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SEVENTH AMENDMENT AND RESTATED CREDIT AGREEMENT
THIS SEVENTH AMENDMENT AND RESTATED CREDIT AGREEMENT is made and
entered into as of the 26 day of October, 2000, to be effective June 30, 2000,
among LANCER PARTNERSHIP, LTD., a Texas limited partnership ("OPERATING
SUBSIDIARY"), and LANCER DE MEXICO, S.A. DE C.V., formerly known as NUEVA
DISTRIBUIDORA LANCERMEX, S.A. de C.V., a sociedad anonima de capital variable
organized under the laws of the United Mexican States ("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"); LANCER CAPITAL CORPORATION,
a Delaware corporation ("LANCER CAPITAL") and LANCER INTERNATIONAL SALES, INC.,
a Texas corporation, ("LANCER INTERNATIONAL") SERVICIOS LANCERMEX, S.A. DE C.V,
a sociedad anonima de capital variable organized under the laws of the United
Mexican States ("SERVICIOS LANCERMEX"), INDUSTRIAS LANCERMEX, S.A. DE C.V., a
sociedad anonima de capital variable organized under the laws of the United
Mexican States ("INDUSTRIAS LANCERMEX") (Lancer Capital, Lancer International,
Servicios Lancermex, Industrias Lancermex and Operating Subsidiary,
individually, a "GUARANTOR" and collectively, the "GUARANTORS"); and THE FROST
NATIONAL BANK ("FROST"), 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"), HARRIS TRUST AND SAVINGS BANK, an Illinois
banking corporation ("HARRIS"), individually, and WHITNEY NATIONAL BANK, a
national banking association ("WHITNEY"), individually, and each of the lenders
which becomes a party hereto as provided in Section 10.7 below (individually, a
"BANK" and collectively, the "BANKS").
Recitals
A. As of July 15, 1996 pursuant to that certain "Credit Agreement" (the
"ORIGINAL CREDIT Agreement" as amended, modified, restated and supplemented from
time to time, the "CREDIT AGREEMENT") dated as of such date, Agent and THE
BOATMEN'S NATIONAL BANK OF ST. LOUIS, a national banking association
("BOATMEN'S") (i) provided to Operating Subsidiary a revolving credit facility,
a term loan facility and an acquisition facility for the purposes provided in
such Credit Agreement; and (ii) provided to Mexico Subsidiary a term loan
facility for the purposes provided in such Credit Agreement.
B. Pursuant to those certain five amendments to the Credit Agreement,
entered into from time to time, various modifications were made to the
above-described loan facilities and to the terms of the Credit Agreement.
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C. Pursuant to those certain Assignment and Acceptances dated August
16, 1999 in accordance with the terms of Section 10.7, BANK OF AMERICA, N.A.,
successor to NationsBank, N.A., successor to Boatmen's assigned thirty-three and
three- tenths percent (33.3%) of its Commitments to Whitney and sixty-six and
seven-tenths percent (66.7%) of its Commitments to Harris.
D. The Banks and Borrowers have previously negotiated, but have not
executed, that certain Sixth Amendment to Credit Agreement in order to modify
certain terms and conditions of the Original Credit Agreement and have mutually
agreed to include the terms and conditions of the proposed Sixth Amendment in
this Seventh Amendment and Restated Credit Agreement.
E. The Banks, severally, are willing to renew and extend to the extent
of their respective Commitments, as reduced or modified by the term of this
Agreement, the Revolving Loans, Term Loans and outstanding balance of the
Acquisition Loans (to be included within the Term Loans) to Borrowers upon the
terms and subject to the conditions herein provided.
NOW THEREFORE, for and in consideration of the premises and the
promises herein, and for other good and valuable considerations, the receipts
adequacy and reasonable equivalency of which are hereby acknowledged by each
party hereto, Operating Subsidiary, Mexico Subsidiary, Parent Company, Lancer
Capital, Lancer International, Servicios Lancermex, Industrias Lancermex and
each Bank and the Agent agree as follows:
ARTICLE 1
DEFINITIONAL PROVISIONS
SECTION 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.
SECTION 1.2 General Definitional Provisions.
(a) 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 senders should be
construed to include any gender.
(b) 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.
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(c) 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.
(d) 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.
(e) 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.
(f) 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, or a Revolving 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).
ARTICLE 2
THE CREDITS
SECTION 2.1 Commitments to Lend.
(a) (1) Term A Loans. Each Bank severally agrees, on and subject to the
terms and conditions set forth in this Agreement, to renew term loans (each a
"Term A Loan") to Operating Subsidiary in an amount not exceeding such Bank's
Term A Loan Commitment. Each Bank's Term A Loan Commitment shall include the sum
of (i) the principal balance now outstanding of all Term A Loans from such Bank
to Operating Subsidiary, and (ii) the principal balance now outstanding of all
Acquisition Loans from such Bank to Operating Subsidiary. The
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Term A Loan Commitments shall not exceed $12,923,750.00 in the aggregate for all
Banks. Any Term A Loan that is repaid or prepaid may not be reborrowed.
(2) Term B Loans. Each Bank severally agrees, on and subject
to the terms and conditions set forth in this Agreement, to renew term loans
(each a "Term B Loan") to Mexico Subsidiary in an amount not exceeding such
Bank's Term B Loan Commitment and not exceeding $1,900,000.00 in the aggregate
for all Banks. Any Term B Loan that is repaid or prepaid may not be reborrowed.
(b) 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 as shown on
Annex A. 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.
(c) Acquisition Loans. From time to time during the Acquisition
Availability Period (as that term is defined in the Original Credit Agreement),
each Bank made acquisition loans (each an "Acquisition Loan") to Operating
Subsidiary, on and subject to the terms and conditions set forth in the Credit
Agreement. The current balance of all Acquisition Loans has been refinanced as a
part of and is included within the balance of Term A Loans. No further
Acquisition Loans shall be available pursuant to this Agreement.
(d) Amount of Borrowings: Borrowings Ratable. 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.
(e) 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 below, provided that all Loans made pursuant to the same Borrowing
shall be of the same Type; provided, however, no more than 10 LIBOR Loan
Borrowings shall be outstanding at any time.
SECTION 2.2 Method of Borrowing.
(a) Operating Subsidiary shall give the Agent notice in the form
attached hereto as Exhibit A (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
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Loan and (ii) with respect to LIBOR Loans, the second LIBOR Business Day before
each Borrowing consisting of a LIBOR Loan, specifying:
(1) 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;
(2) 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;
(3) the aggregate amount of such Borrowing and of each Loan comprising
such Borrowing; and
(4) (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
(5) 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).
(b) 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.
(c) 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.
(d) 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
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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.
(e) 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.
SECTION 2.3 Notes.
(a) 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. The current
outstanding balance of any Acquisition Loans of each Bank has been incorporated
into the balance of and shall be evidenced by the Term A Note of each Bank.
(b) 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.
(c) 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.
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SECTION 2.4 Interest Rates and Payment.
(a) 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.
(b) 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.
(c) 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.
(d) 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
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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.
(e) 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.
SECTION 2.5 Continuations/Conversions, Etc.
(a) Continuation/Conversion.
(i) 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.
(ii) 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.
(iii) 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.
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(iv) 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.
(b) 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)(k) 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.
(c) 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.
SECTION 2.6 Commitment and Other Fees. Subject to Section 10.8:
(a) 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 Revolving Commitments of all Banks during the Revolving
Availability Period. Such fees shall be payable quarterly in arrears on each
Quarterly Date during the Revolving Availability Period and on the Revolving
Commitment Termination Date.
SECTION 2.7 Termination of Commitments.
(a) No further advances shall be made on the Term A Loans or the Term B
Loans.
(b) During the Revolving Availability Period, Operating Subsidiary may,
upon at least 5 Business Days' prior notice to the Agent, receipt of which
notice Agent shall promptly
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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 Revolving Commitments of all Banks.
(c) 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.
(d) To the extent not theretofore terminated or permanently reduced, as
applicable,
pursuant to other provisions of this Agreement, the Revolving Commitments of all
Banks shall terminate on July 15, 2002.
SECTION 2.8 Mandatory Prepayments.
(a) 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. All such mandatory
prepayments shall be accompanied by, and such Borrower shall pay, interest
thereon which has accrued until the date of payment thereof.
(b) 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.
(c) 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.
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(d) If at any time, Parent Company issues or sells any Indebtedness
permitted under Section 6.2(y), Operating Subsidiary shall immediately prepay
the Term A Loans in amounts equal to, in the aggregate, the net cash proceeds
received for such issuance or sale. Such prepayment shall be applied to the
payment of principal of the Term A Notes. Each such prepayment with respect of
the Term A Loans shall be applied, to the unpaid scheduled principal
installments of such Loans in the inverse order of maturity thereof.
SECTION 2.9 Principal Payments on Loans.
(a) On each Quarterly Date commencing September 30, 2000 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) $275,000 on
each Quarterly Date from September 30, 2000 through July 15, 2002, 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, 2002.
(b) On each Quarterly Date commencing September 30, 2000 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, 2002.
(c) Until (i) the Term Loan A and all other obligations and liabilities
of Operating Subsidiary under this Agreement and the other Loan Documents are
fully paid and satisfied, and (ii) the Banks have no further commitment to lend
hereunder, Operating Subsidiary shall pay not later than ninety (90) days after
the end of each fiscal year of Operating Subsidiary, fifty percent (50%) of
Excess Cash Flow of Borrowers for such fiscal year as a prepayment of Term Loan
A, to be applied in the inverse order of maturity; provided however in no event
shall the amounts of principal payments for any fiscal year (including payments
made as a result of sections (a) and (b) above and amounts paid pursuant to this
Section (c)) exceed, in the aggregate, $3,200,000.00.
(d) 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
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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 to the Agent (as herein provided) Loans for application, such payment
shall be applied, ratably, by the Agent as it determines in its sole discretion.
(e) 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.
SECTION 2.10 Optional Prepayments.
(a) 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.
(b) 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.
SECTION 2.11 General Provisions as to Payments. (i) Operating
Subsidiary shall make each payment of principal of and interest on the Term A
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
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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.
SECTION 2.12 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.
SECTION 2.13 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
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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.
SECTION 2.14 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
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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.
SECTION 2.15 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 pre-payment 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.
SECTION 2.16 Proceeds of Loans. The proceeds of the Term A Loans shall
be used by Operating Subsidiary solely to (i) refinance the unpaid principal
balance of indebtedness used for the expansion of Operating Subsidiary's
manufacturing facility in San Antonio, Texas (ii) refinance the unpaid principal
balance of existing loans which financed the purchase of equipment of Operating
Subsidiary and (iii) refinance the balance of the Acquisition Loans. The
proceeds of the Term B Loans shall be used to refinance the principal balance of
indebtedness 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.
ARTICLE 3
CONDITIONS
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SECTION 3.1 Initial Loans on the Closing Date. The obligations of the
Banks to make any Revolving 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.
SECTION 3.2 All Loans, Conversions/Continuations. The obligations of
the Banks to make each Revolving 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:
(a) 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, 2000), that has caused a Material Adverse Effect;
and (iii) no Event of Default or Default shall have occurred and be continuing.
(b) 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.
(c) 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.
(d) 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 origin, (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.
SECTION 3.3 Loans For Acquisitions. Intentionally Omitted.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
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To induce each of the Agent and the Banks to enter into and perform its
agreements pursuant to this Agreement, including, without limitation, the
renewal 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:
SECTION 4.1 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,
SECTION 4.2 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.
SECTION 4.3 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 (E) 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.
SECTION 4.4 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
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binding obligations of each Company, enforceable against each Company in
accordance with its respective terms.
SECTION 4.5 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.
SECTION 4.6 Financial Condition.
(a) 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, 1999, 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 June 30, 2000. 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.
(b) 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:
(i) 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;
(ii) 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;
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(iii) 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
(iv) 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).
SECTION 4.7 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.
SECTION 4.8 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.
SECTION 4.9 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.
SECTION 4.10 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
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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.
SECTION 4. 11 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.
SECTION 4.12 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.
SECTION 4.13 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.
SECTION 4.14 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
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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.
SECTION 4.15 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).
SECTION 4.16 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.
SECTION 4.17 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. Section 200, et
seq., as amended, including specifically, but without limitation, 29 U.S.C.
Section 215(a).
21
<PAGE> 22
SECTION 4.18 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 (h) 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.
SECTION 4.19 Insider. No Company is, and no Person having "control" (as
that term is defined in 12 U.S.C. Section 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.
Section 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.
SECTION 4.20 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
22
<PAGE> 23
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.
SECTION 4.21 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.
ARTICLE 5
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:
SECTION 5.1 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:
(a) 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
23
<PAGE> 24
been prepared in accordance with the generally accepted accounting principles of
the jurisdiction of incorporation or organization of such Non-US Company;
(b) 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;
(c) 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;
(d) 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;
(e) Compliance Certificate. Concurrently with the delivery of the
financial statements delivered pursuant to Sections 1.5(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
24
<PAGE> 25
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.
(f) 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;
(g) 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;
(h) 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;
(i) 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:
(j) 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
25
<PAGE> 26
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
(k) 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.
SECTION 5.2 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.
SECTION 5.3 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.
SECTION 5.4 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.
SECTION 5.5 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
26
<PAGE> 27
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.
SECTION 5.6 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.
SECTION 5.7 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.
SECTION 5.8 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.
SECTION 5.9 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.
SECTION 5.10 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
27
<PAGE> 28
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.
SECTION 5. 11 ERISA Compliance.
Each Borrower and Parent Company will, and Parent Company will cause
each Company to, at all times:
(a) 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;
(b) 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;
(c) 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;
(d) 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
(e) 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
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<PAGE> 29
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.
SECTION 5.12 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.
SECTION 5.13 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.
SECTION 5.14 Primary Business. Each Borrower and Parent Company will,
and Parent Company cause each Company, to, continue to design, engineer,
manufacture and/or market beverage dispensing systems as its primary business.
SECTION 5.15 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
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<PAGE> 30
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.
ARTICLE 6
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:
SECTION 6.1 Certain Financial Matters. Neither any Borrower nor Parent
Company will permit:
(a) 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
(b) the ratio of:
(i) EBIT of the Companies determined on a consolidated basis
(excluding the write-down of the Brazilian Subsidiary),
to
(ii) the interest expense of the Companies determined on a
consolidated basis, (as of the end of each Fiscal Quarter and
for the number of quarters shown below next to the ending date
of each of the Fiscal Quarters listed below),
to be less than set out below opposite the period in which such Fiscal
Quarter ends;
provided, however, (1) 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, and (2) the
write-down of Lancer do Brasil taken in the third quarter of fiscal
1999 shall not be included in the calculation of this ratio,
30
<PAGE> 31
<TABLE>
<CAPTION>
Fiscal Quarter(s) Ended Number of Quarters in Calculation
On or About (Ending Quarter plus prior Quarters) Ratio
------------------------ ------------------------------------ -------------
<S> <C> <C> <C>
6/30/00 2 1.25 to 1.00
9/30/00 3 1.25 to 1.00
12/31/00 4 1.25 to 1.00
3/31/01 4 1.25 to 1.00
6/30/01 4 1.75 to 1.00
9/30/01 4 2.25 to 1.00
12/31/01 and 4 2.50 to 1.00
thereafter on a
rolling four quarter
basis
</TABLE>
or
(c) Intentionally Omitted.
(d) the net worth of the Companies determined on a consolidated basis
as of the end of any Fiscal Quarter (excluding 100% of the "Accumulated
Other Comprehensive Income/Loss" balance listed in the "Shareholders
Equity" section of the Parent Company's balance sheet) to be less than
the sum of (i) $44,000,000 plus (ii) 75 % of the cumulative amount of
net income of the Companies determined on a consolidated basis from
September 30, 1999 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
(e) the net worth of any Company, other than (i) the Mexico Companies,
(ii) Lancer do Brasil, EcuaLancer S.A. and 000 Lancer Sales Company,
and (iii) 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
(g) 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 (excluding the write-down of the
Brazilian Subsidiary), to be more than set out below opposite the
period in which such Fiscal Quarter ends; provided, however, (1) 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
31
<PAGE> 32
beginning of the first of such Fiscal Quarters included in the relevant
four-quarter measurement period:
<TABLE>
<CAPTION>
Fiscal Quarters Ended On or About Ratio
--------------------------------- -------------
<S> <C>
6/30/00 No test
9/30/00 5.50 to 1.00
12/31/00 5.00 to 1.00
3/31/01 5.00 to 1.00
6/30/01 4.25 to 1.00
9/30/01 3.25 to 1.00
12/31/01 through 7/15/02 3.00 to 1.00
</TABLE>
(h) 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 and (ii) up to $500,000 in
Capital Lease Obligations of the Companies determined on a consolidated
basis for any Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Years (Beginning/Ending) Amount
------------------------------- ------------
<S> <C>
1/1/96 through 12/31/96 $ 4,000,000
l/l/96 through 12/31/97 $ 8,000,000
l/l/96 through 12/31/98 $12,000,000
1/1196 through 12/31/99 $16,000,000
1/1/96 through 12/31/00 $20,000,000
l/l/96 through 12/31/01 $24,000,000;
</TABLE>
or
(i) the ratio of (i) Cost of Goods Sold for the four-quarter period
ending as of the end of each Fiscal Quarter to (ii) Total Inventory as
of the end of any Fiscal Quarter, to be less than for the four-quarter
period ending as of the end of such Fiscal Quarter set out below
opposite the period in which such Fiscal Quarter ends:
<TABLE>
<S> <C>
3/31/00 through 6/30/01 2.25 to 1.00.
9/30/01 2.40 to 1.00
12/31/01 through 7/15/02 2.50 to 1.00
</TABLE>
SECTION 6.2 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"):
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<PAGE> 33
(i) the Obligations;
(ii) current liabilities for Taxes incurred in the ordinary
course of business which are not yet due and payable;
(iii) trade payables arising in the ordinary course of
business;
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<PAGE> 34
(iv) Indebtedness listed in Schedule 6.2: and
(v) forward contracts and other hedging instruments executed
to hedge existing or anticipated exposure to currency or
interest rate fluctuations; and
(vi) 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 aggregate
principal amount of all Term A 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.
SECTION 6.3 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.
SECTION 6.4 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.
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<PAGE> 35
SECTION 6.5 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:
(i) Temporary Cash Investments;
(ii) Investments listed in Schedule 6.5; and
(iii) Investments expressly permitted by other provisions of
this Agreement.
SECTION 6.6 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.
SECTION 6.7 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, and(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.
SECTION 6.8 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.
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<PAGE> 36
SECTION 6.9 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.
SECTION 6.10 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.
SECTION 6.11 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 other-wise 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) 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 (ii)
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<PAGE> 37
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:
(a) 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;
(b) the primary business activity of the Acquisition Target is
substantially related to the business activities of the Operating Subsidiary;
(c) 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;
(d) 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;
(e) 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
(f) 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.
SECTION 6.12 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 to 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.
37
<PAGE> 38
SECTION 6.13 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.
SECTION 6.14 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.
SECTION 6.15 Negative Pledge. Neither any Borrower nor Parent Company
will, and Parent Company will not permit any Company to, create or incur any
lien or encumbrance on any of its assets, other than (i) liens and security
interests to Agent securing indebtedness owing to Agent and the Banks, and (ii)
Permitted Liens (as defined herein). Further, Neither any Borrower nor Parent
Company will, and Parent Company will not permit any Company to, grant any
Negative Pledge upon any Company or any of its Property, except for the benefit
of the Agent and the Banks.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.1 Events of Default. An "Event of Default" shall exist if any
one or more of the following events shall occur and be continuing:
(a) 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
(b) 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
(c) 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
38
<PAGE> 39
period of 45 days after the due date of the Compliance Certificate evidencing
such failure or noncompliance; or
(d) 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
(e) 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
(f) 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
(g) 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
(h) both (i) and (ii) following shall occur: (1) 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
39
<PAGE> 40
4041 or 4042 of ERISA, or (B) a "reportable event" (as defined in Title 4 of
ERISA) occurs with respect to any Plan arid 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
(i) a Change in Control shall occur; or
(j) 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 Ml 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.
SECTION 7.2 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 arid 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.
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<PAGE> 41
ARTICLE 8
THE AGENT AND BANKS
SECTION 8.1 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.
SECTION 8.2 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
41
<PAGE> 42
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
she 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.
SECTION 8.3 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.
SECTION 8.4 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
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<PAGE> 43
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.
SECTION 8.5 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
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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.
SECTION 8.6 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.
SECTION 8.7 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.
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SECTION 8.8 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 she 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.
SECTION 8.9 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.
ARTICLE 9
CHANGED CIRCUMSTANCES
SECTION 9.1 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 tile 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
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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.
SECTION 9.2 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.
SECTION 9.3 Increased Cost And Reduced Return.
(a) 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:
(i) 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
(ii) 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
(iii) 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;
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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.
(b) 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 (Liking 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.
(c) 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.
SECTION 9.4 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
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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 par-ties 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.
SECTION 9.5 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.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 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, Texas 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.
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(b) 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.
SECTION 10.2 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.
SECTION 10.3 Payment of Costs and Expenses; Professionals and
Consultants.
(a) 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.
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(b) 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
(h) 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.
(c) 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, Jenkens and Gilchrist, P.C.) 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.
SECTION 10.4 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"), ALL PARTIES FROM
AND AGAINST 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
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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 WILLFUL MISCONDUCT AS DETERMINED BY A COURT OF
COMPETENT JURISDICTION.
SECTION 10.5 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.
SECTION 10.6 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
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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 at 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.
SECTION 10.7 Successors and Assigns; Participations; Assignments.
(a) 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.
(b) 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 indemnity, 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
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<PAGE> 53
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.
(c) 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.
(d) 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
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<PAGE> 54
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.
(e) 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 (d) with the prior consent
of each Borrower, to any prospective Transferee.
(f) 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.
(g) 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.
(h) 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.
SECTION 10.8 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
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<PAGE> 55
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 Par-ties 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.
SECTION 10.9 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 (1)
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<PAGE> 56
THE PROVISIONS OF CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN
REVOLVING LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) 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 PARITIES 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.
SECTION 10.10 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.
SECTION 10.11 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.
SECTION 10.12 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, and 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.
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<PAGE> 57
SECTION 10.13 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.
SECTION 10.14 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.
SECTION 10.15 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.
SECTION 10.16 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
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<PAGE> 58
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.
SECTION 10.17 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.
SECTION 10.18 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.
SECTION 10.19 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,
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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.
SECTION 10.20 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.
SECTION 10.21 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.
SECTION 10.22 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.
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.
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[SIGNATURES ON THE FOLLOWING PAGE]
60
<PAGE> 61
OPERATING SUBSIDIARY:
LANCER PARTNERSHIP, LTD.
limited partnership
By: Lancer Capital Corporation, a Delaware
corporation, general partner
By: /s/ SCOTT ADAMS
----------------
Name: Scott Adams
-------------
Title: Secretary
------------
MEXICO SUBSIDIARY:
LANCER DE MEXICO, S.A. DE C.V., a sociedad
anonima de capital variable organized under the
laws of the United Mexican States
By: /s/ SCOTT ADAMS
---------------
Name: Scott Adams
-------------
Title: Secretary
------------
PARENT COMPANY:
LANCER CORPORATION, a Texas corporation
By: /s/ SCOTT ADAMS
---------------
Name: Scott Adams
-------------
Title: Secretary
------------
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<PAGE> 62
GUARANTORS:
SERVICIOS LANCERMEX, S.A. DE C.V., a
sociedad anonima de capital variable organized
under the laws of the United Mexican States,
solely as guarantor of the indebtedness of
Lancer de Mexico, S.A. de C.V.
By: /s/ SCOTT ADAMS
---------------
Name: Scott Adams
-------------
Title: Secretary
------------
INDUSTRIAS LANCERMEX, S.A. DE C.V., a
sociedad anonima de capital variable organized
under the laws of the United Mexican States,
solely as guarantor of the indebtedness of
Lancer de Mexico, S.A. de C.V.
By: /s/ SCOTT ADAMS
---------------
Name: Scott Adams
-------------
Title: Secretary
------------
LANCER INTERNATIONAL SALES, INC., a
Texas corporation
By: /s/ SCOTT ADAMS
---------------
Name: Scott Adams
-------------
Title: Secretary
------------
AGENT/BANKS:
THE FROST NATIONAL BANK, a national
banking association, Individually and as
the Agent
By: /s/ KELLY DONOGHUE
------------------
Name: Kelly Donoghue
----------------
Title: Vice President
---------------
62
<PAGE> 63
WHITNEY NATIONAL BANK, a national
banking association
By: /s/ ROBERT L. BROWNING
------------------------
Name: Robert L. Browning
----------------------
Title: Senior Vice President
---------------------
HARRIS TRUST AND SAVINGS BANK, an
Illinois banking corporation
By: /s/ TIMOTHY E. BROCCOLO
-----------------------
Name: Timothy E. Broccolo
---------------------
Title: Managing Director
--------------------
63
<PAGE> 64
ANNEX A
THE FROST NATIONAL BANK
<TABLE>
<S> <C> <C>
1. Domestic Lending Office:
The Frost National Bank
100 West Houston Street
San Antonio, Texas 78205
2. LIBOR Lending Office:
The Frost National Bank
100 West Houston Street
San Antonio, Texas 78205
3. Term A Commitment: $$6,461,875.00
4. Term B Commitment: $950,000.00
5. Revolving Commitment: $15,000,000.00
6. Acquisition Commitment: 0
7. Total Commitment: $22,411,875.00
8. Information for Notices:
The Frost National Bank
100 West Houston Street
San Antonio, Texas 78205
Attention: Beth Weakley
Phone: (210) 220-5393
Fax: (210) 220-4626
</TABLE>
Annex A-I
64
<PAGE> 65
ANNEX A
WHITNEY NATIONAL BANK, a national banking association
<TABLE>
<S> <C> <C>
1. Domestic Lending Office:
Whitney National Bank
228 St. Charles Avenue
New Orleans, Louisiana 70130
2. LIBOR Lending Office.
Whitney National Bank
228 St. Charles Avenue
New Orleans, Louisiana 70130
3. Term A Commitment: $ 2,158,266.25
4. Term B Commitment: $ 317,300.00
5. Revolving Commitment: $ 5,010,000.00
6. Acquisition Commitment: 0
7. Total Commitment: $ 7,485,566.25
8. Information for Notices:
Whitney National Bank
228 St. Charles Avenue
New Orleans, Louisiana 70130
Attention: Robert L. Browning, Senior Vice President
Phone: (504) 586-7163
Fax: (504) 552-4622
</TABLE>
Annex A-2
65
<PAGE> 66
ANNEX A
HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation
<TABLE>
<S> <C> <C>
1. Domestic Lending Office:
Harris Trust and Savings Bank
111 West Monroe Street 5 East
Chicago, Illinois 60603
2. LIBOR Lending Office.
Harris Trust and Savings Bank
111 West Monroe Street 5 East
Chicago, Illinois 60603
3. Term A Commitment: $ 4,303,608.75
4. Term B Commitment: $ 632,700.00
5. Revolving Commitment: $ 9,990,000.00
6. Acquisition Commitment: 0
7. Total Commitment: $ 14,926,308.75
8. Information for Notices:
Harris Trust and Savings Bank
111 West Monroe Street 5 East
Chicago, Illinois 60603
Attention: Tim Broccolo
Phone: (312) 461-2752
Fax: (312) 765-8382
</TABLE>
Annex A-3
66
<PAGE> 67
ANNEX A
Address for Operating Subsidiary:
Lancer Partnership, Ltd.
6655 Lancer Boulevard
San Antonio, Texas 78219
Attention: Chief Financial Officer
Phone: (210) 310-7000
Fax: (210) 310-7091
Address for Mexico Subsidiary:
Lancer de Mexico, S.A. de C.V.
c/o Lancer Corporation
6655 Lancer Boulevard
San Antonio, Texas 78219
Attention: Chief Financial Officer
Phone: (210) 310-7000
Fax: (210) 310-7091
Address for Parent Company:
Lancer Corporation
6655 Lancer Boulevard
San Antonio, Texas 78219
Attention: Chief Financial Officer
Phone: (210) 310-7000
Fax: (210) 310-7091
Address for Lancer Capital, Lancer International, Servicios Lancermex,
Industrias Lancermex
6655 Lancer Boulevard
San Antonio, Texas 78219
Attention: Chief Financial Officer
Phone: (210) 310-7000
Fax: (210) 310-7091
Annex A-4
67
<PAGE> 68
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 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) of the
Original Credit Agreement.
"Acquisition Note" means a promissory note executed by Operating
Subsidiary, substantially in the form of Exhibit F to the Original Credit
Agreement 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.
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"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 Indemnities" 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 correction 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) From the date hereof, until the receipt of the Financial Statements
due on September 30, 2000, The Applicable Margin shall be a LIBOR
Spread of 2.25 and a Base Rate Spread of 0.50. Thereafter, 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:
<TABLE>
<CAPTION>
Ratio of Total Funded Debt to Consolidated Base Rate
EBITDA LIBOR Spread Spread
------------------------------------------ ------------ ---------
<S> <C> <C>
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 less than
2.50 to 1.00 1.50 0.00
Greater than or equal to 2.50 to 1.00 but less than 1.875 0.25
3.00 to 1.00
Greater than or equal to 3.00 to 1.00 but less than 2.25 0.50
4.00 to 1.00
Greater than or equal to 4.00 to 1.00 but less than 3.00 1.25
5.00 to 1.00
Greater than or equal to 5.00 to 1.00 3.75 2.00
</TABLE>
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<PAGE> 70
(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 Lancer Pacific Pty. Ltd, an Australian
corporation, formerly known as Glenn Pleass Holdings Pty. Ltd.
"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 1/2% 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.
"Brazilian Subsidiary" means Lancer do Brasil.
"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
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<PAGE> 71
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 l3d-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 Ad-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 l3d-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 June 30, 2000.
"Code" means the Internal Revenue Code of 1986, as heretofore and
hereafter amended, or any successor statute.
"Commitment" means a Revolving 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 (h) 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
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<PAGE> 72
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 Law" 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.
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<PAGE> 73
"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 its bailee and is not
evidenced by any negotiable or nonnegotiable 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 surface water,
groundwater, or land; (iii) generation, handling, treatment, storage, disposal,
air, 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. Section 6901 et
seq.); (h) 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. Section 9601 et seq.); (iii) the
Clean Water Act, as now or hereafter amended (33 U.S.C. Section 1251 et seq.);
(iv) the Toxic Substances Control Act, as now or hereafter amended (15 U.S.C.
Section 2601 et seq.); (v) the Clean Air Act, as now or hereafter amended (42
U.S. C. Section 7401 et seq.), Texas Solid Waste Disposal Act (V.T.C.A. Health
and Safety Code Section 361.001 et seq.) and the Texas Water Code (V.T.C.A.
Water Code Sections 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.
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"Event of Default" has the meaning set forth in Section 7.1.
"Excess Cash Flow" shall mean the net cash flow (net income, plus
depreciation, plus amortization) of Operating Subsidiary, less principal
reductions made on the Term Loan A and Term Loan B during such period, less
capital expenditures of Operating Subsidiary during such fiscal year.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"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,
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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), (d) 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.; (h) 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 Rodino 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, emissions 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.
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"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.
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<PAGE> 77
"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, arbitrate mediation or
otherwise) claim, complaint, demand, lawsuit, hearing, inquiry and/or
investigation conducted or threatened by or before any Governmental Authority.
"Loan" or "Loans" means any advance or advances by the Banks to any
Borrower pursuant to their Revolving Commitments, or any advances previously
made pursuant to 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), and "Loan Party" means any one of them.
"Loan Documents" means this Agreement, each Note and any and all other
agreements (including, without limitation, deeds of trust, security agreements,
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
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<PAGE> 78
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 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
other-wise.
"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 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 6.1.1.
"Permitted Indebtedness" has the meaning stated in Section 6.2.
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<PAGE> 79
"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, insurers 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).
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<PAGE> 80
"Revolving Note" means a promissory note executed by Operating
Subsidiary, 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."
"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."
"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).
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<PAGE> 81
"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
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 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 Business and Commerce 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.
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ANNEX C
CONDITIONS PRECEDENT: INITIAL LOAN
(a) 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.
(b) Revolving Notes. A Renewal Revolving Note duly executed by
Operating Subsidiary in favor of each Bank in the respective amount of such
Bank's Revolving Commitment.
(c) 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.
(d) 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.
(e) Acquisition Notes. Intentionally Omitted.
(f) Security Documents. (i) A Guaranty Agreement, or at the option of
Banks, a Reaffirmation of existing Guaranty Agreements, executed by each
Subsidiary of Parent Company other than Operating Subsidiary, the Mexico
Companies, in form and substance acceptable to the Banks, securing the
obligations described therein, including the Obligations, (ii) a Guaranty
Agreement, or at the option of Banks, a Reaffirmation of the existing Guaranty
Agreement, executed by Parent Company in form and substance acceptable to the
Banks, securing the obligations described therein, including the Obligations,
(iv) a Guaranty Agreement executed by each Mexico Company (other than the Mexico
Subsidiary, or at the option of Banks, a Reaffirmation of existing Guaranty
Agreements in form and substance acceptable to the Banks, securing the
obligations described therein, (iv) a Stock Pledge Agreement duly executed by
Parent Company securing the obligations described therein, including the
Obligations, in form and substance acceptable to the Banks (v) a Deed of Trust,
Security Agreement and Financing Statement, executed by Operating Subsidiary in
form and substance acceptable to the Banks, securing the obligations described
therein, including the Obligations, and (vi) a Security Agreement and a
Financing Statement, executed by Operating Subsidiary in form and substance
acceptable to the Banks, securing the obligations described therein, including
the Obligations.
(g) Opinion of Counsel to the Companies. Opinion of legal counsel for
the Companies in form and substance acceptable to the Banks and their respective
legal counsel.
(h) 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.
(i) 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.
(j) 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.
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(k) 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.
(1) 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.
(m) 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.
(n) 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.
(o) 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 5.1.0 and certifying that such insurance is in full force and effect
and that all premiums then due and payable thereon have been paid.
(p) Financial Statements. Copies of financial statements of the
Companies for the most recent period required under Section 5.1.
(q) 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.
(r) Regulatory and Other Approvals. Evidence that all necessary
approvals or consents of Governmental Authorities and all other Persons have
been obtained.
(s) 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.
(t) 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.
(u) Additional Documentation. Such additional approvals, opinions,
documents, instruments, reports, certifications and/or agreements as the Agent,
the Banks or their counsel may reasonably request.
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EXHIBIT A
NOTICE OF BORROWING
[LANCER PARTNERSHIP, LTD.]
TO: THE FROST NATIONAL BANK, as the Agent under the Seventh Amendment and
Restated Credit Agreement effective June 30, 2000 Bank (including any
amendments or modifications thereof, the "Credit Agreement") among,
inter alia, Lancer Partnership, Ltd. ("Operating Subsidiary"), Lancer
de Mexico, S.A. de C.V., ("Mexico Subsidiary") (Operating Subsidiary
and Mexico Subsidiary are hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers"), Lancer Corporation
("Parent Company"), The Frost National Bank, individually and as the
Agent, Harris Trust And Savings Bank, individually, and Whitney
National Bank, individually, and the financial institutions now or
hereafter parties thereto. Unless otherwise defined herein, terms
defined in the Credit Agreement shall have the same meanings in this
Notice of Borrowing.
1. Operating Subsidiary hereby requests a Borrowing on the date
and in the amount as follows:
(a) REVOLVING LOANS:
$_____________________ under the Revolving Notes
Requested funding date: _______________, 200_
Type of Borrowing: _____ Base Rate Loans
_____ LIBOR Loans
If LIBOR Loans,
length of Interest Period: _____ 30 days
_____ 90 days
_____ 180 days
(b) Intentionally Omitted
(c) Intentionally Omitted
(d) Check one:
_____ DEPOSIT ACCOUNT: The Agent is hereby instructed
to deposit the proceeds of the Loans requested above into
Account No. at the Agent's Domestic Lending Office.
_____ WIRING INSTRUCTIONS: The Agent is hereby
instructed to wire the proceeds of the Loans requested above
into Account No. ______________ of _______________________,
whose routing number is _____________, and is located in
_______________, ________________.
2. Operating Subsidiary hereby certifies that no Default or
Event of Default has occurred and is continuing under the
Credit Agreement.
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3. As of the date hereof, and as a result of the making of the
requested Loans, there does not and will not exist any Default
or Event of Default.
4. The representations and warranties contained in Article 4
of the Credit Agreement (other than those by their terms
limited to a specific date) are true and correct in all
material respects as of the date hereof and shall be true and
correct in all material respects upon the making of the
requested Loans, with the same force and effect as though made
on and as of the date hereof and thereof, except for such
representations and warranties which relate to a particular
date or which fail to be true and correct as a result of
events or occurrences permitted under the Loan Documents.
5. No event has occurred since the date of the most recent
financial statements provided to the Banks pursuant to Section
5.1 of the Credit Agreement that has caused a Material Adverse
Effect.
6. The undersigned certifies that he is the _____________ of
General Partner and that as such he is authorized to execute
this certificate on behalf of Operating Subsidiary.
DATED: , 200 .
------------------- --
LANCER PARTNERSHIP, LTD.
BY: LANCER CAPITAL CORP., general partner
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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EXHIBIT B
INTENTIONALLY OMITTED
EXHIBIT C
[TERM A NOTE]
INTENTIONALLY OMITTED
EXHIBIT D
INTENTIONALLY OMITTED
EXHIBIT E
REVOLVING NOTE
INTENTIONALLY OMITTED
EXHIBIT F
ACQUISITION NOTE
INTENTIONALLY OMITTED
EXHIBIT G
INTENTIONALLY OMITTED
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EXHIBIT H
INTENTIONALLY OMITTED
EXHIBIT I
INTENTIONALLY OMITTED
EXHIBIT J
INTENTIONALLY OMITTED
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EXHIBIT K
CONTINUATION/CONVERSION NOTICE
LANCER PARTNERSHIP, LTD.
TO: THE FROST NATIONAL BANK, as the Agent under the Seventh Amendment and
Restated Credit Agreement effective June 30, 2000 Bank (including any
amendments or modifications thereof, the "Credit Agreement") among,
inter alia, Lancer Partnership, Ltd. ("Operating Subsidiary"), Lancer
de Mexico, S.A. de C.V., ("Mexico Subsidiary") (Operating Subsidiary
and Mexico Subsidiary are hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers"), Lancer Corporation
("Parent Company"), The Frost National Bank, individually and as the
Agent, Harris Trust And Savings Bank, individually, and Whitney
National Bank, individually, and the financial institutions now or
hereafter parties thereto. Unless otherwise defined herein, terms
defined in the Credit Agreement shall have the same meanings in this
Notice of Borrowing.
Pursuant to Section 2.5 of the Credit Agreement, this
Continuation/Conversion Notice (this "Notice") represents Operating Subsidiary's
election to [complete, as applicable, one or more of the following]:
1. Use if converting LIBOR Loans to Base Rate Loans.
<TABLE>
<S> <C>
Class of Loan (select one): ________ Revolving Loans
________ Term A Loans
</TABLE>
Convert $________________ in aggregate principal amount of LIBOR Loans
of the Class of loan above designated with a current Interest Period ending on
________,200____ to Base Rate Loans of the same Class on ___________, 200___
[and]
2. Use if converting Base Rate Loans to LIBOR Loans.
<TABLE>
<S> <C>
Class of Loan (select one): _______ Revolving Loans
_______ Term A Loans
</TABLE>
Convert $_________ in aggregate principal amount of Base Rate Loans of
the Class of Loan above designated to LIBOR Loans of the same Class on ________,
200__. The Interest Period for such LIBOR Loans is requested to be a [one]
[three] [six] (_______) month period. [and]
3. Use if continuing LIBOR Loans.
<TABLE>
<S> <C>
Class of Loan (select one): _______ Revolving Loans
_______ Term A Loans
</TABLE>
Convert $_________ in aggregate principal amount of LIBOR Loans of the
Class of Loan above designated with a Current Interest Period ending on
________, 200___. The initial Interest Period for such continued LIBOR Loans is
requested to be a [one] [three] [six] (_______) month period.
4. Operating Subsidiary hereby certifies, warrants and represents to
the Agent, the Issuing Bank and each Bank as follows:
88
<PAGE> 89
(a) to Operating Subsidiary's knowledge, the representations
and warranties contained and referred to in Article 4 of the Credit Agreement
(other than those by their terms limited to a specific date) are true and
correct in all material respects as of the date hereof and will be true and
correct upon the making of the requested Loans, with the same force and effect
as though made on and as of the date hereof and thereof;
(b) no event has occurred since the date of the most recent
financial statements delivered pursuant to Section 5.1 of the Credit Agreement
(or if this Borrowing request precedes the delivery of such financial
statements, ______________200__) that has caused a Material Adverse Effect;
(c) as of the date hereof, and as a result of the making of
the requested Loans, there does not and will not exist any Default or Event of
Default; and
(d) as of the date hereof, no change or event has occurred
that might cause a Material Adverse Effect.
5. The undersigned certifies that he/she is the [president] [chief
financial officer] of General Partner and that as such he/she is familiar with
the terms of the Credit Agreement, has knowledge of all information necessary to
deliver this Certificate and is authorized to execute this certificate on behalf
of Operating Subsidiary.
DATED: , 2000 .
------------------------- --
LANCER PARTNERSHIP, LTD.
By: LANCER CAPITAL CORP., general partner
By:
-----------------------------------
Name:
----------------------------
Title:
---------------------------
89
<PAGE> 90
EXHIBIT L
CONTINUATION/CONVERSION NOTICE
LANCER DE MEXICO, S.A. DE C.V.
TO: THE FROST NATIONAL BANK, as the Agent under the Seventh Amendment and
Restated Credit Agreement effective June 30, 2000 Bank (including any
amendments or modifications thereof, the "Credit Agreement") among,
inter alia, Lancer Partnership, Ltd. ("Operating Subsidiary"), Lancer
de Mexico, S.A. de C.V., ("Mexico Subsidiary") (Operating Subsidiary
and Mexico Subsidiary are hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers"), Lancer Corporation
("Parent Company"), The Frost National Bank, individually and as the
Agent, Harris Trust And Savings Bank, individually, and Whitney
National Bank, individually, and the financial institutions now or
hereafter parties thereto. Unless otherwise defined herein, terms
defined in the Credit Agreement shall have the same meanings in this
Notice of Borrowing.
Pursuant to Section 2.5 of the Credit Agreement, this
Continuation/Conversion Notice (this "Notice") represents Mexico Subsidiary's
election to [complete, as applicable, one or more of the following]:
1. Use if converting LIBOR Loans to Base Rate Loans.
Convert $________________ in aggregate principal amount of LIBOR Loans
with a current Interest Period ending on ________,200____ to Base Rate Loans on
___________, 200___ [and]
2. Use if converting Base Rate Loans to LIBOR Loans.
Convert $_________ in aggregate principal amount of Base Rate Loans to
LIBOR Loans on ________, 200__. The Interest Period for such LIBOR Loans is
requested to be a [one] [three] [six] (_______) month period. [and]
3. Use if continuing LIBOR Loans.
Convert $_________ in aggregate principal amount of LIBOR Loans with a
Current Interest Period ending on ________, 200___. The initial Interest Period
for such continued LIBOR Loans is requested to be a [one] [three] [six]
(_______) month period.
4. Mexico Subsidiary hereby certifies, warrants and represents to the
Agent, the Issuing Bank and each Bank as follows:
(a) to Mexico Subsidiary's knowledge, the representations and
warranties contained and referred to in Article 4 of the Credit Agreement (other
than those by their terms limited to a specific date) are true and correct in
all material respects as of the date hereof and will be true and correct upon
the making of the requested Loans, with the same force and effect as though made
on and as of the date hereof and thereof;
(b) no event has occurred since the date of the most recent
financial statements delivered pursuant to Section 5.1 of the Credit Agreement
(or if this Borrowing request precedes the delivery of such financial
statements, ______________200__) that has caused a Material Adverse Effect;
(c) as of the date hereof, and as a result of the making of
the requested Loans, there does not and will not exist any Default or Event of
Default; and
90
<PAGE> 91
(d) as of the date hereof, no change or event has occurred
that might cause a Material Adverse Effect.
5. The undersigned certifies that he/she is the [president] [chief
financial officer] and that as such he/she is familiar with the terms of the
Credit Agreement, has knowledge of all information necessary to deliver this
Certificate and is authorized to execute this certificate on behalf of Mexico
Subsidiary.
DATED: , 200 .
------------------------- --
LANCER DE MEXICO, S.A. DE C.V., formerly known as
NUEVA DISTRIBUIDORA LANCERMEX, S.A. de C.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
91
<PAGE> 92
EXHIBIT M
COMPLIANCE CERTIFICATE
TO: THE FROST NATIONAL BANK, as the Agent under the Seventh Amendment and
Restated Credit Agreement effective June 30, 2000 Bank (including any
amendments or modifications thereof, the "Credit Agreement") among,
inter alia, Lancer Partnership, Ltd. ("Operating Subsidiary"), Lancer
de Mexico, S.A. de C.V., ("Mexico Subsidiary") (Operating Subsidiary
and Mexico Subsidiary are hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers"), Lancer Corporation
("Parent Company"), The Frost National Bank, individually and as the
Agent, Harris Trust And Savings Bank, individually, and Whitney
National Bank, individually, and the financial institutions now or
hereafter parties thereto. Unless otherwise defined herein, terms
defined in the Credit Agreement shall have the same meanings in this
Notice of Borrowing.
This Compliance Certificate is delivered pursuant to Section 5.1(e) of
the Credit Agreement and relates to the Companies' compliance with the covenants
set forth in Section 6.1 of the Credit Agreement. This Compliance Certificate
contains "short-hand" descriptions of such covenants. The precise descriptions
of such covenants, including defined terms used in connection therewith, are
more fully set forth in the Credit Agreement, which shall control to the extent
of any inconsistency with the "short-hand" descriptions used herein.
1. The Companies are in compliance with the covenants set forth in
Section 6.1 of the Credit Agreement for the Fiscal Quarter ended
_______________, ____ (the "Determination Date"), as follows:
SECTION 6.1(a): CURRENT RATIO (COMPANIES)
As of the Determination Date:
<TABLE>
<S> <C>
(1) current assets (GAAP) of the Companies
determined on a consolidated basis $__________
(2) current liabilities (GAAP) of the Companies
determined on a consolidated basis excluding
the unpaid principal amount of Revolving Loans $___________
(3) unpaid principal amount of Revolving Loans $___________
Ratio: (1) to [(2) plus (3)] ___ to ____
Minimum Ratio (pursuant to Credit Agreement): ___________
</TABLE>
SECTION 6.1(b): EBIT/INTEREST RATIO (COMPANIES)
For the four-quarter period ended as of the Determination Date:
<TABLE>
<S> <C>
(1) net income (GAAP) of the Companies determined
on a consolidated basis $___________
(2) interest expense of the Companies determined on
a consolidated basis excluding the interest
component of payments under Capital Lease
Obligations $___________
(3) interest component of payments under
Capital Lease Obligations $___________
</TABLE>
92
<PAGE> 93
<TABLE>
<S> <C>
(4) income tax expense of the Companies determined
on a consolidated basis $___________
(5) writedown of Lancer do Brasil $___________
(6) EBIT: sum of (1) through (5) $___________
(7) interest expense of the Companies determined
on a consolidated basis excluding the
interest component of payments under Capital
Lease Obligations $___________
(8) interest component of payments under
Capital Lease Obligations $___________
(9) Interest: sum of (7) plus (8) $___________
Interest Ratio: EBIT (6) to Interest (9) ____ to ___
Minimum Ratio (pursuant to Credit Agreement): ____________
</TABLE>
DO ABOVE FIGURES INCLUDE PRO FORMA ADJUSTMENTS FOR
ACQUISITIONS? _____ NO _____ YES
IF ANSWER IS YES, ATTACH EXPLANATION OF ADJUSTMENTS.
SECTION 6.1(d): MINIMUM NET WORTH (COMPANIES)
As of the Determination Date:
<TABLE>
<S> <C>
(1) net worth (GAAP) of the Companies determined on a consolidated
basis (excluding 100% of the "Accumulated Other Comprehensive
Income/Loss" balance listed in the "Shareholders Equity"
Section of the Parent Company's balance sheet) $___________
(2) 75% of cumulative net income (GAAP) of the
Companies determined on a consolidated basis
from __________ through Determination
Date (no deduction for losses) $___________
(3) 100% of Indebtedness of any Company converted
into shares of capital stock or other equity interests $___________
(4) 100% of any issuance or sale of capital stock or
other equity interests of any Company $___________
Net Worth of the Companies: (1) above $___________
Minimum Required: $44,000,000 plus (2)
plus (3) plus (4) $___________
</TABLE>
93
<PAGE> 94
SECTION 6.1(e): NET WORTH (GAAP) (EACH COMPANY EXCLUDING THE MEXICO
COMPANIES, LANCER DO BRASIL, ECUALANCER S.A., 000 LANCER SALES COMPANY, AND ANY
NEW COMPANY)
As of the Determination Date:
<TABLE>
<S> <C>
(1) net worth of Lancer Corporation $________
(2) net worth of Lancer Partnership, Ltd. $________
(3) net worth of Lancer Investment Corp $________
(4) net worth of Lancer Capital Corp. $________
(5) net worth of Lancer International $________
(6) net worth of Glenn Pleass Holdings Pty. Ltd. $________
(7) net worth of [acquired companies] $________
Minimum Required for each Company excluding
the Mexico Companies and any New Company: $400,000
</TABLE>
SECTION 6.1(f): NET WORTH (GAAP) (EACH NEW COMPANY)
<TABLE>
<S> <C>
As of the Determination Date: $________
(shall not be negative)
SECTION 6.1(g): TOTAL FUNDED DEBT TO CONSOLIDATED
EBITDA
As of the Determination Date:
(1) unpaid principal balance of Notes $_________
(2) unpaid principal amount of other
borrowed-money Indebtedness of any
Company determined on a consolidated
basis $_________
(3) Total Funded Debt: (1) plus (2) $_________
</TABLE>
94
<PAGE> 95
For the four-quarter period ended on the
Determination Date:
<TABLE>
<S> <C>
(4) net income of the Companies determined on a
consolidated basis (GAAP) $__________
(5) interest expense $__________
(6) income tax expense $__________
(7) depreciation/amortization expense $__________
(8) writedown of Lancer do Brasil $___________
(9) EBITDA: sum of (4) through (8) $__________
Ratio: (3) to (9) _____ to ____
</TABLE>
Maximum Ratio:
<TABLE>
<CAPTION>
Fiscal Quarters Ended On or About Ratio
--------------------------------- -------------
<S> <C>
6/30/00 No test
9/30/00 5.50 to 1.00
12/31/00 5.00 to 1.00
3/31/01 5.00 to 1.00
6/30/01 4.25 to 1.00
9/30/01 3.25 to 1.00
12/31/01 through 7/15/02 3.00 to 1.00
</TABLE>
DO ABOVE FIGURES INCLUDE PRO FORMA ADJUSTMENTS FOR
ACQUISITIONS? _____NO _____YES
If answer is YES, attach explanation of adjustments.
SECTION 6.1(h): CAPITAL EXPENDITURES
For the current Fiscal Year through the
Determination Date:
<TABLE>
<S> <C>
(1) capital expenditures of the Companies determined
on a consolidated basis (GAAP) $__________
(2) reimbursements for capital expenditures received
by any Company from Coca Cola Company $__________
(3) Capital Lease Obligations (subject to a maximum
of $500,000) $__________
Amount: (1) minus [(2) plus (3)] $___________
</TABLE>
95
<PAGE> 96
<TABLE>
<CAPTION>
Fiscal Years (Beginning/Ending): Maximum Amount
-------------------------------- --------------
<S> <C>
1/1/96 through 12/31/00 $20,000,000
l/l/96 through 12/31/01 $24,000,000
</TABLE>
SECTION 6.1(i): COST OF GOODS SOLD TO INVENTORY
As of the Determination Date:
<TABLE>
<S> <C>
(1) cost of goods sold of the Companies
determined on a consolidated basis $___________
(2) inventory (GAAP) of the Companies
determined on a consolidated basis $___________
Ratio: (1) to (2) ____ to ____
Minimum Ratio (pursuant to Credit Agreement): ____ to ____
</TABLE>
2. Parent Company hereby certifies, warrants and represents to the
Agent, the Issuing Bank and each Bank as follows:
(a) the representations and warranties contained and referred to in
Article 4 of the Credit Agreement (other than those by their terms limited to a
specific date) are true and correct in all material respects as of the date
hereof, with the same force and effect as though made on and as of the date
hereof and thereof;
(b) no event has occurred since the date of the most recent financial
statements delivered pursuant to Section 5.1 of the Credit Agreement (or if this
Borrowing request, precedes the delivery of such financial statements, _______,
__ 2000) that has caused a Material Adverse Effect;
(c) as of the date hereof, there does not exist any Default or Event of
Default; and
(d) as of the date hereof, no change or event has occurred that might
cause a Material Adverse Effect.
3. The undersigned certifies that he/she is the [president] [chief
financial officer] of Parent Company, and that as such he/she is familiar with
the terms of the Credit Agreement, has knowledge of all information required to
deliver this certificate and is authorized to execute this certificate on behalf
of Parent Company.
DATED: , 200 .
-------------------- --
LANCER CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
96
<PAGE> 97
EXHIBIT N
CONSOLIDATED BORROWING BASE CERTIFICATE
FOR THE FISCAL MONTH BEGINNING _________________, 20____
AND ENDING ______________, _____
From: Lancer Corporation
Date: _______,__ 2000
To: THE FROST NATIONAL BANK, as the Agent under the Seventh Amendment and
Restated Credit Agreement effective June 30, 2000 Bank (including any
amendments or modifications thereof, the "Credit Agreement") among,
inter alia, Lancer Partnership, Ltd. ("Operating Subsidiary"), Lancer
de Mexico, S.A. de C.V., ("Mexico Subsidiary") (Operating Subsidiary
and Mexico Subsidiary are hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers"), Lancer Corporation
("Parent Company"), The Frost National Bank, individually and as the
Agent, Harris Trust And Savings Bank, individually, and Whitney
National Bank, individually, and the financial institutions now or
hereafter parties thereto. Unless otherwise defined herein, terms
defined in the Credit Agreement shall have the same meanings in this
Notice of Borrowing.
This Consolidated Borrowing Base Certificate is delivered pursuant to
Section 5.1(g) of the Credit Agreement. All capitalized terms used but not
defined herein shall have the respective meanings specified in the Credit
Agreement.
For the purposes of determining the Consolidated Borrowing Base, the
undersigned does hereby certify that as of ___,__ 200_, as follows:
<TABLE>
<S> <C>
1. Total receivables of the Companies $___________
determined on a consolidated basis (GAAP) as
of the end of the Fiscal Month
</TABLE>
Ineligible receivables of the Companies determined an a consolidated basis as of
the end of the Fiscal Month determined without duplication:
<TABLE>
<S> <C>
2. Accounts receivable due more than 180 days $________
from invoice date
3. Accounts receivable unpaid more than 60 $_________
days after such accounts receivable are due
and payable
4. All accounts receivable of any account debtor, $_________
other than the Coca Cola Company and any
of its wholly owned Subsidiaries, in excess of
20% of the aggregate amount of all accounts
receivable of the Companies determined on a
consolidated basis
5. Accounts receivable due from Affiliates of any $__________
Company
</TABLE>
97
<PAGE> 98
<TABLE>
<S> <C> <C>
6. Accounts receivable of the Mexico Companies $__________
7. Accounts receivable subject to any dispute or $__________
setoff
8. Other accounts receivable which are not $__________
Eligible Accounts Receivable
9. Total ineligible accounts receivable of the $__________
Companies determined on a consolidated
basis for the Fiscal Month (Add Lines 2
through 8)
10. Total Eligible Accounts Receivable for the $___________
Companies determined on a consolidated
basis for the Fiscal Month (Line 1 minus
Line 9)
11. Multiplied by: 80%
12. Equals: Eligible Accounts Receivables $____________
component of Consolidated Borrowing Base
13. Total inventory of the Companies determined $_____________
on a consolidated basis (GAAP) as of the end
of the Fiscal Month
</TABLE>
Inventory which is not Eligible Inventory of the Companies determined on a
consolidated basis as of the end of Fiscal Month:
<TABLE>
<S> <C> <C>
14. Inventory owned by any Mexico Company $________
15. Other inventory which is not Eligible $_________
Inventory
16. Total ineligible inventory for the Companies $___________
determined on a consolidated basis (GAAP)
the Fiscal Month (Add lines 14 through 15)
17. Total Eligible Inventory for the Companies $___________
determined on a consolidated basis (GAAP) at
end of Fiscal Month (Line 13 minus Line 16)
18. Multiplied by: 30% $___________
19. Equals: Eligible Inventory component of $___________
Consolidated Borrowing Base
20. Consolidated Borrowing Base at end of Fiscal $___________
Month (Line 12 plus Line 20)
</TABLE>
98
<PAGE> 99
21. Aggregate principal amount of advances $___________
outstanding under all Revolving Loans
22. Equals: Amount available for Borrowing $___________
under the Revolving Note subject to terms of
the Credit Agreement, if positive, or amount
to be repaid, if negative [Line 21 minus the
sum of (Line 22 plus Line 23 plus Line 24)]
The undersigned further certifies that the above information and
computations are true and correct and not misleading as of the date hereof, and
that no Default or Event of Default has occurred and is continuing under the
Credit Agreement.
LANCER PARTNERSHIP, LTD.
BY: LANCER CAPITAL CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
LANCER CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
99
<PAGE> 100
EXHIBIT O
INTENTIONALLY OMITTED
EXHIBIT P
ANCHOR BOTTLERS
Coca-Cola Enterprises - United States
Panamerican Beverage Company - Mexico
Amatil Holdings, Ltd. - Australia
Swire Holdings, Ltd. - Hong Kong
Leventis Bottling Gropu - United Kingdom
Fraser & Neave - Malaysia
100
<PAGE> 101
SCHEDULE 4.1
None
SCHEDULE 4.5
No material liens
SCHEDULE 4.9
See attached report
SCHEDULE 4.10
None
101
<PAGE> 102
SCHEDULE 4.14
<TABLE>
<S> <C>
Lancer Corporation A
Lancer Partnership, Ltd. A,B,C,D,E,F
Lancer Investment Corporation S
Lancer Capital Corporation A
Lancer International Sales, Inc. A
Lancer do Brasil, Ltda. H
Lancer de Mexico SA de CV J
Servicios Lancermex SA de CV J
Industrias Lancermex SA de CV K,L
Lancer Pacific Ltd. P
Lancer Pacific Industries, Pty. Ltd. M,N,O
Lancer Pacific Pty. Ltd. M,N,O
OOO Lancer Sales Company R
Lancer Europe SA I
Advanced Beverage Solutions, LLC G
Ecualancer SA Q
</TABLE>
First address listed for each entity is primary
<TABLE>
<S> <C>
A 6655 Lancer Blvd. San Antonio, TX 78219
B 1125 Northmeadow Parkway, Suite 116 Roswell, GA 30076
C 5807 Business Park San Antonio, TX 78218
D 1793 Brown St. Bldg. A-2 Eagle Pass, TX 78852
E 10815 Sentinel San Antonio, TX 78217
F 235 West Turbo San Antonio, TX 78216
G 1425 South Wright Blvd. Schaumburg, IL 60193
H Rua Rio de Janeiro 44 Diadema - SP 09961-730 Brasil
I Mechelsesteenweg 592 B-1930 Zaventem Belgium
J Calle Lerdo de Tejada #544 PTE. San Nicolas de los Garza NL Col Las Villas CP 66422 Monterrey, Mexico
K Victoria #2708 Norte Piedras Negras Coah, Mexico
L 100 Ave Dr. Chavarria Piedras Negras Coah, Mexico
M 5 Toogood Avenue Beverly SA 5009 Australia
N 67 Prince William Drive Seven Hill, NSW 2147, Sydney, Australia
O 4 Shepherd Street Marrickville, NSW 2204 Sydney, Australia
P 249 Neilson Street, Onehunga, Auckland, New Zealand
Q Amazonas y Rumipamba Edificio Torre Carolina Cuarto Piso Officina 402 Quito, Ecuador
R Tzhorskaya Str 13/19, 127412 Moscow, Russia
S 1209 Orange St. Wilmington, DE 19801-1120
</TABLE>
102
<PAGE> 103
SCHEDULE 4.20
None
SCHEDULE 6.2
ANZ debt
SPAL debt
Operating lease with CCA Financial, Inc.
SCHEDULE 6.5
Lancer Ice Link, LLC
Packaged Ice, Inc.
Lancer Frank Corporation
Lancer FBD Partnership, Ltd.
103
