall be held by the Agent
pending such distribution solely as the Agent for such Banks, and the Agent
shall have no equitable title to any portion thereof. absent gross negligence or
willful misconduct on its part (but excluding its own negligence of any other
kind), as determined by a final judgment, the agent shall be fully protected and
free from liability to the banks for any costs and liabilities resulting from or
related to the deferral of distributions and/or making of investments as
provided for in this section 8, including the failure of any such investment.
.7 Nature of Article 8. The provisions of this Article 8 (other than the
following Section 8.9) are intended solely for the benefit of the Agent and the
Banks, and neither any Borrower nor any other Person shall be entitled to rely
on any such provision or assert any such provision in a claim or defense against
the Agent or any Bank. The Agent and the Banks may waive or amend such
provisions as they desire without any notice to or consent of any Borrower.
Nothing contained in any Loan Document, and no action taken by any Bank or the
Agent pursuant hereto or in connection herewith or pursuant to or in connection
with the Loan Documents, shall be deemed to constitute the Banks, together or
with or without the Agent, a partnership, association, joint venture or other
entity.
.8 Resignation and Removal by Agent. The Agent may resign at any time as
the Agent under the Loan Documents by giving written notice thereof (which
notice shall contain the date of such resignation) to the Banks and the
Borrowers and, upon the gross negligence or manifest incompetence of the Agent,
the Agent may be removed as the Agent under the Loan Documents by the Required
Banks. Upon any such resignation or removal, the Required Banks (without having
to obtain the consent of any Borrower) shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Banks and shall have accepted such appointment within 30 calendar days
after the retiring Agent's giving of notice of resignation or the Required
Banks' removal of the retiring Agent, as applicable, then the retiring Agent
may, on behalf of Banks (without having to obtain the consent of any Borrower)
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof having a combined
capital and surplus of at least $500,000,000. In any case where a successor
Agent is being selected, the parties agree to attempt to select such successor
from one of the Banks. Upon the acceptance of any appointment as the Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all rights, powers, privileges and duties of the retiring
or removed Agent and the retiring or removed Agent shall be discharged from its
duties and obligations under the Loan Documents. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article 8
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Agent under the Loan Documents.
7 CHANGED CIRCUMSTANCES
.0 Basis for Determining Interest Rate Inadequate or Unfair. If on or prior
to the first day of any Interest Period, (i) the Agent shall have determined
(which determination shall be conclusive and binding upon each Borrower) that,
by reason of circumstances affecting the interbank eurodollar market, or
reporting or data gathering and/or dissemination networks, systems or companies
related thereto or dealing therewith, adequate and reasonable means do not exist
for ascertaining the London Interbank Offered Rate for such Interest Period, or
(ii) the Agent shall have received written notice from the Required Banks that
for reasons beyond their control the London Interbank Offered Rate determined or
to be determined for such Interest Rate Period will not adequately and fairly
reflect the cost to such Banks (as conclusively certified by such Banks)
directly related to the making or maintaining of their LIBOR Loans during such
Interest Period, then the Agent shall forthwith give notice thereof to Borrowers
and the Banks. Until the Agent notifies Borrowers that such notice has been
withdrawn by the Agent, no further LIBOR Loans by any Bank shall be made or
continued as such, nor shall any Borrower have the right to convert Loans to
LIBOR Loans.
.1 Illegality. Notwithstanding any other provision herein, if at any time a
Bank determines (which determination shall be reasonably exercised and if so
reasonably exercised, shall be conclusive and binding upon the parties, absent
manifest error) that the making or maintaining LIBOR Loans hereunder has become
unlawful pursuant to applicable Law, or any interpretation, application or
administration thereof (whether or not having the force of law), then such Bank
(an "Affected Bank") shall so promptly notify the Agent, the other Banks and
each Borrower. Upon giving such notice (i) the obligations of all Banks to make
or continue, or to convert Base Rate Loans into, LIBOR Loans shall be suspended
until the Affected Bank notifies the Agent, the other Banks and Borrowers that
it may again make and maintain LIBOR Loans, and (ii) each Borrower shall, upon
the request of any Bank, prepay any LIBOR Loan then outstanding (which
prepayment, if requested by such Borrower, shall be made with the proceeds or
effect of a Base Rate Loan extended contemporaneously by such Bank), together
with accrued interest thereon, and loss and expenses, if any, provided for in
Section 2.12.
.2 Increased Cost and Reduced Return.
( ) If the adoption of, or any change in, any Law, or in the
interpretation, application or administration thereof, or compliance by any Bank
(or its Lending Office) with any request or directive (whether or not having the
force of law) of any central bank or other Governmental Authority:
( ) shall subject any Bank (or its Lending Office) to any tax, duty or
other charge of any kind whatsoever with respect to this Agreement or any Note
or any LIBOR Loan made by it, or its obligations in respect to any of the
foregoing, or shall change the basis of taxation of payments to such Bank (or
its Lending Office) in respect to any amounts due to it in respect to any of the
foregoing (except for changes in the rate of tax on the overall net income of
such Bank or its Lending Office imposed by any jurisdiction); or
(i) shall impose, modify or deem applicable any reserve, special deposit,
compulsory loan or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System)
against assets of, deposits with or other liabilities of or for the account of,
advances, loans or other extensions of credit by, or other acquisition of funds
by, any Bank (or its Lending Office), which is not otherwise included in the
determination of the Adjusted London Interbank Offered Rate; or
(ii) shall impose on any Bank (or its Lending Office) or on the London
interbank market any other condition affecting this Agreement, any Note, or any
LIBOR Loan, or its obligations in respect to any of the foregoing;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Lending Office) of making, converting into, continuing or maintaining
any LIBOR Loan or to reduce the amount of any sum received or receivable by such
Bank (or its Lending Office) under this Agreement or under its Notes with
respect thereto, then subject to Section 10.8, within 5 days after demand by
such Bank (with a copy to the Agent), each Borrower shall, without limiting the
effect of any other applicable provision hereof (but without duplication) pay to
such Bank such additional amount or amounts as will compensate such Bank for
such increased costs or reduction of amount receivable.
(a) If the adoption of, or any change in, any Law regarding capital
adequacy or risk-based capital guidelines or requirements, or in the
interpretation, application or administration thereof or compliance by any Bank
(or its Lending Office, or its or any of their Affiliates) with any request or
directive regarding capital adequacy or risk-based capital guidelines or
requirements (whether or not having the force of law) of any central bank or
other Governmental Authority, does or shall, in the reasonable determination of
such Bank, have the effect of reducing the rate of return on such Bank's (or its
Lending Office, or its or their Affiliates) capital or assets as a consequence
of its obligations hereunder, to a level below that which such Bank (or its
Lending Office, or its or their Affiliates) could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's (or its
Lending Office, or its or their Affiliates) policies with respect to capital
adequacy or risk-based capital guidelines or requirements), then from time to
time, within 5 days after demand by such Bank (with a copy to the Agent),
subject to Section 10.8, each Borrower shall, without limiting the effect of the
foregoing provisions of this Section 9.3 (but without duplication), pay to such
Bank such additional amount or amounts as will compensate such Bank for the
amount of such reduction.
(b) Each Bank will promptly notify each Borrower and the Agent of any event
of which it has knowledge which will entitle such Bank to compensation pursuant
to this Section 9.3. A certificate of any Bank claiming compensation under this
Section 9.3 and setting forth the additional amount or amounts to be paid to it,
as well as the manner in which such amount or amounts were calculated, hereunder
shall be conclusive and binding on Borrowers in the absence of manifest error.
In determining such amount, such Bank may use, among others, any reasonable
averaging and attribution methods.
.3 Substitute Rate for Affected LIBOR Loans. (a) If the obligation of any
Bank to make, convert or continue (as applicable) a LIBOR Loan shall be
suspended pursuant to Section 9.1 or Section 9.2 (each such affected LIBOR Loan,
an "Affected Loan"), then each such Affected Loan that otherwise would have been
made, converted or continued (as applicable) by the Banks as a LIBOR Loan shall
be made, converted or continued (as applicable) instead as a Base Rate Loan.
(b) If the London Interbank Offered Rate is not published or reported for
30 consecutive days or 30 days have passed since any Borrower's receipt of an
Agent's notice as provided under in Section 9.1 or an Affected Bank's notice as
provided in Section 9.2, as applicable, and the circumstance underlying such
notice continues to exist, then within 15 days after the earlier to occur of any
such event (such earliest to occur event, a "LIBOR Event"), and so long as such
LIBOR Event shall be continuing, such Borrower may notify the Agent and the
Banks that it desires to discuss with them the availability of a reasonably
comparable alternate rate option or additional interest rate option for the
Loans that is mutually agreeable to such Borrower, the Agent and the Banks; and,
if such Borrower, the Agent and the Banks so mutually agree within 30 days after
such notice is given by such Borrower, the parties shall as soon as reasonably
practical thereafter enter into an amendment to this Agreement and any other
affected Loan Documents in form, scope and substance, and upon terms and
conditions, satisfactory to the Agent and the Banks. If, in any event, any Bank
does not, in its sole discretion (with due respect for, among other matters, its
independent requirements, considerations and circumstances), agree to any
proposed alternate or additional interest rate option within such 30-day period,
no such alternate or additional interest rate option shall be available with
respect to the LIBOR Event initiating the discussions related to such proposed
alternative or additional interest rate option.
.4 Alternate Lending Office Designation. Each Bank agrees that it will
endeavor to use reasonable efforts to designate an alternate Lending Office with
respect to any LIBOR Loans affected by the matters or circumstances described in
any of Sections 9.1, 9.2 and 9.3 to reduce the liability of each Borrower or
avoid the results provided thereunder, so long as such designation is not
disadvantageous to such Bank as determined by it in its sole discretion;
provided, however, no Bank shall have any obligation to so designate an
alternate Lending Office located in the United States of America.
8 MISCELLANEOUS
.0 Notices. (a) All notices, requests and other communications to any party
under any Loan Document shall be in writing or, in the case of a Notice of
Borrowing, by telephone confirmed the same day in writing on or before 11:00
A.M. (San Antonio time) (including bank wire, telecopy, telex or similar
writing) and shall be given to such party at its address, telecopy or telex
number set forth in Annex A or such other address, telecopy or telex number as
such party may hereafter specify for the purpose by notice to the Agent and each
Borrower. Each such notice, request or other communication shall be effective
(i) if given by telex, when such telex is transmitted to the telex number
specified pursuant to this Section 10.1 and the appropriate answerback is
received, (ii) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified pursuant to this Section 10.1, and the sender has
received electronic confirmation thereof, (iii) if given by registered or
certified mail, return receipt requested, 72 hours after such communication is
deposited in the mails with postage prepaid, addressed as aforesaid or (iv) if
given by any other means, when delivered at the address specified pursuant to
this Section 10.1; provided that notices to the Agent under Article 2 or Article
9 shall not be effective until actually received by a representative of the
Agent, as distinguished from received at its place of business only.
( ) Any verbal communication or instrument in writing received by the Agent
in connection with a Borrowing or a Loan, or any other matter with respect to
any Loan Document, which purports to be dispatched or signed by or on behalf of
any Borrower and confirmed, in the case of a verbal communication, by the Agent
by telephone confirmation with an Authorized Officer of such Borrower, shall
conclusively be deemed to have been dispatched or signed by or on behalf of such
Borrower pursuant to such Person's authority to bind such Borrower and all other
Persons for the liabilities and matters in connection therewith to the Agent and
each Bank; and the Agent and each Bank may conclusively rely thereon and shall
have no obligation, duty or responsibility to determine the validity or
genuineness thereof or the authority of the Person or Persons executing or
dispatching the same.
.1 No Waivers. No failure or delay by the Agent or any Bank in exercising
any Right under any Loan Document, and no course of dealing with respect to any
such Rights, shall operate as a waiver thereof, nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps or actions to
enforce any Rights, preclude or prejudice the concurrent or subsequent exercise
thereof or the exercise of any other such Rights. The Rights provided in the
Loan Documents shall be cumulative and not exclusive of any rights or remedies
provided by Law or in equity.
.2 Payment of Costs and Expenses; Professionals and Consultants.
( ) Each Borrower agrees to pay all reasonable costs and expenses incurred
(whether before, after or during the Closing Date) by or on behalf of the Agent
(including audit costs and expenses and all attorneys' and other professionals'
and consultants' fees, costs and expenses of Agent incurred in connection with
the preparation of, advice or counsel regarding, or enforcement of, any Loan
Document) in connection with (i) the investigation, review, negotiation,
preparation, execution, delivery, administration, syndication, participation,
filing, recordation, refinancing, restructuring, renegotiation or enforcement of
each of the Loan Documents, and any and all renewals, amendments, extensions,
restatements, supplements, rearrangements, consents, waivers, assignments and
modifications thereto or thereof, and the transactions contemplated thereby,
(ii) the monitoring, evaluating, making, maintaining, servicing, enforcement and
collection of the Revolving Loans and the Term Loans, (iii) the creation,
preservation, maintenance, protection, perfection and enforcement of Rights
under each Loan Document and Liens in Property (whether or not incurred in
connection with the commencement of a proceeding, litigation, foreclosure or
other proceeding), specifically including all costs and expenses incurred with
respect to any bankruptcy, insolvency or reorganization proceeding, regardless
of whether the Agent ultimately prevails in such bankruptcy, insolvency or
reorganization proceeding, and (iv) all amounts expended, advanced or incurred
by or on behalf of the Agent to satisfy any obligation of any Borrower under any
Loan Document which is not timely satisfied by such Borrower, if the Agent, at
its discretion, so chooses to incur any such expenses or costs.
(a) Should any Borrower fail to perform or observe any covenant or
agreement contained in any of the Loan Documents and such failure continues
through the cure period provided for therein, if any, the Agent or any Bank may
then perform or attempt to perform such covenant or agreement on behalf of such
Borrower. Such Person will endeavor to give such Borrower notice of such
performance or attempted performance. Such Borrower shall, at the request of
such Person, promptly pay any amount expended in such performance or attempted
performance to such Person at the principal office of the Agent, together with
interest on the portion thereof from time to time remaining unpaid at the
Default Rate. Notwithstanding the foregoing, it is expressly understood and
agreed that (i) neither the Agent nor any Bank assumes any liability or
responsibility for the performance of any covenants or agreements of any
Borrower hereunder or under any of the other Loan Documents, or any other
documents, or other control over the management and affairs of any Borrower, and
(ii) such Borrower's failure to perform any covenant or agreement that is cured,
in whole or part, by any of their action shall be and continue a Default unless
and until (A) all of such Person's attendant costs and expenses have been
reimbursed as herein provided and (B) such Borrower has submitted, and the Agent
has received and approved, with the consent of the Required Banks, such
objective evidence that supports the determination that such Default will not
reoccur.
(b) Each Borrower acknowledges and agrees that all attorneys, accountants,
auditors, and other professional Persons and consultants who are from time to
time engaged or employed by the Agent (including, without limitation, Fulbright
& Jaworski L.L.P.) and whose fees and expenses are or may be paid or reimbursed,
as applicable, by Borrowers, pursuant to the terms of any Loan Document, are the
professionals of the Agent and not of any Borrower, and each of them (i) shall
have the right to act exclusively in the interest of the Agent, and (ii) shall
have no duty of disclosure, duty of loyalty, duty of care or any other duty of
any type or nature whatsoever, or deemed to have any attorney-client or other
similar professional relationship whatsoever, to any Borrower.
.3 Indemnification. subject to section 10.8, each borrower shall indemnify,
defend, protect and hold harmless each bank and the agent, and their respective
affiliates, subsidiaries, parent companies and other related entities, and their
respective officers, directors, employees, agents, attorneys and other
professionals and consultants, insurers and stockholders, and each of them (and
together with each and all of their respective successors, assigns, heirs and
legal representatives, the "indemnified parties"), from and against all
liabilities, obligations, losses, claims, actions, suits and other legal
proceedings, judgments, penalties, damages, costs, interest, charges, attorneys'
and other professionals' and consultants' fees and other expenses and
disbursements of any kind or nature whatsoever ("indemnified costs"), which may
be imposed on, incurred or sustained by, or asserted against, the indemnified
parties, or any of them, by reason of, arising out of, or in any manner related
to (directly or indirectly, consequentially, or otherwise), a borrower's breach
of any of the terms and conditions of any loan document and/or a borrower's
negligence. The foregoing is intended to indemnify, defend, protect and hold
harmless each of the indemnified parties against all risks, foreseeable or
unforeseeable, arising from a borrower's breach of the terms and conditions of
any loan document and/or a borrower's negligence, including, without limitation,
the negligence or alleged negligence (whether sole, comparative, contributory or
otherwise) of any of the indemnified parties, arising out of their efforts or
omissions to cure or remedy a borrower's breach of the terms and conditions of
any loan document and/or a borrower's negligence. to the extent that the
foregoing indemnification may be deemed unenforceable, in whole or in part, for
any reason whatsoever, including because it is violative of law or public policy
as determined by a final, non-appealable judgment or order of a court of
competent jurisdiction, each borrower agrees to contribute the maximum portion
that it is not prohibited to pay under applicable law, to the payment and
satisfaction of the subject transactions.; provided, however an indemnified
party shall not be entitled to indemnification for indemnified costs to the
extent such indemnified costs are directly caused by a breach of its material
obligations under any loan document or its own gross negligence or wilful
misconduct as determined by a court of competent jurisdiction.
.4 Sharing of Set-Offs. Each Borrower hereby grants to Agent and each Bank
the right of set-off, to secure repayment of the Obligations, upon any and all
monies, securities or other Property of such Borrower and the proceeds
therefrom, now or hereafter held or received by or in transit to Agent or any
Bank or any of their respective agents, from or for the account of such
Borrower, whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or special) and credits
of such Borrower, and any and all claims of such Borrower against Agent or any
Bank at any time existing. In connection with any set off, counterclaim or
similar action by any Bank, such Bank agrees that it shall comply with, and
otherwise be bound by, the provisions of Section 2.13. Each Borrower, the Agent
and each Bank agree that any Person purchasing a participation from a Bank
pursuant to Section 10.7(b) shall, to the fullest extent permitted by Law and if
provided in the participation agreement between the Bank and the participant,
have all of the obligations of a Bank pursuant to the terms of this Section
10.5. Without limiting any Bank's right of set-off or counterclaim or otherwise,
the Agent shall have the right to charge any account of any Borrower maintained
with Agent for the amount of any payment due under any Loan Document or under
the Notes.
.5 Amendments and Waivers. All modifications, consents, amendments, waivers
and the like of any provision of any Loan Document, or consent to any departure
by any Borrower therefrom (collectively, the foregoing are referred to in this
Section 10.6 as a "modification"), shall be effective only if the same is in a
writing in form, scope and substance, and subject to conditions and
requirements, if any, acceptable to the Agent and the Required Banks, and if so
acceptable, is signed by such Borrower, the Agent and, at least, the Required
Banks; provided that no such modification shall, unless consented to in writing
by all the Banks, (i) modify the Commitment of any Bank or subject any Bank to
any additional funding obligation, (ii) reduce the principal amount or the
stated rate of interest on any Loan or reduce any fees hereunder (other than
fees payable solely to the Agent), (iii) extends the date fixed for any
principal reduction pursuant to Section 2.8 or Section 2.9, the payment of any
interest on any Loan, the payment of any Reimbursement Obligation or the payment
of any fees hereunder (other than fees payable solely to the Agent), the
maturity date of any of the Obligations, the Revolving Commitment Termination
Date or the Term Commitment Termination Date, (iv) release or impair the Lien in
any Property in favor of the Banks, (v) release any guarantor of the
Obligations, (vi) change the percentage of the Commitments or the aggregate
unpaid principal amount of the Notes, or the number of Banks which shall be
required for the Banks or any of them to take any action under this Section 10.6
or any other provision of the Loan Documents, or (vii) affects this Section 10.6
or Section 10.3 or Section 10.4 or modifies the definition of "Required Banks";
provided, further, that, no modification or waiver which modifies the rights,
duties or obligations of the Agent shall be effective without the prior written
consent of the Agent.
.6 Successors and Assigns; Participations; Assignments.
( ) The Loan Documents shall be binding upon, and inure to the benefit of
the parties thereto and their respective successors and assigns, except that (i)
neither any Borrower nor Parent Company may assign or transfer any of its rights
or obligations under any Loan Document without the prior written consent of the
Agent and all the Banks, and (ii) unless otherwise permitted under this Section
10.7, no Bank may transfer, pledge, assign, sell participations in or otherwise
convey or encumber its Commitments or Loans. Neither Borrower shall directly or
indirectly purchase or otherwise retire any Obligations owed to any Bank nor
will any Bank accept any offer to do so, unless each Bank shall have received
substantially the same offer with respect to the same pro rata share of the
Obligations owed to it. If any Borrower, directly or indirectly, at any time
purchases some but less than all of the Obligations owed to the Agent and the
Banks, then notwithstanding any provision herein to the contrary such purchaser
or purchasers shall not be entitled to any rights of the Agent or the Banks
under the Loan Documents (including voting rights or the right to participate in
or determine any modification (as that term is defined in Section 10.6)), unless
and until such Borrower has purchased all of the Obligations.
(a) Neither this Agreement nor any other Loan Document, nor any benefits
hereunder or thereunder, shall inure to or for the benefit of any Person that is
not a signatory party hereto, other than any of such Persons that are expressly
named or designated as indemnitees, releasees or exculpatees herein. All
conditions to make Revolving Loans or Term Loans hereunder, and all covenants,
warranties, representations, and other terms and provisions of, and applicable
to, each Borrower in each Loan Document are imposed solely and exclusively for
the benefit of the Agent and each Bank, and their respective successors and
assigns. No other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that no
Revolving Loans or Term Loans will be made in the absence of strict compliance
with any or all of such conditions; and no other Person shall, under any
circumstances, be deemed to be a beneficiary of such conditions, covenants,
warranties, representations and other terms and provisions. Any of such
conditions, and the breach of, or noncompliance with, any such covenants,
warranties, representations and other terms and provisions may be freely waived
in whole or in part by the Agent and the Banks (subject to applicable provisions
hereof) at any time if in its or their (as applicable) sole discretion it or
they (as applicable) deem it advisable to do so. No such conditions, covenants,
warranties, representations or other terms or provisions are intended to
release, or authorize or permit a breach by, any Borrower of any of its
obligations and requirements to any third Person, or any noncompliance
therewith, or to evidence the contractual interference therewith by the Agent
and the Banks.
(b) Subject to the provisions of this Section 10.7, any Bank may, in the
ordinary course of its business, with the consent of each Borrower and in
accordance with applicable Law, at any time sell to one or more Qualified Banks
(each a "Participant") a participating interests in all or any part of any
Loans, or in the Commitments, of such Bank. In the event of any such sale by a
Bank to a Participant, (i) such Bank shall remain a "Bank" for all purposes
under this Agreement, and the Participant shall not constitute a "Bank"
hereunder, (ii) such Bank's obligations under this Agreement shall remain
unchanged, (iii) such Bank shall remain solely responsible for the performance
of its obligations under this Agreement, (iv) such Bank shall remain the holder
of any such Note and the obligor to fund its respective Commitments for all
purposes under this Agreement, and (v) each Borrower, the Agent and the other
Banks shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement and the other Loan
Documents. Participants shall have no rights under this Agreement or any of the
Loan Documents, other than rights of set off (and attendant obligations)
expressly set forth herein. No Bank shall sell any participating interest under
which the Participant shall have, and no Participant shall have, any rights to
vote on any modification (as such term is defined in Section 10.6) of this
Agreement or any other Loan Document, and any agreement between any Bank and any
Participant granting any Participant any voting rights shall be void ab initio.
Except in the case of the sale of a participating interest to a Bank, the
relevant participation agreement shall not permit the Participant to transfer,
pledge, assign, sell participations in, or encumber its portion of, the
Commitments or the Loans.
(c) Subject to the provisions of this Section 10.7, with the prior consent
of each Borrower, and in accordance with applicable Law, any Bank may, in the
ordinary course of its business, assign to one or more Qualified Banks (each a
"Purchaser") a proportional part (not less than $5,000,000 of each of the Bank's
Commitments, unless such Bank is reducing its Commitments to zero) of its rights
and obligations under the Loan Documents, and such Purchaser shall (i) assume
all such rights and obligations, pursuant to an assignment and assumption
agreement and other necessary and related documents, all in form, scope and
substance satisfactory to the Agent, executed by such Purchaser, such transferor
Bank and the Agent, and (ii) pay to the Agent, for its account, a non-refundable
processing fee in the amount of $2,000. Upon the effectiveness of such
assignment and assumption agreement, such Purchaser shall for all purposes be a
Bank party to this Agreement and shall have all the rights and obligations of a
Bank under this Agreement to the same extent as if it were an original party
hereto with Commitments as set forth in the assignment agreement, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any Borrower, the
Banks or the Agent shall be required. Upon the consummation of any transfer to a
Purchaser pursuant to this Section 10.7(d), the transferor Bank, the Agent and
each Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to such Purchaser. Any sale pursuant to this Section 10.7(d)
shall be of an equal pro rata portion of each of the transferor Bank's
Commitments and Loans. A Purchaser shall be subject to all the provisions of
this Section 10.7 the same as if it were a Bank signatory hereto as of the
Closing Date.
(d) Each Borrower authorizes each Bank to disclose any and all financial
information in such Bank's possession concerning such Borrower which has been
delivered to such Bank by or on behalf of them pursuant to this Agreement or
which has been delivered to such Bank by them in connection with such Bank's
credit evaluation prior to entering into this Agreement (i) to any Participant
or Purchaser (each a "Transferee"), and (ii) with the prior consent of each
Borrower, to any prospective Transferee.
(e) No Transferee (including for this purpose a different Lending Office of
a Bank) shall be entitled to receive any greater payment under this Agreement
than the transferor Bank would have been entitled to receive with respect to the
rights assigned, unless such assignment is made with the prior written consent
of each Borrower or by reason of the provisions referred to in Section 9.5
regarding the designation of a different Lending Office under certain
circumstances.
(f) Notwithstanding any other provisions of this Section 10.7, no transfer
or assignment of the interests or obligations of any Bank hereunder or any grant
of participations therein shall be permitted if such transfer, assignment or
grant would require any Borrower to file a registration statement with the
Securities and Exchange Commission or to qualify the Loans under the "Blue Sky"
laws of any state.
(g) Each Bank initially party to this Agreement hereby represents, and each
person that becomes a Bank pursuant to an assignment permitted by Section
10.7(d) will, upon its becoming party to this Agreement, represent that it is a
Qualified Bank, and that it will make or acquire Loans only for its own account
in the ordinary course of its business; provided, however, that subject to the
preceding provisions of this Section 10.7, the disposition of any promissory
notes or other evidences of or interests in Obligations held by it shall at all
times be within its exclusive control.
.7 Maximum Interest Rate. It is the intent of the parties hereto that each
of the Agent and the Banks (collectively, the "Financing Parties"), and each
Borrower in the execution, delivery and performance of all Loan Documents, the
transactions provided for therein and contemplated thereby, and all matters
incidental and related thereto and arising therefrom, shall comply and conform
strictly with Applicable Law from time to time in effect, including without
limitation, Usury Laws. In furtherance thereof, the Financing Parties and each
Borrower stipulate and agree that none of the terms and provisions contained in,
or pertaining to, the Loan Documents shall ever be construed to create a
contract to pay for the use or forbearance or detention of money with interest
at a rate or in an amount in excess of the Maximum Rate or maximum amount of
interest permitted or allowed to be contracted for, charged, received, taken or
reserved under said Laws. For purposes of each Loan Document, (i) "interest"
shall include the aggregate of all amounts which constitute or are deemed to
constitute interest under the Laws of the State of Texas or, to the extent they
may apply, the Laws of the United States of America, that are contracted for,
chargeable, receivable (whether received or deemed to have been received), taken
or reserved under each such document, and (ii) all computations of the maximum
amount of interest permitted or allowed under Applicable Law will be made on the
basis of the actual number of days elapsed over a 365 or 366 day year, whichever
is applicable. Neither any Borrower nor any other person shall ever be required
to pay unearned interest on, or with respect to any of, the Loan Documents and
shall never be required to pay interest on, or with respect to any of, the Loan
Documents at a rate or in an amount in excess of the Maximum Rate or maximum
amount of interest that may be lawfully contracted for, charged, received, taken
or reserved under Applicable Law, and the provisions of this paragraph shall
control over all other provisions of the Loan Documents. If the effective rate
or amount of interest which would otherwise be payable under the Loan Documents
would exceed the Maximum Rate or maximum amount of interest any Financing Party
or any other holder of any Note or other Obligations is allowed by Applicable
Law to charge, contract for, take, reserve or receive, or in the event any
Financing Party or any holder of any Note or other Obligations shall charge,
contract for, take, reserve or receive monies that are deemed to constitute
interest which would, in the absence of this provision, increase the effective
rate or amount of interest payable under the Loan Documents to a rate or amount
in excess of that permitted or allowed to be charged, contracted for, taken,
reserved or received under Applicable Law then in effect, then the principal
amount of such Note or other Obligations or the amount of interest which would
otherwise be payable thereunder shall be payable at, or reduced to, as
applicable, the maximum amount allowed pursuant to the then applicable indicated
(weekly) rate ceiling referred to hereinabove at the definition of the term
Applicable Law, or if no such ceiling is then in effect, as authorized and
allowed under said Laws as now or hereafter construed by the courts having
jurisdiction, and all such monies so charged, contracted, for, received, taken
or reserved that are deemed to constitute interest in excess of the Maximum Rate
or maximum amount of interest permitted by Applicable Law shall be immediately
returned or credited to the account of such Borrower upon such determination.
.8 Governing Law; Submission to Jurisdiction. this agreement, each note and
each other loan document (including its and their validity, enforceability and
interpretation) shall be governed by and construed in accordance with the
internal laws of the state of texas (without regard to any conflicts of law
principles) and to the extent controlling, the federal laws of the usa; provided
that (i) the provision of chapter 15 of the texas credit code (vernon's texas
civil statutes, article 5069- 15.01 et seq.) are expressly declared by the
parties not to be applicable to any Loan document or the transactions
contemplated by any of them, and (ii) the laws of the state of texas and/or the
united states of america shall not limit the amount or rate of interest which
the holder of any note may contract for, charge, receive, collect, take, reserve
and/or apply if other applicable laws permit at any time a higher amount or
rate. the parties expressly acknowledge that (y) they intend that this agreement
and each other loan document shall be governed by the provisions (including,
without limitation, the right of the parties to select the governing law) of the
uniform commercial code and not by common law and (z) the state of texas bears a
reasonable relationship to this transaction and no other state has a materially
greater interest in this transaction than the state of texas. each borrower
hereby submits to the nonexclusive jurisdiction of the united states district
court for the western district of texas (san antonio division) and of any texas
state court sitting in bexar county, texas for purposes of all legal proceedings
arising out of or relating to the loan documents or the transactions
contemplated thereby.
.9 Counterparts; Effectiveness. This Agreement may be signed in any number
of counterparts, and by each of the parties hereto on separate counterparts, all
of which taken together shall constitute one and the same instrument. This
Agreement shall become effective when the Agent shall have received counterparts
hereof signed by all of the parties hereto.
.10 Independence of Covenants. Each covenant and agreement of each Borrower
under each Loan Document shall be given independent effect so that, if a
particular action or condition is prohibited or required by any covenant, the
fact that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of a Default or
Event of Default if such action is taken or condition exists.
.11 Survival. The obligations of each Borrower under Sections 2.12, 9.3,
10.3, 10.4, 10.8, 10.18 and 10.20 shall survive the termination of this
Agreement, the payment of all other Obligations, the termination of the
Commitments. The representations and warranties set forth in this Agreement and
each of the other Loan Documents shall survive the execution, delivery and
performance of this Agreement and the other Loan Documents and shall continue
until one year after the later of (i) the repayment of the Obligations and (ii)
the date on which the Banks' obligations to make Loans shall have fully and
finally terminated; and any investigation at any time by or on behalf of the
Agent or any Bank shall not diminish any of their respective rights to rely
thereon.
.12 Severability. In case any one or more of the provisions or part of a
provision contained in any Loan Document shall for any reason be held to be
invalid, illegal or unenforceable in any respect in any jurisdiction, such
invalidity, illegality or unenforceability shall be deemed not to affect any
other jurisdiction or any other provision or part of a provision of any Loan
Document, but such Loan Document shall be reformed and construed in such
jurisdiction as if such provision or part of a provision held to be invalid or
illegal or unenforceable had never been contained herein and such provision or
part reformed so that it would be valid, legal and enforceable in such
jurisdiction to the maximum extent possible.
.13 Governmental Regulation. Anything contained in any Loan Document to the
contrary notwithstanding, each Borrower acknowledges and agrees that neither the
Agent nor any Bank shall be obligated (i) to extend or fund any credit or other
financial accommodation to, or for the benefit of, any Borrower in an amount, or
(ii) to perform any other agreement or obligation to, or for the benefit of, any
Borrower in any regard, in contradiction or violation of any limitation or
prohibition provided by any applicable statute or regulation, or any
interpretation, ruling, decision, opinion or other pronouncement in respect
thereto (whether or not having the effect of law), which any of them believes is
applicable.
.14 No Control. None of the covenants, terms or other provisions of any
Loan Document or any document executed in conjunction therewith or related
thereto shall, or shall be deemed to, give the Agent or any Bank rights or
powers to exercise control over, or participate in the management of, the
business, affairs, operations or management of any Borrower or any of their
respective Property, including any right or power to influence or affect any of
its treatment, transportation, storage or disposal of toxic and/or hazardous
waste, substances or constituents. The relationship between each Borrower and
the other parties hereto created by this Agreement and each of the other Loan
Documents is only that of debtor-creditor (with or without security, as
applicable), and the Rights of such other parties hereunder and thereunder are
limited to the rights to receive payment of the Obligations and to exercise the
Rights provided herein and therein and in any other document executed in
conjunction herewith or therewith or related hereto or thereto.
.15 Renewals, Extensions, Rearrangements, Termination, Etc. With respect to
each and every (i) renewal, extension, increase and rearrangement, if any, of
the Obligations, or any part thereof, and (ii) amendment, modification,
supplement, restatement, waiver and consent, if any, of or to this Agreement or
any other Loan Document, all provisions of this Agreement and the other Loan
Documents shall apply with equal force and effect to each such event or
circumstance, except to the extent, if any, expressly set forth in connection
with each such event or circumstance; provided, however, the foregoing is not
intended in any regard to convey, acknowledge or otherwise evidence on the part
of the Agent or any Bank, expressly or by implication, any present consent or
agreement to any such event or circumstance occurring subsequent to the date
hereof, it being acknowledged and agreed that the entry by the parties hereto to
any such events or circumstances shall be evaluated as they occur and subject to
the other provisions of the Loan Documents, as same may be applicable. Except as
expressly provided therein, all Loan Documents shall remain in effect until full
and complete payment of all Obligations, termination of all commitments and
obligations of the Banks to make or extend any credit or financial accommodation
to, or for the benefit of, any Borrower, and receipt by the Agent and the Banks,
or any of the foregoing Persons, if so requested, of such written assurances of
each Borrower and any other designated Person or Persons that no other claims,
rights, defenses, liabilities or obligations exist in respect hereto or against
any of them or any other Indemnified Party.
.16 Conflicts. In the event of any inconsistency or conflict between the
terms of this Agreement and the terms of any other Loan Document, the terms of
this Agreement shall control.
.17 Confidentiality. Each Bank and the Agent agree to use reasonable
precautions to keep confidential, in accordance with customary procedures for
handling confidential information of this nature and in accordance with safe and
sound banking practices, any information supplied to it by any Borrower pursuant
to this Agreement, provided that nothing herein shall limit the disclosure of
any such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any Bank or the Agent, (iii) to bank
examiners, auditors or accountants of any Bank or the Agent, (iv) to any other
Bank or the Agent, (v) in connection with any litigation to which any Bank or
the Agent is a party, provided, further, that, unless specifically prohibited by
applicable Law or court order, each Bank and the Agent shall, at least 5
Business Days prior to disclosure thereof, notify such Borrower of any request
for disclosure of any such non-public information (A) by any governmental agency
or representative thereof (other than any such request in connection with an
examination of such Bank's financial condition by such governmental agency) or
(B) pursuant to legal process, or (vi) to any Transferee (or any prospective
Transferee, with the consent of each Borrower) so long as such Transferee (or
any such prospective Transferee) enters into a confidentiality agreement with
each Borrower and the Banks in form, scope and substance satisfactory to the
Banks and satisfactory to each Borrower, provided further that nothing shall
limit the disclosure of any such information which (a) is already in the
possession of the Agent or any Bank, provided that such information is not known
by the Agent or any Bank to be subject to a confidentiality agreement or
obligation of secrecy to any Company or any other Person, (b) becomes generally
available to the public other than as a result of a disclosure by the Agent or
any Bank or (c) becomes available to the Agent or any Bank on a non-confidential
basis from a source other than any Company, provided that such source is not
known by the Agent or any Bank to be bound by a confidentiality agreement with
other obligation of secrecy to any Company or any Person.
.18 Payments Set Aside. To the extent that any Borrower makes a payment or
payments to the Agent or any Bank, or any of them (or their Transferee), or the
Agent or any Bank, or any of them (or their Transferee) enforces any Lien or
exercises its right of setoff, and such payment or payments or the proceeds of
such enforcement or setoff, or any part thereof, are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other Person under any Debtor Laws or
equitable cause, then, to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all rights and remedies
therefor, shall be revived and shall continue in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred.
.19 Limitation of Liability; Commencement of Actions. To the extent not
prohibited by applicable Law, no claim may be made by or on behalf of any
Borrower or any other Person against the Agent or any Bank or any other
Indemnified Party for any special, indirect, consequential or punitive damages
in respect of any claim for breach of contract arising out of or related to the
transactions contemplated by any Loan Document, or any act, omission, or event
occurring in connection therewith (whether any of such is a claim based on
contract, tort, duty imposed by law or otherwise), and each Borrower hereby
waives, releases, and agrees not to sue, or commence or authorize the
commencement of any Litigation, upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
Further, any claim made by or on behalf of any Borrower or any other Person
against the Agent or any Bank or any other Indemnified Party shall be barred
unless it is asserted by the commencement of an action or proceeding in a court
as prescribed in Section 10.9 by the filing of a complaint therein within one
(1) year after the first act, occurrence or omission upon which such claim or
cause of action, or any part thereof, is based (i) is discovered or, (ii) in the
exercise of reasonable diligence, should have been discovered; and each Borrower
agrees that such period of time is a reasonable and sufficient time for it to
investigate and act upon any such claim or cause of action. The provisions of
this Section 10.20 shall survive any termination, howsoever occurring, of this
Agreement and each Loan Document and the full and final payment of the Notes and
the other Obligations.
.20 Review. Each Borrower and Parent Company acknowledges and represents to
the Agent and each Bank that Borrower has reviewed this Agreement and each other
Loan Document, has had the benefit of legal counsel of its own choice throughout
its review and negotiation of this Agreement and each other Loan Document, has
been afforded an opportunity to review and negotiate this Agreement and each
other Loan Document with the advice of its legal counsel, and is fully informed
and knowledgeable of the terms, provisions, rights and effects of this Agreement
and each other Loan Document. In furtherance of the foregoing, but not in
limitation thereof, each Borrower and Parent Company acknowledge and agree that
each Loan Document should be and shall be construed as if jointly drafted by the
parties hereto.
.21 This Agreement. this written loan agreement and all other loan
documents represent the final agreement among the parties with respect to the
subject matter covered hereby and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements by the parties. there are no
unwritten oral agreements between or among the parties.
[Signatures on Next Page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the day and year
first above written.
OPERATING SUBSIDIARY:
LANCER PARTNERSHIP, LTD.
By: LANCER CAPITAL CORP.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
MEXICO SUBSIDIARY:
NUEVA DISTRIBUIDORA LANCERMEX, S.A. de
C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President
PARENT COMPANY:
LANCER CORPORATION
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
BANKS:
THE FROST NATIONAL BANK
Individually and as the Agent
By: /s/ Suzanne Houser
Name: Suzanne Houser
Title: Vice President
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By: /s/ Dwight D. Erdbroegger
Name: Dwight D. Erdbroegger
Title: Vice President
<PAGE>
ANNEX A
THE FROST NATIONAL BANK
( ) Domestic Lending Office:
The Frost National Bank
100 West Houston Street
San Antonio, Texas 78205
(a) LIBOR Lending Office:
The Frost National Bank
100 West Houston Street
San Antonio, Texas 78205
(b) Term A Commitment: $ 6,100,000
(c) Term B Commitment: $ 1,400,000
(d) Revolving Commitment: $ 8,750,000
(e) Acquisition Commitment: $ 5,000,000
(f) Total Commitment: $21,250,000
(g) Information for Notices:
The Frost National Bank
100 West Houston Street
San Antonio, Texas 78205
Attention: Beth Weekly
Phone: (210) 220-5393
<PAGE>
Fax: (210) 220-4626
ANNEX A
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
(h) Domestic Lending Office:
The Boatmen's National Bank
of St. Louis
800 Market Street
St. Louis, Missouri 63166
(i) LIBOR Lending Office:
The Boatmen's National Bank
of St. Louis
800 Market Street
St. Louis, Missouri 63166
(j) Term A Commitment: $ 6,100,000
(k) Term B Commitment: $ 1,400,000
(l) Revolving Commitment: $ 8,750,000
(m) Acquisition Commitment: $ 5,000,000
(n) Total Commitment: $21,250,000
(o) Information for Notices:
The Boatmen's National Bank
of St. Louis
800 Market Street
St. Louis, Missouri 63166
Attention: Juan Cazorla
Phone: (314) 466-6695
Fax: (314) 466-6499
<PAGE>
ANNEX A
Address for Operating Subsidiary:
Lancer Partnership, Ltd.
235 West Turbo
San Antonio, Texas 78216
Attention: Chief Financial Officer
Phone: (210) 661-6964
Fax: (210) 666-2830
Address for Mexico Subsidiary:
Nueva Distribuidora Lancermex, S.A. de C.V.
c/o Lancer Corporation
235 West Turbo
San Antonio, Texas 78216
Attention: Chief Financial Officer
Phone: (210) 661-6964
Fax: (210) 666-2830
Address for Parent Company:
Lancer Corporation
235 West Turbo
San Antonio, Texas 78216
Attention: Chief Financial Officer
Phone: (210) 661-6964
Fax: (210) 666-2830
ANNEX B
CERTAIN DEFINITIONS
As used herein, the following terms shall have the respective meanings
assigned to them as follows:
"Acquisition" means, as to any Person, the following: (i) the purchase or
acquisition by such Person of all of (A) the capital stock of a corporation, (B)
the membership interests of a limited liability company or (C) the partnership
interests of a general or limited partnership, provided that each such
transaction results in such Person possessing the power to control the
management and policies of such corporation; or (ii) the purchase or acquisition
by any such Person of the assets of a going concern business (as defined in
accordance with GAAP).
"Acquisition Availability Period" means the period from and including the
Closing Date to July 15, 1998.
"Acquisition Documents" means all agreements, documents, instruments,
employee-related agreements and plans, deeds, bills of sale, assignments,
assumptions, financial statements and information, projections and other
acquisition-related documents received or delivered by any Person as part of the
closing of such Acquisition.
"Acquisition Borrowing" means a Borrowing for which the proceeds are any
part of the consideration for the Acquisition by Operating Subsidiary of an
Acquisition Target.
"Acquisition Commitment" means, as to any Bank and on each relevant date of
determination, the obligation of such Bank to make Acquisition Loans to
Operating Subsidiary in an aggregate principal amount at any one time
outstanding not exceeding the amount set forth opposite such Bank's name in
Annex A under the caption "Acquisition Commitment", as the same may be reduced
from time to time pursuant to this Agreement, including reductions attributable
to each Unavailable Commitment for the applicable quarterly period.
"Acquisition Commitment Termination Date" means the earlier to occur of (i)
July 15, 1998, and (ii) the date upon which the Acquisition Commitments of all
Banks have been terminated pursuant to the terms of this Agreement.
"Acquisition Loan" has the meaning set forth in Section 2.1(c).
"Acquisition Note" means a promissory note executed by Operating
Subsidiary, substantially in the form of Exhibit F hereto and otherwise in form
and substance satisfactory to the Agent, payable to the order of each Bank and
evidencing the obligation of Operating Subsidiary to repay Acquisition Loans
made to it by such Bank.
"Acquisition Target" means the Person or business which is the subject of
an Acquisition by Operating Subsidiary.
"Adjusted London Interbank Offered Rate" means, with respect to any
Interest Period, a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/16th of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the LIBOR Reserve
Percentage. The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the LIBOR Reserve
Percentage.
"Affiliate" means any Person who, directly or indirectly, controls, is
controlled by or is under common control with the relevant Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, means a member of the board of directors, a partner or an officer
of such Person, or any other Person with possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, through the ownership (of record, as trustee or by proxy) of Voting
Shares, through a management contract, or otherwise. Any Person owning or
controlling directly or indirectly 10% or more of the Voting Shares, or other
equity interests of another Person shall be deemed to be an Affiliate of such
Person.
"Affected Bank" has the meaning set forth in Section 9.2.
"Agent" has the meaning set forth in the introductory paragraph of this
Agreement and shall include, at all relevant times, each successor appointed in
the manner provided for in Article 8.
"Agent Indemnitees" has the meaning set forth in Section 8.2.
"Agreed Maximum Rate" means a per annum rate of interest equal to 5% plus
the Base Rate, which Agreed Maximum Rate shall apply only during a period while
there is no Maximum Rate applicable to the transactions contemplated hereby.
"Agreement", "hereof", "hereto", "herein", "hereunder" and words of similar
import means this Agreement as a whole, and not any particular article or
section.
"Agreement" means this Credit Agreement, as the same may be amended,
modified or supplemented from time to time.
"Applicable Law" means, with respect to each of the Agent and the Banks,
the law in effect, from time to time, applicable to this loan transaction and
each Loan Document which lawfully permits the contracting for, taking,
reserving, receiving, charging and/or collection of the maximum lawful,
non-usurious rate of interest by such Person on each Loan Document and the
transactions evidenced thereby, and arising in connection therewith (including,
but without limitation, the Notes), including laws of the State of Texas, to the
extent controlling, the laws of the United States of America, and laws of any
jurisdiction whose laws may be mandatorily applicable to such Person,
notwithstanding other provisions of any Loan Document or laws of the United
States of America applicable to such Person and the transaction contemplated
hereby, which would permit such Person to contract for, take, reserve, receive,
charge or collect a greater amount of interest then under such jurisdiction's
law. To the extent that Applicable Law is determined by reference to Article
1.04, Title 79, Revised Civil Statutes of Texas, 1925, as amended, the interest
ceiling applicable hereto and in connection herewith shall be the "indicated"
(weekly) rate ceiling as defined in said Article 1.04; provided however, it is
agreed that the terms hereof, including the rate, or index, formula or provision
of law used to compute the rate in connection herewith, will be subject to the
revisions as to current and future balances, from time to time, pursuant to
Applicable Law. IT IS FURTHER AGREED THAT IN NO EVENT SHALL CHAPTER 15 OF
SUBTITLE 3, TITLE 79, REVISED CIVIL STATUTES OF TEXAS, 1925, AS AMENDED, APPLY
TO ANY LOAN DOCUMENT OR THE TRANSACTIONS EVIDENCED THEREBY, OR ARISING IN
CONNECTION THEREWITH.
"Applicable Margin" means, with respect to any Loan, the following per
annum percentages determined by the Agent as follows:
(a) The Applicable Margin shall be equal to the percentage set forth below
based upon the ratio of Total Funded Debt to Consolidated EBITDA as of the end
of each Fiscal Quarter with respect to the four fiscal-quarter period ending on
as of the end of such Fiscal Quarter:
- ------------------------------------------------------------
Base Rate
LIBOR Spread Spread
- ------------------------------------------------------------
Ratio of Total Funded Debt to
Consolidated EBITDA
- ------------------------------------------------------------
Less than 1.00 to 1.00 0.75 0.00
- ------------------------------------------------------------
Greater than or equal to 1.00 to
1.00 but less than 2.00 to 1.00 1.125 0.00
- ------------------------------------------------------------
Greater than or equal to 2.00 to
1.00 but 1.50 0.00
less than 2.50 to 1.00
- ------------------------------------------------------------
Greater than or equal to 2.50 to 1.875 0.25
1.00
- ------------------------------------------------------------
(b) Each determination of the Applicable Margin determined pursuant to
subsection (a) above shall be determined by the Agent within 10 days after the
delivery to it of a certificate required by Section 5.1(e). Promptly upon each
such determination, the Agent shall notify each Borrower and each Bank of such
determination. Each change in the Applicable Margin shall remain effective until
the next such determination.
"Australian Subsidiary" means Glenn Pleass Holdings Pty. Ltd., an
Australian corporation.
"Authorized Officer" means (i) as to Operating Subsidiary, the president,
chief financial officer, assistant treasurer or controller of the General
Partner of Operating Subsidiary and (ii) as to any other Company, the president,
chief financial officer, assistant treasurer or controller of such Company.
"Bank" has the meaning set forth in the introductory paragraph of this
Agreement.
"Base Rate" means, as determined by the Agent on a daily basis, the higher
of (i) the variable rate per annum established by Frost from time to time as its
corporate base rate for short- term commercial loans to corporate borrowers
(which each Borrower acknowledges is not necessarily the lowest rate offered by
Frost), and (ii) the overnight cost of funds of Frost as determined solely by
Frost plus a margin of % per annum. Each change in the Base Rate shall become
effective, without prior notice to either Borrower, automatically as of the
opening of business on the date of such change in the Base Rate.
"Base Rate Loan" means a Loan to be made or continued as or converted into
such a designated Loan pursuant to the applicable Notice of Borrowing or
Continuation/Conversion Notice, as the case may be, which will bear interest at
the Base Rate.
"Borrowing" means a borrowing pursuant to a Notice of Borrowing or a
continuation or a conversion pursuant to Section 2.5 consisting, in each case,
of the same Type of Loan having in the case of LIBOR Loans, the same Interest
Period and made previously or being made concurrently by all of the Banks.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in San Antonio, Texas are authorized or required by law
to close.
"Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP.
"Change in Control" means, (i) Alfred A. Schroeder and George F. Schroeder,
collectively, shall cease to be the "beneficial owners" (as that term is used in
Rules 13d-3 and 13d- 5 under the Exchange Act) of at least 20% of the combined
voting power of the then outstanding voting securities of Parent Company
normally entitled to vote in elections of directors; (ii) any Person who, on the
Closing Date, is not the "beneficial owner" (as that term is used in Rules 13d-3
and 13d-5 under the Exchange Act) of at least 5% of the combined voting power of
the then outstanding voting securities of Parent Company normally entitled to
vote in elections of directors becomes the "beneficial owner" (as that term is
used in Rules 13d-3 and 13d-5 under the Exchange Act) of at least 35% of the
combined voting power of the then outstanding voting securities of Parent
Company normally entitled to vote in elections of directors; or (iii) during any
period of 12 consecutive months, Continuing Directors of Parent Company cease
for any reason (other than death or disability) to constitute a majority of the
Board of Directors of Parent Company then in office.
"Class" has the meaning set forth on Section 1.2(f).
"Closing Date" means July 15, 1996.
"Code" means the Internal Revenue Code of 1986, as heretofore and hereafter
amended, or any successor statute.
"Commitment" means a Term Commitment, Revolving Commitment or Acquisition
Commitment, and "Commitments" means two or more of the foregoing, as the context
may require.
"Companies" means Operating Subsidiary, Mexico Subsidiary, Parent Company,
and all of their respective present and future direct and indirect Subsidiaries,
and "Company" means any one of them.
"Consolidated Borrowing Base" means an amount equal to the sum of (i) 80%
of the Consolidated Eligible Accounts Receivable, plus (ii) 30% of the Eligible
Inventory of the Companies determined on a consolidated basis.
"Consolidated EBITDA" means, for any period, the net income (plus or minus
any extraordinary charges or credits) of the Companies determined on a
consolidated basis, plus (i) the aggregate amount of all income tax expense of
the Companies for such period, plus (ii) interest expense for such period
(including the interest expense with respect to the Loans and the interest
component of payments under Capital Lease Obligations) plus (iii) the aggregate
amount deducted in determining consolidated net income of the Companies for such
period for depreciation and amortization of Property.
"Consolidated Eligible Accounts Receivable" means the accounts receivable
of the Companies determined on a consolidated basis meeting all of the following
criteria as of the date of any determination: (a) the account receivable shall
be due and payable not more than one hundred eighty (180) days from the date of
the invoice or agreement evidencing the same; (b) the account receivable shall
be billed promptly after the shipment of the goods or performance of the
services giving rise to the account receivable and shall not remain unpaid for
more than 60 days after such account receivable is due and payable; (c) the
account receivable shall arise from the performance by the obligee of the
account receivable of services which have been fully and satisfactorily
performed, or from the absolute sale by the obligee of the account receivable of
goods (i) in which such obligee had sole and complete ownership, and (ii) which
have been shipped and delivered to the account debtor, evidencing which such
obligee has possession of shipping and delivery receipts; (d) the account
receivable is not subject to set-off, counterclaim, defense, allowance or
adjustment other than discounts for prompt payment shown on the invoice, or to
dispute, objection or complaint by the account debtor concerning its liability
on the account receivable, and the goods, the sale of which gave rise to the
account receivable, have not been refunded, rejected, lost or damaged; (e) the
account receivable shall arise in the ordinary course of business of the obligee
thereof, and no notice of bankruptcy or insolvency of the account debtor, nor
any notice of such account debtor's inability to pay its debts as they become
due, has been received by the obligee of such account receivable; (f) the
account debtor is not a director, officer, employee or Affiliate of any Company;
and (g) the account debtor's obligation to pay the account receivable is not
conditional upon such account debtor's approval or the account receivable is not
subject to any repurchase obligation or return right. Notwithstanding the
foregoing, Consolidated Eligible Accounts Receivable shall not include (A) the
accounts receivable of any Mexico Company or (B) the amount of all or any part
of any account receivable to the extent that the inclusion of all or such part
of the amount of such account receivable would cause the aggregate amount of all
accounts receivable which are otherwise eligible under this provision owed by
any account debtor, other than The Coca-Cola Company and any of its wholly-
owned Subsidiaries, or any other significant customer of Borrower (an "Anchor
Bottler") whose status as an Anchor Bottler has received the prior written
approval of Banks (which Anchor Bottlers initially include those customers
listed on Exhibit P attached hereto and made a part hereof and which exhibit
shall be revised from time-to-time), to the Companies determined on a
consolidated basis to exceed 20% of the amount equal to (x) the aggregate amount
of all accounts receivable held by the Companies that meet the criteria set out
in items (a), (b), (c), (d), (e), (f) and (g) above; less (y) the accounts
receivable held by the Companies that are to be excluded by item (A) above.
"Contested Claim" means any Tax, Indebtedness or other claim or liability,
(i) the validity or amount of which is being diligently contested in good faith
by any Company by appropriate proceedings being diligently prosecuted, (ii) for
which adequate reserves, if required by GAAP, have been established by such
Company and (iii) with respect to which any right to execute upon or sell any
Property or assets of any Company has not matured or has been and continues to
be effectively enjoined, superseded or stayed.
"Continuation/Conversion Notice" has the meaning set forth in Section
2.5(a).
"Continuing Directors" means any member of the Board of Directors of Parent
Company on the date of this Agreement, any director elected since the date
thereof in any annual meeting of the shareholders upon the recommendation of the
Board of Directors of Parent Company or any other member of the Board of
Directors of Parent Company who will be recommended or elected to succeed a
Continuing Director by a majority of Continuing Directors who are then members
of the Board of Directors of Parent Company.
"Credit Event" means the making or continuation of, or conversion into, any
Loan.
"Debtor Laws" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization or
similar Laws, or general equitable principles, from time to time in effect,
affecting the Rights of creditors generally or providing for relief to debtors.
"Default" means any of the events specified in Section 7.1, regardless of
whether there shall have occurred any passage of time or giving of notice or
both that would be necessary in order to constitute such event an Event of
Default.
"Default Rate" means, at the time in question, the lesser of (i) the Base
Rate, as in effect for each day during such time, plus 4% and (ii) the Maximum
Rate.
"Dividends" means, in respect of any corporation, limited liability company
or similar Person, cash distributions or any other distributions (whether in
cash, Property or obligations) on, or in respect of, any class of capital stock
of such entity, except for distribution made solely in shares of common stock.
"DOJ" means the United States Department of Justice.
"Domestic Lending Office" means, with respect to any Bank, the office of
such Bank specified as its "Domestic Lending Office" opposite its name on Annex
A attached hereto and made a part hereof or such other office of such Bank as
such Bank may from time to time specify to each Borrower and the Agent.
"EBIT" means, for any period, the net income (plus or minus any
extraordinary charges or credits) of any Company plus (i) the aggregate amount
of all income tax expense of such Company for such period plus (ii) the interest
expense for such period (including the interest expense for such period with
respect to the Loans and the interest component of payments under Capital Lease
Obligations.)
"Eligible Inventory" means, with respect to each Company, inventory of such
Company meeting all of the following criteria as of the date of determination:
(a) the inventory is not owned by any Mexico Company; (b) there are no Liens
with respect to the inventory except Permitted Liens other than described in
clauses (iii) and (iv) in the definition of "Permitted Liens" and such inventory
is in the possession of such Company or it bailee and is not evidenced by any
negotiable or non-negotiable document of title; (c) the inventory has not been
refunded, repossessed or damaged; (d) the inventory has not become obsolete and
is (i) saleable for the use for which it was manufactured or purchased or (ii)
usable in the manufacturing process for the purpose for which it was
manufactured or purchased; and (e) the inventory is not held on consignment or
subject to a buyer's rights. For purposes of determining the value of Eligible
Inventory to be included in the Consolidated Borrowing Base, the value thereof
shall be equal to the actual net cost of the inventory to such Company.
"Environmental Complaint" means any third party (including private parties,
governmental agencies, and employees) action, lawsuit, claim, demand, event,
condition, report, investigation or proceeding which seeks to impose liability
for (i) noise; (ii) pollution or contamination of the air, surface water,
groundwater, or land; (iii) generation, handling, treatment, storage, disposal,
or transportation of Hazardous Materials; (iv) exposure to Hazardous Materials;
or (v) non-compliance with any Environmental Law.
"Environmental Law" shall mean any federal, state, or local law, statute,
ordinance, or regulation pertaining to health, industrial hygiene, or the
environmental conditions, including without limitation, (i) the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments of 1984, as now or hereafter amended (42 U.S.C. 6901 et seq.); (ii)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, as
now or hereafter amended (42 U.S.C. 9601 et seq.); (iii) the Clean Water Act, as
now or hereafter amended (33 U.S.C. 1251 et seq.); (iv) the Toxic Substances
Control Act, as now or hereafter amended (15 U.S.C. 2601 et seq.); (v) the Clean
Air Act, as now or hereafter amended (42 U.S.C. 7401 et seq.), Texas Solid Waste
Disposal Act (V.T.C.A. Health and Safety Code 361.001 et seq.) and the Texas
Water Code (V.T.C.A. Water Code 26.001-26.407); (vi) all regulations promulgated
under any of the foregoing; (vii) any local, state or foreign law, statute,
regulation or ordinance analogous to any of the foregoing; and (viii) any other
federal, state, local, or foreign law (including any common law), statute,
regulation, or ordinance, regulating, prohibiting, or otherwise restricting the
placement, discharge, release, threatened release, generation, treatment, or
disposal upon or into any environmental media of any substance, pollutant, or
waste which is now or hereafter classified or considered to be hazardous or
toxic to human health or the environment.
"Environmental Liability" means any claim, demand, obligation, cause of
action, accusation, allegation, order, violation, damage, injury, judgment,
penalty or fine, cost of enforcement, cost of remedial action or any other cost
or expense whatsoever, including reasonable attorneys' fees and disbursements,
resulting from the violation or alleged violation of any Environmental Law, the
storage, handling, transportation or release of Hazardous Materials, or the
imposition of any Environmental Lien.
"Environmental Lien" means a Lien in favor of a Governmental Authority or
other Person (i) for any liability under an Environmental Law or (ii) for
damages arising from or costs incurred by such Governmental Authority or other
person in response to a release or threatened release of hazardous or toxic
waste, substance or constituent into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all presently effective and future regulations issued
pursuant thereto.
"Event of Default" has the meaning set forth in Section 7.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FCB" means F.C.B. Engineering, Inc.
"FCB Acquisition" means the proposed Acquisition by Operating Subsidiary of
FCB, the general terms of which Acquisition are set forth in a Letter of Intent
dated June 17, 1996 between Operating Subsidiary and Jimmy I. Frank and Nita T.
Frank.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal fund transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, on the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Financing Parties" has the meaning set forth in Section 10.8.
"Fiscal Month", "Fiscal Quarter" and "Fiscal Year" refer to the fiscal
month, fiscal quarter and fiscal year, respectively, of Parent Company and each
of its Subsidiaries.
"Frost" means The Frost National Bank, a national banking association.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"General Partner" means Lancer Capital Corp., a Delaware corporation.
"Governmental Authority" means, whether now or hereafter constituted and/or
existing, (i) any government or nation, (ii) any state, province, commonwealth,
territory, possession, county, parish, town, township, city or municipality,
(iii) any other Person or entity that exercises executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
government, (iv) any political or other authority, district or subdivision of
any of the Persons or entities referred to in the preceding clauses (i), (ii)
and (iii), (v) any court, tribunal, panel, board, commission, department,
agency, bureau, examiner or instrumentality of the Persons or entities referred
to in the preceding clauses (i), (ii), (iii) and (iv), and (vi) any arbitrator,
mediator or arbitration and/or mediation panel, board or the like, whether
impaneled pursuant to Laws, by contract or otherwise.
"Guarantee" means, directly or indirectly (without duplication): (i)
guarantee or guaranty, as applicable, an endorsement, an assumption, or an
undertaking, an understanding or a contingent agreement or other agreement
(hereinafter in this definition, the foregoing shall be collectively referred to
as "any agreement", or "any other agreement", as the context may require) to
purchase or acquire, or to furnish funds or Property for the payment or
maintenance of, or otherwise to be or become liable (contingently, irrevocably,
absolutely or otherwise) under or with respect to, or to perform or cause to be
performed, the Indebtedness (or any Property constituting security therefor),
other obligations and liabilities, net worth, capital requirements, working
capital, earnings, financial condition or position, or financial covenants of
any Person, or the redemption or repurchase obligations of any Person's capital
stock, warrants or stock or other equity, partnership or similar capital
equivalents, or any class or nature; (ii) a guarantee of, or any other agreement
for, the payment of dividends or other distributions upon the stock, equity,
partnership or other interests of any Person; (iii) any agreement to purchase,
sell or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of its
obligations or Indebtedness, or to provide assurances thereof to any creditor or
other obligee of a debtor; (iv) any agreement to assure a creditor or other
obligee against any loss, including but without limitation, causing a bank or
other Person to issue a letter of credit or other similar instrument for the
benefit of another Person; or (v) any agreement commonly known as or referred to
as a "comfort" or "keepwell" letter or agreement; provided however, in no event
shall "Guarantee" include endorsements for collection or deposit made in the
ordinary course of business. The terms "Guarantee" and "Guaranteed" used as a
verb shall have a correlative meaning.
"Governing Documents" means (i) as to any corporation, the articles of
incorporation and bylaws of such corporation (including any amendments or
modifications), (ii) as to any limited liability company, the articles of
organization and regulations of such limited liability company (including any
amendments or modifications), (iii) as to any limited partnership, the
certificate of limited partnership and the limited partnership agreement of such
limited partnership (including any amendments or modifications) and (iv) as to
any general partnership, the partnership agreement of such partnership
(including any amendments or modifications).
"Hazardous Discharge" means the happening of any event, status or
circumstance involving the use, storage, spill, transportation, removal,
disposal, discharge or cleanup of any Hazardous Material.
"Hazardous Material" means (i) any hazardous substance defined in the
Comprehensive Response, Compensation and Liability Act 42 U.S.C. Section 9601 et
seq.; (ii) any substance the presence of which on any Property requires
reporting or remediation under any Environmental Law; (iii) gasoline, diesel
fuel, fuel oil, motor oil and any other petroleum hydrocarbons, including any
additives or other byproducts associated therewith; and (iv) asbestos and
asbestos-containing materials in any form.
"HSR Act" means the Hart-Scott Rodina Antitrust Improvements Act of 1976,
as amended and the rules and regulations thereunder.
"Indebtedness" means, for any Person (without duplication), any liability,
indebtedness or obligation, contingent or otherwise, of such Person: (i) for
borrowed money (whether by loan or the issuance and sale of debt securities or
instruments or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (ii) evidenced by bonds, notes, debentures or similar
instruments; (iii) representing the deferred purchase or acquisition price of
Property or services, including trade accounts payable; (iv) with respect to
amounts or obligations Guaranteed or Indebtedness of another secured by a Lien
on the Property of such Person, whether or not the respective indebtedness or
obligations so secured have been assumed by such Person; (v) with respect to
reimbursement of, or payment in respect to, letters of credit, bankers'
acceptances, surety or other bonds or similar instruments issued or credit
transactions; (vi) for any Guarantee of such Person; (vii) under, or in respect
of, an interest rate swap, cap or collar agreement or similar arrangement
providing for the transfer or mitigation of interest or currency risks generally
or under specific contingencies; (viii) under leases serving as a source of
financing or otherwise capitalized in accordance with GAAP; (ix) under sales or
other title retention agreements; (x) under, or in respect of, any indemnity and
similar obligations, howsoever arising, including, indemnities incurred or
arising in connection with the purchase, sale or use of Property, the scope of
which indemnity is unlimited, unqualified or unquantifiable, or exceeds the fair
market value of the Property being purchased, sold or used, or pertains to
Environmental Liability or to the negligence, actions, omissions or other
activities of any Person; (xi) under, or in respect of, any partnership, joint
venture or similar entity in which such Person is a general partner, joint
venturer or similar participant; (xii) in respect of unfunded vested benefits
under any Plan; (xiii) to redeem, repurchase, retire or otherwise acquire any
shares of capital stock, warrants, stock equivalents or other evidences of
equity of any class or nature of such person, or to set apart any money or other
Property for a defeasance, sinking or analogous fund for any Dividend or
distribution thereon, or for any redemption, repurchase, retirement or other
acquisition thereof; or (xiv) which would under GAAP be shown on such Person's
balance sheet as a liability.
"Interest Period" means with respect to each Borrowing consisting of a
LIBOR Loan, the period commencing on the date of such Borrowing and ending one,
three or six months thereafter, as each Borrower may elect in the applicable
Notice of Borrowing or Continuation/Conversion Notice; provided that:
(i) any Interest Period which would otherwise end on a day that is not a
LIBOR Business Day shall be extended to the next succeeding LIBOR Business Day
unless such LIBOR Business Day falls in another calendar month, in which case
such Interest Period shall end on the immediately preceding LIBOR Business Day;
(ii) any Interest Period which 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, subject to
clause (iii) below, end on the last LIBOR Business Day of a calendar month; and
(iii) no Interest Period applicable to a Term Loan shall be elected that
extends beyond the Term Commitment Termination Date, and no Interest Period
applicable to a Revolving Loan shall be elected that extends beyond the
Revolving Commitment Termination Date.
"Investment" in any Person means any investment, whether by means of share
purchase, loan, advance, extension of credit, capital contribution or otherwise,
in or to such Person, the guarantee of any Indebtedness of such Person or the
subordination of any claim against such Person to other Indebtedness of such
Person.
"Investment Subsidiary" means Lancer Investment Corp., a Delaware
corporation.
"Judgment" means any judgment, order, subpoena, levy, abstract, mandamus,
decree, injunction, restraining order or other directive, demand or the like, of
any Governmental Authority, howsoever issued by it (whether pursuant to its
equity rights or powers, or otherwise).
"Laws" means all applicable statutes, laws, ordinances, regulations, rules,
directives, guidelines, interpretations, rulings, orders, requirements,
determinations, judgments, writs, injunctions, decrees and other similar
pronouncements or directives of any Governmental Authority, and "Law" means each
of the foregoing.
"Leasing Subsidiary" means Lan-Leasing, Inc., a Delaware corporation.
"Legal Rights" means, with respect to a Person, and to such Person's
business, operations and Property, all licenses, permits, certificates
franchises, authorizations, consents, approvals, patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, copyrights,
service marks, applications, registrations and other similar rights, privileges
and authorities, used or useful and required of such Person and/or for such
Person to own and/or operate its business and Property.
"Lending Office" means, as to any Bank, its Domestic Lending Office or its
LIBOR Lending Office, as the context may require.
"LIBOR Business Day" means any Business Day on which commercial banks are
open for international business in London.
"LIBOR Lending Office" means, as to any Bank, its office, branch or
Affiliate identified in Annex A as its LIBOR Lending Office or such other
office, branch or Affiliate of such Bank as it may hereafter designate as its
LIBOR Lending Office by notice to each Borrower and the Agent.
"LIBOR Loan" means a Loan to be made or continued as or converted into such
a designated Loan pursuant to the applicable Notice of Borrowing or
Continuation/Conversion Notice, as the case may be, which will bear interest at
the Adjusted London Interbank Offered Rate.
"LIBOR Rate Borrowing" means a Borrowing consisting of a LIBOR Loan.
"LIBOR Reserve Percentage" means, for any day, that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement for a member bank of the Federal Reserve System in
New York with deposits exceeding five billion dollars in respect of
"Eurocurrency Liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on LIBOR Loans
is determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to United States
residents).
"Lien" means any lien, mortgage, tax lien, pledge, encumbrance,
Environmental Lien, easement, restriction, right-of-way, charge or adverse claim
affecting title or use of, or resulting in an encumbrance against, Property of a
Person, or a security interest, conditional sale or title retention arrangement,
or any other interest in Property designed to secure the repayment of a
liability or the performance of an obligation or agreement, whether arising by
agreement, under any Law or otherwise, including, without limitation, any lease
in the nature thereof, any option, right of first refusal or other similar
agreement to sell, and any filing of, or agreement to give, any financing
statement under the UCC or equivalent statute in any jurisdiction or any other
instrument that evidences the creation, perfection, continuation, notice and/or
other aspect of a present or future Lien or asserted Lien.
"Litigation" means any proceeding, (judicial, arbitral, mediation or
otherwise) claim, complaint, demand, lawsuit, hearing, inquiry and/or
investigation conducted or threatened by or before any Governmental Authority.
"Loan" means any advance by the Banks to any Borrower pursuant to their
Revolving Commitments, their Acquisition Commitments and their Term Commitments.
"Loan Parties" means (i) Operating Subsidiary, (ii) Mexico Subsidiary,
(iii) Parent Company and (iv) each Subsidiary of Parent Company which is now or
hereafter becomes a party to a Guaranty Agreement described on Annex C
(including Subsidiaries of Parent Company that may hereafter become a party
thereto in connection with Acquisitions permitted under the terms of this
Agreement), and "Loan Party" means any one of them.
"Loan Documents" means this Agreement, each Note and any and all other
agreements (including, without limitation, pledge agreements and guaranty
agreements), documents, promissory notes, instruments, reports, opinions,
requests, certificates, notices, filings and all other documents, instruments,
agreements (including, without limitation, guaranty agreements) and writings,
now or hereafter executed or delivered pursuant to, or in connection with, this
Agreement, or the transactions provided for herein or contemplated hereby, or in
or by any other Loan Document, each of the foregoing being in form, scope and
substance satisfactory to the Banks.
"London Interbank Offered Rate" means, with respect to any Interest Period,
the rate per annum (rounded upwards, if necessary, to the next higher 1/16 of
1%) shown on page 3750 of the Dow Jones & Company Telerate screen or any
successor page as the composite offered rate for London interbank deposits with
a period equal to such Interest Period two LIBOR Business Days before the first
day of such Interest Period. In the event that the London Interbank Offered Rate
is no longer published or reported as specified above, then the parties shall
use the rate of interest published in the Wall Street Journal (Southwest
Edition) in the "Money Rates" section as the "London Interbank Offered Rates
(LIBOR)" for a period of time equal or comparable to the applicable Interest
Period, as of two Business Days preceding the date of Borrowing, in which case
each Borrower agrees it will no longer have the option to choose 60 days as an
Interest Period with respect thereto.
"Material Adverse Effect" means any circumstance or event which,
individually or in the aggregate with other circumstances or events, (i) could
have any material adverse effect whatsoever upon the validity, performance,
perfection or enforceability of any Loan Documents, or (ii) could be material
and adverse to the financial condition, business, operations or prospects of the
Companies, taken as a whole, or the Property of the Companies, taken as a whole,
(iii) could impair the ability of any Company to fulfill promptly and completely
its obligations under any of the Loan Documents to which is a party, (iv) could
result in or cause a Default or an Event of Default, or (v) could have any
material and adverse effect whatsoever upon the business relationship between
The Coca-Cola Company and any Company.
"Maximum Rate" means, with respect to each of the Agent and the Banks and
on any and with respect to each day, the maximum lawful non-usurious rate of
interest (if any) which, under Applicable Law, it is permitted or authorized to
contract for, charge, collect, receive, take or reserve from any Borrower on its
Notes or other Obligations owed or owing to it, as the case may be, from time to
time in effect, including changes in such Maximum Rate attributable to changes
under Applicable Law which permit a greater rate of interest to be contracted
for, charged, collected, received, taken or reserved as of the effective dates
of the respective changes.
"Mexico Companies" means Mexico Subsidiary, Servicios Lancermex, S.A. de
C.V. and Industrias Lancermex, S.A. de C.V. and "Mexico Company" means any one
of them.
"Negative Pledge" means any term, provision, agreement, contract or
undertaking that, directly or indirectly, (i) precludes or restricts, or
purports to preclude or restrict, the imposition or voluntary creation of, a
Lien on Property, or (ii) upon the imposition or voluntary creation of a Lien on
Property, requires the owner, lessee or other interest holder therein or thereto
to incur an obligation (payment, performance, creation of a Lien or otherwise)
to a Person, or requires such owner, lessee or other interest holder to provide,
or cause to be provided, any assurances or security to a Person, which
assurances and security did not theretofore exist and/or was not theretofore
required, whether such assurances or security consist of collateral, guaranties,
modifications or supplements to then existing agreements, new agreements, or
otherwise.
"New Company" means any Company that has not yet commenced operations.
"Non-US Company" has the meaning set forth in Section 5.1(a).
"Note" means a Term Note or a Revolving Note, and "Notes" means the Term
Notes, the Revolving Notes or the Acquisition Notes or all of them, and as
otherwise provided in Section 2.3(b).
"Notice of Borrowing" has the meaning set forth in Section 2.2(a).
"Notice of Default" has the meaning set forth in Section 8.3.
"Obligations" means all obligations, indebtedness, fees, expenses, costs,
indemnities and other indemnification obligations, and liabilities of any
Borrower to the Agent and the Banks, now existing or hereafter arising, whether
direct or indirect, related or unrelated, fixed or contingent, liquidated or
unliquidated, joint, several or joint or several, or otherwise, and all
renewals, extensions, increases, refinancings, rearrangements or modifications
thereof, or any part thereof, arising pursuant to, or in connection with, this
Agreement or any other Loan Document, and all interest accruing thereon
(including, without limitation, interest which, but for the filing of a petition
in bankruptcy with respect to such Borrower, would accrue on such Obligations),
and attorneys' fees incurred in the enforcement or collection thereof.
"Other Taxes" has the meaning set forth in Section 2.14.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor to
all or any of the Pension Benefit Guaranty Corporation's functions under ERISA.
"Participant" has the meaning set forth in Section 10.6(b).
"Permitted Acquisition" has the meaning set forth in Section 6.11.
"Permitted Indebtedness" has the meaning stated in Section 6.2.
"Permitted Liens" means: (i) Liens imposed by mandatory provisions of Law
such as carrier's, materialmen's, mechanics', warehousemen's, landlord's and
other like Liens arising in the ordinary course of business, securing
Indebtedness not yet due, (ii) Liens for Taxes, if the same are not yet due and
payable or qualify as a Contested Claim, (iii) encumbrances consisting of minor
zoning restrictions, easements or other restrictions on the use of real
Property, provided that such items do not or will not impair or interfere with
the use of such Property for the purposes intended or the value thereof, and
(iv) pledges or deposits in connection with or to secure worker's compensation,
unemployment insurance, pensions or other employee benefits, or public or
statutory obligations.
"Person" includes any individual, corporation, company, joint venture,
general or limited partnership, trust, organization, association, limited
liability partnership, limited liability company or other entity (whether or not
incorporated), or Governmental Authority.
"Plan" means any plan subject to Title IV of ERISA and maintained at any
time since January 1, 1986 for employees of any Company or of any member of a
"controlled group of corporations" or "trade or business," as such terms are
defined in Section 414(b) or (c) of the Code, of which any Company is a member,
or any plan subject to Title IV of ERISA to which any Company is required to
contribute, or has been required to contribute at any time since January 1,
1986, on behalf of its employees.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible (including, without
limitation, Legal Rights).
"Purchaser" has the meaning set forth in Section 10.7(c).
"Qualified Bank" means any commercial bank located in the USA, which is
organized under the laws of the USA or any state thereof, insures its deposits
with the Federal Deposit Insurance Corporation (or any successor) and has
capital, surplus and undivided profits aggregating at least $100,000,000 as of
the date of such commercial bank's most recent financial report.
"Quarterly Date" means each September 30, December 31, March 31, and June
30.
"Regulation D", "Regulation G", "Regulation T", "Regulation U" and
"Regulation X" mean Regulation D, G, T, U or X, as the case may be, of the Board
of Governors of the Federal Reserve System, or any successor or other regulation
hereafter promulgated by said Board to replace the prior Regulation D, G, T, U
or X and having substantially the same function.
"Required Banks" means, as of the date of any determination, Banks that
hold at least 66 2/3% of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing 66 2/3% of the sum of the aggregate unpaid
principal amount of the Loans.
"Revolving Availability Period" means the period from and including the
Closing Date to but not including the Revolving Commitment Termination Date.
"Revolving Commitment" means, as to any Bank and on each relevant date of
determination, the obligation of such Bank to make Revolving Loans to Operating
Subsidiary in an aggregate principal amount at any one time outstanding not
exceeding the amount set forth opposite such Bank's name in Annex A under the
caption "Revolving Commitment", as the same may be reduced from time to time
pursuant to this Agreement, including reductions attributable to each
Unavailable Commitment for the applicable quarterly period.
"Revolving Commitment Termination Date" means the date upon which the
Revolving Commitments of all Banks have been terminated pursuant to the terms of
this Agreement.
"Revolving Loan" has the meaning set forth in Section 2.1(b).
"Revolving Note" means a promissory note executed by Operating Subsidiary,
substantially in the form of Exhibit E hereto and otherwise in form and
substance satisfactory to the Agent, payable to the order of each Bank and
evidencing the obligation of Operating Subsidiary to repay Revolving Loans made
to it by such Bank.
"Rights" means rights, remedies, powers and privileges.
"Subsidiary" means, for any Person, any corporation or other entity
(including, without limitation, any partnership or joint venture) (i) of which
at least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors or other Persons having similar powers and/or performing similar
functions of such corporation or other entity (irrespective of whether or not at
any time securities or other ownership interests of any class or classes of such
corporation or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person or one or more Subsidiaries of such Person, or (ii) of
which such Person is a general partner, joint venturer or similar capacity.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties or other charges of any nature whatsoever from time to time or at any
time imposed by any Law or any Governmental Authority, whether on income,
profits, Property, sales, use, excise, franchises, capital, ownership,
operations or otherwise, excluding (i) in the case of each Bank and the Agent,
taxes imposed on its income and franchise taxes imposed on it by the
jurisdiction under the laws of which such Bank or the Agent, as the case may be,
is organized or any political subdivision of the jurisdiction, and (ii) with
respect to each Bank, taxes imposed on its income and franchise taxes imposed on
it by the jurisdiction of such Bank's applicable Lending Office or any political
subdivision of such jurisdiction.
"Temporary Cash Investment" means any Investment in (i) direct obligations
of the USA or any agency thereof, or obligations fully guaranteed by the USA or
any agency thereof (including indirect investments in such obligations through
repurchase agreements with the Agent or any Qualified Bank), provided that such
obligations mature within 30 days of the date of acquisition thereof, (ii)
commercial paper rated in the highest grade by two or more national credit
rating agencies and maturing not more than 30 days from the date of acquisition
thereof, (iii) time deposits with, and certificates of deposit and banker's
acceptances issued by, the Agent, (iv) commercial paper maturing not more than
30 days from the acquisition thereof issued by any Bank (or the parent of any
Bank) and (v) Eurodollar investments made available through any Bank.
"Term Availability Period" means the period from and including July 15,
1996 to but not including the Term Commitment Termination Date.
"Term A Commitment" means, as to any Bank and on each relevant date of
determination, the obligation of such Bank to make Term A Loans to Operating
Subsidiary in an aggregate principal amount at any one time outstanding not
exceeding the amount set forth opposite such Bank's name in Annex A under the
caption "Term A Commitment", as the same may be reduced from time to time
pursuant to this Agreement, including reductions attributable to each
Unavailable Commitment for the applicable quarterly period.
"Term B Commitment" means, as to any Bank and on each relevant date of
determination, the obligation of such Bank to make Term B Loans to Mexico
Subsidiary in an aggregate principal amount at any one time outstanding not
exceeding the amount set forth opposite such Bank's name in Annex A under the
caption "Term B Commitment", as the same may be reduced from time to time
pursuant to this Agreement, including reductions attributable to each
Unavailable Commitment for the applicable quarterly period.
"Term Commitment" means the Term A Commitment and the Term B Commitment.
"Term Commitment Termination Date" means the earlier to occur of (i) July
15, 1998, and (ii) the date upon which the Term Commitments of all Banks have
been terminated pursuant to the terms of this Agreement.
"Term A Loan" has the meaning set forth in Section 2.1(a)(1).
"Term B Loan" has the meaning set forth in Section 2.1(a)(2).
"Term Loans" means the Term A Loans and the Term B Loans.
"Term A Note" means a promissory note executed by Operating Subsidiary
substantially in the form of Exhibit C hereto and otherwise in form and
substance satisfactory to the Agent, payable to the order of each Bank and
evidencing the obligation of Operating Subsidiary to repay Term A Loans made to
it by such Bank.
"Term B Note" means a promissory note executed by Mexico Subsidiary
substantially in the form of Exhibit D hereto and otherwise in form and
substance satisfactory to the Agent, payable to the order of each Bank and
evidencing the obligation of Mexico Subsidiary to repay Term B Loans made to it
by such Bank.
"Term Notes" means the Term A Notes and the Term B Notes.
"Total Funded Debt" means, as of any time, the outstanding principal
balance of (i) the Notes plus (ii) any other borrowed- money Indebtedness of any
Company determined on a consolidated basis.
"Transferee" has the meaning set forth in Section 10.7(d).
"Type" has the meaning set forth in Section 1.2(f).
"UCC" means the Uniform Commercial Code of the State of Texas and of any
other state to the extent Texas Law requires application of the same.
"USA" means the United States of America.
"US Companies" means Parent Company and each Subsidiary of Parent Company
that is incorporated or organized under the Laws of any state in the USA.
"Unavailable Commitment" has the meaning set forth in Section 2.7(a).
"Voting Shares" of any corporation means shares of any class or classes
(however designated) having ordinary voting power for the election of at least a
majority of the members of the Board of Directors (or other governing bodies) of
such corporation. ANNEX C
CONDITIONS PRECEDENT: INITIAL LOAN
_ Agreement and Schedules. This Agreement duly executed by each Borrower
and Parent Company, and all Schedules, duly and fully completed, that are
provided for in this Agreement. _ _ Revolving Notes. A Revolving Note duly
executed by Operating Subsidiary in favor of each Bank in the respective amount
of such Bank's Revolving Commitment.
_ Term A Notes. A Term A Note duly executed by Operating Subsidiary in
favor of each Bank in the respective amount of such Bank's Term A Commitment.
_ Term B Notes. A Term B Note duly executed by Mexico Subsidiary in favor
of each Bank in the respective amount of such Bank's Term B Commitment.
_ Acquisition Notes. As Acquisition Note duly executed by Operating
Subsidiary in favor of each Bank in the respective amount of such Bank's
Acquisition Commitment.
_ Security Documents. (i) A Guaranty Agreement executed by each Subsidiary
of Parent Company other than Operating Subsidiary, the Mexico Companies, the
Australian Subsidiary, and the Investment Subsidiary) in the form of Exhibit G,
securing the obligations described therein, including the Obligations, (ii) a
Guaranty Agreement executed by Parent Company in the form of Exhibit H, securing
the obligations described therein, including the Obligations, (iv) a Guaranty
Agreement executed by each Mexico Company (other than the Mexico Subsidiary) in
the form of Exhibit I, securing the obligations described therein and (iv) a
Stock Pledge Agreement duly executed by Parent Company securing the obligations
described therein, including the Obligations, in the form of Exhibit J.
_ Opinion of Counsel to the Companies. Opinion of legal counsel for the
Companies in the form of Exhibit O.
_ Opinion of Counsel to the Mexico Companies. Opinion of legal for each of
the Mexico Companies in form, scope and substance satisfactory to the Banks.
_ Notice of Borrowing and Other Certificates. A Notice of Borrowing in the
form of Exhibit A duly completed and executed by Operating Subsidiary, a Notice
of Borrowing in the form of Exhibit B hereto duly completed and executed by
Mexico Subsidiary and a Compliance Certificate in the form of Exhibit M duly
completed and executed by Parent Company.
_ Secretary Certificate. With respect to each Company, a Certificate signed
by the secretary of such Company, which secretary's office and signature shall
be confirmed by another officer of such Company, dated and effective as of the
Closing Date attaching thereto or containing therein, and certifying as to the
following: (i) corporate resolutions, as in effect and neither revoked nor
rescinded, duly adopted by the board of directors of such Company authorizing
the execution, delivery and performance of the Loan Documents to which it is or
will be a party, and the transactions contemplated thereby; (ii) true and
correct copies of the charter, bylaws and other internal governance documents,
as amended and in effect, of such Company; and (iii) names, incumbency and
specimen signatures of the officers of such Company authorized to execute and
deliver the Loan Documents to which such Company is a party.
_ Official Certificates. With respect to each Company, Certificates as to
incorporation, existence and good standing for such Company issued by the
Secretary of State (and/or other appropriate official) of the state of
incorporation of such Company and certificates of foreign qualification and good
standing (or other similar instruments) for such Company, issued by the
Secretary of State (and/or other appropriate official) of each of the states
wherein such Company is or should be qualified to do business as a foreign
corporation, each of the foregoing certificates being dated within 10 days prior
to the date of the Closing Date.
_ Articles of Incorporation, Charter and Bylaws. A copy of the Certificate
or Articles of Incorporation of each Company and all amendments thereto,
certified by the Secretary of State of the state of incorporation of such
Company as being true, correct and complete, and being dated within 10 days
prior to the Closing Date.
_ Litigation Report. A report of counsel to each Company describing all
pending or threatened Litigation by or against any Company or any of its
Property (including Litigation for which any Company will be responsible after
the Closing Date). There shall be no outstanding order or injunction of any
Governmental Authority which would prohibit (i) the execution, delivery or
performance, now or hereafter, of any Loan Document or (ii) any of the
transactions contemplated by the Loan Documents.
_ Environmental Reports. Copies of all environmental surveys or reports
relating to real Property owned or leased by any Company (i) which have
heretofore been performed or prepared (each of which is described in Schedule
4.20 hereof) and (ii) additional reports or surveys in form, scope and substance
satisfactory to the Agent.
_ Insurance Certificates. A certificate from each insurer or duly
authorized insurer's Agent of each Company setting forth a listing of all
insurance coverage of such Company and reflecting that the policies evidencing
such coverage conforms to the requirements of this Agreement and each of the
other Loan Documents, including, without limitation, loss payable endorsements
in favor of the Agent and notification of cancellation and modification
endorsements as specified in Section 5.10. In addition, each Company shall
deliver a certificate executed by an Authorized Officer of such Company setting
forth the insurance obtained by such Company in accordance with the requirements
of Section 5.10 and certifying that such insurance is in full force and effect
and that all premiums then due and payable thereon have been paid.
_ Financial Statements. Copies of financial statements of the Companies for
the most recent period required under Section 5.1.
_ UCC Reports. Copies of the results of Uniform Commercial Code searches
showing all financing statements and other documents or instruments on file
against each Company in the appropriate central and local offices of the
relevant jurisdictions, each such search to be through a search period ending as
of a date no more than 10 days prior to the Closing Date.
_ Regulatory and Other Approvals. Evidence that all necessary approvals or
consents of Governmental Authorities and all other Persons have been obtained.
_ Compliance with Laws. Evidence that each Company has complied with all
Laws necessary to consummate the transactions contemplated by this Agreement and
each of the other Loan Documents.
_ Fees. Payment of (i) the facility fees payable to the Agent on the
Closing Date by Operating Subsidiary and Mexico Subsidiary, respectively, and
(ii) fees of counsel to the Banks payable by each Borrower in connection with
the preparation, negotiation and closing of the transactions contemplated by
this Agreement.
_ Additional Documentation. Such additional approvals, opinions, documents,
instruments, reports, certifications and/or agreements as the Agent, the Banks
or their counsel may reasonably request.
TERM A NOTE
$6,100,000.00 San Antonio, TX July 15, 1996
For value received, LANCER PARTNERSHIP, LTD., a Texas
limited partnership (the "Maker"), irrevocably and
unconditionally promises to pay to the order of THE FROST
NATIONAL BANK (the "Bank"), at the principal office of THE FROST
NATIONAL BANK in San Antonio, Texas, as the Agent for the Banks,
the principal sum of SIX MILLION ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($6,100,000.00), or such lesser amount as shall equal the
aggregate unpaid principal amount of Term A Loans made by the
Bank to the Maker pursuant to the terms of the Credit Agreement
referred to below, in lawful money of the USA and in immediately
available funds, on the dates and in the principal amounts
provided for in the Credit Agreement, and to pay interest on the
unpaid principal amount of such Term A Loans at such office, in
like money and funds for the period commencing on the date of
each such Term A Loan until it is paid in full, at the rates and
on the dates provided for in the Credit Agreement. All
capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of
Term A Loans under this Note from time to time outstanding shall
be due and payable as set forth in the Credit Agreement.
This Note is one of the "Term A Notes" executed by the Maker
and is referred to in, governed by, and entitled to the benefits
of, the Credit Agreement dated as of July 15, 1996, among the
Maker; NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V.; LANCER
CORPORATION; THE FROST NATIONAL BANK, individually and as Agent;
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, individually; and the
financial institutions that are now or hereafter parties thereto
(as amended, restated, supplemented, renewed, extended or
otherwise modified from time to time, "Credit Agreement"), to
which reference is made for all relevant intents and purposes,
including for a statement of the rights and obligations of the
Agent and the Banks and the duties and obligations of the Maker
in relation thereto, including scheduled payments and mandatory
and voluntary prepayments hereof, interest rate and amount
limitations and the acceleration of the maturity hereof.
However, neither the foregoing reference to the Credit Agreement
nor to any provision thereof or referred to therein, shall affect
or impair the irrevocable, absolute and unconditional obligation
of the Maker to pay principal of, and interest on, this Note when
due. Unless the maturity of this Note shall have sooner
occurred, the outstanding principal balance of this Note and all
accrued and unpaid interest thereon shall be finally and fully
payable on July 15, 2001.
The date, amount, Type, interest rate and duration of
Interest Period (if applicable) of each Term A Loan made by the
Bank to the Maker, and each payment made on account of the
principal thereof, and accrued interest thereon, shall be
recorded by the Bank on its books and prior to any transfer of
this Note, endorsed by the Bank on a schedule attached hereto or
any continuation thereof. The Bank's failure to make or error in
making any such recordations or endorsements shall not diminish,
reduce or relieve the Maker's obligation to pay (i) all Term A
Loans made by the Bank to the Maker and then outstanding and
(ii) all accrued and earned interest on the amounts thereof from
time to time outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other
Persons ever liable for the payment of any sums payable on this
Note, jointly and severally, waive notice, demand, notice of
presentment, presentment, presentment for payment, demand for
payment, non-payment, notice of dishonor, dishonor, notice of
intent to accelerate maturity, notice of acceleration of
maturity, notice of intent to demand, protest, notice of protest,
grace and all formalities and other notices of any and every
kind, and filing of suit or diligence in collecting this Note or
enforcing (in whole or part) any security or guaranty now or
hereafter for the payment of this Note, and consent and agree to
any partial or full substitution, exchange or release of any such
security or guaranty or the partial or full release of any Person
primarily or secondarily liable hereon, and consent and agree
that it will not be necessary for any holder hereof, in order to
enforce payment by it of this Note to first institute suit or
exhaust its remedies against the Maker or any other Persons
liable herefor, or to enforce it rights against any such security
herefor or guarantor or any other Person with respect hereto, and
consent to any or all extensions, increases or renewals or
postponements, modifications or rearrangements of time or payment
of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Except as provided by Section 10.7 of the Credit Agreement,
this Note may not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and
interpretation) shall be governed by, and construed in accordance
with, the laws of the State of Texas (without regard to conflict
of law principles) and, to the extent controlling, the federal
laws of the USA.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
LANCER PARTNERSHIP, LTD.
By: LANCER
CAPITAL CORPORATION, general
partner
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President of Finance
<PAGE>
TERM A NOTE
$6,100,000.00 San Antonio, TX July 15, 1996
For value received, LANCER PARTNERSHIP, LTD., a Texas
limited partnership (the "Maker"), irrevocably and
unconditionally promises to pay to the order of THE FROST
NATIONAL BANK (the "Bank"), at the principal office of THE FROST
NATIONAL BANK in San Antonio, Texas, as the Agent for the Banks,
the principal sum of SIX MILLION ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($6,100,000.00), or such lesser amount as shall equal the
aggregate unpaid principal amount of Term A Loans made by the
Bank to the Maker pursuant to the terms of the Credit Agreement
referred to below, in lawful money of the USA and in immediately
available funds, on the dates and in the principal amounts
provided for in the Credit Agreement, and to pay interest on the
unpaid principal amount of such Term A Loans at such office, in
like money and funds for the period commencing on the date of
each such Term A Loan until it is paid in full, at the rates and
on the dates provided for in the Credit Agreement. All
capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of
Term A Loans under this Note from time to time outstanding shall
be due and payable as set forth in the Credit Agreement.
This Note is one of the "Term A Notes" executed by the Maker
and is referred to in, governed by, and entitled to the benefits
of, the Credit Agreement dated as of July 15, 1996, among the
Maker; NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V.; LANCER
CORPORATION; THE FROST NATIONAL BANK, individually and as Agent;
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, individually; and the
financial institutions that are now or hereafter parties thereto
(as amended, restated, supplemented, renewed, extended or
otherwise modified from time to time, "Credit Agreement"), to
which reference is made for all relevant intents and purposes,
including for a statement of the rights and obligations of the
Agent and the Banks and the duties and obligations of the Maker
in relation thereto, including scheduled payments and mandatory
and voluntary prepayments hereof, interest rate and amount
limitations and the acceleration of the maturity hereof.
However, neither the foregoing reference to the Credit Agreement
nor to any provision thereof or referred to therein, shall affect
or impair the irrevocable, absolute and unconditional obligation
of the Maker to pay principal of, and interest on, this Note when
due. Unless the maturity of this Note shall have sooner
occurred, the outstanding principal balance of this Note and all
accrued and unpaid interest thereon shall be finally and fully
payable on July 15, 2001.
The date, amount, Type, interest rate and duration of
Interest Period (if applicable) of each Term A Loan made by the
Bank to the Maker, and each payment made on account of the
principal thereof, and accrued interest thereon, shall be
recorded by the Bank on its books and prior to any transfer of
this Note, endorsed by the Bank on a schedule attached hereto or
any continuation thereof. The Bank's failure to make or error in
making any such recordations or endorsements shall not diminish,
reduce or relieve the Maker's obligation to pay (i) all Term A
Loans made by the Bank to the Maker and then outstanding and
(ii) all accrued and earned interest on the amounts thereof from
time to time outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other
Persons ever liable for the payment of any sums payable on this
Note, jointly and severally, waive notice, demand, notice of
presentment, presentment, presentment for payment, demand for
payment, non-payment, notice of dishonor, dishonor, notice of
intent to accelerate maturity, notice of acceleration of
maturity, notice of intent to demand, protest, notice of protest,
grace and all formalities and other notices of any and every
kind, and filing of suit or diligence in collecting this Note or
enforcing (in whole or part) any security or guaranty now or
hereafter for the payment of this Note, and consent and agree to
any partial or full substitution, exchange or release of any such
security or guaranty or the partial or full release of any Person
primarily or secondarily liable hereon, and consent and agree
that it will not be necessary for any holder hereof, in order to
enforce payment by it of this Note to first institute suit or
exhaust its remedies against the Maker or any other Persons
liable herefor, or to enforce it rights against any such security
herefor or guarantor or any other Person with respect hereto, and
consent to any or all extensions, increases or renewals or
postponements, modifications or rearrangements of time or payment
of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Except as provided by Section 10.7 of the Credit Agreement,
this Note may not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and
interpretation) shall be governed by, and construed in accordance
with, the laws of the State of Texas (without regard to conflict
of law principles) and, to the extent controlling, the federal
laws of the USA.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
LANCER PARTNERSHIP, LTD.
By: LANCER CAPITAL CORPORATION,
general partner
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President of Finance
TERM B NOTE
$1,400,000 July 15, 1996
For value received, NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexico
Corporation (the Maker), irrevocably and unconditionally promises to pay to
the order of THE FROST NATIONAL BANK (the Bank), at the principal office of
THE FROST NATIONAL BANK in San Antonio, Texas, as the Agent for the Banks, the
principal sum of ONE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($1,400,000), or such lesser amount as shall equal the aggregate unpaid
principal amount of Term B Loans made by the Bank to the Maker pursuant to the
terms of the Credit Agreement referred to below, in lawful money of the USA and
in immediately available funds, on the dates and in the principal amounts
provided for in the Credit Agreement, and to pay interest on the unpaid
principal amount of such Term B Loans at such office, in like money and funds
for the period commencing on the date of each such Term B Loan until it is paid
in full, at the rates and on the dates provided for in the Credit Agreement. All
capitalized terms used but not defined herein shall have the meanings set forth
in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of Term B Loans
under this Note from time to time outstanding shall be due and payable as set
forth in the Credit Agreement.
This Note is one of the Term B Notes executed by the Maker and is
referred to in, governed by, and entitled to the benefits of, the Credit
Agreement dated as of July 15, 1996, among the Maker; NUEVA DISTRIBUIDORA
LANCERMEX, S.A. de C.V.; LANCER CORPORATION; THE FROST NATIONAL BANK,
individually and as Agent; THE BOATMENS NATIONAL BANK OF ST. LOUIS,
individually; and the financial institutions that are now or hereafter parties
thereto, attached hereto as Exhibit A and incorporated herein for all purposes
(the Credit Agreement), to which reference is made for all relevant intents
and purposes, including for a statement of the rights and obligations of the
Agent and the Banks and the duties and obligations of the Maker in relation
thereto, including scheduled payments and mandatory and voluntary prepayments
hereof, interest rate and amount limitations and the acceleration of the
maturity hereof. However, neither the foregoing reference to the Credit
Agreement nor to any provision thereof or referred to therein, shall affect or
impair the irrevocable, absolute and unconditional obligation of the Maker to
pay principal of, and interest on, this Note when due. Unless the maturity of
this Note shall have sooner occurred, the outstanding principal balance of this
Note and all accrued and unpaid interest thereon shall be finally and fully
payable on July 15, 2001.
The date, amount, Type, interest rate and duration of Interest Period (if
applicable) of each Term B Loan made by the Bank to the Maker, and each payment
made on account of the principal thereof, and accrued interest thereon, shall be
recorded by the Bank on its books and prior to any transfer of this Note,
endorsed by the Bank on a schedule attached hereto or any continuation thereof.
The Banks failure to make or error in making any such recordations or
endorsements shall not diminish, reduce or relieve the Makers obligation to pay
(i) all Term B Loans made by the Bank to the Maker and then outstanding and (ii)
all accrued and earned interest on the amounts thereof from time to time
outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other Persons ever
liable for the payment of any sums payable on this Note, jointly and severally,
waive notice, demand, notice of presentment, presentment, presentment for
payment, demand for payment, non-payment, notice of dishonor, dishonor, notice
of intent to accelerate maturity, notice of acceleration of maturity, notice of
intent to demand, protest, notice of protest, grace and all formalities and
other notices of any and every kind, and filing of suit or diligence in
collecting this Note or enforcing (in whole or part) any security or guaranty
now or hereafter for the payment of this Note, and consent and agree to any
partial or full substitution, exchange or release of any such security or
guaranty or the partial or full release of any Person primarily or secondarily
liable hereon, and consent and agree that it will not be necessary for any
holder hereof, in order to enforce payment by it of this Note to first institute
suit or exhaust its remedies against the Maker or any other Persons liable
herefor, or to enforce it rights against any such security herefor or guarantor
or any other Person with respect hereto, and consent to any or all extensions,
increases or renewals or postponements, modifications or rearrangements of time
or payment of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Except as provided by Section 10.7 of the Credit Agreement, this Note may
not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and interpretation) shall
be governed by, and construed in accordance with, the laws of the State of Texas
(without regard to conflict of law principles) and, to the extent controlling,
the federal laws of the USA; provided, however, notwithstanding any other
provision of this Note or the Credit Agreement to the contrary, that in
connection with any legal action or proceeding (other than an action or
proceeding to enforce a judgment obtained in another jurisdiction) brought by
the Agent or the holder of this Note in any courts of Mexico or any political
subdivision thereof, this Note shall be deemed to be an instrument made under
the laws of Mexico and for such purposes shall be governed by, and construed in
accordance with, the laws of Mexico, and if any provision of this Note is
invalid, illegally ineffective, or contrary to the laws of Mexico, it shall be
excised and all other parts of the Note shall remain in effect and binding.
Notwithstanding any other provision of this Note or the Credit Agreement to the
contrary, the Maker hereby irrevocably submits to the jurisdiction of any
competent court of Mexico City, Federal District, Mexico or of the United States
District Court for the Western District of Texas (San Antonio Division) of the
United States of America, or the courts of the State of Texas sitting in the
County of Bexar, State of Texas, United States of America, as the Agent or the
holder hereof may elect, in any action or proceeding arising out of or relating
to this Note, and the Maker and the Guarantors hereby irrevocably agree that
claims in respect of such action or proceeding may be held and determined in any
of such courts. The Maker irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding with respect to this Note brought in any court
aforementioned, and the Maker further irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. The Maker hereby expressly waives all rights of any other
jurisdiction which it may now or hereafter have by reason of its presence or
subsequent domiciles.
This Note is executed in English and Spanish, and both versions shall bind
the undersigned but both of which shall constitute one and the same instrument;
provided however that in case of doubt as to the proper interpretation or
construcction of this Note, the English text shall be controlling, except that
in the case of any action or proceeding in the United Mexican States or any
political subdivision in connection whith this Note, in which case the Spanish
text will be controlling.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Maker has executed this Note as of the day and year
first above written in San Antonio, Texas.
MAKER:
NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President
GUARANTORS:
INDUSTRIAS LANCERMEX, S.A. de C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President
Domicile: U.S.A.
SERVICIOS LANCERMEX, S.A. de C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President
Domicile: U.S.A.
<PAGE>
TERM B NOTE
$1,400,000 July 15, 1996
For value received, NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexico
Corporation (the Maker), irrevocably and unconditionally promises to pay to
the order of THE BOATMENS NATIONAL BANK OF ST. LOUIS (the Bank), at the
principal office of THE FROST NATIONAL BANK in San Antonio, Texas, as the Agent
for the Banks, the principal sum of ONE MILLION FOUR HUNDRED THOUSAND AND NO/100
DOLLARS ($1,400,000), or such lesser amount as shall equal the aggregate unpaid
principal amount of Term B Loans made by the Bank to the Maker pursuant to the
terms of the Credit Agreement referred to below, in lawful money of the USA and
in immediately available funds, on the dates and in the principal amounts
provided for in the Credit Agreement, and to pay interest on the unpaid
principal amount of such Term B Loans at such office, in like money and funds
for the period commencing on the date of each such Term B Loan until it is paid
in full, at the rates and on the dates provided for in the Credit Agreement. All
capitalized terms used but not defined herein shall have the meanings set forth
in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of Term B Loans
under this Note from time to time outstanding shall be due and payable as set
forth in the Credit Agreement.
This Note is one of the Term B Notes executed by the Maker and is
referred to in, governed by, and entitled to the benefits of, the Credit
Agreement dated as of July 15, 1996, among the Maker; NUEVA DISTRIBUIDORA
LANCERMEX, S.A. de C.V.; LANCER CORPORATION; THE FROST NATIONAL BANK,
individually and as Agent; THE BOATMENS NATIONAL BANK OF ST. LOUIS,
individually; and the financial institutions that are now or hereafter parties
thereto, attached hereto as Exhibit A and incorporated herein for all purposes
(the Credit Agreement), to which reference is made for all relevant intents
and purposes, including for a statement of the rights and obligations of the
Agent and the Banks and the duties and obligations of the Maker in relation
thereto, including scheduled payments and mandatory and voluntary prepayments
hereof, interest rate and amount limitations and the acceleration of the
maturity hereof. However, neither the foregoing reference to the Credit
Agreement nor to any provision thereof or referred to therein, shall affect or
impair the irrevocable, absolute and unconditional obligation of the Maker to
pay principal of, and interest on, this Note when due. Unless the maturity of
this Note shall have sooner occurred, the outstanding principal balance of this
Note and all accrued and unpaid interest thereon shall be finally and fully
payable on July 15, 2001.
The date, amount, Type, interest rate and duration of Interest Period (if
applicable) of each Term B Loan made by the Bank to the Maker, and each payment
made on account of the principal thereof, and accrued interest thereon, shall be
recorded by the Bank on its books and prior to any transfer of this Note,
endorsed by the Bank on a schedule attached hereto or any continuation thereof.
The Banks failure to make or error in making any such recordations or
endorsements shall not diminish, reduce or relieve the Makers obligation to pay
(i) all Term B Loans made by the Bank to the Maker and then outstanding and (ii)
all accrued and earned interest on the amounts thereof from time to time
outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other Persons ever
liable for the payment of any sums payable on this Note, jointly and severally,
waive notice, demand, notice of presentment, presentment, presentment for
payment, demand for payment, non-payment, notice of dishonor, dishonor, notice
of intent to accelerate maturity, notice of acceleration of maturity, notice of
intent to demand, protest, notice of protest, grace and all formalities and
other notices of any and every kind, and filing of suit or diligence in
collecting this Note or enforcing (in whole or part) any security or guaranty
now or hereafter for the payment of this Note, and consent and agree to any
partial or full substitution, exchange or release of any such security or
guaranty or the partial or full release of any Person primarily or secondarily
liable hereon, and consent and agree that it will not be necessary for any
holder hereof, in order to enforce payment by it of this Note to first institute
suit or exhaust its remedies against the Maker or any other Persons liable
herefor, or to enforce it rights against any such security herefor or guarantor
or any other Person with respect hereto, and consent to any or all extensions,
increases or renewals or postponements, modifications or rearrangements of time
or payment of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Except as provided by Section 10.7 of the Credit Agreement, this Note may
not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and interpretation) shall
be governed by, and construed in accordance with, the laws of the State of Texas
(without regard to conflict of law principles) and, to the extent controlling,
the federal laws of the USA; provided, however, notwithstanding any other
provision of this Note or the Credit Agreement to the contrary, that in
connection with any legal action or proceeding (other than an action or
proceeding to enforce a judgment obtained in another jurisdiction) brought by
the Agent or the holder of this Note in any courts of Mexico or any political
subdivision thereof, this Note shall be deemed to be an instrument made under
the laws of Mexico and for such purposes shall be governed by, and construed in
accordance with, the laws of Mexico, and if any provision of this Note is
invalid, illegally ineffective, or contrary to the laws of Mexico, it shall be
excised and all other parts of the Note shall remain in effect and binding.
Notwithstanding any other provision of this Note or the Credit Agreement to the
contrary, the Maker hereby irrevocably submits to the jurisdiction of any
competent court of Mexico City, Federal District, Mexico or of the United States
District Court for the Western District of Texas (San Antonio Division) of the
United States of America, or the courts of the State of Texas sitting in the
County of Bexar, State of Texas, United States of America, as the Agent or the
holder hereof may elect, in any action or proceeding arising out of or relating
to this Note, and the Maker and the Guarantors hereby irrevocably agree that
claims in respect of such action or proceeding may be held and determined in any
of such courts. The Maker irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding with respect to this Note brought in any court
aforementioned, and the Maker further irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. The Maker hereby expressly waives all rights of any other
jurisdiction which it may now or hereafter have by reason of its presence or
subsequent domiciles.
This Note is executed in English and Spanish, and both versions shall bind
the undersigned but both of which shall constitute one and the same instrument;
provided however that in case of doubt as to the proper interpretation or
construcction of this Note, the English text shall be controlling, except that
in the case of any action or proceeding in the United Mexican States or any
political subdivision in connection whith this Note, in which case the Spanish
text will be controlling.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Maker has executed this Note as of the day and year
first above written in San Antonio, Texas.
MAKER:
NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President
GUARANTORS:
INDUSTRIAS LANCERMEX, S.A. de C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President
Domicile: U.S.A.
SERVICIOS LANCERMEX, S.A. de C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President
Domicile: U.S.A.
REVOLVING NOTE
$8,750,000.00 San Antonio, TX July 15, 1996
For value received, LANCER PARTNERSHIP, LTD., a Texas limited partnership
(the "Maker"), irrevocably and unconditionally promises to pay to the order of
THE FROST NATIONAL BANK (the "Bank"), at the principal office of THE FROST
NATIONAL BANK in San Antonio, Texas, as the Agent for the Banks, the principal
sum of EIGHT MILLION SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($8,750,000.00), or such lesser amount as shall equal the aggregate unpaid
principal amount of Revolving Loans made by the Bank to the Maker pursuant to
the terms of the Credit Agreement referred to below, in lawful money of the USA
and in immediately available funds, on the dates and in the principal amounts
provided for in the Credit Agreement, and to pay interest on the unpaid
principal amount of such Revolving Loans at such office, in like money and funds
for the period commencing on the date of each such Revolving Loan until it is
paid in full, at the rates and on the dates provided for in the Credit
Agreement. All capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of Revolving
Loans under this Note from time to time outstanding shall be due and payable as
set forth in the Credit Agreement.
This Note is one of the "Revolving Notes" executed by the Maker and is
referred to in, governed by, and entitled to the benefits of, the Credit
Agreement dated as of July 15, 1996, among the Maker; NUEVA DISTRIBUIDORA
LANCERMEX, S.A. de C.V.; LANCER CORPORATION; THE FROST NATIONAL BANK,
individually and as Agent; THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
individually; and the financial institutions that are now or hereafter parties
thereto (as amended, restated, supplemented, renewed, extended or otherwise
modified from time to time, "Credit Agreement"), to which reference is made for
all relevant intents and purposes, including for a statement of the rights and
obligations of the Agent and the Banks and the duties and obligations of the
Maker in relation thereto, including mandatory and voluntary prepayments hereof,
interest rate and amount limitations and the acceleration of the maturity
hereof. However, neither the foregoing reference to the Credit Agreement nor to
any provision thereof or referred to therein, shall affect or impair the
irrevocable, absolute and unconditional obligation of the Maker to pay principal
of, and interest on, this Note when due. Unless the maturity of this Note shall
have sooner occurred, the outstanding principal balance of this Note and all
accrued and unpaid interest thereon shall be finally and fully payable on
Revolving Commitment Termination Date.
The date, amount, Type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Bank to the Maker, and each
payment made on account of the principal thereof, and accrued interest thereon,
shall be recorded by the Bank on its books and prior to any transfer of this
Note, endorsed by the Bank on a schedule attached hereto or any continuation
thereof. The Bank's failure to make or error in making any such recordations or
endorsements shall not diminish, reduce or relieve the Maker's obligation to pay
(i) all Revolving Loans made by the Bank to the Maker and then outstanding and
(ii) all accrued and earned interest on the amounts thereof from time to time
outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other Persons ever
liable for the payment of any sums payable on this Note, jointly and severally,
waive notice, demand, notice of presentment, presentment, presentment for
payment, demand for payment, non-payment, notice of dishonor, dishonor, notice
of intent to accelerate maturity, notice of acceleration of maturity, notice of
intent to demand, protest, notice of protest, grace and all formalities and
other notices of any and every kind, and filing of suit or diligence in
collecting this Note or enforcing (in whole or part) any security or guaranty
now or hereafter for the payment of this Note, and consent and agree to any
partial or full substitution, exchange or release of any such security or
guaranty or the partial or full release of any Person primarily or secondarily
liable hereon, and consent and agree that it will not be necessary for any
holder hereof, in order to enforce payment by it of this Note to first institute
suit or exhaust its remedies against the Maker or any other Persons liable
herefor, or to enforce it rights against any such security herefor or guarantor
or any other Person with respect hereto, and consent to any or all extensions,
increases or renewals or postponements, modifications or rearrangements of time
or payment of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Except as provided by Section 10.7 of the Credit Agreement, this Note may
not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and interpretation) shall
be governed by, and construed in accordance with, the laws of the State of Texas
(without regard to conflict of law principles) and, to the extent controlling,
the federal laws of the USA.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LANCER PARTNERSHIP, LTD.
By: LANCER CAPITAL
CORPORATION., general partner
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President of Finance
<PAGE>
REVOLVING NOTE
$8,750,000.00 San Antonio, TX July 15, 1996
For value received, LANCER PARTNERSHIP, LTD., a Texas limited partnership
(the "Maker"), irrevocably and unconditionally promises to pay to the order of
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS (the "Bank"), at the principal office
of THE FROST NATIONAL BANK in San Antonio, Texas, as the Agent for the Banks,
the principal sum of EIGHT MILLION SEVEN HUNDRED FIFTY THOUSAND AND NO/100
DOLLARS ($8,750,000.00), or such lesser amount as shall equal the aggregate
unpaid principal amount of Revolving Loans made by the Bank to the Maker
pursuant to the terms of the Credit Agreement referred to below, in lawful money
of the USA and in immediately available funds, on the dates and in the principal
amounts provided for in the Credit Agreement, and to pay interest on the unpaid
principal amount of such Revolving Loans at such office, in like money and funds
for the period commencing on the date of each such Revolving Loan until it is
paid in full, at the rates and on the dates provided for in the Credit
Agreement. All capitalized terms used but not defined herein shall have the
meanings set forth in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of Revolving
Loans under this Note from time to time outstanding shall be due and payable as
set forth in the Credit Agreement.
This Note is one of the "Revolving Notes" executed by the Maker and is
referred to in, governed by, and entitled to the benefits of, the Credit
Agreement dated as of July 15, 1996, among the Maker; NUEVA DISTRIBUIDORA
LANCERMEX, S.A. de C.V.; LANCER CORPORATION; THE FROST NATIONAL BANK,
individually and as Agent; THE BOATMEN'S NATIONAL BANK OF ST. LOUIS,
individually; and the financial institutions that are now or hereafter parties
thereto (as amended, restated, supplemented, renewed, extended or otherwise
modified from time to time, "Credit Agreement"), to which reference is made for
all relevant intents and purposes, including for a statement of the rights and
obligations of the Agent and the Banks and the duties and obligations of the
Maker in relation thereto, including mandatory and voluntary prepayments hereof,
interest rate and amount limitations and the acceleration of the maturity
hereof. However, neither the foregoing reference to the Credit Agreement nor to
any provision thereof or referred to therein, shall affect or impair the
irrevocable, absolute and unconditional obligation of the Maker to pay principal
of, and interest on, this Note when due. Unless the maturity of this Note shall
have sooner occurred, the outstanding principal balance of this Note and all
accrued and unpaid interest thereon shall be finally and fully payable on
Revolving Commitment Termination Date.
The date, amount, Type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Bank to the Maker, and each
payment made on account of the principal thereof, and accrued interest thereon,
shall be recorded by the Bank on its books and prior to any transfer of this
Note, endorsed by the Bank on a schedule attached hereto or any continuation
thereof. The Bank's failure to make or error in making any such recordations or
endorsements shall not diminish, reduce or relieve the Maker's obligation to pay
(i) all Revolving Loans made by the Bank to the Maker and then outstanding and
(ii) all accrued and earned interest on the amounts thereof from time to time
outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other Persons ever
liable for the payment of any sums payable on this Note, jointly and severally,
waive notice, demand, notice of presentment, presentment, presentment for
payment, demand for payment, non-payment, notice of dishonor, dishonor, notice
of intent to accelerate maturity, notice of acceleration of maturity, notice of
intent to demand, protest, notice of protest, grace and all formalities and
other notices of any and every kind, and filing of suit or diligence in
collecting this Note or enforcing (in whole or part) any security or guaranty
now or hereafter for the payment of this Note, and consent and agree to any
partial or full substitution, exchange or release of any such security or
guaranty or the partial or full release of any Person primarily or secondarily
liable hereon, and consent and agree that it will not be necessary for any
holder hereof, in order to enforce payment by it of this Note to first institute
suit or exhaust its remedies against the Maker or any other Persons liable
herefor, or to enforce it rights against any such security herefor or guarantor
or any other Person with respect hereto, and consent to any or all extensions,
increases or renewals or postponements, modifications or rearrangements of time
or payment of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Except as provided by Section 10.7 of the Credit Agreement, this Note may
not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and interpretation) shall
be governed by, and construed in accordance with, the laws of the State of Texas
(without regard to conflict of law principles) and, to the extent controlling,
the federal laws of the USA.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LANCER PARTNERSHIP, LTD.
By: LANCER CAPITAL
CORPORATION, general partner
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President of Finance
ACQUISITION NOTE
$5,000,000.00 San Antonio, TX July 15, 1996
For value received, LANCER PARTNERSHIP, LTD., a Texas partnership (the
"Maker"), irrevocably and unconditionally promises to pay to the order of THE
FROST NATIONAL BANK (the "Bank"), at the principal office of THE FROST NATIONAL
BANK in San Antonio, Texas, as the Agent for the Banks, the principal sum of
FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), or such lesser amount as shall
equal the aggregate unpaid principal amount of Acquisition Loans made by the
Bank to the Maker pursuant to the terms of the Credit Agreement referred to
below, in lawful money of the USA and in immediately available funds, on the
dates and in the principal amounts provided for in the Credit Agreement, and to
pay interest on the unpaid principal amount of such Acquisition Loans at such
office, in like money and funds for the period commencing on the date of each
such Acquisition Loan until it is paid in full, at the rates and on the dates
provided for in the Credit Agreement. All capitalized terms used but not defined
herein shall have the meanings set forth in the Credit Agreement referred to
below.
Principal of and interest on the unpaid principal balance of Acquisition
Loans under this Note from time to time outstanding shall be due and payable as
set forth in the Credit Agreement.
This Note is one of the "Acquisition Notes" executed by the Maker and is
referred to in, governed by, and entitled to the benefits of, the Credit
Agreement dated as of July 15, 1996, among the Maker; NUEVA DISTRIBUIDORA
LANCERMEX, S.A. de C.V.; LANCER CORPORATION; THE FROST NATIONAL BANK,
individually, as Agent and as the Issuing Bank; THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS, individually; and the financial institutions that are now or
hereafter parties thereto (as amended, restated, supplemented, renewed, extended
or otherwise modified from time to time, "Credit Agreement"), to which reference
is made for all relevant intents and purposes, including for a statement of the
rights and obligations of the Agent and the Banks and the duties and obligations
of the Maker in relation thereto, including scheduled payments and mandatory and
voluntary prepayments hereof, interest rate and amount limitations and the
acceleration of the maturity hereof. However, neither the foregoing reference to
the Credit Agreement nor to any provision thereof or referred to therein, shall
affect or impair the irrevocable, absolute and unconditional obligation of the
Maker to pay principal of, and interest on, this Note when due. Unless the
maturity of this Note shall have sooner occurred, the outstanding principal
balance of this Note and all accrued and unpaid interest thereon shall be
finally and fully payable on July 15, 2001.
The date, amount, Type, interest rate and duration of Interest Period (if
applicable) of each Acquisition Loan made by the Bank to the Maker, and each
payment made on account of the principal thereof, and accrued interest thereon,
shall be recorded by the Bank on its books and prior to any transfer of this
Note, endorsed by the Bank on a schedule attached hereto or any continuation
thereof. The Bank's failure to make or error in making any such recordations or
endorsements shall not diminish, reduce or relieve the Maker's obligation to pay
(i) all Acquisition Loans made by the Bank to the Maker and then outstanding and
(ii) all accrued and earned interest on the amounts thereof from time to time
outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other Persons ever
liable for the payment of any sums payable on this Note, jointly and severally,
waive notice, demand, notice of presentment, presentment, presentment for
payment, demand for payment, non-payment, notice of dishonor, dishonor, notice
of intent to accelerate maturity, notice of acceleration of maturity, notice of
intent to demand, protest, notice of protest, grace and all formalities and
other notices of any and every kind, and filing of suit or diligence in
collecting this Note or enforcing (in whole or part) any security or guaranty
now or hereafter for the payment of this Note, and consent and agree to any
partial or full substitution, exchange or release of any such security or
guaranty or the partial or full release of any Person primarily or secondarily
liable hereon, and consent and agree that it will not be necessary for any
holder hereof, in order to enforce payment by it of this Note to first institute
suit or exhaust its remedies against the Maker or any other Persons liable
herefor, or to enforce it rights against any such security herefor or guarantor
or any other Person with respect hereto, and consent to any or all extensions,
increases or renewals or postponements, modifications or rearrangements of time
or payment of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Except as provided by Section 10.7 of the Credit Agreement, this Note may
not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and interpretation) shall
be governed by, and construed in accordance with, the laws of the State of Texas
(without regard to conflict of law principles) and, to the extent controlling,
the federal laws of the USA.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LANCER PARTNERSHIP, LTD.
By:
LANCER CAPITAL CORPORATION,
general partner
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President of Finance
<PAGE>
ACQUISITION NOTE
$5,000,000.00 San Antonio, TX July 15, 1996
For value received, LANCER PARTNERSHIP, LTD., a Texas partnership (the
"Maker"), irrevocably and unconditionally promises to pay to the order of THE
BOATMEN'S NATIONAL BANK OF ST. LOUIS (the "Bank"), at the principal office of
THE FROST NATIONAL BANK in San Antonio, Texas, as the Agent for the Banks, the
principal sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), or such lesser
amount as shall equal the aggregate unpaid principal amount of Acquisition Loans
made by the Bank to the Maker pursuant to the terms of the Credit Agreement
referred to below, in lawful money of the USA and in immediately available
funds, on the dates and in the principal amounts provided for in the Credit
Agreement, and to pay interest on the unpaid principal amount of such
Acquisition Loans at such office, in like money and funds for the period
commencing on the date of each such Acquisition Loan until it is paid in full,
at the rates and on the dates provided for in the Credit Agreement. All
capitalized terms used but not defined herein shall have the meanings set forth
in the Credit Agreement referred to below.
Principal of and interest on the unpaid principal balance of Acquisition
Loans under this Note from time to time outstanding shall be due and payable as
set forth in the Credit Agreement.
This Note is one of the "Acquisition Notes" executed by the Maker and is
referred to in, governed by, and entitled to the benefits of, the Credit
Agreement dated as of July 15, 1996, among the Maker; NUEVA DISTRIBUIDORA
LANCERMEX, S.A. de C.V.; LANCER CORPORATION; THE FROST NATIONAL BANK,
individually, as Agent and as the Issuing Bank; THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS, individually; and the financial institutions that are now or
hereafter parties thereto (as amended, restated, supplemented, renewed, extended
or otherwise modified from time to time, "Credit Agreement"), to which reference
is made for all relevant intents and purposes, including for a statement of the
rights and obligations of the Agent and the Banks and the duties and obligations
of the Maker in relation thereto, including scheduled payments and mandatory and
voluntary prepayments hereof, interest rate and amount limitations and the
acceleration of the maturity hereof. However, neither the foregoing reference to
the Credit Agreement nor to any provision thereof or referred to therein, shall
affect or impair the irrevocable, absolute and unconditional obligation of the
Maker to pay principal of, and interest on, this Note when due. Unless the
maturity of this Note shall have sooner occurred, the outstanding principal
balance of this Note and all accrued and unpaid interest thereon shall be
finally and fully payable on July 15, 2001.
The date, amount, Type, interest rate and duration of Interest Period (if
applicable) of each Acquisition Loan made by the Bank to the Maker, and each
payment made on account of the principal thereof, and accrued interest thereon,
shall be recorded by the Bank on its books and prior to any transfer of this
Note, endorsed by the Bank on a schedule attached hereto or any continuation
thereof. The Bank's failure to make or error in making any such recordations or
endorsements shall not diminish, reduce or relieve the Maker's obligation to pay
(i) all Acquisition Loans made by the Bank to the Maker and then outstanding and
(ii) all accrued and earned interest on the amounts thereof from time to time
outstanding and unpaid, pursuant to this Note.
The Maker and all sureties, endorsers, guarantors and other Persons ever
liable for the payment of any sums payable on this Note, jointly and severally,
waive notice, demand, notice of presentment, presentment, presentment for
payment, demand for payment, non-payment, notice of dishonor, dishonor, notice
of intent to accelerate maturity, notice of acceleration of maturity, notice of
intent to demand, protest, notice of protest, grace and all formalities and
other notices of any and every kind, and filing of suit or diligence in
collecting this Note or enforcing (in whole or part) any security or guaranty
now or hereafter for the payment of this Note, and consent and agree to any
partial or full substitution, exchange or release of any such security or
guaranty or the partial or full release of any Person primarily or secondarily
liable hereon, and consent and agree that it will not be necessary for any
holder hereof, in order to enforce payment by it of this Note to first institute
suit or exhaust its remedies against the Maker or any other Persons liable
herefor, or to enforce it rights against any such security herefor or guarantor
or any other Person with respect hereto, and consent to any or all extensions,
increases or renewals or postponements, modifications or rearrangements of time
or payment of this Note or any other indulgence with respect hereto, without
notice thereof to, or consent thereto from, any of them.
Except as provided by Section 10.7 of the Credit Agreement, this Note may
not be assigned by the Bank to any Person.
This Note (including its validity, enforceability and interpretation) shall
be governed by, and construed in accordance with, the laws of the State of Texas
(without regard to conflict of law principles) and, to the extent controlling,
the federal laws of the USA.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
LANCER PARTNERSHIP, LTD.
By: LANCER
CAPITAL CORPORATION, general
partner
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President of Finance
STOCK PLEDGE AGREEMENT
(LANCER CORPORATION)
This Stock Pledge Agreement is made as of July 15, 1996, by LANCER
CORPORATION, a Texas corporation (the "Pledgor"), in favor of THE FROST NATIONAL
BANK, a national banking association ("Frost"), and its successors and assigns,
as agent (the "Agent"), for the equal and ratable benefit of the financial
institutions which are now or hereafter parties to the hereinafter described
Credit Agreement (collectively, the "Banks").
RECITALS
The Pledgor is the owner of the shares (the "Pledged Shares") of stock
described in Schedule I hereto and issued by the corporation named therein (the
"Issuer"). The Agent and the Banks have entered into a Credit Agreement dated as
of July 15, 1996 (as it may hereafter by amended or otherwise modified from time
to time, the "Credit Agreement"), with LANCER PARTNERSHIP, LTD., a Texas limited
partnership ("Operating Subsidiary"), NUEVA DISTRIBUIDORA LANCERMEX, S.A. de
C.V., a Mexico corporation ("Mexico Subsidiary"), and Pledgor. Operating
Subsidiary and Mexico Subsidiary are wholly owned Subsidiaries of Pledgor. It is
a condition precedent to the effectiveness of the Credit Agreement that the
Pledgor shall have executed and delivered this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein and for other good and valuable consideration, the
adequacy, receipt and sufficiency of which are hereby acknowledged, and in order
to induce the Banks to make the Loans and issue the Letters of Credit under the
Credit Agreement, the Pledgor hereby agrees as follows:
Defined Terms and Related Matters.
The capitalized terms used herein which are defined in the Credit Agreement
and not otherwise defined herein shall have the meanings specified therein.
The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement.
Unless otherwise defined herein or in the Credit Agreement, the terms
defined in the Uniform Commercial Code as enacted in the State of Texas, as
amended from time to time (the "UCC") are used herein as therein defined.
Pledge. The Pledgor hereby pledges and delivers to the Agent, for the equal
and ratable benefit of the Banks, and hereby grants to the Agent, for the equal
and ratable benefit of the Banks, a security interest in and a lien on, the
property described in subsections (a) and (b) of this Section 2 (the "Pledged
Collateral"):
the Pledged Shares and the certificates representing the Pledged Shares,
and all dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares; and
all additional shares of stock of the Issuer of the Pledged Shares from
time to time acquired by the Pledgor in any manner, and the certificates
representing such additional shares, and all dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such shares.
The inclusion of proceeds in this Agreement does not authorize the Pledgor
to sell, dispose of or otherwise use the Pledged Collateral in any manner not
specifically authorized hereby.
Security for Obligations. This Agreement secures the prompt and complete
(i) payment and performance of all obligations, covenants and conditions of
Pledgor under the Credit Agreement and the other Loan Documents to which it is a
party, whether such obligations, covenants and conditions are now existing or
hereafter arising, and all renewals, extensions, amendments, supplements and
rearrangements thereof, and (ii) payment and performance of all obligations,
covenants and conditions required to be paid or performed by any other Loan
Party under the Notes, the Credit Agreement and the other Loan Documents; in
each case whether for principal, interest, prepayment premium, taxes, losses,
compensation, reimbursements, fees, expenses or any other amount payable to the
Banks and the Agent under the Credit Agreement or any other Loan Document (all
such obligations, covenants and conditions described in the foregoing clauses
(i) and (ii) being hereinafter collectively referred to as the "Obligations").
Delivery of Pledged Collateral. All certificates or instruments
representing or evidencing the Pledged Collateral have been delivered to and
held by or on behalf of the Agent pursuant hereto in suitable form for transfer
by delivery, or accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Agent. The
Agent shall have the right at any time to exchange certificates or instruments
representing or evidencing the Pledged Collateral in its possession for
certificates or instruments of smaller or larger denominations.
Representations and Warranties. The Pledgor represents and warrants as
follows:
This Agreement is, and all other documents and instruments executed in
connection herewith will be, legal, valid and binding obligations of the Pledgor
enforceable against the Pledgor in accordance with their respective terms,
except as enforceability may be (i) limited by applicable Debtor Laws and
(ii) subject to the general effect of general principles of equity (regardless
of whether such enforceability is considered in a proceeding is equity or at
law).
The Pledged Shares have been duly authorized and validly issued and are
fully paid and nonassessable under the laws of the jurisdiction of incorporation
of the Issuer.
The Pledgor is the legal and beneficial owner of the Pledged Collateral
free and clear of any Lien, and the Pledgor has not sold, granted any option
with respect to, assigned, transferred or otherwise disposed of any of its
rights or interests in or to the Pledged Collateral.
This Agreement and the delivery of the Pledged Collateral to the Agent
create a valid first priority Lien in the Pledged Collateral securing the
payment of the Obligations.
No authorization, approval or other action by, and no notice to or filing
with, any governmental authority which has not been received is required for
(i) the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement; (ii) the execution, delivery or performance of this Agreement by the
Pledgor; or (iii) the exercise by the Agent of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required in connection
with such disposition by laws affecting the offering and sale of securities
generally).
The Pledged Shares constitute the percentage of the issued and outstanding
shares of stock of the Issuer thereof indicated on Schedule I.
The Pledgor has received, or will receive, direct or indirect benefit from
the making of this Agreement.
Further Assurances. The Pledgor agrees that at any time and from time to
time, at the reasonable request of the Agent and at the expense of the Pledgor,
the Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action that may be reasonably necessary or
desirable, or that the Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce the Banks' rights and
remedies hereunder with respect to any of the Pledged Collateral, and, to the
extent any of the Pledged Collateral is at any time in the custody of a
"clearing corporation" or of a "custodian bank" or a nominee of either subject
to the control of a clearing corporation, as defined in the UCC, then the
Pledgor shall cause a pledge of such Pledged Collateral to be effected hereunder
by causing appropriate entries to be made on the books of the clearing
corporation reducing the account of the Pledgor and increasing the account of
the Agent in the manner and with the effect provided in Section 8.320 of the
UCC. The Pledgor and the Agent agree that a pledge effected by the making of
such entries shall have the effect of a delivery of such securities pursuant to
Section 8.313 of the UCC and the effect of a taking of delivery by the Agent of
such Pledged Collateral in accordance with Section 8.321 of the UCC.
Voting Rights; Dividends; Etc.
So long as no Event of Default shall have occurred and be continuing:
The Pledgor shall be entitled to exercise any and all voting and other
consensual rights (including, without limitation, the right to give consents,
waivers and notifications in respect of the Pledged Collateral) pertaining to
the Pledged Collateral or any part thereof; provided, however, that no vote
shall be cast or consent, waiver or ratification given or action taken which
would be inconsistent with or violate any provision of this Agreement or any
other Loan Document; and provided further that the Pledgor shall give the Agent
at least 10 days' written notice in the form of an officer's certificate of the
manner in which it intends to exercise, or the reasons for refraining from
exercising, any voting or other consensual rights pertaining to the Pledged
Collateral or any part thereof, which might have a material adverse effect on
the value of the Pledged Collateral or any part thereof; and
The Pledgor shall be entitled to receive and retain any and all dividends
and interest paid in respect of the Pledged Collateral; provided, however, that
any and all
(1) dividends and interest paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral,
(2) dividends and other distributions hereafter paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus, and
(3) cash paid, payable or otherwise distributed in redemption of, or in
exchange for, any Pledged Collateral,
shall be, and shall be forthwith delivered to the Agent to hold as, Pledged
Collateral and shall, if received by the Pledgor be received in trust for the
benefit of the Agent, be segregated from the other property or funds of the
Pledgor and be forthwith delivered to the Agent as Pledged Collateral in the
same form as so received (with any necessary endorsement).
Upon the occurrence and during the continuance of an Event of Default:
The Agent may, without notice to the Pledgor, transfer or register in the
name of the Agent or any of its nominees, for the equal and ratable benefit of
the Banks, any or all shares of the Pledged Collateral held by the Agent
hereunder, and the Agent or its nominee may thereafter, after delivery of notice
to the Pledgor (which notice must have been requested by the Banks), exercise
all voting and corporate rights at any meeting of Issuer and any and all rights
of conversion, exchange, subscription or any other rights, privileges or options
pertaining to any shares of the Pledged Collateral as if it were the absolute
owner thereof, including, without limitation, the right to exchange at its
discretion any and all of the Pledged Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of Issuer or upon the
exercise by Issuer or the Agent of any right, privilege or option pertaining to
any shares of the Pledged Collateral, and in connection therewith, to deposit
and deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but the Agent shall have no duty to exercise,
and the Banks shall not have any duty to request the exercise of any of the
aforesaid rights, privileges or options, and neither the Agent nor any Bank
shall be responsible for any failure to do so or delay in so doing.
All rights of the Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to Section
7(a)(i) and to receive the dividends and interest payments which it would
otherwise be authorized to receive and retain pursuant to Section 7(a)(ii) shall
cease, and all such rights shall thereupon become vested in the Agent which
shall thereupon have the sole right to exercise such voting and other consensual
rights and to receive and hold as Pledged Collateral such dividends and interest
payments.
All dividends and interest payments which are received by the Pledgor
contrary to the provisions of Section 7(b)(ii) shall be received in trust for
the benefit of the Agent, shall be segregated from other funds of the Pledgor,
and shall be forthwith paid over to the Agent as Pledged Collateral in the same
form as so received (with any necessary endorsement).
The Pledgor shall execute and deliver (or cause to be executed and
delivered to the Agent) all such proxies and other instruments as the Agent may
reasonably request for the purpose of enabling the Agent to exercise the voting
and other rights which it is entitled to exercise pursuant to Section 7(b)(ii)
and to receive the dividends or interest payments which it is entitled to
receive and retain pursuant to Section 7(b)(iii).
Transfers and Other Liens; Additional Shares; No Amendment.
Except for dispositions or Liens constituting Permitted Liens, the Pledgor
shall not sell, exchange or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral or create or permit to exist any Lien
upon or with respect to any of the Pledged Collateral.
The Pledgor agrees that it will (i) cause the Issuer of the Pledged Shares
not to issue any stock or other securities in addition to or in substitution for
the Pledged Shares issued by the Issuer, except to the Pledgor, and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities of the Issuer of the
Pledged Shares.
The Pledgor shall not amend, and the Pledgor shall cause the Issuer not to
amend, the articles of incorporation (or equivalent corporate documents) of the
Issuer in a manner that would adversely affect the rights and remedies of the
Banks and the Agent under this Agreement.
Agent Appointed Attorney-in Fact. The Pledgor hereby irrevocably appoints
the Agent as the Pledgor's attorney-in-fact, effective upon and during the
continuance of an Event of Default, with full authority in the place and stead
of the Pledgor and in the name of the Pledgor, the Agent or otherwise, from time
to time in the Agent's discretion, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
to receive, endorse and collect any drafts or other instruments, documents
and chattel paper in connection with Section 9(a); and
to file any claims or take any action or institute any proceedings which
the Agent may deem necessary or desirable for the collection of any of the
Pledged Collateral or otherwise to enforce the rights of the Banks and the Agent
with respect to any of the Pledged Collateral.
Agent May Perform. If the Pledgor fails to perform any agreement contained
herein (after the expiration of any applicable grace period or opportunity to
cure), the Agent may itself perform, or cause performance of, such agreement,
and the reasonable expenses of the Agent incurred in connection therewith shall
be payable by the Pledgor under Section 14(b).
Possession; Reasonable Care. The Agent shall hold in its possession all
Pledged Collateral pledged, assigned or transferred hereunder and from time to
time constituting a portion of the Pledged Collateral, except as from time to
time any documents or instruments may be required for recordation or for the
purpose of enforcing or realizing upon any right or value thereby represented.
The Agent may, from time to time, in its sole discretion, appoint one or more
agents (which in no case shall be the Pledgor or an affiliate of the Pledgor) to
hold physical custody, for the account of the Agent, of any or all of the
Pledged Collateral. The Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Pledged Collateral in its possession if
the Pledged Collateral is accorded treatment substantially equal to that which
the Agent accords its own property, it being understood that the Agent shall not
have any responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Pledged Collateral, whether or not the Agent has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral.
Remedies. If any Event of Default shall have occurred and be continuing:
The Agent may exercise in respect of the Pledged Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party upon default under the UCC (whether
or not the UCC applies to the affected Pledged Collateral), or under the laws of
any other applicable jurisdiction, and the Agent may also, without notice except
as specified below, sell the Pledged Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker's board or at
any of the Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Agent may reasonably deem
commercially reasonable. The Pledgor agrees that, to the extent notice of sale
shall be required by law, at least 10 days' notice to the Pledgor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Agent shall not be obligated
to make any sale of Pledged Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Any cash held by the Agent as Pledged Collateral and all cash proceeds
received by the Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral shall be applied in
whole or in part by the Agent against, the Obligations in such order as the
Agent shall select. Any surplus of such cash or cash proceeds and interest
accrued thereon, if any, held by the Agent and remaining after payment in full
of all the Obligations shall be paid over to the Pledgor or to whomsoever may be
lawfully entitled to receive such surplus; provided that the Agent shall have no
obligation to invest or otherwise pay interest on any amounts held by it in
connection with or pursuant to this Agreement.
All rights and remedies of the Agent and the Banks expressed herein are in
addition to all other rights and remedies possessed by the Agent and the Banks
in the Loan Documents and any other agreement or instrument relating to the
Obligations.
Registration Rights, Private Sales, Etc.
If the Agent shall determine to exercise its and the Banks' right to sell
all or any of the Pledged Collateral pursuant to Section 12, the Pledgor agrees
that, upon request of the Agent, the Pledgor will use its best efforts to cause
the officers and directors of the Issuer of the Pledged Shares, at Pledgor's
expense, to cooperate fully with the Agent in conformity with requirements
imposed by law for the availability of an exemption from registration under the
Securities Act of 1933, as amended from time to time (the "Securities Act") and
in the Agent's determination that such exemption is not reasonably available for
such sale, the Pledgor shall use its best efforts to:
(i)execute and deliver, and cause the Issuer of the Pledged Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and to use its best efforts to do
or cause to be done all such other acts and things, as may be necessary in the
reasonable opinion of the Agent to effectively realize upon the value of the
Pledged Collateral, to register such Pledged Collateral under the provisions of
the Securities Act and to use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished to facilitate the
sale or other disposition of the Pledged Collateral, or that portion thereof to
be sold, and to make all amendments and supplements thereto and to the related
prospectuses which, in the reasonable opinion of the Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act, and
the rules and regulations of the Securities Act, and the rules and regulations
of the Securities and Exchange Commission, applicable thereto or, where
relevant, the laws, rules and regulations of such other jurisdiction applicable
thereto;
(ii) use its best efforts to qualify the Pledged Collateral under the state
securities or "Blue Sky" laws, if applicable thereto, and to obtain all
necessary governmental approvals for the sale of the Pledged Collateral, as
reasonably requested by the Agent; provided, however, that an Issuer will not be
required (1) to qualify generally to do business in any jurisdiction where it
subject itself to taxation in any such jurisdiction, or (3) to consent to
general service of process in any such jurisdiction;
(iii) cause the Issuer to make available to its security holders, as soon
as practicable, an earnings statement which will satisfy the provisions of
Section 11 (a) of the Securities Act; and
(iv) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law.
(b) The Pledgor recognizes that the Agent may be unable to effect a public
sale of any or all of the Pledged Collateral by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
Pledged Collateral for their own account for investment and not with a view to
the distribution or resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall, to the extent permitted
by law, be deemed to have been made in a commercially reasonable manner. Neither
the Agent nor the Banks shall be under any obligation to delay a sale of any of
the Pledged Collateral for the period of time necessary to permit the Issuer of
such securities to register such securities under the Securities Act or under
any applicable state securities laws, even if the Issuer would agree to do so.
(c) The Pledgor further agrees to do or cause to be done, to the extent
that the Pledgor may legally do so, all such other acts and things as may be
necessary to make such sales or resales of any portion or all of the Pledged
Collateral valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at the Pledgor's expense.
The Pledgor further agrees that a breach of any of the covenants contained in
this Section 13 will cause irreparable injury to the Agent and the Banks, and
that the Agent and the Banks have no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in
this Section 13 shall be specifically enforceable against the Pledgor, and the
Pledgor hereby waives and agrees, to the fullest extent permitted by law, not to
assert as a defense against an action for specific performance of such covenants
that (i) the Pledgor's failure to perform such covenants will not cause
irreparable injury to the Agent or the Banks, or (ii) the Agent or the Banks
have an adequate remedy at law in respect of such breach. The Pledgor further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by the Agent and the Banks by reason of a breach of any of the
covenants contained in this Section 13 and, consequently, agrees that, if the
Pledgor shall breach any of such covenants and the Agent or any Bank shall sue
for damages for such breach, the Pledgor shall pay to the Agent or such Bank, as
liquidated damages and not as a penalty, an aggregate amount equal to the value
of the Pledged Collateral on the date the Agent or such Bank shall demand
compliance with this Section 13.
(d) To the fullest extent permitted by applicable law and subject to the
provisions of Section 10.8 of the Credit Agreement, the Pledgor agrees to
indemnify, protect and save harmless the Agent, the Banks and any controlling
persons thereof within the meaning of the Securities Act from and against any
and all liabilities, suits, claims, costs and expenses (including counsel fees
and disbursements) arising under the Securities Act, the Securities and Exchange
Act of 1934, as amended, or at common law, or pursuant to any other applicable
law in connection with the aforesaid registration, insofar as such liabilities,
suits, claims, costs and expenses arise out of or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
aforesaid registration statement, or the aforesaid registration statement as
amended or supplemented, or arises out of or is based upon, the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that the Pledgor shall not be liable in any such case to the extent that any
such liabilities, suits, claims, costs and expenses arise out of or are based
upon, the gross negligence or the wilful misconduct of the Agent or any Bank or
any untrue statement or alleged untrue statement or omission or alleged omission
made in the aforesaid registration statement or the aforesaid registration
statement as amended or supplemented, in reliance upon and in conformity with
written information furnished to the Pledgor by the Agent or such Bank
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability that the Pledgor may otherwise have to the Agent and
any such Bank, or any such controlling person.
SECTION 14. Indemnity, Expenses and Interest.
(a) To the fullest extent permitted by law and subject to the provisions of
Section 10.8 of the Credit Agreement, the Pledgor agrees to indemnify the Agent
and the Banks and their respective affiliates, subsidiaries, parent companies
and other related entities, and their respective officers, directors employees,
agents, attorneys and other professionals and consultants, insurers and
stockholders, and each of them, in the manner set forth in Section 10.4 of the
Credit Agreement.
(b) The Pledgor agrees to pay to the Agent and the Banks the costs and
expenses set forth in Section 10.3 of the Credit Agreement in the manner set
forth in Section 10.3 of the Credit Agreement.
(c) The Pledgor agrees to pay interest on any expenses or other sums due to
the Agent and the Banks hereunder that are not paid when due at the Default
Rate.
SECTION 15. Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Pledgor herefrom shall in any
event be effective unless the same shall be in writing and signed by the
Required Banks, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 16. Addresses for Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, facsimile or cable communication) and, if
to the Pledgor, mailed, telegraphed, transmitted, cabled or delivered to it,
addressed to it at the address of the Pledgor specified on the signature page
hereof; if to the Agent or any Bank, mailed, telegraphed, transmitted, cabled or
delivered to it, addressed to it at the address of the Agent or such Bank (as
the case may be) specified in the Credit Agreement; or as to each party at such
other address as shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this Section 16. All such
notices and other communications shall, when mailed, telegraphed, telexed,
transmitted or cabled, respectively, be effective when deposited in the mails,
confirmed by telex answerback, transmitted by telecopier or delivered to the
cable company, respectively.
SECTION 17. Security Interest Absolute. All rights of the Agent and the
Banks, all obligations of the Pledgor hereunder and the security interest
hereunder shall, to the extent permitted by applicable law, be absolute and
unconditional, irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement, the
Notes, or any of the other Loan Documents;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations or any other amendment or waiver of or
any consent to any departure from the Credit Agreement, the Notes or any of the
other Loan Documents;
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the Obligations; or
(d) any other circumstance (other than payment in full of the Obligations)
which might otherwise constitute a defense available to, or a discharge of, the
Pledgor or any Loan Party in respect of the Obligations.
SECTION 18. Continuing Security Interest. This Agreement and the delivery
of the Pledged Collateral to the Agent shall create a continuing security
interest in the Pledged Collateral and shall (a) remain in full force and effect
until termination of the obligations of the Banks to make the Loans under the
Credit Agreement and the indefeasible payment in full thereafter of the
Obligations; (b) be binding upon the Pledgor and its successors and assigns; and
(c) inure to the benefit of the Agent, the Banks and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), the Agent and the Banks may assign or otherwise transfer
any of their respective rights under this Agreement to any other Person, and
such Person shall thereupon become vested with all the benefits in respect
thereof granted herein or otherwise to the Agent or the Banks, as the case may
be. Upon the termination of the obligations of the Banks to make the Loans and
the indefeasible payment in full thereafter of the Obligations, the Pledgor
shall be entitled to the return, upon its request and at its expense, of such of
the Pledged Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof.
SECTION 19. Waiver of Marshalling. All rights of marshalling of assets of
the Pledgor, including any such right with respect to the Pledged Collateral,
are hereby waived by the Pledgor.
SECTION 20. Limitation by Law. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
SECTION 21. Separability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Should any clause, sentence, paragraph, subsection or
Section of this Agreement be judicially declared to be invalid, unenforceable or
void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree that the part or parts
of this Agreement so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom by the parties hereto, and the remainder will have
the same force and effectiveness as if such stricken part or parts had never
been included herein.
SECTION 22. Captions. The captions in this Agreement have been inserted for
convenience only and shall be given no substantive meaning or significance
whatever in construing the terms and provisions of this Agreement.
SECTION 23. No Waiver: Remedies. No failure on the part of the Agent or any
Bank to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 24. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 25. Survival of Representations and Warranties. All representations
and warranties contained in this Agreement or made in writing by or on behalf of
the Pledgor in connection herewith, shall survive the execution and delivery of
this Agreement. Any investigation by the Agent or any Bank shall not diminish in
any respect whatsoever its right to rely on such representations and warranties.
SECTION 26. Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF TEXAS (WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES). THE PARTIES
EXPRESSLY ACKNOWLEDGE THAT (I) THEY INTEND THAT THIS AGREEMENT SHALL BE GOVERNED
BY THE PROVISIONS (INCLUDING, WITHOUT LIMITATION, THE RIGHT OF THE PARTIES TO
SELECT THE GOVERNING LAW) OF THE UNIFORM COMMERCIAL CODE AND NOT BY COMMON LAW
AND (II) THE STATE OF TEXAS BEARS A REASONABLE RELATIONSHIP TO THIS TRANSACTION
AND NO OTHER STATE HAS A MATERIALLY GREATER INTEREST IN THIS TRANSACTION THAN
THE STATE OF TEXAS. THE PLEDGOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS AND OF ANY
TEXAS STATE COURT SITTING IN TEXAS FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[signatures on next page]
<PAGE>
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
LANCER CORPORATION
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
ADDRESS:
235 West Turbo
San Antonio, Texas 78216
Facsimile: (210) 661-6964
Attention: Chief Financial Officer
<PAGE>
SCHEDULE I
TO
PLEDGE AND SECURITY AGREEMENT
Stock
Class Certificate Number
Name of Issuer of Stock Number Par Value of Shares Percentages
- ------------------------------------------------------------------------------
Glenn Pleass Holdings Pty. A 10 $1.00 11
Ltd. C 12 $1.00 150
D 13 $1.00 50
E 14 $1.00 50
Total Percentage 63.5%
10-33 EXHIBIT INDEX
Parent and Affiliate Guaranties, dated July 15, 1996, between Lancer
Corporation and The Frost National Bank
Parent Guaranty
Affiliate Guaranty - Lancer Capital Corporation
Affiliate Guaranty - Lancer Partnership, Ltd.
Affiliate Guaranty - Lancer International Sales, Inc.
Affiliate Guaranty - Lan-Leasing, Inc.
Affiliate Guaranty - Industrias Lancermex, S.A. de C.V.
Affiliate Guaranty - Servicios Lancermex, S.A. de C.V.
<PAGE>
PARENT GUARANTY
This Parent Guaranty (the "Guaranty") is made as of the 15th day of July,
1996 by LANCER CORPORATION, a corporation organized under the laws of the State
of Texas (the "Guarantor"), in favor of THE FROST NATIONAL BANK, a national
banking association and its successors and assigns, as agent (the "Agent") for
the equal and ratable benefit of the banks and other financial institutions
listed on the signature pages of and any other bank or financial institution
that may hereafter become a party to the hereinafter described Credit Agreement
in accordance with the terms thereof (hereinafter collectively referred to as
the "Banks").
PRELIMINARY STATEMENT
1. The Banks have entered into a Credit Agreement dated as of July __, 1996
(as it may hereafter be amended or otherwise modified from time to time, the
"Credit Agreement") with LANCER PARTNERSHIP, LTD., a Texas limited partnership
("Operating Subsidiary"), NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexico
corporation ("Mexico Subsidiary")(Operating Subsidiary and Mexico Subsidiary
being hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers"), and LANCER CORPORATION, a Texas corporation ("Parent Company").
Operating Subsidiary and Mexico Subsidiary are wholly owned Subsidiaries of
Guarantor. The Guarantor will derive substantial benefit, whether directly or
indirectly, from the making of the Loans by the Banks to Operating Subsidiary
and Mexico Subsidiary pursuant to the terms and conditions set forth in the
Credit Agreement. It is a condition precedent to the effectiveness of the Credit
Agreement and the making of the Loans by the Banks under the Credit Agreement
that the Guarantor shall have executed and delivered this Guaranty. Unless
otherwise defined herein, the capitalized terms used herein which are defined in
the Credit Agreement shall have the meanings specified therein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
Guaranty. Subject to Section 22 hereof, the Guarantor hereby
unconditionally and irrevocably (a) guarantees the punctual payment when due
(following any applicable grace period or opportunity to cure), whether at
stated maturity, by acceleration, by prepayment or otherwise, of all obligations
to the Agent and the Banks now or hereafter existing under the Credit Agreement,
the Notes and all other Loan Documents, whether for principal, interest,
prepayment premium, fees, expenses, taxes, costs, losses, compensation,
reimbursements or any other amount payable to the Agent and the Banks under the
terms of the Credit Agreement, the Notes and the other Loan Documents, and (b)
agrees to pay any and all expenses (including, without limitation, reasonable
counsel fees and expenses) incurred by the Agent and the Banks in enforcing any
rights under this Guaranty (all of the above being hereinafter called the
"Obligations").
Guaranty Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, the Notes
and all other Loan Documents (subject to any applicable grace period or
opportunity to cure), regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Banks with respect thereto. The liability of the Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
any lack of validity or enforceability of or defect or deficiency in the
Credit Agreement, the Notes, or any of the other Loan Documents;
any change in the time, manner, terms or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to departure from the Credit Agreement, the Notes, or any of
the other Loan Documents;
any sale, exchange, release or non-perfection of any property standing as
security for the liabilities hereby guaranteed or any liabilities incurred
directly or indirectly hereunder or any set-off against any of said liabilities,
or any release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
any change in the existence, structure or ownership of the Guarantor or any
other Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting such Company or such Company's assets;
the existence of any claim, set-off or other rights which the Guarantor may
have at any time against any other Company, the holder or holders of the Notes
or any other Person, whether or not arising in connection with this Guaranty,
the Credit Agreement, the Notes or any other Loan Document; provided that
nothing contained herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
failure, omission, delay, neglect, refusal or lack of diligence by any Bank
or the Agent or any other Person to assert, enforce, give notice of intent to
exercise, or any other notice with respect to, or exercise any right, privilege,
power or remedy conferred on any Bank or the Agent or any other Person in any of
the Loan Documents or by law or action on the part of any Bank or the Agent or
any other Person granting indulgence, grace, adjustment, forbearance or
extension of any kind to Guarantor, any other Company or any other Person;
release, surrender, exchange, subordination or loss of any security or lien
priority under any of the Loan Documents or in connection with the Obligations;
release, modification or waiver of, or failure, omission, delay, neglect,
refusal or lack of diligence to enforce, any guaranty, pledge, mortgage, deed of
trust, security agreement, lien, charge, insurance agreement, bond, letter of
credit or other security device, guaranty, surety or indemnity agreement
whatsoever;
failure by any Bank, the Agent or any other Person to notify, or timely
notify, the Guarantor of any default, event of default or similar event (however
denominated) under any of the Loan Documents, any renewal, extension,
supplementing, modification, rearrangement, amendment, restatement, replacement,
cancellation, rescission, revocation or reinstatement (whether or not material)
or assignment of any part of the Obligations, release or exchange of any
security, any other action taken or not taken by any Bank or the Agent against
the Guarantor, any other Company or any other Person or any direct or indirect
security for any part of the Obligations, any new agreement between any Bank or
the Agent and any other Company or any other Person or any other event or
circumstance. Except as required by applicable law or as otherwise provided in
the Loan Documents, neither the Agent nor any Bank has any duty or obligation to
give the Guarantor (in its capacity as a guarantor hereunder) any notice of any
kind under any circumstances whatsoever with respect to or in connection with
the Obligations or the Loan Documents; or
any other circumstance which might otherwise constitute a defense available
to, or a discharge of any other Company or any other Person (including any
guarantor) in respect of the Obligations, other than payment in full of the
Obligations.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is annulled, set
aside, invalidated, declared to be fraudulent or preferential, rescinded or must
otherwise be returned, refunded or repaid by the Banks or the proceeds of
collateral are required to be returned by the Banks upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any other Company, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any other Company or any substantial part
of such Company's respective property or otherwise, all as though such payment
or payments had not been made. The obligations of the Guarantor under this
Guaranty shall not be subject to reduction, termination or other impairment by
reason of any setoff, recoupment, counterclaim or defense or for any other
reason.
Continuing Guaranty. This is a continuing Guaranty, and all extensions of
credit and financial accommodations heretofore, concurrently herewith or
hereafter made by the Banks and the Agent to either Borrower and all
indebtedness of either Borrower now owned or hereafter acquired by the Banks and
the Agent in connection with the transactions contemplated under the Credit
Agreement shall be conclusively presumed to have been made or acquired in
acceptance hereof.
Waiver. This is an absolute Guaranty of payment and not of collection, and
the Guarantor hereby waives (a) promptness, diligence, notice of acceptance,
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate, notice of acceleration and any other notice with respect to any
of the Obligations and this Guaranty; and (b) any requirement that the Agent or
any Bank protect, secure, perfect or insure any security interest or Lien on any
property subject thereto or exhaust any right or take any action against any
other Company or any other Person or any Collateral or that any other Company or
any other Person be joined in any action hereunder. Should the Agent or any Bank
seek to enforce the obligations of the Guarantor hereunder by action in any
court, the Guarantor waives any necessity, substantive or procedural, that a
judgment previously be rendered against any Borrower or any other Person, or
that any action be brought against any other Company or any other Person, or
that any other Company or any other Person should be joined in such cause. Such
waiver shall be without prejudice to the Agent or any Bank at their option to
proceed against any other Company or any other Person, whether by separate
action or by joinder.
Several Obligations. The obligations of the Guarantor hereunder are several
from any other Company or any other Person, and are primary obligations
concerning which the Guarantor is the principal obligor. The Guarantor agrees
that this Guaranty shall not be discharged except by complete performance of the
Obligations of Borrowers under the Notes, the Credit Agreement and the other
Loan Documents and the obligations of the Guarantor hereunder. The obligations
of the Guarantor hereunder shall not be affected in any way by any receivership,
insolvency, bankruptcy or other proceedings affecting any other Company or any
other Person or any of such Company's or such Person's assets, or the release or
discharge of any other Company or any other Person from the performance of any
obligation contained in any promissory note or other instrument issued in
connection with, evidencing or securing any indebtedness guaranteed by this
instrument, whether occurring by reason of law or any other cause, whether
similar or dissimilar to the foregoing.
Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise, until the termination of the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement and the indefeasible
payment in full thereafter of all the Obligations. If any amount shall be paid
to the Guarantor on account of such subrogation rights at any time when the
Banks are obligated to make Loans or issue Letters of Credit under the Credit
Agreement or when all the Obligations shall not have been indefeasibly paid in
full, such amount shall be held in trust for the benefit of the Banks and shall
forthwith be paid to the Agent to be applied to the Obligations in such order as
the Agent shall select. If (a) the Guarantor shall make payment to the Agent of
all or any part of the Obligations and (b) the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement shall be terminated
and all of the Obligations shall be paid in full thereafter, the Agent will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of any interest in the
Obligations resulting from such payment by the Guarantor.
Subordination of Borrowers' Obligations to the Guarantor. The Guarantor
agrees that if, for any reason whatsoever, any Borrower now or hereafter owes
any indebtedness, directly or indirectly, to the Guarantor, or the Guarantor now
or hereafter owes any indebtedness, directly or indirectly, to any other
guarantor of the Obligations, all such indebtedness, together with all interest
thereon and fees and other charges in connection therewith, and all Liens
securing any such indebtedness shall at all times be second, subordinate and
inferior in right of payment, in lien priority and in all other respects to the
Obligations and the fulfillment of any of the Guarantor's obligations hereunder
or under any of the other Loan Documents. The provisions of this Section 7 are
in addition to, and cumulative of, any other provisions contained in any other
Loan Document or other document, instrument or writing.
Stay of Acceleration. If acceleration of the time for payment of any amount
payable by any Borrower under the Credit Agreement or the Notes is stayed upon
the insolvency, bankruptcy or reorganization of such Borrower, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement shall
nonetheless be payable by the Guarantor hereunder forthwith on demand by the
holder or holders of the Notes. The Guarantor's Obligations under this Guaranty
shall not be limited by any valuation, estimation or disallowance made in
connection with any proceedings filed under the United States Bankruptcy Code.
Representations and Warranties. The Guarantor hereby represents and
warrants as follows:
This Guaranty is, and all other documents and instruments executed in
connection herewith when delivered will be, legal, valid and binding obligations
of the Guarantor, enforceable against the Guarantor in accordance with their
respective terms, except as such enforceability may be (i) limited by the effect
of any Debtor Laws and (ii) subject to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Upon giving effect to (a) the execution of this Guaranty and (b) the
consummation of the transactions contemplated under this Guaranty, the following
are true and correct after diligent investigation:
The fair saleable value of the assets of the Guarantor exceeds the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including, without limitation, pending or overtly threatened
litigation in amounts in excess of effective insurance coverage and all other
contingent liabilities) of the Guarantor as they mature.
The assets of the Guarantor do not constitute unreasonably small capital
for the Guarantor to carry out its business as now conducted and as proposed to
be conducted including the capital needs of the Guarantor, taking into account
the particular capital requirements of the business conducted by the Guarantor,
and projected capital requirements and capital availability thereof.
The Guarantor does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
received by the Guarantor, and of amounts to be payable on or in respect of debt
of the Guarantor).
The fair saleable value of the assets of the Guarantor is greater than the
total fair value of the liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured, and liquidated or unliquidated
liabilities, of the Guarantor.
The Guarantor has determined that its liability and obligation under this
Guaranty may reasonably be expected to substantially benefit it directly or
indirectly, and its board of directors has made that determination. Borrowers
and the Guarantor are mutually dependent on each other in the conduct of their
respective businesses and are, and do business together with the other Companies
as, an integrated business enterprise involved in the designing, engineering,
manufacturing and marketing of fountain soft drink dispensing systems and citrus
beverage dispensing systems. The maintenance and improvement of each Borrower's
financial condition is vital to sustaining the Guarantor's business and the
transactions contemplated in the Credit Agreement produce distinct and
identifiable financial and economic direct or indirect benefits to the
Guarantor. Such identifiable benefits include the general improvement of the
Guarantor's financial and economic condition. The Guarantor has had full and
complete access to the Loan Documents and all other papers executed by any other
Company or any other Person in connection with the Obligations, has reviewed
them and is fully aware of the meaning and effect of their contents. The
Guarantor is fully informed of all circumstances which bear upon the risks of
executing this Guaranty and which a diligent inquiry would reveal. It has
adequate means to obtain from each Company on a continuing basis information
concerning the financial condition of the Companies, and is not depending on the
Agent or any Bank to provide such information, now or in the future. It agrees
that neither the Agent nor any Bank shall have an obligation to advise or notify
it or to provide it with any such data or information. The execution and
delivery of this Guaranty is not a condition precedent (and neither the Agent
nor any Bank has in any way implied that the execution of this Guaranty is a
condition precedent) to the Agent's or any Bank's making, extending or modifying
any loan or any other financial accommodation to or for the Guarantor.
No bankruptcy or insolvency proceedings are pending or contemplated by or
against the Guarantor.
Amendments, Etc. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Banks and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Banks, limit
the liability of the Guarantor hereunder.
Notices, Etc. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Guarantor, at the address for the Guarantor set forth on
the signature page hereof; if to the Agent or any Bank, at the address for the
Agent or such Bank (as the case may be) set forth in the Credit Agreement, or,
as to each party, at such other address as shall be designated by such party in
a written notice to the other party. All such notices and communications shall,
when mailed, telegraphed, telexed, transmitted or cabled be effective when
deposited in the mail, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telecopier or delivered to the cable company,
respectively.
No Waiver; Remedies. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Banks are hereby authorized at any time and from time to
time, without notice to the Guarantor (any such notice being expressly waived by
the Guarantor) to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any Bank to or for the
credit or the account of the Guarantor against any and all of the obligations of
the Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not any Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Banks under this
Section 13 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Banks may have.
Costs, Expenses and Taxes. The Guarantor agrees to pay, and cause to be
paid, the costs and expenses of the Agent and the Banks that are set forth in
Section 10.3 of the Credit Agreement in the manner set forth in Section 10.3 of
the Credit Agreement. The Guarantor agrees to pay interest on any expenses or
other sums due to the Agent and the Banks thereunder that are not paid when due
(following any applicable grace period or opportunity to cure) at the Default
Rate. In addition, subject to Section 10.8 of the Credit Agreement, the
Guarantor shall pay any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of this Guaranty and
any of the documents or instruments evidencing the Obligations, and agrees to
save the Agent and the Banks harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes. The agreements of the Guarantor contained in this Section 14 shall
survive the payment of all other amounts owing hereunder or under any of the
other Obligations.
Indemnity. To the fullest extent permitted by law and subject to Section
10.8 of the Credit Agreement, the Guarantor agrees to indemnify the Agent and
the Banks and their respective officers, directors employees, agents, attorneys
and other professionals and consultants, insurers and stockholders, and each of
them, in the manner set forth in Section 10.4 of the Credit Agreement.
Separability. Should any clause, sentence, paragraph, subsection or Section
of this Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the remainder
of this Guaranty, and the parties hereto agree that the part or parts of this
Guaranty so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
Captions. The captions in this Guaranty have been inserted for convenience
only and shall be given no substantive meaning or significance whatever in
construing the terms and provisions of this Guaranty.
Continuing Guaranty; Transfer of the Notes. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the termination of
the obligations of the Banks to make Loans or issue Letters of Credit under the
Credit Agreement and the indefeasible payment in full thereafter of the
Obligations; (b) be binding upon the Guarantor, its successors and assigns; and
(c) inure to the benefit of and be enforceable by the Agent and the Banks and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), the Agent and the Banks may assign or
otherwise transfer the Notes to any other Person or entity in accordance with
the terms and provisions set forth in Section 10.7 of the Credit Agreement, and
such other Person or entity shall thereupon become vested with all the rights
and benefits in respect thereof granted to the Agent and the Banks herein or
otherwise.
Limitation by Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
Survival of Representations and Warranties. All representations and
warranties contained in this Guaranty or made in writing by or on behalf of the
Guarantor in connection herewith, shall survive the execution and delivery of
this Guaranty. Any investigation by the Agent or any Bank shall not diminish in
any respect whatsoever its right to rely on such representations and warranties.
Governing Law; Submission to Jurisdiction. THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES). THE PARTIES EXPRESSLY
ACKNOWLEDGE THAT (I) THEY INTEND THAT THIS AGREEMENT AND EACH NOTE SHALL BE
GOVERNED BY THE PROVISIONS (INCLUDING, WITHOUT LIMITATION, THE RIGHT OF THE
PARTIES TO SELECT THE GOVERNING LAW) OF THE UNIFORM COMMERCIAL CODE AND NOT BY
COMMON LAW AND (II) THE STATE OF TEXAS BEARS A REASONABLE RELATIONSHIP TO THIS
TRANSACTION AND NO OTHER STATE HAS A MATERIALLY GREATER INTEREST IN THIS
TRANSACTION THAN THE STATE OF TEXAS. THE GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN TEXAS FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Limitation on Guaranteed Amount. Any other provision of this Guaranty
notwithstanding, the amount guaranteed by the Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations under this
Guaranty shall not be subject to avoidance under Section 548 of the Federal
Bankruptcy Code or to being set aside or annulled under any applicable state law
relating to fraud on creditors. In determining the limitations, if any, on the
amount of the Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which the Guarantor may have
under this Guaranty or applicable law shall be taken into account.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed by its respective officer thereunto duly authorized, as of the date
first above written.
LANCER CORPORATION
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
235 West Turbo
San Antonio, Texas 78216
Facsimile:
Attention:
<PAGE>
AFFILIATE GUARANTY
[US AFFILIATE]
This Affiliate Guaranty (the "Guaranty") is made as of the 15th day of
July, 1996 by LANCER CAPITAL CORPORATION, a corporation organized under the laws
of the State of Delaware (the "Guarantor"), in favor of THE FROST NATIONAL BANK,
a national banking association and its successors and assigns, as agent (the
"Agent") for the equal and ratable benefit of the banks and other financial
institutions listed on the signature pages of and any other bank or financial
institution that may hereafter become a party to the hereinafter described
Credit Agreement in accordance with the terms thereof (hereinafter collectively
referred to as the "Banks").
PRELIMINARY STATEMENT
1. The Banks have entered into a Credit Agreement dated as of July 15, 1996
(as it may hereafter be amended or otherwise modified from time to time, the
"Credit Agreement") with LANCER PARTNERSHIP, LTD., a Texas limited partnership
("Operating Subsidiary"), NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexico
corporation ("Mexico Subsidiary")(Operating Subsidiary and Mexico Subsidiary
being hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers"), and LANCER CORPORATION, a Texas corporation ("Parent Company").
The Guarantor is an Affiliate of Operating Subsidiary and Mexico Subsidiary and
a Subsidiary of Parent Company. The Guarantor will derive substantial benefit,
whether directly or indirectly, from the making of the Loans by the Banks to
Operating Subsidiary and Mexico Subsidiary pursuant to the terms and conditions
set forth in the Credit Agreement. It is a condition precedent to the
effectiveness of the Credit Agreement and the making of the Loans by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty. Unless otherwise defined herein, the capitalized terms used
herein which are defined in the Credit Agreement shall have the meanings
specified therein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
Guaranty. Subject to Section 22 hereof, the Guarantor hereby
unconditionally and irrevocably (a) guarantees the punctual payment when due
(following any applicable grace period or opportunity to cure), whether at
stated maturity, by acceleration, by prepayment or otherwise, of all obligations
to the Agent and the Banks now or hereafter existing under the Credit Agreement,
the Notes and all other Loan Documents, whether for principal, interest,
prepayment premium, fees, expenses, taxes, costs, losses, compensation,
reimbursements or any other amount payable to the Agent and the Banks under the
terms of the Credit Agreement, the Notes and the other Loan Documents, and (b)
agrees to pay any and all expenses (including, without limitation, reasonable
counsel fees and expenses) incurred by the Agent and the Banks in enforcing any
rights under this Guaranty (all of the above being hereinafter called the
"Obligations").
Guaranty Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, the Notes
and all other Loan Documents (subject to any applicable grace period or
opportunity to cure), regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Banks with respect thereto. The liability of the Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
any lack of validity or enforceability of or defect or deficiency in the
Credit Agreement, the Notes, or any of the other Loan Documents;
any change in the time, manner, terms or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to departure from the Credit Agreement, the Notes, or any of
the other Loan Documents;
any sale, exchange, release or non-perfection of any property standing as
security for the liabilities hereby guaranteed or any liabilities incurred
directly or indirectly hereunder or any set-off against any of said liabilities,
or any release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
any change in the existence, structure or ownership of the Guarantor or any
other Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting such Company or such Company's assets;
the existence of any claim, set-off or other rights which the Guarantor may
have at any time against any other Company, the holder or holders of the Notes
or any other Person, whether or not arising in connection with this Guaranty,
the Credit Agreement, the Notes or any other Loan Document; provided that
nothing contained herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
failure, omission, delay, neglect, refusal or lack of diligence by any Bank
or the Agent or any other Person to assert, enforce, give notice of intent to
exercise, or any other notice with respect to, or exercise any right, privilege,
power or remedy conferred on any Bank or the Agent or any other Person in any of
the Loan Documents or by law or action on the part of any Bank or the Agent or
any other Person granting indulgence, grace, adjustment, forbearance or
extension of any kind to Guarantor, any other Company or any other Person;
release, surrender, exchange, subordination or loss of any security or lien
priority under any of the Loan Documents or in connection with the Obligations;
release, modification or waiver of, or failure, omission, delay, neglect,
refusal or lack of diligence to enforce, any guaranty, pledge, mortgage, deed of
trust, security agreement, lien, charge, insurance agreement, bond, letter of
credit or other security device, guaranty, surety or indemnity agreement
whatsoever;
failure by any Bank, the Agent or any other Person to notify, or timely
notify, the Guarantor of any default, event of default or similar event (however
denominated) under any of the Loan Documents, any renewal, extension,
supplementing, modification, rearrangement, amendment, restatement, replacement,
cancellation, rescission, revocation or reinstatement (whether or not material)
or assignment of any part of the Obligations, release or exchange of any
security, any other action taken or not taken by any Bank or the Agent against
the Guarantor, any other Company or any other Person or any direct or indirect
security for any part of the Obligations, any new agreement between any Bank or
the Agent and any other Company or any other Person or any other event or
circumstance. Except as required by applicable law or as otherwise provided in
the Loan Documents, neither the Agent nor any Bank has any duty or obligation to
give the Guarantor (in its capacity as a guarantor hereunder) any notice of any
kind under any circumstances whatsoever with respect to or in connection with
the Obligations or the Loan Documents; or
any other circumstance which might otherwise constitute a defense available
to, or a discharge of any other Company or any other Person (including any
guarantor) in respect of the Obligations, other than payment in full of the
Obligations.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is annulled, set
aside, invalidated, declared to be fraudulent or preferential, rescinded or must
otherwise be returned, refunded or repaid by the Banks or the proceeds of
collateral are required to be returned by the Banks upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any other Company, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any other Company or any substantial part
of such Company's respective property or otherwise, all as though such payment
or payments had not been made. The obligations of the Guarantor under this
Guaranty shall not be subject to reduction, termination or other impairment by
reason of any setoff, recoupment, counterclaim or defense or for any other
reason.
Continuing Guaranty. This is a continuing Guaranty, and all extensions of
credit and financial accommodations heretofore, concurrently herewith or
hereafter made by the Banks and the Agent to either Borrower and all
indebtedness of either Borrower now owned or hereafter acquired by the Banks and
the Agent in connection with the transactions contemplated under the Credit
Agreement shall be conclusively presumed to have been made or acquired in
acceptance hereof.
Waiver. This is an absolute Guaranty of payment and not of collection, and
the Guarantor hereby waives (a) promptness, diligence, notice of acceptance,
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate, notice of acceleration and any other notice with respect to any
of the Obligations and this Guaranty; and (b) any requirement that the Agent or
any Bank protect, secure, perfect or insure any security interest or Lien on any
property subject thereto or exhaust any right or take any action against any
other Company or any other Person or any Collateral or that any other Company or
any other Person be joined in any action hereunder. Should the Agent or any Bank
seek to enforce the obligations of the Guarantor hereunder by action in any
court, the Guarantor waives any necessity, substantive or procedural, that a
judgment previously be rendered against any Borrower or any other Person, or
that any action be brought against any other Company or any other Person, or
that any other Company or any other Person should be joined in such cause. Such
waiver shall be without prejudice to the Agent or any Bank at their option to
proceed against any other Company or any other Person, whether by separate
action or by joinder.
Several Obligations. The obligations of the Guarantor hereunder are several
from any other Company or any other Person, and are primary obligations
concerning which the Guarantor is the principal obligor. The Guarantor agrees
that this Guaranty shall not be discharged except by complete performance of the
Obligations of Borrowers under the Notes, the Credit Agreement and the other
Loan Documents and the obligations of the Guarantor hereunder. The obligations
of the Guarantor hereunder shall not be affected in any way by any receivership,
insolvency, bankruptcy or other proceedings affecting any other Company or any
other Person or any of such Company's or such Person's assets, or the release or
discharge of any other Company or any other Person from the performance of any
obligation contained in any promissory note or other instrument issued in
connection with, evidencing or securing any indebtedness guaranteed by this
instrument, whether occurring by reason of law or any other cause, whether
similar or dissimilar to the foregoing.
Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise, until the termination of the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement and the indefeasible
payment in full thereafter of all the Obligations. If any amount shall be paid
to the Guarantor on account of such subrogation rights at any time when the
Banks are obligated to make Loans or issue Letters of Credit under the Credit
Agreement or when all the Obligations shall not have been indefeasibly paid in
full, such amount shall be held in trust for the benefit of the Banks and shall
forthwith be paid to the Agent to be applied to the Obligations in such order as
the Agent shall select. If (a) the Guarantor shall make payment to the Agent of
all or any part of the Obligations and (b) the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement shall be terminated
and all of the Obligations shall be paid in full thereafter, the Agent will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of any interest in the
Obligations resulting from such payment by the Guarantor.
Subordination of Borrowers' Obligations to the Guarantor. The Guarantor
agrees that if, for any reason whatsoever, any Borrower now or hereafter owes
any indebtedness, directly or indirectly, to the Guarantor, or the Guarantor now
or hereafter owes any indebtedness, directly or indirectly, to any other
guarantor of the Obligations, all such indebtedness, together with all interest
thereon and fees and other charges in connection therewith, and all Liens
securing any such indebtedness shall at all times be second, subordinate and
inferior in right of payment, in lien priority and in all other respects to the
Obligations and the fulfillment of any of the Guarantor's obligations hereunder
or under any of the other Loan Documents. The provisions of this Section 7 are
in addition to, and cumulative of, any other provisions contained in any other
Loan Document or other document, instrument or writing.
Stay of Acceleration. If acceleration of the time for payment of any amount
payable by any Borrower under the Credit Agreement or the Notes is stayed upon
the insolvency, bankruptcy or reorganization of such Borrower, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement shall
nonetheless be payable by the Guarantor hereunder forthwith on demand by the
holder or holders of the Notes. The Guarantor's Obligations under this Guaranty
shall not be limited by any valuation, estimation or disallowance made in
connection with any proceedings filed under the United States Bankruptcy Code.
Representations and Warranties. The Guarantor hereby represents and
warrants as follows:
This Guaranty is, and all other documents and instruments executed in
connection herewith when delivered will be, legal, valid and binding obligations
of the Guarantor, enforceable against the Guarantor in accordance with their
respective terms, except as such enforceability may be (i) limited by the effect
of any Debtor Laws and (ii) subject to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Upon giving effect to (a) the execution of this Guaranty and (b) the
consummation of the transactions contemplated under this Guaranty, the following
are true and correct after diligent investigation:
The fair saleable value of the assets of the Guarantor exceeds the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including, without limitation, pending or overtly threatened
litigation in amounts in excess of effective insurance coverage and all other
contingent liabilities) of the Guarantor as they mature.
The assets of the Guarantor do not constitute unreasonably small capital
for the Guarantor to carry out its business as now conducted and as proposed to
be conducted including the capital needs of the Guarantor, taking into account
the particular capital requirements of the business conducted by the Guarantor,
and projected capital requirements and capital availability thereof.
The Guarantor does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
received by the Guarantor, and of amounts to be payable on or in respect of debt
of the Guarantor).
The fair saleable value of the assets of the Guarantor is greater than the
total fair value of the liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured, and liquidated or unliquidated
liabilities, of the Guarantor.
The Guarantor has determined that its liability and obligation under this
Guaranty may reasonably be expected to substantially benefit it directly or
indirectly, and its board of directors has made that determination. Borrowers
and the Guarantor are mutually dependent on each other in the conduct of their
respective businesses and are, and do business together with the other Companies
as, an integrated business enterprise involved in the designing, engineering,
manufacturing and marketing of fountain soft drink dispensing systems and citrus
beverage dispensing systems. The maintenance and improvement of each Borrower's
financial condition is vital to sustaining the Guarantor's business and the
transactions contemplated in the Credit Agreement produce distinct and
identifiable financial and economic direct or indirect benefits to the
Guarantor. Such identifiable benefits include the general improvement of the
Guarantor's financial and economic condition. The Guarantor has had full and
complete access to the Loan Documents and all other papers executed by
Borrowers, Parent Company or any other Person in connection with the
Obligations, has reviewed them and is fully aware of the meaning and effect of
their contents. The Guarantor is fully informed of all circumstances which bear
upon the risks of executing this Guaranty and which a diligent inquiry would
reveal. It has adequate means to obtain from Parent Company on a continuing
basis information concerning the financial condition of the Companies, and is
not depending on the Agent or any Bank to provide such information, now or in
the future. It agrees that neither the Agent nor any Bank shall have an
obligation to advise or notify it or to provide it with any such data or
information. The execution and delivery of this Guaranty is not a condition
precedent (and neither the Agent nor any Bank has in any way implied that the
execution of this Guaranty is a condition precedent) to the Agent's or any
Bank's making, extending or modifying any loan or any other financial
accommodation to or for the Guarantor.
No bankruptcy or insolvency proceedings are pending or contemplated by or
against the Guarantor.
Amendments, Etc. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Banks and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Banks, limit
the liability of the Guarantor hereunder.
Notices, Etc. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Guarantor, at the address for the Guarantor set forth on
the signature page hereof; if to the Agent or any Bank, at the address for the
Agent or such Bank (as the case may be) set forth in the Credit Agreement, or,
as to each party, at such other address as shall be designated by such party in
a written notice to the other party. All such notices and communications shall,
when mailed, telegraphed, telexed, transmitted or cabled be effective when
deposited in the mail, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telecopier or delivered to the cable company,
respectively.
No Waiver; Remedies. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Banks are hereby authorized at any time and from time to
time, without notice to the Guarantor (any such notice being expressly waived by
the Guarantor) to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any Bank to or for the
credit or the account of the Guarantor against any and all of the obligations of
the Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not any Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Banks under this
Section 13 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Banks may have.
Costs, Expenses and Taxes. The Guarantor agrees to pay, and cause to be
paid, the costs and expenses of the Agent and the Banks that are set forth in
Section 10.3 of the Credit Agreement in the manner set forth in Section 10.3 of
the Credit Agreement. The Guarantor agrees to pay interest on any expenses or
other sums due to the Agent and the Banks thereunder that are not paid when due
(following any applicable grace period or opportunity to cure) at the Default
Rate. In addition, subject to Section 10.8 of the Credit Agreement, the
Guarantor shall pay any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of this Guaranty and
any of the documents or instruments evidencing the Obligations, and agrees to
save the Agent and the Banks harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes. The agreements of the Guarantor contained in this Section 14 shall
survive the payment of all other amounts owing hereunder or under any of the
other Obligations.
Indemnity. To the fullest extent permitted by law and subject to Section
10.8 of the Credit Agreement, the Guarantor agrees to indemnify the Agent and
the Banks and their respective officers, directors employees, agents, attorneys
and other professionals and consultants, insurers and stockholders, and each of
them, in the manner set forth in Section 10.4 of the Credit Agreement.
Separability. Should any clause, sentence, paragraph, subsection or Section
of this Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the remainder
of this Guaranty, and the parties hereto agree that the part or parts of this
Guaranty so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
Captions. The captions in this Guaranty have been inserted for convenience
only and shall be given no substantive meaning or significance whatever in
construing the terms and provisions of this Guaranty.
Continuing Guaranty; Transfer of the Notes. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the termination of
the obligations of the Banks to make Loans or issue Letters of Credit under the
Credit Agreement and the indefeasible payment in full thereafter of the
Obligations; (b) be binding upon the Guarantor, its successors and assigns; and
(c) inure to the benefit of and be enforceable by the Agent and the Banks and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), the Agent and the Banks may assign or
otherwise transfer the Notes to any other Person or entity in accordance with
the terms and provisions set forth in Section 10.7 of the Credit Agreement, and
such other Person or entity shall thereupon become vested with all the rights
and benefits in respect thereof granted to the Agent and the Banks herein or
otherwise.
Limitation by Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
Survival of Representations and Warranties. All representations and
warranties contained in this Guaranty or made in writing by or on behalf of the
Guarantor in connection herewith, shall survive the execution and delivery of
this Guaranty. Any investigation by the Agent or any Bank shall not diminish in
any respect whatsoever its right to rely on such representations and warranties.
Governing Law; Submission to Jurisdiction. THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES). THE PARTIES EXPRESSLY
ACKNOWLEDGE THAT (I) THEY INTEND THAT THIS AGREEMENT AND EACH NOTE SHALL BE
GOVERNED BY THE PROVISIONS (INCLUDING, WITHOUT LIMITATION, THE RIGHT OF THE
PARTIES TO SELECT THE GOVERNING LAW) OF THE UNIFORM COMMERCIAL CODE AND NOT BY
COMMON LAW AND (II) THE STATE OF TEXAS BEARS A REASONABLE RELATIONSHIP TO THIS
TRANSACTION AND NO OTHER STATE HAS A MATERIALLY GREATER INTEREST IN THIS
TRANSACTION THAN THE STATE OF TEXAS. THE GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN TEXAS FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Limitation on Guaranteed Amount. Any other provision of this Guaranty
notwithstanding, the amount guaranteed by the Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations under this
Guaranty shall not be subject to avoidance under Section 548 of the Federal
Bankruptcy Code or to being set aside or annulled under any applicable state law
relating to fraud on creditors. In determining the limitations, if any, on the
amount of the Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which the Guarantor may have
under this Guaranty or applicable law shall be taken into account.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed by its respective officer thereunto duly authorized, as of the date
first above written.
LANCER CAPITAL CORPORATION
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
235 West Turbo
San Antonio, Texas 78216
Facsimile:
Attention:
<PAGE>
AFFILIATE GUARANTY
[US AFFILIATE]
This Affiliate Guaranty (the "Guaranty") is made as of the 15th day of
July, 1996 by LANCER PARTNERSHIP, LTD., a Texas limited partnership, acting by
and through sole general partner, LANCER CAPITAL CORPORATION, a Delaware
corporation (the "Guarantor"), in favor of THE FROST NATIONAL BANK, a national
banking association and its successors and assigns, as agent (the "Agent") for
the equal and ratable benefit of the banks and other financial institutions
listed on the signature pages of and any other bank or financial institution
that may hereafter become a party to the hereinafter described Credit Agreement
in accordance with the terms thereof (hereinafter collectively referred to as
the "Banks").
PRELIMINARY STATEMENT
1. The Banks have entered into a Credit Agreement dated as of July 15, 1996
(as it may hereafter be amended or otherwise modified from time to time, the
"Credit Agreement") with Guarantor, NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V.,
a Mexico corporation ("Mexico Subsidiary")(Guarantor and Mexico Subsidiary being
hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers"), and LANCER CORPORATION, a Texas corporation ("Parent Company").
The Guarantor is an Affiliate of Operating Subsidiary and Mexico Subsidiary and
a Subsidiary of Parent Company. The Guarantor will derive substantial benefit,
whether directly or indirectly, from the making of the Loans by the Banks to
Operating Subsidiary and Mexico Subsidiary pursuant to the terms and conditions
set forth in the Credit Agreement. It is a condition precedent to the
effectiveness of the Credit Agreement and the making of the Loans by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty. Unless otherwise defined herein, the capitalized terms used
herein which are defined in the Credit Agreement shall have the meanings
specified therein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
Guaranty. Subject to Section 22 hereof, the Guarantor hereby
unconditionally and irrevocably (a) guarantees the punctual payment when due
(following any applicable grace period or opportunity to cure), whether at
stated maturity, by acceleration, by prepayment or otherwise, of all obligations
to the Agent and the Banks now or hereafter existing under the Credit Agreement,
the Notes and all other Loan Documents, whether for principal, interest,
prepayment premium, fees, expenses, taxes, costs, losses, compensation,
reimbursements or any other amount payable to the Agent and the Banks under the
terms of the Credit Agreement, the Notes and the other Loan Documents, and (b)
agrees to pay any and all expenses (including, without limitation, reasonable
counsel fees and expenses) incurred by the Agent and the Banks in enforcing any
rights under this Guaranty (all of the above being hereinafter called the
"Obligations").
Guaranty Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, the Notes
and all other Loan Documents (subject to any applicable grace period or
opportunity to cure), regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Banks with respect thereto. The liability of the Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
any lack of validity or enforceability of or defect or deficiency in the
Credit Agreement, the Notes, or any of the other Loan Documents;
any change in the time, manner, terms or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to departure from the Credit Agreement, the Notes, or any of
the other Loan Documents;
any sale, exchange, release or non-perfection of any property standing as
security for the liabilities hereby guaranteed or any liabilities incurred
directly or indirectly hereunder or any set-off against any of said liabilities,
or any release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
any change in the existence, structure or ownership of the Guarantor or any
other Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting such Company or such Company's assets;
the existence of any claim, set-off or other rights which the Guarantor may
have at any time against any other Company, the holder or holders of the Notes
or any other Person, whether or not arising in connection with this Guaranty,
the Credit Agreement, the Notes or any other Loan Document; provided that
nothing contained herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
failure, omission, delay, neglect, refusal or lack of diligence by any Bank
or the Agent or any other Person to assert, enforce, give notice of intent to
exercise, or any other notice with respect to, or exercise any right, privilege,
power or remedy conferred on any Bank or the Agent or any other Person in any of
the Loan Documents or by law or action on the part of any Bank or the Agent or
any other Person granting indulgence, grace, adjustment, forbearance or
extension of any kind to Guarantor, any other Company or any other Person;
release, surrender, exchange, subordination or loss of any security or lien
priority under any of the Loan Documents or in connection with the Obligations;
release, modification or waiver of, or failure, omission, delay, neglect,
refusal or lack of diligence to enforce, any guaranty, pledge, mortgage, deed of
trust, security agreement, lien, charge, insurance agreement, bond, letter of
credit or other security device, guaranty, surety or indemnity agreement
whatsoever;
failure by any Bank, the Agent or any other Person to notify, or timely
notify, the Guarantor of any default, event of default or similar event (however
denominated) under any of the Loan Documents, any renewal, extension,
supplementing, modification, rearrangement, amendment, restatement, replacement,
cancellation, rescission, revocation or reinstatement (whether or not material)
or assignment of any part of the Obligations, release or exchange of any
security, any other action taken or not taken by any Bank or the Agent against
the Guarantor, any other Company or any other Person or any direct or indirect
security for any part of the Obligations, any new agreement between any Bank or
the Agent and any other Company or any other Person or any other event or
circumstance. Except as required by applicable law or as otherwise provided in
the Loan Documents, neither the Agent nor any Bank has any duty or obligation to
give the Guarantor (in its capacity as a guarantor hereunder) any notice of any
kind under any circumstances whatsoever with respect to or in connection with
the Obligations or the Loan Documents; or
any other circumstance which might otherwise constitute a defense available
to, or a discharge of any other Company or any other Person (including any
guarantor) in respect of the Obligations, other than payment in full of the
Obligations.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is annulled, set
aside, invalidated, declared to be fraudulent or preferential, rescinded or must
otherwise be returned, refunded or repaid by the Banks or the proceeds of
collateral are required to be returned by the Banks upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any other Company, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any other Company or any substantial part
of such Company's respective property or otherwise, all as though such payment
or payments had not been made. The obligations of the Guarantor under this
Guaranty shall not be subject to reduction, termination or other impairment by
reason of any setoff, recoupment, counterclaim or defense or for any other
reason.
Continuing Guaranty. This is a continuing Guaranty, and all extensions of
credit and financial accommodations heretofore, concurrently herewith or
hereafter made by the Banks and the Agent to either Borrower and all
indebtedness of either Borrower now owned or hereafter acquired by the Banks and
the Agent in connection with the transactions contemplated under the Credit
Agreement shall be conclusively presumed to have been made or acquired in
acceptance hereof.
Waiver. This is an absolute Guaranty of payment and not of collection, and
the Guarantor hereby waives (a) promptness, diligence, notice of acceptance,
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate, notice of acceleration and any other notice with respect to any
of the Obligations and this Guaranty; and (b) any requirement that the Agent or
any Bank protect, secure, perfect or insure any security interest or Lien on any
property subject thereto or exhaust any right or take any action against any
other Company or any other Person or any Collateral or that any other Company or
any other Person be joined in any action hereunder. Should the Agent or any Bank
seek to enforce the obligations of the Guarantor hereunder by action in any
court, the Guarantor waives any necessity, substantive or procedural, that a
judgment previously be rendered against any Borrower or any other Person, or
that any action be brought against any other Company or any other Person, or
that any other Company or any other Person should be joined in such cause. Such
waiver shall be without prejudice to the Agent or any Bank at their option to
proceed against any other Company or any other Person, whether by separate
action or by joinder.
Several Obligations. The obligations of the Guarantor hereunder are several
from any other Company or any other Person, and are primary obligations
concerning which the Guarantor is the principal obligor. The Guarantor agrees
that this Guaranty shall not be discharged except by complete performance of the
Obligations of Borrowers under the Notes, the Credit Agreement and the other
Loan Documents and the obligations of the Guarantor hereunder. The obligations
of the Guarantor hereunder shall not be affected in any way by any receivership,
insolvency, bankruptcy or other proceedings affecting any other Company or any
other Person or any of such Company's or such Person's assets, or the release or
discharge of any other Company or any other Person from the performance of any
obligation contained in any promissory note or other instrument issued in
connection with, evidencing or securing any indebtedness guaranteed by this
instrument, whether occurring by reason of law or any other cause, whether
similar or dissimilar to the foregoing.
Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise, until the termination of the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement and the indefeasible
payment in full thereafter of all the Obligations. If any amount shall be paid
to the Guarantor on account of such subrogation rights at any time when the
Banks are obligated to make Loans or issue Letters of Credit under the Credit
Agreement or when all the Obligations shall not have been indefeasibly paid in
full, such amount shall be held in trust for the benefit of the Banks and shall
forthwith be paid to the Agent to be applied to the Obligations in such order as
the Agent shall select. If (a) the Guarantor shall make payment to the Agent of
all or any part of the Obligations and (b) the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement shall be terminated
and all of the Obligations shall be paid in full thereafter, the Agent will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of any interest in the
Obligations resulting from such payment by the Guarantor.
Subordination of Borrowers' Obligations to the Guarantor. The Guarantor
agrees that if, for any reason whatsoever, any Borrower now or hereafter owes
any indebtedness, directly or indirectly, to the Guarantor, or the Guarantor now
or hereafter owes any indebtedness, directly or indirectly, to any other
guarantor of the Obligations, all such indebtedness, together with all interest
thereon and fees and other charges in connection therewith, and all Liens
securing any such indebtedness shall at all times be second, subordinate and
inferior in right of payment, in lien priority and in all other respects to the
Obligations and the fulfillment of any of the Guarantor's obligations hereunder
or under any of the other Loan Documents. The provisions of this Section 7 are
in addition to, and cumulative of, any other provisions contained in any other
Loan Document or other document, instrument or writing.
Stay of Acceleration. If acceleration of the time for payment of any amount
payable by any Borrower under the Credit Agreement or the Notes is stayed upon
the insolvency, bankruptcy or reorganization of such Borrower, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement shall
nonetheless be payable by the Guarantor hereunder forthwith on demand by the
holder or holders of the Notes. The Guarantor's Obligations under this Guaranty
shall not be limited by any valuation, estimation or disallowance made in
connection with any proceedings filed under the United States Bankruptcy Code.
Representations and Warranties. The Guarantor hereby represents and
warrants as follows:
This Guaranty is, and all other documents and instruments executed in
connection herewith when delivered will be, legal, valid and binding obligations
of the Guarantor, enforceable against the Guarantor in accordance with their
respective terms, except as such enforceability may be (i) limited by the effect
of any Debtor Laws and (ii) subject to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Upon giving effect to (a) the execution of this Guaranty and (b) the
consummation of the transactions contemplated under this Guaranty, the following
are true and correct after diligent investigation:
The fair saleable value of the assets of the Guarantor exceeds the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including, without limitation, pending or overtly threatened
litigation in amounts in excess of effective insurance coverage and all other
contingent liabilities) of the Guarantor as they mature.
The assets of the Guarantor do not constitute unreasonably small capital
for the Guarantor to carry out its business as now conducted and as proposed to
be conducted including the capital needs of the Guarantor, taking into account
the particular capital requirements of the business conducted by the Guarantor,
and projected capital requirements and capital availability thereof.
The Guarantor does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
received by the Guarantor, and of amounts to be payable on or in respect of debt
of the Guarantor).
The fair saleable value of the assets of the Guarantor is greater than the
total fair value of the liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured, and liquidated or unliquidated
liabilities, of the Guarantor.
The Guarantor has determined that its liability and obligation under this
Guaranty may reasonably be expected to substantially benefit it directly or
indirectly, and its board of directors has made that determination. Borrowers
and the Guarantor are mutually dependent on each other in the conduct of their
respective businesses and are, and do business together with the other Companies
as, an integrated business enterprise involved in the designing, engineering,
manufacturing and marketing of fountain soft drink dispensing systems and citrus
beverage dispensing systems. The maintenance and improvement of each Borrower's
financial condition is vital to sustaining the Guarantor's business and the
transactions contemplated in the Credit Agreement produce distinct and
identifiable financial and economic direct or indirect benefits to the
Guarantor. Such identifiable benefits include the general improvement of the
Guarantor's financial and economic condition. The Guarantor has had full and
complete access to the Loan Documents and all other papers executed by
Borrowers, Parent Company or any other Person in connection with the
Obligations, has reviewed them and is fully aware of the meaning and effect of
their contents. The Guarantor is fully informed of all circumstances which bear
upon the risks of executing this Guaranty and which a diligent inquiry would
reveal. It has adequate means to obtain from Parent Company on a continuing
basis information concerning the financial condition of the Companies, and is
not depending on the Agent or any Bank to provide such information, now or in
the future. It agrees that neither the Agent nor any Bank shall have an
obligation to advise or notify it or to provide it with any such data or
information. The execution and delivery of this Guaranty is not a condition
precedent (and neither the Agent nor any Bank has in any way implied that the
execution of this Guaranty is a condition precedent) to the Agent's or any
Bank's making, extending or modifying any loan or any other financial
accommodation to or for the Guarantor.
No bankruptcy or insolvency proceedings are pending or contemplated by or
against the Guarantor.
Amendments, Etc. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Banks and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Banks, limit
the liability of the Guarantor hereunder.
Notices, Etc. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Guarantor, at the address for the Guarantor set forth on
the signature page hereof; if to the Agent or any Bank, at the address for the
Agent or such Bank (as the case may be) set forth in the Credit Agreement, or,
as to each party, at such other address as shall be designated by such party in
a written notice to the other party. All such notices and communications shall,
when mailed, telegraphed, telexed, transmitted or cabled be effective when
deposited in the mail, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telecopier or delivered to the cable company,
respectively.
No Waiver; Remedies. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Banks are hereby authorized at any time and from time to
time, without notice to the Guarantor (any such notice being expressly waived by
the Guarantor) to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any Bank to or for the
credit or the account of the Guarantor against any and all of the obligations of
the Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not any Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Banks under this
Section 13 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Banks may have.
Costs, Expenses and Taxes. The Guarantor agrees to pay, and cause to be
paid, the costs and expenses of the Agent and the Banks that are set forth in
Section 10.3 of the Credit Agreement in the manner set forth in Section 10.3 of
the Credit Agreement. The Guarantor agrees to pay interest on any expenses or
other sums due to the Agent and the Banks thereunder that are not paid when due
(following any applicable grace period or opportunity to cure) at the Default
Rate. In addition, subject to Section 10.8 of the Credit Agreement, the
Guarantor shall pay any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of this Guaranty and
any of the documents or instruments evidencing the Obligations, and agrees to
save the Agent and the Banks harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes. The agreements of the Guarantor contained in this Section 14 shall
survive the payment of all other amounts owing hereunder or under any of the
other Obligations.
Indemnity. To the fullest extent permitted by law and subject to Section
10.8 of the Credit Agreement, the Guarantor agrees to indemnify the Agent and
the Banks and their respective officers, directors employees, agents, attorneys
and other professionals and consultants, insurers and stockholders, and each of
them, in the manner set forth in Section 10.4 of the Credit Agreement.
Separability. Should any clause, sentence, paragraph, subsection or Section
of this Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the remainder
of this Guaranty, and the parties hereto agree that the part or parts of this
Guaranty so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
Captions. The captions in this Guaranty have been inserted for convenience
only and shall be given no substantive meaning or significance whatever in
construing the terms and provisions of this Guaranty.
Continuing Guaranty; Transfer of the Notes. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the termination of
the obligations of the Banks to make Loans or issue Letters of Credit under the
Credit Agreement and the indefeasible payment in full thereafter of the
Obligations; (b) be binding upon the Guarantor, its successors and assigns; and
(c) inure to the benefit of and be enforceable by the Agent and the Banks and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), the Agent and the Banks may assign or
otherwise transfer the Notes to any other Person or entity in accordance with
the terms and provisions set forth in Section 10.7 of the Credit Agreement, and
such other Person or entity shall thereupon become vested with all the rights
and benefits in respect thereof granted to the Agent and the Banks herein or
otherwise.
Limitation by Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
Survival of Representations and Warranties. All representations and
warranties contained in this Guaranty or made in writing by or on behalf of the
Guarantor in connection herewith, shall survive the execution and delivery of
this Guaranty. Any investigation by the Agent or any Bank shall not diminish in
any respect whatsoever its right to rely on such representations and warranties.
Governing Law; Submission to Jurisdiction. THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES). THE PARTIES EXPRESSLY
ACKNOWLEDGE THAT (I) THEY INTEND THAT THIS AGREEMENT AND EACH NOTE SHALL BE
GOVERNED BY THE PROVISIONS (INCLUDING, WITHOUT LIMITATION, THE RIGHT OF THE
PARTIES TO SELECT THE GOVERNING LAW) OF THE UNIFORM COMMERCIAL CODE AND NOT BY
COMMON LAW AND (II) THE STATE OF TEXAS BEARS A REASONABLE RELATIONSHIP TO THIS
TRANSACTION AND NO OTHER STATE HAS A MATERIALLY GREATER INTEREST IN THIS
TRANSACTION THAN THE STATE OF TEXAS. THE GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN TEXAS FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Limitation on Guaranteed Amount. Any other provision of this Guaranty
notwithstanding, the amount guaranteed by the Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations under this
Guaranty shall not be subject to avoidance under Section 548 of the Federal
Bankruptcy Code or to being set aside or annulled under any applicable state law
relating to fraud on creditors. In determining the limitations, if any, on the
amount of the Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which the Guarantor may have
under this Guaranty or applicable law shall be taken into account.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed by its respective officer thereunto duly authorized, as of the date
first above written.
LANCER PARTNERSHIP, LTD.
By: LANCER CAPITAL CORPORATION
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
<PAGE>
AFFILIATE GUARANTY
[US AFFILIATE]
This Affiliate Guaranty (the "Guaranty") is made as of the 15th day of
July, 1996 by LANCER INTERNATIONAL SALES, INC., a corporation organized under
the laws of the State of Texas (the "Guarantor"), in favor of THE FROST NATIONAL
BANK, a national banking association and its successors and assigns, as agent
(the "Agent") for the equal and ratable benefit of the banks and other financial
institutions listed on the signature pages of and any other bank or financial
institution that may hereafter become a party to the hereinafter described
Credit Agreement in accordance with the terms thereof (hereinafter collectively
referred to as the "Banks").
PRELIMINARY STATEMENT
1. The Banks have entered into a Credit Agreement dated as of July 15, 1996
(as it may hereafter be amended or otherwise modified from time to time, the
"Credit Agreement") with LANCER PARTNERSHIP, LTD., a Texas limited partnership
("Operating Subsidiary"), NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexico
corporation ("Mexico Subsidiary")(Operating Subsidiary and Mexico Subsidiary
being hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers"), and LANCER CORPORATION, a Texas corporation ("Parent Company").
The Guarantor is an Affiliate of Operating Subsidiary and Mexico Subsidiary and
a Subsidiary of Parent Company. The Guarantor will derive substantial benefit,
whether directly or indirectly, from the making of the Loans by the Banks to
Operating Subsidiary and Mexico Subsidiary pursuant to the terms and conditions
set forth in the Credit Agreement. It is a condition precedent to the
effectiveness of the Credit Agreement and the making of the Loans by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty. Unless otherwise defined herein, the capitalized terms used
herein which are defined in the Credit Agreement shall have the meanings
specified therein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
Guaranty. Subject to Section 22 hereof, the Guarantor hereby
unconditionally and irrevocably (a) guarantees the punctual payment when due
(following any applicable grace period or opportunity to cure), whether at
stated maturity, by acceleration, by prepayment or otherwise, of all obligations
to the Agent and the Banks now or hereafter existing under the Credit Agreement,
the Notes and all other Loan Documents, whether for principal, interest,
prepayment premium, fees, expenses, taxes, costs, losses, compensation,
reimbursements or any other amount payable to the Agent and the Banks under the
terms of the Credit Agreement, the Notes and the other Loan Documents, and (b)
agrees to pay any and all expenses (including, without limitation, reasonable
counsel fees and expenses) incurred by the Agent and the Banks in enforcing any
rights under this Guaranty (all of the above being hereinafter called the
"Obligations").
Guaranty Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, the Notes
and all other Loan Documents (subject to any applicable grace period or
opportunity to cure), regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Banks with respect thereto. The liability of the Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
any lack of validity or enforceability of or defect or deficiency in the
Credit Agreement, the Notes, or any of the other Loan Documents;
any change in the time, manner, terms or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to departure from the Credit Agreement, the Notes, or any of
the other Loan Documents;
any sale, exchange, release or non-perfection of any property standing as
security for the liabilities hereby guaranteed or any liabilities incurred
directly or indirectly hereunder or any set-off against any of said liabilities,
or any release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
any change in the existence, structure or ownership of the Guarantor or any
other Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting such Company or such Company's assets;
the existence of any claim, set-off or other rights which the Guarantor may
have at any time against any other Company, the holder or holders of the Notes
or any other Person, whether or not arising in connection with this Guaranty,
the Credit Agreement, the Notes or any other Loan Document; provided that
nothing contained herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
failure, omission, delay, neglect, refusal or lack of diligence by any Bank
or the Agent or any other Person to assert, enforce, give notice of intent to
exercise, or any other notice with respect to, or exercise any right, privilege,
power or remedy conferred on any Bank or the Agent or any other Person in any of
the Loan Documents or by law or action on the part of any Bank or the Agent or
any other Person granting indulgence, grace, adjustment, forbearance or
extension of any kind to Guarantor, any other Company or any other Person;
release, surrender, exchange, subordination or loss of any security or lien
priority under any of the Loan Documents or in connection with the Obligations;
release, modification or waiver of, or failure, omission, delay, neglect,
refusal or lack of diligence to enforce, any guaranty, pledge, mortgage, deed of
trust, security agreement, lien, charge, insurance agreement, bond, letter of
credit or other security device, guaranty, surety or indemnity agreement
whatsoever;
failure by any Bank, the Agent or any other Person to notify, or timely
notify, the Guarantor of any default, event of default or similar event (however
denominated) under any of the Loan Documents, any renewal, extension,
supplementing, modification, rearrangement, amendment, restatement, replacement,
cancellation, rescission, revocation or reinstatement (whether or not material)
or assignment of any part of the Obligations, release or exchange of any
security, any other action taken or not taken by any Bank or the Agent against
the Guarantor, any other Company or any other Person or any direct or indirect
security for any part of the Obligations, any new agreement between any Bank or
the Agent and any other Company or any other Person or any other event or
circumstance. Except as required by applicable law or as otherwise provided in
the Loan Documents, neither the Agent nor any Bank has any duty or obligation to
give the Guarantor (in its capacity as a guarantor hereunder) any notice of any
kind under any circumstances whatsoever with respect to or in connection with
the Obligations or the Loan Documents; or
any other circumstance which might otherwise constitute a defense available
to, or a discharge of any other Company or any other Person (including any
guarantor) in respect of the Obligations, other than payment in full of the
Obligations.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is annulled, set
aside, invalidated, declared to be fraudulent or preferential, rescinded or must
otherwise be returned, refunded or repaid by the Banks or the proceeds of
collateral are required to be returned by the Banks upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any other Company, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any other Company or any substantial part
of such Company's respective property or otherwise, all as though such payment
or payments had not been made. The obligations of the Guarantor under this
Guaranty shall not be subject to reduction, termination or other impairment by
reason of any setoff, recoupment, counterclaim or defense or for any other
reason.
Continuing Guaranty. This is a continuing Guaranty, and all extensions of
credit and financial accommodations heretofore, concurrently herewith or
hereafter made by the Banks and the Agent to either Borrower and all
indebtedness of either Borrower now owned or hereafter acquired by the Banks and
the Agent in connection with the transactions contemplated under the Credit
Agreement shall be conclusively presumed to have been made or acquired in
acceptance hereof.
Waiver. This is an absolute Guaranty of payment and not of collection, and
the Guarantor hereby waives (a) promptness, diligence, notice of acceptance,
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate, notice of acceleration and any other notice with respect to any
of the Obligations and this Guaranty; and (b) any requirement that the Agent or
any Bank protect, secure, perfect or insure any security interest or Lien on any
property subject thereto or exhaust any right or take any action against any
other Company or any other Person or any Collateral or that any other Company or
any other Person be joined in any action hereunder. Should the Agent or any Bank
seek to enforce the obligations of the Guarantor hereunder by action in any
court, the Guarantor waives any necessity, substantive or procedural, that a
judgment previously be rendered against any Borrower or any other Person, or
that any action be brought against any other Company or any other Person, or
that any other Company or any other Person should be joined in such cause. Such
waiver shall be without prejudice to the Agent or any Bank at their option to
proceed against any other Company or any other Person, whether by separate
action or by joinder.
Several Obligations. The obligations of the Guarantor hereunder are several
from any other Company or any other Person, and are primary obligations
concerning which the Guarantor is the principal obligor. The Guarantor agrees
that this Guaranty shall not be discharged except by complete performance of the
Obligations of Borrowers under the Notes, the Credit Agreement and the other
Loan Documents and the obligations of the Guarantor hereunder. The obligations
of the Guarantor hereunder shall not be affected in any way by any receivership,
insolvency, bankruptcy or other proceedings affecting any other Company or any
other Person or any of such Company's or such Person's assets, or the release or
discharge of any other Company or any other Person from the performance of any
obligation contained in any promissory note or other instrument issued in
connection with, evidencing or securing any indebtedness guaranteed by this
instrument, whether occurring by reason of law or any other cause, whether
similar or dissimilar to the foregoing.
Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise, until the termination of the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement and the indefeasible
payment in full thereafter of all the Obligations. If any amount shall be paid
to the Guarantor on account of such subrogation rights at any time when the
Banks are obligated to make Loans or issue Letters of Credit under the Credit
Agreement or when all the Obligations shall not have been indefeasibly paid in
full, such amount shall be held in trust for the benefit of the Banks and shall
forthwith be paid to the Agent to be applied to the Obligations in such order as
the Agent shall select. If (a) the Guarantor shall make payment to the Agent of
all or any part of the Obligations and (b) the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement shall be terminated
and all of the Obligations shall be paid in full thereafter, the Agent will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of any interest in the
Obligations resulting from such payment by the Guarantor.
Subordination of Borrowers' Obligations to the Guarantor. The Guarantor
agrees that if, for any reason whatsoever, any Borrower now or hereafter owes
any indebtedness, directly or indirectly, to the Guarantor, or the Guarantor now
or hereafter owes any indebtedness, directly or indirectly, to any other
guarantor of the Obligations, all such indebtedness, together with all interest
thereon and fees and other charges in connection therewith, and all Liens
securing any such indebtedness shall at all times be second, subordinate and
inferior in right of payment, in lien priority and in all other respects to the
Obligations and the fulfillment of any of the Guarantor's obligations hereunder
or under any of the other Loan Documents. The provisions of this Section 7 are
in addition to, and cumulative of, any other provisions contained in any other
Loan Document or other document, instrument or writing.
Stay of Acceleration. If acceleration of the time for payment of any amount
payable by any Borrower under the Credit Agreement or the Notes is stayed upon
the insolvency, bankruptcy or reorganization of such Borrower, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement shall
nonetheless be payable by the Guarantor hereunder forthwith on demand by the
holder or holders of the Notes. The Guarantor's Obligations under this Guaranty
shall not be limited by any valuation, estimation or disallowance made in
connection with any proceedings filed under the United States Bankruptcy Code.
Representations and Warranties. The Guarantor hereby represents and
warrants as follows:
This Guaranty is, and all other documents and instruments executed in
connection herewith when delivered will be, legal, valid and binding obligations
of the Guarantor, enforceable against the Guarantor in accordance with their
respective terms, except as such enforceability may be (i) limited by the effect
of any Debtor Laws and (ii) subject to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Upon giving effect to (a) the execution of this Guaranty and (b) the
consummation of the transactions contemplated under this Guaranty, the following
are true and correct after diligent investigation:
The fair saleable value of the assets of the Guarantor exceeds the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including, without limitation, pending or overtly threatened
litigation in amounts in excess of effective insurance coverage and all other
contingent liabilities) of the Guarantor as they mature.
The assets of the Guarantor do not constitute unreasonably small capital
for the Guarantor to carry out its business as now conducted and as proposed to
be conducted including the capital needs of the Guarantor, taking into account
the particular capital requirements of the business conducted by the Guarantor,
and projected capital requirements and capital availability thereof.
The Guarantor does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
received by the Guarantor, and of amounts to be payable on or in respect of debt
of the Guarantor).
The fair saleable value of the assets of the Guarantor is greater than the
total fair value of the liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured, and liquidated or unliquidated
liabilities, of the Guarantor.
The Guarantor has determined that its liability and obligation under this
Guaranty may reasonably be expected to substantially benefit it directly or
indirectly, and its board of directors has made that determination. Borrowers
and the Guarantor are mutually dependent on each other in the conduct of their
respective businesses and are, and do business together with the other Companies
as, an integrated business enterprise involved in the designing, engineering,
manufacturing and marketing of fountain soft drink dispensing systems and citrus
beverage dispensing systems. The maintenance and improvement of each Borrower's
financial condition is vital to sustaining the Guarantor's business and the
transactions contemplated in the Credit Agreement produce distinct and
identifiable financial and economic direct or indirect benefits to the
Guarantor. Such identifiable benefits include the general improvement of the
Guarantor's financial and economic condition. The Guarantor has had full and
complete access to the Loan Documents and all other papers executed by
Borrowers, Parent Company or any other Person in connection with the
Obligations, has reviewed them and is fully aware of the meaning and effect of
their contents. The Guarantor is fully informed of all circumstances which bear
upon the risks of executing this Guaranty and which a diligent inquiry would
reveal. It has adequate means to obtain from Parent Company on a continuing
basis information concerning the financial condition of the Companies, and is
not depending on the Agent or any Bank to provide such information, now or in
the future. It agrees that neither the Agent nor any Bank shall have an
obligation to advise or notify it or to provide it with any such data or
information. The execution and delivery of this Guaranty is not a condition
precedent (and neither the Agent nor any Bank has in any way implied that the
execution of this Guaranty is a condition precedent) to the Agent's or any
Bank's making, extending or modifying any loan or any other financial
accommodation to or for the Guarantor.
No bankruptcy or insolvency proceedings are pending or contemplated by or
against the Guarantor.
Amendments, Etc. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Banks and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Banks, limit
the liability of the Guarantor hereunder.
Notices, Etc. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Guarantor, at the address for the Guarantor set forth on
the signature page hereof; if to the Agent or any Bank, at the address for the
Agent or such Bank (as the case may be) set forth in the Credit Agreement, or,
as to each party, at such other address as shall be designated by such party in
a written notice to the other party. All such notices and communications shall,
when mailed, telegraphed, telexed, transmitted or cabled be effective when
deposited in the mail, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telecopier or delivered to the cable company,
respectively.
No Waiver; Remedies. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Banks are hereby authorized at any time and from time to
time, without notice to the Guarantor (any such notice being expressly waived by
the Guarantor) to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any Bank to or for the
credit or the account of the Guarantor against any and all of the obligations of
the Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not any Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Banks under this
Section 13 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Banks may have.
Costs, Expenses and Taxes. The Guarantor agrees to pay, and cause to be
paid, the costs and expenses of the Agent and the Banks that are set forth in
Section 10.3 of the Credit Agreement in the manner set forth in Section 10.3 of
the Credit Agreement. The Guarantor agrees to pay interest on any expenses or
other sums due to the Agent and the Banks thereunder that are not paid when due
(following any applicable grace period or opportunity to cure) at the Default
Rate. In addition, subject to Section 10.8 of the Credit Agreement, the
Guarantor shall pay any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of this Guaranty and
any of the documents or instruments evidencing the Obligations, and agrees to
save the Agent and the Banks harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes. The agreements of the Guarantor contained in this Section 14 shall
survive the payment of all other amounts owing hereunder or under any of the
other Obligations.
Indemnity. To the fullest extent permitted by law and subject to Section
10.8 of the Credit Agreement, the Guarantor agrees to indemnify the Agent and
the Banks and their respective officers, directors employees, agents, attorneys
and other professionals and consultants, insurers and stockholders, and each of
them, in the manner set forth in Section 10.4 of the Credit Agreement.
Separability. Should any clause, sentence, paragraph, subsection or Section
of this Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the remainder
of this Guaranty, and the parties hereto agree that the part or parts of this
Guaranty so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
Captions. The captions in this Guaranty have been inserted for convenience
only and shall be given no substantive meaning or significance whatever in
construing the terms and provisions of this Guaranty.
Continuing Guaranty; Transfer of the Notes. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the termination of
the obligations of the Banks to make Loans or issue Letters of Credit under the
Credit Agreement and the indefeasible payment in full thereafter of the
Obligations; (b) be binding upon the Guarantor, its successors and assigns; and
(c) inure to the benefit of and be enforceable by the Agent and the Banks and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), the Agent and the Banks may assign or
otherwise transfer the Notes to any other Person or entity in accordance with
the terms and provisions set forth in Section 10.7 of the Credit Agreement, and
such other Person or entity shall thereupon become vested with all the rights
and benefits in respect thereof granted to the Agent and the Banks herein or
otherwise.
Limitation by Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
Survival of Representations and Warranties. All representations and
warranties contained in this Guaranty or made in writing by or on behalf of the
Guarantor in connection herewith, shall survive the execution and delivery of
this Guaranty. Any investigation by the Agent or any Bank shall not diminish in
any respect whatsoever its right to rely on such representations and warranties.
Governing Law; Submission to Jurisdiction. THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES). THE PARTIES EXPRESSLY
ACKNOWLEDGE THAT (I) THEY INTEND THAT THIS AGREEMENT AND EACH NOTE SHALL BE
GOVERNED BY THE PROVISIONS (INCLUDING, WITHOUT LIMITATION, THE RIGHT OF THE
PARTIES TO SELECT THE GOVERNING LAW) OF THE UNIFORM COMMERCIAL CODE AND NOT BY
COMMON LAW AND (II) THE STATE OF TEXAS BEARS A REASONABLE RELATIONSHIP TO THIS
TRANSACTION AND NO OTHER STATE HAS A MATERIALLY GREATER INTEREST IN THIS
TRANSACTION THAN THE STATE OF TEXAS. THE GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN TEXAS FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Limitation on Guaranteed Amount. Any other provision of this Guaranty
notwithstanding, the amount guaranteed by the Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations under this
Guaranty shall not be subject to avoidance under Section 548 of the Federal
Bankruptcy Code or to being set aside or annulled under any applicable state law
relating to fraud on creditors. In determining the limitations, if any, on the
amount of the Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which the Guarantor may have
under this Guaranty or applicable law shall be taken into account.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed by its respective officer thereunto duly authorized, as of the date
first above written.
LANCER INTERNATIONAL SALES, INC.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
Facsimile:
Attention:
<PAGE>
AFFILIATE GUARANTY
[US AFFILIATE]
This Affiliate Guaranty (the "Guaranty") is made as of the 15th day of
July, 1996 by LAN-LEASING, INC., a corporation organized under the laws of the
State of Delaware (the "Guarantor"), in favor of THE FROST NATIONAL BANK, a
national banking association and its successors and assigns, as agent (the
"Agent") for the equal and ratable benefit of the banks and other financial
institutions listed on the signature pages of and any other bank or financial
institution that may hereafter become a party to the hereinafter described
Credit Agreement in accordance with the terms thereof (hereinafter collectively
referred to as the "Banks").
PRELIMINARY STATEMENT
1. The Banks have entered into a Credit Agreement dated as of July 15, 1996
(as it may hereafter be amended or otherwise modified from time to time, the
"Credit Agreement") with LANCER PARTNERSHIP, LTD., a Texas limited partnership
("Operating Subsidiary"), NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexico
corporation ("Mexico Subsidiary")(Operating Subsidiary and Mexico Subsidiary
being hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers"), and LANCER CORPORATION, a Texas corporation ("Parent Company").
The Guarantor is an Affiliate of Operating Subsidiary and Mexico Subsidiary and
a Subsidiary of Parent Company. The Guarantor will derive substantial benefit,
whether directly or indirectly, from the making of the Loans by the Banks to
Operating Subsidiary and Mexico Subsidiary pursuant to the terms and conditions
set forth in the Credit Agreement. It is a condition precedent to the
effectiveness of the Credit Agreement and the making of the Loans by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty. Unless otherwise defined herein, the capitalized terms used
herein which are defined in the Credit Agreement shall have the meanings
specified therein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
Guaranty. Subject to Section 22 hereof, the Guarantor hereby
unconditionally and irrevocably (a) guarantees the punctual payment when due
(following any applicable grace period or opportunity to cure), whether at
stated maturity, by acceleration, by prepayment or otherwise, of all obligations
to the Agent and the Banks now or hereafter existing under the Credit Agreement,
the Notes and all other Loan Documents, whether for principal, interest,
prepayment premium, fees, expenses, taxes, costs, losses, compensation,
reimbursements or any other amount payable to the Agent and the Banks under the
terms of the Credit Agreement, the Notes and the other Loan Documents, and (b)
agrees to pay any and all expenses (including, without limitation, reasonable
counsel fees and expenses) incurred by the Agent and the Banks in enforcing any
rights under this Guaranty (all of the above being hereinafter called the
"Obligations").
Guaranty Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, the Notes
and all other Loan Documents (subject to any applicable grace period or
opportunity to cure), regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Banks with respect thereto. The liability of the Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
any lack of validity or enforceability of or defect or deficiency in the
Credit Agreement, the Notes, or any of the other Loan Documents;
any change in the time, manner, terms or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to departure from the Credit Agreement, the Notes, or any of
the other Loan Documents;
any sale, exchange, release or non-perfection of any property standing as
security for the liabilities hereby guaranteed or any liabilities incurred
directly or indirectly hereunder or any set-off against any of said liabilities,
or any release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
any change in the existence, structure or ownership of the Guarantor or any
other Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting such Company or such Company's assets;
the existence of any claim, set-off or other rights which the Guarantor may
have at any time against any other Company, the holder or holders of the Notes
or any other Person, whether or not arising in connection with this Guaranty,
the Credit Agreement, the Notes or any other Loan Document; provided that
nothing contained herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
failure, omission, delay, neglect, refusal or lack of diligence by any Bank
or the Agent or any other Person to assert, enforce, give notice of intent to
exercise, or any other notice with respect to, or exercise any right, privilege,
power or remedy conferred on any Bank or the Agent or any other Person in any of
the Loan Documents or by law or action on the part of any Bank or the Agent or
any other Person granting indulgence, grace, adjustment, forbearance or
extension of any kind to Guarantor, any other Company or any other Person;
release, surrender, exchange, subordination or loss of any security or lien
priority under any of the Loan Documents or in connection with the Obligations;
release, modification or waiver of, or failure, omission, delay, neglect,
refusal or lack of diligence to enforce, any guaranty, pledge, mortgage, deed of
trust, security agreement, lien, charge, insurance agreement, bond, letter of
credit or other security device, guaranty, surety or indemnity agreement
whatsoever;
failure by any Bank, the Agent or any other Person to notify, or timely
notify, the Guarantor of any default, event of default or similar event (however
denominated) under any of the Loan Documents, any renewal, extension,
supplementing, modification, rearrangement, amendment, restatement, replacement,
cancellation, rescission, revocation or reinstatement (whether or not material)
or assignment of any part of the Obligations, release or exchange of any
security, any other action taken or not taken by any Bank or the Agent against
the Guarantor, any other Company or any other Person or any direct or indirect
security for any part of the Obligations, any new agreement between any Bank or
the Agent and any other Company or any other Person or any other event or
circumstance. Except as required by applicable law or as otherwise provided in
the Loan Documents, neither the Agent nor any Bank has any duty or obligation to
give the Guarantor (in its capacity as a guarantor hereunder) any notice of any
kind under any circumstances whatsoever with respect to or in connection with
the Obligations or the Loan Documents; or
any other circumstance which might otherwise constitute a defense available
to, or a discharge of any other Company or any other Person (including any
guarantor) in respect of the Obligations, other than payment in full of the
Obligations.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is annulled, set
aside, invalidated, declared to be fraudulent or preferential, rescinded or must
otherwise be returned, refunded or repaid by the Banks or the proceeds of
collateral are required to be returned by the Banks upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any other Company, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any other Company or any substantial part
of such Company's respective property or otherwise, all as though such payment
or payments had not been made. The obligations of the Guarantor under this
Guaranty shall not be subject to reduction, termination or other impairment by
reason of any setoff, recoupment, counterclaim or defense or for any other
reason.
Continuing Guaranty. This is a continuing Guaranty, and all extensions of
credit and financial accommodations heretofore, concurrently herewith or
hereafter made by the Banks and the Agent to either Borrower and all
indebtedness of either Borrower now owned or hereafter acquired by the Banks and
the Agent in connection with the transactions contemplated under the Credit
Agreement shall be conclusively presumed to have been made or acquired in
acceptance hereof.
Waiver. This is an absolute Guaranty of payment and not of collection, and
the Guarantor hereby waives (a) promptness, diligence, notice of acceptance,
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate, notice of acceleration and any other notice with respect to any
of the Obligations and this Guaranty; and (b) any requirement that the Agent or
any Bank protect, secure, perfect or insure any security interest or Lien on any
property subject thereto or exhaust any right or take any action against any
other Company or any other Person or any Collateral or that any other Company or
any other Person be joined in any action hereunder. Should the Agent or any Bank
seek to enforce the obligations of the Guarantor hereunder by action in any
court, the Guarantor waives any necessity, substantive or procedural, that a
judgment previously be rendered against any Borrower or any other Person, or
that any action be brought against any other Company or any other Person, or
that any other Company or any other Person should be joined in such cause. Such
waiver shall be without prejudice to the Agent or any Bank at their option to
proceed against any other Company or any other Person, whether by separate
action or by joinder.
Several Obligations. The obligations of the Guarantor hereunder are several
from any other Company or any other Person, and are primary obligations
concerning which the Guarantor is the principal obligor. The Guarantor agrees
that this Guaranty shall not be discharged except by complete performance of the
Obligations of Borrowers under the Notes, the Credit Agreement and the other
Loan Documents and the obligations of the Guarantor hereunder. The obligations
of the Guarantor hereunder shall not be affected in any way by any receivership,
insolvency, bankruptcy or other proceedings affecting any other Company or any
other Person or any of such Company's or such Person's assets, or the release or
discharge of any other Company or any other Person from the performance of any
obligation contained in any promissory note or other instrument issued in
connection with, evidencing or securing any indebtedness guaranteed by this
instrument, whether occurring by reason of law or any other cause, whether
similar or dissimilar to the foregoing.
Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise, until the termination of the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement and the indefeasible
payment in full thereafter of all the Obligations. If any amount shall be paid
to the Guarantor on account of such subrogation rights at any time when the
Banks are obligated to make Loans or issue Letters of Credit under the Credit
Agreement or when all the Obligations shall not have been indefeasibly paid in
full, such amount shall be held in trust for the benefit of the Banks and shall
forthwith be paid to the Agent to be applied to the Obligations in such order as
the Agent shall select. If (a) the Guarantor shall make payment to the Agent of
all or any part of the Obligations and (b) the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement shall be terminated
and all of the Obligations shall be paid in full thereafter, the Agent will, at
the Guarantor's request, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of any interest in the
Obligations resulting from such payment by the Guarantor.
Subordination of Borrowers' Obligations to the Guarantor. The Guarantor
agrees that if, for any reason whatsoever, any Borrower now or hereafter owes
any indebtedness, directly or indirectly, to the Guarantor, or the Guarantor now
or hereafter owes any indebtedness, directly or indirectly, to any other
guarantor of the Obligations, all such indebtedness, together with all interest
thereon and fees and other charges in connection therewith, and all Liens
securing any such indebtedness shall at all times be second, subordinate and
inferior in right of payment, in lien priority and in all other respects to the
Obligations and the fulfillment of any of the Guarantor's obligations hereunder
or under any of the other Loan Documents. The provisions of this Section 7 are
in addition to, and cumulative of, any other provisions contained in any other
Loan Document or other document, instrument or writing.
Stay of Acceleration. If acceleration of the time for payment of any amount
payable by any Borrower under the Credit Agreement or the Notes is stayed upon
the insolvency, bankruptcy or reorganization of such Borrower, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement shall
nonetheless be payable by the Guarantor hereunder forthwith on demand by the
holder or holders of the Notes. The Guarantor's Obligations under this Guaranty
shall not be limited by any valuation, estimation or disallowance made in
connection with any proceedings filed under the United States Bankruptcy Code.
Representations and Warranties. The Guarantor hereby represents and
warrants as follows:
This Guaranty is, and all other documents and instruments executed in
connection herewith when delivered will be, legal, valid and binding obligations
of the Guarantor, enforceable against the Guarantor in accordance with their
respective terms, except as such enforceability may be (i) limited by the effect
of any Debtor Laws and (ii) subject to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Upon giving effect to (a) the execution of this Guaranty and (b) the
consummation of the transactions contemplated under this Guaranty, the following
are true and correct after diligent investigation:
The fair saleable value of the assets of the Guarantor exceeds the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including, without limitation, pending or overtly threatened
litigation in amounts in excess of effective insurance coverage and all other
contingent liabilities) of the Guarantor as they mature.
The assets of the Guarantor do not constitute unreasonably small capital
for the Guarantor to carry out its business as now conducted and as proposed to
be conducted including the capital needs of the Guarantor, taking into account
the particular capital requirements of the business conducted by the Guarantor,
and projected capital requirements and capital availability thereof.
The Guarantor does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
received by the Guarantor, and of amounts to be payable on or in respect of debt
of the Guarantor).
The fair saleable value of the assets of the Guarantor is greater than the
total fair value of the liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured, and liquidated or unliquidated
liabilities, of the Guarantor.
The Guarantor has determined that its liability and obligation under this
Guaranty may reasonably be expected to substantially benefit it directly or
indirectly, and its board of directors has made that determination. Borrowers
and the Guarantor are mutually dependent on each other in the conduct of their
respective businesses and are, and do business together with the other Companies
as, an integrated business enterprise involved in the designing, engineering,
manufacturing and marketing of fountain soft drink dispensing systems and citrus
beverage dispensing systems. The maintenance and improvement of each Borrower's
financial condition is vital to sustaining the Guarantor's business and the
transactions contemplated in the Credit Agreement produce distinct and
identifiable financial and economic direct or indirect benefits to the
Guarantor. Such identifiable benefits include the general improvement of the
Guarantor's financial and economic condition. The Guarantor has had full and
complete access to the Loan Documents and all other papers executed by
Borrowers, Parent Company or any other Person in connection with the
Obligations, has reviewed them and is fully aware of the meaning and effect of
their contents. The Guarantor is fully informed of all circumstances which bear
upon the risks of executing this Guaranty and which a diligent inquiry would
reveal. It has adequate means to obtain from Parent Company on a continuing
basis information concerning the financial condition of the Companies, and is
not depending on the Agent or any Bank to provide such information, now or in
the future. It agrees that neither the Agent nor any Bank shall have an
obligation to advise or notify it or to provide it with any such data or
information. The execution and delivery of this Guaranty is not a condition
precedent (and neither the Agent nor any Bank has in any way implied that the
execution of this Guaranty is a condition precedent) to the Agent's or any
Bank's making, extending or modifying any loan or any other financial
accommodation to or for the Guarantor.
No bankruptcy or insolvency proceedings are pending or contemplated by or
against the Guarantor.
Amendments, Etc. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Banks and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Banks, limit
the liability of the Guarantor hereunder.
Notices, Etc. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Guarantor, at the address for the Guarantor set forth on
the signature page hereof; if to the Agent or any Bank, at the address for the
Agent or such Bank (as the case may be) set forth in the Credit Agreement, or,
as to each party, at such other address as shall be designated by such party in
a written notice to the other party. All such notices and communications shall,
when mailed, telegraphed, telexed, transmitted or cabled be effective when
deposited in the mail, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telecopier or delivered to the cable company,
respectively.
No Waiver; Remedies. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Banks are hereby authorized at any time and from time to
time, without notice to the Guarantor (any such notice being expressly waived by
the Guarantor) to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any Bank to or for the
credit or the account of the Guarantor against any and all of the obligations of
the Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not any Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Banks under this
Section 13 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Banks may have.
Costs, Expenses and Taxes. The Guarantor agrees to pay, and cause to be
paid, the costs and expenses of the Agent and the Banks that are set forth in
Section 10.3 of the Credit Agreement in the manner set forth in Section 10.3 of
the Credit Agreement. The Guarantor agrees to pay interest on any expenses or
other sums due to the Agent and the Banks thereunder that are not paid when due
(following any applicable grace period or opportunity to cure) at the Default
Rate. In addition, subject to Section 10.8 of the Credit Agreement, the
Guarantor shall pay any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of this Guaranty and
any of the documents or instruments evidencing the Obligations, and agrees to
save the Agent and the Banks harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes. The agreements of the Guarantor contained in this Section 14 shall
survive the payment of all other amounts owing hereunder or under any of the
other Obligations.
Indemnity. To the fullest extent permitted by law and subject to Section
10.8 of the Credit Agreement, the Guarantor agrees to indemnify the Agent and
the Banks and their respective officers, directors employees, agents, attorneys
and other professionals and consultants, insurers and stockholders, and each of
them, in the manner set forth in Section 10.4 of the Credit Agreement.
Separability. Should any clause, sentence, paragraph, subsection or Section
of this Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the remainder
of this Guaranty, and the parties hereto agree that the part or parts of this
Guaranty so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
Captions. The captions in this Guaranty have been inserted for convenience
only and shall be given no substantive meaning or significance whatever in
construing the terms and provisions of this Guaranty.
Continuing Guaranty; Transfer of the Notes. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the termination of
the obligations of the Banks to make Loans or issue Letters of Credit under the
Credit Agreement and the indefeasible payment in full thereafter of the
Obligations; (b) be binding upon the Guarantor, its successors and assigns; and
(c) inure to the benefit of and be enforceable by the Agent and the Banks and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), the Agent and the Banks may assign or
otherwise transfer the Notes to any other Person or entity in accordance with
the terms and provisions set forth in Section 10.7 of the Credit Agreement, and
such other Person or entity shall thereupon become vested with all the rights
and benefits in respect thereof granted to the Agent and the Banks herein or
otherwise.
Limitation by Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
Survival of Representations and Warranties. All representations and
warranties contained in this Guaranty or made in writing by or on behalf of the
Guarantor in connection herewith, shall survive the execution and delivery of
this Guaranty. Any investigation by the Agent or any Bank shall not diminish in
any respect whatsoever its right to rely on such representations and warranties.
Governing Law; Submission to Jurisdiction. THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES). THE PARTIES EXPRESSLY
ACKNOWLEDGE THAT (I) THEY INTEND THAT THIS AGREEMENT AND EACH NOTE SHALL BE
GOVERNED BY THE PROVISIONS (INCLUDING, WITHOUT LIMITATION, THE RIGHT OF THE
PARTIES TO SELECT THE GOVERNING LAW) OF THE UNIFORM COMMERCIAL CODE AND NOT BY
COMMON LAW AND (II) THE STATE OF TEXAS BEARS A REASONABLE RELATIONSHIP TO THIS
TRANSACTION AND NO OTHER STATE HAS A MATERIALLY GREATER INTEREST IN THIS
TRANSACTION THAN THE STATE OF TEXAS. THE GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN TEXAS FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Limitation on Guaranteed Amount. Any other provision of this Guaranty
notwithstanding, the amount guaranteed by the Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations under this
Guaranty shall not be subject to avoidance under Section 548 of the Federal
Bankruptcy Code or to being set aside or annulled under any applicable state law
relating to fraud on creditors. In determining the limitations, if any, on the
amount of the Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which the Guarantor may have
under this Guaranty or applicable law shall be taken into account.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed by its respective officer
thereunto duly authorized, as of the date first above written.
LAN-LEASING, INC.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
Facsimile:
Attention:
<PAGE>
AFFILIATE GUARANTY
[MEXICO AFFILIATE]
This Affiliate Guaranty (the "Guaranty") is made as of the 15th day of
July, 1996 by INDUSTRIAS LANCERMEX, S.A. de C.V., a corporation organized under
the laws of Mexico (the "Guarantor"), in favor of THE FROST NATIONAL BANK, a
national banking association and its successors and assigns, as agent (the
"Agent") for the equal and ratable benefit of the banks and other financial
institutions listed on the signature pages of and any other bank or financial
institution that may hereafter become a party to the hereinafter described
Credit Agreement in accordance with the terms thereof (hereinafter collectively
referred to as the "Banks").
PRELIMINARY STATEMENT
1. The Banks have entered into a Credit Agreement dated as of July 15, 1996
(as it may hereafter be amended or otherwise modified from time to time, the
"Credit Agreement") with LANCER PARTNERSHIP, LTD., a Texas limited partnership
("Operating Subsidiary"), NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexico
corporation ("Mexico Subsidiary")(Operating Subsidiary and Mexico Subsidiary
being hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers"), and LANCER CORPORATION, a Texas corporation ("Parent Company").
The Guarantor is an Affiliate of Operating Subsidiary and Mexico Subsidiary and
a Subsidiary of Parent Company. The Guarantor will derive substantial benefit,
whether directly or indirectly, from the making of the Loans by the Banks to
Operating Subsidiary and Mexico Subsidiary pursuant to the terms and conditions
set forth in the Credit Agreement. It is a condition precedent to the
effectiveness of the Credit Agreement and the making of the Loans by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty. Unless otherwise defined herein, the capitalized terms used
herein which are defined in the Credit Agreement shall have the meanings
specified therein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
Guaranty. Subject to Section 22 hereof, the Guarantor hereby
unconditionally and irrevocably (a) guarantees the punctual payment when due
(following any applicable grace period or opportunity to cure), whether at
stated maturity, by acceleration, by prepayment or otherwise, of all obligations
of Mexico Subsidiary to the Agent and the Banks now or hereafter existing under
the Credit Agreement, the Term B Notes and all other Loan Documents to which any
Mexico Company is a party, whether for principal, interest, prepayment premium,
fees, expenses, taxes, costs, losses, compensation, reimbursements or any other
amount payable by Mexico Subsidiary to the Agent and the Banks under the terms
of the Credit Agreement, the Term B Notes and the other Loan Documents to which
any Mexico Company is a party, and (b) agrees to pay any and all expenses
(including, without limitation, reasonable counsel fees and expenses) incurred
by the Agent and the Banks in enforcing any rights under this Guaranty (all of
the above being hereinafter called the "Obligations").
Guaranty Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, the Term B
Notes and all other Loan Documents to which any Mexico Company is a party
(subject to any applicable grace period or opportunity to cure), regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Banks with respect thereto. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
any lack of validity or enforceability of or defect or deficiency in the
Credit Agreement, the Term B Notes, or any of the other Loan Documents;
any change in the time, manner, terms or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to departure from the Credit Agreement, the Term B Notes, or
any of the other Loan Documents;
any sale, exchange, release or non-perfection of any property standing as
security for the liabilities hereby guaranteed or any liabilities incurred
directly or indirectly hereunder or any set-off against any of said liabilities,
or any release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
any change in the existence, structure or ownership of the Guarantor or any
other Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting such Company or such Company's assets;
the existence of any claim, set-off or other rights which the Guarantor may
have at any time against any other Company, the holder or holders of the Term B
Notes or any other Person, whether or not arising in connection with this
Guaranty, the Credit Agreement, the Term B Notes or any other Loan Document;
provided that nothing contained herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
failure, omission, delay, neglect, refusal or lack of diligence by any Bank
or the Agent or any other Person to assert, enforce, give notice of intent to
exercise, or any other notice with respect to, or exercise any right, privilege,
power or remedy conferred on any Bank or the Agent or any other Person in any of
the Loan Documents or by law or action on the part of any Bank or the Agent or
any other Person granting indulgence, grace, adjustment, forbearance or
extension of any kind to Guarantor, any other Company or any other Person;
release, surrender, exchange, subordination or loss of any security or lien
priority under any of the Loan Documents or in connection with the Obligations;
release, modification or waiver of, or failure, omission, delay, neglect,
refusal or lack of diligence to enforce, any guaranty, pledge, mortgage, deed of
trust, security agreement, lien, charge, insurance agreement, bond, letter of
credit or other security device, guaranty, surety or indemnity agreement
whatsoever;
failure by any Bank, the Agent or any other Person to notify, or timely
notify, the Guarantor of any default, event of default or similar event (however
denominated) under any of the Loan Documents, any renewal, extension,
supplementing, modification, rearrangement, amendment, restatement, replacement,
cancellation, rescission, revocation or reinstatement (whether or not material)
or assignment of any part of the Obligations, release or exchange of any
security, any other action taken or not taken by any Bank or the Agent against
the Guarantor, any other Company or any other Person or any direct or indirect
security for any part of the Obligations, any new agreement between any Bank or
the Agent and any other Company or any other Person or any other event or
circumstance. Except as required by applicable law or as otherwise provided in
the Loan Documents, neither the Agent nor any Bank has any duty or obligation to
give the Guarantor (in its capacity as a guarantor hereunder) any notice of any
kind under any circumstances whatsoever with respect to or in connection with
the Obligations or the Loan Documents; or
any other circumstance which might otherwise constitute a defense available
to, or a discharge of any other Company or any other Person (including any
guarantor) in respect of the Obligations, other than payment in full of the
Obligations.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is annulled, set
aside, invalidated, declared to be fraudulent or preferential, rescinded or must
otherwise be returned, refunded or repaid by the Banks or the proceeds of
collateral are required to be returned by the Banks upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any other Company, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any other Company or any substantial part
of such Company's respective property or otherwise, all as though such payment
or payments had not been made. The obligations of the Guarantor under this
Guaranty shall not be subject to reduction, termination or other impairment by
reason of any setoff, recoupment, counterclaim or defense or for any other
reason.
Continuing Guaranty. This is a continuing Guaranty, and all extensions of
credit and financial accommodations heretofore, concurrently herewith or
hereafter made by the Banks and the Agent to Mexico Subsidiary and all
indebtedness of Mexico Subsidiary now owned or hereafter acquired by the Banks
and the Agent in connection with the transactions contemplated under the Credit
Agreement shall be conclusively presumed to have been made or acquired in
acceptance hereof.
Waiver. This is an absolute Guaranty of payment and not of collection, and
the Guarantor hereby waives (a) promptness, diligence, notice of acceptance,
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate, notice of acceleration and any other notice with respect to any
of the Obligations and this Guaranty; and (b) any requirement that the Agent or
any Bank protect, secure, perfect or insure any security interest or Lien on any
property subject thereto or exhaust any right or take any action against any
other Company or any other Person or any Collateral or that any other Company or
any other Person be joined in any action hereunder. Should the Agent or any Bank
seek to enforce the obligations of the Guarantor hereunder by action in any
court, the Guarantor waives any necessity, substantive or procedural, that a
judgment previously be rendered against Mexico Subsidiary or any other Person,
or that any action be brought against any other Company or any other Person, or
that any other Company or any other Person should be joined in such cause. Such
waiver shall be without prejudice to the Agent or any Bank at their option to
proceed against any other Company or any other Person, whether by separate
action or by joinder.
Several Obligations. The obligations of the Guarantor hereunder are several
from any other Company or any other Person, and are primary obligations
concerning which the Guarantor is the principal obligor. The Guarantor agrees
that this Guaranty shall not be discharged except by complete performance of the
Obligations of Mexico Subsidiary under the Term B Notes, the Credit Agreement
and the other Loan Documents to which any Mexico Company is a party and the
obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder shall not be affected in any way by any receivership, insolvency,
bankruptcy or other proceedings affecting any other Company or any other Person
or any of such Company's or such Person's assets, or the release or discharge of
any other Company or any other Person from the performance of any obligation
contained in any promissory note or other instrument issued in connection with,
evidencing or securing any indebtedness guaranteed by this instrument, whether
occurring by reason of law or any other cause, whether similar or dissimilar to
the foregoing.
Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise, until the termination of the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement and the indefeasible
payment in full thereafter of all the Obligations. If any amount shall be paid
to the Guarantor on account of such subrogation rights at any time when the
Banks are obligated to make Term B Loans under the Credit Agreement or when all
the Obligations shall not have been indefeasibly paid in full, such amount shall
be held in trust for the benefit of the Banks and shall forthwith be paid to the
Agent to be applied to the Obligations in such order as the Agent shall select.
If (a) the Guarantor shall make payment to the Agent of all or any part of the
Obligations and (b) the obligations of the Banks to make Term B Loans under the
Credit Agreement shall be terminated and all of the Obligations shall be paid in
full thereafter, the Agent will, at the Guarantor's request, execute and deliver
to the Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
the Guarantor of any interest in the Obligations resulting from such payment by
the Guarantor.
Subordination of Mexico Subsidiary's Obligations to the Guarantor. The
Guarantor agrees that if, for any reason whatsoever, Mexico Subsidiary now or
hereafter owes any indebtedness, directly or indirectly, to the Guarantor, or
the Guarantor now or hereafter owes any indebtedness, directly or indirectly, to
any other guarantor of the Obligations, all such indebtedness, together with all
interest thereon and fees and other charges in connection therewith, and all
Liens securing any such indebtedness shall at all times be second, subordinate
and inferior in right of payment, in lien priority and in all other respects to
the Obligations and the fulfillment of any of the Guarantor's obligations
hereunder or under any of the other Loan Documents. The provisions of this
Section 7 are in addition to, and cumulative of, any other provisions contained
in any other Loan Document or other document, instrument or writing.
Stay of Acceleration. If acceleration of the time for payment of any amount
payable by Mexico Subsidiary under the Credit Agreement or the Term B Notes is
stayed upon the insolvency, bankruptcy or reorganization of such Borrower, all
such amounts otherwise subject to acceleration under the terms of the Credit
Agreement shall nonetheless be payable by the Guarantor hereunder forthwith on
demand by the holder or holders of the Term B Notes. The Guarantor's Obligations
under this Guaranty shall not be limited by any valuation, estimation or
disallowance made in connection with any proceedings filed under the United
States Bankruptcy Code.
Representations and Warranties. The Guarantor hereby represents and
warrants as follows:
This Guaranty is, and all other documents and instruments executed in
connection herewith when delivered will be, legal, valid and binding obligations
of the Guarantor, enforceable against the Guarantor in accordance with their
respective terms, except as such enforceability may be (i) limited by the effect
of any Debtor Laws and (ii) subject to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Upon giving effect to (a) the execution of this Guaranty and (b) the
consummation of the transactions contemplated under this Guaranty, the following
are true and correct after diligent investigation:
The fair saleable value of the assets of the Guarantor exceeds the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including, without limitation, pending or overtly threatened
litigation in amounts in excess of effective insurance coverage and all other
contingent liabilities) of the Guarantor as they mature.
The assets of the Guarantor do not constitute unreasonably small capital
for the Guarantor to carry out its business as now conducted and as proposed to
be conducted including the capital needs of the Guarantor, taking into account
the particular capital requirements of the business conducted by the Guarantor,
and projected capital requirements and capital availability thereof.
The Guarantor does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
received by the Guarantor, and of amounts to be payable on or in respect of debt
of the Guarantor).
The fair saleable value of the assets of the Guarantor is greater than the
total fair value of the liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured, and liquidated or unliquidated
liabilities, of the Guarantor.
The Guarantor has determined that its liability and obligation under this
Guaranty may reasonably be expected to substantially benefit it directly or
indirectly, and its board of directors made that determination. Mexico
Subsidiary and the Guarantor are mutually dependent on each other in the conduct
of their respective businesses and are, and do business together with the other
Companies as, an integrated business enterprise involved in the designing,
engineering, manufacturing and marketing of fountain soft drink dispensing
systems and citrus beverage dispensing systems. The maintenance and improvement
of Mexico Subsidiary's financial condition is vital to sustaining the
Guarantor's business and the transactions contemplated in the Credit Agreement
produce distinct and identifiable financial and economic direct or indirect
benefits to the Guarantor. Such identifiable benefits include the general
improvement of the Guarantor's financial and economic condition. The Guarantor
has had full and complete access to the Loan Documents and all other papers
executed by Mexico Subsidiary or any other Person in connection with the
Obligations, has reviewed them and is fully aware of the meaning and effect of
their contents. The Guarantor is fully informed of all circumstances which bear
upon the risks of executing this Guaranty and which a diligent inquiry would
reveal. It has adequate means to obtain from Parent Company on a continuing
basis information concerning the financial condition of the Companies, and is
not depending on the Agent or any Bank to provide such information, now or in
the future. It agrees that neither the Agent nor any Bank shall have an
obligation to advise or notify it or to provide it with any such data or
information. The execution and delivery of this Guaranty is not a condition
precedent (and neither the Agent nor any Bank has in any way implied that the
execution of this Guaranty is a condition precedent) to the Agent's or any
Bank's making, extending or modifying any loan or any other financial
accommodation to or for the Guarantor.
No bankruptcy or insolvency proceedings are pending or contemplated by or
against the Guarantor.
Amendments, Etc. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Banks and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Banks, limit
the liability of the Guarantor hereunder.
Notices, Etc. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Guarantor, at the address for the Guarantor set forth on
the signature page hereof; if to the Agent or any Bank, at the address for the
Agent or such Bank (as the case may be) set forth in the Credit Agreement, or,
as to each party, at such other address as shall be designated by such party in
a written notice to the other party. All such notices and communications shall,
when mailed, telegraphed, telexed, transmitted or cabled be effective when
deposited in the mail, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telecopier or delivered to the cable company,
respectively.
No Waiver; Remedies. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Banks are hereby authorized at any time and from time to
time, without notice to the Guarantor (any such notice being expressly waived by
the Guarantor) to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any Bank to or for the
credit or the account of the Guarantor against any and all of the obligations of
the Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not any Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Banks under this
Section 13 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Banks may have.
Costs, Expenses and Taxes. The Guarantor agrees to pay, and cause to be
paid, the costs and expenses of the Agent and the Banks that are payable by the
Mexico Subsidiary under Section 10.3 of the Credit Agreement in the manner set
forth in Section 10.3 of the Credit Agreement. The Guarantor agrees to pay
interest on any expenses or other sums due to the Agent and the Banks by Mexico
Subsidiary thereunder that are not paid when due (following any applicable grace
period or opportunity to cure) at the Default Rate. In addition, subject to
Section 10.8 of the Credit Agreement, the Guarantor shall pay any and all stamp
and other taxes payable or determined to be payable in connection with the
execution and delivery of this Guaranty and any of the documents or instruments
evidencing the Obligations, and agrees to save the Agent and the Banks harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes. The agreements of the Guarantor
contained in this Section 14 shall survive the payment of all other amounts
owing hereunder or under any of the other Obligations.
Indemnity. To the fullest extent permitted by law and subject to Section
10.8 of the Credit Agreement, the Guarantor agrees to indemnify the Agent and
the Banks and their respective officers, directors employees, agents, attorneys
and other professionals and consultants, insurers and stockholders, and each of
them, in the manner set forth in Section 10.4 of the Credit Agreement.
Separability. Should any clause, sentence, paragraph, subsection or Section
of this Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the remainder
of this Guaranty, and the parties hereto agree that the part or parts of this
Guaranty so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
Captions. The captions in this Guaranty have been inserted for convenience
only and shall be given no substantive meaning or significance whatever in
construing the terms and provisions of this Guaranty.
Continuing Guaranty; Transfer of the Notes. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the termination of
the obligations of the Banks to make Term B Loans under the Credit Agreement and
the indefeasible payment in full thereafter of the Obligations; (b) be binding
upon the Guarantor, its successors and assigns; and (c) inure to the benefit of
and be enforceable by the Agent and the Banks and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), the Agent and the Banks may assign or otherwise transfer the Term B Notes
to any other Person or entity in accordance with the terms and provisions set
forth in Section 10.7 of the Credit Agreement, and such other Person or entity
shall thereupon become vested with all the rights and benefits in respect
thereof granted to the Agent and the Banks herein or otherwise.
Limitation by Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
Survival of Representations and Warranties. All representations and
warranties contained in this Guaranty or made in writing by or on behalf of the
Guarantor in connection herewith, shall survive the execution and delivery of
this Guaranty. Any investigation by the Agent or any Bank shall not diminish in
any respect whatsoever its right to rely on such representations and warranties.
Governing Law; Submission to Jurisdiction. THIS GUARANTY (INCLUDING ITS
VALIDITY, ENFORCEABILITY AND INTERPRETATION) SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES) AND, TO THE EXTENT CONTROLLING, THE FEDERAL LAWS OF THE USA;
PROVIDED, HOWEVER, NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS GUARANTY OR THE
CREDIT AGREEMENT TO THE CONTRARY, THAT IN CONNECTION WITH ANY LEGAL ACTION OR
PROCEEDING (OTHER THAN AN ACTION OR PROCEEDING TO ENFORCE A JUDGMENT OBTAINED IN
ANOTHER JURISDICTION) BROUGHT BY THE AGENT OR THE HOLDER OF THIS GUARANTY IN ANY
COURTS OF MEXICO OR ANY POLITICAL SUBDIVISION THEREOF, THIS GUARANTY SHALL BE
DEEMED TO BE AN INSTRUMENT MADE UNDER THE LAWS OF MEXICO AND FOR SUCH PURPOSES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF MEXICO, AND
IF ANY PROVISION OF THIS GUARANTY IS INVALID, ILLEGALLY INEFFECTIVE, OR CONTRARY
TO THE LAWS OF MEXICO, IT SHALL BE EXCISED AND ALL OTHER PARTS OF THE GUARANTY
SHALL REMAIN IN EFFECT AND BINDING. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
GUARANTY OR THE CREDIT AGREEMENT TO THE CONTRARY, THE MAKER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY COMPETENT COURT OF MEXICO CITY, FEDERAL
DISTRICT, MEXICO OR OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT
OF TEXAS (SAN ANTONIO DIVISION) OF THE UNITED STATES OF AMERICA, OR THE COURTS
OF THE STATE OF TEXAS SITTING IN THE COUNTY OF BEXAR, STATE OF TEXAS, UNITED
STATES OF AMERICA, AS THE AGENT OR THE HOLDER HEREOF MAY ELECT, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, AND THE MAKER AND THE
GUARANTORS HEREBY IRREVOCABLY AGREE THAT CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS. THE MAKER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY BROUGHT IN ANY COURT AFOREMENTIONED,
AND THE MAKER FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE MAKER HEREBY EXPRESSLY WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH IT
MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENCE OR SUBSEQUENT DOMICILES.
Limitation on Guaranteed Amount. Any other provision of this Guaranty
notwithstanding, the amount guaranteed by the Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations under this
Guaranty shall not be subject to avoidance under Section 548 of the Federal
Bankruptcy Code or to being set aside or annulled under any applicable state law
relating to fraud on creditors. In determining the limitations, if any, on the
amount of the Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which the Guarantor may have
under this Guaranty or applicable law shall be taken into account.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed by its respective officer thereunto duly authorized, as of the date
first above written.
INDUSTRIAS LANCERMEX, S.A. de C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
Facsimile:
Attention:
<PAGE>
AFFILIATE GUARANTY
[MEXICO AFFILIATE]
This Affiliate Guaranty (the "Guaranty") is made as of the 15th day of
July, 1996 by SERVICIOS LANCERMEX, S.A., de C.V. a corporation organized under
the laws of Mexico (the "Guarantor"), in favor of THE FROST NATIONAL BANK, a
national banking association and its successors and assigns, as agent (the
"Agent") for the equal and ratable benefit of the banks and other financial
institutions listed on the signature pages of and any other bank or financial
institution that may hereafter become a party to the hereinafter described
Credit Agreement in accordance with the terms thereof (hereinafter collectively
referred to as the "Banks").
PRELIMINARY STATEMENT
1. The Banks have entered into a Credit Agreement dated as of July 15, 1996
(as it may hereafter be amended or otherwise modified from time to time, the
"Credit Agreement") with LANCER PARTNERSHIP, LTD., a Texas limited partnership
("Operating Subsidiary"), NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.V., a Mexico
corporation ("Mexico Subsidiary")(Operating Subsidiary and Mexico Subsidiary
being hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers"), and LANCER CORPORATION, a Texas corporation ("Parent Company").
The Guarantor is an Affiliate of Operating Subsidiary and Mexico Subsidiary and
a Subsidiary of Parent Company. The Guarantor will derive substantial benefit,
whether directly or indirectly, from the making of the Loans by the Banks to
Operating Subsidiary and Mexico Subsidiary pursuant to the terms and conditions
set forth in the Credit Agreement. It is a condition precedent to the
effectiveness of the Credit Agreement and the making of the Loans by the Banks
under the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty. Unless otherwise defined herein, the capitalized terms used
herein which are defined in the Credit Agreement shall have the meanings
specified therein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
Guaranty. Subject to Section 22 hereof, the Guarantor hereby
unconditionally and irrevocably (a) guarantees the punctual payment when due
(following any applicable grace period or opportunity to cure), whether at
stated maturity, by acceleration, by prepayment or otherwise, of all obligations
of Mexico Subsidiary to the Agent and the Banks now or hereafter existing under
the Credit Agreement, the Term B Notes and all other Loan Documents to which any
Mexico Company is a party, whether for principal, interest, prepayment premium,
fees, expenses, taxes, costs, losses, compensation, reimbursements or any other
amount payable by Mexico Subsidiary to the Agent and the Banks under the terms
of the Credit Agreement, the Term B Notes and the other Loan Documents to which
any Mexico Company is a party, and (b) agrees to pay any and all expenses
(including, without limitation, reasonable counsel fees and expenses) incurred
by the Agent and the Banks in enforcing any rights under this Guaranty (all of
the above being hereinafter called the "Obligations").
Guaranty Absolute. The Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Credit Agreement, the Term B
Notes and all other Loan Documents to which any Mexico Company is a party
(subject to any applicable grace period or opportunity to cure), regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Banks with respect thereto. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
any lack of validity or enforceability of or defect or deficiency in the
Credit Agreement, the Term B Notes, or any of the other Loan Documents;
any change in the time, manner, terms or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to departure from the Credit Agreement, the Term B Notes, or
any of the other Loan Documents;
any sale, exchange, release or non-perfection of any property standing as
security for the liabilities hereby guaranteed or any liabilities incurred
directly or indirectly hereunder or any set-off against any of said liabilities,
or any release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations;
any change in the existence, structure or ownership of the Guarantor or any
other Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting such Company or such Company's assets;
the existence of any claim, set-off or other rights which the Guarantor may
have at any time against any other Company, the holder or holders of the Term B
Notes or any other Person, whether or not arising in connection with this
Guaranty, the Credit Agreement, the Term B Notes or any other Loan Document;
provided that nothing contained herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
failure, omission, delay, neglect, refusal or lack of diligence by any Bank
or the Agent or any other Person to assert, enforce, give notice of intent to
exercise, or any other notice with respect to, or exercise any right, privilege,
power or remedy conferred on any Bank or the Agent or any other Person in any of
the Loan Documents or by law or action on the part of any Bank or the Agent or
any other Person granting indulgence, grace, adjustment, forbearance or
extension of any kind to Guarantor, any other Company or any other Person;
release, surrender, exchange, subordination or loss of any security or lien
priority under any of the Loan Documents or in connection with the Obligations;
release, modification or waiver of, or failure, omission, delay, neglect,
refusal or lack of diligence to enforce, any guaranty, pledge, mortgage, deed of
trust, security agreement, lien, charge, insurance agreement, bond, letter of
credit or other security device, guaranty, surety or indemnity agreement
whatsoever;
failure by any Bank, the Agent or any other Person to notify, or timely
notify, the Guarantor of any default, event of default or similar event (however
denominated) under any of the Loan Documents, any renewal, extension,
supplementing, modification, rearrangement, amendment, restatement, replacement,
cancellation, rescission, revocation or reinstatement (whether or not material)
or assignment of any part of the Obligations, release or exchange of any
security, any other action taken or not taken by any Bank or the Agent against
the Guarantor, any other Company or any other Person or any direct or indirect
security for any part of the Obligations, any new agreement between any Bank or
the Agent and any other Company or any other Person or any other event or
circumstance. Except as required by applicable law or as otherwise provided in
the Loan Documents, neither the Agent nor any Bank has any duty or obligation to
give the Guarantor (in its capacity as a guarantor hereunder) any notice of any
kind under any circumstances whatsoever with respect to or in connection with
the Obligations or the Loan Documents; or
any other circumstance which might otherwise constitute a defense available
to, or a discharge of any other Company or any other Person (including any
guarantor) in respect of the Obligations, other than payment in full of the
Obligations.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is annulled, set
aside, invalidated, declared to be fraudulent or preferential, rescinded or must
otherwise be returned, refunded or repaid by the Banks or the proceeds of
collateral are required to be returned by the Banks upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any other Company, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any other Company or any substantial part
of such Company's respective property or otherwise, all as though such payment
or payments had not been made. The obligations of the Guarantor under this
Guaranty shall not be subject to reduction, termination or other impairment by
reason of any setoff, recoupment, counterclaim or defense or for any other
reason.
Continuing Guaranty. This is a continuing Guaranty, and all extensions of
credit and financial accommodations heretofore, concurrently herewith or
hereafter made by the Banks and the Agent to Mexico Subsidiary and all
indebtedness of Mexico Subsidiary now owned or hereafter acquired by the Banks
and the Agent in connection with the transactions contemplated under the Credit
Agreement shall be conclusively presumed to have been made or acquired in
acceptance hereof.
Waiver. This is an absolute Guaranty of payment and not of collection, and
the Guarantor hereby waives (a) promptness, diligence, notice of acceptance,
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate, notice of acceleration and any other notice with respect to any
of the Obligations and this Guaranty; and (b) any requirement that the Agent or
any Bank protect, secure, perfect or insure any security interest or Lien on any
property subject thereto or exhaust any right or take any action against any
other Company or any other Person or any Collateral or that any other Company or
any other Person be joined in any action hereunder. Should the Agent or any Bank
seek to enforce the obligations of the Guarantor hereunder by action in any
court, the Guarantor waives any necessity, substantive or procedural, that a
judgment previously be rendered against Mexico Subsidiary or any other Person,
or that any action be brought against any other Company or any other Person, or
that any other Company or any other Person should be joined in such cause. Such
waiver shall be without prejudice to the Agent or any Bank at their option to
proceed against any other Company or any other Person, whether by separate
action or by joinder.
Several Obligations. The obligations of the Guarantor hereunder are several
from any other Company or any other Person, and are primary obligations
concerning which the Guarantor is the principal obligor. The Guarantor agrees
that this Guaranty shall not be discharged except by complete performance of the
Obligations of Mexico Subsidiary under the Term B Notes, the Credit Agreement
and the other Loan Documents to which any Mexico Company is a party and the
obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder shall not be affected in any way by any receivership, insolvency,
bankruptcy or other proceedings affecting any other Company or any other Person
or any of such Company's or such Person's assets, or the release or discharge of
any other Company or any other Person from the performance of any obligation
contained in any promissory note or other instrument issued in connection with,
evidencing or securing any indebtedness guaranteed by this instrument, whether
occurring by reason of law or any other cause, whether similar or dissimilar to
the foregoing.
Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty, by any payment made hereunder
or otherwise, until the termination of the obligations of the Banks to make
Loans or issue Letters of Credit under the Credit Agreement and the indefeasible
payment in full thereafter of all the Obligations. If any amount shall be paid
to the Guarantor on account of such subrogation rights at any time when the
Banks are obligated to make Term B Loans under the Credit Agreement or when all
the Obligations shall not have been indefeasibly paid in full, such amount shall
be held in trust for the benefit of the Banks and shall forthwith be paid to the
Agent to be applied to the Obligations in such order as the Agent shall select.
If (a) the Guarantor shall make payment to the Agent of all or any part of the
Obligations and (b) the obligations of the Banks to make Term B Loans under the
Credit Agreement shall be terminated and all of the Obligations shall be paid in
full thereafter, the Agent will, at the Guarantor's request, execute and deliver
to the Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
the Guarantor of any interest in the Obligations resulting from such payment by
the Guarantor.
Subordination of Mexico Subsidiary's Obligations to the Guarantor. The
Guarantor agrees that if, for any reason whatsoever, Mexico Subsidiary now or
hereafter owes any indebtedness, directly or indirectly, to the Guarantor, or
the Guarantor now or hereafter owes any indebtedness, directly or indirectly, to
any other guarantor of the Obligations, all such indebtedness, together with all
interest thereon and fees and other charges in connection therewith, and all
Liens securing any such indebtedness shall at all times be second, subordinate
and inferior in right of payment, in lien priority and in all other respects to
the Obligations and the fulfillment of any of the Guarantor's obligations
hereunder or under any of the other Loan Documents. The provisions of this
Section 7 are in addition to, and cumulative of, any other provisions contained
in any other Loan Document or other document, instrument or writing.
Stay of Acceleration. If acceleration of the time for payment of any amount
payable by Mexico Subsidiary under the Credit Agreement or the Term B Notes is
stayed upon the insolvency, bankruptcy or reorganization of such Borrower, all
such amounts otherwise subject to acceleration under the terms of the Credit
Agreement shall nonetheless be payable by the Guarantor hereunder forthwith on
demand by the holder or holders of the Term B Notes. The Guarantor's Obligations
under this Guaranty shall not be limited by any valuation, estimation or
disallowance made in connection with any proceedings filed under the United
States Bankruptcy Code.
Representations and Warranties. The Guarantor hereby represents and
warrants as follows:
This Guaranty is, and all other documents and instruments executed in
connection herewith when delivered will be, legal, valid and binding obligations
of the Guarantor, enforceable against the Guarantor in accordance with their
respective terms, except as such enforceability may be (i) limited by the effect
of any Debtor Laws and (ii) subject to the effect of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
Upon giving effect to (a) the execution of this Guaranty and (b) the
consummation of the transactions contemplated under this Guaranty, the following
are true and correct after diligent investigation:
The fair saleable value of the assets of the Guarantor exceeds the amount
that will be required to be paid on or in respect of the existing debts and
other liabilities (including, without limitation, pending or overtly threatened
litigation in amounts in excess of effective insurance coverage and all other
contingent liabilities) of the Guarantor as they mature.
The assets of the Guarantor do not constitute unreasonably small capital
for the Guarantor to carry out its business as now conducted and as proposed to
be conducted including the capital needs of the Guarantor, taking into account
the particular capital requirements of the business conducted by the Guarantor,
and projected capital requirements and capital availability thereof.
The Guarantor does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
received by the Guarantor, and of amounts to be payable on or in respect of debt
of the Guarantor).
The fair saleable value of the assets of the Guarantor is greater than the
total fair value of the liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured, and liquidated or unliquidated
liabilities, of the Guarantor.
The Guarantor has determined that its liability and obligation under this
Guaranty may reasonably be expected to substantially benefit it directly or
indirectly, and its board of directors has made that determination. Mexico
Subsidiary and the Guarantor are mutually dependent on each other in the conduct
of their respective businesses and are, and do business together with the other
Companies as, an integrated business enterprise involved in the designing,
engineering, manufacturing and marketing of fountain soft drink dispensing
systems and citrus beverage dispensing systems. The maintenance and improvement
of Mexico Subsidiary's financial condition is vital to sustaining the
Guarantor's business and the transactions contemplated in the Credit Agreement
produce distinct and identifiable financial and economic direct or indirect
benefits to the Guarantor. Such identifiable benefits include the general
improvement of the Guarantor's financial and economic condition. The Guarantor
has had full and complete access to the Loan Documents and all other papers
executed by Mexico Subsidiary or any other Person in connection with the
Obligations, has reviewed them and is fully aware of the meaning and effect of
their contents. The Guarantor is fully informed of all circumstances which bear
upon the risks of executing this Guaranty and which a diligent inquiry would
reveal. It has adequate means to obtain from Parent Company on a continuing
basis information concerning the financial condition of the Companies, and is
not depending on the Agent or any Bank to provide such information, now or in
the future. It agrees that neither the Agent nor any Bank shall have an
obligation to advise or notify it or to provide it with any such data or
information. The execution and delivery of this Guaranty is not a condition
precedent (and neither the Agent nor any Bank has in any way implied that the
execution of this Guaranty is a condition precedent) to the Agent's or any
Bank's making, extending or modifying any loan or any other financial
accommodation to or for the Guarantor.
No bankruptcy or insolvency proceedings are pending or contemplated by or
against the Guarantor.
Amendments, Etc. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Banks and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Banks, limit
the liability of the Guarantor hereunder.
Notices, Etc. All notices and other communications provided for hereunder
shall be in writing (including telegraphic, telex, facsimile or cable
communication) and mailed, telegraphed, telexed, transmitted, cabled or
delivered, if to the Guarantor, at the address for the Guarantor set forth on
the signature page hereof; if to the Agent or any Bank, at the address for the
Agent or such Bank (as the case may be) set forth in the Credit Agreement, or,
as to each party, at such other address as shall be designated by such party in
a written notice to the other party. All such notices and communications shall,
when mailed, telegraphed, telexed, transmitted or cabled be effective when
deposited in the mail, delivered to the telegraph company, confirmed by telex
answerback, transmitted by telecopier or delivered to the cable company,
respectively.
No Waiver; Remedies. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Right of Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Banks are hereby authorized at any time and from time to
time, without notice to the Guarantor (any such notice being expressly waived by
the Guarantor) to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any Bank to or for the
credit or the account of the Guarantor against any and all of the obligations of
the Guarantor now or hereafter existing under this Guaranty, irrespective of
whether or not any Bank shall have made any demand under this Guaranty and
although such obligations may be contingent and unmatured. Each Bank agrees
promptly to notify the Guarantor after any such set-off and application made by
such Bank; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Banks under this
Section 13 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Banks may have.
Costs, Expenses and Taxes. The Guarantor agrees to pay, and cause to be
paid, the costs and expenses of the Agent and the Banks that are payable by the
Mexico Subsidiary under Section 10.3 of the Credit Agreement in the manner set
forth in Section 10.3 of the Credit Agreement. The Guarantor agrees to pay
interest on any expenses or other sums due to the Agent and the Banks by Mexico
Subsidiary thereunder that are not paid when due (following any applicable grace
period or opportunity to cure) at the Default Rate. In addition, subject to
Section 10.8 of the Credit Agreement, the Guarantor shall pay any and all stamp
and other taxes payable or determined to be payable in connection with the
execution and delivery of this Guaranty and any of the documents or instruments
evidencing the Obligations, and agrees to save the Agent and the Banks harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes. The agreements of the Guarantor
contained in this Section 14 shall survive the payment of all other amounts
owing hereunder or under any of the other Obligations.
Indemnity. To the fullest extent permitted by law and subject to Section
10.8 of the Credit Agreement, the Guarantor agrees to indemnify the Agent and
the Banks and their respective officers, directors employees, agents, attorneys
and other professionals and consultants, insurers and stockholders, and each of
them, in the manner set forth in Section 10.4 of the Credit Agreement.
Separability. Should any clause, sentence, paragraph, subsection or Section
of this Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the remainder
of this Guaranty, and the parties hereto agree that the part or parts of this
Guaranty so held to be invalid, unenforceable or void will be deemed to have
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
Captions. The captions in this Guaranty have been inserted for convenience
only and shall be given no substantive meaning or significance whatever in
construing the terms and provisions of this Guaranty.
Continuing Guaranty; Transfer of the Notes. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the termination of
the obligations of the Banks to make Term B Loans under the Credit Agreement and
the indefeasible payment in full thereafter of the Obligations; (b) be binding
upon the Guarantor, its successors and assigns; and (c) inure to the benefit of
and be enforceable by the Agent and the Banks and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), the Agent and the Banks may assign or otherwise transfer the Term B Notes
to any other Person or entity in accordance with the terms and provisions set
forth in Section 10.7 of the Credit Agreement, and such other Person or entity
shall thereupon become vested with all the rights and benefits in respect
thereof granted to the Agent and the Banks herein or otherwise.
Limitation by Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
Survival of Representations and Warranties. All representations and
warranties contained in this Guaranty or made in writing by or on behalf of the
Guarantor in connection herewith, shall survive the execution and delivery of
this Guaranty. Any investigation by the Agent or any Bank shall not diminish in
any respect whatsoever its right to rely on such representations and warranties.
Governing Law; Submission to Jurisdiction. THIS GUARANTY (INCLUDING ITS
VALIDITY, ENFORCEABILITY AND INTERPRETATION) SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES) AND, TO THE EXTENT CONTROLLING, THE FEDERAL LAWS OF THE USA;
PROVIDED, HOWEVER, NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS GUARANTY OR THE
CREDIT AGREEMENT TO THE CONTRARY, THAT IN CONNECTION WITH ANY LEGAL ACTION OR
PROCEEDING (OTHER THAN AN ACTION OR PROCEEDING TO ENFORCE A JUDGMENT OBTAINED IN
ANOTHER JURISDICTION) BROUGHT BY THE AGENT OR THE HOLDER OF THIS GUARANTY IN ANY
COURTS OF MEXICO OR ANY POLITICAL SUBDIVISION THEREOF, THIS GUARANTY SHALL BE
DEEMED TO BE AN INSTRUMENT MADE UNDER THE LAWS OF MEXICO AND FOR SUCH PURPOSES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF MEXICO, AND
IF ANY PROVISION OF THIS GUARANTY IS INVALID, ILLEGALLY INEFFECTIVE, OR CONTRARY
TO THE LAWS OF MEXICO, IT SHALL BE EXCISED AND ALL OTHER PARTS OF THE GUARANTY
SHALL REMAIN IN EFFECT AND BINDING. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
GUARANTY OR THE CREDIT AGREEMENT TO THE CONTRARY, THE MAKER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY COMPETENT COURT OF MEXICO CITY, FEDERAL
DISTRICT, MEXICO OR OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT
OF TEXAS (SAN ANTONIO DIVISION) OF THE UNITED STATES OF AMERICA, OR THE COURTS
OF THE STATE OF TEXAS SITTING IN THE COUNTY OF BEXAR, STATE OF TEXAS, UNITED
STATES OF AMERICA, AS THE AGENT OR THE HOLDER HEREOF MAY ELECT, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, AND THE MAKER AND THE
GUARANTORS HEREBY IRREVOCABLY AGREE THAT CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS. THE MAKER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY BROUGHT IN ANY COURT AFOREMENTIONED,
AND THE MAKER FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE MAKER HEREBY EXPRESSLY WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH IT
MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENCE OR SUBSEQUENT DOMICILES.
Limitation on Guaranteed Amount. Any other provision of this Guaranty
notwithstanding, the amount guaranteed by the Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations under this
Guaranty shall not be subject to avoidance under Section 548 of the Federal
Bankruptcy Code or to being set aside or annulled under any applicable state law
relating to fraud on creditors. In determining the limitations, if any, on the
amount of the Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which the Guarantor may have
under this Guaranty or applicable law shall be taken into account.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed by its respective officer thereunto duly authorized, as of the date
first above written.
SERVICIOS LANCERMEX, S.A. de C.V.
By: /s/ John P. Herbots
Name: John P. Herbots
Title: Vice President Finance
Facsimile:
Attention:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The Consolidated Balance Sheets and Conslidated
Statements of Income found on pages 2, 3, and 4 of the Company's 10-Q for the
year-to-date.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1626
<SECURITIES> 0
<RECEIVABLES> 20295
<ALLOWANCES> 85
<INVENTORY> 23303
<CURRENT-ASSETS> 45581
<PP&E> 40024
<DEPRECIATION> 18468
<TOTAL-ASSETS> 70307
<CURRENT-LIABILITIES> 26727
<BONDS> 0
0
0
<COMMON> 58
<OTHER-SE> 9915
<TOTAL-LIABILITY-AND-EQUITY> 70307
<SALES> 48786
<TOTAL-REVENUES> 49154
<CGS> 37152
<TOTAL-COSTS> 43737
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 807
<INCOME-PRETAX> 4610
<INCOME-TAX> 1744
<INCOME-CONTINUING> 2866
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2866
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
